FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For quarter ended September 30, 1996
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( ) 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 0-4025
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SYMETRICS INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
Florida 59-0954868
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(State of Incorporation) (I.R.S. Employer Identification No.)
557 N. Harbor City Boulevard, Melbourne, Florida 32935
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(Address of principal executive offices)
(407) 254-1500
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(Registrant's telephone number, including area code)
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
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at November 14, 1996
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(Common stock, $.25 par value) 1,616,491
<PAGE>
PART 1 - FINANCIAL INFORMATION
SYMETRICS INDUSTRIES, INC. AND SUBSIDARY
CONDENSED CONSOLIDATED BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
SEPTEMBER 30 MARCH 31
1996 1996
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(UNAUDITED) (DERIVED FROM AUDITED
FINANCIAL STATEMENTS)
<S> <C> <C>
Current assets:
Cash $ 421,682 $ 1,657,905
Receivables 2,271,574 1,581,428
Costs and estimated earnings in excess
of billings on uncompleted contracts 3,806,128 2,931,069
Inventory 1,048,998 635,893
Mortgage receivable 450,000 450,000
Other assets 157,009 65,898
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Total current assets 8,155,391 7,322,193
----------- -----------
Property, plant and equipment 3,613,272 3,336,076
Less accumulated depreciation 1,750,594 1,572,585
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1,862,678 1,763,491
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Deferred income taxes 297,385 325,453
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Other assets:
Other 1,104,269 94,784
Goodwill, less accumulated amortization 538,843 580,577
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1,643,112 675,361
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Total assets $11,958,566 $10,086,498
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 250,000 $ 1,000
Current maturities of long-term debt 30,725 25,436
Accounts payable and accrued expenses 2,094,303 2,098,788
Billings in excess of costs and estimated
earnings on uncompleted contracts 361,412 7,869
Income taxes payable 237,792 452,239
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Total current liabilities 2,974,232 2,585,332
----------- -----------
Deferred compensation 505,355 479,439
Long-term debt, less current maturities 1,219,016 568,363
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1,724,371 1,047,802
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Shareholders' equity
Common stock, $.25 par value 403,012 398,824
Additional paid-in capital 2,154,275 2,120,025
Retained earnings 4,702,676 3,934,515
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Total shareholders' equity 7,259,963 6,453,364
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Total liabilities and shareholders' equity $11,958,566 $10,086,498
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</TABLE>
See accompanying notes to the condensed consolidated financial statements
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<PAGE>
SYMETRICS INDUSTRIES, INC.
CONDENSED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
SEPT. 30 SEPT. 30 SEPT. 30 SEPT. 30
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1996 1995 1996 1995
<S> <C> <C> <C> <C>
Contract revenue $ 12,733,986 $ 12,197,420 $ 5,854,581 $ 5,123,350
Costs and expenses
Costs of revenues earned 9,648,231 9,139,762 4,355,962 3,833,570
General and administrative 1,689,111 1,588,322 870,111 911,053
Research and development 145,379 380,460 61,459 39,836
------------ ------------ ------------ ------------
11,482,721 11,108,544 5,287,532 4,784,459
------------ ------------ ------------ ------------
Income from operations 1,251,265 1,088,876 567,049 338,891
Other income (expense)
Rental and other income 19,236 18,537 9,618 9,312
Related expense (8,628) (56,292) (4,311) (3,972)
------------ ------------ ------------ ------------
10,608 (37,755) 5,307 5,340
------------ ------------ ------------ ------------
Interest income 50,190 60,668 6,707 25,686
Interest expense (42,838) (29,101) (26,881) (18,875)
------------ ------------ ------------ ------------
7,352 31,567 (20,174) 6,811
------------ ------------ ------------ ------------
Income before taxes 1,269,225 1,082,688 552,182 351,042
Income (taxes) (501,064) (500,482) (225,041) (237,740)
------------ ------------ ------------ ------------
Net income $ 768,161 $ 582,206 $ 327,141 $ 113,302
============ ============ ============ ============
Earnings per share $ .48 $ .37 $ 0.20 $ 0.07
============ ============ ============ ============
Weighted average number
of shares outstanding 1,606,289 1,585,620 1,611,101 1,587,251
</TABLE>
See accompanying notes to the condensed financial statements.
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<PAGE>
SYMETRICS INDUSTRIES, INC. AND SUBSIDARY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED
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SEPTEMBER 30 SEPTEMBER 30
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1996 1995
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Cash provided by (used in)
Operations
Net income $ 768,161 $ 582,206
Adjustments for non cash charge 245,659 201,087
Changes in assets and liabilities (2,661,935) 930,590
----------- -----------
Net cash provided by (used in) (1,648,115) 1,713,883
operations
Investing
Capital expenditures (277,196) (386,081)
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Cash used for investing (277,196) (386,081)
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Financing
Proceeds from stock options 38,435 16,623
Borrowing (repayment) of long-term debt 650,653 (334,446)
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Cash provided by (used) for financing 689,088 (317,823)
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Increase (decrease) in cash (1,236,223) 1,009,975
Cash beginning of period 1,657,905 318,138
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Cash end of period $ 421,682 $ 1,328,117
=========== ===========
Cash payments for interest $ 44,038 $ 20,115
Cash payments for income taxes $ 727,846 $ 951,398
See accompanying notes to the condensed consolidated financial statements
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<PAGE>
SYMETRICS INDUSTRIES, INC. AND SUBSIDARY
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1996
Notes to Condensed Consolidated Financial Statements
(Unaudited)
BASIS OF PRESENTATION
---------------------
* The financial statements contained herein are unaudited but, in the opinion of
management, reflect all adjustments, consisting of normal recurring adjustments,
which are necessary to a fair statement of the results for the periods ended
September 30, 1996 and 1995. The results of operations for the period ended
September 30, 1996 are not necessarily indicative of the results to be expected
for the full fiscal year.
* Refer to the Company's Form 10-K for the year ended March 31, 1996 as filed
with the Securities and Exchange Commission on June 14, 1996 for a description
of accounting policies which have been continued without change. Refer to the
Form 8-K filed by the Company on May 3, 1996 as amended by the 8-K/A filed on
July 5, 1996 regarding the acquisition of American Digital Switching effective
April 1, 1996. Also refer to notes included in the financial statements for
additional details of the Company's financial condition, results of operations
and changes in financial position.
* Inventories stated on the balance sheet are raw materials, work in process and
finished assemblies primarily for Symetrics' subsidiary American Digital
Switching for future shipments of existing orders and to provide field service
support to their customers. Refer to the Company's Form 10-K for the year ended
March 31, 1996 for discussion of costs incurred on uncompleted contracts.
ACQUISTION DURING THE QUARTER ENDED JUNE 30, 1996
-------------------------------------------------
Effective April 1, 1996, Symetrics acquired 933,334 (approximately 95%) of
the outstanding common stock of American Digital Switching, Inc. ("ADS") in
exchange for 207,399 shares of Symetrics' common stock or approximately 13% of
the outstanding capital stock of Symetrics after the exchange. The transaction
has been accounted for under the pooling- of-interest method of accounting.
Accordingly, the condensed consolidated statements of income and cash flows for
the periods ended September 30, 1996 include the combined operations of the
Companies. The condensed consolidated balance sheet as of March 31, 1996
includes the combined assets and liabilities of the two Companies and is derived
from separate audited financial statements of the Companies at that date.
Similarly, the condensed consolidated statements of income and cash flows for
the periods ended September 30, 1995 presented herein for comparative purposes,
includes the combined operations of the Companies as if the combination had
occurred at April 1, 1995. Such statements were derived from the unaudited
interim financial statements of the separate Companies. The weighted average
number of common shares outstanding used in the computation of earnings per
share for the periods ended September 30, 1995 and September 30, 1996 includes
the shares issued by Symetrics in the ADS acquisition.
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<PAGE>
SYMETRICS INDUSTRIES, INC. AND SUBSIDARY
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1996
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
For the six months ended September 30, 1996, contract revenues were
$12,733,986, a 4.4% increase over the $12,197,420 for the corresponding period
last year. For the current six month period, net income was $768,161, or $0.48
per share, a 32% increase over the $582,206 or $0.37 per share, a year ago.
Working capital increased by $444,298 for the six months. The backlog closed at
$10.4 million, slightly lower than the $12.1 million at September 30, 1995 .
The increase in contract revenues for the current six months is
attributable to growth in the Company's commercial products that generated 26%
of the total revenue. The increase in net income for the current six months is
attributed to continued productivity and profitability of the Company's Defense
products division and the incorporation of American Digital Switching's
financial performance which has the effect of reducing the Company's
consolidated net income last year. The higher general and administrative expense
is due to the continued marketing emphasis on the Company's Computer Telephony
Software products and the Government's military procurements. The reduced
research and development costs are attributed to capitalizing American Digital
Switching's (ADS) development expenses for fiscal 1997 which will be amortized
over the anticipated quantity of Centura TM 2000 systems and subsystems to be
sold. Increased interest expense resulted from the continued financing
requirements of American Digital Switching for the developmental phase of the
Centura TM 2000 telephone switch.
Referring to the Balance Sheet, the Company's combined cash and
receivables are significantly lower due to increased research and development
expenses for the Centura TM 2000 switch as well as marketing expenses attributed
to the Company's commitment to foster growth in it's commercial divisions. Cost
and estimated earnings in excess of billings on uncompleted contracts increased
primarily due to the booking of cost related to ongoing Defense Products and
Contract Manufacturing programs which as of September 30, 1996 were unbillable
due to timing of customer invoicing The increase in property, plant and
equipment reflects primarily capital purchases for manufacturing equipment. The
increase in long-term debt and the current maturities portion reflects the
American Digital Switching continued financing requirements for the development
of their Centura TM 2000 telephone switch. The capitalized development expenses
in fiscal yeat 1997 for the Centura TM 2000 telephone switch are classified
under other assets on the Company's balance sheet. These capitalized
developmental expenses will be amortized to cost of goods sold as shipments of
the Centura TM 2000 telephone switching system commence. Prior to fiscal year
1997 these development costs were expensed as incurred by ADS. A increase in
notes payable to $250,000 reflects use of an unsecured line of credit by the
Company to take prompt payment discounts . The increase in billings in excess of
costs and estimated earnings on uncompleted contracts in fiscal year 1997
reflects primarily the advanced payment by customers of American Digital
Switching.
-6-
<PAGE>
The estimated corporate income tax for the three months ended September 30, 1996
of $225,041 has been accrued and is reflected on the balance sheet as $237,792
income tax payable.
For the three months ended September 30, 1996, contract revenues were
$5,854,581, a 14% increase over the $5,123,350 for the corresponding period last
fiscal year. The net income for the current period of $327,141 or $0.20 per
share, was 188% higher than the $113,302 or $0.07 per share for the comparative
three month period last year. These improvements are attributed to continued
productivity and resulting increased profitability on the Company's Improved
Data Modem (IDM) contract with the government as well as the incorporation of
American Digital Switching's financial performance which had the effect of
reducing the Company's consolidated net income last year.
A comparison of the current quarter ended September 30, 1996 to the
immediately preceding quarter, shows contract revenues were about 15% lower at
$5,854,581 for the current quarter versus $6,879,405 for the three months ended
June 30, 1996. This decrease is due to a lower value of material purchases by
the Company's Defense Products Division and the Contract Manufacturing Division
from suppliers during the current quarter. However, the $5,854,581 revenues for
the current quarter is more in line with the average business volume the Company
anticipates for fiscal year 1997. Due in part to the lower business volume, the
net income of $ 327,141 was lower than the $441,020 of the immediately preceding
quarter. Backlog at the end of the current quarter was $10.4 million compared
with $ 13.4 million at June 30, 1996.
Part II OTHER INFORMATION
Item 6. Reports on Form 8-K
A report on Form 8-K/A was filed on July 5, 1996 in connection with the
American Digital Switching acquisition.
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<PAGE>
SYMETRICS INDUSTRIES, INC. AND SUBSIARY
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1996
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.
SYMETRICS INDUSTRIES, INC.
DATE November 14, 1996
/s/ Dudley E. Garner, Jr.
--------------------------------
Dudley E. Garner, Jr.
President,
Principal Executive Officer
Principal Financial Officer
- 8 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF SYMETRICS INDUSTRIES INC. FOR THE SIX MONTHS ENDED
SEPTEMBER 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 421
<SECURITIES> 0
<RECEIVABLES> 2,271
<ALLOWANCES> 0
<INVENTORY> 1,048
<CURRENT-ASSETS> 8,155
<PP&E> 3,613
<DEPRECIATION> 1,731
<TOTAL-ASSETS> 11,958
<CURRENT-LIABILITIES> 2,974
<BONDS> 0
0
0
<COMMON> 403
<OTHER-SE> 6,857
<TOTAL-LIABILITY-AND-EQUITY> 11,958
<SALES> 12,733
<TOTAL-REVENUES> 12,733
<CGS> 9,648
<TOTAL-COSTS> 11,482
<OTHER-EXPENSES> 8,628
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 42
<INCOME-PRETAX> 1,269
<INCOME-TAX> 501
<INCOME-CONTINUING> 768
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 768
<EPS-PRIMARY> .48
<EPS-DILUTED> .48
</TABLE>
