FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For quarter ended SEPTEMBER 30, 1997
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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.)
1615 W. NASA Boulevard, Melbourne, Florida 32901
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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 October 31, 1997
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(Common stock, $.25 par value) 1,627,713
<PAGE>
PART 1 - FINANCIAL INFORMATION
SYMETRICS INDUSTRIES, INC. AND SUBSIDARY
CONDENSED CONSOLIDATED BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
SEPTEMBER 30 MARCH 31
1997 1997
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(UNAUDITED) (DERIVED FROM AUDITED
FINANCIAL STATEMENTS)
<S> <C> <C>
Current assets:
Cash $ 193,698 $ 56,638
Receivables 3,458,155 2,365,365
Costs and estimated earnings in excess
of billings on uncompleted contracts 5,782,790 5,452,394
Inventory 2,117,367 1,661,249
Deferred income taxes 49,123 51,677
Other assets 154,577 57,453
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Total current assets 11,755,710 9,644,776
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Property, plant and equipment 5,892,384 5,163,389
Less accumulated depreciation 1,844,575 1,571,167
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4,047,809 3,592,222
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Deferred income taxes 273,549 273,549
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Other assets:
Product development costs 3,434,690 2,187,758
Investment in real estate 513,298 513,298
Goodwill, less accumulated amortization 462,704 501,064
Other 146,919 141,583
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Total other assets 4,557,611 3,343,703
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Total assets $20,634,679 $16,854,250
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 2,360,538 $ 2,523,000
Current maturities of long-term debt 129,647 72,719
Accounts payable 3,588,194 2,157,360
Billings in excess of costs and estimated
earnings on uncompleted contracts 348,493 144,373
Accrued liabilities 698,292 962,570
Income taxes payable 128,736 218,545
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Total current liabilities 7,253,900 6,078,567
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Deferred income taxes 191,584 191,584
Deferred compensation liability 438,945 438,945
Long-term debt, less current maturities 4,233,894 1,838,446
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4,864,423 2,468,975
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Shareholders' equity
Common stock, $.25 par value 406,928 406,366
Additional paid-in capital 2,211,608 2,209,358
Retained earnings 5,897,820 5,690,984
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Total shareholders' equity 8,516,356 8,306,708
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Total liabilities and shareholders' equity $20,634,679 $16,854,250
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</TABLE>
See accompanying notes to the condensed consolidated financial statements
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<PAGE>
SYMETRICS INDUSTRIES, INC. AND SUBSIDARY
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30 SEPTEMBER 30 SEPTEMBER 30
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1997 1996 1997 1996
<S> <C> <C> <C> <C>
Contract revenue $ 13,063,293 $ 12,733,986 $ 6,661,484 $ 5,854,581
Costs and expenses
Costs of revenues earned 10,384,628 9,648,231 5,447,404 4,355,962
General and administrative 2,169,279 1,689,111 1,062,706 870,111
Research and development 124,926 145,379 47,131 61,459
------------ ------------ ------------ ------------
12,678,833 11,482,721 6,557,241 5,287,532
------------ ------------ ------------ ------------
Income from operations 384,460 1,251,265 104,243 567,049
Other income (expense)
Rental and other income 104,513 19,236 45,310 9,618
Other expense (29,975) (8,628) (14,642) (4,311)
------------ ------------ ------------ ------------
74,538 10,608 30,668 5,307
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Interest income 20,057 50,190 7,912 6,707
Interest expense (160,856) (42,838) (95,675) (26,881)
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(140,799) 7,352 (87,763) (20,174)
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Income before taxes 318,199 1,269,225 47,148 552,182
Income (taxes) (111,363) (501,064) (16,495) (225,041)
------------ ------------ ------------ ------------
Net income $ 206,836 $ 768,161 $ 30,653 $ 327,141
============ ============ ============ ============
Earnings per share $ 0.13 $ 0.48 $ 0.02 $ 0.20
============ ============ ============ ============
Weighted average number
of shares outstanding 1,626,588 1,606,289 1,627,713 1,611,101
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
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<PAGE>
SYMETRICS INDUSTRIES, INC. AND SUBSIDARY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED
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SEPTEMBER 30 SEPTEMBER 30
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1997 1996
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Cash provided by (used in)
Operations
Net income $ 206,836 $ 768,161
Adjustments for non cash charge 311,768 245,659
Changes in assets and liabilities (1,945,274) (2,661,935)
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Net cash (used in) operations (1,426,670) (1,648,115)
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Investing
Capital expenditures (728,995) (277,196)
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Cash used for investing (728,995) (277,196)
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Financing
Proceeds from stock options 2,812 38,435
Borrowing of long-term debt 2,289,913 650,653
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Cash provided by financing 2,292,725 689,088
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Increase/(Decrease) in cash 137,060 (1,236,223)
Cash beginning of period 56,638 1,657,905
Cash end of period $ 193,698 $ 421,682
=========== ===========
Cash payments for interest $ 160,856 $ 44,038
Cash payments for income taxes $ 197,000 $ 727,846
See accompanying notes to the condensed consolidated financial statements.
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<PAGE>
SYMETRICS INDUSTRIES, INC. AND SUBSIDARY
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1997
Notes to Condensed Consolidated Financial Statements
(Unaudited)
O BASIS OF PRESENTATION
---------------------
* The financial statements contained herein are unaudited but, in the
opinion of management, reflect all adjustments, consisting of normal recurring
adjustments, which are necessary to a fair statement of the results for the
periods ended September 30, 1997 and 1996. The results of operations for the
period ended September 30, 1997 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, 1997 as
filed with the Securities and Exchange Commission on June 16, 1997 for a
description of accounting policies which have been continued without change.
Also refer to notes included in the financial statements for additional details
of the Company's financial condition, results of operations and cash flows.
* 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, 1997 for discussion of costs incurred on uncompleted contracts.
O ACQUISTION DURING THE QUARTER ENDED JUNE 30, 1996
-------------------------------------------------
Effective April 1, 1996, Symetrics acquired all of the outstanding common
stock of American Digital Switching, Inc. ("ADS") in exchange for 214,065 shares
of Symetrics, or approximately 13% of the outstanding capital stock of Symetrics
after the exchange, and $35,000 in cash. The transaction has been accounted for
under the pooling-of-interests method of accounting. Accordingly, the condensed
consolidated statements of income and cash flows for the six months ended
September 30, 1997 and September 30, 1996 include the combined operations of the
Companies. The condensed consolidated balance sheet as of March 31, 1997
includes the combined assets and liabilities of the two Companies and is derived
from consolidated audited financial statements at that date. The weighted
average number of common shares outstanding used in the computation of earnings
per share for the six months ended September 30, 1997 and 1996 includes the
shares issued by Symetrics in the exchange.
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<PAGE>
SYMETRICS INDUSTRIES, INC. AND SUBSIDARY
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1997
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
For the six months ended September 30, 1997 consolidated contract revenues
were $13,063,293 which was a 2.6% increase over the $12,733,986 for the
corresponding period last year. For the current six month period net income was
$206,836, or $0.13 per share, compared with $768,161 or $0.48 per share a year
ago. Working capital increased by $935,601 for the six months. The current
backlog of $11.2 million was higher than the $10.4 million at September 30,
1996.
The increase in contract revenues for the current six months is
attributable to growth in the Company's commercial products that generated 31%
of the total revenue. The decrease in net income for the current six months is
primarily due to increased marketing and administrative expenses at the
Company's subsidiary, American Digital Switching (ADS), to support the
introduction of its new Centura TM central office telephone system and higher
marketing expenses in the Company's other divisions. Financial performance, for
the six months, in the Company's Defense Products Division was strong and
consistent with the results achieved in the corresponding period last year.
A comparison of the current quarter ended September 30, 1997 to the
immediately preceding quarter, shows consolidated contract revenues were 4.1%
higher at $6,661,484 for the current quarter versus $6,401,809 for the three
months ended June 30, 1997. Net income for the current period was $30,653, which
was significantly lower than the $176,183 reported for the quarter ended June
30, 1997. This decrease is primarily due to higher interest expenses at ADS, and
lower business volume in commercial contract manufacturing resulting in a
sizable decrease in gross margin. The Company believes this lower volume is a
temporary timing issue, since $1.7 million of new orders of contract
manufacturing business has subsequently been received. Backlog at September 30,
1997 was $11.2 million versus $16.3 million at June 30, 1997. However, the
Company anticipates being awarded significant new orders for its Improved Data
Modem business that will add to backlog and contribute to revenues in the
upcoming quarter.
Although profitability did not meet the anticipated level, the Company
believes that the investment currently being made to diversify will result in a
stronger, more balanced and poised Company in the future. Towards this end,
during the quarter ended September 30, 1997, the Company installed an advanced
very high speed component placement machine and achieved the international
quality standard of ISO 9002 certification in its contract manufacturing
division.
As reported in the September 12, 1997 issue of the magazine "Inside the
Air Force", the U.S. Government's General Accounting Office (GAO) took the
unusual measure of sustaining the Company's protest of an Air Force contract
that had been awarded to a defense contractor for the AN/ALE-47(V)
Countermeasures Dispenser System. Consequently, the Air Force reopened the
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<PAGE>
competition, and the Company recently submitted it's final bid. Although the
award is very competitive, the Company believes it has submitted a viable
proposal based on our excellent track record and fully compliant proposal.
Referring to the balance sheet, the Company had a $935,601 or 26.2%
increase in working capital facilitated by the $2,395,448 increase in long term
debt, to help finance the ongoing development of the Centura TM telephone
system. The increase in cash and accounts receivable of $1,229,850 at September
30, 1997 is offset by the $1,430,834 increase in accounts payable. The increase
in inventory is primarily work-in-process for the upcoming Centura shipments.
The increase in the other assets was primarily from the expected reimbursement
by the U.S. Department of Defense for the Company's expense in the successful
protest related to the Air Force procurement discussed above. During the current
quarter the Company purchased, and financed over five years, a $525,000 very
high speed electronic placement machine for its' commercial contract
manufacturing business. The other additions to fixed assets included purchases
for computers and software upgrades. The increase in product development costs
at September 30, 1997 was the capitalization of additional research and
development expenses for the Centura switch. The increase in billings in excess
of costs and estimated earnings on uncompleted contracts primarily reflects
advance billings on one defense related contract. The decrease in accrued
liabilities reflects product shipments that were previously part of advance
billings.
PART II OTHER INFORMATION
ITEM 6. REPORTS ON FORM 8-K
No reports on Form 8-K were filed for the quarter ended September
30, 1997.
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<PAGE>
SYMETRICS INDUSTRIES, INC. AND SUBSIARY
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1997
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SYMETRICS INDUSTRIES, INC.
DATE November 6, 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 SIX MONTHS ENDED
SEPTEMBER 30, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
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<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 193
<SECURITIES> 0
<RECEIVABLES> 3,458
<ALLOWANCES> 0
<INVENTORY> 2,117
<CURRENT-ASSETS> 11,755
<PP&E> 5,892
<DEPRECIATION> 1,844
<TOTAL-ASSETS> 20,634
<CURRENT-LIABILITIES> 7,253
<BONDS> 0
0
0
<COMMON> 407
<OTHER-SE> 8,109
<TOTAL-LIABILITY-AND-EQUITY> 20,634
<SALES> 13,063
<TOTAL-REVENUES> 13,063
<CGS> 10,384
<TOTAL-COSTS> 12,678
<OTHER-EXPENSES> 30
<LOSS-PROVISION> 0
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</TABLE>
