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 December 31, 1996
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( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________to__________________
Commission file number 0-4025
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SYMETRICS INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
Florida 59-0954868
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(State of Incorporation) (I.R.S. Employer
Identification No.)
557 N. Harbor City Boulevard, Melbourne, Florida 32935
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(Address of principal executive offices)
(407) 254-1500
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at February 14, 1997
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(Common stock, $.25 par value) 1,618,713
<PAGE>
PART 1 - FINANCIAL INFORMATION
SYMETRICS INDUSTRIES, INC. AND SUBSIDARY
CONDENSED CONSOLIDATED BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31 MARCH 31
1996 1996
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(UNAUDITED) (DERIVED FROM AUDITED
FINANCIAL STATEMENTS)
<S> <C> <C>
Current assets:
Cash $ 34,951 $ 1,657,905
Receivables 2,717,655 1,581,428
Costs and estimated earnings in excess
of billings on uncompleted contracts 4,690,444 2,931,069
Inventory 972,688 635,893
Mortgage receivable 450,000 450,000
Other assets 139,130 65,898
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Total current assets 9,004,868 7,322,193
----------- -----------
Property, plant and equipment 4,966,749 3,336,076
Less accumulated depreciation 1,456,898 1,572,585
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3,509,851 1,763,491
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Deferred income taxes 298,720 325,453
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Other assets:
Other 1,791,654 94,784
Goodwill, less accumulated amortization 519,807 580,577
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2,311,461 675,361
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Total assets $15,124,900 $10,086,498
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 300,000 $ 1,000
Current maturities of long-term debt 70,732 25,436
Accounts payable and accrued expenses 2,719,333 2,098,788
Billings in excess of costs and estimated
earnings on uncompleted contracts 371,449 7,869
Income taxes payable 243,455 452,239
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Total current liabilities 3,704,969 2,585,332
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Deferred compensation 505,355 479,439
Non-current deferred tax liability 226,234
Long-term debt, less current maturities 2,729,598 568,363
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3,461,187 1,047,802
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Shareholders' equity
Common stock, $.25 par value 404,123 398,824
Additional paid-in capital 2,153,163 2,120,025
Retained earnings 5,401,458 3,934,515
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Total shareholders' equity 7,958,744 6,453,364
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Total liabilities and shareholders' equity $15,124,900 $10,086,498
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</TABLE>
See accompanying notes to the condensed consolidated financial statements
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<PAGE>
SYMETRICS INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
DEC. 31 DEC. 31 DEC. 31 DEC. 31
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1996 1995 1996 1995
<S> <C> <C> <C> <C>
Contract revenue $ 18,634,480 $ 17,225,808 $ 5,900,494 $ 5,028,388
Costs and expenses
Costs of revenues earned 13,863,446 12,788,297 4,215,215 3,648,535
General and administrative 2,626,454 2,489,150 937,343 900,828
Research and development 212,290 392,879 66,911 12,419
------------ ------------ ------------ ------------
16,702,190 15,670,326 5,219,469 4,561,782
------------ ------------ ------------ ------------
Income from operations 1,932,290 1,555,482 681,025 466,606
Other income (expense)
Rental and other income 47,593 28,451 28,357 9,914
Related expense (23,671) (11,916) (15,043) 44,376
------------ ------------ ------------ ------------
23,922 16,535 13,314 54,290
------------ ------------ ------------ ------------
Interest income 57,638 45,547 7,448 (15,121)
Gain (loss) on sale of 580,087 (14,151) 580,087 (14,151)
property
Interest expense (96,181) (39,264) (53,343) (10,163)
------------ ------------ ------------ ------------
541,544 (7,868) 534,192 (39,435)
------------ ------------ ------------ ------------
Income before taxes 2,497,756 1,564,149 1,228,531 481,461
Income (taxes) (1,030,813) (736,436) (529,749) (235,954)
------------ ------------ ------------ ------------
Net income $ 1,466,943 $ 827,713 $ 698,782 $ 245,507
============ ============ ============ ============
Earnings per share $ .91 $ .52 $ 0.43 $ 0.15
============ ============ ============ ============
Weighted average number
of shares outstanding 1,609,601 1,602,795 1,616,153 1,607,931
</TABLE>
See accompanying notes to the condensed financial statements.
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<PAGE>
SYMETRICS INDUSTRIES, INC. AND SUBSIDARY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED
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DECEMBER 31 DECEMBER 31
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1996 1995
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Cash provided by (used in)
Operations
Net income $ 1,466,943 $ 827,713
Adjustments for non cash charge 317,384 221,380
Changes in assets and liabilities (3,976,278) 802,614
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Net cash provided by (used in) operations (2,191,951) 1,851,707
Investing
Capital expenditures (1,630,673) (691,785)
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Cash used for investing (1,630,673) (691,785)
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Financing
Proceeds from stock options 38,435 36,936
Borrowing (repayment) of long-term debt 2,161,235 (230,769)
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Cash provided by (used) for financing 2,199,670 (193,833)
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Increase (decrease) in cash (1,622,954) 966,089
Cash beginning of period 1,657,905 318,138
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Cash end of period $ 34,951 $ 1,284,227
=========== ===========
Cash payments for interest $ 97,380 $ 39,264
Cash payments for income taxes $ 999,626 $ 951,398
See accompanying notes to the condensed consolidated financial statements
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<PAGE>
SYMETRICS INDUSTRIES, INC. AND SUBSIDARY
FORM 10-Q
QUARTER ENDED DECEMBER 31, 1996
Notes to Condensed Consolidated Financial Statements
(Unaudited)
o BASIS OF PRESENTATION
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* 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 December 31, 1996 and 1995. The results of operations for the
period ended December 31, 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.
o ACQUISTION DURING THE QUARTER ENDED JUNE 30, 1996
-------------------------------------------------
Effective April 1, 1996, Symetrics acquired 933,334 (approximately 95%)
of the outstanding common stock of American Digital Switching, Inc. ("ADS") in
exchange for 207,399 shares of Symetrics' common stock or approximately 13% of
the outstanding capital stock of Symetrics after the exchange. The transaction
has been accounted for under the pooling-of-interest method of accounting.
Accordingly, the condensed consolidated statements of income and cash flows for
the periods ended December 31, 1996 include the combined operations of the
Companies. The condensed consolidated balance sheet as of March 31, 1996
includes the combined assets and liabilities of the two Companies and is derived
from separate audited financial statements of the Companies at that date.
Similarly, the condensed consolidated statements of income and cash flows for
the periods ended December 31, 1995 presented herein for comparative purposes,
includes the combined operations of the Companies as if the combination had
occurred at April 1, 1995. Such statements were derived from the unaudited
interim financial statements of the separate Companies. The weighted average
number of common shares outstanding used in the computation of earnings per
share for the periods ended December 31, 1995 and December 31, 1996 includes the
shares issued by Symetrics in the ADS acquisition.
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<PAGE>
SYMETRICS INDUSTRIES, INC. AND SUBSIDARY
FORM 10-Q
QUARTER ENDED DECEMBER 31, 1996
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
For the nine months ended December 31, 1996, contract revenues were
$18,634,480 a 8.2% increase over the $17,225,808 for the corresponding period
last year. For the current nine month period, net income was $1,466,943, or
$0.91 per share, including $353,853 (net of income taxes) or $0.22 per share
resulting from the gain on exchange of property in the acquisition of the
Company's new facilities in Melbourne, Florida, Net income (excluding the gain
on exchange of property) was $1,113,090 or $0.69 per share, a 34% increase over
the $827,713 or $0.52 per share, a year ago. Working capital increased by
$563,038 for the nine months. The backlog closed at $9.8 million, compared with
the $9.6 million at December 31, 1995 .
The increase in contract revenues for the current nine months is
attributable to growth in the Company's commercial products that generated 28.6%
of the total revenue. The increase in net income for the current nine months is
attributed to continued profitability of the Company's Defense Products Division
and the incorporation of American Digital Switching's financial performance
which has the effect of reducing the Company's consolidated net income last
year. The higher general and administrative expense is due to the continued
marketing emphasis on the Company's products. The reduced research and
development costs are attributed to capitalizing American Digital Switching's
(ADS) development expenses for fiscal 1997 which will be amortized over the
anticipated quantity of Centura TM 2000 systems and subsystems to be sold. Prior
to fiscal year 1997 these development costs were expensed as incurred by ADS.
Increased interest expense resulted from the continued financing requirements of
American Digital Switching for the developmental phase of the Centura TM 2000
telephone switch. The $580,087 gain on sale of property reflects the tax
deferred exchange of the Company's previous property in the acquisition of the
new facility on NASA boulevard.
Referring to the Balance Sheet, the Company's combined cash and
receivables, less the accounts payable are significantly lower due to increased
research and development costs for the Centura TM 2000 switch as well as
marketing expenses attributed to the Company's commitment to foster growth in
it's commercial divisions. Cost and estimated earnings in excess of billings on
uncompleted contracts increased primarily due to the booking of cost related to
ongoing Defense Products and Contract Manufacturing programs which as of
December 31, 1996 were unbillable due to timing of customer invoicing. The
increase in inventory reflects American Digital Switching's procurement of
electronic components and production of assemblies which are to be utilized
primarily toward fulfillment of backlog. Other current assets increased,
reflecting a upward adjustments in the current portion of deferred income taxes
as well as a the prepaid expense accounts. The increase in property, plant and
equipment reflects primarily the acquisition of the new facility for $1.8
million and also capital purchases for manufacturing equipment. The increase in
long-term debt and the current maturities portion reflect the American Digital
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<PAGE>
Switching continued financing requirements for the development of the Centura TM
2000 telephone switch and $552,724, fifteen year note for the new facility.The
capitalized development expenses in fiscal year 1997 for the Centura TM 2000
telephone switch are classified under other assets on the Company's balance
sheet. These capitalized developmental expenses will be amortized to cost of
goods sold as shipments of the Centura TM 2000 telephone switching system
commence. An increase in notes payable to $300,000 reflects use of an unsecured
line of credit by the Company to take prompt payment discounts . The increase in
billings in excess of costs and estimated earnings on uncompleted contracts in
fiscal year 1997 reflects primarily the advanced payment by customers of
American Digital Switching.
The estimated corporate income tax for the three months ended December
31, 1996 of $529,749 has been accrued and is reflected on the balance sheet as
$243,455 (net of estimated payments) income tax payable. The non-current
deferred tax liability of $226,234 resulted from the exchange of the Company's
previous facility as part of the acquisition of the new facility.
For the three months ended December 31, 1996, contract revenues were
$5,900,494, a 17.3% increase over the $5,028,388 for the corresponding period
last fiscal year. The net income for the current period of $698,782 or $0.43 per
share, includes $353,853 (net of income taxes), or $0.22 per share, on exchange
of property. Net income from operations of $344,929 or $0.21 per share, was
40.5% higher than the $245,507 or $0.15 per share for the comparative three
month period last year. These improvements are attributed to continued
profitability on the Company's Improved Data Modem (IDM) contract with the
Government as well as the incorporation of American Digital Switching's
financial performance which had the effect of reducing the Company's
consolidated net income last year.
A comparison of the current quarter ended December 31, 1996 to the
immediately preceding quarter, shows contract revenues at $5,900,494 for the
current quarter were essentially the same as $5,854,581 for the three months
ended September 30, 1996. Net income from operations of $ 344,929 was slightly
higher than the $327,141 of the immediately preceding quarter. Backlog at the
end of the current quarter was $9.8 million compared with $10.4 million at
September 30, 1996.
Part II OTHER INFORMATION
Item 6. Reports on Form 8-K
No reports on Form 8-K were filed for the quarter ended December 31,
1996.
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<PAGE>
SYMETRICS INDUSTRIES, INC. AND SUBSIARY
FORM 10-Q
QUARTER ENDED DECEMBER 31, 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 FEBRUARY 14, 1997
/s/ Dudley E. Garner, Jr.
-----------------------------
Dudley E. Garner, Jr.
President,
Principal Executive Officer
Principal Financial Officer
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF SYMETRICS INDUSTRIES INC. FOR THE NINE MONTHS ENDED
DECEMBER 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 34
<SECURITIES> 0
<RECEIVABLES> 2,717
<ALLOWANCES> 0
<INVENTORY> 972
<CURRENT-ASSETS> 9,004
<PP&E> 4,966
<DEPRECIATION> 1,456
<TOTAL-ASSETS> 15,124
<CURRENT-LIABILITIES> 3,704
<BONDS> 0
0
0
<COMMON> 404
<OTHER-SE> 7,554
<TOTAL-LIABILITY-AND-EQUITY> 15,124
<SALES> 18,634
<TOTAL-REVENUES> 18,634
<CGS> 13,863
<TOTAL-COSTS> 16,702
<OTHER-EXPENSES> 23
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 96
<INCOME-PRETAX> 2,497
<INCOME-TAX> 1,030
<INCOME-CONTINUING> 1,466
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,466
<EPS-PRIMARY> .91
<EPS-DILUTED> .91
</TABLE>
