FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the fiscal year ended March 31, 1996 OR ( ) TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the
transition period from to .
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Commission file number 0-4025
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SYMETRICS INDUSTRIES, INC.
(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) (Zip Code)
Registrant's telephone number, including area code (407) 254-1500
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Securities Registered Pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
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None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock (Par Value .25 cents per share)
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(Title of class)
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 by check mark if the disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. ( )
Based on the average bid and asked prices on May 17, 1996 the aggregate market
value of the voting stock held by non-affiliates of the registrant was
$14,576,364.
The number of shares outstanding of the registrant's common stock, $.25 par
value was 1,605,297 at May 17, 1996.
Documents Incorporated by Reference
-----------------------------------
Proxy Statement dated June 3, 1996 (Incorporated by Reference into Part III).
<PAGE>
PART I
ITEM 1. BUSINESS
(a) General Development of Business
Symetrics Industries, Inc. ( "Symetrics" or the "Company") was
incorporated in Florida in 1962. The business of the Company which may be
broadly defined as electronics, consist of the design, development and
manufacture of electronic systems and system components and related computer
software. The principal market for this electronic equipment is agencies of the
U.S. Government. Historically, essentially all of the Company's business has
been the manufacture and testing of electronic equipment and sub-assemblies to
Government furnished specifications and drawings.
Beginning in 1993, the Company began an effort to diversify its
business primarily through acquisitions. In July 1993, the Company acquired a
25% interest in an interactive voice response product line, and during fiscal
year 1994 increased its percentage ownership to this product line to 50%. With
the interactive voice response product line as a base, the Company's Computer
Telephony Systems Division designs, develops and markets advanced, cost
effective electronic systems and related software for telecommunications
applications such as mass notification of emergency and non-emergency events,
community service, international callback and debit card calling.
In January 1995, the Company acquired substantially all of the assets
of a Melbourne, Florida company engaged in contract manufacturing of
commercial and industrial electronics. The Company's Contract Manufacturing
Division builds electronic assemblies for commercial and industrial customers.
In April 1996, The Company acquired substantially all of the
outstanding capital stock of American Digital Switching, Inc. ("ADS"). ADS is a
supplier of complete telephone systems for the smaller cities of the United
States and Canada. The Company's Contract Manufacturing Division will serve as
the manufacturing arm of ADS.
(b) Financial Information about Industry Segments
The Company operates primarily in a three industry segments: 1)
Defense products accounted for 86.6% of total Company revenues for the year
ended March 31, 1996. These products are electronic systems and system
components for the U. S. Government. 2) Contract manufacturing of
electronic assemblies for commercial and industrial customers. This
business segment contributed 10.7% to the Company's fiscal 1996 revenues.
3) Computer Telephony Systems for a broad spectrum of industries including
commercial, industrial, state and local Governments, Department of Defense
as well as international markets. This business segment contributed 2.7% to
the Company's revenues in fiscal 1996.
The following table reflects the revenues generated by each of the
above industry segments during the prior three fiscal years:
PERCENT OF TOTAL REVENUES
FISCAL YEAR ENDED MARCH 31,
---------------------------
1996 1995 1994
Defense Products 86.6% 97.3% 99.9%
Contract Manufacturing 10.7% 1.1% 0.0%
Computer Telephony Systems 2.7% 1.6% 0.1%
(c) Narrative Description of Business and Competition
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DEFENSE PRODUCTS
The Company manufactures electronic assemblies and systems to, what
it believes to be, the highest workmanship and quality standards recognized by
the Department of Defense. All electronic components, bare printed circuit
boards ("PCB's"), metal parts and enclosures are purchased by the Company from
suppliers. Thereafter, the complete manufacturing process including soldering,
wiring harnesses, cables, inspection, test, conformal coating and environmental
stress screening is performed by the Company. The Company's facilities are
designed for medium volume production where, typically, several hundred of a
particular assembly or system are manufactured in a continuous production run.
Contract durations range from accelerated deliveries in two to three months to
longer term contracts of two to three years. Symetrics' Improved Data Modem
(IDM) contract awarded in March 1993 is expected to continue through year 1999.
A typical contract would be completed in ten to fifteen months including
procurement of components and the manufacturing phase. The Company believes that
its manufacturing process and cycle are typical for an electronic system and
component manufacturer of its size.
During the past fiscal year essentially all of Symetrics Defense
Products business segment was the manufacture and testing of electronic
equipment and sub-assemblies to Government furnished specifications and
drawings. These contracts generally resulted from advertised Government
procurements set aside for small business concerns. The competition for this
business is severe with several (typically ten to fifteen) small business
concerns bidding for these fixed price contracts. Price is the principal
competitive factor for these contracts, however, the business risks involved are
normally well defined and quantifiable. In addition, the Government normally
provides monthly progress payments, typically 90 percent of costs incurred,
during these contracts. Typical electronic systems and assemblies being
manufactured by the Company on these contracts are:
1) Telemetry sets for processing down-link performance data for training
flights of the Sparrow Missile for the U.S. Navy, U. S. Air Force and NATO
(FMS) countries. Symetrics has shipped 3216 systems during the past nine
years on five previous production contracts and is now completing the
remaining 102 systems on a 1992 contract. In September 1995, Symetrics won
a new contract for an additional 545 AN/DKT-61A Telemetry Sets. In March
1996 an option was exercised increasing the total to 755 sets.
Manufacturing on this new contract will continue through 1997. Each system
consists of typically seven circuit card assemblies, a power supply and
high frequency transmitter mounted on an aluminum chassis and housed
inside a section of the missile's shell.
2) Improved Data Modems (IDMs) are used aboard aircraft, in ground
vehicles and at fixed sites to transmit and receive digital targeting data
via existing radios. The IDM is a four-channel terminal that performs
message processing and distribution and communicates with the on-board
electronics via a standard 1553 communications bus. This ruggedized
electronic subsystem comprises three advanced surface mount technology
(SMT) microprocessor modules, a power module and a rigid-flex back
plane/connector assembly. The IDM is 7.4 inches high, 5.4 inches wide, 9
inches long and weighs less than fifteen pounds. Symetrics initial
quantity of 188 IDMs has been increased to 1606 through the awarding of
contract options. Qualification testing and reliability demonstration
testing of the IDMs have been successfully completed. Full production is
underway and through May 1996, 922 IDMs have been shipped. The
completed manufacturing process for the IDM including the SMT portion of
the assembly is now being performed at Symetrics facilities along with all
other manufacturing operations.
3) Printed circuit card and module assemblies for communications and
information processing equipment for various agencies of the U.S.
Government and for several prime contractors. Quantities of each type of
assembly typically run between 100 and 1000 on each individual contract.
Raw materials essential to the business are widely available from a
variety of sources. Symetrics is not required to carry significant amounts of
inventory to meet rapid delivery requirements of customers. Most of Symetrics'
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sales are made directly to the U. S. Government under contracts which can
include standard Government clauses providing for termination for convenience of
the Government or for default of the contractor. These contracts are not
normally subject to renegotiation of profit.
Symetrics could be affected by across the board cutbacks in the U.S.
Government defense spending; however, the Company's principal products are for
equipment already in operational use by the Government and are not as vulnerable
to cutbacks as are research and development contracts for new equipment.
Although the contract backlog is with several Governmental agencies and prime
contractors on various programs, Symetrics has one contract, which if terminated
for any reason, would have a material adverse affect on operations. This
contract, for Improved Data Modems, is expected to comprise as much as 50
percent of the Company's fiscal year 1997's revenues. However, this contract,
through the U.S. Government's Foreign Military Sales, is in effect a multi-
national contract with half the 1,606 IDMs now under contract, being funded by
foreign countries. Consequently the contract is not overly dependent on the
Department of Defense's budget. Also, this IDM is being purchased to
significantly improve the communications capability of aircraft, helicopters and
other equipment already in operational use and consequently it is not as vulner-
able to cutbacks as research and development programs
Symetrics intends to concentrate on expanding its customer base for
Defense Products through new contracts with additional U.S. Government Agencies
and other prime contractors for military electronics equipment similar to those
presently being manufactured.
CONTRACT MANUFACTURING
In January 1995, the Company acquired the assets of Southern Circuit
Technologies, Inc. (SCTI), a Melbourne, Florida company engaged in contract
manufacturing of commercial and industrial electronics. SCTI had good capability
and recognized expertise in surface mount technology (SMT) manufacturing
processes. The Company acquired the assets of SCTI to provide: 1) an in-house
SMT manufacturing capability for its long-term IDM contract and; 2) an entry
into the commercial contract manufacturing business. The Company has already
realized a significant benefit from the acquisition in that the in-house SMT
capability has markedly improved the productivity of IDM manufacturing. This
has resulted in lower manufacturing costs and facilitated a 50% increase in
shipping rate of the IDMs. The Company believes its new business in the commer-
cial electronics contract manufacturing market will add measurable revenues in
fiscal 1997.
The SCTI acquisition has served as a base for the development of the
Company's Contract Manufacturing Division. The Company's Contract Manufacturing
Division (CMD) builds electronic assemblies for a wide variety of commercial and
industrial customers and applications. For most of its customers, the Company
purchases the bare printed circuit board and most of the electronic components.
The Company performs the complete assembly operations and processes to
manufacture the electronic assemblies, performs in-circuit or functional testing
for some customers and conformal coating on some assemblies.
These commercial and industrial contracts are normally quick
reaction, fixed priced, short term contracts. The competition for these
contracts is severe with typically three to five qualified companies bidding.
However, the Company believes that most potential customers are willing to pay a
modest premium, 5% to 7% for proven dependable service and high quality.
COMPUTER TELEPHONY SYSTEMS
In July 1993, Symetrics acquired a 25% interest in an Interactive
Voice Response product line and during fiscal year 1994 increased its share to
a current level of 50%. These products include: Econ-O-Voice for lowering
costs of overseas telephone communications; SureCall for emergency group
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notification for fire, ambulance and hazardous events and general group
notification; and Icon-O-Voice, an application generator system for voice and
fax messaging. These products added nominally to revenues in fiscal 1995 and
1996, and the Company anticipates that they will add increased revenues in
fiscal 1997.
The Company designs produces electronic system related software that
is intended to facilitate telephone communications both on a localized basis
and internationally. Typical applications include:
1) Telephone systems to rapidly call a large listing of people or
numbers (mass notification) in a short period of time by phone,
beeper or fax.
2) Interactive telephone systems to facilitate community services
such as paying child support or traffic tickets with automated
credit card payment by phone.
3) Systems to reduce the costs of international communications and
phone debit cards.
4) Systems for telephone or cellular telephones which operate on
basis the basis of prepaid individual accounts.
The customers for these products (mass notification and international
calling) are typically willing to pay for the technical and cost saving merits
of these products. Competition is typically from two or three companies that
have products that perform a similar function.
ACQUISITION OF AMERICAN DIGITAL SWITCHING
Effective April 1, 1996, the Company acquired approximately 95% of
the outstanding capital stock of American Digital Switching, Inc. ("ADS") of
Melbourne, Florida. ADS is a provider of central office digital switching
systems and support services to telephone companies of rural communities in the
United States and Canada. ADS was formed in 1988 by 24 independent phone
companies and acquired the Vidar Division of TRW Inc., thus securing a 36 year
heritage in central office switching dating back to 1960 as Vidar Corp; 1970 as
the Vidar Division of Continental Telephone; and 1975 as the Vidar Division of
TRW, Inc. The Company intends to complete the acquisition of the remaining
shares of ADS in the near future
ADS is now completing the development of the CENTURATM 2000 central
office telephone switching system. This economic next generation product offers
advanced features: a capacity of 20,000 subscriber telephone lines, smaller
physical size and lower power consumption. With the growth in the size of the
rural telephone systems and demand for small telephone systems created by the
Telecommunications Act of 1996, the Company believes that this product line is
well conceived and timely. The CENTURA TM 2000 product line includes: Low
Bandwidth on Demand, Advanced System Features, Distributed Architecture, Real
Time Video, and a host of other features designed to meet the existing needs of
customers.
ADS currently serves over 300 sites in the U.S. and Canada, including
the entire telephone system for 75 cities. The Company believes that this
customer base, which includes 32 telephone companies owned by GTE and 2 by
Sprint United, benefits from ADS's long established relationship in the
industry, more reliable products and responsive customer service. The new
CENTURATM 2000 telephone system is being released in segments that are
compatible and interchangeable with the older design. Each of the new segments
of the CENTURA TM 2000 system will immediately provide new features and
additional revenue for existing customers. The CENTURA TM 2000 Enhanced
Processor, the telephone systems computer manager, is already installed in 52
cities. The recently released telephone line switching matrix, also called the
time slot interchanger, providing up to 20,000 telephone lines is now
operational.
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Future releases planned include:
Subscriber Switch: Voice or computer lines, and
digital services for offices
Integrated, Interactive Voice Processing: Voice mail, fax mail,
announcements and Interactive
bulletin board services
Signaling System 7 (SS7): Caller ID and selective call
screening plus extended 800
number services.
Companies which have products competing directly with ADS's CENTURA
TM 2000 switches are AT&T, Northern Telecom, and Siemens. Competition is
typically from one or two of these companies which have products that perform
similar functions and are targeted for use by rural telephone companies. Raw
materials and electronic components for ADS's products are in most cases readily
available through a multitude of electronic and technology suppliers. In certain
instances, raw materials and electronic components are supplied by sole source
vendors, and the impact of the loss of these materials has been investigated and
solutions have been identified. The Company does not believe that the loss of
any sole source vendor would have a material adverse effect on the operations of
ADS.
Under the terms of the acquisition, ADS will operate as a subsidiary
of Symetrics Industries, Inc. The acquisition of ADS added approximately $1.8
million of backlog to the Company, and is expected to generate revenues in the
range of $ 4 million during fiscal year 1997. This fiscal years focus is on
product development, and increased marketing and sales efforts to a select
portion of the approximately 1400 independent telephone companies which are not
currently part of ADS's established base.
BACKLOG
At the end of fiscal year 1996, backlog, believed to be firm, was
$12.1 million compared with $17.5 million at March 31, 1995. About 90% of this
$12.1 million backlog is expected to be filled in the current fiscal year. The
acquisition of ADS brings the Company's total backlog at the beginning fiscal
year to approximately $14.0 million.
RESEARCH AND DEVELOPMENT
During the past fiscal year the Company expended $137,000 for
continued development of the interactive voice response product line compared
with $80,830 in fiscal 1995 and $9,304 in fiscal 1994.
ENVIRONMENTAL CONSIDERATIONS
The manufacturing facilities of the Company do not normally generate
emissions or large amounts of waste. However, Symetrics' facilities and
products, in common with those of the industry generally, are subject to
numerous laws and regulations designed to protect the environment, provide
standards for occupational health and safety and customer product safety. It is
the Company's policy to comply with these laws and compliance in the past has
not had a material adverse affect on its operations. Although Symetrics cannot
predict the full effect on its business of additional regulation or standards
that may be imposed in the future, the Company is not presently subject to any
unusual emission controls and does not anticipate any material expenditure to
comply with existing regulations.
EMPLOYEES
As of March 31, 1996 Symetrics had 91 employees compared to 73
employees on March 31, 1995. In addition Symetrics has engaged several
consultants from time to time on an as needed basis. The Company considers its
relationship with its employees to be satisfactory.
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ITEM 2. PROPERTIES
Symetrics' corporate office and primary engineering and manufacturing
facility is a 20,500 square foot building, which it owns, on approximately 1
acre in Melbourne, Florida. Symetrics uses 78% of this facility for its own
business and leases and/or offers for lease the balance of the building for
terms typically of one to five years. Rental rates charged by Symetrics are
consistent with rates for similar type buildings in the area. Symetrics leases a
14,500 square foot building for $6,360 per month, with 27 months remaining on
the term thereof, for its interactive voice response software and commercial
contract manufacturing products. ADS leases a 14,428 square foot building for
approximately $7500 per month, with 59 months remaining on the lease. Symetrics
considers its facilities to be suitable and adequate for the purposes for which
they are used.
ITEM 3. LEGAL PROCEEDINGS
During the fiscal year reported, the Company was not involved in any
material legal proceeding.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year covered by this report.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Symetrics Industries, Inc. common stock is traded in the NASDAQ (National
Association of Securities Dealers Automated Quotations) National Market System
under the symbol SYMT. As of May 17, 1996 there were approximately 480 holders
of record of the common stock. The following quotations reflect inter-dealer
prices, without retail mark-up, mark-down or commission and may not necessarily
represent actual transactions. The following information reflects the 3-for-2
stock split of the common stock of the Company effected as a stock dividend in
May 1995.
<TABLE>
<CAPTION>
FISCAL YEAR 1996 FISCAL YEAR 1995
QUARTER ENDING BID ASKED BID ASKED
Low - High Low - High Low - High Low - High
<S> <C> <C> <C> <C>
June 30 8 1/4 - 13 9 - 13 1/2 3 13/16 - 5 5/16 4 3/16 - 5 11/16
September 30 7 7/8 - 10 1/2 8 1/2 - 11 1/4 4 3/16 - 5 11/16 4 11/16 - 6
December 31 6 3/4 - 9 1/2 7 1/4 - 10 1/4 5 3/16 - 10 1/2 5 1/2 - 11 3/16
March 31 6 1/2 - 8 1/4 7 1/4 - 8 1/4 7 3/16 - 12 13/16 7 13/16 - 13 13/16
</TABLE>
The Company did not pay a cash dividend for fiscal year 1996 or 1995.
<TABLE>
<CAPTION>
ITEM 6. SELECTED FINANCIAL DATA
FISCAL YEAR ENDED
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MARCH 31 MARCH 31 MARCH 31 MARCH 31 MARCH 31
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Contract revenues $19,692,320 $21,341,695 $ 8,602,562 $ 3,425,563 $ 5,521,494
Cost of revenue earned 15,212,737 18,111,889 7,250,114 2,868,456 4,654,850
Research and development 137,000 70,852 9,304 0 0
General and administrative
and other expenses 1,557,563 916,294 675,318 633,941 618,755
----------- ----------- ----------- ----------- -----------
Income (loss) from operations 2,785,020 2,242,660 667,826 (76,834) 247,889
Other revenue, net 19,659 7,944 15,822 21,913 32,251
Net interest income (expense) 93,430 46,276 19,219 22,700 4,202
----------- ----------- ----------- ----------- -----------
Income (loss) before income taxes $ 2,898,109 $ 2,296,880 $ 702,867 $ (32,221) $ 284,342
=========== =========== =========== =========== ===========
Net income (loss) $ 1,846,477 $ 1,469,807 $ 550,159* $ (28,143) $ 218,620
=========== =========== =========== =========== ===========
Net income (loss) per share** $ 1.34 $ 1.18 $ .46* $ (.02) $ .18
Working capital at year end 4,268,591 2,762,973 1,366,652 1,066,992 1,030,929
Total assets 8,434,851 8,045,547 3,235,203 2,255,937 2,622,832
Long-term debt 0 0 18,908 55,761 100,102
Shareholders' equity 5,894,049 4,010,634 1,948,824 1,385,887 1,413,467
* Includes extraordinary item of $74,514 or $.09 per share due to realization of a
cumulative change in adopting Financial Accounting Standard No. 109.
** Earnings per share have been adjusted to reflect the 3 for 2 stock split in May 1995.
</TABLE>
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ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
FISCAL 1996 COMPARED WITH 1995
Net income increased despite a 7.7% reduction in contract revenues to
$19,692,320 for fiscal 1996 as a result of the Company operating with a lower
backlog, particularly on its largest contract, the Improved Data Modem (IDM).
Net income of $1,846,477 for fiscal 1996 was 25.6% higher than the previous year
as gross margin improved 7.6%. This improvement in gross margin is due primarily
to higher productivity and lower material costs on the IDM contract. Improved
productivity is primarily attributable to the Company's January 1995 acquisition
of Surface Mount Technology (SMT) electronics assembly capability. With this SMT
capability, the entire IDM assembly is accomplished at the Company's facilities,
thereby eliminating a subcontract and improving manufacturing logistics. The
reduction in material was due to the very high backlog during fiscal 1995 which
permitted volume purchasing of IDM materials used in fiscal 1996.
Research and development expense was higher by $66,148 or 93% in fiscal
1996 due to the Company's emphasis on diversification into Computer Telephony
Systems (CTS). Marketing and proposal expense was higher by $461,895 or 110% due
to significantly increased marketing, both in the U.S. and internationally, of
the IDM, continued emphasis on CTS and marketing expense for the new commercial
Contract Manufacturing Division (CMD). General and administrative expense was
higher by $179,374 or 36% in fiscal 1996 due to amortization of goodwill from
the January 1995 acquisition of SMT capability, accounting expense for CMD,
NASDAQ National Market listing fee, investor relations activities and
performance bonuses for the Company's CEO and other employees.
Interest expense increased, particularly in the first half of the year,
due to the use of the Company's line of credit to take advantage of prompt
payment discounts from suppliers. Interest income increased significantly due to
the $450,000 mortgage receivable, interest on Government receivables and frugal
management of cash on hand. Working capital increased to $4,268,591, up from
$2,762,973 the previous year due to operating profits.
The backlog decreased to $12.1 million at March 31, 1996, from $17.5
million the prior year primarily because the Government exercised more options
in fiscal year 1995 on the IDM contract than in fiscal year 1996. The Company
believes that the delay on Capitol Hill in approving the 1996 DoD budget was
also a factor. The Company believes this is not indicative of a reduction in the
future business potential of the IDM product. The number of Company employees,
particularly manufacturing personnel, generally fluctuates in relation to the
backlog. However, during fiscal 1996 the number of Company employees increased
from 73 to 91, primarily because of the increased business in the Contract
Manufacturing Division.
FISCAL 1995 COMPARED WITH 1994
Contract revenues of $21,341,695 were 248% higher than fiscal 1994 since
the Company was operating with a very high backlog throughout the year and its
largest contract, the IDM, was in full production. Consequently net income of
$1,469,807, compared with $550,159, which includes a $74,514 adjustment for the
cumulative effect of a change in accounting principle the preceding year, is
attributed to the substantially higher business volume. The cumulative effect
adjustment of $74,514 in fiscal 1994 was due to adopting Statement of Financial
Accounting Standards No. 109; Accounting For Income Taxes. The gross margin
percentage for fiscal 1995 was 0.6% higher than 1994. The fiscal 1995 purchased
material component of the cost of revenues earned was considerably higher in
proportion to the labor and burden components compared with the prior year due
to the high material content of the IDM. The marketing and proposal expenses for
fiscal 1995 were 49.9% higher than the previous year due to a significant
corporate emphasis on marketing the telecommunications software products. The
general and administrative expenses were 25.7% higher in fiscal 1995 due
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ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS (CONTINUED)
primarily to an increased bonus earned by the Company's CEO and increased legal
and accounting expenses for the acquisition in January 1995 of the assets of
Southern Circuit Technologies Incorporated (SCTI Acquisition). Interest expenses
increased due to the use of the Company's line of credit to take advantage of
prompt payment discounts from suppliers. Interest income increased substantially
due to interest on a large receivable. Working capital increased to $2,762,973,
up from $1,366,652 the previous year, due to the higher volume of profitable
business.
The backlog decreased substantially to $17.5 million at March 31, 1995,
from $28.9 million the prior year primarily because the Government exercised
significantly more options in fiscal year 1994 on the IDM contract than in
fiscal year 1995. The number of Company employees, particularly manufacturing
personnel, generally fluctuates in relation to the backlog. However, during
fiscal 1995 the number of Company employees increased from 45 to 73, primarily
because of the SCTI Acquisition.
LIQUIDITY AND CAPITAL RESOURCES
During Fiscal year 1996 the Company operated on a positive cash flow
basis. Working capital was primarily derived from the Government's 90% progress
payments and additional payments equal to 10% of costs plus about 8% profit that
are billable as shipments are made on the Company's largest contracts -
Telemetry Sets and the IDM. Referring to the Balance Sheet, the cash was
substantially higher due to profitable operations and aggressive collection
efforts which resulted in lower contract receivables. The receivables decrease
also resulted from reduced IDM shipments during the last quarter as the
Government was implementing a design change to increase the IDM's computer
memory. Costs and estimated earnings in excess of billings on uncompleted
contracts decreased in 1996 compared with 1995 because of the higher shipping
volume, particularly on the IDM contract. These costs and estimated earnings
represent the work-in-process that is unbillable until shipments are made. On
most contracts the unbillable cost is ten percent of the actual costs incurred.
The Company had about 30 contract accounts in process in both of its last two
fiscal years.
In January 1995 the Company acquired the assets of Southern Circuit
Technologies, Inc. (SCTI), a Melbourne, Florida company engaged in contract
manufacturing of commercial and industrial electronics. SCTI had good capability
and recognized expertise in SMT manufacturing processes. The Company acquired
SCTI to provide: 1) an in-house SMT manufacturing capability for its long-term
IDM contact and; 2) an entry into the commercial contract manufacturing
business. The purchase price of $580,206, including $431,916 goodwill, was paid
with $135,000 cash and the balance in Symetrics common stock. The Company has
already realized a significant benefit from the acquisition in that the in-house
SMT capability has markedly improved the productivity of IDM manufacturing. This
has resulted in lower manufacturing costs and facilitated a much higher shipping
rate of the IDMs. The Company believes the goodwill, amortized to $377,927 at
March 31, 1996, will be readily recovered by the cost savings on the IDM
program. The Company's new Contract Manufacturing Division generated $2.1
million in revenues in fiscal 1996.
In April 1996, the Company acquired about 95% of the outstanding stock of
American Digital Switching, Inc. (ADS) of Melbourne, Florida. The purchase price
was paid by the delivery of 207,399 shares of Symetrics common stock. The
Company anticipates that approximately 11,000 shares of its stock will be used
to purchase the remaining 5% of the ADS stock. ADS provides complete telephone
systems and related services to the telephone companies of smaller cities in the
United States and Canada. ADS has averaged about $5 million in revenues the last
two years. As the development and field testing of ADS' new Centura(TM) central
office telephone systems are completed over the next ten months, the Company
anticipates that ADS will make a measurable and growing contribution to
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ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
consolidated revenues and profits. The Company anticipates that approximately
$1.1 million in additional operating capital will be required by ADS to complete
development of the Centura(TM) telephone system. The Company believes its
present cash position and cash generated by operations will be sufficient for
this purpose.
Referring again to the Balance Sheet, capital expenditures in fiscal 1996
of $834,022 were used for SMT manufacturing equipment ($700,795), transportation
vehicles ($51,299), office computers and related equipment ($16,626), building
and leasehold improvements ($15,302) and 2.2 acres of land ($50,000). Capital
expenditures in fiscal 1995 of $273,437 were used for SMT manufacturing
equipment ($189,000), test and manufacturing equipment ($60,117), computer
equipment ($18,220) and building improvements ($6,100). Commitments for capital
expenditures for fiscal 1997 are expected to be about $530,000 for additional
manufacturing equipment for the commercial contract manufacturing business and
special purpose software and equipment for ADS. Large capital purchases are
normally financed from three to five years with the purchased items being used
as collateral. However, in fiscal 1996, the capital purchases were paid by cash.
In fiscal 1994 the Company invested $50,000 to acquire 50% interest in an
Interactive Voice Response product line. These products nominally contributed to
revenues in fiscal 1996 and are expected to generate increased revenues in
fiscal 1997.
The balance sheet deferred income tax assets reflects the adoption in
fiscal 1994 of Statement of Financial Accounting Standards No. 109 which
resulted from the customary difference in timing of income and expense for
accounting and income tax purposes. The $97,149 balance of the cash surrender
value of the officers life insurance policy was liquidated in fiscal 1996 to
help finance the acquisition of fixed assets. The decrease in deposits reflects
capitalization of the initial payment toward an item of production equipment
($18,900) placed into service during fiscal 1996. Goodwill was reduced by
$43,191 reflecting one full year of amortization expense resulting from the SCTI
Acquisition.
Accounts payable were substantially lower in fiscal 1996 as compared with
1995, due to the lower business volume in the last quarter of fiscal 1996 as
compared to 1995. The reduction in billings in excess of costs and estimated
earnings reflect equipment shipments that liquidated advanced billing. Accrued
liabilities increased by $32,407 primarily reflecting estimated expenses
relating to the fiscal 1996 performance bonus for the CEO. The $452,239 income
tax liability for fiscal 1996 reflects taxes due of $1,051,632 for the
profitable year, less the payments during the year. The increase in the common
stock and additional paid-in capital resulted from employees exercising options
to purchase 14,250 shares of common stock for a total exercise price of $36,938.
The common stock and additional paid-in capital account had offsetting
adjustments of $114,576 to reflect the 3 for 2 stock split in May 1995.
As of March 31, 1996, $1,499,000 was available to the Company on its
unsecured $1,500,000 line-of-credit, renewable in July 1998, bearing interest at
the lending bank's prime rate less .25% or the 30 day LIBOR base rate plus 1.5
basis points (8.0% at March 31, 1996 and 9.0% at March 31, 1995) and payable
monthly. At March 31, 1996 the Company had a loan commitment of $500,000 for
financing production equipment over five years. In fiscal 1996 the Company
initially borrowed $250,000 for financing SMT production equipment, but this
debt was subsequently retired due to the Company's strong cash flow.
Referring to the Statement of Cash Flows, during fiscal year 1996 net cash
provided by operating activities was $2,059,882. Discussions of the material
changes in net income, income taxes, other receivables, costs and estimated
10
<PAGE>
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
earnings in excess of billings, billings in excess of costs and estimated
earnings, accounts payable and accrued liabilities are presented above.
Likewise, the significant items of the cash flows from investing activities,
i.e. capital expenditures, mortgage receivable and proceeds from surrender of
life insurance policy, have been also been discussed. Material items of cash
flows from financing activities include the complete repayment of long-term debt
which at March 31, 1996 had a balance of $18,908 for the mortgage on the
Company's building and property. The final payment on the mortgage payable was
made in March 1996. During fiscal year 1996 proceeds from the exercise of 14,250
stock options by employees totaled $36,938.
For financial management the Company uses a number of measures of
liquidity and profitability. The following figures represent year end values for
the last three fiscal years:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Working capital $4,268,591 $2,762,973 $1,366,652
Current ratio 3.07 1.77 2.55
Leverage ratios - Current debt to net worth .35 .90 .45
- Total debt to net worth .43 1.01 .66
Profitability ratios - Return on sales, net 9.38% 6.89% 5.53%
- Return on net wort 31.33% 36.65% 24.41%
- Gross profit 22.75% 15.13% 15.72%
</TABLE>
These measurement factors for the past three years, particularly working
capital and profitability ratios, indicate positive trends toward improved
liquidity and strengthened financial posture. The current and leverage ratios
are also good considering the significant increase in business volume since
fiscal 1994. The anticipated continued profitability for fiscal 1997 is expected
to result in further improvement of the Company's financial condition.
For the past three years the Company has operated on an even or positive
cash flow basis. This is because the Company receives typically 90% progress
payments on its actual costs incurred on most of its contracts. The remaining
10% of the costs, plus profits, are paid as shipments are made. Considering that
2 to 3% of the allowable costs for progress billings are non-cash expenses and
the US. Government typically pays progress payments in two weeks, Symetrics
usually collects its receivables in time to make prompt payments on its trade
accounts. Consequently the Company, by frugal cash management, expects to
continue to minimize the need for significant amounts of capital, other than
that generated by its own operations.
The United States Government spending for defense related products appears
to have stabilized. Although each solicitation is very competitive, the Company
believes that sufficient new business opportunities exist and that it has the
capability and technical expertise to win its share of the awards. During fiscal
1996, the Company was awarded $7.4 million on its IDM contract, bringing the
total contract value to $47.6 million for 1,491 IDMs since the start of
Symetrics' contract in March 1993. Although there can be no assurance with
respect to future orders, the Company's IDM contract has option provisions
whereby the Government may order additional equipment through September 1997.
The Company believes the IDM program will be a significant part of its business
for several years.
The Company believes that its backlog of $12.1 million at March 31, 1996,
although down from the backlog of $17.5 million last year, is still a solid base
for strong financial results in fiscal 1997. With the ADS acquisition in April
1996, the Company begins fiscal 1997 with a backlog of almost $14 million. In
the last three fiscal years, the Company has diversified into three
commercial/industrial markets, including the ADS market. Although there can be
no assurance, the Company believes that its diversification efforts will
contribute 35 to 40 percent of total revenues in fiscal 1997, with the potential
for additional growth in subsequent years.
11
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
Index to Financial Statements
Page
----
<S> <C>
Independent Auditor's Report 13
Financial Statements:
Balance Sheet, March 31, 1996 and 1995 14,15
Statement of Operations, Years Ended March 31, 1996, 1995, and 1994 16
Statement of Stockholders' Equity, Years Ended March 31, 1996, 1995 and 1994 17
Statement of Cash Flows, Years Ended March 31, 1996, 1995 and 1994 18,19
Notes to Financial Statements 20-28
</TABLE>
12
<PAGE>
INDEPENDENT AUDITOR'S REPORT
----------------------------
The Board of Directors
Symetrics Industries, Inc.
We have audited the accompanying balance sheet of Symetrics Industries,
Inc. as of March 31, 1996 and 1995, and the related statements of operations,
stockholders' equity and cash flows for each of the three years in the period
ended March 31, 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Symetrics Industries, Inc.
at March 31, 1996 and 1995 and the results of its operations and its cash flows
for each of the three years in the period ended March 31, 1996, in conformity
with generally accepted accounting principles.
As discussed in Notes 1, 14 and 19, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions", and Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" during the year
ended March 31, 1994.
/S/Pricher and Company
--------------------------
Pricher and Company
Orlando, Florida
May 1, 1996
13
<PAGE>
SYMETRICS INDUSTRIES, INC
BALANCE SHEET
March 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents (Note 3) $1,482,082 $ 154,334
Contract receivables (Note 3) 1,274,966 2,000,643
Other receivables 64,566 53,062
Costs and estimated earnings in excess
of billings on uncompleted contracts (Note 6) 2,931,069 3,575,501
Inventory 75,136 83,336
Prepaid expenses 17,577 20,500
Mortgage receivable (Note 5) 450,000 450,000
Deferred income taxes (Note 14) 34,558 27,811
---------- ----------
Total current assets 6,329,954 6,365,187
---------- ----------
Property, plant and equipment (Notes 7 and 10) 2,707,594 1,873,572
Less accumulated depreciation 1,140,981 904,959
---------- ----------
1,566,613 968,613
---------- ----------
Deferred income taxes (Note 14) 84,228 116,711
---------- ----------
Other assets:
Cash surrender value, officer's life insurance 97,149
Investment in product line (Note 8) 50,000 50,000
Deposits 10,390 26,769
Goodwill, less accumulated amortization:
1996, $53,989; 1995, $10,798 (Note 4) 377,927 421,118
Deferred acquisition costs (Note 20) 15,739
---------- ----------
454,056 595,036
---------- ----------
$8,434,851 $8,045,547
========== ==========
</TABLE>
See accompanying notes to financial statements
14
<PAGE>
SYMETRICS INDUSTRIES, INC.
BALANCE SHEET
March 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable (Note 9) $ 1,000 $ 1,000
Current maturities of long-term debt (Note 10) 18,908
Accounts payable 1,252,419 2,387,115
Billings in excess of costs and estimated
earnings on uncompleted contracts (Note 6) 7,869 166,972
Accrued liabilities (Note 15) 347,836 315,429
Income taxes payable (Note 14) 452,239 712,790
---------- ----------
Total current liabilities 2,061,363 3,602,214
---------- ----------
Deferred compensation liability (Note 15) 479,439 432,699
---------- ----------
Stockholders' equity:
Common stock, par value $.25 per share;
authorized 2,000,000 shares, issued 1,387,898
and 1,377,984 shares (Notes 4, 12, 16, 18 and 20) 346,975 229,664
Additional paid-in capital 1,090,638 1,171,011
Retained earnings 4,456,436 2,609,959
---------- ----------
Total stockholders' equity 5,894,049 4,010,634
---------- ----------
Commitments and contingencies
(Notes 8, 11, 13, 15, 17 and 19)
$8,434,851 $8,045,547
========== ==========
</TABLE>
See accompanying notes to financial statements
15
<PAGE>
SYMETRICS INDUSTRIES, INC
STATEMENT OF OPERATIONS
Years Ended March 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Contract revenues (Note 3) $ 19,692,320 $ 21,341,695 $ 8,602,562
------------ ------------ ------------
Cost and expenses:
Cost of revenues earned 15,212,737 18,111,889 7,250,114
Research and development 137,000 70,852 9,304
Marketing and proposals 880,150 418,255 278,956
General and administrative 677,413 498,039 396,362
------------ ------------ ------------
16,907,300 19,099,035 7,934,736
------------ ------------ ------------
Income from operations 2,785,020 2,242,660 667,826
------------ ------------ ------------
Other income (expense):
Rental income, net of related expenses
(Note 13):
1996, $15,888; 1995, $15,888;
1994, $15,888 20,712 16,092 20,712
Interest income 120,017 59,347 27,068
Loss on sale of marketable securities (8,225)
Miscellaneous income (expense) (1,053) 77 (4,890)
Interest expense (26,587) (13,071) (7,849)
------------ ------------ ------------
113,089 54,220 35,041
------------ ------------ ------------
Income before income taxes and
cumulative effect adjustment 2,898,109 2,296,880 702,867
Income taxes (Note 14) 1,051,632 827,073 227,222
------------ ------------ ------------
Income before cumulative effect of
change in accounting principle 1,846,477 1,469,807 475,645
Cumulative effect of change in accounting
principle (Note 14) 74,514
------------ ------------ ------------
Net income $ 1,846,477 $ 1,469,807 $ 550,159
============ ============ ============
Earnings per common share:
Weighted average shares outstanding 1,382,697 1,250,609 1,192,326
============ ============ ============
Income before cumulative effect of
change in accounting principle $ 1.34 $ 1.18 $ 0.40
Cumulative effect of change in accounting
principle 0.00 0.00 0.06
------------ ------------ ------------
Net income $ 1.34 $ 1.18 $ 0.46
============ ============ ============
</TABLE>
See accompanying notes to financial statements
16
<PAGE>
SYMETRICS INDUSTRIES, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
Years Ended March 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
Common Stock
--------------------------
Additional Total
Number of Par Paid-In Retained Treasury Stockholders'
Shares Value Capital Earnings Stock Equity
---------- -------------- ------------- --------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Balance,
March 31, 1993 828,368 $ 207,092 $ 671,512 $ 589,993 $ (82,710) $ 1,385,887
Stock options exercised
during the year ended
March 31, 1994 12,000 3,000 10,875 13,875
Repurchase odd lots of stock
(703 shares) (1,097) (1,097)
Retire treasury stock
(Note 18) (37,463) (9,366) (74,441) 83,807
Net income for the year
ended March 31, 1994 550,159 550,159
---------- ----------- ---------- ----------- ----------- -----------
Balance, March 31, 1994 802,905 200,726 607,946 1,140,152 1,948,824
Stock options exercised
during the year ended
March 31, 1995 86,071 21,518 125,279 146,797
Shares issued in connection
with purchase of assets of
SCTI (Note 4) 29,680 7,420 437,786 445,206
Net income for the year
ended March 31, 1995 1,469,807 1,469,807
---------- ----------- ---------- ----------- ----------- -----------
Balance, March 31, 1995 918,656 229,664 1,171,011 2,609,959 4,010,634
Adjustments to number of
shares issued in connection
with purchase of assets of
SCTI (Note 4) (3,313) (828) 828
Stock options exercised
during the year ended
March 31, 1996 14,250 3,563 33,375 36,938
Three for two stock split
during the year ended
March 31, 1996 (Note 12) 458,305 114,576 (114,576)
Net income for the year
ended March 31, 1996 1,846,477 1,846,477
---------- ----------- ---------- ----------- ----------- -----------
Balance, March 31, 1996 1,387,898 $ 346,975 $ 1,090,638 $ 4,456,436 $ $ 5,894,049
========== =========== ========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements
17
PAGE>
SYMETRICS INDUSTRIES, INC.
STATEMENT OF CASH FLOWS
Years Ended March 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Reconciliation of net income
to net cash provided by operating activities
Net income $ 1,846,477 $ 1,469,807 $ 550,159
Items not requiring cash:
Loss on sale of equipment 1,110 5,713
Loss on sale of marketable securities 8,225
Depreciation and amortization 279,672 162,664 123,987
Deferred compensation 46,740 45,300 45,386
Cash surrender value, officer's
life insurance (4,017) (7,647) (9,709)
Deferred income taxes 25,736 (13,257) (102,866)
Changes in assets and liabilities net
of effects from purchase of SCTI:
Contract receivables 725,677 (1,365,866) (98,101)
Other receivables (11,504) (44,346) 4,512
Costs and estimated earnings in excess
of billings on uncompleted contracts 644,432 (2,160,915) (688,503)
Inventory 8,200 25,253 4,065
Prepaid expenses 2,923 (11,351) 1,666
Income taxes receivable 4,243
Accounts payable (1,134,696) 1,631,193 247,552
Billings in excess of costs and estimated
earnings on uncompleted contracts (159,103) 166,309 663
Accrued liabilities 32,407 73,914 81,370
Income taxes payable (260,551) 631,759 81,031
Decrease in deposits 16,379 19,080
----------- ----------- -----------
Net cash provided by operating
activities 2,059,882 630,122 251,168
----------- ----------- -----------
</TABLE>
(Continued)
See accompanying notes to financial statements
18
<PAGE>
SYMETRICS INDUSTRIES, INC
STATEMENT OF CASH FLOWS
(Continued)
Years Ended March 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from investing activities:
Purchase of marketable securities (11,313) (10,799)
Proceeds from sale of marketable securities 168,264
Investment in product line (50,000)
Capital expenditures (836,640) (273,437) (265,265)
Proceeds from sale of equipment 1,050 587 3,500
Payment for purchase of SCTI,
net of cash acquired (126,359)
Investment in mortgage receivable (450,000)
Proceeds from surrender of life insurance
policy 101,166 91,296
Payment of deferred acquisition costs (15,739)
----------- ----------- -----------
Net cash used in investing activities (750,163) (600,962) (322,564)
----------- ----------- -----------
Cash flows from financing activities:
Reduction of long-term debt (18,908) (174,898) (39,673)
Proceeds from stock options 36,938 146,797 13,875
Repurchase odd lots of stock (1,097)
----------- ----------- -----------
Net cash provided by (used in) financing
activities 18,030 (28,101) (26,895)
----------- ----------- -----------
Net increase (decrease) in cash and
cash equivalents 1,327,749 1,059 (98,291)
Cash and cash equivalents at beginning
of year 154,334 153,275 251,566
----------- ----------- -----------
Cash and cash equivalents at end of year $ 1,482,083 $ 154,334 $ 153,275
=========== =========== ===========
Supplemental cash flow information:
Amounts paid during the year for:
Interest $ 31,531 $ 14,583 $ 10,255
=========== =========== ===========
Income taxes $ 573,659 $ 208,571 $ 174,000
=========== =========== ===========
Noncash financing activities:
Issuance of shares in connection with three
for two stock split $ 114,576 $ $
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements
19
<PAGE>
SYMETRICS INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH EQUIVALENTS - For purposes of the statement of cash flows, the
Company considers all highly liquid investments with original maturities of
three months or less to be cash equivalents and include banker's acceptances of
approximately $1,000,000 at March 31, 1996 which matured on April 8, 1996.
REVENUE AND COST RECOGNITION - Revenues from fixed-price contracts are
recognized on the percentage-of-completion method, measured by the percentage of
cost incurred to date to estimate total cost for each contract.
Contract costs include all direct material and labor costs and those
indirect costs related to contract performance. General and administrative costs
are charged to expense as incurred. Provisions for estimated losses on
uncompleted contracts are made in the period such losses are determined.
Estimates of total contract costs are reviewed periodically during each year and
the cumulative effects of changes in total estimated contract costs are
recognized in the period determined. Revenues recognized in excess of amounts
billed are classified under current assets as "costs and estimated earnings in
excess of billings on uncompleted contracts". Amounts billed in excess of
revenues recognized to date are classified under current liabilities as
"billings in excess of costs and estimated earnings on uncompleted contracts".
CONTRACT RECEIVABLES - Contract receivables are due from the U.S.
Government and commercial customers and are considered current and fully
collectible at March 31, 1996 and 1995. Contract receivables include only those
amounts which are currently due and payable and do not include retainages or
recognized but unbilled revenues.
Billings are determined based on the terms of the individual contracts
which generally provide for progress payment billings based on ninety percent of
contract costs incurred. As of March 31, 1996 and 1995, there were no
significant amounts included in contract receivables related to claims or other
similar items subject to uncertainty concerning their determination or ultimate
realization.
INVENTORY - Inventory, consisting principally of spare electronic
components, is valued at lower of cost or market. Cost is determined generally
on a first-in, first-out basis.
PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment are carried
at cost. Depreciation is computed using the straight-line method over the
estimated useful lives of the property which ranges from five to twenty-five
years. When assets are retired or otherwise disposed, the cost and related
accumulated depreciation are removed from the accounts, and any resulting gain
or loss is recognized in income for the period. The cost of maintenance and
repairs is charged to income when incurred; significant renewals and betterments
are capitalized. Deduction is made for retirements resulting from renewals or
betterments.
INCOME TAXES - On April 1, 1993, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes." This statement requires that deferred taxes be established for all
temporary differences between the book and tax bases of assets and liabilities.
In addition, deferred tax balances must be adjusted to reflect tax rates that
will be in effect in the years in which the temporary differences are expected
to reverse. Accordingly, deferred tax assets and liabilities represent the
future tax consequences of those differences, which will be either taxable or
deductible when the assets and liabilities are recovered or settled. The primary
temporary differences between financial and income tax reporting relate to
depreciation methods and deferred compensation expense.
USE OF ESTIMATES - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Although these estimates are based on
management's knowledge of current events and actions it may undertake in the
future, they may ultimately differ from actual results.
20
<PAGE>
SYMETRICS INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CHANGES IN ACCOUNTING PRINCIPLES - In 1995, the Financial Accounting
Standards Board (FASB) issued Statement of Financial Accounting Standards No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of" (SFAS 121). The Company's required adoption date is
April 1, 1996. SFAS 121 standardizes the accounting practices for the
recognition and measurement of impairment losses on certain long-lived assets.
The Company anticipates the adoption of SFAS 121 will not have a material impact
on its results of operations or financial position. However, the provisions of
SFAS 121 may require certain charges historically recorded by the Company in
other income (deductions) - net to be included in operating income.
RECLASSIFICATION OF FINANCIAL STATEMENT PRESENTATION - Certain
reclassifications have been made to the 1995 financial statements to conform
with the 1996 financial statement presentation. Such reclassifications had no
effect on net income as previously reported.
2 BUSINESS SEGMENTS
The Company operates principally in three industries, A, B and C.
Operations in Industry A involve the manufacture and sale of electronic
components to the United States Government primarily for defense-related
applications. Operations in Industry B involve the manufacture and sale of
electronic components to commercial and industrial customers. Operations in
Industry C involve the development and sale of software products to commercial
customers. All three activities are generally performed under fixed-price
contracts. Total revenue by industry includes sales only to unaffiliated
customers.
Operating profits is total revenue less operating expenses. In computing
operating profit, none of the following items have been added or deducted:
general corporate expenses, interest expense, rental income, interest income,
income taxes and cumulative effect of change in accounting principle.
Identifiable assets by industry are those assets that are used in the
Company's operations in each industry. Corporate assets are principally cash, a
mortgage receivable, and a portion of property, plant and equipment.
The following summarizes certain financial information for the years ended
March 31, 1996, 1995 and 1994 classified as described above:
<TABLE>
<CAPTION>
1996 1995 1994
----------- ------------ ------------
<S> <C> <C> <C>
Sales to Unaffiliated Customers
-------------------------------
Segment A $17,059,626 $ 20,764,331 $ 8,595,370
Segment B 2,103,103 229,932 0
Segment C 529,591 347,432 7,192
----------- ------------ ------------
$19,692,320 $ 21,341,695 $ 8,602,562
=========== ============ ============
Operating profit
----------------
Segment A $ 3,275,777 $ 2,583,542 $ 829,994
Segment B 31,871 (19,074) 0
Segment C (363,939) (235,571) (114,227)
----------- ------------ ------------
2,943,709 2,328,897 715,767
Corporate expenses 158,689 86,237 47,940
----------- ------------ ------------
2,785,020 2,242,660 667,826
Unallocated components of
other income and expense 113,089 54,220 35,041
----------- ------------ ------------
Net income before income taxes $ 2,898,109 $ 2,296,880 $ 702,867
=========== ============ =============
</TABLE>
21
<PAGE>
SYMETRICS INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
2 BUSINESS SEGMENTS (CONTINUED)
1996 1995 1994
----------- ----------- -----------
Identifiable assets
-------------------
Segment A $ 3,431,370 $ 5,607,380 $ 2,435,185
Segment B 2,317,208 1,249,656 50,000
Segment C 411,449 228,963 2,157
Corporate assets 2,274,824 959,548 747,861
--------- ------- -------
$ 8,434,851 $ 8,045,547 $ 3,235,203
=========== =========== ===========
The following summarizes the depreciation and amortization of and
additions to property, plant and equipment for the three years ended March 31,
1996, 1995 and 1994.
Depreciation Additions
------------------------- --------------------------
1996 1995 1994 1996 1995 1994
----- ---- ----- ---- ---- ----
Segment A $140,949 $126,673 $115,951 $126,255 $65,696 $261,259
Segment B 76,244 14,778 0 626,875 387,068 0
Segment C 11,234 2,342 0 32,320 18,220 0
Corporate 8,054 8,072 8,036 51,190 1,525 4,006
----- ----- ----- ------ ----- -----
$236,481 $151,865 $123,987 $836,640 $472,713 $265,265
======== ======== ======== ======== ======== ========
3 CONCENTRATIONS OF CREDIT RISK
The Company has on deposit with one commercial bank, amounts in excess of
federal depository insurance coverage of approximately $381,423.
At March 31, 1996 and 1995, accounts receivable due from the U.S.
Government comprised 29% and 81%, respectively of the total amounts due to the
Company.
For the years ended March 31, 1996, 1995 and 1994, respectively,
approximately 87%, 97% and 100% of Company's revenues were derived from
contracts with the U.S. Government.
4 ACQUISITION OF SOUTHERNCIRCUIT TECHNOLOGIES, INC.
On January 5, 1995, the Company purchased substantially all of the assets
of SouthernCircuit Technologies, Inc. ("SCTI") in exchange for $135,000 cash and
26,367 shares of common stock of the Company valued at $445,206. SCTI was a
contract electronics manufacturing firm specializing in surface mount technology
that allows circuit components to be mounted on a circuit board in a dense and
efficient manner. The purchase method was used to account for the acquisition.
At March 31, 1995 it was estimated and reported that 29,680 shares of common
stock of the Company were issued in connection with this acquisition. During the
year ended March 31, 1996, it was determined that 26,367 shares were actually
issued. The decrease of 3,313 shares has been shown in the current period.
The accompanying balance sheet includes the assets and liabilities of SCTI
at March 31, 1995 and the statement of income includes the results of operations
of SCTI for the period from January 5, 1995 to March 31, 1995. The excess of the
purchase price over the fair market value of the assets acquired is being
amortized over ten years.
23
<PAGE>
SYMETRICS INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
4 ACQUISITION OF SOUTHERNCIRCUIT TECHNOLOGIES, INC. (CONTINUED)
The pro forma results of operations which follow assume that the
acquisition had occurred at the beginning of each period presented:
Year Ended March 31,
-----------------------
1996 1995
-------- --------
Contract revenues $22,080,927 $ 8,958,896
=========== ===========
Net income $ 1,594,894 $ 577,128
=========== ===========
Net income per share $ 1.24 $ 0.47
=========== ===========
5 MORTGAGE RECEIVABLE
In 1994, the Company made a loan of $450,000 to an unrelated company.
Interest was received through November 1995 in scheduled quarterly installments
at 14% with the entire principal balance due in February 1996. At March 31, 1996
the loan was in default with an unpaid balance of $471,352, including accrued
interest. The loan is collateralized by a first mortgage on real property having
an assessed value in excess of $800,000. The Company filed for foreclosure on
April 30, 1996 and expects to receive a partial payment of $233,093 in June
1996. Management expects to recover its entire investment plus accrued interest
on this loan by July 1996.
6 CONTRACTS IN PROCESS
Comparative information with respect to contracts in process at March 31,
1996 and 1995 is as follows:
1996 1995
------------ ------------
Costs incurred on uncompleted contracts $ 39,505,908 $ 25,168,632
Estimated earnings 8,136,268 4,074,459
------------ ------------
47,642,176 29,243,091
Less billings to date 44,718,976 25,834,562
------------ ------------
$ 2,923,200 $ 3,408,529
============ ============
Included in the accompanying balance sheet under the following captions:
1996 1995
------------ ------------
Costs and estimated earnings in excess of
billings on uncompleted contracts $ 2,931,069 $ 3,575,501
Billings in excess of costs and estimated
earnings on uncompleted contracts 7,869 166,972
----------- ------------
$ 2,923,200 $ 3,408,529
=========== ============
Costs incurred on uncompleted contracts do not exceed the aggregate
estimated cost of all in-process and delivered units on the basis of the
estimated average cost of all units expected to be produced under contracts not
yet complete. All costs incurred on uncompleted contracts are expected to be
absorbed in cost of revenues earned based on existing firm orders at March 31,
1996 and 1995. As of March 31, 1996 and 1995, there were no significant amounts
included in uncompleted contracts related to claims or other similar items
subject to uncertainty concerning their determination or ultimate realization.
23
<PAGE>
SYMETRICS INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
7 PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at March 31, 1996 and 1995 include the
following:
1996 1995
---------- ----------
Land $ 97,250 $ 47,250
Buildings and improvements 511,034 495,732
Machinery and equipment 1,820,768 1,119,973
Office furniture and equipment 164,260 147,634
Transportation equipment 114,282 62,983
------- --------
$2,707,594 $1,873,572
========= ===========
Depreciation expense for the years ended March 31, 1996, 1995 and 1994 was
$236,481 and $151,866 and $123,987, respectively.
8 INVESTMENT IN PRODUCT LINE
On June 29, 1993, the Company entered into an agreement with another
entity which would provide the Company with Interactive Voice Response products.
The Company has agreed to provide the working capital for marketing, advertising
and development for the product line. The Company initially purchased a 25%
ownership in the product line and subsequently increased this ownership to 50%
for a total cost of $50,000 plus stock options for 10,000 shares of the
Company's common stock issued to key employees associated with the product line.
These options were issued under the fiscal 1994 stock option plan and 50% will
not be exercisable until certain gross profit levels are met. Since the Company
is paying the marketing and development expenses, profit sharing will be 50%
after recoupment of these expenses plus the cost of goods sold.
9 NOTES PAYABLE
The Company has an unsecured $2,000,000 line-of-credit which bears
interest at the lending bank's prime rate less .25% (prime was 8.25% at March
31, 1996 and 9% at March 31, 1995) or at the option of the Company the thirty
day London Interbank Offering Rate ("LIBOR") base rate plus 1.5 basis points
payable monthly. Under the line-of-credit, $1,500,000 may be used for general
short-term working capital requirements and $500,000 is available for equipment
purchases. This line of credit expires July 31, 1998. The line-of-credit
agreement contains financial covenants which require the Company to maintain a
debt to net worth ratio of no greater than 2.0 to 1 and a current ratio of no
less than 1.5 to 1. At March 31, 1996 and 1995, $1,000 was outstanding on this
line.
10 LONG-TERM DEBT
Long-term debt at March 31, 1995 consisted of a mortgage note payable with
a balance of $18,908 due in monthly installments of $1,784 including interest at
7.5%. This mortgage payable was collateralized by land and building with an
original cost of $235,000. Final payment was made during March 1996.
11 STOCK OPTIONS
Under the Company's 1983 Incentive Stock Option Plan, 117,975 shares of
common stock (adjusted for the effect of 1985, 1986 and 1995 stock dividends)
were reserved for issuance upon exercise of options granted to officers and key
employees. Of the total shares issued under this plan, 114,975 have been
exercised or have lapsed and options for 3,000 shares are exercisable at March
31, 1996.
During 1994, the Company adopted another Stock Option Plan which reserves
120,000 shares of common stock (adjusted for the effect of 1995 stock dividend)
for issuance upon exercise of options granted to key employees, officers,
24
<PAGE>
SYMETRICS INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
11 STOCK OPTIONS (CONTINUED)
directors and consultants. At March 31, 1996, the Board of Directors has
reserved an additional 120,000 shares of common stock for issuance under the
plan pending approval by the shareholders, of which 16,125 were granted at March
31, 1996. The option price shall not be less than one hundred percent of the
fair market value of the stock on the date of the grant. All options granted
expire ten years after the date of grant.
Transactions and other information relating to the plans for the years
ended March 31, 1996 and 1995 are as follows:
Number of Option Price
Shares Per Share
------ ---------
Options outstanding at beginning of year:
1996 64,500
1995 114,631 $1.0625 to $ 6.25
Options granted during:
1996 33,000
1995 24,000 $11.375 to $14.50
Options exercised during:
1996 14,250
1995 70,756 $1.0625 to $ 6.25
Options lapsing during:
1996 -0-
1995 3,375 $1.875
Options outstanding at end of year:
1996 83,250
1995 64,500 $1.875 to $14.50
Options exercisable at March 31, 1996 and 1995 totaled 35,250 and
1,500, respectively.
On February 6, 1990, the board of directors granted to the Company's
president a non-qualified stock option for 39,400 shares of common stock, which
was exercised during 1995 at a price of $1.22 per share.
12 STOCK SPLIT
The Company declared a three for two stock split effective May 1, 1995
with a payment date of May 15, 1995.
13 LEASES
The Company currently leases a portion of its building space to a tenant
on a month-to-month basis. During 1996, this space was rented for $2,600 per
month plus sales tax and utilities.
During 1994, the Company entered into a long-term operating lease
agreement for the premises which house its contract manufacturing division. Rent
expense for this lease during the year ended March 31, 1996 was $74,160. The
term of the lease is April 1, 1995 to August 31, 1998.
Annual lease payments are as follows:
Year Ending
March 31,
---------
1997 $72,000
1998 $72,000
1999 $30,000
14 INCOME TAXES
Effective April 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, ("SFAS No. 109") "Accounting for Income
Taxes". The cumulative effect of the change in accounting principle is
included in determining net income for 1994. Financial statements for
prior years have not been restated.
25
<PAGE>
SYMETRICS INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
14 INCOME TAXES (CONTINUED)
The components of income taxes (benefit) are as follows:
1996 1995 1994
---- ---- ----
Current:
Federal $ 776,068 $ 235,106 $ 938,523
State 64,262 20,468 87,375
----------- ---------- ----------
1,025,898 840,330 255,574
----------- ---------- ----------
Deferred:
Federal 23,760 (12,239) (26,175)
State 1,974 (1,018) (2,177)
----------- ---------- ----------
25,734 (13,257) (28,352)
----------- ---------- ----------
$ 1,051,632 $ 827,073 $ 227,222
=========== ========== ==========
The tax effects of temporary differences that result in deferred tax
assets and deferred tax liabilities at March 31, 1996 and 1995 are as follows:
1996 1995
----------- ---------
Deferred tax assets:
Deferred compensation due to accrual
for financial reporting purposes. $ 171,711 $ 154,971
Compensated absences, due to accrual
for financial reporting purposes 34,558 27,811
------ -------
Total deferred tax assets 206,269 182,782
Less valuation allowance
------- -------
Total deferred tax assets 206,269 182,782
Deferred tax liabilities:
Property, plant and equipment, due
to differences in depreciation 87,483 38,260
------ -------
Net deferred tax assets $ 118,786 $ 144,522
======= =======
Since it is more likely than not that the deferred tax assets will be
realized in future reversals of existing temporary differences, future taxable
income and tax planning strategies, the Company has determined that it is not
required to establish a valuation allowance for the deferred tax assets as
required by SFAS No. 109.
Prior year financial statements were not restated to reflect the new
accounting standard. The principal components of deferred taxes in prior years
are as follows:
1993
----------
Excess of tax depreciation over financial
depreciation $ ( 1,566)
Deferred compensation not currently
deductible for income tax purposes ( 6,642)
Utilization of net operating loss
carryforwards and carryback 543
Accrued vacation cost not currently
deductible for income tax purposes 2,709
Other ( 284)
---------
$ ( 5,240)
=========
26
<PAGE>
SYMETRICS INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
14 INCOME TAXES (CONTINUED)
The effective tax rate varied from the statutory federal income tax rate
as follows:
1996 1995 1994
---- ---- ----
Statutory federal income tax rate 34.0% 34.0% 34.0%
Increase (decrease):
State income taxes, net of federal benefit 2.0 1.9 1.9
Non-taxable income ( 0.4)
Non-deductible expenses 0.2
Tax credits ( 2.2)
Other 0.1 0.1 ( 1.0)
----- ---- -------
Effective income tax rate 36.3% 36.0% 32.3%
===== ===== ======
15 COMMITMENTS
On November 1, 1983, the Company entered into a deferred compensation and
salary continuation agreement with its president. The agreement provides that
the officer will perform consulting services for a period of three years
following his termination of employment and that he will agree not to compete
with the Company during his employment or during the term of his consulting
services. Under this agreement the officer will receive nine equal payments upon
termination. The annual payments amount to $72,000 if termination occurs before
October 31, 1996 and increase to $80,000 thereafter. The present value of the
deferred compensation liability included in the accompanying balance sheet at
March 31, 1996 and 1995 was $479,439 and $432,699, respectively, based on an
assumed rate of nine percent.
Effective January 1, 1994, the Company entered into a three-year
employment agreement with its president which provides for an annual base
salary, subject to an increase in the second and third year by the percentage
increase in the Consumer Price Index plus one percent. In the event of
termination without cause, the Company is required to pay an amount equal to the
greater of a) two years' salary or, b) the salary for the remaining term of the
employment agreement. The agreements also provide for a bonus of at least
$20,833 in the event that pre-tax income equals or exceeds five percent of
contract revenue for the years 1994, 1995 and 1996. The bonus increases
proportionately for any increase in pre-tax income above five percent of
contract revenue. No bonus is required to be paid if pre-tax income is less than
five percent of contract revenue. For the years ended March 31, 1996 and 1995,
bonuses under this arrangement amounted to $120,542 and $84,530, respectively
which are reported as accrued liabilities at March 31, 1996 and 1995.
On January 5, 1995, the Company entered into a four-year employment
agreement with its vice president of manufacturing. The agreement provides for
an annual base salary. The agreement may be terminated by the Company for cause
or by death of the employee. The agreement also provides for a maximum bonus of
$50,000 for calendar year 1995 and increases $10,000 each year through calendar
year 1998. Twenty-five percent (25%) of the bonus is determined each year by a
subjective evaluation of the Company's Board of Directors. Seventy-five percent
(75%) of the bonus is based on the Company's contract manufacturing business
volume and net income for the applicable year exclusive of the Company's
government electronics business. In order to receive the entire seventy-five
percent (75%) portion, the contract manufacturing business must achieve at least
twenty percent (20%) net income before taxes and a sales volume of at least five
million, eight million, twelve million and sixteen million for calendar years
1995 through 1998, respectively. No bonus is required if net income before taxes
of the contract manufacturing business achieves less than fifteen percent net
income before taxes or the shipment volume is less than sixty percent (60%) of
the shipment goal.
16 EARNINGS PER COMMON SHARE
Earnings per common share are computed by dividing net income by the
weighted average number of shares of common stock outstanding (net of treasury
stock) during each year. Stock options were not included in the calculation of
such per share data as their effect would be immaterial. The 29,680 shares
issued in connection with the purchase of the assets of SCTI were treated as
common stock equivalents as of the purchase date of January 5, 1995. However,
27
<PAGE>
SYMETRICS INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
16 EARNINGS PER COMMON SHARE (CONTINUED)
the number of shares issued in connection with the SCTI acquisition was
actually 26,367. The effect of this change has not been reflected in the
weighted average number of shares as their effect would be immaterial.
All share and per share data, except shares authorized, have been
retroactively adjusted to reflect a three for two stock split effective May 1,
1995.
17 PROFIT-SHARING PLAN
Effective January 1, 1990, the Company established a profit-sharing plan,
as provided for under Section 401(k) of the Internal Revenue Code, whereby all
eligible employees are entitled to defer up to the lesser of $9,500 or fifteen
percent of their salary. Substantially all employees are eligible to participate
in the plan depending on the length of service and attainment of minimum age
requirements. Under the terms of the plan, the Company contributes an amount
equal to fifty percent (50%) of the first six percent (6%) of compensation each
employee elects to defer. At the discretion of the board of directors, the
Company may make additional contributions to the plan or modify the employer
matching contribution percentage. This percentage was increased by the board of
directors to equal seventy-five percent (75%) effective January 1, 1995.
Employer contributions to the plan in 1996, 1995 and 1994 were $57,691, $31,725
and $23,246, respectively.
18 TREASURY STOCK
In September 1989, 36,760 shares of the Company's common stock were
purchased for cash of $82,710 ($2.25 per share) and were being held as treasury
stock at March 31, 1993. During 1994, the Company repurchased 703 shares of
common stock from its stockholders for cash of $1,097 ($1.56 per share).
Effective May 6, 1993, all shares of treasury stock were canceled.
19 POST-RETIREMENT BENEFIT PLANS
The Company does not provide health care benefits or life insurance
coverage for retired employees and therefore the accompanying financial
statements do not include any expense related to such benefits. In December
1990, the Financial Accounting Standards Board issued Statement No. 106 ("SFAS
106") "Employer's Accounting For Post-Retirement Benefits Other Than Pensions,"
which is effective for fiscal years beginning after December 15, 1992. The
statement requires, among other things, that costs of providing post-retirement
benefits other than pensions be expensed over employees' service terms and not
on a pay-as-you-go basis. The Company adopted SFAS 106 during the fiscal year
ended March 31, 1994. The post-retirement benefit expense remains at zero until
such time as a health care or life insurance plan for retired employees is
established.
20 SUBSEQUENT EVENTS
Effective April 1, 1996, the Company acquired approximately 95% of the
outstanding capital stock of American Digital Switching, Inc. ("ADS") of
Melbourne, Florida. ADS is a provider of central office digital switching
systems and support services to telephone companies serving the communications
requirements of rural communities.
The acquisition was accomplished by the exchange of one share of
Symetrics' common stock for every 4.5 shares of ADS common stock (the
"Exchange"). Pursuant to the Exchange, Symetrics exchanged 207,399 shares of
Symetrics common stock, or approximately 13% of the outstanding capital stock of
Symetrics after the Exchange, for 933,334 shares of ADS common stock. Symetrics
intends to complete the acquisition of the remaining outstanding shares of ADS
in the near future. Deferred acquisition costs relating to this acquisition of
$15,739 have been incurred and capitalized as of March 31, 1996.
28
<PAGE>
PART II
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
There were no changes in or disagreements with Accountants on
accounting and financial disclosures required to be disclosed by Item 304 of
Regulation S-K.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information contained on pages 4, 5 and 6 of the Company's
definitive proxy statement dated June 3, 1996 with respect to Directors and
Executive Officers is incorporated herein by reference in response to this item.
ITEM 11. EXECUTIVE COMPENSATION
The information contained on pages 6 and 7 of the Company's
definitive proxy statement dated June 3, 1996 with respect to executive
compensation is incorporated herein by reference in response to this item.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information contained on page 2 of the Company's definitive proxy
statement dated June 3, 1996 with respect to security ownership of certain
beneficial owners and management is incorporated herein by reference in response
to this item.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There was no information required to be disclosed by Item 404 of
Regulation S-K.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
The following financial statements of Symetrics Industries,
Inc. are included in Part II, Item 8:
(a) 1.Financial Statements Page
----
Independent Auditor's Report 13
Balance Sheet 14,15
Statement of Operations 16
Statement of Stockholders' Equity 17
Statement of Cash Flows 18,19
Notes to Financial Statements 20-28
29
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(CONTINUED)
2.Financial Statement Schedules
All schedules have been omitted because they are not applicable, not
required, or because the required information is included in the
financial statements or notes thereto.
3.Exhibits
2.1 Agreement for Purchase and Sale of Assets dated January 5, 1995
by and among Southern Circuit Technologies, Inc., Symetrics
Industries, Inc., Anton Szpendyk and Kenneth R. Derossett
(Incorporated by reference to the Company's Current Report on Form
8-K dated January 5, 1995).
2.2 Stock Purchase Agreement signed April 20, 1996 and effective as
of April 1, 1996 by and among Symetrics Industries, Inc., American
Digital Switching, Inc. , and the Selling Shareholders named in
Schedule 1 thereto (Incorporated by reference to the Company's
Current Report on Form 8-K dated April 20, 1996.
3.1 Articles of Incorporation (Incorporated by reference to the
Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1991).
3.2 By-laws
10.1 Employment Agreement dated February 9, 1994 between the
Company and Dudley E. Garner, Jr.* (Incorporated by reference to
the Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1994).
10.2 Deferred Compensation and Salary Continuation Agreement dated
November 1, 1983 between the Company and Dudley E. Garner, Jr.,
(Incorporated by reference to the Company's Annual Report on Form
10-K for the fiscal year ended March 31, 1991).*
10.3 Symetrics Industries, Inc. Stock Option Plan (Incorporated by
reference to Exhibit A to the Company's Proxy Statement dated May
21, 1993).*
10.4 Employment Agreement dated January 5, 1995 between the Company
and Anton Szpendyk (Incorporated by reference to the Company's
Current Report on Form 8-K dated January 5, 1995).*
23 Consent of Pricher and Company, independent certified public
accountants.
27 Financial Data Schedule - (Electronic filing only)
*Management contract or compensatory plan or arrangement
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K.
30
<PAGE>
SIGNATURES
Pursuant to the requirement of Section 13 or 15(d) 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.
(Registrant)
/s/ Dudley E. Garner, Jr.
-------------------------
Dudley E. Garner, Jr.
President
Principal Executive Officer
Principal Financial &Accounting Officer
Date: June 11, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
----------------------- ---------------------- -------------
/s/Dudley E. Garner, Jr. Chairman, Treasurer, June 11, 1996
------------------------ President and Director --------------
Dudley E. Garner, Jr.
/s/Michael E. Terry Director June 11, 1996
----------------------- --------------
Michael E. Terry
/s/Earl J. Claire Director June 11, 1996
----------------------- --------------
Earl J. Claire
31
COMPOSITE JUNE 11, 1996
16 PAGES
BY - LAWS
---------
AS AMENDED
----------
ARTICLE 1 - IDENTIFICATION
SECTION 1. NAME: The name of the Corporation is
SYMETRICS INDUSTRIES, INCORPORATED
SECTION 2. OFFICES: The principal office of the Corporation shall be in
Melbourne, County of Brevard, State of Florida or other locations as the Board
of Directors may designate. The Corporation may have such other offices, either
within or without the State of Florida as the Board of Directors may designate,
or as the business of the Corporation may require from time to time.
SECTION 3. SEAL: The seal of the Corporation shall; have inscribed thereon the
name of the Corporation, the year of its organization, and the words "Corporate
Seal Florida". The seal may be used by causing it, or a facsimile, to be
impressed or affixed, or otherwise reproduced.
ARTICLE II - STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS: Meetings of the stockholders of the Corporation
may be held at such place, either within or without the State of Florida, as may
be specified in the respective notices, or waivers of notice thereof, or proxies
to represent stockholders thereat.
SECTION 2. ANNUAL MEETINGS: The annual meeting of the stockholders of the
Corporation shall be on the third Tuesday of each year, or any other day within
a thirty day period as selected by the Board of Directors, at 10 o'clock in the
forenoon. The purpose of the annual meeting of the stockholders shall be to
elect directors and to transact such other business as may come before the
meeting. If the election of directors shall not be held on the day designated
herein for the annual meeting of the stockholders, or at adjournment thereof,
the Board of Directors shall cause such election to be held as a special meeting
of the stockholders as soon thereafter as conveniently may be.
1
<PAGE>
SECTION 3. SPECIAL MEETINGS: Special meetings of the stockholders, for any
purpose or purposes, may be called by the Chairman of the Board, and shall be
called by the Chairman of the Board or Secretary of the Corporation at the
request in writing of a majority of the Board of Directors, or at the request in
writing of holders of not less than 50 percent of all the outstanding shares of
the Corporation entitled to vote at the meeting. Such request shall state the
purpose or purposes of the proposed meeting.
SECTION 4. JOINT MEETINGS: Notwithstanding SECTION 2 and 3 of the Article, any
meeting, including the annual meeting of the stockholders may be held as a joint
meeting of the stockholder's and Board of Directors of the Corporation for the
purposes specified in the respective notices, or waivers of notice, thereof, or
proxies to represent stockholders thereat.
SECTION 5. NOTICE OF MEETING: Written or printed notice stating the place, day
and hour of the meeting and, in the case of a special meeting or a special joint
meeting, the purpose or purposes for which the meeting is called, shall be
delivered not less than ten (10) or more than sixty (60) days before the date of
the meeting, either personally or by mail, by or at the direction of the
Chairman of the Board or the Secretary, to each stockholder of record entitled
to vote at such meeting. If mailed, such notice shall be deemed to be delivered
when deposited in the United States mail addressed to the stockholder, at his
address as it appears on the stock transfer books of the Corporation, with
postage prepaid thereon. Waiver by stockholder of notice in writing of a
stockholders' meeting, signed by him, whether before or after the time stated
thereon, shall be equivalent to the giving of such notice. Attendance by a
stockholder, whether in person or by proxy, at a stockholders' meeting shall
constitute a waiver of notice of such meeting.
SECTION 6. QUORUM: A 51% majority of the outstanding shares of the Corporation
entitled to vote, represented in person or by proxy, shall constitute a quorum
at a meeting of stockholders. If less than a majority of the outstanding shares
are represented at a meeting, a majority of the shares so represented may
adjourn the meeting from time to time without further notice. At any adjourned
meeting when a quorum shall be present or represented, any business may be
transacted which might have transacted at the meeting as originally notified.
The stockholders present at a duly constituted meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.
SECTION 7. VOTING: At any meeting of the Shareholders every shareholder having
the right to vote shall be entitled to vote in person, or by proxy. Except as
otherwise provided by law or the certificate of incorporation, each shareholder
of record shall be entitled to one vote for every share of stock standing in his
name on the books of the Corporation. All elections shall be determined by a
plurality vote, and, except as otherwise provided by law or the certificate of
incorporation, all other matters shall be determined by vote of a majority of
the shares present or represented at such meeting and voting on such questions.
2
<PAGE>
SECTION 8. VOTING OF SHARES BY CERTAIN HOLDERS: Shares standing in the name of
another corporation may be voted by such officer, agent or proxy as the By-laws
of such Corporation may prescribe, or in the absence of such provision, as the
Board of Directors of such Corporation may determine.
Shares held by an administrator, executor, guardian or conservator may
be voted by him, either in person or by proxy, without a transfer of such shares
into his name. Shares standing in the name of a trustee may be voted by him,
either in person or by proxy, but no trustee shall be entitled to vote shares
held by him without a transfer of such shares into his name.
Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such a receiver without the transfer thereof into his name if authority so to do
be contained in an appropriate order of the court by which such receiver was
appointed.
A stockholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Shares of its own stock belonging to the Corporation or held by it in a
fiduciary capacity shall not be voted, directly or indirectly, at any meeting,
and shall not be counted in determining the total number of outstanding shares
at any given time.
Shares of stock held under a voting trust agreement shall be voted in
accordance with the instructions, limitations, and conditions contained in such
agreement.
SECTION 9. PROXIES: Every proxy must be executed in writing by the shareholder
or by his attorney- in-fact. No proxy shall be valid after the expiration of
eleven (11) months from the date thereof, unless otherwise provided in the
proxy. Every proxy shall be revocable at the pleasure of the shareholder
executing it , except in those cases where an irrevocable proxy is permitted by
law.
ARTICLE III - BOARD OF DIRECTORS
--------------------------------
SECTION 1. GENERAL POWERS: The business and affairs of the Corporation shall be
managed by its Board of Directors.
SECTION 2. NUMBER, QUALIFICATION AND TENURE: The initial number of Directors
which shall constitute the entire Board of Directors shall be seven (7). At
least one of such directors shall be a resident of the State of Florida and a
citizen of the United States. The number of directors may be altered by
resolution adopted by a vote of the majority of the entire Board of Directors or
the stockholders, but in no event shall the number of directors be more than
fifteen (15) or less than three (3).
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Directors shall be elected at the annual meeting of stockholders,
except as provided in SECTION 4 of the ARTICLE III, and each director shall be
elected to serve until his successor has been elected and has qualified.
The directors of the Corporation shall be divided into three classes,
which are hereby designated Class I, Class II, and Class III. Each of such
classes shall consist of two directors, except Class I, which shall consist of
three directors. The term of office of the initial Class I directors shall
expire at the next annual meeting of stockholders; that of the initial Class II
directors at the second meeting of Stockholders: and that of the Class III
directors at the third succeeding annual meeting of stockholders. At each annual
meeting after the initial classification of directors, directors to replace
those whose terms expire at such annual meeting shall be elected to hold office
until the third succeeding annual meeting. If the number of directors is
changed, any increase or decrease shall be apportioned among the classes so as
to maintain the number of directors in each class as nearly equal as possible.
SECTION 3. RESIGNATION; REMOVAL: Any director may resign at any time. The Board
of Directors may, by a majority vote of all directors then in office, remove a
director, except that such director is also Chairman of the Board in which event
a 75 percent majority shall be required, either with or without cause.
SECTION 4. VACANCIES: Any vacancy on the Board of Directors that results from an
increase in the number of directors may be filled by a majority of the Board of
Directors then in office, any other vacancy occurring in the Board of Directors
may be filled by a majority of the directors then in office, although less than
a quorum or by the sole remaining director. Any director elected to fill a
vacancy not resulting from an increase in the number of directors shall have the
same remaining term as that of his predecessor. Any director elected by the
Board to fill a vacancy resulting from an increase in the number of directors
shall serve until the next annual meeting of stockholders.
In the event the directors remaining in office shall be unable, by majority
vote, to fill such vacancy within thirty (30) days of the occurrence thereof,
the Chairman of the Board or the Secretary may call a special meeting of the
stockholders at which such vacancy shall be filled.
ARTICLE IV - MEETING OF THE BOARD
---------------------------------
SECTION 1. PLACE OF MEETINGS: Meetings of the Board of Directors of the
Corporation, whether annual, regular or special, may be held either within or
without the State of Florida.
SECTION 2. ANNUAL MEETINGS: The Board of Directors shall meet each year either
immediately after the annual meeting of the stockholders or at a joint annual
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meeting of the stockholders and directors at a place where such meeting of the
stockholders has been held, for the purpose of election of officers, and
consideration of any other business that may properly be brought before the
meeting. No notice of any kind to either old or new members of the Board of
Directors for such annual meeting or joint annual meeting shall be necessary.
SECTION 3. REGULAR MEETINGS: Regular meetings of the Board of Directors may be
held without notice at such time and place as shall from time to time be
determined by the Board.
SECTION 4. SPECIAL MEETINGS: Special meetings of the Board of Directors may be
called by the Chairman of the Board or the Secretary on two (2) days notice to
each director, either personally or by mail or by telegram; special meetings
shall be called by the Chairman or the Secretary in like manner and on like
notice on written request of two (2) directors. Notice of any special meeting of
the Board of Directors may be waived in writing, signed by the person or persons
entitled to such notice, whether before or after the time stated therein, and
shall be equivalent to the giving of such notice. Attendance of a director at a
special meeting shall constitute a waiver of notice of such special meeting,
except where a director attends a meeting for the express purpose of objecting
to the transaction of any business because such special meeting is not lawfully
convened.
SECTION 5. QUORUM: At all meetings of the Board of Directors, a majority of the
entire Board shall be necessary to constitute a quorum for the transaction of
business and the vote of the majority of directors present at the time of the
vote, if a quorum is present, shall be the act of the Board of Directors, except
that, when considering and acting upon the proposed sale, lease exchange, or
other disposition of all, or substantially all, of the assets of the
Corporation, or the merger or consolidation of the Corporation with or into any
other corporation, 70 percent of the entire Board shall be necessary to
constitute a quorum for the transaction of such business and the vote of 51
percent of the entire Board of Directors, shall be necessary to constitute the
action taken at such meeting the act of the Board of Directors.
SECTION 6. COMPENSATION: By resolution of the Board of Directors , the directors
may be paid their expenses, if any, of attendance at each meeting of the Board
of Directors, and may be paid a fixed sum for attendance at each meeting of the
Board of Directors, or a stated salary as a director. No such payment shall
preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor.
SECTION 7. EXECUTIVE COMMITTEE: The Board may, by resolution passed by a
majority of the whole Board, designate two (2) or more of its members which one
shall be the Chairman of the Board to constitute an executive committee, which
committee shall have and may exercise any or all of the powers of the Board of
Directors in the management of the business and affairs of the Corporation.
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SECTION 8. WRITTEN CONSENT: Any action of the Board of Directors or of the
Executive Committee, which is required or permitted to be taken at a meeting,
may be taken without a meeting if written consent to the action signed by all of
the members of the Board or of the Executive Committee, as the case may be, is
filed in the minutes of the proceedings of the Board or Committee prior to the
taking of such action.
ARTICLE V - THE OFFICERS
------------------------
SECTION 1. NUMBER: The officers of the Corporation shall consist of a Chairman
of the Board, and a President both of whom shall also be Directors, a Secretary
and a Treasurer, each of whom shall be elected by a majority of the Board of
Directors; further such Vice Presidents and other officers, assistant officers
and agents as may be deemed necessary by the President and approved by the Board
of Directors. Any person may hold two or more offices, except that the President
shall not also be the Secretary or Assistant Secretary.
SECTION 2. GENERAL DUTIES: All officers, assistant officers, and agents of the
Corporation, as between themselves and the corporation, shall have such
authority and perform such duties in the management of the Corporation as may be
provided in these By-laws, or as may be determined by the resolutions of the
Board of Directors not inconsistent with these By-laws.
SECTION 3. TERM OF OFFICE; REMOVAL: All officers shall be elected by the Board
of Directors and shall hold office for such term as may be prescribed by the
Board. Any officer elected or appointed by the Board may be removed with or
without cause at any time by the Board.
SECTION 4. RESIGNATION: Any officer may resign at any time by giving written
notice to the Board of Directors, Chairman of the Board, President or Secretary.
Such resignation shall take effect at the time specified therein, and unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
SECTION 5. VACANCIES: Any vacancy in any office because of death, resignation,
removal, or any other cause may be filled by the Board of Directors for the
unexpired portion of the term.
SECTION 6. THE CHAIRMAN OF THE BOARD: The Chairman of the Board shall preside at
all meetings of the Stockholders and the Board of Directors. He shall have other
such duties as may be prescribed by the Board of Directors.
SECTION 7. THE PRESIDENT: The President shall be the chief executive officer of
the Corporation and shall have the general control of the affairs of the
Corporation, he may execute contracts, notes, loans, evidence of indebtedness,
deeds and mortgages in the name of the Corporation, he may appoint and discharge
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agents and employees and fix the compensation of such agents and employees. The
Board of Directors may augment, alter or prescribe any and all duties of the
President.
SECTION 6. THE VICE PRESIDENT: Each Vice President shall report to the President
and have the powers and duties incident to the office of Vice President and
shall have such other powers and duties as may be prescribed from time to time
by the President. In the event of incapacity of the President, a Vice President
designated by the Board of Directors shall perform such duties of the President
as the Board of Directors shall prescribe.
SECTION 9. THE SECRETARY: The Secretary shall attend all sessions of the Board
of Directors and all meetings of the Stockholders and record all votes and
minutes of all proceedings in a book to be kept for that purpose, and shall
perform like duties for the Executive Committee when required. He shall give or
cause to be given notice to the members of the Board of Directors of all
meetings, and shall perform such other duties as may be prescribed by the Board
or the President under whose supervision he shall be. The Secretary shall keep
in safe custody the seal of the Corporation.
SECTION 10. THE TREASURER: The Treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation, and shall deposit all
monies and other valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by the Board of Directors.
He shall disburse the funds of the Corporation, taking proper vouchers for such
disbursements, and shall render to the President and Directors at the regular
meetings of the Board, or whenever they may require it, an account of all his
transactions as Treasurer and of the financial condition of the Corporation. He
shall give the Corporation a bond if required by the Board of Directors in a sum
and with one or more sureties satisfactory to the Board, for the faithful
performance of the duties of his office, and for the restoration to the
Corporation in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the Corporation. The
Treasurer shall also maintain adequate records of all assets, liabilities and
transactions of the Corporation and shall have adequate audits thereof currently
and regularly made.
In conjunction with other officers, he shall initiate and enforce measures and
procedures whereby the business of this Corporation shall be conducted with the
maximum safety, efficiency and economy. He shall attend all meetings of the
Board of Directors and shall report to the President or the Board of Directors
as the Board may prescribe. His duties and powers shall extend to all subsidiary
corporations and, so far as the President may deem practicable, to all
affiliated corporations.
SECTION 11. DELEGATION OF DUTIES: In the case of the absence of an officer of
the Corporation, or for any other reason that the Board may deem sufficient, the
Chairman of the Board may delegate for the time being the powers or duties, or
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any of them, of such officers to any other officer or officers, or to any
director or directors, provided a majority of the entire Board concurs therein.
SECTION 12. SALARIES: The salary of the officers shall be fixed from time to
time by the Board of Directors. No officer shall be prevented from receiving
such salary by reason of the fact that he is also a Director of the Corporation.
ARTICLE VI - CONTRACTS, LOANS, CHECKS AND DEPOSITS
--------------------------------------------------
SECTION 1. EXECUTION OF DEEDS, CONTRACTS, ETC.: Except as otherwise provided by
the Board of Directors, all deeds and mortgages made by the Corporation and all
other written contracts and agreements to which the Corporation shall be a party
may be executed on behalf of the Corporation by the President and may be
attested and the corporate seal affixed thereto by the Secretary or Assistant
Secretary. The Board of Directors may authorize the execution of deeds,
mortgages and all other written contracts and agreements to which the
Corporation may be a party by such other officers, assistant officers or agents,
as may be selected by the President from time to time and with such limitations
and restrictions as authorization may prescribe.
SECTION 2. LOANS: No Loans shall be contracted on behalf of the Corporation and
no evidence of indebtedness shall be issued in its name unless authorized by
resolution of the Board of Directors. Such authority may be generally given or
confined to specific instances.
SECTION 3. CHECKS, DRAFTS, ETC.: All checks, drafts or orders for the payment of
money, notes or other evidences of indebtedness issued in the name of the
Corporation shall be signed by such officer or officers or agent or agents of
the Corporation and in such manner as shall from time to time be determined by
resolution of the Board of Directors.
SECTION 4. DEPOSITS: All funds of the Corporation not otherwise employed shall
be deposited from time to time to the credit of the Corporation in such banks,
trust companies or other depositories as the Board of Directors may select.
ARTICLE VII - CERTIFICATES FOR SHARES AND THEIR TRANSFER
--------------------------------------------------------
SECTION 1. CERTIFICATES FOR SHARES: Every Stockholder shall be entitled to a
certificate or certificates of the common stock of the Corporation in such form
as may be prescribed by the Board of Directors, duly numbered and sealed with
the corporate seal of the Corporation and setting forth the number and kind of
shares. Such certificates shall be signed by the President or a Vice President
and the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant
Secretary, and sealed with the seal of the Corporation. The seal may be a
facsimile, engraved or printed. Where, however, such certificate is signed by a
transfer agent or any assistant transfer agent other than the Corporation
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itself, or by a transfer clerk acting in behalf of the Corporation and a
registrar, the signatures of any of the above named officers may be facsimile.
In case any officer who has signed, or whose facsimile signature has
been used on a certificate, has ceased to be an officer before the certificate
has been delivered, such certificates may, nevertheless, be adopted and issued
and delivered by the Corporation as through the officer who signed such
certificate or certificates or whose facsimile signature or signatures shall
have been used thereon had not ceased to be such officer of the Corporation.
SECTION 2. LOST CERTIFICATES: The Board of Directors may direct a new share
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate to be lost or destroyed. When authorizing such issue of a new
certificate or certificates, the Board of Directors may, in its discretion and
as a condition precedent to the issuance thereof, require the owner of such lost
or destroyed certificate or certificates, or his legal representative, to give
the Corporation a bond in such sum as it may direct as indemnity against any
claim that may be made against the Corporation with respect to the certificate
alleged to have been lost or destroyed.
SECTION 3. REGISTRATION OF TRANSFER: Upon surrender to the Corporation or any
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation or such transfer agent to
issue a new certificate to the person entitled thereto, cancel the old
certificate and record the transaction upon its books.
SECTION 4. REGISTERED STOCKHOLDERS: Except as otherwise provided by law, the
Corporation shall be entitled to recognize the exclusive right of a person
registered on its books as the owner of stock to receive dividends or other
distributions, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of stock, and shall
not be bound to recognize any equitable or legal claim to or interest in such
stock on the part of any other person.
SECTION 5. RECORD DATE: For the purpose of determining the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, or to express consent to or dissent from any proposal without a
meeting, or for the purpose of determining stockholders entitled to receive
payment of any dividend or the allotment of any rights, or for the purpose of
any other action affecting the interests of stockholders, the Board of Directors
may fix, in advance, a record date. After such record date has been fixed,
notice that such day has been fixed shall be published in the city, town or
county where the principal office of the Corporation is located and in each city
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or town where an agency for transfer of stock is maintained. Such date shall not
be more than sixty (60) nor less than ten (10) days before the date of any such
meeting, nor more than fifty (50) days prior to any other action.
In each such case, except as otherwise provided by law, only such
persons as shall be stockholders of record on the date so fixed shall be
entitled to notice of, and to vote at, such meeting and any adjournment thereof,
or to express such consent or dissent, or to receive payment of such dividend,
or such allotment of rights, or otherwise to be recognized as stockholders for
the related purpose, notwithstanding any registration of transfer of shares on
the books of the Corporation after any such record date so fixed.
ARTICLE VIII - GENERAL PROVISIONS
---------------------------------
SECTION 1. DIVIDENDS: Subject to the applicable provisions of the certificate of
incorporation, if any, dividends upon the outstanding shares of the Corporation
may be declared by the Board of Directors at any regular or special meeting,
pursuant to law and may be paid in cash, in property, or in shares of the
Corporation.
SECTION 2. RESERVES: Before payment of any dividend, there may be set aside out
of any funds of the Corporation available for dividends such sums as the Board
of Directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for such other
purpose as the Board shall think conducive to the interest of the Corporation,
and the Board may modify or abolish any such reserve in the manner in which it
was created.
SECTION 3. ANNUAL STATEMENT: The Board of Directors shall present at each annual
meeting, and at any special meeting of the stockholders when called for by vote
of the stockholders, a full and clear statement of the business and condition of
the Corporation.
SECTION 4. INSTRUMENTS UNDER SEAL: All deeds, bonds, mortgages, contracts, and
other instruments requiring a seal may be signed in the name of the Corporation
by the President or by any other officer authorized to sign such instrument by
the President or the Board of Directors.
SECTION 5. FISCAL YEAR: The fiscal year of the Corporation shall be fixed by
resolution of the Board of Directors.
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ARTICLE IX CORPORATE INDEMNIFICATION PLAN
-----------------------------------------
SECTION 1. DEFINITIONS. For purposes of this Article IX, the following
terms shall have the meanings hereafter ascribed to them:
(a) "Corporation" includes, as the context may require, Symetrics
Industries, Inc., any resulting corporation and any constituent
corporation (including any constituent of a constituent) absorbed
in a consolidation or merger, so that any person who is or was a
director or officer of a constituent corporation, or is or was
serving at the request of a constituent corporation as a director
or officer of another corporation, partnership, joint venture,
trust or other enterprise, is in the same position with respect to
the resulting or surviving corporation as he would have been with
respect to such constituent corporation if its separate existence
had continued.
(b) "Expenses" include, without limitation, all costs, expenses,
attorneys' fees, and paralegal expenses incurred by the director
or officer in, for or related to the Proceeding or in connection
with investigating, preparing to defend, defending, being a
witness in or participating in the Proceeding, including such
costs, expenses, attorneys' fees and paralegal expenses incurred
on appeal. Such attorneys' fees shall include without limitation,
(a) attorneys' fees incurred by the director or officer in any and
all judicial or administrative proceedings, including appellate
Proceedings, arising out of or related to the Proceedings; (b)
attorneys' fees incurred in order to interpret, analyze or
evaluate that person's rights and remedies in the proceedings or
under any contracts or obligations which are the subject of such
Proceeding: and (c) attorneys' fees to negotiate with counsel for
any claimant, regardless of whether formal legal action is taken
against him.
(c) "Liability" includes obligations to pay a judgment, settlement,
penalty, fine (including an excise tax assessed to any employee
benefit plan), and Expenses actually and reasonably incurred with
respect to a Proceeding.
(d) "Not Opposed to the Best Interest of the Corporation" describes
the actions of a person who acts in good faith and in a manner he
reasonably believes to be in the best interest of the Corporation
or the participants and beneficiaries of an employee benefit plan,
as the case may be.
(e) "Other Enterprises" include employee benefit plans.
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(f) "Proceeding" includes any threatened, pending, or complete action,
suit, or other type of proceeding, whether civil, criminal,
administrative, or investigative and whether formal or informal to
which the person is a party by reason of the fact that he is or
was a director or officer of the Corporation or is now or was
Serving at the Request of the Corporation as a director or officer
of another corporation, partnership, joint venture, trust or Other
Enterprise.
(g) "Serving at the Request of the Corporation" includes any service
as a director or officer of the Corporation that imposes duties on
such persons, including duties relating to an employee benefit
plan and its participants or beneficiaries.
(h) The terms "officer" or "director" as used herein shall include any
person serving in such capacity or who has served in such
capacity.
SECTION 2. INDEMINIFICATION: The Corporation shall indemnify to the
fullest extent permitted by law and shall advance Expenses therefor to any
director or officer who was or is a party to any Proceeding, against Liability
incurred in connection with such Proceeding, including any appeal thereof;
provided, however, that no indemnification under this SECTION 2 shall be made:
(a) If a judgment or other final adjudication established that the
person's actions or omissions to act were material to the cause of
action adjudicated and such actions or omissions constitute
either:
(1)a violation of the criminal law, unless the director or
officer had reasonable cause to believe his conduct was
lawful or had no reasonable cause to believe his conduct
was unlawful;
(2)a transaction from which the director or officer derived
an improper personal benefit;
(3)a circumstance under which the Liability provisions of
Fla. Stat.ss.607.144 are applicable; or
(4)willful misconduct or a conscious disregard for the best
interest of the Corporation in a Proceeding by or in the
right of the Corporation to procure a judgment in its
favor in a Proceeding by or in the right of a shareholder.
(b) Unless authorized in the specific case by either:
(1)the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to such
Proceeding;
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(2)if such a quorum is not obtained or, even if obtained, a
majority vote of a committee duly designated by the Board
of Directors (in which directors who are parties may
participate) consisting solely of two or more directors
not at the time parties to the Proceeding;
(3)independent legal counsel:
(i) selected by the Board of Directors prescribed in
paragraph (b) (1) or the committee prescribed in
paragraph (b) (2);
(ii) if a quorum of the directors cannot be obtained
for paragraph (b) (1) and the committee cannot be
designated under paragraph (b) (2) selected by
majority vote of the full board of directors (in
which directors who are parties may participate);
or
(4)the shareholders by a majority vote of a quorum
consisting of shareholders who were not parties to such
Proceeding or, if no such quorum is obtainable, a majority
vote of shareholders who were not parties to such
Proceeding.
(c) Upon determination that:
(1)in a Proceeding other than an action by, or in the right
of, the Corporation, the person did not act in good faith
and in a manner he reasonable believed to be in, or Not
Opposed to, the Best Interests of the Corporation and,
with respect to any criminal action or Proceeding, had
reasonable cause to believe his conduct was unlawful;
(2)in a Proceeding by, or in the right of, the Corporation
to procure a judgment in its favor, the person did not act
in good faith and in a manner he reasonable believed to be
in, or Not Opposed to, the Best Interests of the
Corporation; provided, further, that the parties described
in SECTIONS 2 (b) (1) - (4) shall not authorize any
indemnification in such a Proceeding if the person has
been adjudged to be liable therein. The foregoing
provision shall not preclude or limit indemnification
under the mandatory indemnification provision of SECTION 3
or as directed by the court pursuant to SECTION 4;
(3)for purposes of making the determinations set forth in c
(1) and c (2) above, the fact that a Proceeding was
terminated by a judgment, order, settlement or conviction
or upon plea of nolo contendere or its equivalent shall
not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably
believed to be in, or Not Opposed to, the Best Interests
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of the Corporation or, with respect to any criminal action
or Proceeding, that the person has reasonable cause to
believe his conduct was unlawful.
SECTION 3. SUCCESSFUL DEFENSE. In all events and notwithstanding the
conditions and qualifications set forth in SECTION 2 above, the Corporation
shall indemnify a director or officer who has been successful on the merits or
otherwise in defense of any Proceeding or in defense of any claim, issue, or
matter therein, against Expenses actually and reasonably incurred by him in
connection therein.
SECTION 4. COURT ORDER INDEMNIFICATION. Notwithstanding the failure of
the Corporation to provide indemnification due to a failure to satisfy the
conditions of SECTION 2 (a) (1) - (4) and despite any contrary determination of
the Board or of the shareholders in the specific case, a director or officer of
the Corporation who is or was a party to a Proceeding may apply for
indemnification or advancement of Expenses, or both, to the court conducting the
proceeding, to the circuit court, or to another court of competent jurisdiction,
and such court may order indemnification and advancement of Expenses, including
Expenses incurred in seeking court-ordered indemnification or advancement of
Expenses, if it determines that:
(a) The director or officer is entitled to mandatory indemnification
under SECTION 3, in which case the court shall also order the
Corporation to pay such person reasonable Expenses incurred in
obtaining court-ordered indemnification or advancement of Expenses;
(b) The director or officer is entitled to indemnification or advance-
ment of Expenses, or both, under SECTION 2; or
(c) The directors or officer is fairly and reasonably entitled to
indemnification or advancement of Expenses, or both, in view of all the
relevant circumstances, regardless of whether such person met the
standards of conduct set forth in SECTION 2 (a) (1) - (4) or SECTION 2
(b) (1) - (4).
SECTION 5. AUTHORIZATION. If a judgment or other final adjudication
establishes that the person's actions or omissions to act were material to the
cause of action adjudicated and such actions or omission constitute a violation
of the standards set forth in SECTION 2 (a) (1) - (4), then the Corporation
shall cause one or more of the meetings described in SECTION 2 (b) (1) - (4) to
be held for the purpose of determining indemnification.
SECTION 6. ADVANCEMENT OF EXPENSES. Expenses incurred by an officer or
director in defending a Proceeding shall be paid by the Corporation in advance
of the final disposition of such Proceeding upon receipt of an undertaking by or
on behalf of such director or officer to repay such amount if he is ultimately
found not to be entitled to indemnification by the Corporation pursuant to this
ARTICLE IX. Expenses incurred by other employees or Agents may be paid in
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advance upon such terms or consideration that the Board of Directors deems
appropriate.
SECTION 7. CONTINUING INDEMNIFICATION. Indemnification and advancement
of Expenses as provided in this ARTICLE shall continue as, unless otherwise
provided when such indemnification and advancement of Expenses was authorized or
ratified, to a person who has ceased to be a director or officer and shall inure
to the benefit of the heirs, executors and administrators of such person.
SECTION 8. LIABILITY INSURANCE. A Corporation shall have the power to
purchase and maintain insurance on behalf of any person who is or was a director
or officer of the Corporation or is or was serving at the request of the
Corporation as a director or officer of another corporation, partnership, joint
venture, trust, or other enterprise against any liability asserted against him
and incurred by him in any such capacity or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provisions of this ARTICLE IX.
SECTION 9. STATEMENT OF SHAREHOLDERS'. If any Expenses or other amounts
are paid by way of indemnification other than by court order or action by the
shareholders or by an insurance carrier pursuant to insurance maintained by the
Corporation, the Corporation shall, not later than the time of delivery to the
shareholders of written notice of the next annual meeting of shareholders,
unless such meeting is held within 3 months from the date of such payment, and,
in any event within 15 months from the date of such payment, deliver either
personally or by mail to each shareholder of record at the time entitled to vote
for the election of directors a statement specifying the persons paid, the
amounts paid, and the nature and status at the time of such payment of the
litigation or threatened litigation.
SECTION 10. EMPLOYEES AND AGENTS. The Board of Directors may authorize
indemnification or advancement of expenses in favor of other employees or agents
upon such terms or conditions as the Board of Directors may deem appropriate
under the circumstances, and may enter into agreement thereof with such
employees and agents.
SECTION 11. INDEMNIFICATION HEREUNDER IN ADDITION TO OTHER RIGHTS. The
rights of an officer or director hereunder shall be in addition to any other
rights such person may have under the Corporation's Articles of Incorporation or
the Florida General Corporation Act or otherwise, and nothing herein shall be
deemed to diminish or otherwise restrict such person's right to indemnification
under any such other provision. It is the intent of this By-law to provide the
maximum indemnification possible under the applicable law. To the extent
applicable law or the Articles of Incorporation of the Corporation, as in effect
on the date hereof or at any time in the future, permit greater indemnification
than is provided for in this By-law, the parties hereto agree that Indemnitee
shall enjoy by this agreement the greater benefits so afforded by such law or
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provision of the Articles of Incorporation, and this By-law and the exceptions
to indemnification set forth in Section 2 (a), to the extent applicable, shall
be deemed amended without any further action by the Corporation to grant such
greater benefits.
SECTION 12. INDEMNIFICATION TO THE FULLEST EXTENT OF THE LAW. This
Article IX shall be interpreted to permit indemnification to the fullest extent
permitted by law. If any part of this ARTICLE shall be found to be invalid or
ineffective in any action, suit or Proceeding, the validity and effect of the
remaining part thereof shall not be affected. The provisions of this Article IX
shall be applicable to all Proceedings commenced after the adoption hereof,
whether arising from acts or omissions occurring before or after its adoption.
SECTION 13. LIMITATIONS. In no event shall the Corporation indemnify an
officer or director against any Liability or advance Expenses arising out of or
relating to a Proceeding brought by, or behalf of, or for the benefit of, such
officer or director against the Corporation.
ARTICLE X - AMENDMENT
---------------------
SECTION 1. POWER TO AMEND. The Board of Directors shall have power to
adopt or amend By-laws not inconsistent with any By-laws that may have been
adopted by the stockholders.
ARTICLE XI - CONTROL SHARE STATUTE DOES NOT APPLY
-------------------------------------------------
SECTION 1. SECTION 607.109, Florida Statutes, does not apply to control
share acquisitions of shares of the Corporation.
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Symetrics Industries, Inc.
We hereby consent to the incorporation by reference in the October 4,
1993 Registration Statement on Form S-8 of Symetrics Industries, Inc. of our
report dated May 1, 1996, which appears on page 12 of this annual report on Form
10K for the Year ended March 31, 1996.
PRICHER AND COMPANY
Orlando, Florida
June 7, 1996
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF SYMETRICS INDUSTRIES INC. FOR THE TWELVE MONTHS ENDED
MARCH 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
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<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> MAR-31-1996
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<SECURITIES> 0
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0
0
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<INCOME-TAX> 1,051
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