FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For quarter ended JUNE 30, 1996
-------------
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________to__________________
Commission file number 0-4025
-------
SYMETRICS INDUSTRIES, INC.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-0954868
---------------------- ----------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
557 N. Harbor City Boulevard, Melbourne, Florida 32935
------------------------------------------------------
(Address of principal executive offices)
(407) 254-1500
--------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
---- ----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at August 14, 1996
---------------------------- ------------------------------
(Common stock, $.25 par value) 1,609,047
<PAGE>
PART 1 - FINANCIAL INFORMATION
SYMETRICS INDUSTRIES, INC. AND SUBSIDARY
CONDENSED CONSOLIDATED BALANCE SHEET
ASSETS
JUNE 30 MARCH 31
1996 1996
---- ----
(UNAUDITED) (DERIVED FROM
AUDITED
FINANCIAL
STATEMENTS)
Current assets:
Cash $ 901,071 $ 1,657,905
Receivables 1,940,839 1,581,428
Costs and estimated earnings in
excess of billings on uncompleted
contracts 4,512,725 2,931,069
Inventory 604,882 635,893
Mortgage receivable 450,000 450,000
Other Assets 91,241 65,898
----------- -----------
Total current assets 8,500,758 7,322,193
----------- -----------
Property, plant and equipment 3,585,915 3,336,076
Less accumulated depreciation 1,683,451 1,572,585
----------- -----------
1,902,464 1,763,491
----------- -----------
Deferred income taxes 313,282 325,453
----------- -----------
Other assets:
Other 523,939 94,784
Goodwill, less accumulated
amortization 628,213 580,577
----------- -----------
1,152,152 675,361
----------- -----------
Total assets $11,868,656 $10,086,498
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 1,000 $ 1,000
Current maturities of long-term
debt 30,724 25,436
Accounts payable and accrued
expenses 2,831,110 2,098,788
Billings in excess of costs and
estimated earnings on uncompleted
contracts 347,616 7,869
Income taxes payable 260,131 452,239
----------- -----------
Total current liabilities 3,470,581 2,585,332
----------- -----------
Deferred compensation 492,397 479,439
Long-term debt, less current maturities 976,607 568,363
----------- -----------
1,469,004 1,047,802
----------- -----------
Shareholders' equity
Common stock, $.25 par value 412,095 398,824
Additional paid-in capital 2,141,441 2,120,025
Retained earnings 4,375,535 3,934,515
----------- -----------
Total shareholders' equity 6,929,071 6,453,364
----------- -----------
Total liabilities and shareholders' equity $11,868,656 $10,086,498
----------- -----------
See accompanying notes to the condensed consolidated financial statements
-2-
<PAGE>
SYMETRICS INDUSTRIES, INC. AND SUBSIDARY
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
THREE MONTHS ENDED
------------------
JUNE 30 JUNE 30
------- -------
1996 1995
Contract revenue $ 6,879,405 $ 7,074,070
Costs and expenses
Costs of revenues earned 5,292,269 5,306,192
General and administrative 819,000 677,269
Research and development 83,920 340,624
--------- ---------
6,195,189 6,324,085
Income from operations 684,216 749,985
Other income (expense)
Rental and other income 9,618 9,225
Other expense (4,317) (52,320)
------ -------
5,301 (43,095)
------ -------
Interest income 43,483 34,982
Interest expense (15,957) (10,226)
------- -------
27,526 24,756
-------
Income before taxes 717,043 731,646
Income (taxes) (276,023) (262,742)
-------- --------
Net income $ 441,020 $ 468,904
======= =======
Earnings per share $ 0.28 $ 0.30
======= =======
Weighted average number
of shares outstanding 1,601,370 1,579,966
See accompanying notes to the condensed consolidated financial statements.
-3-
<PAGE>
SYMETRICS INDUSTRIES, INC. AND SUBSIDARY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED
JUNE 30 JUNE 30
1996 1995
---- ----
Cash provided by (used in)
Operations
Net income $ 441,020 $ 468,904
Adjustments for non cash charge 146,524 98,099
Changes in assets and liabilities (1,537,471) 52,008
----------- -----------
Net cash provided by (used in) (949,927) 619,011
----------- -----------
operations
Investing
Capital expenditures (249,839) (270,173)
----------- -----------
Cash used for investing (249,839) (270,173)
----------- -----------
Financing
Proceeds from stock options 34,688 7,875
Borrowing (repayment) of long-term debt 408,244 (316,108)
----------- -----------
Cash provided by (used) for financing 442,932 (308,233)
----------- -----------
Increase (decrease) in cash (756,834) 40,605
Cash beginning of period 1,657,905 318,138
----------- -----------
Cash end of period $ 901,071 $ 358,743
=========== ===========
Cash payments for interest $ 16,556 $ 10,226
Cash payments for income taxes $ 727,846 $ 729,445
See accompanying notes to the condensed consolidated financial statements
- 4 -
<PAGE>
SYMETRICS INDUSTRIES, INC. AND SUBSIDARY
FORM 10-Q
QUARTER ENDED JUNE 30, 1996
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
0 BASIS OF PRESENTATION
---------------------
* The financial statements contained herein are unaudited but, in the opinion of
management, reflect all adjustments, consisting of normal recurring adjustments,
which are necessary to a fair statement of the results for the periods ended
June 30, 1996 and 1995. The results of operations for the period ended June 30,
1996 are not necessarily indicative of the results to be expected for the full
fiscal year.
* Refer to the Company's Form 10-K for the year ended March 31, 1996 as filed
with the Securities and Exchange Commission on June 14, 1996 for a description
of accounting policies which have been continued without change. Refer to the
Form 8-K filed by the Company on May 3, 1996 as amended by the 8-K/A filed on
July 5, 1996 regarding the acquisition of American Digital Switching effective
April 1, 1996. Also refer to notes included in the financial statements for
additional details of the Company's financial condition, results of operations
and changes in financial position.
* Inventories stated on the balance sheet are raw materials, work in process and
finished assemblies primarily for Symetrics' subsidiary American Digital
Switching for future shipments of existing orders and to provide field service
support to their customers. Refer to the Company's Form 10-K for the year ended
March 31, 1996 for discussion of costs incurred on uncompleted contracts.
0 ACQUISTION DURING THE QUARTER ENDED JUNE 30, 1996
-------------------------------------------------
Effective April 1, 1996, Symetrics acquired 933,334 (approximately 95%) of
the outstanding common stock of American Digital Switching, Inc. ("ADS") in
exchange for 207,399 shares of Symetrics or approximately 13% of the outstanding
capital stock of Symetrics after the exchange. The transaction has been
accounted for under the pooling- of-interest method of accounting. Accordingly,
the condensed consolidated statements of income and cash flows for the three
months ended June 30, 1996 include the combined operations of the Companies from
April 1, 1996. The condensed consolidated balance sheet as of March 31, 1996
includes the combined assets and liabilities of the two companies and is derived
from separate audited financial statements of the Companies at that date.
Similarly, the condensed consolidated statements of income and cash flows for
the three months ended June 30, 1995, presented herein for comparative purposes,
includes the combined operations of the Companies as if the combination has
occurred at April 1, 1995. Such statements were derived from the unaudited
interim financial statements of the separate Companies. The weighted average
number of common shares outstanding used in the computation of earnings per
share for the three months ended March 31, 1996 and 1995 includes the shares
issued by Symetrics in the exchange.
- 5 -
<PAGE>
SYMETRICS INDUSTRIES, INC. AND SUBSIDARY
FORM 10-Q
QUARTER ENDED JUNE 30, 1996
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
For the three months ended June 30, 1996 consolidated contract
revenues for Symetrics Industries, Inc. and Subsidiary, American Digital
Switching were $6,879,405, a 2.8% decrease compared to the $7,074,070 for the
corresponding period last year. For the current three month period, a
consolidated net income of $441,020, or $0.28 per share is reported compared to
$468,904, or $0.30 per share, a year ago. Working capital increased by $293,316,
or 6.2%, for the three months. The backlog closed at $13.4 million, as compared
to $13.6 million at June 30, 1995. These comparisons reflect the pro-forma
consolidation of the Company's financial statements with respect to the American
Digital Switching (ADS) acquisition, effective April 1, 1996. Contract revenues,
net income, and earnings per share for the periods ended June 30, 1996 and June
30, 1995, by Symetrics Industries and its subsidiary ADS were:
Three Months Ended
June 30, 1996 June 30, 1995
Contract revenues
Symetrics Industries $ 6,394,565 $ 5,824,139
American Digital Switching $ 484,840 $ 1,249,931
---------- ---------
Total $ 6,879,405 $ 7,074,070
Net income (loss)
Symetrics Industries $ 484,812 $ 447,344
American Digital Switching $ (43,792) $ 21,560
------- --------
Total $ 441,020 $ 468,904
Earnings (loss) per share
Symetrics Industries $ 0.30 $ 0.29
American Digital Switching $ (0.02) $ 0.01
------ ----
Total $ 0.28 $ 0.30
For the three months ended June 30, 1996 contract revenues for Symetrics
Industries were $6,394,565, a 9.8% increase over the $5,824,139 for the
corresponding period last year. Revenues of Symetrics Industries are generated
by its three divisions: Defense Products, Contract Manufacturing and Computer
Telephony Systems. The increased contract revenues of Symetrics Industries
resulted primarily from the growth in the business volume of its Contract
Manufacturing Division (CMD). The increased net income for Symetrics Industries
is primarily due to CMD's increased business volume.
-6-
<PAGE>
Contract revenues for ADS were $484,840 for the current three months,
down significantly from the $1,249,931 for the corresponding period last year.
Last year ADS was completing a large contract for the Enhanced Processor
subsystem of the Centura TM Central Office Telephone System. During the current
fiscal year the emphasis at ADS is on the completion of the development of the
remaining subsystems of the Centura TM Telephone System. Contract revenues for
ADS are not expected to increase substantially until sales of Centura TM systems
and subsystems generate additional revenue in the latter part of the current
fiscal year. ADS posted a net loss of $43,792 for the period ended June 30, 1996
versus earnings of $21,560 for the corresponding period last year, primarily due
to a non-recurring expense of $51,765 incurred in relocating its operations to a
new facility in May, 1996.
The consolidated G&A expenses for the Company increased by 20.9% due to
significant marketing activity for the Defense Products, Computer Telephony
Systems and Contract Manufacturing Divisions and administrative expenses for the
management of these divisions. The G&A expenses for ADS included a $51,765
non-recurring expense for relocating its operations to a new facility in May,
1996. Otherwise the ADS G&A expenses were about $106,000 lower for the current
quarter, compared with the corresponding period last year, due to downsizing and
other cost reductions implemented during the last half of fiscal year ended
1996. Consolidated research and development costs of $83,920 for the current
quarter were significantly less since last year ADS's research and development
costs of $326,491 were expensed and ADS's current quarters' research and
development costs of $441,293 have been capitalized and will be amortized over
the anticipated quantity of Centura TM systems and subsystems to be sold.
Symetrics Industries research and development costs were $83,920 for the current
quarter compared with $13,773 last year due to increased costs in enhancing the
product offerings of the Computer Telephony Systems Division.
Referring to the Balance sheet, the Company had a $293,316 increase in
working capital facilitated by the $408,244 increase in long term debt to help
finance the ongoing development of the ADS Centura TM System. The $397,423
decrease in the combined totals of cash and receivables at June 30, 1996,
coupled with the $732,322 increase in accounts payable, reflects significant
unbilled costs at June 30, 1996 which were billed in July, 1996. Also, shipments
of the Improved Data Modem (IDM) on the Company's largest contract were
significantly less than previous quarters due to the incorporation of a U.S.
Government engineering change. Full production and shipments of the IDM have
restarted in August 1996. This lower quantity of IDM shipments caused the
increase in cost and estimated earnings in excess of billings on uncompleted
contracts and also impacted receivables which otherwise would have been higher.
The increase in other current assets for the quarter was due to higher prepaid
expenses and the current portion of deferred income taxes. The increase in other
assets, which totaled $523,939 for the current quarter, was due to the
capitalization of research and development expenses of ADS. Billings in excess
of costs and estimated earnings on uncompleted contracts increased to $347,616
reflecting primarily advance payments by several customers made to the ADS
subsidiary. The taxes of $452,239 accrued as of March 31, 1996 have been paid
and the estimated corporate income taxes of $260,131 for the current period have
been accrued at June 30, 1996.
-7-
<PAGE>
A comparison of the current quarter ended June 30, 1996 to the immediately
proceeding quarter, shows contract revenues were 41.2% higher at $6,879,405 for
the current quarter versus $4,870,781 for the three months ended March 31, 1996.
The increase is due primarily to the additional revenues in the Company's IDM
contract and the strong revenue growth of it's Contract Manufacturing Division .
Net income for the current period was $441,020 significantly higher than the
$220,083 reported for the quarter ended March 31, 1996. The difference is due to
the $250,222 net loss reported by ADS. Backlog at June 30, 1996 was $13.4
million versus $13.9 million at March 31, 1996.
PART II OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders was held on June 28, 1996. Three
items were voted upon at the meeting:
(1) Four directors were elected to staggered one to three year terms. The
director nominees were Ms. Jane J. Beach, Mr. Edward H. Eichler, Mr.
Michael D. Jensen and Dr. Earl J. Claire. Shareholder voting was the same
for all nominees with 1,316,309 FOR, and 5,433 WITHHELD. Directors
continuing in office are Mr. Dudley E. Garner, Jr. (two years remaining)
and Mr. Michael E. Terry (one year remaining).
(2) An amendment to the Company's Articles of Incorporation to increase
the number of shares authorized of common stock from 2,000,000 to
5,000,000 shares was approved with 1,277,494 FOR, 42,091 AGAINST, 2,112
WITHHELD.
(3) An amendment to the Company's Stock Option Plan to increase the number
of shares authorized from 120,000 to 240,000 for issuance upon exercise of
options under such plan was approved with 788,227 FOR, 52,155 AGAINST and
7,719 WITHHELD.
ITEM 6. REPORTS ON FORM 8-K
On May 3, 1996 a Form 8K was filed with the Securities Exchange Commission
regarding the April 20, 1996 acquisition of American Digital Switching by the
Company as amended by Form 8-K/A as filed on July 5, 1996.
- 8 -
<PAGE>
SYMETRICS INDUSTRIES, INC. AND SUBSIARY
FORM 10-Q
QUARTER ENDED JUNE 30, 1996
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SYMETRICS INDUSTRIES, INC.
DATE August 14, 1996
/s/ Dudley E. Garner, Jr.
----------------------------
Dudley E. Garner, Jr.
President,
Principal Executive Officer
Principal Financial Officer
- 9 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF SYMETRICS INDUSTRIES INC. FOR THE THREE MONTHS ENDED
JUNE 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 901
<SECURITIES> 0
<RECEIVABLES> 1,941
<ALLOWANCES> 0
<INVENTORY> 604
<CURRENT-ASSETS> 8,501
<PP&E> 3,586
<DEPRECIATION> 1,683
<TOTAL-ASSETS> 11,869
<CURRENT-LIABILITIES> 3,471
<BONDS> 0
0
0
<COMMON> 412
<OTHER-SE> 6,517
<TOTAL-LIABILITY-AND-EQUITY> 11,869
<SALES> 6,879
<TOTAL-REVENUES> 6,879
<CGS> 5,292
<TOTAL-COSTS> 6,195
<OTHER-EXPENSES> 4
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16
<INCOME-PRETAX> 717
<INCOME-TAX> 276
<INCOME-CONTINUING> 441
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 441
<EPS-PRIMARY> .28
<EPS-DILUTED> .28
</TABLE>
