UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JULY 31, 1998
-----------------------------------
Commission File Number 0-27414
------------------------------------------
REMEC, INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
CALIFORNIA 95-3814301
- -------------------------------------------------------------------------------
(State of other jurisdiction of I.R.S. Employer
incorporation or organization) Identification Number
9404 CHESAPEAKE DRIVE SAN DIEGO, CALIFORNIA 92123
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(619) 560-1301
- -------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check 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 month (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 number of shares outstanding of each of the issuer's classes of common
stock, at the latest practicable date:
Class Outstanding as of: JULY 31, 1998
----------- --------------------------------
Common shares,
$.01(cent)par value 23,363,275
Index Page No.
- ----- --------
PART I FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements:
Condensed Consolidated Balance Sheets.......................... 3
Condensed Consolidated Statements of Income.................... 4
Condensed Consolidated Statement of Changes in
Shareholder's Equity........................................ 5
Condensed Consolidated Statements of Cash Flows................ 6
Notes to Condensed Consolidated Financial Statements........... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.............................. 9
PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders................. 13
Item 6. Exhibits and Reports on Form 8-K.................................... 13
SIGNATURES.................................................................. 14
- 2 -
PART I - FINANCIAL INFORMATION
ITEM 1
REMEC, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
July 31, 1998 January 31, 1998
------------- ----------------
ASSETS
Current assets:
Cash and cash equivalents $80,466,162 $41,937,101
Accounts receivable, net 24,674,287 25,494,474
Inventories, net 32,652,819 30,380,941
Prepaid expenses and other current assets 9,834,339 6,831,010
------------ ------------
Total current assets 147,627,607 104,643,526
Property, plant and equipment, net 40,309,269 31,988,934
Intangible and other assets, net 16,632,639 17,232,241
------------ ------------
$204,569,515 $153,864,701
------------ ------------
------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $4,051,125 $8,531,756
Accrued expenses 8,972,870 11,616,242
------------ ------------
Total current liabilities 13,023,995 20,147,998
Deferred income taxes and other long-term liabilities 4,912,307 5,222,169
Shareholders' equity 186,633,213 128,494,534
------------ ------------
$204,569,515 $153,864,701
------------ ------------
------------ ------------
See accompanying notes.
- 3 -
REMEC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Three months ended Six months ended
--------------------------------- ---------------------------------
July 31, 1998 August 1, 1997 July 31, 1998 August 1, 1997
------------- -------------- ------------- --------------
Net sales $39,634,681 $39,427,649 $85,386,065 $73,289,357
Cost of sales 30,349,218 27,387,817 60,746,362 51,072,534
----------- ----------- ----------- -----------
Gross profit 9,285,463 12,039,832 24,639,703 22,216,823
Operating expenses:
Selling, general and administrative 7,730,597 6,189,215 14,990,752 11,567,235
Research and development 1,827,497 1,322,918 3,491,358 2,645,193
----------- ----------- ----------- -----------
Total operating expenses 9,558,094 7,512,133 18,482,110 14,212,428
----------- ----------- ----------- -----------
Income (loss) from operations (272,631) 4,527,699 6,157,593 8,004,395
Interest income 783,070 580,215 1,467,980 1,226,187
----------- ----------- ----------- -----------
Income before provision (credit) for income taxes 510,439 5,107,914 7,625,573 9,230,582
Provision (credit) for income taxes (2,014,413) 1,681,715 692,587 3,372,785
----------- ----------- ----------- -----------
Net income $2,524,852 $3,426,199 $6,932,986 $5,857,797
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Earnings per share:
Basic $0.11 $0.17 $0.30 $0.28
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Diluted $0.11 $0.16 $0.30 $0.27
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Shares used in computing earnings per share:
Basic 23,261,000 20,733,000 22,900,000 20,666,000
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Diluted 23,605,000 21,490,000 23,457,000 21,312,000
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
See accompanying notes.
- 4 -
REMEC, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(unaudited)
Common stock
-------------------------
Shares Amount Paid-in capital Retained earnings Total
---------- ----------- --------------- ---------------- ------------
Balance at January 31, 1998 21,182,663 $211,828 $95,838,167 $32,444,539 $128,494,534
Issuance of common shares in stock offering 1,990,000 19,900 49,543,600 -- 49,563,500
Issuance of common shares upon exercise of
stock options 67,635 676 373,439 -- 374,115
Issuance of common shares under employee
stock purchase plan 122,977 1,229 1,266,849 -- 1,268,078
Net income -- -- -- 6,932,986 6,932,986
------------ --------- ------------ ---------- ------------
Balance at July 31, 1998 23,363,275 $233,633 147,022,055 39,377,525 $186,633,213
------------ --------- ------------ ---------- ------------
------------ --------- ------------ ---------- ------------
See accompanying notes.
- 5 -
REMEC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Six months ended
----------------------------------
July 31, 1998 August 1, 1997
------------- --------------
OPERATING ACTIVITIES
Net income $6,932,986 $5,857,797
Adjustments to reconcile net income to net cash
used by operating activities:
Depreciation and amortization 4,708,604 2,337,622
Changes in operating assets and liabilities:
Accounts receivable 820,187 (2,489,143)
Inventories (2,271,878) (3,801,639)
Prepaid expenses and other current assets (3,003,329) (1,199,547)
Accounts payable (4,480,631) (1,096,300)
Accrued expenses, deferred income taxes and
other long-term liabilities (2,953,234) (1,479,028)
----------- ------------
Net cash used by operating activities (247,295) (1,870,238)
INVESTING ACTIVITIES
Additions to property, plant and equipment (12,230,344) (6,587,986)
Payment for acquisitions, net of cash acquired -- (1,018,286)
Other assets (198,993) 41,137
----------- ------------
Net cash used by investing activities (12,429,337) (7,565,135)
FINANCING ACTIVITIES
Borrowings under credit facilities and long-term debt -- 9,349,408
Repayments on credit facilities and long-term debt -- (11,270,131)
Proceeds from sale of common stock 51,205,693 1,129,350
----------- ------------
Net cash provided (used) by financing activities 51,205,693 (791,373)
----------- ------------
Increase (decrease) in cash and cash equivalents 38,529,061 (10,226,746)
Cash and cash equivalents at beginning of period 41,937,101 63,172,362
Adjustment for net cash activity of pooled companies -- (326,504)
----------- ------------
Cash and cash equivalents at end of period $80,466,162 $52,619,112
----------- ------------
----------- ------------
See accompanying notes.
- 6 -
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. QUARTERLY FINANCIAL STATEMENTS
The interim condensed consolidated financial statements included herein
have been prepared by REMEC, Inc. (the "Company") without audit,
pursuant to the rules and regulations of the Securities and Exchange
Commission (the "SEC"). Certain information and footnote disclosures,
normally included in annual financial statements, have been condensed
or omitted pursuant to such SEC rules and regulations; nevertheless,
management of the Company believes that the disclosures herein are
adequate to make the information presented not misleading. These
condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes
thereto for the year ended January 31, 1998 included in the Company's
Annual Report on Form 10-K. In the opinion of management, the condensed
consolidated financial statements included herein reflect all
adjustments, consisting only of normal recurring adjustments, necessary
to present fairly the consolidated financial position of the Company as
of July 31, 1998 and the results of its operations for the three and
six month periods ended July 31, 1998 and August 1, 1997. The results
of operations for the interim periods ended July 31, 1998 are not
necessarily indicative of the results which may be reported for any
other interim period or for the entire fiscal year.
In June 1997, the Financial Accounting Standards Board issued FAS No.
130, "Reporting Comprehensive Income" and FAS No. 131, "Segment
Information". Both of these standards are effective for fiscal years
beginning after December 15, 1997. FAS No. 130 requires that all
components of comprehensive income, including net income, be reported
in the financial statements in the period in which they are recognized.
Comprehensive income is defined as the change in equity during a period
from transactions and other events and circumstances from non-owner
sources. Net income and other comprehensive income, including foreign
currency translation adjustments, and unrealized gains and losses on
investments, shall be reported, net of their related tax effect, to
arrive at comprehensive income. Comprehensive income is not materially
different than reported net income for the three and six month periods
ended July 31, 1998 and August 1, 1997. FAS No. 131 amends the
requirements for public enterprises to report financial and descriptive
information about its reportable operating segments. Operating
segments, as defined in FAS No. 131, are components of an enterprise
for which separate financial information is required to be reported on
the basis that is used internally for evaluating the segment
performance. The Company believes it operates in one business and
operating segment and that adoption of these standards will not have
a material impact on the Company's financial statements.
The statements in this report on Form 10-Q that relate to future plans,
events or performance are forward- looking statements. Actual results
could differ materially due to a variety of factors, including the
Company's success in penetrating the commercial wireless market, risks
associated with the cancellation or reduction of orders by significant
commercial or defense customers, trends in the commercial wireless and
defense markets, risks of cost overruns and product nonperformance and
other factors and considerations described in the Company's Annual
Report on Form 10-K, and the other documents the company files from
time to time with the SEC. Readers are cautioned not to place undue
reliance on these forward- looking statements, which speak only as of
the date hereof. Other than as required by applicable law, the Company
undertakes no obligation to publicly release the result of any
revisions to these forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
- 7 -
2. NET INCOME PER SHARE
The Company presents its earnings per share information in accordance
with FAS No. 128, "Earnings per Share". Statement 128 replaced the
previously reported primary and fully diluted earnings per share with
basic and diluted earnings per share. Unlike primary earnings per
share, basic earnings per share excludes any dilutive effects of
options, warrants and convertible securities. Diluted earnings per
share, which includes the dilutive effects of options, warrants and
convertible securities, is very similar to the previously reported
fully diluted earning per share. All earnings per share amounts for all
periods have been presented, and where necessary, restated to conform
to the Statement 128 requirements.
The following table reconciles the shares used in computing basic and
diluted earnings per share for the periods indicated:
Three Months Ended Six Months Ended
--------------------------------- --------------------------------
July 31, 1998 August 1, 1997 July 31, 1998 August 1, 1997
------------- -------------- ------------- --------------
Weighted average common shares
outstanding used in basic earnings per
share calculation 23,261,000 20,733,000 22,900,000 20,666,000
Effect of dilutive stock options 344,000 757,000 557,000 646,000
---------- ---------- ---------- ----------
Shares used in diluted earnings per share
calculation 23,605,000 21,490,000 23,457,000 21,312,000
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
3. INVENTORIES
Inventories consist of the following:
July 31, 1998 January 31, 1998
------------- ----------------
Raw materials $17,637,948 $16,087,158
Work in progress 15,652,356 14,968,767
----------- -----------
33,290,304 31,055,925
Less unliquidated progress payments (637,485) (674,984)
----------- -----------
$32,652,819 $30,380,941
----------- -----------
----------- -----------
Inventories related to contracts with prime contractors to the U.S.
Government included capitalized general and administrative expenses of
$2,144,000 and $2,076,000 at July 31, 1998 and January 31, 1998,
respectively.
4. EQUITY OFFERING
In March 1998, the Company sold in an underwritten public offering an
additional 1,990,000 shares of common stock. The net proceeds received
by the Company from this offering totaled approximately $49.6 million.
Certain shareholders of the Company also sold 1,000,000 shares as part
of this offering.
- 8 -
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
REMEC commenced operations in 1983 and has become a leader in the design
and manufacture of microwave multifunction modules ("MFM's") for microwave
transmission systems used in defense applications and the commercial wireless
telecommunications industry. REMEC's consolidated results of operations
include the operations of REMEC Microwave, Inc. ("Microwave"), REMEC
Wireless, Inc. ("Wireless"), Humphrey, Inc. ("Humphrey"), Magnum Microwave
Corporation ("Magnum"), Radian Technology, Inc. ("Radian"), Verified
Technical Corporation ("Veritek"), C&S Hybrid, Inc. ("C&S"), Q-bit
Corporation ("Q-bit") and Nanowave Technologies, Inc. ("Nanowave"). The
Company's consolidated results of operations for the three and six months
ended August 1, 1997 include the operations of RF Microsystems, Inc. ("RFM").
RFM, which was acquired by REMEC on April 30 ,1996, was sold on August 26,
1997.
During fiscal 1998, the Company acquired all of the outstanding shares of
Q-bit, Radian and C&S Hybrid in a series of transactions accounted for as
poolings of interests. Accordingly, the consolidated financial statements for
the three and six months ended August 1, 1997 have been restated to include
Radian's, C&S Hybrid's and Q-bit's operations, assets and liabilities.
In March 1997, the Company acquired Veritek in a transaction accounted
for as a purchase. The condensed consolidated statements of income and cash
flows for the three and six months ended August 1, 1997 include Veritek's
results of operations from March 31, 1997. In October 1997, the Company
acquired Nanowave in a transaction also accounted for as a purchase. REMEC's
January 31, 1998 balance sheet includes Veritek's and Nanowave's assets and
liabilities.
REMEC's research and development efforts in the defense industry are
conducted in direct response to the unique requirements of a customer's order
and, accordingly, expenditures related to such efforts are included in cost
of sales and the related funding is included in net sales. As a result,
historical REMEC funded research and development expenses related to defense
programs have been minimal. As REMEC's commercial business has expanded,
research and development expenses have generally increased in amount and as a
percentage of sales. REMEC expects this trend to continue, although research
and development expenses may fluctuate on a quarterly basis both in amount
and as a percentage of sales.
Currently, the Company derives significant revenues from a limited group
of customers and expects that it will continue to do so in the immediate
future. A substantial amount of the Company's backlog with these customers
can be canceled at any time generally without substantial penalties. As a
result, any cancellation, reduction or delay in orders by or shipments to any
significant customer may have a material adverse effect on the Company's
business, financial condition and results of operations. The Company's
results of operations for the second quarter of fiscal 1999 were adversely
affected by the significant decline in commercial revenues from their level
for the first quarter of fiscal 1999. The decline in commercial revenues was
primarily attributable to requests by certain customers to delay deliveries
of previously announced requirements. Some of the customer delays are
attributable to the economic difficulties in the Asian markets or other
international markets in which REMEC's customers operate, and to the
increased competition among the participants in those markets. There can be
no assurance whether, or to what extent, these delays will result in future
cancellations or reductions in customer orders, or whether the delays may
reflect the transfer of revenues to future quarters. The Company has also
experienced continued pricing pressure on follow-on orders for existing
defense programs on which the Company participates, and the Company
anticipates that there will be fewer available defense programs to which it
can market its products in the future. Failure of the Company to replace
sales attributable to a significant defense program or contract at the end of
that program or contract, whether due to cancellation, spending cuts,
budgetary constraints or otherwise, may have a material adverse effect on the
Company's business, financial condition or results of operations.
- 9 -
RESULTS OF OPERATIONS
The following table sets forth, as a percentage of total net sales,
certain consolidated statement of income data for the periods indicated.
Three Months Ended Six Months Ended
-------------------------- --------------------------
July 31, August 1, July 31, August 1,
1998 1997 1998 1997
---------- ------------ ----------- ----------
Net sales...................................... 100% 100% 100% 100%
Cost of goods sold............................. 77 69 71 70
--- --- --- ---
Gross profit................................... 23 31 29 30
Operating expenses:
Selling, general & administrative.............. 19 16 18 16
Research and development....................... 5 3 4 3
--- --- --- ---
Total operating expenses....................... 24 19 22 19
--- --- --- ---
Income (loss) from operations.................. (1) 12 7 11
Interest income ............................... 2 1 2 2
--- --- --- ---
Income before income taxes..................... 1 13 9 13
Provision (credit) for income taxes............ (5) 4 1 5
--- --- --- ---
Net income..................................... 6% 9% 8% 8%
--- --- --- ---
--- --- --- ---
NET SALES. Net sales were $39.6 million and $85.4 million for the
three and six month periods ended July 31, 1998, representing increases of
$.2 million or 1% and $12.1 million or 17%, respectively, over the comparable
prior year periods. Defense sales were $17.8 million and $34.6 million for
the three and six month periods ended July 31, 1998, representing decreases
of $1.2 million or 6% and $1.8 million or 5%, respectively, over the
comparable prior year periods. Commercial wireless sales were $21.9 million
and $50.8 million for the three and six month periods ended July 31, 1998,
representing increases of $1.4 million or 7% and $13.9 million or 38%,
respectively, over the comparable prior year periods. The decrease in defense
sales during the three and six months ended July 31, 1998 is primarily
attributable to the sale of RF Microsystems in August 1997; the fiscal 1999
period includes no defense contract revenues from RFM as opposed to $3.1
million in the fiscal 1998 period. Approximately $3.5 million of the increase
in commercial sales during fiscal 1999 is attributable to revenue generated
by the Company's Nanowave subsidiary which was acquired in October 1997; the
fiscal 1998 period includes no revenue for Nanowave. The remaining increase
in commercial sales during fiscal 1999 is primarily attributable to increased
customer demand for the Company's products over the comparable prior year
period.
GROSS PROFIT. Gross profit was $9.3 million and $24.6 million for
the three and six month periods ended July 31, 1998, representing a decrease
of $2.8 million or 23% and an increase of $2.4 million or 11%, respectively,
over the comparable prior year periods. Gross margins for defense were 27 %
and 30% for the three and six month periods ended July 31, 1998, compared
with 30% and 31%, respectively, for the comparable prior year periods.
Commercial gross margins were 21% and 28% for the three and six month periods
ended July 31, 1998 compared with 31% and 29%, respectively, for the
comparable prior year periods. The decrease in both defense and commercial
gross margins is primarily attributable to changes in the Company's defense
and commercial sales mixes.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses ("SG & A") were $7.7 million and $15.0 million for
the three and six month periods ended July 31, 1998, representing increases
of $1.5 million or 25% and $3.4 million or 30%, respectively, over the
comparable prior year periods. These expenses as a percentage of sales
increased to 19% and 18% for the three and six month periods ended July 31,
1998 from 16% for both comparable prior year periods. The increased expenses
are primarily attributable to costs of approximately $1.5 million arising at
subsidiaries acquired during fiscal 1998 whose operations were not fully
included in operating results for the three and six months ended August 1,
1997, approximately $600,000 of accounting and legal expenses associated with
the income tax credit study completed during the second quarter of
fiscal 1999, and increased personnel, legal and other administrative costs
resulting from the Company's growth.
- 10 -
RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses
were $1.8 million and $3.5 million for the three and six month periods ended
July 31, 1998, representing increases of $ .5 million or 38% and $ .8 million
or 32%, respectively, over the comparable prior year periods. The
expenditures are almost entirely attributable to the Company's commercial
wireless business. Research and development expenditures fluctuate on a
quarterly basis both in amount and as a percentage of sales.
INTEREST INCOME. Interest income was $783,000 and $ 1,468,000 for
the three and six month periods ended July 31, 1998, representing increases
of $203,000 and $242,000 over the comparable prior year periods. The increase
in interest income during the current year reflects the increased level of
cash on hand as a result of the funds generated from REMEC's follow-on public
offering which was completed in March 1998.
PROVISION FOR INCOME TAXES. REMEC's effective income tax rate
declined from 37% during the six month period ended August 1, 1997 to 9%
during the six month period ended July 31, 1998. The decrease in the
effective income tax rate reflects the tax benefit of $1,900,000 related to
the recognition of research and experimentation tax credits pertaining to
previously filed tax returns. The reduction in the effective tax rate during
fiscal 1999 also reflects the benefit of tax credits for certain capital
expenditures. The Company expects its future effective tax rate to be
approximately 34%.
LIQUIDITY AND CAPITAL RESOURCES
At July 31, 1998, REMEC had $134.6 million of working capital which
included cash and cash equivalents totaling $80.5 million. REMEC also has $17.0
million in available credit facilities consisting of a $9.0 million revolving
working capital line of credit and a $8.0 million revolving term loan. The
borrowing rate under both credit facilities is based on a fixed spread over the
London Interbank Offered Rate (LIBOR). The revolving working capital line of
credit terminates July 3, 2000. The revolving period under the term loan expires
July 1, 2000, at which time any loan amount outstanding converts to a term loan
to be fully amortized and paid in full by January 2, 2004. As of July 31, 1998,
there were no borrowings outstanding under REMEC's credit facilities.
During the six month period ended July 31, 1998, net cash used by
operations totaled $.2 million as the cash flow from earnings and non-cash
expenses (primarily depreciation and amortization) was offset by the increase
in inventories and the repayment of trade accounts payables and other accrued
expenses. Inventories increased during this period due to requests by certain
customers to delay delivery of previously announced requirements. Investing
activities utilized $12.4 million during the six months ended July 31, 1998,
primarily as a result of $12.2 million in capital expenditures. The bulk of
the capital expenditures were associated with the expansion of REMEC's
commercial wireless telecommunications business. The above expenditures were
financed primarily by cash on hand. REMEC's future capital expenditures may
continue to be substantially higher than historical levels as a result of
commercial wireless telecommunications expansion requirements. Financing
activities generated approximately $51.2 million during the first six months
of fiscal 1999, principally as a result of the net proceeds of $49.6 million
from the follow-on offering and the proceeds generated by the issuance of
shares in connection with the Company's Employee Stock Purchase Plan and from
exercises of stock options.
REMEC's future capital requirements will depend upon many factors,
including the nature and timing of orders by OEM customers, the progress of
REMEC's research and development efforts, expansion of REMEC's marketing and
sales efforts, and the status of competitive products.
IMPACT OF YEAR 2000
Many currently installed computer systems and software products are
coded to accept only two digit entries to represent years. For example, the
year "1998" would be represented by "98". These systems and products will
need to be able to accept four digit entries to distinguish years beginning
with 2000 from prior years. As a result, systems and products that do not
accept four digit year entries will need to be upgraded or replaced to comply
with such "Year 2000" requirements. The Company believes that its internal
systems are Year 2000 compliant or will be upgraded or replaced in connection
with previously planned changes to information systems prior to the need to
comply with Year 2000 requirements without material cost or expense. The
anticipated costs of any Year 2000 modifications are based on
- 11 -
management's best estimates, which were derived utilizing numerous
assumptions of future events, including the continued availability of certain
resources and other factors. However, there can be no guarantee that these
estimates will be achieved and actual results could differ materially from
these anticipated. Specific factors that might cause such material
differences include, but are not limited to, the availability and cost of
personnel trained in this area, the ability to locate and correct all
relevant computer codes, and similar uncertainties. In addition, there can be
no assurance that Year 2000 compliance problems will not be revealed in the
future which could have a material adverse affect on the Company's business,
financial condition and results of operations. Many of the Company's
customers and suppliers may be effected by Year 2000 issues that may require
them to expend significant resources to modify or replace their existing
systems, which may result in those customers having reduced funds to purchase
the Company's products or those suppliers experiencing difficulties in
producing or shipping key components to the Company on a timely basis or at
all.
- 12 -
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders of the Company was held on June 12, 1998.
The following items were voted upon by the shareholders with all items being
approved.
1. To elect nine directors to serve for the ensuing year and until
their successors are elected.
Votes for Votes against or withheld Votes abstained Broker non-votes
---------- ------------------------- ---------------- ----------------
Ronald E. Ragland 19,817,472 245,464 - -
Errol Ekaireb 19,823,575 239,361 - -
Jack A. Giles 19,823,828 239,108 - -
Joe Lee 19,823,828 239,108 - -
Denny E. Morgan 19,823,875 239,061 - -
Andre R. Horn 19,823,775 239,161 - -
Jeffrey M. Nash 19,823,875 239,061 - -
Thomas A. Corcoran 19,823,875 239,061 - -
William H. Gibbs 19,823,875 239,061 - -
2. To approve an amendment to the Company's Restated Articled of
Incorporation to increase the number of the Company's
authorized shares of common stock.
Votes for Votes against or withheld Votes abstained Broker non-votes
---------- -------------------------- ---------------- -----------------
19,391,077 554,075 94,364 23,420
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed herewith:
- Exhibit 27 - Financial Data Schedule
(b) There were no reports on Form 8-K filed during the quarter ended
July 31, 1998.
- 13 -
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, as
amended, the registrant duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
REMEC, Inc.
(Registrant)
By: /s/ Ronald E. Ragland
-------------------------------------------
Ronald E. Ragland
Chairman and Chief Executive Officer
By: /s/ Michael D. McDonald
------------------------------------------
Michael D. McDonald
Chief Financial Officer and Secretary
Date: September 14, 1998
- 14 -
EXHIBIT INDEX
Exhibit
Number
27 Financial Data Schedule