<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 0-22336
-------
ANTEC CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 36-3892082
- -------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
2850 W. Golf Road
Rolling Meadows, IL 60008
(847)439-4444
(Address, including zip code and telephone number, including
area code, of registrant's principal executive offices)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- ----
At July 31, 1996, there were 22,899,132 shares of Common Stock, $0.01 par
value, of the registrant outstanding.
<PAGE> 2
PART I. FINANCIAL INFORMATION
ANTEC CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<Capital>
June 30, December 31,
1996 1995
----------- -------------
(Unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $1,012 $979
Accounts receivable (net of allowance for
doubtful accounts of $2,157 in 1996 and
$1,956 in 1995) 105,291 106,547
Inventories, primarily finished goods 112,915 122,231
Other current assets 3,160 2,477
-------- --------
Total current assets 222,378 232,234
Property, plant and equipment, net 26,036 25,937
Goodwill (net of accumulated amortization
of $29,366 in 1996 and $26,877 in 1995) 169,326 171,815
Deferred income taxes, net 13,499 13,824
Other assets 10,086 13,108
-------- --------
$441,325 $456,918
======== ========
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
<S> <C> <C>
Current liabilities:
Accounts payable $50,898 $63,482
Accrued compensation, benefits and related taxes 16,137 15,899
Other current liabilities 21,033 22,395
-------- --------
Total current liabilities 88,068 101,776
Long-term debt 110,164 117,920
-------- --------
Total liabilities 198,232 219,696
Stockholders' equity:
Preferred stock, par value $1.00 per share, 5 million
shares authorized, none issued and outstanding --- ---
Common stock, par value $0.01 per share,
50 million shares authorized; 22.9 million shares
issued and outstanding in 1996 and 1995 229 229
Capital in excess of par value 217,401 217,013
Retained earnings 25,762 20,194
Cumulative translation adjustments (299) (214)
-------- --------
Total stockholders' equity 243,093 237,222
-------- --------
$441,325 $456,918
======== ========
</TABLE>
See accompanying notes to the consolidated financial statements.
2
<PAGE> 3
ANTEC CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share data)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30 June 30
------------------- -------------------
1996 1995 1996 1995
---- ----- ---- ----
<S> <C> <C> <C> <C>
Net sales $162,784 $165,332 $325,176 $324,179
Cost of sales 124,522 127,704 249,104 245,618
-------- -------- -------- --------
Gross profit 38,262 37,628 76,072 78,561
Operating expenses:
Selling, general and
administrative expenses 28,474 30,625 56,854 59,045
Amortization of goodwill 1,245 1,185 2,489 2,366
------ ------- -------- --------
29,719 31,810 59,343 61,411
------- ------ -------- --------
Operating income 8,543 5,818 16,729 17,150
Interest expense and other, net 2,216 2,834 4,918 5,692
------- ------ -------- -------
Income before income taxes 6,327 2,984 11,811 11,458
Income tax expense 3,321 1,902 6,243 5,982
------- ------ ----- -----
Net income $3,006 $1,082 $5,568 $5,476
======= ====== ====== ======
Net income per common and
common equivalent share $.13 $.05 $.24 $.24
======= ======= ===== ====
Weighted average common and
common equivalent shares 23,499 23,077 23,514 23,064
====== ====== ====== =======
</TABLE>
See accompanying notes to the consolidated financial statements.
3
<PAGE> 4
ANTEC CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Six months ended
June 30
--------------------
1996 1995
---- ----
<S> <C> <C>
Operating activities:
Net income $5,568 $5,476
Adjustments to reconcile net income to
net cash provided (used) by operating activities:
Depreciation and amortization 6,318 5,659
Changes in operating assets and liabilities
net of effects of acquisitions:
Accounts receivable 1,256 (21,128)
Inventories 9,316 (13,286)
Accounts payable and accrued liabilities (13,735) 8,119
Other, net 467 452
--------- --------
Net cash provided (used) by operating activities 9,190 (14,708)
Investing activities:
Purchases of property, plant and equipment (3,333) (8,105)
Other 1,549 (1,867)
--------- --------
Net cash used by investing activities (1,784) (9,972)
--------- --------
Net cash provided (used) before financing activities 7,406 (24,680)
Financing activities:
Borrowings 117,995 77,941
Reductions in borrowings (125,756) (52,272)
Proceeds from issuance of common stock 388 933
--------- --------
Net cash provided (used) by financing activities (7,373) 26,602
--------- --------
Net increase in cash and cash equivalents 33 1,922
Cash and cash equivalents at beginning of period 979 835
--------- --------
Cash and cash equivalents at end of period $1,012 $2,757
========= ========
Supplemental cash flow information:
Interest paid during the period $4,089 $5,424
========= ========
Income taxes paid during the period $5,735 $8,490
========= ========
</TABLE>
See accompanying notes to the consolidated financial statements.
4
<PAGE> 5
ANTEC CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. BASIS OF PRESENTATION
The accompanying consolidated financial statements should be read in
conjunction with the consolidated financial statements included in ANTEC
Corporation's (the "Company" or "ANTEC") Annual Report on Form 10-K for the
year ended December 31, 1995. The consolidated financial information furnished
herein reflects all adjustments (consisting of normal recurring accruals) which
are, in the opinion of management, necessary for a fair presentation of the
consolidated financial statements for the periods shown.
5
<PAGE> 6
ANTEC CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
COMPARISON OF OPERATIONS FOR THE SIX AND THREE MONTHS ENDED JUNE 30, 1996 AND
1995
Net Sales. Net sales for the six and three month periods ended June 30,
1996 were $325.2 million and $162.8 million, respectively, compared to $324.2
million and $165.3 million for the same periods in 1995. 1996 sales reflect
international sales growth offset by continued softness in the domestic cable
TV market.
Gross Profit. Gross profit for the six and three month periods ended June
30, 1996 was $76.1 million and $38.3 million, respectively, compared to $78.6
million and $37.6 million for the same periods in 1995. Gross profit as a
percentage of net sales for the six and three month periods ended June 30, 1996
was 23.4% and 23.5%, respectively, compared to 24.2% and 22.8% for the same
periods in 1995. The six month period of 1995 was favorably impacted by
additional service fees received in the first quarter of that year. The
improved gross profit percentage for the three month period ended June 30, 1996
is a result of product mix, notably an increase in ANTEC manufactured product
sales.
Selling, General and Administrative ("SG&A") Expenses. SG&A expenses for
the six and three month periods ended June 30, 1996 were $56.9 million and
$28.5 million, respectively, compared to $59.0 million and $30.6 million for
the same periods in 1995. This represents decreases of 3.7% and 7.0% for the
six and three month periods, respectively. These reductions primarily reflect
the impact of ANTEC's reorganized management structure.
Interest Expense and Other, Net. Interest expense and other, net for the
six and three month periods ended June 30, 1996 was $4.9 million and $2.2
million, respectively, compared to $5.7 million and $2.8 million for the same
periods in 1995. These decreases primarily relate to decreased debt levels
resulting from an improved working capital position, driven largely by a
significant reduction in inventory levels and, to a lesser extent, a lower
average interest rate under the Company's credit facility.
Net Income. Net income for the six and three month periods ended June 30,
1996 was $5.6 million and $3.0 million, respectively, compared to $5.5 million
and $1.1 million for the same periods in 1995. These increases are due to the
factors described above.
6
<PAGE> 7
ANTEC CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CON'T.)
FINANCIAL LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1996, the Company had a balance of $107.5 million
outstanding and had approximately $62 million of available borrowings under its
credit facility. The average interest rate on these borrowings was 6.5% at
June 30, 1996. The commitment fee on unused borrowings is approximately 1/4 of
1%.
The Company's capital expenditures were $3.3 million and $8.1 million for
the six months ended June 30, 1996 and 1995, respectively. 1995 capital
expenditures consisted primarily of planned sales office and warehouse
improvements and expansion. The Company has no significant commitments for
capital expenditures at June 30, 1996.
As of June 30, 1996, approximately $3 million of the Company's 1995
non-recurring charge had yet to be utilized. It is currently anticipated that
the remaining balance will be expended by the end of 1996, except for amounts
related to long-term property lease commitments.
The Company's primary need for capital is to fund working capital
requirements, primarily accounts receivable and inventory. The accounts
receivable component of working capital tends to fluctuate closely with the
overall volume of sales activity. Reflecting sales fluctuations, the
investment in accounts receivable (decreased) increased approximately ($1.3)
million and $21.1 million in 1996 and 1995, respectively. The Company has
generally been able to adjust inventory levels according to anticipated
business activity. 1996 inventory levels decreased in the first half of the
year resulting from the Company's continued efforts to control inventory
levels. Reflecting an anticipated increase in sales, investment in inventory
increased significantly in the six months ended June 30, 1995.
CASH FLOW
Cash flows provided (used) by operating activities were $9.2 million and
($14.7) million for the six months ended June 30, 1996 and 1995, respectively.
1996 reflects the Company's improved working capital position including its
continued effort to control inventory. 1995 reflects an increase in working
capital investments required to support the increased sales activity.
Cash flows used by investing activities were $1.8 million and $10.0
million for the six months ended June 30, 1996 and 1995, respectively. 1995
includes the impact of planned sales and warehouse improvements.
Cash flows (used) provided by financing activities were ($7.4) million and
$26.6 million for the six months ended June 30, 1996 and 1995, respectively.
Both periods reflect their respective trends in working capital investments.
7
<PAGE> 8
PART II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
8
<PAGE> 9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ANTEC CORPORATION
Dated: August 9, 1996 By: /s/ Lawrence A. Margolis
-----------------------------
Lawrence A. Margolis
Executive Vice President
(Principal Financial Officer,
duly authorized to sign on
behalf of the registrant)
9
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-3-1996
<CASH> 1,012
<SECURITIES> 0
<RECEIVABLES> 105,291
<ALLOWANCES> 2,157
<INVENTORY> 112,915
<CURRENT-ASSETS> 222,378
<PP&E> 26,036
<DEPRECIATION> 19,851
<TOTAL-ASSETS> 441,325
<CURRENT-LIABILITIES> 88,068
<BONDS> 110,164
<COMMON> 229
0
0
<OTHER-SE> 242,864
<TOTAL-LIABILITY-AND-EQUITY> 441,325
<SALES> 162,784
<TOTAL-REVENUES> 162,784
<CGS> 124,522
<TOTAL-COSTS> 124,52
<OTHER-EXPENSES> 29,719
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,216
<INCOME-PRETAX> 6,327
<INCOME-TAX> 3,321
<INCOME-CONTINUING> 3,006
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,006
<EPS-PRIMARY> .13
<EPS-DILUTED> .13
</TABLE>
