SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended April 2, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
----------- -----------
Commission File No. 1-4236
M/A-COM, INC.
- - -------------
(Exact name of registrant as specified in its charter)
Massachusetts
- - -------------
(State, or other jurisdiction of incorporation or organization)
04-2090644
- - ----------
(I.R.S. Employer Identification No.)
401 Edgewater Place, Wakefield, MA 01880-6210
- - --------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(617) 224-5600
- - --------------
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 ( )
As of May 6, 1994, M/A-COM, Inc. had outstanding 25,752,257 shares of Common
Stock, $1.00 par value (exclusive of 18,253,452 shares held in its treasury).
Page 1
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
M/A-COM, INC.
AND SUBSIDIARIES
The accompanying condensed consolidated financial statements include, in the
opinion of management, all adjustments which are normal and recurring (with
the exception of the cumulative effect of a change in accounting for income
taxes) and necessary to a fair statement of the results for the interim
periods presented. Neither the results for the current period nor comparison
with the corresponding period of the preceding fiscal year should be
considered indicative of the results which may be expected for the fiscal
year ending October 1, 1994. These condensed consolidated financial
statements should be read in conjunction with the financial statements and
notes thereto contained in the Company's Annual Report on Form 10-K for the
fiscal year ended October 2, 1993.
We have engaged our independent accountants, Price Waterhouse, to conduct a
limited review of the condensed financial information included in this report
for the quarter ended April 2, 1994. They have reported to us that such
review, which does not constitute an audit, has been completed in accordance
with standards established for such reviews by the American Institute of
Certified Public Accountants. They proposed no adjustments or additional
disclosure which they believed should be reflected in the financial
information accompanying this report. Price Waterhouse's report on their
review is enclosed with this report.
Page 2
M/A-COM, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per share amounts)
UNAUDITED
Three Months Ended Six Months Ended
------------------------------- -------------------------------
April 2, April 3, April 2, April 3,
1994 1993 1994 1993
------------------------------- -------------------------------
Net sales $ 83,851 $ 87,111 $162,971 $166,246
-------- -------- -------- --------
Costs and expenses:
Cost of sales 54,646 59,969 106,366 115,643
Company sponsored research
and development 5,959 4,781 10,669 8,675
Selling, general and
administrative expenses 20,087 23,096 39,558 40,666
Interest expense 2,334 2,139 4,589 4,239
Interest income (129) (3,004) (265) (3,575)
-------- -------- -------- --------
82,897 86,981 160,917 165,648
-------- -------- -------- --------
Income from continuing operations
before income taxes 954 130 2,054 598
Income tax (benefit) provision 482 (2,600) 812 (2,506)
-------- -------- -------- --------
Income from continuing operations 472 2,730 1,242 3,104
Discontinued operations, net of
applicable income taxes - 1,000 - 1,000
Cumulative effect of a change in
accounting for income taxes - - 3,300 -
-------- -------- -------- --------
Net income $ 472 $ 3,730 $ 4,542 $ 4,104
======== ======== ======== ========
Income per share:
Continuing operations $ .02 $ .11 $ .05 $ .13
Discontinued operations - .04 - .04
Cumulative effect of
accounting change - - .13 -
----- ----- ----- -----
Net income per share $ .02 $ .15 $ .18 $ .17
===== ===== ===== =====
Shares used in income per share
calculation 25,946 24,076 25,877 24,020
====== ====== ====== ======
See accompanying notes.
Page 3
M/A-COM, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
----------------------------
April 2, October 2,
1994 1993
(Unaudited)
----------------------------
ASSETS
- - ------
Current assets:
Cash and cash equivalents $ 4,123 $ 10,024
Marketable securities 1,250 1,250
Accounts receivable, net 71,568 72,730
Unbilled revenue under customer contracts 554 1,744
Inventories 67,734 58,629
Other current assets 13,593 7,157
--------- ---------
Total current assets 158,822 151,534
--------- ---------
Plant assets 253,790 251,942
Less - Accumulated depreciation (147,337) (145,235)
--------- ---------
106,453 106,707
--------- ---------
Other assets 54,875 56,462
--------- ---------
Total Assets $ 320,150 $ 314,703
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
- - ------------------------------------
Current liabilities:
Notes payable and current portion of
long-term debt $ 9,802 $ 6,737
Accounts payable-trade 17,778 21,255
Accrued liabilities and taxes 81,660 94,264
--------- ---------
Total current liabilities 109,240 122,256
--------- ---------
Long-term debt 67,987 68,352
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Other long-term liabilities 27,085 16,220
--------- ---------
Stockholders' equity:
Paid-in-capital 45,321 41,900
Retained earnings 70,517 65,975
--------- ---------
Total stockholders' equity 115,838 107,875
--------- ---------
Commitments and contingencies
Total Liabilities and Stockholders' Equity $ 320,150 $ 314,703
========= =========
See accompanying notes.
Page 4
M/A-COM, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
UNAUDITED
Six Months Ended
-------------------------------
April 2, April 3,
1994 1993
-------------------------------
Cash provided by continuing operating
activities $ 272 $ 2,970
-------- --------
Cash flows from investing activities:
Additions to plant assets (7,648) (21,473)
Investment in IVHS Technologies, Inc. - (2,250)
-------- --------
Cash applied to investing activities (7,648) (23,723)
-------- --------
Cash flows from financing activities:
Net proceeds from short-term borrowings 3,193 1,438
Repayment of debt (385) (377)
Repurchase of common stock - (1,001)
Stock options exercised 1,047 291
-------- --------
Cash provided by financing activities 3,855 351
-------- --------
Cash provided by (applied to)
discontinued operations (2,380) 2,559
-------- --------
Decrease in cash and cash equivalents (5,901) (17,843)
Cash and cash equivalents at
beginning of period 10,024 36,136
-------- --------
Cash and cash equivalents at
end of period $ 4,123 $ 18,293
======== ========
See accompanying notes.
Page 5
M/A-COM, INC.
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
- - ----------------------------------------------------
(Unaudited except for October 2, 1993 amounts)
Note 1 - Changes in the Business
Sale of Product Line
In the first quarter of 1993, the Company sold its high power, narrow band
receiver protector product line. Sales and gross profits have been excluded
from the date of the sale. The sale was for cash of $5.1 million and
resulted in a gain of $2.3 million which was recorded as a reduction of
selling, general and administrative expenses in the accompanying consolidated
statement of income.
Investment in IVHS Technologies, Inc.
In the second quarter of 1993, the Company made an equity investment in IVHS
Technologies, Inc. ("IVHS") for $2.3 million. IVHS is in the business of
innovating, designing and manufacturing specialized electronic products that
enhance the safety and efficiency of vehicles, drivers and roadways.
Note 2 - Unusual Items
In the fourth quarter of 1993, the Company decided to refocus the direction
of its commercial business and reallocated certain resources associated with
that aspect of its operations. As a result of these actions, the Company
recorded a $5.3 million reserve for anticipated losses relating to its
manufacturing obligations on certain technically complex commercial
contracts.
Beginning in 1994, in connection with certain changes in operational
management, the Company embarked upon a new strategy of negotiating the
termination of these contracts in an effort to minimize the anticipated
losses and maximize the Company's resources.
In the first quarter of 1994, the Company reached an agreement in principle
to terminate one of the technically complex commercial contracts for which it
had previously established a reserve. In connection with this, the Company
reduced its orders and backlog to reflect the termination of this contract.
In addition, the Company reassessed the adequacy of the $2.6 million reserve
initially established for this contract and determined that $1.6 million of
this reserve was necessary for the write-off of inventory and other potential
obligations related to this contract. Accordingly the Company reversed $1.0
million related to this reserve. During the second quarter of 1994, the
Company formalized the termination of this contract without any further
obligations or contingencies. Accordingly, the Company charged approximately
$.7 in unusable inventory relating to this contract against the reserve, and
reversed the remaining reserve balance of $.9 million. The first and second
quarter reserve reversals were recorded as reductions to cost of sales.
Page 6
In the second quarter of 1993, the Company recorded a charge to selling,
general and administrative expenses ("SG&A") of $4.0 million as a refinement
of the estimated cost of the Company's consolidation and downsizing plans
which were initially established during 1992. Additionally, the Company
recorded an increase to its allowance for doubtful accounts of $1.0 million
during the second quarter of 1993. This increase was charged to SG&A and was
the result of cash flow problems being experienced by a specific customer.
During the second quarter of 1993, the Company also benefited from the
recovery of $2.2 million in insurance proceeds. The proceeds represent the
reimbursement of expenditures made for certain liabilities at a site
previously occupied by the Company and were recorded as a reduction of SG&A
in the second quarter of 1993. The expenditures had been charged to the
results of operations in previous periods.
In the first quarter of 1993, a production facility of a foreign subsidiary
was damaged by fire. The Company recorded a gain of approximately $1.0
million related to the excess of insurance recovery over the net book value
of the assets damaged by the fire. The gain was recorded as a reduction of
selling, general and administrative expenses in the accompanying consolidated
statement of income.
Note 3 - Income Taxes
In the first quarter of 1994, the Company prospectively adopted Statement of
Financial Accounting Standards No. 109, Accounting for Income Taxes ("SFAS
109"), effective as of October 3, 1993. SFAS 109 is an asset and liability
approach that requires the recognition of deferred tax assets and liabilities
for the expected future tax consequences of events that have been recognized
in the Company's financial statements or tax returns. In estimating future
tax consequences, SFAS 109 generally considers all expected future events
other than enactments of changes in the tax law or rates. The measurement of
deferred tax assets is reduced, if necessary, by a valuation allowance.
Previously the Company used the SFAS 96 asset and liability approach that
gave no recognition to future events other than the recovery of assets and
settlement of liabilities at their carrying amounts.
The adjustments to the balance sheet to adopt SFAS 109 netted to $3.3
million. This amount is reflected in the consolidated statement of income
for the six months ended April 2, 1994 as the cumulative effect of a change
in accounting principle. It primarily represents the reversal of deferred
tax assets and liabilities resulting from the adoption of SFAS 109. The
deferred tax assets and liabilities were established in connection with a
previous acquisition and were recorded as reductions of the respective assets
and liabilities to which they relate. Additionally, SFAS 109 had no material
impact on the provision for income taxes for the first and second quarters of
1994.
Page 7
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes and operating
loss carry forwards. The following is a summary of the significant
components of the Company's deferred tax assets and liabilities as of the
date of adoption (in thousands):
Deferred Tax Assets:
- - -------------------
Inventory capitalization and reserves $ 13,716
Capitalized R&D 5,353
Deferred compensation 3,101
Net operating loss carryovers 27,098
Restructuring accruals 11,464
Other accruals and reserves 13,809 74,541
--------
Deferred Tax Liabilities:
- - ------------------------
Depreciation and amortization (23,017)
Other (5,645) (28,662)
--------
Valuation allowance (50,775)
--------
Net deferred tax liability $ (4,896)
========
The net current deferred tax asset of $9.5 million is included in other
current assets and the deferred tax liability of $14.5 million is included in
the other long-term liabilities in the accompanying condensed consolidated
balance sheet at April 2, 1994.
During the second quarter of 1993, the Company reached initial resolution
with the Internal Revenue Service of certain prior years' tax returns. As a
result, the Company recorded $2.8 million of interest income on a tax refund
claim during the second quarter of 1993. Additionally, the Company recorded
a reversal, net of the second quarter of 1993 tax provision, of $3.6 million
of accrued tax liabilities ($1.0 million of which was applicable to
discontinued operations).
The Company has not provided deferred taxes on the undistributed earnings of
its foreign subsidiaries as such earnings are expected to be reinvested for
an indefinite period of time.
Page 8
Note 4 - Common Stock Transactions and Debt
In the second quarter of 1994, the Company negotiated a new revolving credit
agreement (the "agreement") with maximum borrowings of $30.0 million expiring
on August 30, 1995. The maximum borrowings may be limited based on the
amount of the Company's domestic accounts receivable, as adjusted by the
agreement. As of April 2, 1994, the Company's borrowing availability under
this agreement was $22.7 million. During the term of the agreement, the
Company can borrow at the bank's base rate (6.25% at April 2, 1994) or the
bank's Eurodollar rate, as adjusted, plus one and one-half percent. The
agreement contains certain restrictive covenants including, but not limited
to, minimum levels of profitability and liquidity and restrictions related to
indebtedness, cash flow and capital expenditures. The agreement also
contains restrictions with respect to acquisitions and the repurchase of the
Company's public debt. As of April 2, 1994 the Company had outstanding
borrowings under this agreement of $2.5 million. Subsequent to the end of
the second quarter, the Company has borrowed an additional $6.5 million.
The Company's foreign subsidiaries have lines of credit available to fund
local working capital requirements. The lines of credit provide for
borrowings aggregating approximately $18.3 million. During the first six
months of 1994, the Company increased its borrowings by approximately $.7
million under its foreign lines of credit. As of April 2, 1994, total
borrowings under the foreign lines of credit aggregated approximately $6.5
million.
In the first quarter of 1994, the Company repaid $2.6 million of an
Industrial Revenue Bond ("IRB") associated with a previously discontinued
operation. The IRB had been included in accrued liabilities in the Company's
consolidated balance sheet at October 2, 1993.
In the three month and six month periods ended April 2, 1994, the Company
contributed a total of 122,000 and 240,000 shares of common stock,
respectively, to match employee contributions to the Company's defined
contribution retirement plan.
During the first quarter of 1993, the Company acquired 226,000 shares for
$1.0 million under its common stock repurchase program.
Note 5 - Inventories
Inventories are summarized as follows (in thousands):
April 2, October 2,
1994 1993
----------------------------------
Raw materials $23,151 $22,829
Work in process 32,283 26,291
Finished goods 12,300 9,509
------- -------
$67,734 $58,629
======= =======
Page 9
Note 6 - Computation of Income per Share
The shares used in the computation of income per share were as follows (in
thousands):
Three Months Ended Six Months Ended
------------------------------ ------------------------------
April 2, April 3, April 2, April 3,
1994 1993 1994 1993
------------------------------ ------------------------------
Weighted average shares
outstanding during period 25,563 24,076 25,460 24,020
Add: Incremental shares to reflect
dilutive effect of stock option
and deferred compensation plans 383 - 417 -
------ ------ ------ ------
25,946 24,076 25,877 24,020
====== ====== ====== ======
Inclusion of common stock equivalents in the computation of earnings per
share for the three and six month periods ending April 3, 1993 would not be
dilutive. Fully diluted earnings per share have not been presented as the
effect would not be dilutive in any period presented.
Note 7 - Litigation
On October 27, 1993, at the request of the Company's insurance carrier, the
Company entered into a Stipulation of Settlement in connection with the class
action entitled Rand, et al. v. M/A-COM, Inc., et al. On February 1, 1994,
the court approved the Stipulation of Settlement. Pursuant to the
Stipulation of Settlement the Company's insurance carrier has paid into a
settlement fund the amount of $3.9 million in full settlement of all claims
in the action. The Company is not required to make any payment to the
plaintiffs out of its own funds, and the Company's insurance carrier has paid
the Company $325,000 to compensate the Company for certain costs associated
with the litigation.
Page 10
M/A-COM, INC.
AND SUBSIDIARIES
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Overview
The Company reported income from continuing operations of $.5 million, or
$.02 per share in the second quarter of 1994 in comparison with $2.7 million
or $.11 per share in the second quarter of 1993.
Net income for the three month and six month periods ended April 2, 1994 was
$.5 million and $4.5 million, respectively. Net income for the six months
ended April 2, 1994 includes $3.3 million attributable to the cumulative
effect of an accounting change upon the adoption of Statement of Financial
Accounting Standard No. 109, Accounting for Income Taxes. Net income for the
same periods of 1993 was $3.7 million and $4.1 million, respectively, and
included $1.0 million of income from discontinued operations which was
recorded in the second quarter of 1993.
New orders for the second quarter of 1994 were $80.6 million compared with
$87.2 million in the same period of 1993. The decrease in new orders is
attributed to a $10.9 million decrease in orders from non-defense United
States government and foreign government markets and a $2.1 million decrease
in commercial orders. The decrease in non-defense United States government
and foreign government orders is attributed to spending reductions in the
U.S. agencies which the Company supplies and a non-recurring order of $3.0
million recorded in the second quarter of 1993. The second quarter 1994
reduction in commercial orders includes a reversal of $6.9 million
attributable to the cancellation of an order for products ultimately intended
for the commercial aircraft industry. These reductions were partially offset
by an increase in United States defense-related orders of $6.4 million.
United States defense-related orders include a $7.6 million order awarded to
the Company under Title III of the Defense Production Act to support world
class, domestic manufacturing capabilities for the production of gallium
arsenide for applications in the commercial and defense marketplace.
New orders for the first six months of 1994 were $145.6 million, a decrease
of $21.8 million in comparison with the first six months of 1993. The
decrease is due to decreases of $14.3 million in orders from non-defense
United States government and foreign government markets, a $4.1 million
decrease in United States defense-related orders and a $3.4 million decrease
in commercial orders. The decrease in commercial orders includes a $3.9
million reduction which reflects the termination of a technically complex
development contract during the first quarter of 1994 as well as the factors
previously mentioned.
Page 11
In the fourth quarter of 1993, the Company formulated a plan for additional
consolidation and downsizing. During the second quarter of 1994, the Company
commenced the previously announced closing of a facility in southern New
Hampshire and, since the beginning of 1994, has reduced its workforce by 227
persons. It is anticipated that additional workforce reductions will occur
over the remainder of the current year. The facility closure and workforce
reductions are expected to produce overall cost reductions; however, these
cost reductions may be offset by reduced revenues and increased costs for
salaries and related benefits for personnel and other cost increases.
Results of Continuing Operations
Net sales for the second quarter of 1994 decreased by $3.3 million in
comparison with the same period of 1993 as a $5.2 million increase in
commercial sales was offset by an $8.2 million decrease in United States
defense-related sales. Decreases in United States defense-related sales
reflect a continued contraction of the United States defense market.
Sales for the first six months of 1994 decreased by $3.3 million in
comparison with the first six months of 1993. A $20.1 million decrease in
United States defense-related sales was partially offset by a $13.9 million
increase in commercial sales and a $3.0 million increase in sales to non-
defense U.S. government agencies and foreign governments.
The Company's gross margin improved to 34.8% in the second quarter of 1994 in
comparison with 31.2% in the second quarter of 1993. The increase in gross
margin percentage was attributable to increased sales of higher margin
circulator products of 1.1%; increased sales of connector products resulting
in margin growth of 3.1% and the reversal of previously established reserves
related to a terminated contract of 1.1% (see Note 2 to the condensed
consolidated financial statements contained in this Quarterly Report on Form
10-Q) partially offset by the impact on gross margin of reduced revenues from
the Company's antenna products operation of 1.2%. Gross margin for the first
six months of 1994 improved to 34.7% from 30.4% in the first six months of
1993. The improvement in 1994 gross margin is attributable to the factors
noted above as well as productivity improvement in the Company's
Microelectronics Division. The improvement in margins at the
Microelectronics Division is primarily the result of the Company's
consolidation and downsizing which have resulted in reduced facility and
personnel costs.
Page 12
Company-sponsored research and development expenditures have increased by
$1.2 million and $2.0 million in the three and six month periods ended April
2, 1994 in comparison with the same periods of 1993. The Company also
incurred $2.6 million and $4.9 million of costs, included in cost of sales,
on customer-sponsored research and development ($.8 million and $1.1 million
of which was not recoverable under fixed price engineering contracts) for the
three month and six month periods ended April 2, 1994, respectively,
representing decreases of $1.0 million and $3.1 million from the comparable
period of 1993. The increase in company-sponsored research and development
is attributable to a reallocation of engineers from production to research
and development as the Company continues to invest in products with
significant potential in both commercial and defense applications. The
decrease in customer-sponsored research and development expense reflects the
change to a commercial business environment where customer funding for
research and development is less prevalent than in government contracting and
a decrease in development costs for contracts which have moved from
development stages into production.
Selling, general and administrative ("SG&A") expenses decreased by $3.0
million in the second quarter of 1994 compared with the second quarter of
1993. In the second quarter of 1993, the Company recorded a charge of $4.0
million to refine estimates related to its 1992 restructuring plan and $1.0
million to its allowance for doubtful accounts due to cash flow problems
being experienced by one specific customer. These charges were partially
offset by the recovery of $2.2 million in insurance proceeds (see Note 2 to
the Condensed Consolidated Financial Statements).
SG&A decreased by $1.1 million for the first six months of 1994 in comparison
with the first six months of 1993. The decrease is mainly attributable to
the factors previously discussed and to gains of $2.3 million related to the
sale of a product line and $1.0 million attributed to the excess of insurance
recovery over the book value of assets damaged by a fire at a production
facility which were recorded as reductions of SG&A in the first quarter of
1993. The remaining decrease is the result of the Company's consolidation
and downsizing which has reduced facility and personnel costs.
Net interest expense increased by $3.1 million and $3.7 million in the three
and six month period ended April 2, 1994 in comparison with the same periods
of 1993. The increase is mainly attributable to the recording of $2.8
million of interest income on a tax refund claim during the second quarter of
1993 (see Note 3 to the condensed consolidated financial statements contained
in this Quarterly Report on Form 10-Q), higher interest expense related to
increased borrowings, and reduced interest income on lower invested cash
balances.
During the second quarter of 1993, the Company reached initial resolution
with the Internal Revenue Service of certain prior years tax returns. As a
result, the Company recorded a reversal, net of the second quarter tax
provision, of $3.6 million of accrued tax liabilities ($1.0 million of which
was attributable to discontinued operations).
The variance between the statutory federal tax rate of 35% and the Company's
effective tax rate of 40% is due to the differential in tax rates applied to
the earnings of foreign subsidiaries and Puerto Rico operations.
Page 13
Liquidity and Capital Resources
The Company's cash and marketable securities position at April 2, 1994 was
$5.4 million in comparison with $11.3 million at October 2, 1993. The
Company's operating activities have generated $.3 million of cash during the
first six months of 1994. The Company also expended $7.6 million for
additions to plant assets. During the first six months of 1994, the Company
has borrowed $8.0 million and repaid $5.5 million under its revolving credit
agreement and increased the borrowings by its foreign subsidiaries by a net
of $.7 million to fund local working capital requirements. The Company has
also repaid $.4 million of maturities on its long-term debt. Additionally,
the Company received $1.0 million from the exercise of stock options. The
Company had net cash outflows of $2.4 million relating to discontinued
operations, mainly attributable to the $2.6 million repayment of an
Industrial Revenue Bond partially offset by royalty income and asset sales
associated with previously discontinued operations.
As of April 2, 1994, the Company's accounts receivable, as measured by the
number of days sales outstanding, increased to 72 days in comparison with 70
days at October 2, 1993. The increase is attributable to a shift in sales
mix from defense and other government customers to commercial customers with
longer collection periods.
The Company's inventory balance at April 2, 1994 increased by $9.1 million in
comparison with the inventory balance at October 2, 1993. The increase is
mainly the result of consistent levels of production at several divisions of
$4.0 million in anticipation of increasing sales in the third and fourth
quarters of 1994, increasing inventory balances in support of increased sales
volume in the Company's connector products operation of $1.9 million and a
build of inventory in anticipation of shipments to occur in the third and
fourth quarters of 1994 of $2.4 million in the antenna product operation.
During the second quarter of 1994, the Company completed negotiations for a
new unsecured revolving line of credit. The new line of credit, which
permits maximum borrowings of $30.0 million, expires on August 30, 1995. The
maximum borrowings may be limited depending on the amount of the Company's
domestic accounts receivable and also contains certain other restrictions
(see Note 4 to the condensed consolidated financial statements contained in
this Quarterly Report on Form 10-Q).
The Company believes that its existing cash balances, funds to be generated
by future operating activities and available borrowing capacity are
sufficient to finance operating requirements, the previously described
restructuring action, to provide for ongoing capital and research and
development requirements and to take advantage of investment opportunities.
Page 14
Part II. Other Information
Item 1. Legal Proceedings
The information set forth in Note 7 to the condensed consolidated financial
statements contained in this Quarterly Report on Form 10-Q is incorporated
herein by reference.
Item 4. Submissions of Matters to a Vote of Security Holders
(a) On February 16, 1994, the Company held its Annual Meeting of
Stockholders (the "Meeting").
(b) At the Meeting, the stockholders elected to the Board of Directors all
Class I Director nominees listed in the proxy material for the Meeting
by the following votes:
Total Vote
Name of Total Vote for Withheld from
Director Nominees Director Nominee Director Nominee
- - ----------------- ---------------- ----------------
Daniel J. Fink 22,544,950 348,051
Raymond F. Pettit 22,570,024 322,977
Dr. Thomas A. Vanderslice 22,468,511 424,490
Page 15
Item 6. Exhibits and Reports on Form 8-K
(a) List of Exhibits: Method of Filing
----------------
Exhibit 10.1 Revolving Credit Agreement among Filed herewith.
M/A-COM, Inc. and First National
Bank of Boston, et al., dated as
of March 15, 1994.
Exhibit 10.2 Unlimited Guaranty made by M/A-COM Filed herewith.
Government Products, Inc., M/A-COM
Light Control Systems, Inc.,
M/A-COM Omni Spectra, Inc., M/A-COM
PHI, Inc. and M/A-COM Puerto Rico,
Inc. in favor of First National
Bank of Boston, et al., dated as of
March 15, 1994.
Management Contracts, Compensatory Plans
and Arrangements
Exhibit 10.3 Severance Agreement dated as of Filed herewith.
March 20, 1994 between M/A-COM,
Inc. and Allan L. Rayfield.
-------------------------
Exhibit 11 Statement Re: Computation of Per Incorporated from
Share Earnings. Note 6 to Condensed
Consolidated
Financial Statements.
Exhibit 15 Letter Re: Unaudited Interim Filed herewith.
Financial Information.
(b) Reports on Form 8-K
No report on Form 8-K has been filed during the quarter ended April 2, 1994.
Page 16
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized, on May 13, 1994.
M/A-COM, Inc.
By: PETER J. RICE
- - --------------------------------
Peter J. Rice
Vice President,
Chief Accounting Officer
and Controller
Page 17
April 25, 1994
To the Board of Directors and
Shareholders of M/A-COM, Inc.
We have reviewed the condensed consolidated balance sheet of M/A-COM, Inc.
and its subsidiaries as of April 2, 1994 and April 3, 1993 (not presented
herein), the related consolidated statement of income for the three-month and
six-month periods then ended and the related condensed consolidated statement
of cash flows for the six month periods then ended. These financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with the standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statement taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial information for it to be in
conformity with generally accepted accounting principles.
We previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of October 2, 1993, and the
related consolidated statements of income and cash flows for the year then
ended (not presented herein), and in our report dated November 2, 1993 we
expressed an unqualified opinion on those consolidated financial statements.
In our opinion, the information set forth in the accompanying condensed
consolidated balance sheet as of October 2, 1993, is fairly stated in all
material respects in relation to the consolidated balance sheet from which it
has been derived.
PRICE WATERHOUSE