SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995 Commission file number 1-4371
TECH-SYM CORPORATION
(Exact name of registrant as specified in its charter)
NEVADA 74-1509818
{State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
10500 WESTOFFICE DRIVE
HOUSTON, TEXAS 77042
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 785-7790
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
------------------- ---------------------------------------
COMMON STOCK (PAR VALUE $.10 NEW YORK STOCK EXCHANGE
PER SHARE) AND COMMON STOCK
PURCHASE RIGHTS(THE RIGHTS ARE
NOT CURRENTLY EXERCISABLE OR
TRANSFERABLE APART FROM THE
COMMON STOCK)
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT
NONE
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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Sec. 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of 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. [X]
As of March 15, 1996, 6,566,751 shares of the registrant's Common Stock
were issued and outstanding. The aggregate market value of the voting stock held
by non-affiliates of the registrant (assuming only for purposes of this
computation that directors and officers may be affiliates) was $206,115,510
(based on the closing sales price published in The Wall Street Journal reports
of New York Stock Exchange Composite Transactions on March 15, 1996).
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by reference into
the Part of the Form 10-K specified herein: (1) Annual Report to Shareholders
for 1995 (to the extent set forth in Parts I and II of this Annual Report); and
(2) Proxy Statement for the Annual Meeting of Shareholders to be held April 30,
1996 (to the extent set forth in Part III of this Annual Report).
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Form 10-K includes "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Act of 1934, as amended. All statements other than
statements of historical facts included in this Form 10-K , including without
limitation the statements under "Item 1. Business," "Item 2. Properties," "Item
3. Legal Proceedings" and "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations" are forward-looking statements.
Although Tech-Sym Corporation believes that the expectations reflected in such
forward-looking statements are reasonable, no assurance can be given that such
expectations will prove to have been correct. Important factors that could cause
actual results to differ materially from expectations ("Cautionary Statements")
are disclosed in this Form 10-K, including without limitation in conjunction
with the forward-looking statements included in this Form 10-K. All subsequent
written and oral forward-looking statements attributable to Tech-Sym Corporation
or persons acting on its behalf are expressly qualified in their entirety by
Cautionary Statements.
PART I
ITEM 1. BUSINESS
GENERAL
Tech-Sym Corporation (the "Company" or "Registrant") is a
diversified electronics engineering and manufacturing company primarily involved
in the design, development, and manufacture of products used for communications,
the exploration and production of hydrocarbons, and defense systems.
The Company, incorporated in Nevada in 1944, is headquartered
in Houston, Texas. The Company operates through seven principal subsidiaries:
CogniSeis Development, Inc. ("CogniSeis") located in Houston, Texas; Continental
Electronics Corporation ("Continental") located in Dallas, Texas; Enterprise
Electronics Corporation ("EEC") located in Enterprise, Alabama; Metric Systems
Corporation ("Metric") located in Fort Walton Beach, Florida; Syntron, Inc.
("Syntron") located in Houston, Texas; Tecom Industries, Incorporated ("Tecom")
located in Chatsworth, California; and TRAK Microwave Corporation ("TRAK")
located in Tampa, Florida. The business of the Company is conducted as one
segment comprised of three product areas.
COMMUNICATIONS. The communications products include microwave
components, antennas, broadcast transmitters, and weather information systems.
The microwave components and subsystems are used by customers to make
communications and radar products. Microwave components include energy sources
(oscillators and amplifiers), frequency multipliers, filters, ferrite isolators
and circulators, and a broad range of passive components for modulation and
control of microwave energy. Microwave subsystems consist of synthesizers,
frequency converters, and microwave receiver assemblies. These microwave
components and subsystems are used in such areas as wireless communications,
satellite communications, aircraft instruments, radars, electronic warfare
systems, and industrial microwave heating and cooking. Original equipment
manufacturers purchase these products to integrate into systems.
The Company also builds extremely accurate timing systems for use by
government and commercial organizations such as NASA, telephone companies, and
electric power utilities.
During 1995, the assets of two companies were acquired and combined to
form Daden-Anthony Associates, Inc., in San Clemente, California. The new
subsidiary designs and produces RF and microwave filters and has designed a
specialized airborne filter amplifier assembly for GPS receivers.
The Company designs and produces antennas for wireless voice and data
communication, satellite communication, surveillance, and range instrumentation.
The Company also supplies antennas, fiber optic controllers, and positioners for
information gathering by the U.S. surveillance community and high power antennas
for jamming enemy radars during electronic warfare missions. Telemetry tracking
systems and microprocessor-based antenna controllers are sold to the U.S. and
foreign governments for use on test and training ranges. The Company has also
designed and produces antennas for air and land mobile satellite communications
systems. In the emerging wireless local loop market, the Company provides high
performance base station and home subscriber antennas for telephony systems.
Broadcast transmitter products include a complete line of transmitters
and related equipment for the radio broadcast industry such as high power
transmitters for use in the "short" and "medium" wave frequency bands as well as
transmitters that operate at the radio broadcast frequencies commonly referred
to as "AM" and "FM". High power radio frequency energy sources such as large
particle accelerators are also made for medical and physics research
installations. Communications and radar equipment for U.S. and foreign defense
agencies have also been designed and manufactured. Customers include the
commercial radio broadcast industry, private and government agencies that
operate radio broadcast stations, and organizations or government funded
operations that engage in scientific research.
Through its Continental-Lensa subsidiary in Santiago, Chile, the
Company designs and manufactures solid state AM transmitters for sale in North
and South America as well as Europe. The Company also participates in a joint
manufacturing agreement with the Ministry of Film, Radio, and Television in the
People's Republic of China. The agreement provides for the manufacture of FM and
shortwave broadcast transmitters at the Company's facility in Dallas as well as
in Beijing.
Effective January 1, 1996, the Company acquired TELEFUNKEN
Sendertechnik GmbH in Berlin, Germany. The company is a significant designer,
manufacturer, and seller of broadcast transmitters and antennas in the world
market. Its digital audio broadcast equipment produces CD quality sound for
specially designed
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FM radios and is currently in use in several test markets. It
also manufactures and sells solid state television transmitters which can be
used for High Definition Television broadcasts.
Meteorological agencies and television broadcasters use the Company's
Doppler weather radars to forecast weather and provide severe weather warnings.
The Doppler process measures both reflectivity and velocity of rain droplets and
is used to detect, quantify and display precipitation intensity, velocity, and
turbulence. It is extremely helpful in analyzing severe weather conditions such
as hurricanes, tornadoes, thunderstorms, and wind shear. EEC has coupled the
high performance Doppler radar with sophisticated data processing systems. These
range from low-cost PC-based display and control systems through UNIX platform
mid-range systems to larger scientific systems utilizing Hewlett Packard, IBM
and the DEC-Alpha type computers and software.
With the development of powerful data processing systems known as
Weather Windows(R) and EDGE(R) (Enterprise Doppler Graphics Environment), the
products give meteorologists automated radar control as well as enhanced
meteorological displays and image processing capabilities. The systems can be
integrated into a network to obtain accurate weather information for a large
geographic area. More than 600 weather radars have been installed in more than
60 countries.
GEOSCIENCE. The Company designs and manufactures products that acquire,
digitize, transmit, record, display, and analyze acoustic energy produced on the
surface by air guns, dynamite, or other sound sources and reflected from
underground or subsea geologic formations. After the stored data is processed,
potential locations of hydrocarbon deposits can be determined. With the advent
of more powerful computers, three dimensional ("3-D") seismic surveys have
become more routine. The 3-D surveys result in higher resolution than two
dimensional surveys and the success rate of oil and gas wells based on 3-D
surveys is much greater. The demand for the Company's seismic equipment has
increased with the demand for 3-D surveys.
Principal seismic products include the SYNTRAK 480(R) Digital Streamer
System consisting of one to twelve arrays, each up to 12,000 meters in length,
containing sensors, electronic modules, and conductors. As the arrays are towed
behind a boat, the acoustic energy is collected by the sensors, digitized and
transmitted via a patented, low power telemetry communications scheme through
the towed cable array to the boat. Once on board, the data is saved on magnetic
tape by the Company's high-speed shipboard recording system.
A related product is the Ocean Bottom Cable which is placed on the
ocean floor instead of towed behind a boat. It is used in shallow water,
congested areas, and transition zones where large seismic vessels cannot
operate. It can also be used to monitor a reservoir as hydrocarbons are removed.
Both the SYNTRAK 480(TM) system and the Ocean Bottom Cable have been
upgraded to integrate the latest technology. The amount of seismic data able to
be acquired has been increased by the use of 24-bit integrated circuits and the
volume of the modules reduced 60% through the use of hybrid technology which
combined most of the discrete components.
Another seismic product recently introduced is the PolySeis(TM) system
which the Company has developed with partial funding from the INSTITUTE FRANCAIS
DU PETROLE. The PolySeis(TM) system is a 24-bit modular radio and/or wireline
telemetry
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seismic data acquisition system that can be easily configured by the
user for most land or transition zone needs. The system is specifically adaptive
to the unique requirements associated with exploration in transition zones or in
areas that are inaccessible or difficult to reach such as lakes, swamps, or
mountainous areas.
The Company maintains operations for the design, manufacture, and
repair of seismic cables in England, Singapore, and Houston. The ability to
design, manufacture and repair seismic cables enhances the Company's quality
control over critical processes and its ability to provide needed services to
its customers worldwide. In October of 1995, the Company expanded its product
line to include fiber optic and copper wire seismic cables and associated
connectors by acquiring the business and assets of Primatek Industries, Inc.
In 1995, the Company sold its Syntron Pressure Controls business to
enable it to concentrate on its core businesses.
The Company's geoscientific software business was established in 1995
with the acquisition of CogniSeis Development, Inc., in Houston, Texas. The
subsidiary's geoscientific software applications products are designed to
process seismic data collected in the field in order to make the data
interpretable and to interpret processed seismic data and other geological data
to identify, define, and visualize subsurface geologic formations. Several of
the applications utilize three dimensional ("3-D") displays to enable geologists
and geophysicists to locate oil and gas reserves.
In August of 1995, the Company acquired the rights to develop and sell
VoxelGeo, a computer software program used by geologists and geophysicists to
interpret and visualize seismic data on a 3-D basis. In September of 1995, the
Company acquired Photon Systems Ltd., a company that develops, markets and
licenses seismic and geologic interpretation systems.
The Company is in the process of integrating its line of seismic
processing, geological interpretation, and visualization applications into a
comprehensive three dimensional earth model interpretation package called
"TerraCube." By linking the individual applications into a framework, TerraCube
is expected to reduce the overall cycle time and expense involved in processing
seismic data and interpreting geological data, as well as improve the quality of
the data.
DEFENSE SYSTEMS. The principal defense systems products include
shipboard electronics, airborne training systems, range instrumentation systems,
and mechanical systems.
The Company first became involved in shipboard electronics, when it
received a contract for the design, development, and qualification testing of
electronic control, monitoring, and power distribution equipment for the U.S.
Navy's Vertical Launching System (VLS). Upon successful completion of this
development effort, full scale production was initiated and has been continuous
since. Utilizing the expertise gained during the VLS development effort, the
Company expanded its business operations in this area to include subsystems for
the AN/SQQ-89 Surface Anti-Submarine Warfare Combat System, firing mechanisms
for the submarine launched Tomahawk and Trident missiles, and radar cable
assemblies for the AEGIS weapon system. In 1994, the Company acquired the
Switchboard Systems Division of Ferranti Technologies, Inc., which produces
electronic power switching and intercommunications equipment primarily for U.S.
Navy ships.
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The airborne training systems consist of pods which are attached to
aircraft to collect data on the position, altitude, flight characteristics, and
weapons systems of the aircraft during simulated combat. The data inputs are
sent via telemetry to ground instrumentation equipment for display, debriefing,
and subsequent analysis by the participants. The Company is producing airborne
and ground equipment utilizing Global Positioning Systems (GPS) receivers to
precisely locate and track aircraft operated on the training ranges. The use of
this equipment will reduce the cost of operating Air Combat Maneuvering
Instrumentation (ACMI) ranges since manned radar tracking sites and other
equipment will become unnecessary.
The Company also designs and manufactures transportable radar systems
used on military training ranges to replicate foreign military radars that
control surface-to-air missiles (SAMs) and anti-aircraft artillery fire. These
systems are used to train aircrews on defensive maneuvers and to test the
effectiveness of electronic countermeasures.
The mechanical systems designed and manufactured by the Company include
antenna support structures for large communications antennas, custom containers
with environmental controls for sensitive electronics equipment such as
satellites and missiles, and aircraft launcher rail assemblies for the AMRAAM
missile. The Company has also developed and manufactures air cargo systems for
airborne supply operations including on-board cargo roller/restraint systems,
air-drop platforms, and cargo handling equipment for many types of aircraft.
The Company manufactures a variety of other systems including memory
expansion equipment for the FAA's air traffic control Interim Update Plan, TOW
missile launchers used on the U.S. Army's Bradley Fighting Vehicle, custom
automated test equipment for a variety of electronic equipment, and radar
surveillance systems.
GOVERNMENT CONTRACTS
Sales under contracts with or for the United States Government
accounted for $81.3 million or 32% of the Company's sales in 1995. Most of the
Company's Government contracts are fixed-price contracts. Under this type of
contract, the price paid to the Company is not subject to adjustment by reason
of the costs incurred by the Company in the performance of the contract, except
that adjustments are made for costs incurred due to contract changes ordered by
the Government. Cost overruns incurred in connection with fixed-price contracts,
particularly those involving engineering and development, could substantially
reduce the Company's profitability or cause losses.
Government contracts may be terminated for the convenience of the
Government at any time the Government believes that such termination would be in
its best interests. Under contracts terminated for the convenience of the
Government, the Company is entitled to receive payments for its allowable costs
and, in general, a proportionate share of its fee or profit for the work
actually performed. Under the Truth in Negotiations Act, the Government has a
right for three years after final payment on substantially all negotiated
Government contracts to examine all the Company's cost records with respect to
such contracts in order to determine whether the Company used and made available
to the Government, or to the prime contractor in the case of a subcontract,
accurate, complete and current cost or pricing information in preparing bids and
conducting negotiations on the contracts or any amendments thereto.
5
The Company recognizes revenue under its Government contracts on the
percentage of completion method generally measured by the percentage of total
costs incurred to date to estimated total costs for each contract. Estimated
losses on contracts are provided for in full when they become apparent. Provided
the job is on schedule, the Company normally recovers most of its costs on large
contracts under a progress payment system whereby 75% to 80% of its allowable
costs incurred in performing the contract, including applicable indirect costs
such as general and administrative expenses, may be collected from the
Government on a current basis, while related profit, if any, is billable only
upon completion of the contract, or in certain instances, as delivery of units
is made. The Company and Government representatives closely monitor the
Company's performance against the overall budget of cost and profit for a job as
the job progresses. Revisions of a budget may occur during the course of the
work for many reasons, including increases or decreases in the scope of the
work, change orders and funding adjustments, as well as for the Company's
performance against such budget. Budget revisions forecasting profit reductions
are recorded by the Company on a current basis, whereas forecasted profit
increases are recorded over the remaining period of performance.
The Company believes that business done under Government contracts
differs from ordinary commercial contracts in certain other ways. Capital
requirements tend to be smaller because of the progress payment system. There is
no significant bad debt loss risk and, in general, receivables are paid
promptly. The Company has also found that, in the case of Department of Defense
contracts, the contract dispute procedures are well defined and generally permit
expeditious and inexpensive resolutions of contract problems.
COMPETITION AND BUSINESS CONDITIONS
The Company faces significant competition in most aspects of its
business. Its principal competitors in each area of its activities include
corporations with substantially greater assets and access to larger financial
resources than the Company. The Company's products are of a highly technical
nature and involve the use of techniques and materials similar to those used by
its competitors. The principal competitive factors with respect to the Company's
products are technological innovation, product quality, price, adherence to
delivery schedules and product reliability. A significant portion of the
Company's sales are made under Government contracts awarded on the basis of
competitive proposals. In addition to price, the factors involved in the award
of such contracts include the quality of the proposal and reputation of the
bidder. While the Company faces competition with respect to each of its product
lines, the Company believes it is a principal supplier of (i) meteorological
radars to foreign government agencies, and (ii)marine seismic data acquisition
systems to the petroleum industry.
Demand for many of the products sold by the Company is dependent on the
level and nature of the nation's defense expenditures. See "Other Information"
included in Management's Discussion and Analysis set forth on pages 20 and 21 of
the Company's Annual Report to Shareholders for the year ended December 31,
1995, which information is incorporated herein by reference. The defense-related
electronic systems and components manufactured by the Company are sold primarily
to the United States armed forces, defense contractors, and foreign countries
for military and training use. General increases or decreases in the level of
defense appropriations tend to affect demand for defense-related products, but
do not necessarily have a corresponding effect on demand for the specialized
products manufactured by the
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Company. Due to the process by which appropriations and contracts are approved
for defense projects, it is common for the Company to experience delays in the
receipt of anticipated orders, which can adversely affect operating results by
shifting operating revenues from one period to another. Because most of the
Company's defense-related contracts are awarded on a fixed-price basis, cost
overruns can affect the Company's profitability.
MARKETING AND CUSTOMERS
The Company's products are primarily marketed directly by the sales
force of each of its operating subsidiaries, with the assistance of domestic and
international independent technical sales representatives who receive
commissions on their sales. The principal customers for the communications
products include the United States Government (primarily the armed services),
government contractors, communication equipment manufacturers, government and
commercial weather services, foreign government agencies, radio broadcast
companies and organizations, and research organizations. The geoscience
customers include major independent and foreign national oil and gas companies,
seismic contractors, geophysical contractors and government agencies around the
world. The defense systems products are sold to the armed forces of the United
States and foreign governments, government contractors, and aircraft
manufacturers.
The Company's largest customer is the United States Government, its
agencies and contractors, whose purchases accounted for approximately 32% of the
Company's consolidated sales in 1995. Of that amount, approximately 92% was
attributable to purchases by the Department of Defense and its contractors. The
loss of these Government contracts would have a material adverse effect on the
Company as a whole. Contracts with or for the United States Government and most
prime contractors may be terminated by the Government at will. See "Government
Contracts." The Company has not, however, experienced any significant problems
with contract cancellations.
PRODUCT DEVELOPMENT
Information concerning the amount spent during each of the last three
years on Company-sponsored research and development activities is set forth in
the Company's "Consolidated Statement of Income" on page 22 of the Company's
Annual Report to Shareholders for the year ended December 31, 1995, which
information is incorporated herein by reference. Certain of the Company's
research and development activities are undertaken pursuant to Government
contracts and subcontracts. The costs incurred under these contracts for product
research and development are charged to cost of sales, rather than to product
development costs.
PATENTS
Although TRAK, Tecom, Continental and Syntron hold a number of United
States and foreign patents, the Company believes that its business is not
materially dependent upon the protection afforded by patents, but primarily upon
the experience and continued creative skills of its personnel. In many cases,
because of rapidly changing technology and the need for confidentiality, the
Company does not seek to obtain patents.
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BACKLOG
The backlog of unshipped orders was $121,293,000 and $138,221,000 as of
December 31, 1994 and 1995, respectively. The backlog as of such dates which was
reasonably expected to be filled within twelve months of such date was
$104,402,000 and $128,035,000, respectively.
The backlog figures include only the sales value of the equipment or
products for which the Company has received orders it believes to be firm.
Contracts with or for the United States Government and most prime contractors
may be terminated by the Government at will. See "Government Contracts." The
Company has not, however, experienced any significant problems with contract
cancellations.
MATERIALS AND SUPPLIES
The Company's operations require a wide variety of electronic and
mechanical components and raw materials. Most of these items are available from
several commercial sources. The Company does not depend on any single source for
a significant portion of its supplies except for the 24-bit analog-to-digital
converters and hybrid processors used in Syntron's new SYNTRAK 480-24 towed
array system and ocean bottom cable.
ENVIRONMENTAL PROTECTION
No material effect on the operations of the Company is presently
anticipated in the compliance with Federal, State and local provisions
regulating the discharge of materials into the environment, or otherwise
relating to the protection of the environment, and the Company does not expect
to make any material capital expenditures in the next year in order to comply
with any such provisions.
EMPLOYEES
As of December 31, 1995, the Company employed a total of 2,124 persons.
None of the Company's domestic employees is represented by a labor union.
PRODUCT LINE SALES
Information concerning the Company's product line sales is set forth
under the caption "Product Line Sales" on page 20 of the Company's Annual Report
to Shareholders for the year ended December 31, 1995, which information is
incorporated herein by reference.
EXPORT SALES
Information concerning the Company's export sales is set forth in Note
13 of the Notes to Consolidated Statements contained in the Company's Annual
Report
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to Shareholders for the year ended December 31, 1995, which information
is incorporated herein by reference.
ITEM 2. PROPERTIES
The Company's corporate headquarters are located in Houston, Texas, in
a company-owned building. The Company, through its Tech-Sym Management
Corporation subsidiary, occupies approximately 7,500 square feet of the 20,000
square foot building. Approximately 7,500 square feet of the building is leased
to third parties, with the remainder of the building available for lease or
expansion.
Metric's defense systems manufacturing operations are conducted from
office and plant facilities comprising a total of 226,000 square feet located on
three tracts totaling 38 acres owned by the Company in Fort Walton Beach,
Florida. Metric also leases 10,000 square feet of manufacturing, office and
storage space in several nearby facilities.
EEC's weather information systems operations are conducted from office
and plant facilities comprising 43,000 square feet located on an 11 acre tract
owned by the Company in Enterprise, Alabama.
The electronic components manufacturing operation conducted by the
Company's TRAK subsidiary consists of office and plant facilities located on ten
acres owned by TRAK in Tampa, Florida, with combined square footage of
approximately 123,000 square feet. TRAK'S subsidiary, TRAK Microwave Limited,
leases plant and office facilities totaling 45,500 square feet in Dundee,
Scotland. Daden-Anthony Associates, Inc., leases 14,500 square feet of plant and
office facilities in San Clemente, California.
Tecom's antenna manufacturing operations are conducted in a 50,000
square foot leased facility located in Chatsworth, California.
Syntron's seismic data acquisition systems operations are conducted
from company-owned facilities comprising 79,000 square feet located on a 15.2
acre tract and leased facilities totaling 105,000 square feet, in Houston,
Texas. Syntron's European subsidiary, Syntron Europe Limited, operates from a
52,000 square foot office and plant facility on a 2.8 acre tract owned by the
Company in Derbyshire, England. Syntron's Asian subsidiary, Syntron Asia Pte.
Ltd., has leased a 1.4 acre tract in Singapore and operates from a 33,300 square
foot office and plant facility it constructed on the site.
CogniSeis geoscientific software operations are conducted from 73,000
square feet of leased office space in Houston, Texas. Additional office space
for development centers, service centers, and sales offices is leased in
Colorado, Canada, England, The People's Republic of China, Russia, and
Singapore.
The manufacturing operations for Continental's high power energy
sources are conducted from office and plant facilities comprising 160,000 square
feet on a 14 acre tract owned by the company in Dallas, Texas. Continental also
leases an 80,000 square foot building on a 4 acre tract contiguous to the
Continental property.
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Continental-Lensa S.A. of Santiago, Chile, leases 5,400 square feet for its
assembly operations. TELEFUNKEN Sendertechnik GmbH operates from a leased
facility of approximately 65,000 square feet in Berlin, Germany.
The Company is the developer of a 9,000 acre residential/recreational
project located near Concho, Arizona, in which Lake Investment Company, a
wholly-owned subsidiary of the Company, owns a 100% interest. Approximately 900
acres of this development remains unsold. The Company intends to continue its
efforts to liquidate its real estate operations and to use the proceeds in its
manufacturing operations.
Certain of the facilities of the Company and its subsidiaries are
subject to mortgage debt as set forth in Note 7 of the Notes to Consolidated
Financial Statements contained in the Company's Annual Report to Shareholders
for the year ended December 31, 1995, which information is incorporated herein
by reference.
ITEM 3. LEGAL PROCEEDINGS
As previously reported, the Company received notice on October 18,
1994, that Thomcast A.G. ("Thomcast") commenced an action in the United States
District Court for the Northern District of Alabama, Southern Division, alleging
that Continental Electronics Corporation ("Continental"), a wholly-owned
subsidiary of the Company, and Eternal Word Television Network, Inc., a customer
of Continental, have infringed and are infringing two claims of United States
Patent No. 4,560,944 (the "Patent") assigned to Thomcast.
Thomcast has stated that its damages cannot presently be ascertained,
but has computed its alleged damages on past sales at approximately $6,500,000
and has requested treble damages, prejudgment interest, costs and attorneys'
fees. Although the Company believes it has meritorious defenses to such claims,
it cannot predict the ultimate resolution of this matter. Trial on the matter is
expected to occur during the first quarter of 1997.
There are various other lawsuits and claims pending against the
Company's subsidiaries. In the opinion of Tech-Sym's management, based in part
on advice of counsel, none of these actions will have a material adverse effect
on the consolidated financial position of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted during the fourth quarter of 1994 to a vote of
the Company's security holders through the solicitation of proxies or otherwise.
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ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information concerning the
current executive officers (as defined by the Securities and Exchange Commission
rules) of the Company. These officers serve at the discretion of the Board of
Directors of the Company and of various subsidiaries of the Company, as the case
may be.
NAME AGE POSITIONS
---- --- ---------
Wendell W. Gamel 66 Chairman of the Board, President
and Director of the Company and
officer and director of various
subsidiaries of the Company
Coy J. Scribner 64 Vice President and Director of the
Company, President and Director
of Metric, and Chairman of the
Board of EEC
Ray F. Thompson 59 Vice President, Treasurer,
Controller and Chief Financial
Officer of the Company and officer
and director of various
subsidiaries of the Company
J. Rankin Tippins 43 Secretary and General Counsel of
the Company and officer and
director of various subsidiaries
of the Company
O. Dale Burris 59 President of TRAK Microwave
Corporation
Robert M. McDonald 65 President of Continental
Electronics Corporation
Richard F. Miles 47 Chairman of the Boards of Syntron,
Inc., and CogniSeis Development,
Inc.
There are no family relationships between any of the above persons.
Executive officers are elected annually by the Board of Directors of the Company
or a wholly-owned subsidiary of the Company, as the case may be, at their
respective meetings of directors held immediately following the annual meeting
of shareholders for such Company, to serve for the ensuing year or until their
successors have been elected. The annual meeting of shareholders of the Company
is normally held in April of each year and the annual meeting of each of the
Company's principal subsidiaries, including Metric, TRAK, Syntron, CogniSeis,
and Continental, are held in June of each year. There are no arrangements or
understandings between any officer and any other person pursuant to which the
officer was elected.
Mr. Gamel has been Chairman of the Board and President of the Company
for more than the past five years. Mr. Gamel has served as a director of the
Company continuously since 1966.
Mr. Scribner has been Vice President of the Company, President and a
director of Metric, and Chairman of the Board of EEC, for more than the past
five years. He has been a director of the Company continuously since 1983.
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Mr. Thompson has been Treasurer, Controller and Chief Financial Officer
of the Company for more than the past five years. In February of 1993, he was
elected to the additional office of Vice President of the Company.
Mr. Tippins has been Secretary and General Counsel of the Company for
more than the past five years.
Mr. Burris has served as President of TRAK for more than the past five
years.
Mr. McDonald has served as President of Continental for more than the
past five years.
Mr. Miles was elected President of Syntron on January 29, 1990. In
December of 1995, he resigned as President of Syntron and was elected Chairman
of the Boards of both Syntron and CogniSeis.
PART II
The information called for by Items 5 through 8, inclusive, of Part II
of this form is contained in the following sections of the Company's Annual
Report to Shareholders for 1994, which sections are incorporated herein by
reference:
Caption and Page of
Annual Report
--------------------
Item 5. Market for Registrant's "Stockholder and Market
Common Equity and Information"; page 37
Related Stockholder
Matters.
Item 6. Selected Financial Data "Selected Financial Data";
page 17
Item 7. Management's Discussion "Management's Discussion
Financial Condition and and Analysis of and
Results of Operations Analysis of Financial
Condition and Results of
Operations"; pages 18-21,
inclusive
Item 8. Financial Statements Tech-Sym Corporation and
and Supplementary Data Subsidiaries Consolidated
Financial Statements pages
22 through 36, inclusive
12
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
There were no such changes or disagreements.
PART III
The information called for by Items 10, 11, 12 and 13 of Part III of
this form (other than the information required by Item 10 with respect to
executive officers which has been included in Part I above as Item 4A) is
contained in the Company's definitive proxy statement for the Annual Meeting of
Shareholders to be held April 30, 1996. Such information has been filed with the
Securities and Exchange Commission and is incorporated herein.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1) FINANCIAL STATEMENTS
A list of the financial statements incorporated herein by reference is
set forth in the Index to Financial Statements and Schedules submitted as a
separate section of this report.
(2) FINANCIAL STATEMENT SCHEDULES
A list of the financial statement schedules included herein is contained
in the accompanying Index to Financial Statements and Schedules.
(3) EXHIBITS
The following documents are included as Exhibits to this report. An
asterisk (*) before an Exhibit number denotes that such Exhibit has been
incorporated by reference to the registration statement or report specified in
the brackets thereafter.
*3(a) Articles of Incorporation of Registrant, as amended [Registrant's 10-K
(1989), SEC File No. 1-4371, Exhibit 3(a)]
13
*3(b) By-Laws of Registrant, as amended [Registrant's 10-K (1993), SEC File
No. 1-4371, Exhibit 3(b)]
*4(a) Amended and Restated Rights Agreement dated as of June 1, 1988,
between the Registrant and Continental Stock Transfer and Trust
Company, as rights agent, relating to Common Stock Purchase Rights
[Registrant's 10-K (1993), SEC File No. 1-4371, Exhibit 4(a)]
*4(b) Note Agreement dated as of March 1, 1989, between the Registrant and
Principal Mutual Life Insurance Company et al with respect to
$20,000,000 principal amount of 10.28% Senior Notes due March 1, 2001
(excluding attachments) [Registrant's 10-K (1988), SEC File No.
1-4371, Exhibit 4(b)]
*4(c) 10.28% Note dated March 14, 1989, of Registrant due March 1, 2001 in
the principal amount of $12 million and issued to Principal Mutual
Life Insurance Company [Registrant's 10-K (1988), SEC File No. 1-4371,
Exhibit 4(c)]
*4(d) 10.28% Note dated March 14, 1989, of Registrant due March 1, 2001 in
the principal amount of $5 million and issued to Crown Life Insurance
Company [Registrant's 10-K (1988), SEC File No. 1-4371, Exhibit 4(d)]
*4(e) 10.28% Note dated March 14, 1989, of Registrant due March 1, 2001 in
the principal amount of $2 million and issued to Guarantee Mutual Life
Company [Registrant's 10-K (1988), SEC File No. 1-4371, Exhibit 4(e)]
*4(f) 10.28% Note dated March 14, 1989, of Registrant due March 1, 2001 in
the principal amount of $1,000,000 and issued to Security Mutual Life
Insurance Company [Registrant's 10-K (1988), SEC File No. 1-4371,
Exhibit 4(f)]
*10(a) 1980 Stock Option Plan of Registrant [Registration Statement No.
2-68084, Exhibit 1.1]
*10(b) First Amendment to 1980 Stock Option Plan of Registrant dated February
23, 1982 [Registration Statement No. 2-77742, Exhibit 10(b)]
*10(c) Second Amendment to 1980 Stock Option Plan of Registrant dated
February 17, 1983 [Registration Statement No. 2-87064, Exhibit 10(c)]
14
*10(d) 1990 Stock Option Plan of Registrant [Registration Statement No.
33-38208, Exhibit 28.1]
*10(e) 1990 Stock Option Plan, as amended, effective February 21, 1991
[Registrant's 10-K (1991) SEC File No. 1-4371, Exhibit 10(e)]
*10(f) 1990 Stock Option Plan, as amended, effective February 17, 1994
[Registration No. 33-56535, Exhibit 4.1]
*10(g) Written description of incentive bonus compensation plan effective
February 20, 1992 [Registrant's 10-K (1991) SEC File No. 1-4371,
Exhibit 10(f)]
*10(h) Deferred Compensation Agreement dated January 1, 1978, between the
Registrant and Robert E. Moore with attached Amendments through
January 1, 1991 [Registrant's 10-K (1990) SEC File No. 1-4371, Exhibit
10 (g)]
*10(i) Consulting Agreement dated January 1, 1981, between TRAK Microwave
Corporation and Rollin J. Sloan [Registration Statement No. 2-87064,
Exhibit 10(p)]
*10(j) First Amendment to Consulting Agreement dated January 1, 1984, between
TRAK Microwave Corporation and Rollin J. Sloan [Registrant's 10-K
(1983), SEC File No. 1-4371, Exhibit 10(t)]
*10(k) Second Amendment to Consulting Agreement dated January 1, 1986,
between TRAK Microwave Corporation and Rollin J. Sloan [Registrant's
10-K (1985), SEC File No. 1-4371, Exhibit 10(cc)]
*10(l) Third Amendment to Consulting Agreement dated December 10, 1987,
between Registrant and Rollin J. Sloan [Registrant's 10-K (1987), SEC
File No. 1-4371, Exhibit 10(cc)]
*10(m) Consulting Agreement dated January 1, 1988, between Registrant and
Robert E. Moore [Registrant's 10-K (1987), SEC File No. 1-4371,
Exhibit 10(dd)]
*10(n) Form of Director's Stock Option Agreement dated as of December 10,
1987, entered into between Registrant and Keith R. Beeman (5,000
shares), A. A. Gallotta, Jr. (5,000 shares), Christopher C. Kraft, Jr.
(5,000 shares), and Joal A. Teresko (5,000 shares) [Registrant's 10-K
(1988), SEC File No. 1-4371, Exhibit 10(ii)]
15
*10(o) Termination Agreement dated May 1, 1991, between the Registrant and
Wendell W. Gamel [Registrant's 10-K (1991) SEC File No. 1-4371,
Exhibit 10(p)]
*10(p) Termination Agreement dated May 1, 1991, between the Registrant and
Coy J. Scribner [Registrant's 10-K (1991) SEC File No. 1-4371, Exhibit
10(q)]
*10(q) Termination Agreement dated May 1, 1991, between the Registrant and
Ray F. Thompson [Registrant's 10-K (1991) SEC File No. 1-4371, Exhibit
10(r)]
*10(r) Termination Agreement dated May 1, 1991, between the Registrant and
Richard F. Miles [Registrant's 10-K (1991) SEC File No. 1-4371,
Exhibit 10(s)]
*10(s) First Amendment to Termination Agreement, dated April 26, 1994,
between the Registrant and Richard F. Miles [Registration No.
33-56533, Exhibit 10(s)]
*10(t) Termination Agreement dated May 1, 1991, between the Registrant and J.
Rankin Tippins [Registrant's 10-K (1991) SEC File No. 1-4371, Exhibit
10(t)]
*10(u) Termination Agreement dated May 1, 1991, between the Registrant and O.
Dale Burris [Registrant's 10-K (1991) SEC File No. 1-4371, Exhibit
10(u)]
*10(v) Termination Agreement dated May 1, 1991, between the Registrant and
Robert M. McDonald [Registrant's 10-K (1991) SEC File No. 1-4371,
Exhibit 10(v)]
*10(w) Trust Agreement dated June 11, 1991 between the Registrant and Texas
Commerce Bank National Association [Registrant's 10-K (1991) SEC File
No. 1-4371, Exhibit 10(w)]
*10(x) First Amendment dated June 1, 1992, to Trust Agreement dated June 11,
1991, between the Registrant and Texas Commerce Bank National
Association [Registrant's 10-K (1992) SEC File No. 1-4371, Exhibit
10(x)]
16
*10(y) Nonemployee Director Retirement Plan of the Registrant effective
January 1, 1992 [Registrant's 10-K (1991) SEC File No. 1-4371, Exhibit
10(x)]
*10(z) Executive Retirement Agreement dated May 1, 1991, between the
Registrant and Wendell W. Gamel [Registrant's 10-K (1991) SEC File No.
1-4371, Exhibit 10(y)]
*10(aa) Executive Retirement Agreement dated May 1, 1991, between the
Registrant and Coy J. Scribner [Registrant's 10-K (1991) SEC File No.
1-4371, Exhibit 10(z)]
*10(bb) Executive Retirement Agreement dated May 1, 1991, between the
Registrant and Ray F. Thompson [Registrant's 10-K (1991) SEC File No.
1-4371, Exhibit 10(aa)]
*10(cc) Executive Retirement Agreement dated May 1, 1991, between the
Registrant and O. Dale Burris [Registrant's 10-K (1991) SEC File No.
1-4371, Exhibit 10(bb)]
*10(dd) Executive Retirement Agreement dated July 1, 1991, between Registrant
and J. Rankin Tippins [Registrant's 10-K (1991) SEC File No. 1-4371,
Exhibit 10(cc)]
*10(ee) Executive Retirement Agreement dated April 26, 1994, between the
Registrant and Richard F. Miles [Registration No. 33-56533, Exhibit
10(ee)]
13 Pages 17-37 of the Annual Report to Shareholders of Registrant for the
year ended December 31, 1994, are included as an Exhibit to this
report for the information of the Securities and Exchange Commission,
and, except for those portions thereof specifically incorporated by
reference elsewhere herein, such pages of the Annual Report should not
be deemed filed as a part of this report
21 Subsidiaries of the Registrant
23 Consent of independent accountants
27 Financial Data Schedule which is deemed not to be filed for purposes
of liability under the federal securities laws
(B) REPORTS ON FORM 8-K
No reports on Form 8-K were required to be filed during the
quarter ended December 31, 1995.
17
SIGNATURES
Pursuant to the requirements 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.
TECH-SYM CORPORATION
By: /s/ RAY F. THOMPSON
Ray F. Thompson, Vice President,
Treasurer and Controller (Principal
financial officer and principal
accounting officer)
Date: March 29, 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.
By: /s/ WENDELL W. GAMEL
Wendell W. Gamel, Chairman of the
Board, President and Director
(Principal executive officer)
Date: March 29, 1996
By: /s/ W. L. CREECH
W. L. Creech
Director
Date: March 29, 1996
By: /s/ MICHAEL C. FORREST
Michael C. Forrest
Director
Date: March 29, 1996
By: /s/ A. A. GALLOTTA, JR.
A. A. Gallotta, Jr.
Director
Date: March 29, 1996
18
By: /s/ CHRISTOPHER C. KRAFT, JR.
Christopher C. Kraft, Jr.
Director
Date: March 29, 1996
By: /s/ ROBERT E. MOORE
Robert E. Moore
Director
Date: March 29, 1996
By: /s/ COY J. SCRIBNER
Coy J. Scribner
Director
Date: March 29, 1996
By: /s/ ROLLIN J. SLOAN
Rollin J. Sloan
Director
Date: March 29, 1996
By: /s/ JOAL A. TERESKO
Joal A. Teresko
Director
Date: March 29, 1996
By: /s/ CHARLES K. WATT
Charles K. Watt
Director
Date: March 29, 1996
19
FINANCIAL STATEMENTS AND
SCHEDULES
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Page in
Annual Report*
--------------
(a) The following documents are filed as part of
this report:
(1) Financial Statements:
Consolidated Statements of Income for
the three years ended December 31, 1995 22
Consolidated Balance Sheets at
December 31, 1995 and 1994 23
Consolidated Statements of Cash Flows for
the three years ended December 31, 1995 24
Consolidated Statements of Changes in
Shareholders' Investment for the three
years ended December 31, 1995 25
Notes to Consolidated Financial Statements 26
Quarterly Financial Information (Unaudited) 35
Report of Independent Accountants 36
Page
in this Report
on Form 10-K
-------------
(2) Financial Statement Schedules:
Report of Independent Accountants on
Financial Statement Schedules S-2
II Valuation and Qualifying Accounts and
Reserves for the three years ended
December 31, 1995 S-3
*Incorporated by reference from the indicated pages of the 1995
Annual Report to Shareholders.
All other schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes
thereto.
Report of Independent Accountants on
Financial Statement Schedules
To the Board of Directors of
Tech-Sym Corporation:
Our audits of the consolidated financial statements referred to in our
report dated February 22, 1996 appearing in the 1995 Annual Report to
Shareholders of Tech-Sym Corporation (which report and consolidated
financial statements are incorporated by reference in this Annual Report
on Form 10-K) also included an audit of the Financial Statement
Schedules listed in Item 14(a)(2) of this Form 10-K. In our opinion,
these Financial Statement Schedules present fairly, in all material
respects, the information set forth therein when read in conjunction
with the related consolidated financial statements.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Houston, Texas
February 22, 1996
S-2
TECH-SYM CORPORATION AND SUBSIDIARIES
Valuation and Qualifying Accounts and Reserves (Schedule II)
For the Three Years Ended December 31, 1995
<TABLE>
<CAPTION>
===========================================================================================================================
(In thousands)
Charged Charged Charged
Balance to costs to costs to costs
at and Balance and Balance and Balance
beginning expenses Deductions at end expenses Deductions at end expenses Deductions at end
Description of 1993 1993 1993 of 1993 1994 1994 of 1994 1995 1995 of 1995
----------- ------- ---- ---------- ------- ---- ---------- ------- ---- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Tech-Sym Corporation and
Consolidated Subsidiaries
- -------------------------
Reserves deducted
from assets:
Current receivables $ 231 $ 164 $ 173 $ 222 $ 476 $ 234 $ 464 $1,836 $1,069 $1,231
Long-term receivables 172 287 147 312 162 262 212 394 0 606
--- --- --- --- --- --- --- ----- ----- -----
$ 403 $ 451 $ 320 $ 534 $ 638 $ 496 $ 676 $2,230 $1,069 $1,837
=== === === === === === === ===== ===== =====
</TABLE>
S-3
EXHIBIT 13
<PAGE>
SELECTED FINANCIAL DATA
(In thousands except per share amounts)
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
For the Year:
Sales ............................................. $246,487 $213,605 $199,248 $202,172 $200,061
Costs and expenses ................................ 227,552 195,172 184,765 190,681 184,139
-------- -------- -------- -------- --------
Income before income taxes ........................ 18,935 18,433 14,483 11,491 15,922
Provision for income taxes ........................ 5,900 6,318 5,234 3,952 5,761
-------- -------- -------- -------- --------
Net income ........................................ $ 13,035 $ 12,115 $ 9,249 $ 7,539 $ 10,161
======== ======== ======== ======== ========
Earnings per common share ......................... $ 2.00 $ 1.86 $ 1.44 $ 1.16 $ 1.56
======== ======== ======== ======== ========
At Year End:
Current assets .................................... $178,318 $152,067 $135,719 $124,312 $135,074
Current liabilities ............................... 74,561 56,284 35,634 30,012 41,320
Working capital ................................... 103,757 95,783 100,085 94,300 93,754
Property, plant and equipment - net ............... 42,469 39,993 35,047 36,641 35,357
Long-term debt .................................... 29,522 21,587 23,317 26,635 27,929
Total assets ...................................... 265,026 225,803 194,732 181,077 185,985
Total liabilities ................................. 115,008 90,016 71,395 68,176 77,936
Shareholders' investment .......................... 150,018 135,787 123,337 112,901 108,049
</TABLE>
Amounts related to 1991 through 1994 have been restated to reflect the
acquisition of CogniSeis Development, Inc. in a transaction accounted for as a
pooling-of-interests.
No dividends were paid on common stock for any of the above years.
17
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
WORKING CAPITAL
In Millions of Dollars
[BAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
1991 93.8
1992 94.3
1993 100.1
1994 95.8
1995 103.8
At December 31, 1995, the Company's working capital was $103,757,000 as
compared to $95,783,000 at December 31, 1994. The Company's cash, cash
equivalents and short-term investments decreased to $20,815,000 at December 31,
1995 from $24,383,000 at December 31, 1994, primarily because of cash used for
acquisitions and increases in receivables and inventory relating to the
Company's overall increase in sales volume, partially offset by increases in
notes and accounts payable.
The Company's operations used cash in the amount of $11,220,000 in 1995,
and provided cash in the amounts of $6,332,000 in 1994, and $15,392,000 in 1993.
During 1995, the Company received U.S. Government contracts which generally
provide for progress billing based upon a percentage (usually 75-80%) of costs
incurred, while remaining costs and total profit are billable only upon
completion of the contract or, in certain instances, as delivery of units is
made. In addition, large contracts with foreign customers usually provide for
substantial advance payments. Less reliance on government contracts, which
contain provisions for progress payments, has increased the Company's
requirement for cash. Increased pressure for financing of purchases by
commercial customers, primarily for seismic exploration systems and radio
transmitters, has also increased cash requirements.
The Company is required to repay its senior unsecured notes in annual
principal installments of $2,857,000. The terms of the unsecured note financing
impose limitations on future (additional) borrowings. However, if the most
restrictive limitation is used, defined consolidated funded debt cannot exceed
55% of defined consolidated total capitalization which would permit a maximum
defined funded debt of approximately $183,000,000 as compared to $42,700,000 in
actual funded debt as of December 31, 1995. Given the current level of liquid
assets and forecasted cash flows from future operations, the Company does not
presently anticipate the need for future borrowings in excess of such
limitations. At December 31, 1995, the Company had unused lines of credit which
aggregated $32,500,000.
Because of the Company's $138,000,000 backlog and anticipated new
business, it is expected that additional investments will be required in capital
equipment and new facilities. Capital expenditures for land, buildings and
improvements, and machinery and equipment were $8,875,000, $10,231,000, and
$7,001,000, for 1995, 1994, and 1993, respectively, and such expenditures are
expected to be approximately $13,800,000 for 1996. The Company believes that the
funds required for working capital needs and capital equipment additions will
come from available funds on hand, cash flows from operations, and capital
equipment financing.
18
RESULTS OF OPERATIONS
DEBT TO CAPITAL RATION
IN PERCENT
[BAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
1991 22.9
1992 21.6
1993 17.7
1994 20.9
1995 28.1
1995 IN COMPARISON WITH 1994: Sales for 1995 increased 15.4% as compared with
1994 while costs and expenses increased 16.6% which resulted in a 2.7% increase
in income before income taxes. The increase in sales for 1995 was the result of
(i) increased sales in the geoscience area ($19,950,000 or 30.3%) primarily due
to a new customer for marine seismic data acquisition systems, increased sales
and repair of seismic cables and accessories, and sales of new seismic
processing and geological interpretation products, as well as the acquisition of
Photon Systems Ltd., effective September 11, 1995; (ii) greater sales in the
communications area ($13,865,000 or 17.5%) primarily due to strong international
demand in general for microwave components, high power broadcast equipment and
meteorological radars. The sales in the defense systems area were essentially
the same as the previous year.
Cost of sales increased 18.6% while selling, general and administrative
expenses increased 10.8% as compared to 1994. The increase in cost of sales was
primarily due to the increase in sales for 1995 as well as generally lower
margins in all areas primarily due to (i) additional competition in the areas of
geoscience and defense, (ii) costs of introducing new products in the areas of
geoscience and communications, and (iii) supplier quality problems in the
seismic exploration area. The increase in selling, general and administrative
expenses was in line with the increase in sales. Company sponsored product
development increased 23.9% for 1995 and continues to be heavily weighted to the
geoscience area. In addition, the high power broadcast equipment in the
communications area contributed to this increase. Interest expense increased
($884,000 or 29.9%) on a 42% increase in average borrowings for the year.
Interest and other income increased ($1,745,000 or 74.5%) for the period due to
an increase in interest income during 1995 and the absense of the expense of a
1994 litigation settlement. The effective inco me tax rate decreased primarily
due to utilization of loss carry forwards on certain foreign operations,
research and development credits, and foreign investments credits.
1994 IN COMPARISON WITH 1993: Sales for the year increased 7.2% as compared with
1993 while costs and expenses increased 5.6% which resulted in an 27.3% increase
in income before income taxes. The 7.2% increase in sales was the result of (i)
greater sales in the communications area ($3,848,000 or 5.1%) primarily due to
strong foreign demand for high power broadcast equipment and greater demand in
general for commercial microwave components; (ii) increased sales in the
geoscience area ($4,041,000 or 6.5%) primarily due to a new foreign customer;
and (iii) increased sales of defense systems ($1,299,000 or 2.2%) partially due
to a minor acquisition in the defense systems area.
19
Cost of sales increased 9.7% while selling, general and administrative
expenses increased 2.5% as compared to 1993. The increase in cost of sales for
1994 as compared to 1993 was primarily due to the increase in sales as well as a
large lower margin contract in the defense systems area which is in its
engineering phase. The increase in selling, general and administrative expense
was in line with the increase in sales. Company-sponsored product development
was essentially the same as 1993 and continues to be focused on the geoscience
area. This was somewhat offset by a decrease in expenditures in the
communications area. Interest expense decreased ($559,000 or 15.9%) from 1993
partially due to a 1993 payment to the Internal Revenue Service. Interest and
other income - net increased due to additional interest bearing receivables
which offset the expense of a litigation settlement. The effective income tax
rate was lower in 1994 due to the utilization of loss carryforwards on foreign
operations.
PRODUCT LINE SALES
The following table sets forth the percentages for each of the last three
years of total sales contributed by each of the Company's product lines which
accounted for five percent or more of consolidated sales in any of such
years:
Year Ended December 31,
--------------------------------
1995 1994 1993
---- ---- ----
Communications ....................... 38% 37% 38%
Geoscience ........................... 35% 31% 31%
Defense Systems ...................... 25% 29% 30%
The majority of the Company's operations are located in the United
States.
OTHER INFORMATION
In light of the reduction in the nation's defense budget, the Company has
continued its attempts to develop business through product development and
acquisitions which is not related to government defense spending. During the
last seven years, the amount of the Company's sales attributable to expenditures
by the U.S. Department of Defense has remained constant, but the portion of the
Company's total sales attributable to expenditures by the U.S. Department of
Defense has decreased from 65% to 30% due to the increase of sales in other
areas. The Company anticipates that it will continue to develop business which
is unrelated to defense and, although no assurances can be given, anticipates
that the development of such other business will offset declines, if any, in
sales of the Company's defense related products.
20
The increase expected in the non-defense portion of the Company's
business may require additional expenditures for company-sponsored product
development. In addition, sales and earnings in the commercial market,
especially those in the seismic exploration area, are more volatile than under
long-term military programs. However, Management believes it important to
diversify the Company's markets and will take appropriate action to minimize any
adverse effects.
The financial results for the year ended December 31, 1995, were
adversely affected by the delay in shipping orders for systems in the marine
seismic data acquisition systems area using its new SYNTRAK 480trademark 24 bit
digitizing modules due to start-up technical problems. Although the problems
were resolved during the fourth quarter of 1995 and several systems shipped,
production was delayed enough to shift deliveries from the last quarter 1995 to
1996.
Net income and the related per common share amounts for the quarters
ended March 31, 1995, and June 30, 1995, have been restated from previously
reported amounts to reflect the deferral of revenue recognition on certain sales
where the right of exchange for credit existed. As a result, net income was
reduced by $1,457,000, or $.22 per common share, for the quarter ended March 31,
1995, and by $385,000, or $.06 per common share, for the quarter ended June 30,
1995. Net income for the quarter ended December 31, 1995, increased $613,000 or
$.09 per common share as a result of the recognition of a portion of such
deferrals in the fourth quarter. The remaining deferred revenue totaling
approximately $4,000,000 is expected to be recognized during 1996.
SHAREHOLDERS' INVESTMENT
In Millions Of Dollars
[BAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
1991 108.0
1992 112.9
1993 123.3
1994 135.8
1995 150.0
CAPITAL EXPENDITURES
In Millions Of Dollars
[BAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
1991 5.45
1992 7.53
1993 7.00
1994 10.23
1995 8.88
21
<PAGE>
CONSOLIDATED STATEMENT OF INCOME
(In thousands except per share amounts)
<TABLE>
<CAPTION>
For the Year Ended December 31,
-----------------------------------
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Sales ....................................... $ 246,487 $ 213,605 $ 199,248
--------- --------- ---------
Costs and expenses:
Cost of sales .............................. 160,509 135,285 123,298
Selling, general and administrative expenses 52,103 47,013 45,878
Company-sponsored product development ...... 15,187 12,260 13,134
Interest expense ........................... 3,840 2,956 3,515
Interest and other income - net ............ (4,087) (2,342) (1,060)
--------- --------- ---------
227,552 195,172 184,765
--------- --------- ---------
Income before income taxes ................. 18,935 18,433 14,483
Provision for income taxes .................. 5,900 6,318 5,234
--------- --------- ---------
Net income ................................. $ 13,035 $ 12,115 $ 9,249
========= ========= =========
Earnings per common share ................... $ 2.00 $ 1.86 $ 1.44
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
22
<PAGE>
CONSOLIDATED BALANCE SHEET
(In thousands except par value and number of shares)
<TABLE>
<CAPTION>
December 31,
----------------------
1995 1994
--------- ---------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents ................................ $ 20,715 $ 24,083
Short-term investments ................................... 100 300
Receivables - net ........................................ 54,199 46,870
Unbilled revenue ......................................... 39,137 34,329
Inventories .............................................. 59,492 42,507
Other .................................................... 4,675 3,978
--------- ---------
Total current assets ................................... 178,318 152,067
Property, plant and equipment - net ........................ 42,469 39,993
Long-term receivables - net ................................ 10,567 10,576
Other assets ............................................... 33,672 23,167
--------- ---------
Total assets ........................................... $ 265,026 $ 225,803
========= =========
LIABILITIES
Current liabilities:
Notes payable ............................................ $ 24,237 $ 10,985
Current maturities of long-term debt ..................... 4,861 3,318
Accounts payable ......................................... 14,480 13,566
Billings in excess of costs and estimated earnings
on uncompleted contracts ................................. 6,880 7,635
Taxes on income .......................................... 1,366 2,902
Other liabilities ........................................ 22,737 17,878
--------- ---------
Total current liabilities .............................. 74,561 56,284
Long-term debt ............................................. 29,522 21,587
Other liabilities and deferred credits ..................... 10,925 12,145
--------- ---------
Total liabilities ...................................... 115,008 90,016
--------- ---------
SHAREHOLDERS' INVESTMENT
Commitments and Contingencies
Preferred stock - authorized 2,000,000 shares,
without par value, none issued
Common stock - authorized 20,000,000 shares, $.10 par value;
issued 7,860,351 and 7,797,651 ............................ 786 780
Additional capital ......................................... 38,486 37,365
Accumulated earnings ....................................... 122,855 109,820
Cumulative translation adjustments ......................... (1,095) (1,164)
Common stock held in treasury at cost (1,307,592 shares) ... (11,014) (11,014)
--------- ---------
Total shareholders' investment ......................... 150,018 135,787
--------- ---------
Total liabilities and shareholders' investment ......... $ 265,026 $ 225,803
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
23
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income ............................................... $ 13,035 $ 12,115 $ 9,249
Adjustments to reconcile net income to net
cash provided by (used for) operating activities:
Depreciation and amortization ............................ 11,887 9,277 8,362
Deferred income taxes .................................... (861) (3,408) (997)
Change in operating assets and liabilities:
Receivables .............................................. (5,277) (10,829) (4,198)
Unbilled revenue ......................................... (4,808) 3,602 (3,584)
Inventories .............................................. (16,392) (6,712) 1,432
Other assets ............................................. (9,349) (1,009) (1,320)
Accounts payable ......................................... (192) 5,526 (485)
Billings in excess and other liabilities ................. 3,547 (3,551) 6,386
Taxes on income .......................................... (1,741) 980 724
Other - net .............................................. (1,069) 341 (177)
-------- -------- --------
Net cash provided by (used for) operating activities ... (11,220) 6,332 15,392
-------- -------- --------
Cash flows from investing activities:
Capital expenditures ..................................... (8,875) (10,231) (7,001)
Investment in grantor trust .............................. (518) (695) (453)
Payments for purchases of businesses, net of cash acquired (5,942) (8,945) --
Purchases of investment securities ....................... (100) -- (6,507)
Sales of investment securities ........................... 300 7,573 8,835
Other investing activities ............................... (23) (37) (854)
-------- -------- --------
Net cash used for investing activities ................. (15,158) (12,335) (5,980)
-------- -------- --------
Cash flows from financing activities:
Net borrowings (payments) under line of credit agreements 10,730 10,533 (3,982)
Proceeds from long-term debt ............................. 17,910 1,709 --
Payments on long-term debt ............................... (6,826) (3,438) (396)
Proceeds from exercise of stock options .................. 1,127 645 1,621
Cash paid to acquire treasury stock ...................... -- (801) (451)
Other .................................................... 69 130 (120)
-------- -------- --------
Net cash provided by (used for) financing activities ... 23,010 8,778 (3,328)
-------- -------- --------
Net increase (decrease) in cash and cash equivalents ....... (3,368) 2,775 6,084
Cash and cash equivalents at beginning of year ........... 24,083 21,308 15,224
-------- -------- --------
Cash and cash equivalents at end of year ................. $ 20,715 $ 24,083 $ 21,308
======== ======== ========
Cash flows from operating activities include:
Interest paid ............................................ $ 3,742 $ 2,749 $ 2,847
======== ======== ========
Income taxes paid - net .................................. $ 7,441 $ 8,358 $ 5,832
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
24
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' INVESTMENT
(In thousands)
<TABLE>
<CAPTION>
COMMON STOCK CUMULATIVE TREASURY STOCK
-------------- ADDITIONAL ACCUMULATED TRANSLATION ----------------
SHARES AMOUNT CAPITAL EARNINGS ADJUSTMENTS SHARES AMOUNT TOTAL
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1992
as previously reported .................. 6,972 $697 $32,920 $ 81,072 $(1,107) 1,351 $(10,441) $ 103,141
Adjustment for pooling of
interest(Note 2) ........................ 738 74 2,302 7,384 -- -- -- 9,760
-------------------------------------------------------------------------------------
Balance, December 31, 1992
as restated ............................. 7,710 771 35,222 88,456 (1,107) 1,351 (10,441) 112,901
Net income for year ...................... -- -- -- 9,249 -- -- -- 9,249
Issuance of common stock
for stock options ....................... 62 6 873 -- -- -- -- 879
Issuance of common stock
from treasury for stock options ......... -- -- 192 -- -- (91) 550 742
Currency translation adjustment .......... -- -- -- -- (430) -- -- (430)
Acquisition of treasury shares ........... -- -- -- -- -- 29 (451) (451)
Tax benefit associated
with stock options ...................... -- -- 447 -- -- -- -- 447
-------------------------------------------------------------------------------------
Balance, December 31, 1993 ............... 7,772 777 36,734 97,705 (1,537) 1,289 (10,342) 123,337
Net income for year ...................... -- -- -- 12,115 -- -- -- 12,115
Issuance of common stock
for stock options ....................... 26 3 442 -- -- -- -- 445
Issuance of common stock
from treasury for stock options ......... -- -- 71 -- -- (22) 129 200
Currency translation adjustment .......... -- -- -- -- 373 -- -- 373
Acquisition of treasury shares ........... -- -- -- -- -- 41 (801) (801)
Tax benefit associated
with stock options ...................... -- -- 118 -- -- -- -- 118
Balance, December 31, 1994 ............... 7,798 780 37,365 109,820 (1,164) 1,308 (11,014) 135,787
Net income for year ...................... -- -- -- 13,035 -- -- -- 13,035
Issuance of common stock
for stock options ....................... 62 6 853 -- -- -- -- 859
Currency translation adjustment .......... -- -- -- -- 69 -- -- 69
Tax benefit associated
with stock options ...................... -- -- 268 -- -- -- -- 268
-------------------------------------------------------------------------------------
Balance, December 31, 1995 ............... 7,860 $786 $38,486 $122,855 $(1,095) 1,308 $(11,014) $ 150,018
=====================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Tech-Sym Corporation and its subsidiaries (the Company or Tech-Sym) is a high
technology company that designs, develops, and manufactures electronic
systems and components used in diverse markets including communications,
geoscience, and defense systems.
ESTIMATES: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of certain assets
and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the related reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates. Management believes that the estimates are reasonable.
PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include
the accounts of Tech-Sym Corporation and its subsidiaries. All significant
intercompany accounts and transactions have been eliminated in consolidation.
SHORT-TERM INVESTMENTS AND OTHER CASH EQUIVALENTS: Short-term investments are
carried at market value and have maturities of less than one year.
Short-term investments with original maturities of three months or less are
classified as cash equivalents by the Company. Included in short-term
investments at December 31, of both 1995 and 1994 are short-term investments
in certificates of deposit of $100,000 with maturities greater than three
months.
REVENUE RECOGNITION: The Company recognizes revenue on contracts utilizing
the percentage of completion method, measured by the percentage of total
costs incurred to date to estimated total costs for each contract. Estimated
losses on contracts are provided for in full when they become apparent.
Substantially all unbilled revenue amounts are expected to be billed and
collected within one year in accordance with the terms of the related
contracts, typically upon shipment of deliverables.
The Company recognizes revenue from sales of products manufactured in
standard manufacturing operations, primarily seismic exploration systems, at
the time the products are shipped to the customer.
Revenues from the sale of hardware products and software licenses are
recognized at the time of shipment unless significant future obligations
remain.
INVENTORIES: Inventories are valued at the lower of cost or market. Cost is
determined on the first-in, first-out or average cost method.
DEPRECIATION AND AMORTIZATION: Depreciation of plant and equipment is
provided by the straight-line method over their estimated useful lives. Major
renewals and betterments are capitalized while minor replacements,
maintenance, and repairs which do not extend useful lives are expensed. The
cost and accumulated depreciation applicable to assets retired or sold are
removed from the respective accounts and the resultant gain or loss is
recognized at that time.
Goodwill is amortized by the straight-line method over 5 to 15 years.
Amortization expense was $1,020,000, $554,000, and $342,000, in 1995, 1994,
and 1993, respectively. Goodwill of $15,012,000 and $9,421,000 at December
31, 1995 and 1994, respectively, is included in other assets and is net of
accumulated amortization of $5,496,000 and $4,476,000 at December 31, 1995
and 1994, respectively.
26
RESEARCH AND DEVELOPMENT: The Company performs research and development under
both company-sponsored programs and contracts with others, primarily the U.
S. Government. Costs related to company-sponsored research and development
for new products and major product improvements are expensed as incurred.
SOFTWARE DEVELOPMENT COSTS: Costs of developing software for sale are charged
to expense when incurred as research and development until technological
feasibility has been established for the product. Thereafter, software
development costs are capitalized until the software is ready for general
release to customers. Once the software is ready for general release,
amortization of the software development costs begins. Amortization is
calculated as the greater of the amount computed by applying the ratio of
revenues generated during the current year to currently anticipated gross
revenues over the remainder of the product life to the amount capitalized, or
by applying the straight-line method over the currently estimated remaining
product life. Capitalized software development costs are generally not
amortized over periods which exceed five years.
INCOME TAXES: The provision for income taxes is computed based on the pretax
income included in the consolidated statement of income.
Research and development tax credits are recorded to the extent
allowable as a reduction of the provision for federal income taxes in the
year the qualified research and development expenditures are incurred. The
asset and liability approach is used to recognize deferred tax liabilities
and assets for the expected future tax consequences of temporary differences
between the carrying amounts and the tax bases of assets and liabilities.
The Company has not recorded a deferred income tax liability for
additional U.S. Federal income taxes that would result from the distribution
of earnings of its foreign subsidiaries, if they were actually repatriated.
The Company intends to indefinitely reinvest the undistributed earnings of
its foreign subsidiaries. Any federal income taxes on such earnings, if
remitted, would generally be offset by available foreign tax credits.
FOREIGN CURRENCY TRANSLATION: The Company's foreign subsidiaries use the
local currency as the functional currency. Accordingly, assets and
liabilities of the Company's foreign subsidiaries are translated using the
exchange rates in effect at the balance sheet date, while income and expenses
are translated using average rates prevailing during the year. Translation
adjustments are reported as a separate component of shareholders' investment.
EARNINGS PER SHARE: Earnings per common share are based on the weighted
average number of shares outstanding during each year (6,522,000 for 1995,
6,498,000 for 1994, and 6,410,000 for 1993). The effect of common stock
equivalents (stock options) has not been significant during 1995, 1994, and
1993.
STOCK-BASED COMPENSATION: The Company has not elected early adoption of
Financial Accounting Standard No. 123 (FAS 123), Accounting for Stock-Based
Compensation. FAS 123 become effective beginning with the Company's first
quarter of 1996, and will not have a material effect on the Company's
financial position or results of operations. Upon adoption of FAS 123, the
Company will continue to measure compensation expense for its stock-based
employee compensation plans using the intrinsic value method prescribed by
APB Opinion No. 25, Accounting for Stock Issued to Employees and will provide
pro forma disclosures of net income and earnings per share as if the fair
value-based method prescribed by FAS 123 had been applied in measuring
compensation expense.
OTHER RECENT PRONOUNCEMENTS: In 1995 Financial Accounting Standards No. 121
(FAS 121), Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of, was issued and is effective for fiscal
years commencing after December 15, 1995. The future adoption of
FAS 121 is not expected to have a material effect on the Company's
consolidated financial position or operating results.
27
NOTE 2 - ACQUISITIONS
On June 30, 1995, the Company acquired CogniSeis Development, Inc.
(CogniSeis), a company which develops, markets, and licenses seismic
processing and geologic interpretation systems. In connection with the
acquisition, the Company issued a total of 737,781 of its shares in exchange
for all of the outstanding shares of common stock of CogniSeis. The
transaction has been accounted for as a pooling of interests, and
accordingly, the consolidated financial statements for the years ended
December 31, 1994 and 1993 have been restated to include CogniSeis.
Separate results of operations for the periods prior to the merger
with CogniSeis are as follows (in thousands):
UNAUDITED
SIX MONTHS ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
--------- --------------------------
1995 1994 1993
--------- --------- ---------
Sales
Tech-Sym .................. $ 108,273 $ 197,593 $ 184,310
CogniSeis ................. 9,716 16,012 14,938
--------- --------- ---------
Combined ................ $ 117,989 $ 213,605 $ 199,248
========= ========= =========
Net income (loss)
Tech-Sym .................. $ 6,406 $ 12,235 $ 10,216
CogniSeis ................. (46) (120) (967)
--------- --------- ---------
Combined ................ $ 6,360 $ 12,115 $ 9,249
========= ========= =========
No adjustments were necessary in order to conform the accounting
policies of CogniSeis to the Company's accounting policies.
During 1995, 1994, and 1993, the Company made several other
acquisitions which were insignificant individually and in the aggregate.
NOTE 3 - RECEIVABLES AND UNBILLED REVENUE
Receivables and unbilled revenue are summarized as follows (in thousands):
DECEMBER 31,
-----------------
1995 1994
------- -------
Current receivables:
Commercial, less allowance for losses of $1,231 and $464 . $44,709 $33,964
U.S. Government .......................................... 9,490 12,906
------- -------
$54,199 $46,870
======= =======
Unbilled revenue:
Commercial ............................................... $12,718 $ 8,290
U.S. Government .......................................... 26,419 26,039
------- -------
$39,137 $34,329
======= =======
Long-term receivables:
Commercial, less allowance for losses of $606 and $212 ... $10,567 $10,576
======= =======
U.S. Government receivables and unbilled revenue include amounts from
prime contractors with the U.S. Government where the Company is the
subcontractor.
28
NOTE 4 - INVENTORIES
Inventories which consist principally of electronic parts are summarized as
follows (in thousands):
DECEMBER 31,
---------------------------
1995 1994
------- -------
Raw materials .......................... $26,570 $15,502
Work in process ........................ 24,500 21,040
Finished goods ......................... 8,422 5,965
------- -------
$59,492 $42,507
======= =======
NOTE 5 - PROPERTY, PLANT AND EQUIPMENT
The components of property, plant and equipment are summarized as follows
(dollars in thousands):
DECEMBER 31,
ESTIMATED ------------------------
LIVES 1995 1994
------- --------- --------
At cost:
Land, buildings and improvements....... 10-35 $ 28,779 $ 25,528
Machinery and equipment ............... 3-12 75,363 70,865
--------- --------
104,142 96,393
========= ========
Less accumulated depreciation ........... (61,673) (56,400)
--------- --------
$ 42,469 $ 39,993
========= ========
NOTE 6 - NOTES PAYABLE
At December 31, 1995 and 1994, the Company had unused short-term lines of
credit aggregating approximately $32,500,000 and $18,900,000, respectively.
Loans under these lines may be made in such amounts and at such maturities and
interest rates as are offered by the banks and accepted by the Company at the
time of each borrowing. The lines of credit contain certain restrictive
covenants similar to those for the senior unsecured notes. At December 31, 1995
and 1994, borrowings under these lines totaled $24,237,000 and $10,985,000,
respectively. Interest rates on such borrowings outstanding at both December 31,
1995 and 1994 were 8.25%.
NOTE 7 - LONG-TERM DEBT
The components of long-term debt are summarized as follows (dollars in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1995 1994
-------- --------
<S> <C> <C>
Notes to insurance group:
Senior unsecured notes at 10.28% interest payable semi-annually;
due in seven annual principal payments of $2,857 ............. $ 17,143 $ 20,000
Other obligations:
Real estate mortgage notes, due in monthly installments of
$69 including interest at 9.9% to 12% maturing at various
dates through 2005 ........................................... 10,254 4,892
Unsecured note at Frankfurt interbank overnight rate
(6.5% at December 31, 1995) interest payable quarterly;
due September 30, 2000 ....................................... 6,986 --
Other ............................................................ -- 13
-------- --------
34,383 24,905
Less current maturities .......................................... (4,861) (3,318)
-------- --------
$ 29,522 $ 21,587
======== ========
</TABLE>
29
Aggregate maturities of long-term debt due after 1996 are, $4,282,000 in
1997, $4,213,000 in 1998, $4,190,000 in 1999, $12,120,000 in 2000, $3,474,000 in
2001, and $1,243,000 thereafter.
The terms of the senior unsecured notes include certain covenants,
the more significant of which require that the Company and its designated
principal subsidiaries (a) maintain defined tangible net worth of at least
$75,000,000; (b) restrict the aggregate of certain future payments, including
those for dividends and acquisitions of treasury shares, to 75% of the
Company's cumulative post-December 31, 1988 consolidated net income (at
December 31, 1995 accumulated earnings of $38,600,000 was available for
dividends and acquisition of treasury shares); (c) limit future borrowings
and related pledges of assets to certain levels; and (d) limit future
dispositions (except in the ordinary course of business) of assets, including
stock of domestic subsidiaries, such that the aggregate (greater of book or
fair market) value during any twelve month period does not exceed 20% of
defined tangible net worth.
At December 31, 1995, $1,784,000 of machinery and equipment and
$10,905,000 of land, buildings and improvements were pledged as collateral to
secure various long-term debt obligations.
NOTE 8 - INCOME TAXES
The components of income before income taxes were as follows (in thousands):
YEAR ENDED DECEMBER 31,
------------------------------------------
1995 1994 1993
------- ------- --------
Domestic .................. $17,029 $16,527 $ 14,484
Foreign ................... 1,906 1,906 (1)
------- ------- --------
$18,935 $18,433 $ 14,483
======= ======= ========
The provision for income taxes consists of the following (in thousands):
YEAR ENDED DECEMBER 31,
------------------------------------------
1995 1994 1993
------- ------- --------
U.S. Federal:
Current ................. $ 5,658 $ 8,812 $ 5,371
Deferred ................ (861) (3,408) (997)
------- ------- --------
4,797 5,404 4,374
State ..................... 506 376 354
Foreign ................... 597 538 506
------- ------- --------
$ 5,900 $ 6,318 $ 5,234
======= ======= ========
The income tax expense for 1995, 1994, and 1993 resulted in effective
tax rates of 31.2%, 34.3%, and 36.1%, respectively. The reasons for the
differences between these effective tax rates and the U.S. statutory rate of
35% are as follows (in thousands):
YEAR ENDED DECEMBER 31,
------------------------------------------
1995 1994 1993
------- ------- --------
Federal taxes on income at statutory
rates .................... $ 6,627 $ 6,452 $ 5,069
State income taxes - net .. 329 244 230
Foreign Sales Corporation benefit (590) (472) (588)
Other - net ............... (466) 94 523
------- ------- --------
$ 5,900 $ 6,318 $ 5,234
======= ======= ========
The Company increased its U.S. deferred tax liability in 1993 as a
result of legislation enacted during 1993 which increased the corporate tax
rate to 35% from 34% retroactive to January 1, 1993. The increase had an
immaterial effect on the consolidated financial statements.
30
Deferred tax liabilities (assets) at December 31, 1995 and 1994 are
comprised of the following (in thousands):
DECEMBER 31,
--------------------
1995 1994
------- -------
Deferred tax liabilities
Depreciation ....................................... $ 909 $ 1,283
Installment sales .................................. 743 987
Equity in earnings of affiliate .................... 776 518
Percentage of completion ........................... 340
Other .............................................. 819 429
------- -------
Gross deferred tax liabilities ................... 3,247 3,557
------- -------
Deferred tax assets
Deferred compensation .............................. (1,825) (1,589)
Compensatory absences accruals ..................... (825) (885)
Inventory accounting and valuation allowance ....... (1,469) (1,534)
Net operating loss carry forwards .................. (667) (763)
Accrued losses on contracts ........................ (90) (422)
Product warranty and related accruals .............. (300) (228)
Receivable valuation allowances .................... (620) (496)
Accrued sales and other credits .................... (51)
Percentage of completion ........................... (764)
Intangible amortization ............................ (419) (53)
Research and experimentation tax credit ............ (957) (927)
Other .............................................. (585) (1,080)
------- -------
Gross deferred tax assets ........................ (8,521) (8,028)
Deferred tax asset valuation allowance ............. 1,232 1,290
------- -------
$(4,042) $(3,181)
======= =======
Deferred tax assets of $2,668,000 and $3,393,000 were included in
other current assets at December 31, 1995 and 1994, respectively. As a result
of acquisitions, deferred tax assets at December 31, 1994 include additions
of $144,000 which did not impact the provision for income taxes. Additional
deferred tax assets of $1,374,000 were included in other assets at December
31, 1995.
NOTE 9 - STOCK OPTION PLANS
STOCK OPTION PLANS: The Company's 1980 Stock Option Plan (the 1980 Plan)
provided for the granting of options and stock appreciation rights (SARs) in
tandem therewith to key employees of the Company for the purchase of the
Company's common shares. Each option under the 1980 Plan was granted at an
exercise price of 100% of fair market value at date of grant. The options
expire ten years from date of grant and were exercisable 20% after one year,
with an additional 20% exercisable each six months thereafter. Of the
outstanding options covering a total of 29,300 shares at December 31, 1995,
29,300 were exercisable at prices from $10.625 to $14.625 per share. At
December 31, 1995 and 1994, there were 29,300 and 43,150 shares,
respectively, of the Company's common stock reserved for issuance under the
1980 Plan. The 1980 Plan expired by its terms on December 31, 1989, and no
additional options can be granted under the plan.
The Company's 1990 Stock Option Plan (the 1990 Plan) covers 858,000
shares of common stock and provides for the granting of stock options and/or
SARs to key employees of the Company and to the members of the Board of
Directors who are not employees of the Company.
Options covering a total of 523,500 shares and related SARs have been
granted to key employees under the 1990 Plan. Each such option has an
exercise price of 100% of the fair market value on the date of grant and has
a term of ten years. The options are exercisable 20% after one year, with an
additional 20% exercisable each six months thereafter. At December 31, 1995,
options to employees under the 1990 Plan covering a total of 237,480 shares
were exercisable.
31
The 1990 Plan provides for the automatic grant of stock options and SARs
to nonemployee Directors. Each nonemployee Director of the Company was granted
effective February 15, 1990, options and SARs with respect to 10,000 shares of
common stock, and each optionee was required to surrender for cancellation
options previously granted by the Company with respect to the lesser of 10,000
shares or the number of shares covered by such previously granted options. The
1990 Plan further provides that newly-elected nonemployee Directors will
automatically receive options and SARs covering 10,000 shares at the time of his
or her election and that each nonemployee Director will automatically receive
options and SARs covering 1,000 shares each year at the time of his or her
reelection to the Board. Options covering a total of 124,000 shares and SARs
have been granted to nonemployee Directors under the 1990 Plan. These options
and SARs have an exercise price of $8.125 to $30.375, the fair market price on
the date of grant, have a ten year term and are exercisable in full after one
year. At December 31, 1995, options to nonemployee Directors under the 1990 Plan
covering a total of 87,000 shares were exercisable.
The SARs granted under the 1980 and 1990 Stock Option Plans cannot be
exercised without the consent of the Compensation Committee of the Board of
Directors except in certain defined instances involving a change in control
of the Company. Since any exercises of SARs are expected to be allowed by the
Committee only in extenuating circumstances, any liability for benefits
derived therefrom will be recognized only at the time the Committee gives its
approval to such exercises. No SARs have been exercised to date.
Changes in outstanding options under the 1980 and 1990 Plan during
1993, 1994, and 1995 were as follows:
NUMBER OF EXERCISE PRICE
SHARES PER SHARE
------------------------------
Outstanding, December 31, 1992 ............ 393,520 $8.000-20.000
Granted ................................... 250,750 14.500-15.750
Expired or cancelled ...................... (19,050) 8.000-20.000
Exercised ................................. (153,090) 8.000-17.375
------------------------------
Outstanding, December 31, 1993 ............ 472,130 8.000-20.000
Granted ................................... 85,050 21.000-21.750
Expired or cancelled ...................... (4,300) 10.625-15.750
Exercised ................................. (46,060) 8.000-20.000
------------------------------
Outstanding, December 31, 1994 ............ 506,820 8.000-21.750
Granted ................................... 17,000 25.125-30.375
Expired or cancelled ...................... (9,320) 15.750-21.750
Exercised ................................. (50,700) 8.000-21.750
------------------------------
Outstanding, December 31, 1995 ............ 463,800 $8.000-30.375
==============================
NONEMPLOYEE DIRECTOR OPTIONS: During the period from December 8, 1983, to
December 31, 1989, options covering a total of 115,000 shares were granted to
nonemployee Directors by the Board of Directors and approved by the
shareholders of the Company. Each option was granted at an exercise price of
100% of the fair market value at date of grant. Each option is exercisable in
whole or in part until ten years after the date of grant except that, absent
a change in control of the Company, each option terminates seven months after
the option holder ceases to be a Director for any reason except retirement,
death, or disability.
At December 31, 1995 and 1994, there were 27,000 and 39,000 shares,
respectively, of the Company's common stock reserved for issuance upon
exercise of the nonemployee Director stock options at an exercise price per
share of $10.875 to $13.25.
NOTE 10 - SHAREHOLDERS' INVESTMENT
SHAREHOLDER RIGHTS PLAN: The Board of Directors adopted a Shareholder Rights
Plan in 1988 which in certain limited circumstances would permit shareholders
to purchase securities at prices which would be substantially below market
value.
32
STOCK REPURCHASES: The Company's Board of Directors has authorized the
Company to repurchase shares of its common stock through open market
purchases or privately negotiated transactions. Since 1987 the Company has
repurchased an aggregate of 1,237,597 shares related to these authorizations.
The unreissued shares are held by the Company and accounted for using the
treasury stock method. The Company is authorized to repurchase up to 758,800
additional shares under transactions approved by the Board.
NOTE 11 - BENEFIT PLANS
The Company has a defined contribution retirement plan covering substantially
all employees. The annual Company contribution and administrative costs of
the plan were $1,898,000 for 1995, $1,912,000 for 1994, and $1,885,000 for
1993. The Company's policy is to fund these retirement costs currently.
The Company has executive retirement agreements with certain
executive officers of the Company and a nonemployee Directors' retirement
plan for those directors that have never been employees of the Company. The
executive retirement agreements generally provide for the payment of
specified amounts in the event of retirement at or after age 62, total and
permanent disability, death, or termination of employment by the Company
without cause. The nonemployee Directors' retirement plan generally provides
for the payment of specified amounts upon retirement on or after age 65 or
upon termination of service due to disability or death. The Company has
segregated certain assets in a grantor trust to meet these obligations, but
those assets are available to creditors of the Company in the event of its
bankruptcy or insolvency. Accordingly, these assets aggregating $4,887,000
and $4,215,000 at December 31, 1995 and 1994, respectively, are included
other assets.
The costs for the executive retirement agreements and the nonemployee
Directors' retirement plan in 1995, 1994, and 1993 were $855,000, $695,000,
and $635,000, respectively. The status of the retirement plans at December 31
was as follows (in thousands):
1995 1994
------- -------
Actuarial present value of:
Vested benefit obligation .............................. $ 5,650 $ 4,907
======= =======
Accumulated benefit obligation ......................... $ 5,669 $ 4,931
======= =======
Projected benefit obligation ........................... $ 5,903 $ 5,211
Plan assets at fair value ................................ -- --
------- -------
Projected benefit obligation in excess of plan assets .. 5,903 5,211
Unrecognized net gain .................................... (427) (196)
Unrecognized prior service cost .......................... (147) (206)
Unrecognized net obligation at transition ................ (486) (567)
Adjustment to recognize minimum liability ................ 826 689
------- -------
Net deferred pension cost ................................ $ 5,669 $ 4,931
======= =======
The projected benefit obligation was developed assuming a beginning
discount rate of 9% in 1995, 9% in 1994, and 8% in 1993 and an annual rate of
increase in compensation levels of 5% in 1995, 1994, and 1993.
NOTE 12 - COMMITMENTS AND CONTINGENCIES
CONCENTRATION OF CREDIT RISK: Financial instruments which potentially subject
the Company to concentrations of credit risk are primarily cash and cash
equivalents, short-term investments, receivables, unbilled revenue, and
long-term receivables. The Company places its cash, cash equivalents, and
short-term investments in investment grade, short-term debt instruments and
limits the amount of credit exposure to any one commercial issuer. A portion
of the Company's receivables and unbilled revenue are concentrated in the
U.S. Government. Concentrations of credit risk with respect to the
receivables, unbilled revenue, and long-term receivables from customers other
than the U.S. Government are limited due to the large number of customers in
the Company's customer base, and their dispersion across different industries
and geographic areas.
FINANCIAL INSTRUMENTS: The Company enters into various types of financial
instruments in the normal course of business. The Company does not hold or
issue financial instruments for trading purposes nor does it hold interest
rate, leveraged, or other types of derivative financial instruments.
33
Fair values for financial instruments are based on quoted market prices.
The amounts ultimately realized upon settlement of these financial instruments
will depend on actual market conditions during the remaining life of the
instruments. Fair values of cash and cash equivalents, short-term investments,
receivables, unbilled revenue, long-term receivables, accounts payable, and
other liabilities reflected in the December 31, 1995 and 1994 balance sheet
approximate carrying value at that date. The fair value of notes payable and
long-term debt would have been decreased by approximately $1,200,000 at December
31, 1995 and increased by $1,500,000, at December 31, 1994 based on borrowing
rates currently available to the Company for borrowings with similar terms and
maturities.
LEASE COMMITMENTS: The Company leases manufacturing and other facilities
under certain long-term agreements which expire at various dates to 2002.
Total rentals charged to operations under such operating leases for years
1995, 1994, and 1993 were $2,439,000, $2,039,000, and $1,731,000,
respectively.
Future minimum rental commitments under all noncancellable operating
leases in effect at December 31, 1995 total $9,883,000 as follows: 1996 -
$2,264,000; 1997 - $1,735,000; 1998 - $840,000; 1999 - $765,000; 2000 - $691,000
and $3,588,000 thereafter.
LITIGATION: In the ordinary course of business, the Company is involved in
various pending or threatened legal actions. While Management is unable to
predict the ultimate outcome of these actions, it believes that any ultimate
liability arising from these actions will not have a material adverse effect
on the Company's consolidated financial position or operating results.
CONTINGENCIES: The Company is contingently liable for notes receivable
aggregating $7,967,000 at December 31, 1995 which have been sold to a
financial institution.
The Company has no commitments or contingent liabilities which, in
the judgment of Management, would result in losses which would materially
affect the Company's consolidated financial position or operating results.
NOTE 13 - OTHER FINANCIAL INFORMATION
Sales under contracts and subcontracts where the U.S. Government is the
ultimate customer accounted for approximately 32%, 38%, and 39% of the
Company's sales in 1995, 1994, and 1993, respectively.
Foreign sales (primarily exports from the U.S.) as a percentage of
total sales are summarized by geographic area as follows:
1995 1994 1993
------- ----- -----
Europe ......................... 17.8% 17.9% 18.7%
Far East ....................... 18.7 12.2 7.7
Middle East .................... 4.8 1.8 5.1
Other areas .................... 5.1 7.1 6.3
------- ----- -----
46.4% 39.0% 37.8%
======= ===== =====
Other liabilities comprised the following (in thousands):
DECEMBER 31,
--------------------
1995 1994
------- -------
Commissions payable .................................. $ 3,046 $ 2,605
Incentive bonus accruals ............................. 1,727 1,792
Vacation accruals .................................... 2,670 2,822
Accrued product warranty and related reserves ........ 1,594 478
Accrued interest payable ............................. 843 803
Deferred revenue ..................................... 3,433
Other ................................................ 9,424 9,378
------- -------
$22,737 $17,878
======= =======
34
Other liabilities and deferred credits include deferred gains on
installment sales contracts of $3,753,000 and $3,711,000 at December 31, 1995
and 1994, respectively.
Retained earnings of the Company's foreign subsidiaries totaled
$2,611,000 and $1,325,000 at December 31, 1995 and 1994, respectively.
NOTE 14 - QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
The following is a summary of unaudited quarterly financial data for the
years 1995 and 1994 (in thousands except per share amounts):
EARNINGS
PER
GROSS NET COMMON
SALES PROFIT INCOME SHARE
-------- ------- ------- --------
March 31, 1995 ......... $ 52,794 $17,731 $ 1,158 $ .18
June 30, 1995 .......... 59,101 19,924 3,328 .51
September 1995 ......... 65,260 23,130 3,903 .60
December 31, 1995 ...... 69,332 25,193 4,646 .71
-------- ------- ------- --------
$246,487 $85,978 $13,035 $ 2.00
======== ======= ======= ========
March 31, 1994 ......... $ 47,555 $18,468 $ 2,760 $ .43
June 30, 1994 .......... 52,665 19,819 3,005 .46
September 30, 1994 ..... 54,830 18,812 2,930 .45
December 31, 1994 ...... 58,555 21,221 3,420 .52
-------- ------- ------- --------
$213,605 $78,320 $12,115 $ 1.86
======== ======= ======= ========
As more fully discussed in Note 2, on June 30, 1995, the Company
acquired CogniSeis Development, Inc., in a business combination accounted for
as a pooling of interests. Accordingly, the Company's quarterly financial
information for the year ended December 31, 1994 and for the quarter ended
March 31, 1995 has been restated to present the results of the combined
companies.
Sales, gross profit and earnings per common share amounts for the
quarters ended March 31, 1995 and June 30, 1995 have been restated from
previously reported amounts to reflect the deferral of revenue recognition on
certain sales where the right of exchange for credit existed. As a result,
net income was reduced by $1,457,000, or $.22 per common share, for the
quarter ended March 31, 1995 and by $385,000, or $.06 per common share, for
the quarter ended June 30, 1995. Net income for the quarter ended December
31, 1995 increased $613,000 or $.09 per common share as a result of the
recognition of a portion of such deferrals in the fourth quarter. The
remaining deferred revenue totaling approximately $4,000,000 is expected to
be recognized during 1996.
NOTE 15 - SUBSEQUENT EVENT
On January 1, 1996, the Company acquired all of the outstanding capital stock
of Telefunken Sendertechnik GmbH (TFS) from Daimler-Benz Aerospace AG (Dasa).
TFS, located in Berlin, Germany, is in the business of designing and
producing radio and television broadcast transmitting equipment. TFS's
customers include European governments and commercial organizations, the
Voice of America, Radio Free Europe and other governments and organizations
worldwide. The Company intends to continue the existing TFS's business as
part of its existing communications business which is involved in the design
and production of radio broadcast transmitter equipment. TFS had total assets
of $52,831,000 and total liabilities of $39,891,000 at December 31, 1995 and
sales of $20,950,000 for the year ended December 31, 1995.
The purchase price for the acquisition is denominated in Deutsche
Marks and aggregated $9,221,000 based on exchange rates at December 31, 1995.
The purchase price is subject to adjustment based on the completion of an
audited balance sheet of TFS as of December 31, 1995, and $6,986,000 is
payable by the Company to Dasa at the time of the payment of certain
intercompany amounts due from Dasa to TFS following the completion of such
audited balance sheet. The remaining $2,235,000 is payable no later than Janua
ry 31, 1997 and bears interest at the Frankfurt Interbank Offer Rate, as
adjusted from time to time, plus one percent, payable quarterly within 15
days after the end of each calendar quarter.
35
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF TECH-SYM CORPORATION:
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of income, of cash flows and of changes in
shareholders' investment present fairly, in all material respects, the
financial position of Tech-Sym Corporation and its subsidiaries at December
31, 1995 and 1994, and the results of their operations and their cash flows
for each of the three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles. 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 of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit 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, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Houston, Texas
February 22, 1996
36
STOCKHOLDER AND MARKET INFORMATION
CORPORATE INFORMATION
COMPARATIVE COMMON STOCK DATA
1994 1995
-------------- ---------------
QUARTER HIGH LOW HIGH LOW
First........................ 22 1/2 17 5/8 23 5/8 21 1/8
Second....................... 21 7/8 19 1/8 28 1/2 23 1/8
Third........................ 22 3/8 19 1/2 30 5/8 26 3/8
Fourth....................... 24 3/8 20 1/2 31 7/8 28 1/8
No dividends were paid on such stock in 1994 or 1995, and the Company has no
present intention of paying dividends.
Record number of holders of Common Stock at February 29, 1996: 2,114.
Corporate Office
10500 Westoffice Drive, Suite 200
Houston, Texas 77042-5391
Telephone 713/785-7790
Telecopier 713/780-3524
Transfer Agent and Registrar
Continental Stock Transfer & Trust Company
2 Broadway
New York, New York 10004
Telephone 212/509-4000
Telecopier 212/509-5150
Stock Exchange Listing
Tech-Sym Common Stock is listed on the New York Stock Exchange
(Stock Symbol: TSY)
Independent Accountants
Price Waterhouse LLP
1201 Louisiana
Houston, Texas 77002
Stockholders are invited to attend the Tech-Sym Corporation Annual
Meeting of Stockholders which will be held at 10:00 am on Tuesday, April 30,
1996, in the Briarpark Room of the Adam's Mark Hotel at 2900 Briarpark Drive at
Westheimer, Houston, Texas. A Proxy Statement will be sent to stockholders of
record as of March 15, 1996.
37
SUBSIDIARIES OF THE REGISTRANT
Set forth below is certain information with respect to each of the
Registrant's subsidiaries:
STATE OF REGISTRANT'S
SUBSIDIARY DOMICILE OWNERSHIP
- ---------- ------------ ------------
Anarad, Inc. (California) 100%
CogniSeis Development, Inc. (Delaware) 100%
Photon Systems Ltd. (Canada) 100%
Continental Electronics Corporation (Nevada) 100%
Continental-Lensa S.A. (Chile) 75%
TELEFUNKEN Sendertechnik GmbH (Germany) 100%
Enterprise Electronics Corporation (Alabama) 100%
Lake Investment Company (Arizona) 100%
Concho Valley Country Club, Inc. (Arizona) 100%
Livco Water Company (Arizona) 100%
Metric Systems Corporation (Florida) 100%
Symtronix Corporation (Nevada) 100%
Syntron, Inc. (Delaware) 100%
Syntron Europe Limited (Scotland) 100%
Syntron Asia Pte. Ltd. (Singapore) 100%
T-S Holding Corporation (Texas) 100%
(formerly All Woods/Schroeder, Inc.)
Tech-Sym Management Corporation (Delaware) 100%
Tech-Sym International (FSC), Inc. (U.S. Virgin 100%
Islands)
Tecom Industries, Incorporated (California) 100%
Tecom Limited (Scotland) 100%
TRAK Microwave Corporation (Delaware) 100%
Daden-Anthony Associates, Inc. (Nevada) 100%
TRAK Microwave Limited (Scotland) 100%
The Registrant has certain other subsidiaries which are not named above.
Such subsidiaries, when considered in the aggregate as a single
subsidiary, would not constitute a significant subsidiary.
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-8 (No. 2-77162), in
the Prospectus constituting part of the Registration Statement on Form S-8 (No.
33-38208), in the Prospectus constituting part of the Registration Statement on
Form S-8 (No. 33-61846) in the Prospectus constituting part of the Registration
Statement on Form S-8 (No. 33-56535), and in the Prospectus constituting part of
the Registration Statement on Form S-3 (No. 33-56533) of Tech-Sym Corporation of
our report dated February 22, 1996, appearing on page 36 of the Annual Report to
Shareholders which is incorporated in this Annual Report on Form 10-K. We also
consent to the incorporation by reference of our report on the Financial
Statement Schedules, which appears on page S-2 of this Form 10-K.
/s/Price Waterhouse LLP
PRICE WATERHOUSE LLP
Houston, Texas
March 29, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 20,715
<SECURITIES> 0
<RECEIVABLES> 54,199
<ALLOWANCES> 0
<INVENTORY> 59,492
<CURRENT-ASSETS> 178,318
<PP&E> 42,469
<DEPRECIATION> 0
<TOTAL-ASSETS> 265,026
<CURRENT-LIABILITIES> 74,561
<BONDS> 0
0
0
<COMMON> 786
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 265,026
<SALES> 246,487
<TOTAL-REVENUES> 0
<CGS> 160,509
<TOTAL-COSTS> 227,552
<OTHER-EXPENSES> (4,087)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,840
<INCOME-PRETAX> 18,935
<INCOME-TAX> 5,900
<INCOME-CONTINUING> 13,035
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,035
<EPS-PRIMARY> 2.00
<EPS-DILUTED> 2.00
</TABLE>
