<PAGE>
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 30, 1999
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 0-26924
AMX CORPORATION
(Exact name of registrant as specified in its charter)
TEXAS 75-1815822
(State of Incorporation) (I.R.S. Employer Identification No.)
11995 FORESTGATE DRIVE
DALLAS, TEXAS 75243
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (972) 644-3048
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 [ ]
COMMON STOCK, $0.01 PAR VALUE 8,513,576
(Title of Each Class) (Number of Shares Outstanding at July 30, 1999)
<PAGE>
AMX CORPORATION
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999
INDEX
<TABLE>
<CAPTION>
PAGE NUMBER
<S> <C> <C>
PART I. FINANCIAL INFORMATION (UNAUDITED)
Item 1. Consolidated Balance Sheets at June 30, 1999 and March 31, 1999 3
Consolidated Statements of Operations for the Three Months Ended
June 30, 1999 and 1998 5
Consolidated Statements of Cash Flows for the Three Months ended
June 30, 1999 and 1998 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and 9
Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk 14
Part II. Other Information
Item 1. Legal Proceedings 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 16
</TABLE>
2
<PAGE>
AMX CORPORATION
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
JUNE 30, 1999 MARCH 31, 1999
------------- --------------
<S> <C> <C>
Current assets:
Cash and cash equivalents ......................................................... $ 468,629 $ 1,801,756
Receivables - trade and other, less allowance for doubtful accounts
of $468,000 for June 30, 1999 and $420,000 for March 31, 1999 ................. 10,758,540 9,796,261
Inventories ....................................................................... 11,299,101 10,990,262
Prepaid expenses .................................................................. 1,625,114 1,028,767
Deferred income tax ............................................................... 708,805 708,805
----------- -----------
Total current assets ................................................................. 24,860,189 24,325,851
Property and equipment, at cost, net ................................................. 6,205,764 5,693,836
Capitalized software ................................................................. 466,568 --
Deposits and other ................................................................... 424,095 732,826
Goodwill, less accumulated amortization of $432,000 for June 30, 1999
and $370,000 for March 31, 1999 ............................................... 694,383 756,316
----------- -----------
Total assets ......................................................................... $32,650,999 $31,508,829
=========== ===========
</TABLE>
3
<PAGE>
AMX CORPORATION
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
JUNE 30, 1999 MARCH 31, 1999
------------- --------------
<S> <C> <C>
Current liabilities:
Accounts payable ............................................ $ 4,617,221 $ 4,076,799
Line of credit and notes payable ............................ 650,000 --
Current portion of long-term debt ........................... 1,585,000 1,684,000
Accrued compensation ........................................ 1,165,971 1,504,118
Accrued sales commissions ................................... 735,870 667,051
Accrued dealer incentives ................................... 219,000 442,561
Other accrued expenses ...................................... 349,992 212,354
Income taxes payable ........................................ 497,635 386,634
------------ ------------
Total current liabilities ...................................... 9,820,689 8,973,517
Deferred income taxes .......................................... 90,963 90,963
Long-term debt ................................................. 3,633,284 3,909,284
Commitments and contingencies
Shareholders' equity :
Preferred stock, $0.01 par value
Authorized shares - 10,000,000
Issued shares - none ........................................ -- --
Common stock, $0.01 par value:
Authorized shares -- 40,000,000
Issued shares -- 8,983,029 for June 30, 1999 and 8,961,974
for March 31, 1999 ...................................... 89,830 89,620
Additional paid-in capital .................................. 9,546,440 9,419,066
Retained earnings ........................................... 13,908,549 13,517,996
Less treasury stock (496,476 shares) ........................ (4,468,284) (4,468,284)
Accumulated other comprehensive income (loss) .............. 29,528 (23,333)
------------ ------------
Total shareholders' equity ..................................... 19,106,063 18,535,065
------------ ------------
Total liabilities and shareholders' equity ..................... $ 32,650,999 $ 31,508,829
============ ============
</TABLE>
See accompanying notes.
4
<PAGE>
AMX CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
1999 1998
----------- -----------
<S> <C> <C>
Enterprise system sales ........... $13,516,003 $12,217,023
Consumer system sales ............. 4,515,521 3,060,378
----------- -----------
Net sales ...................... 18,031,524 15,277,401
Cost of sales ..................... 7,984,049 6,838,289
----------- -----------
Gross profit ................... 10,047,475 8,439,112
Selling and marketing expenses .... 6,620,096 5,553,595
Research and development expenses.. 1,248,788 865,351
General and administrative
expenses........................ 1,515,439 1,212,504
----------- -----------
Operating income ............... 663,152 807,662
Interest expense .................. 111,982 80,772
Other income, net ................. 27,710 32,228
----------- -----------
Income before income taxes ........ 578,880 759,118
Income tax provision .............. 188,327 247,927
----------- -----------
Net income ........................ $ 390,553 $ 511,191
=========== ===========
Basic earnings per share ......... $ 0.05 $ 0.06
=========== ===========
Diluted earnings per share ........ $ 0.04 $ 0.06
=========== ===========
</TABLE>
See accompanying notes.
5
<PAGE>
AMX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
1999 1998
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES
Net income ......................................................... $ 390,553 $ 511,191
Adjustments to reconcile net income to net cash used in operating
activities:
Depreciation and amortization ................................... 707,507 487,596
Provision for losses on receivables ............................. 48,000 188,779
Provision for inventory obsolescence ............................ -- 15,000
Changes in operating assets and liabilities:
Receivables ................................................. (1,010,279) (823,424)
Inventories ................................................. (308,839) (1,312,018)
Prepaid expenses ............................................ (596,347) 42,904
Accounts payable ............................................ 540,422 853,963
Accrued expenses ............................................ (355,251) (400,756)
Income taxes payable ........................................ 111,001 (131,549)
----------- -----------
Net cash used in operating activities .............................. (473,233) (568,314)
INVESTING ACTIVITIES
Purchase of property and equipment ................................. (1,157,502) (446,344)
Capitalized software costs ......................................... (466,568) --
Decrease in other assets ........................................... 308,731 46,990
Minority interest in PHAST ......................................... -- (1,652,000)
----------- -----------
Net cash used in investing activities .............................. (1,315,339) (2,051,354)
FINANCING ACTIVITIES
Sale of common stock -- net of expenses and exercise of stock
options........................................................... 127,584 46,980
Net increase in line of credit ..................................... 650,000 1,269,947
Proceeds from long-term debt ....................................... -- 1,500,000
Repayments of long-term debt ....................................... (375,000) (13,027)
----------- -----------
Net cash provided by financing activities .......................... 402,584 2,803,900
Effect of exchange rate changes on cash ............................ 52,861 (8,422)
----------- -----------
Net increase (decrease) in cash and cash equivalents ............... (1,333,127) 175,810
Cash and cash equivalents at beginning of period ................... 1,801,756 178,942
----------- -----------
Cash and cash equivalents at end of period ......................... $ 468,629 $ 354,752
=========== ===========
</TABLE>
See accompanying notes.
6
<PAGE>
AMX CORPORATION
Notes to Consolidated Financial Statements
1. Basis of Presentation
The accompanying consolidated financial statements, which should be read in
conjunction with the consolidated financial statements and footnotes thereto
included in the Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1999, are unaudited (except for the March 31, 1999 consolidated
balance sheet, which was derived from the Company's audited financial
statements), but have been prepared in accordance with generally accepted
accounting principles for interim financial information. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting only of normal recurring adjustments)
considered necessary for a fair presentation have been included.
Operating results for the three months ended June 30, 1999 are not necessarily
indicative of the results that may be expected for the entire fiscal year ending
March 31, 2000.
2. Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per
share:
<TABLE>
<CAPTION>
JUNE 30
1999 1998
----------- -----------
<S> <C> <C>
Numerator:
Net income $ 390,553 $ 511,191
=========== ===========
Denominator:
Denominator for basic earnings per share -
Weighted-average shares outstanding................ 8,473,561 8,260,046
Effect of dilutive securities:
Employee stock options................................ 774,563 614,714
----------- -----------
Denominator for diluted earnings per share............ 9,248,124 8,874,760
=========== ===========
Basic earnings per share............................. $ 0.05 $ 0.06
=========== ===========
Diluted earnings per share........................... $ 0.04 $ 0.06
=========== ===========
</TABLE>
7
<PAGE>
3. Inventories
The components of inventories are as follows:
<TABLE>
<CAPTION>
JUNE 30, 1999 MARCH 31, 1999
------------- --------------
<S> <C> <C>
Raw materials $ 5,575,921 $ 5,557,286
Work in progress 851,998 788,733
Finished goods 5,060,712 5,358,651
Less reserve for obsolescence (189,530) (714,408)
------------ ------------
Total $ 11,299,101 $ 10,990,262
============ ============
</TABLE>
4. Comprehensive Income
The components of comprehensive income, net of related tax, for the three-month
periods ended June 30, 1999, and 1998 are as follows:
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Net income $ 390,553 $ 511,191
Foreign currency translation adjustments 52,861 (8,428)
---------- ----------
Comprehensive income $ 443,414 $ 502,763
========== ==========
</TABLE>
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction
with the Consolidated Financial Statements and Notes thereto included in AMX
Corporation's ("AMX or the "Company") 1999 Annual Report on Form 10-K. The
Company believes that all necessary adjustments (consisting only of normal
recurring adjustments) have been included in the amounts stated below to present
fairly the following quarterly information. Quarterly operating results have
varied significantly in the past and can be expected to vary in the future.
Results of operations for any particular quarter are not necessarily indicative
of results of operations for a full year.
FORWARD LOOKING INFORMATION
Certain information contained herein contains forward-looking statements
(as defined in the Private Securities Litigation Reform Act of 1995) regarding
future events or the future financial performance of the Company, and are
subject to a number of risks and other factors which could cause the actual
results of the Company to differ materially from those contained in and
anticipated by the forward-looking statements. Among such factors are: industry
concentration and the Company's dependence on major customers, competition,
risks associated with international operations and entry in to new markets,
government regulation, variability in operating results, general business and
economic conditions, customer acceptance of any demand for the Company's new
products, the Company's overall ability to design, test, and introduce new
products on a timely basis, reliance on third parties, the Company's ability to
manage change, dependence on key personnel, dependence on information systems
and changes in technology. The forward-looking statements contained herein are
necessarily dependent upon assumptions, estimates and data that may be incorrect
or imprecise. Accordingly, any forward-looking statements included herein do not
purport to be predictions of future events or circumstances and may not be
realized. Forward-looking statements contained herein include, but are not
limited to, forecasts, projections and statements relating to inflation, future
acquisitions and anticipated capital expenditures. All forecasts and projections
in the report are based management's current expectations of the Company's near
term results, based on current information available pertaining to the Company,
including the aforementioned risk factors. Actual results could differ
materially.
OVERVIEW
AMX designs, develops, manufactures and markets equipment designed to
utilize broadband information. This utilization is provided by the Company's
integrated control systems that enable end users to retrieve, store, and
narrowcast Internet information to non-PC devices. The Company's WebLinx
software also provides the flexibility of allowing the end user to control a
system via the internet from any remote location. The Company's control systems
are comprised of a central controller, a user-interface and a control card that
communicates with a device linked to the system. This configuration is scalable
from one room control, to whole-home control, to entire campus control.
Principally, these systems allow the end user to operate in a single environment
a broad range of electronic and programmable equipment. The number of devices
that the Company's systems can control exceeds 20,000. These numerous devices
include video equipment, audio equipment, lighting equipment, heating and
air-conditioning equipment, camera equipment, and security systems.
The Company's control systems are utilized in both consumer and
enterprise settings. The consumer applications are currently primarily comprised
of whole-home automation systems, usually installed in upscale residences. The
Company has just introduced several new products that utilize the same system
approach, but are limited to single room automation, which would contain an
entertainment venue. These systems will allow the data, video and audio content
brought to the home by broadband access to be distributed to the entertainment
devices contained within the home. This distribution of information can be
contoured by each end user (narrowcasted) to their particular needs or wants. On
a larger level, this content can also be used to control the home automatically.
The consumer applications are broad in focus, primarily used in board rooms,
training rooms, and auditoriums. However, because of the flexibility in design
and ease of use, these systems are also installed in a number of sport
facilities,
9
<PAGE>
theme parks, museums, and other settings which require the control of a wide
variety of electronic equipment.
The Company's quarterly operating results have varied significantly in
the past, and can be expected to vary in the future. These quarterly
fluctuations have been the result of a number of factors. These factors include
seasonal purchasing of the Company's dealers and distributors, particularly from
international distributors, OEMs, and other large customers; sales and marketing
expenses related to entering new markets; the timing of new product
introductions by the Company and its competitors; fluctuations in commercial and
residential construction and remodeling activity; and changes in product or
distribution channel mix. In addition, the Company generally experiences higher
selling and marketing expenses during the first fiscal quarter of each year due
to costs associated with three of the Company's largest trade shows.
The Company's current products are sold to dealers (typically
audio/visual installer and integrators) or to distributors in the international
market. The Company principally relies on these 1,600 dealers of electronic and
audiovisual equipment to sell, install, support and service its products in the
United States. Internationally, the Company relies on a network of exclusive
distributors dealers to distribute its products. Because of the increase in
broadband access to the home, the Company has recognized the potential of the
increase in the consumer market for its products. Accordingly, the Company will
focus on adding a new distribution channel which will provide its equipment in
an easy to install configuration that will parallel the increase of the
distribution of information to the home via broadband access. Also, in
conjunction with the Company's focus on its Internet applications and service,
the Company has put before the shareholders for vote a proposal to change the
Company's name to Panja Inc. This vote will take place at the annual
shareholders' meeting on September 3, 1999.
The Company's U.S. dealers pursue a wide variety of projects that can
range from small conference rooms/boardrooms to very large projects in a
university, government facility, amusement park, or corporate training facility.
The Company's international distributors tend to order in large quantities to
take advantage of volume discounts the Company offers and to economize on
shipping costs. These international orders are not received at the same time
each year. Notwithstanding the difficulty in forecasting future sales and the
relatively small level of backlog at any given time, the Company generally must
plan production, order components, and undertake its development, selling and
marketing activities, and other commitments months in advance. Accordingly, any
shortfall in revenues in a given quarter may impact the Company's results of
operations.
The Company purchases components that comprise approximately 28% to 32%
of its cost of sales from foreign vendors. The primary components purchased are
standard power supplies and displays for touch panels. Historically, the Company
has not had any significant cost issues related to price changes due to
purchasing from foreign vendors. However, there can be no assurance that this
will be the case in the future. The Company has experienced delays of up to
three weeks in receiving materials from foreign vendors. However, the Company
takes this issue into consideration when orders are placed and, therefore, this
concern has not, in the past, significantly impacted the Company's ability to
meet production and customer delivery deadlines. However, a significant shortage
of or interruption in the supply of foreign components could have a material
adverse effect on the Company's results of operations.
The Company's selling and marketing expenses category also includes
customer service and support. The engineering department of the Company is
involved in research and development as well as customer support and service.
Additionally, the Company has created sales support teams, which are focused on
specific geographic regions or customer categories. These teams include sales
personnel, system designers, and technical support personnel, all of whom
indirectly participate in research and development activities by establishing
close relationships with the Company's customers and by individually responding
to customer-expressed needs.
RESULTS OF OPERATIONS
10
<PAGE>
The following table contains certain amounts, expressed as a percentage
of net sales, reflected in the Company's consolidated statements of income for
the three month periods ended June 30, 1999 and 1998:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
1999 1998
---- ----
<S> <C> <C>
Enterprise system sales 75.0% 80.0%
Consumer system sales 25.0 20.0
----- -----
Net sales 100.0 100.0
Cost of sales 44.3 44.8
----- -----
Gross profit 55.7 55.2
Selling and marketing expenses 36.7 36.4
Research and development expenses 6.9 5.7
General and administrative expenses 8.4 7.9
----- -----
Operating income 3.7 5.2
Interest expense 0.6 0.5
Other income 0.1 0.2
----- -----
Income before income taxes 3.2 4.9
Income taxes 1.0 1.6
----- -----
Net income 2.2 3.3
===== =====
</TABLE>
THREE MONTHS ENDED JUNE 30, 1999 RESULTS COMPARED TO THREE MONTHS ENDED JUNE 30,
1998 (ALL REFERENCES ARE TO FISCAL YEARS)
Because of the new focus on the development of devices that extend the
internet beyond the PC, the Company has begun to segregate revenue based on the
enterprise and the consumer dealers to which it sells. The enterprise category
includes the Company's OEM sales, and the sales of its Synergy product. The
consumer category includes systems sales into the residential market place from
both AMX, the parent company, and PHAST Corporation, a wholly owned subsidiary.
Sales into the International market from AMX are all considered enterprise
sales, while all sales from PHAST are considered to be consumer sales.
Overall, the Company's revenue increased 18% compared to the same
quarter last year. While Enterprise sales grew 11% during the first quarter, the
growth of the markets comprising these sales were drastically different. OEM
sales increased 68% over last year, Commercial sales grew 34%, Synergy sales
were the same as last year, and International sales decreased 22% over last
year. International sales were adversely affected by the large amount of sales
in the fourth quarter of the previous fiscal year. OEM sales growth was aided by
large orders from a new customer.
The Company is focused on improving its gross margins, particularly in
its PHAST subsidiary. This improvement is expected to come as a result of
increasing sales volume, which will allow PHAST to absorb overhead more
efficiently. Also, the Company is using outside manufacturing sources more
predominantly. This outsourcing will allow it to sustain its growth without the
need to expand its current manufacturing space and increase overhead. However,
despite these efforts, gross margins only improved slightly over the previous
year during the first quarter. This improvement was mostly a result of the
reduction in cost of sales at PHAST, where material costs were lowered by .5% of
its revenue. The Company shipped several new products during the quarter which
are targeted at a lower price market and as a result, achieve a lower gross
margin. These new products had a slight effect during the quarter of
11
<PAGE>
offsetting the gains in manufacturing efficiencies, all of which resulted in
only a slight reduction in cost of sales as a percentage of sales in the
quarter compared to last year.
The Company has significantly increased its product development efforts
in order to design the software which allows the distribution of internet
information to non-PC devices. The Company is also committed to providing a
better marketing effort to communicate the benefits of its new products to its
existing distribution channel, and the development of new distribution channels.
As a result, operating expenses were 2.0% higher as a percentage of sales this
quarter than the previous year. Of this increase, 1.3% was attributable to the
Company's increase in its spending for research and development expenses. This
increase would have been greater except that the Company capitalized $467,000 in
costs attributable to its WebLinx software. Selling expenses and General &
Administrative expenses grew only slightly as a percentage of sales compared to
last year.
The Company's effective tax rate remained at 33%, the same as last
year.
LIQUIDITY AND CAPITAL RESOURCES
For the past three years, the Company has satisfied its operating cash
requirements principally through cash flow from operations and borrowings from
its line of credit. In the three months ended June 30, 1999, the Company used
$473,000 of cash in operations and borrowings from its line of credit. The
Company spent $1.2 million for equipment, primarily for the purchase of
computers and furniture for new offices and training facilities at PHAST.
Additionally, the Company capitalized $467,000 in costs associated with the
development of its WebLinx software.
The Company has a $5.0 million revolving line of credit agreement that
expires on September 30, 1999. It is expected that this line of credit will be
renewed at that time. The line of credit provides for interest at the bank's
contract rate, which is expected to approximate the prime rate. At June 30,
1999, $650,000 was outstanding under the revolving loan agreement.
The Company expects to spend approximately $4.0 million for capital
expenditures in fiscal 2000.
The Company believes that cash flow from operations, the Company's
existing cash resources and funds available under its revolving loan facility
will be adequate to fund its working capital and capital expenditure
requirements for at least the next 12 months. An important element of the
Company's business strategy has been, and continues to be, the acquisition of
similar businesses and complementary products and technology and the integration
of such businesses and products and technology into the Company's existing
operations. Such future acquisitions, if they occur, may require that the
Company seek additional funds.
CONTINGENCIES
The Company is party from time to time to ordinary litigation
incidental to its business, none of which is expected to have a material adverse
effect on the results of operations, financial position or liquidity of the
Company.
YEAR 2000
Some computers and other equipment are operated and controlled by software
code in which calendar year data is abbreviated to only two digits. As a result
of this design flaw, some of these systems could fail to produce correct results
beginning on January 1, 2000, if the year indicator "00" is interpreted to
designate the year 1900 rather than the year 2000. This problem with software
design as well as embedded technology such as microcontrollers is commonly
referred to as the "Year 2000" issue. The Company uses a variety of software
products to operate its business, and the Company's products contain
12
<PAGE>
software and embedded technology that are used in the operation of the
products, all of which could be affected by the Year 2000 issue.
STATE OF READINESS
The Company has developed and has completed a majority of its plan to
address the problems involved with the Year 2000 issues. The plan is focused on
four areas: the Company's internal software and hardware, the Company's
products, the Company's suppliers, and the equipment that supports the Company's
infrastructure.
In order to assess its issues with internal software, the Company made a
complete inventory of all software located on its computer network and desktop
support systems. The manufacturers of these software programs have been
contacted in order to ascertain whether these software programs are year 2000
compliant. The Company has had an independent review of its information systems
department conducted to confirm its handling of the Year 2000 issues.
Additionally, the Company arranged to have all of its major software programs
tested in a lab, at which time all date indicators were moved forward to the
year 2000. As a result of these efforts, it is the Company's belief that its
internal software systems will be able to support dates on or after January 1,
2000.
The Company has addressed Year 2000 issues in the engineering of its
products. The Company believes that there will be minimal product failures by
the Company's products as a result of the Year 2000 issues and such failures are
not expected to have a material adverse effect on the Company's business,
financial condition, or results of operations. However, many of the Company's
products interface with systems and products of other manufacturers, and, as a
result, a system of which the Company's products comprise a portion may fail
through no fault of the Company's. The Company may be requested to remedy the
issue because of the integration of its equipment in these systems.
The Company relies on over 300 manufacturers and suppliers to provide parts
and equipment that are integrated during the manufacturing of the Company's
products. Because of the reliance on obtaining these products in order to
manufacture the Company's products, it is important for the Company to ascertain
these suppliers' ability to operate their businesses on January 1, 2000. As of
June 30, 1999, all of these manufacturers and suppliers have been contacted by
the Company and asked to respond to a questionnaire that will indicate their
readiness to the Year 2000 issues. The majority of these suppliers have
responded and provided assurances that their systems are compliant with the Year
2000. Based on the relative size and sophistication of the supplier, and the
critical nature of the part to the Company's products, several on-site visits
have been made to certain suppliers to provide greater assurances of their
readiness.
Finally, the Company has inspected the many systems that provide support to
the infrastructure of its operations. These systems include phone systems,
security systems, air conditioning equipment, machinery and other related
equipment that are used in the Company's physical operations, and outside
service contractors that provide payroll processing, claims processing, and
banking services to the Company. Responses and warranties have been received by
the manufacturers of the equipment and by the service providers. Based on these
responses, it is the Company's belief that there will be no material operational
issues with its infrastructure systems.
COSTS
Based on the analysis and efforts completed so far, the Company believes
that the costs it will incur to address Year 2000 issues will not exceed
$50,000. To date, the Company has spent approximately $35,000 on these efforts
and the remaining costs are covered in the normal operating plan of the Company
for the fiscal year 2000. Personnel costs associated with the implementation and
completion of the plan are also covered in the normal operations of the Company.
RISK OF YEAR 2000 ISSUES AND CONTINGENCY PLANS
The Company believes its products will suffer minimal impact from the Year
2000 issue, and that the Company's software that comprises a portion of the
Company's products is more likely than not free from any Year 2000 issues. It is
the Company's belief that the most reasonably likely worst case scenario is that
the Company's critical suppliers will not have adequately addressed Year 2000
issues. The Company's
13
<PAGE>
contingency plan for this is to seek new suppliers. Because of the bidding
process the Company currently uses in purchasing its materials, the Company
believes that it will not be difficult to find additional sources of its raw
materials. However, because of the inherent complexities involved in Year
2000 issues, the Company may find that its costs of these materials exceeds
its current costs, and as a result its results of operations may be adversely
affected by this course of events. However, it is the Company's belief at
this time that any effect on the Company's costs of doing business and
results of operations will not be material. This belief may change as the
Company's analysis continues.
FORWARD-LOOKING STATEMENTS RELATING TO YEAR 2000 ISSUES
The discussion of the Company's efforts and expectations relating to the
Year 2000 issue contain forward-looking statements. The Company's ability to
achieve Year 2000 compliance and the costs associated with such compliance are
based upon management's best estimates, which were derived using numerous
assumptions. These assumptions involve a number of future events, including the
continued availability of certain resources, cooperation by vendors and
customers, and other factors. There can be no assurance that these estimates
will prove to be accurate, and actual results could differ materially from those
currently anticipated. Specific factors that could cause such material
differences include, but are not limited to, the availability and cost of
personnel trained in Year 2000 issues, variability of definitions of "compliance
with Year 2000" and the myriad of different products and services, and
combinations thereof, sold by the Company. No assurance can be given that the
aggregate cost of defending and resolving such claims, if any, will not
materially adversely affect the Company's results of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
From March 31, 1999 until June 30, 1999, there were no material changes
from the information concerning market risk contained in the Company's Annual
Report on Form 10-K for the year ended March 31, 1999, as filed with the
Securities and Exchange Commission on June 29, 1999 (file no. 0-26924).
14
<PAGE>
AMX CORPORATION
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Information pertaining to this item is incorporated herein from Part I.
Financial Information (Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations - Contingencies).
Item 4. Submission of Matters to a Vote of Security Holders
A Special Meeting of Shareholders of AMX Corporation was held on April 5, 1999,
to consider one item of business. The matter brought before the shareholders was
to approve the Company's 1999 Equity Incentive Plan.
The voting results are as follows:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
1999 Equity Incentive Plan 5,487,471 501,375 32,870
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
3.1 Amended and Restated Articles of Incorporation of the Company.
(Incorporated by reference from Exhibit 3.1 to the Company's
Form S-8 filed March 11, 1996, File No. 333-2202).
3.2 Amended and Restated Bylaws of the Company, as amended.
(Incorporated by reference from Exhibit 3.2 to the Company's
Form 10-Q, for the period ended September 30, 1997, file no.
0-26924).
+27.1 Financial Data Schedule.
b. Reports on Form 8-K
Current Report on Form 8-K dated March 31, 1999 and filed April 6, 1999
regarding a press release (Item 5).
- -------------------------
* Filed herewith.
15
<PAGE>
AMX CORPORATION
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.
AMX Corporation
Date: August 13, 1999 By: /s/ David E. Chisum
------------------------------------------
David E. Chisum
Chief Financial Officer (Duly Authorized
Officer and Principal Financial Officer)
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> APR-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 468,629
<SECURITIES> 0
<RECEIVABLES> 11,226,540
<ALLOWANCES> (468,000)
<INVENTORY> 11,299,101
<CURRENT-ASSETS> 24,860,189
<PP&E> 13,062,976
<DEPRECIATION> 6,857,212
<TOTAL-ASSETS> 32,650,999
<CURRENT-LIABILITIES> 9,820,689
<BONDS> 3,633,284
0
0
<COMMON> 89,830
<OTHER-SE> 19,016,233
<TOTAL-LIABILITY-AND-EQUITY> 32,650,999
<SALES> 18,031,524
<TOTAL-REVENUES> 18,031,524
<CGS> 7,984,049
<TOTAL-COSTS> 7,984,049
<OTHER-EXPENSES> 9,384,323
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 111,982
<INCOME-PRETAX> 578,880
<INCOME-TAX> 188,327
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 390,553
<EPS-BASIC> 0.05
<EPS-DILUTED> 0.04
</TABLE>
