SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 27, 1997
-------------------
OR
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from
---------------------- to -----------------------
Commission File Number 0-24746
TESSCO Technologies Incorporated
(Exact name of registrant as specified in its charter)
Delaware 52-0729657
----------------------------------- --------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification Number)
34 Loveton Circle Sparks, Maryland 21152
- ----------------------------------------------------- --------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (410) 472-7000
-----------------------
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 report(s)), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------------ ------------
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of July 18, 1997:
Class: Common Stock, $.01 par value Number of Shares: 4,358,651
------------
<PAGE>
Part I
Item 1. Financial Statements
TESSCO Technologies Incorporated
Balance Sheets
(unaudited)
<TABLE>
<CAPTION>
June 27, March 28,
1997 1997
------------------ ------------------
(unaudited) (audited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and marketable securities $ 263,800 $ --
Trade accounts receivable, net 16,771,600 16,907,100
Product inventory 16,238,800 16,942,400
Deferred tax asset 369,700 376,100
Prepaid expenses and other current assets 846,800 861,500
----------- -----------
Total current assets 34,490,700 35,087,100
PROPERTY AND EQUIPMENT, net 12,054,900 11,363,100
DEFERRED TAX ASSET 208,800 212,400
GOODWILL 4,170,800 4,252,700
----------- -----------
Total assets $50,925,200 $50,915,300
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 332,800 $ 331,900
Current portion of capital lease obligation 54,700 85,000
Trade accounts payable 10,134,600 10,771,700
Accrued expenses and other current liabilities 2,653,800 2,086,700
----------- -----------
Total current liabilities 13,175,900 13,275,300
Borrowings under credit facility -- 630,500
Long-term debt 7,611,500 7,637,900
----------- -----------
Total liabilities 20,787,400 21,543,700
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock -- --
Common stock 46,000 46,000
Additional paid-in capital 19,399,700 19,346,200
Treasury stock, at cost (2,591,500) (2,591,500)
Retained earnings 13,283,600 12,570,900
----------- -----------
Total shareholders' equity 30,137,800 29,371,600
----------- -----------
Total liabilities and shareholders' equity $50,925,200 $50,915,300
=========== ===========
</TABLE>
<PAGE>
TESSCO Technologies Incorporated
Statements of Income
(unaudited)
Fiscal Quarters Ended
-----------------------------
June 27, June 28,
1997 1996
---- ----
Revenues $ 34,123,400 $ 36,667,900
Cost of goods sold 25,369,500 27,702,300
------------ ------------
Gross profit 8,753,900 8,965,600
Selling, general and administrative expenses 7,396,500 6,656,200
Income from operations 1,357,400 2,309,400
Interest income (expense), net (201,200) (136,300)
------------ ------------
Income before provision for income taxes 1,156,200 2,173,100
Provision for income taxes 443,500 839,000
------------ ------------
Net income $ 712,700 $ 1,334,100
============ ============
Primary earnings per share $ 0.16 $ 0.28
============ ============
Fully diluted earnings per share $ 0.16 $ 0.28
============ ============
Primary weighted average shares outstanding 4,560,700 4,684,600
============ ============
Fully diluted weighted average shares outstanding 4,595,000 4,708,100
============ ============
<PAGE>
TESSCO Technologies Incorporated
Statements of Cash Flows
(unaudited)
<TABLE>
<CAPTION>
Fiscal Quarters Ending
----------------------------------
June 27, June 28,
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 712,700 $ 1,334,100
Adjustments to reconcile net income to net cash
provided by operating activities, net of effects
of business acquired in fiscal 1997
Depreciation and amortization 476,700 241,600
Provision for bad debts 81,500 121,700
Deferred income taxes 10,000 (52,900)
Decrease (increase) in trade accounts receivable 54,000 (5,002,700)
Decrease (increase) in product inventory 703,600 (2,271,600)
Decrease (increase) in prepaid expenses and other
current assets 14,700 (186,100)
(Decrease) increase in trade accounts payable (637,100) 4,800,500
Increase in accrued expenses and other
current liabilities 567,100 694,700
----------- -----------
Net cash provided by (used in) operating activities 1,983,200 (320,700)
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for acquired business -- (5,740,000)
Acquisition of property and equipment (1,086,600) (1,626,900)
----------- -----------
Net cash used in investing activities (1,086,600) (7,366,900)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) increase in borrowings under credit facility (630,500) 7,138,400
Payments on long-term debt (25,500) --
Proceeds from exercise of stock options 53,500 141,700
Payment of capital lease obligations (30,300) (31,900)
----------- -----------
Net cash (used in) provided by financing activities (632,800) 7,248,200
Net increase (decrease) in cash and marketable securities 263,800 (439,400)
CASH AND MARKETABLE SECURITIES, beginning of period -- 439,400
----------- -----------
CASH AND MARKETABLE SECURITIES, end of period $ 263,800 $ --
=========== ===========
</TABLE>
<PAGE>
TESSCO Technologies Incorporated
Notes to Unaudited Financial Statements
June 27, 1997
1. Description of Business and Basis of Presentation
TESSCO Technologies Incorporated is a leading distributor of products to the
wireless communications industry. The Company serves over 6,500 customers per
month in the cellular telephone, personal communications services (PCS), paging
and mobile radio-dispatch markets, including a diversified mix of dealers,
cellular and paging carriers and self-maintained users. The Company offers a
wide selection of nearly 17,500 SKUs which are broadly classified as
infrastructure, mobile and portable accessory and test and maintenance.
In management's opinion, the accompanying interim financial statements of
the Company include all adjustments, consisting only of normal, recurring
adjustments, necessary for a fair presentation of the Company's financial
position at June 27, 1997 and June 28, 1996 and the results of its operations
and its cash flows for the periods then ended. These statements are presented in
accordance with the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
the Company's annual financial statements have been omitted from these
statements, as permitted under the applicable rules and regulations. Readers of
these statements should refer to the Company's annual financial statements and
notes thereto as of March 28, 1997 and for the year then ended. The results of
operations presented in the accompanying interim financial statements are not
necessarily representative of operations for an entire year.
2. Earnings per Share
In March 1997, the Financial Accounting Standards Board issued SFAS No. 128,
"Earnings per Share." SFAS 128 simplifies the standards for computing earnings
per share previously found in APB No. 15, "Earnings per Share." It replaces the
presentation of primary EPS with a presentation of basic EPS and requires a
reconciliation of the numerator and denominator of the basic EPS calculation to
the numerator and denominator of the diluted EPS calculation. Basic EPS excludes
dilution and is computed by dividing income available to common shareholders by
the weighted average number of common shares outstanding for the period. Diluted
EPS is computed similarly to fully diluted EPS pursuant to APB Opinion No. 15.
SFAS No. 128 is effective for fiscal years ending after December 15, 1997,
and early adoption is not permitted. When adopted, it will require restatement
of prior years' EPS. When adopted for the year ended March 27, 1998, the Company
will report basic EPS instead of primary EPS. Basic EPS for the quarters ending
June 27, 1997 and June 28, 1996 is $0.16 and $0.32, respectively.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
First Quarter of Fiscal 1998 Compared to First Quarter of Fiscal 1997
Revenues decreased by $2.5 million, or 6.9%, to $34.1 million for the
first quarter of fiscal 1998 compared to $36.7 million for the first quarter of
fiscal 1997. Although there was an increase in unit volume, an expanded product
offering, and the inclusion of Cartwright Communications Company's revenues for
the entire quarter of fiscal 1998 compared to one month in the first quarter of
fiscal 1997, there was an overall decrease in revenues due to the renegotiation
of, and accounting for, one of the Company's fulfillment services contracts. In
February 1997, the Company successfully renegotiated an existing fulfillment
services contract resulting in the elimination of any future accounts receivable
exposure. Correspondingly, with this change, the Company now reports as revenues
the net fees realized from the contract, instead of reporting the gross selling
price of the products shipped as revenues and reporting the corresponding costs
of goods sold. Revenues increased in two of the Company's three major product
categories, with the larger percentage increase experienced in the sale of
infrastructure products. Revenues decreased in the mobile and portable accessory
product category primarily due to the renegotiation and accounting treatment for
one of the Company's fulfillment services contracts. Infrastructure, mobile and
portable accessory and test and maintenance products accounted for approximately
56%, 31%, and 13%, respectively, of product revenues during the first quarter of
fiscal 1998. Revenues decreased in each of the three major customer
classifications, with the largest decrease experienced in dealers. Cellular,
paging and PCS carriers, dealers and self-maintained users accounted for
approximately 47%, 36%, and 17%, respectively, of product revenues during the
first quarter of fiscal 1998.
Gross profit decreased by $212,000, or 2.4%, to $8.8 million for the
first quarter of fiscal 1998 compared to $9.0 million for the first quarter of
fiscal 1997, while the gross profit margin increased to 25.7% from 24.5%. The
gross profit decrease resulted primarily from reduced fees associated with
fulfillment services contracts. The increase in gross profit margin primarily
resulted from product and service mix changes, as well as the effect of the
renegotiation of one of the company's fulfillment services contracts and the
accounting treatment of that contract.
Selling, general and administrative expenses increased by $740,000, or
11.1%, to $7.4 million during the first quarter of fiscal 1998 compared to $6.7
million for the first quarter of fiscal 1997. The increase in these expenses was
primarily attributable to the continued investment in personnel to build and
support future revenue and gross profit growth, increased marketing costs
associated with the transition of customers to competitive infrastructure
products, and Cartwright Communications Company's expenses being included for
the entire quarter of fiscal 1998 compared to one month in the first quarter of
fiscal 1997. As a percentage of revenues, selling, general and administrative
expenses increased to 21.7% for the first quarter of fiscal 1998 compared to
18.2% for the first quarter of fiscal 1997.
Income from operations decreased by $952,000, or 41.2%, to $1.4 million
for the first quarter of fiscal 1998 compared to $2.3 million for the first
quarter of fiscal 1997. The operating income margin was 4.0% compared to the
corresponding prior year's 5.9% primarily as a result of the increased operating
expenses as a percentage of revenues.
Net interest expense for the first quarter of fiscal 1998 was $201,000
compared to $136,000 for the first quarter of fiscal 1997. This change is a
direct result of increased borrowings incurred in connection with the Company's
acquisition of Cartwright Communications Company, the funding of the Company's
global logistics center, and increased working capital requirements during the
first quarter of fiscal 1998.
<PAGE>
Liquidity and Capital Resources
Net cash provided by operating activities was $2.0 million for the
first quarter of fiscal 1998, compared to net cash used in operating activities
of $321,000 for the first quarter of fiscal 1997. This change was primarily the
result of a decrease in net income offset by changes in operating assets and
liabilities, particularly changes in accounts receivable and inventory offset
partially by changes in accounts payable. Net cash used in investing activities
decreased to $1.1 million for the first quarter of fiscal 1998 compared to $7.4
million for the first quarter of fiscal 1997. This decrease was primarily due to
the Company's acquisition of Cartwright Communications Company during the first
quarter of fiscal 1997. Net cash used in financing activities was $633,000 in
the first quarter of fiscal 1998 compared to net cash provided by financing
activities of $7.2 million for the first quarter of fiscal 1997. This change is
primarily a result of the Company's borrowing under its credit facilities and
proceeds from long-term debt to finance the Cartwright acquisition and the
global logistics center in the first quarter of fiscal 1997.
<PAGE>
Part II - Other Information
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of Shareholders at the Company's
corporate headquarters on July 15, 1997. At the meeting, the shareholders were
asked to vote on the election of directors and the ratification of the
appointment of the Company's independent public accountants.
Election of Directors. At the meeting, the shareholders reelected
Martin L. Grass and Morton F. Zifferer, Jr. for three year terms expiring at the
Company's 2000 Annual Meeting of Shareholders. The votes cast for Mr. Grass and
Mr. Zifferer were as follows:
Martin L. Grass 3,696,291 For
2,390 Against or Withheld
0 Abstentions
653,561 Broker Non-Votes
Morton F. Zifferer, Jr. 3,696,456 For
2,225 Against or Withheld
0 Abstentions
653,561 Broker Non-Votes
Independent Auditors. At the meeting, the shareholders ratified the
appointment of Arthur Andersen LLP to serve as the independent public
accountants of the Company for the fiscal year ending March 27, 1998. The number
of votes for was 3,696,901, the number of votes against or withheld was 500, the
number of abstentions was 1,280, and the number of broker non-votes was 653,561.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8 - K
(a) Exhibit 10.7.4 - Third Amendment to Financing Agreement date
June 1, 1997
Exhibit 11 - Earnings per share computation
Exhibit 27 - Financial Data Schedule
(b) No reports on Form 8-K have been filed during the quarter covered
by this report.
<PAGE>
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.
TESSCO Technologies Incorporated
--------------------------------
(Registrant)
Date: August 8, 1997
By: Gerald T. Garland
----------------------------
Gerald T. Garland
Treasurer and Chief Financial Officer
(principal financial officer)
<PAGE>
EXHIBIT INDEX
The following Exhibits are filed herewith:
10.7.4 Third Amendment to Financing Agreement date June 1, 1997
11. Earnings per share computation
27. Financial Data Schedule
Exhibit 10.7.4
THIRD AMENDMENT
TO
FINANCING AGREEMENT
THIS THIRD AMENDMENT TO FINANCING AGREEMENT (this "Agreement") is made
as of the 1st day of June, 1997, by TESSCO TECHNOLOGIES INCORPORATED (sometimes
referred to herein as the "Parent"), a corporation organized under the laws of
the State of Delaware, TESSCO COMMUNICATIONS INCORPORATED, a corporation
organized under the laws of the State of Delaware, TESSCO INCORPORATED, a
corporation organized under the laws of the State of Delaware, TESSCO FINANCIAL
CORPORATION, a corporation organized under the laws of the State of Delaware,
NATIONAL AIRTIME CORPORATION, a corporation organized under the laws of the
State of Delaware, WIRELESS SOLUTIONS INCORPORATED, a corporation organized
under the laws of the State of Maryland, (each of the foregoing corporations,
jointly and severally, collectively, the "Original Borrower") and CARTWRIGHT
COMMUNICATIONS COMPANY, a corporation organized under the laws of the State of
Delaware ("Cartwright"), jointly and severally (the Original Borrower and
Cartwright collectively, the "Borrower"), and NATIONSBANK, N.A., a national
banking association, its successors and assigns (the "Lender").
RECITALS
A. The Borrower and the Lender are parties to a Financing Agreement
dated March 31, 1995 (the same as amended by First Amendment to Financing
Agreement dated September 26, 1996, by Second Amendment to Financing Agreement
dated February 28, 1997, and as amended, modified, substituted, extended, and
renewed from time to time, the "Financing Agreement"). The Financing Agreement
provides for some of the agreements between the Borrower and the Lender with
respect to the "Loans" (as defined in the Financing Agreement), including the
Revolving Credit Facility (as that term is defined in the Financing Agreement)
in an amount not to exceed $15,000,000.
B. The Borrower and the Lender have entered into an AutoBorrow Service
Agreement dated the same date as this Agreement (as amended, modified, restated,
substituted, extended and renewed at any time and from time to time, the
"AutoBorrow Service Agreement") and wish to amend the Financing Agreement as set
forth in this Agreement to provide that $5,000,000 of the Revolving Credit
Facility shall serve as the "Line of Credit" (as that term is defined in the
AutoBorrow Service Agreement).
AGREEMENTS
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, receipt of which is hereby acknowledged, the Borrower
and the Lender agree as follows:
<PAGE>
1. The Borrower and the Lender agree that the Recitals above are a part
of this Agreement. Unless otherwise expressly defined in this Agreement, terms
defined in the Financing Agreement shall have the same meaning under this
Agreement.
2. The Borrower represents and warrants to the Lender as follows:
(a) The Borrower is a corporation duly organized, and validly
existing and in good standing under the laws of the state in which it was
organized and has the power and authority to own its property and to carry on
its business in each jurisdiction in which the Borrower does business;
(b) The Borrower has the power and authority to execute and deliver
this Agreement and perform its obligations hereunder and has taken all necessary
and appropriate corporate action to authorize the execution, delivery and
performance of this Agreement;
(c) The Financing Agreement, as amended by this Agreement, and each
of the other Financing Documents to which the Borrower is a party remain in full
force and effect, and each constitutes the valid and legally binding obligation
of Borrower, enforceable in accordance with its terms;
(d) All of Borrower's representations and warranties contained in
the Financing Agreement and the other Financing Documents to which the Borrower
is a party are true and correct on and as of the date of Borrower's execution of
this Agreement; and
(e) No Event of Default and no event which, with notice, lapse of
time or both would constitute an Event of Default, has occurred and is
continuing under the Financing Agreement or the other Financing Documents which
has not been waived in writing by the Lender.
3. The Financing Agreement is hereby amended as follows:
(a) Section 1.1 of the Financing Agreement is hereby amended adding
the following:
"AutoBorrow Service Agreement" means that certain AutoBorrow
Service Agreement dated _______, 1997, between the Borrower and the
Lender, as amended, modified, restated, substituted, extended and
renewed at any time and from time to time.
"AutoBorrow Advances" means that portion of the Revolving Loans
which have been advanced under the
2
<PAGE>
terms of the AutoBorrow Service Agreement and pursuant to the terms of
Section 2.1.2(b) of this Agreement.
"Other Advances" means advances under the Revolving Credit
Facility other than AutoBorrow Advances.
(b) Section 2.1.2 of the Financing Agreement is hereby deleted
in its entirety and substituted therefor is the following:
2.1.2 Procedure for Making Advances Under the Revolving
Loan; Lender Protection Loans
(a) The Borrower may borrow under the Revolving
Credit Commitment on any Business Day.
(b) Up to Five Million Dollars ($5,000,000) of the
Revolving Loans at any time outstanding may be advanced under the
terms, in the amounts and at the times provided in the AutoBorrow
Service Agreement. References in the AutoBorrow Service Agreement to
the "Line of Credit" shall mean that portion of the Revolving Credit
Facility.
(c) Other Advances under the Revolving Loan shall
be deposited to the Borrower's demand deposit account with the Lender
or shall be otherwise applied as directed by the Borrower, which
direction the Lender may require to be in writing. No later than 10:00
a.m. (Baltimore time) on the date of the requested borrowing, the
Borrower shall give the Lender oral or written notice (a "Loan Notice")
of the amount of the requested borrowing. Any oral Loan Notice shall be
confirmed in writing by the Borrower within three (3) Business Days
after the making of the requested Revolving Loan. In addition, the
Borrower hereby irrevocably authorizes the Lender at any time and from
time to time, without further request from or notice to the Borrower,
to make advances under the Revolving Loan to cover principal of, and/or
interest on, the Loan, the Obligations, and/or Enforcement Costs, prior
to, on, or after the termination of other advances under this
Agreement, regardless of whether the outstanding principal amount of
the Revolving Loan which the Lender may make hereunder exceeds the
Revolving Credit Committed Amount. In the event the Borrower chooses
the LIBOR Rate under the Revolving Loan Rate, the Borrower shall give
the Lender three (3) days prior written notice thereof.
3
<PAGE>
(c) Section 2.1.3 of the Financing Agreement is hereby deleted
in its entirety and substituted therefor is the following:
2.1.3. Revolving Credit Note. The obligation of the
Borrower to pay the Revolving Loan with interest shall be evidenced by
two promissory notes (as from time to time extended, amended, restated,
supplemented or otherwise modified, collectively the "Revolving Credit
Note"), one of which shall be in the amount of $10,000,000, shall be in
substantially in the form of EXHIBIT "A-1" attached hereto and made a
part hereof, with appropriate insertions, and shall evidence the Other
Advances; and the other shall be in the amount of $5,000,000, shall be
in substantially in the form of EXHIBIT "A-2" attached hereto and made
a part hereof, with appropriate insertions, and shall evidence the
AutoBorrow Advances. The Revolving Credit Note shall be payable to the
order of the Lender at the times provided in the Revolving Credit Note,
and shall be in the aggregate principal amount of the Revolving Credit
Committed Amount. The Borrower acknowledges and agrees that, if the
outstanding principal balance of the Revolving Loan outstanding from
time to time exceeds the aggregate face amount of the Revolving Credit
Note, the excess shall bear interest at the rates provided from time to
time for advances under the Revolving Loan evidenced by the Revolving
Credit Note and shall be payable, with accrued interest, ON DEMAND. The
Revolving Credit Note shall not operate as a novation of any of the
Obligations or nullify, discharge, or release any such Obligations or
the continuing contractual relationship of the parties hereto in
accordance with the provisions of this Agreement.
(d) Section 2.2.1(c) of the Financing Agreement is hereby
deleted in its entirety and substituted therefor is the following:
(c) The term "Revolving Loan Rate" shall mean for
outstanding AutoBorrow Advances the LIBOR Base Rate (as determined
daily by the Lender assuming an
4
<PAGE>
Interest Period of 30 days and adjusted automatically, without notice,
as of the effective date of any change to the LIBOR Base Rate) plus 125
basis points. The term "Revolving Loan Rate" shall mean for outstanding
Other Advance the Base Rate or the LIBOR Rate for such Revolving Loan
as chosen by the Borrower in writing prior to the making of such
Revolving Loan in accordance with the terms and conditions of this
Agreement, including the following basis points (the "Applicable
Margin"), based upon the Borrower's reaching and maintaining the
following corresponding Fixed Charges Coverage Ratios as determined by
the Lender from the Borrower's financial statements delivered in
accordance with Section 5.1.1 hereof:
<TABLE>
<CAPTION>
---------------------------------------------------------- ---------------------- -----------------------
Applicable Margin for Applicable Margin for
Ratio LIBOR Loans Base Rate Loans
---------------------------------------------------------- ---------------------- -----------------------
<S> <C> <C>
If the Borrower's Fixed Charges Coverage Ratio is 125 0
greater than 2.0 to 1.0
---------------------------------------------------------- ---------------------- -----------------------
If the Borrower's Fixed Charges Coverage Ratio is 150 0
greater than or equal to 1.75 to 1.0, but less than 2.0
to 1.0
---------------------------------------------------------- ---------------------- -----------------------
If the Borrower's Fixed Charges Coverage Ratio is less 175 25
than 1.75 to 1.0
---------------------------------------------------------- ---------------------- -----------------------
</TABLE>
The initial Fixed Charges Coverage Ratio is assumed to be greater
than 2.0 to 1.0. Upon the determination of the Fixed Charges Coverage
Ratio at the end of each of the Borrower's fiscal quarters (beginning
on the fiscal quarter ending March, 1997), the corresponding
Revolving Loan Rate shall be in effect commencing with the first day
of the month following the receipt of the applicable financial
statements of the Borrower and continuing through and including the
next determination of the Fixed Charges Coverage Ratio. Provided,
however, in the event that the Borrower fails to timely provide the
5
<PAGE>
Lender with the financial statements required by Section 5.1.1
hereof, then the Lender may in good faith determine the Fixed
Charges Coverage Ratio and the Borrower may choose the
corresponding Revolving Loan Rate set forth above.
(e) Section 2.2.5(a) of the Financing Agreement is hereby
deleted in its entirety and substituted therefor is the following:
(a) Without implying any limitation on the grace period set
forth in Section 6.1.1 of this Agreement, unpaid and accrued
interest on Other Advances which consist of a Base Rate Loan,
and all unpaid and accrued interest on AutoBorrow Advances,
shall be paid monthly, in arrears, on the first day of each
calendar month, commencing on the first such date after the
date of this Agreement, and on the first day of each calendar
month thereafter, and at maturity (whether by acceleration,
declaration, extension or otherwise).
4. At the time this Agreement is executed and delivered, the Borrower
shall execute and deliver the Revolving Credit Note in substantially the forms
attached to this Agreement as EXHIBIT A-1 and EXHIBIT A-2, which amends and
restates the Revolving Credit Note. References in this Agreement, the Financing
Agreement and the other Financing Documents to the "Revolving Credit Note" shall
mean the Revolving Credit Note as so amended and restated.
5. The Borrower hereby ratifies and confirms the representations,
warranties and covenants contained in the Financing Agreement, as amended
hereby. The Borrower agrees that this Agreement is not intended to and shall not
cause a novation with respect to any or all of the Obligations.
6. The Borrower shall pay at the time this Agreement is executed and
delivered all fees, commissions, costs, charges, taxes and other expenses
incurred by the Lender and its counsel in connection with this Agreement,
including, but not limited to, reasonable fees and expenses of the Lender's
counsel.
7. This Agreement may be executed in any number of duplicate originals
or counterparts, each of such duplicate originals or counterparts shall be
deemed to be an original and all taken together shall constitute but one and the
same instrument. The Borrower agrees that the Lender may rely on a
6
<PAGE>
telecopy of any signature of the Borrower. The Lender agrees that the Borrower
may rely on a telecopy of this Agreement executed by the Lender.
IN WITNESS WHEREOF, the Borrower and the Lender have executed this
Agreement under seal as of the date and year first written above on the pages
which follow.
WITNESS: TESSCO TECHNOLOGIES INCORPORATED
By: /s/ Gerald T. Garland (Seal)
- ------------------------- ----------------------------
Gerald T. Garland
Treasurer
WITNESS: TESSCO COMMUNICATIONS INCORPORATED
By: /s/ Gerald T. Garland (Seal)
- ------------------------- ----------------------------
Gerald T. Garland
Treasurer
WITNESS: TESSCO INCORPORATED
By: /s/ Gerald T. Garland (Seal)
- ------------------------- ----------------------------
Gerald T. Garland
Treasurer
WITNESS: TESSCO FINANCIAL CORPORATION
By: /s/ Gerald T. Garland (Seal)
- ------------------------- ----------------------------
Gerald T. Garland
Treasurer
7
<PAGE>
WITNESS: NATIONAL AIRTIME CORPORATION
By: /s/ Gerald T. Garland (Seal)
- ------------------------- ----------------------------
Gerald T. Garland
Treasurer
WITNESS: WIRELESS SOLUTIONS INCORPORATED
By: /s/ Gerald T. Garland (Seal)
- ------------------------- ----------------------------
Gerald T. Garland
Treasurer
WITNESS: CARTWRIGHT COMMUNICATIONS COMPANY
By: /s/ Gerald T. Garland (Seal)
- ------------------------- ----------------------------
Gerald T. Garland
Treasurer
WITNESS: NATIONSBANK, N.A.
By: /s/ Thomas O. Holland (Seal)
- ------------------------- ----------------------------
Thomas O. Holland
Vice President
Exhibit 11
Computation of Earnings per Share
(unaudited)
Fiscal Quarters Ended
----------------------------
June 27, June 28,
1997 1996
---- ----
Weighted average common shares outstanding 4,349,700 4,228,700
Dilutive effect of common equivalent shares (a) 211,000 455,900
---------- ----------
Primary average shares outstanding 4,560,700 4,684,600
Effect of change in share price (b) 34,300 23,500
---------- ----------
Fully diluted weighted average shares outstanding 4,595,000 4,708,100
========== ==========
Net income $ 712,700 $1,334,100
========== ==========
Primary earnings per share $ 0.16 $ 0.28
========== ==========
Fully diluted earnings per share $ 0.16 $ 0.28
========== ==========
(a) Calculates the dilutive effect of outstanding stock options based upon the
"Treasury Stock Method".
(b) Represents the impact on the treasury stock method of the difference
between the average share price during the period and the ending share
price for the period.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's unaudited quarterly financial statements and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000927355
<NAME> Tessco Technologies Incorporated
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-28-1997
<PERIOD-START> MAR-28-1997
<PERIOD-END> JUN-27-1997
<EXCHANGE-RATE> 1
<CASH> 264
<SECURITIES> 0
<RECEIVABLES> 16,771
<ALLOWANCES> 537
<INVENTORY> 16,239
<CURRENT-ASSETS> 34,491
<PP&E> 16,074
<DEPRECIATION> 4,019
<TOTAL-ASSETS> 50,925
<CURRENT-LIABILITIES> 13,176
<BONDS> 0
0
0
<COMMON> 46
<OTHER-SE> 30,092
<TOTAL-LIABILITY-AND-EQUITY> 50,925
<SALES> 34,123
<TOTAL-REVENUES> 34,123
<CGS> 25,369
<TOTAL-COSTS> 25,369
<OTHER-EXPENSES> 7,397
<LOSS-PROVISION> 82
<INTEREST-EXPENSE> 201
<INCOME-PRETAX> 1,156
<INCOME-TAX> 443
<INCOME-CONTINUING> 713
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 713
<EPS-PRIMARY> .16
<EPS-DILUTED> .16
</TABLE>
