FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Quarter Ended
March 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number
1-11916
WIRELESS TELECOM GROUP, INC.
(Exact name of registrant as specified in its charter)
New Jersey 22-2582295
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
East 64 Midland Avenue
Paramus, New Jersey 07652
(Address of principal executive offices) (Zip Code)
(201) 261-8797
Registrant's telephone number, including area code
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
YES X NO
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the most recent practicable date.
Common Stock - Par Value $.01 17,438,828
Class Outstanding Shares
At April 8, 1997
WIRELESS TELECOM GROUP, INC.
Table of Contents
PART I. FINANCIAL INFORMATION
Page(s)
Item 1 -- Consolidated Financial Statements:
Condensed Balance Sheets as of March 31, 1997
(unaudited) and December 31, 1996 3
Condensed Statements of Operations for the Three
Months Ended March 31, 1997 and 1996 (unaudited) 4
Condensed Statements of Cash Flows for the Three
Months Ended March 31, 1997 and 1996 (unaudited) 5
Notes to Interim Condensed Financial Statements
(unaudited) 6
Item 2 -- Management's Discussion and Analysis of Financial
Condition and Results of Operations 7-8
PART II. OTHER INFORMATION
Item 1 -- Legal Proceedings 9
Item 2 -- Changes in Securities 9
Item 3 -- Defaults upon Senior Securities 9
Item 4 -- Submission of Matters to a Vote of
Security Holders 9
Item 5 -- Other Information 9
Item 6 -- Exhibits and Reports on Form 8-K 9
Signatures 10
Exhibit 11.1 11
Exhibit 27 12
PART I - FINANCIAL INFORMATION
ITEM 1 - Financial Statements
WIRELESS TELECOM GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
- ASSETS -
MARCH 31, DECEMBER 31,
1997 1996
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 8,508,345 $ 8,039,128
Accounts receivable -- net of allowance for
doubtful accounts of $78,700 and
$74,707, respectively 4,749,099 4,252,115
Inventories 5,795,009 4,998,575
Prepaid expenses and other current assets 213,083 272,960
---------- ----------
TOTAL CURRENT ASSETS 19,265,536 17,562,778
PROPERTY, PLANT AND EQUIPMENT - NET 1,063,986 1,022,686
OTHER ASSETS 488,416 458,778
---------- ----------
$ 20,817,938 $ 19,044,242
========== ==========
- LIABILITIES AND SHAREHOLDERS' EQUITY -
ACCOUNTS PAYABLE AND OTHER CURRENT LIABILITIES $ 1,608,930 $ 1,379,641
--------- ---------
DEFERRED INCOME TAXES 71,066 65,075
--------- ---------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY (Note 4):
Preferred stock, $.01 par value, 2,000,000
shares authorized, none issued - -
Common stock, $.01 par value, 30,000,000 shares
authorized, 17,562,628 and 17,502,898 shares
issued, respectively 175,626 175,029
Additional paid-in-capital 6,214,952 6,044,782
Retained earnings 12,809,356 11,441,707
Treasury stock, 130,000 shares, at cost (61,992) (61,992)
---------- ----------
19,137,942 17,599,526
---------- ----------
$ 20,817,938 $ 19,044,242
========== ==========
The accompanying notes are an integral part of these financial statements.
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WIRELESS TELECOM GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
For the Three Months
Ended March 31,
1997 1996
--------- ---------
NET SALES $ 7,142,501 $ 5,347,964
COSTS AND EXPENSES
Cost of sales 1,967,196 1,324,852
Operating expenses 1,750,331 1,193,761
Interest, dividend and other income (105,176) (85,450)
--------- ---------
TOTAL COSTS AND EXPENSES 3,612,351 2,433,163
--------- ---------
INCOME FROM OPERATIONS BEFORE
PROVISION FOR INCOME TAXES 3,530,150 2,914,801
PROVISION FOR INCOME TAXES 1,290,870 1,097,854
--------- ---------
NET INCOME $ 2,239,280 $ 1,816,947
========= =========
NET INCOME PER COMMON SHARE (Note 2)
PRIMARY $ .13 $ .10
--- ---
FULLY DILUTED $ .13 $ .10
--- ---
The accompanying notes are an integral part of these financial statements.
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WIRELESS TELECOM GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
For the Three Months
Ended March 31,
1997 1996
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 2,239,280 $ 1,816,947
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 53,241 35,755
Deferred income taxes (benefit) 5,991 (4,438)
Provision for losses on accounts receivable 3,993 7,436
Changes in assets and liabilities:
(Increase) in accounts receivable (500,977) (764,300)
(Increase) in inventories (796,434) (590,819)
Decrease in prepaid expenses and other assets 64,402 361,320
Increase in accounts payable and accrued expenses 229,289 347,255
---------- ---------
Net cash provided by operating activities 1,298,785 1,209,156
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (94,541) (78,581)
Officer's life insurance (34,163) (32,512)
---------- ---------
Net cash (used) for investing activities (128,704) (111,093)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid (871,631) (518,916)
Proceeds from exercise of stock options 170,767 37,845
---------- ---------
Net cash (used) for financing activities (700,864) (481,071)
---------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS 469,217 616,992
Cash and cash equivalents, at beginning of year 8,039,128 5,839,865
---------- ----------
CASH AND CASH EQUIVALENTS, AT END OF PERIOD $ 8,508,345 $ 6,456,857
========== ==========
SUPPLEMENTAL INFORMATION:
Cash paid during the period for:
Taxes $ 1,125,000 $ 632,000
The accompanying notes are an integral part of these financial statements.
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WIRELESS TELECOM GROUP, INC.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES AND POLICIES
The condensed consolidated balance sheet as of March 31, 1997 and the
condensed consolidated statements of operations for the three month periods
ended March 31, 1997 and 1996 and the condensed consolidated statements
of cash flows for the three month periods ended March 31, 1997 and 1996 have
been prepared by the Company without audit. The consolidated financial
statements include the accounts of Wireless Telecom Group, Inc. and its
wholly-owned subsidiary WTG Foreign Sales Corporation. WTG Foreign Sales
Corporation began operations as a subsidiary of the Company in February 1996.
In the opinion of management, the accompanying condensed consolidated
financial statements referred to above contain all necessary adjustments,
consisting of normal accruals and recurring entries only, which are necessary
to present fairly the Company's results for the interim periods being
presented.
The accounting policies followed by the Company are set forth in Note 1 to the
Company's financial statements included in its annual report on Form 10-K for
the year ended December 31, 1996, which is incorporated herein by reference.
Specific reference is made to this report for a description of the Company's
securities and the notes to financial statements included therein.
The results of operations for the three month periods ended March 31, 1997 and
1996 are not necessarily indicative of the results to be expected for the full
year.
NOTE 2 - INCOME PER COMMON SHARE
Income per common share is computed by dividing the net income by the weighted
average number of common shares and common equivalent shares outstanding
during each period.
NOTE 3 - REVOLVING CREDIT LINE
The Company renewed the agreement with its bank which provides for an
unsecured line of credit in the amount of $5,000,000 at the bank's prime
lending rate. There are no direct borrowings currently against the line of
credit. This agreement expires on June 30, 1997.
NOTE 4 - DIVIDENDS
On January 27, 1997, the Company announced the declaration of quarterly cash
dividends of $.05 per share to shareholders of record on March 24, 1997. This
cash dividend of $871,631 was paid by March 31, 1997.
It is the Company's present intention to maintain a quarterly dividend policy.
The Company paid cash dividends aggregating $.15 per share for the year ending
December 31, 1996.
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ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
INTRODUCTION
Wireless Telecom Group, Inc., formerly Noise Com, Inc., (the "Company")
develops, manufactures and markets a wide variety of electronic noise sources
and test instruments for wireless telecommunications. The Company's products
are used to test the performance and capability of satellite, cellular and
personal (PCS) communications, radio, radar, wireless local area network
(WLAN), high-definition television (HDTV) and other communications systems. To
further address the needs of the ever-evolving wireless telecommunications
industry, the Company has been developing and marketing test instruments
designed to fulfill the requirements of such customers. The Company is
expanding its product offerings to these customers as this emerging industry
is expected to provide an opportunity for substantial growth.
The financial information presented herein includes:
(i) Condensed consolidated balance sheets as of the three months ended March
31, 1997 and as of the year ended December 31, 1996 (ii) Condensed
consolidated statements of operations for the three month periods ended March
31, 1997 and 1996 and (iii) Condensed consolidated statements of cash flows
for the three month periods ended March 31, 1997 and 1996.
OPERATIONS
For the three months ended March 31, 1997 as compared to the corresponding
period of the previous year, net sales increased to $7,142,501 from $5,347,964
an increase of $1,794,537 or 33.6%. This volume increase is the result of the
continued growth of commercial applications of the Company's products of which
the most notable are the sales of the Company's wireless telecommunications
instruments.
The Company's gross profit on net sales for the three months ended March 31,
1997 was $5,175,305 or 72.5% as compared to $4,023,112 or 75.2% for the three
months ended March 31, 1996. Variations in gross profit are attributed to the
mix of product sales. The Company continues to rigidly monitor costs
associated with material acquisition, manufacturing and production.
Operating expenses for the three months ended March 31, 1997 were $1,750,331
or 24.5% of net sales as compared to $1,193,761 or 22.3% of net sales for the
three months ended March 31, 1996.
For the three months ended March 31, 1997 as compared to the same period of
the prior year, operating expenses increased in dollars by $556,570.
Approximately 44% of this increase is due to greater expenditures for research
and development of new products. An additional 35% of the increase is
attributable to greater advertising and selling expenses incurred to generate
sales and to expand customer awareness of the Company's wireless
telecommunications instruments. Also, increased rent expense for the Company's
larger facility accounted for 5% of the increase in dollars from 1996.
Interest, dividend and other income increased by $19,726 for the three months
ended March 31, 1997. This increase was due to additional cash generated by
operations.
Net income increased to $2,239,280, or $.13 per share, for the three months
ended March 31, 1997 as compared to $1,816,947, or $.10 per share for the
three months ended March 31, 1996. The explanation of these increases can be
derived from the analysis given above of operations for the three month
periods ending March 31, 1997 and 1996, respectively.
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ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
LIQUIDITY AND CAPITAL RESOURCES:
The Company's working capital has increased by $1,473,469 to $17,656,606 at
March 31, 1997, from $16,183,137 at December 31, 1996. At March 31, 1997 the
Company had a current ratio of 12.0 to 1, and a ratio of debt to net worth of
less than .1 to 1 . At December 31, 1996 the Company had a current ratio of
12.7 to 1, and a ratio of debt to net worth of less than .1 to 1.
Net cash provided from operations has allowed the Company to meet its
liquidity requirements, research and development activities and capital
expenditures. The principal source of cash has been from net income. To
maximize the use of funds, management has been closely monitoring accounts
receivable and inventory.
Management believes that accounts receivable have been increasing commensurate
with the increase in sales. The Company has historically been able to turn
over its accounts receivable approximately every two months. This average
collection period has been sufficient to provide the working capital and
liquidity necessary to operate the Company.
Due to the Company's expanding product line, the volume of items and
accordingly the total dollar value of inventory has increased. As the Company
plans to further expand its product line, inventory is being monitored closely
to balance production requirements while maintaining manageable levels of
goods on hand.
On January 27, 1997 the Company announced the declaration of a quarterly cash
dividend of $.05 per share payable to shareholders of record on March 24,
1997. This cash dividend aggregated $871,631 and was paid by March 31, 1997.
In February 1996, the Company established a Foreign Sales Corporation.
On May 13, 1996 the Company announced the declaration of a two-for-one stock
split on the Company's common stock. The split was effective for shareholders
of record on May 22, 1996 and was paid on May 28, 1996. All share and per
share data have been retroactively adjusted to show the effects of the split.
During 1996, the Company declared quarterly cash dividends aggregating
$2,602,215 or $.15 per common share. It is the Company's present intention to
maintain a quarterly dividend policy.
The Company believes that its financial resources from working capital
provided by operations and its bank line of credit are adequate to meet
current requirements.
INFLATION AND SEASONALITY
The Company does not anticipate that inflation will significantly impact its
business nor does it believe that its business is seasonal.
-8-
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
Not applicable.
Item 2. CHANGES IN SECURITIES
Not applicable.
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
Item 5. OTHER INFORMATION
On January 27, 1997 the Company announced a cash dividend of $.05
per share to shareholders of record on March 24, 1997. The cash dividend was
paid by March 31, 1997.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
11.1 Computation of per share earnings
27.0 Financial Data Schedule
(b) Reports on Form 8-K:
No reports on Form 8-K were filed by the Registrant during the
quarterly period ended March 31, 1997.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WIRELESS TELECOM GROUP, INC.
(Registrant)
Date: April 17, 1997 /S/Dale Sydnor
Dale Sydnor
Chief Executive Officer
Date: April 17, 1997 /S/Eugene Ferrara
Eugene Ferrara
Chief Financial Officer
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