UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 December 31, 2003
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 Number 0-26924
AMX CORPORATION
(Exact name of registrant as specified in its charter)
| Texas | 75-1815822 | |
| (State of Incorporation) | (I.R.S. Employer Identification No.) | |
| 3000 Research Drive Richardson, Texas |
75082 | |
| (Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code: (800) 222-0193
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 whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
| Common Stock, $0.01 Par Value | 11,570,184 | |
| (Title of Each Class) | (Number of Shares Outstanding at January 31, 2004) |
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2003
INDEX
| Page Number | ||||
| Part I. |
Financial Information (Unaudited) | |||
| Item 1. |
Consolidated Balance Sheets at December 31, 2003 and March 31, 2003 | 3 | ||
| Consolidated Statements of Operations for the Three and Nine Months Ended December 31, 2003 and 2002 | 4 | |||
| Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 2003 and 2002 | 5 | |||
| Notes to Consolidated Financial Statements | 6 | |||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 9 | ||
| Item 3. |
Quantitative and Qualitative Disclosures About Market Risk | 14 | ||
| Item 4. |
Controls and Procedures | 15 | ||
| Part II. |
Other Information | |||
| Item 5. |
Other Information | 16 | ||
| Item 6. |
Exhibits and Reports on Form 8-K | 16 | ||
| Signatures | 17 | |||
2
CONSOLIDATED BALANCE SHEETS
| (Unaudited) December 31, 2003 |
(Note 1) March 31, 2003 |
|||||||
| ASSETS | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 8,235,253 | $ | 4,960,700 | ||||
| Receivables, less allowance for doubtful accounts of $721,000 at December 31, 2003 and $983,000 at March 31, 2003 |
10,745,936 | 9,820,272 | ||||||
| Inventories |
7,076,241 | 7,274,059 | ||||||
| Prepaid expenses |
1,301,964 | 981,874 | ||||||
| Other current assets |
217,830 | 252,491 | ||||||
| Total current assets |
27,577,224 | 23,289,396 | ||||||
| Furniture and equipment, at cost, net |
6,782,720 | 6,899,187 | ||||||
| Deposits and other |
907,237 | 291,447 | ||||||
| Total assets |
$ | 35,267,181 | $ | 30,480,030 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: |
||||||||
| Line of credit |
$ | 1,500,000 | $ | 3,000,000 | ||||
| Accounts payable |
3,889,205 | 3,167,108 | ||||||
| Accrued compensation |
2,303,976 | 1,549,503 | ||||||
| Other accrued expenses |
3,474,836 | 2,486,833 | ||||||
| Current portion of long-term debt |
255,363 | 766,088 | ||||||
| Total current liabilities |
11,423,380 | 10,969,532 | ||||||
| Long-term debt, less current portion |
— | 255,363 | ||||||
| Other long-term liabilities |
249,383 | 199,842 | ||||||
| Commitments and contingencies |
||||||||
| Shareholders’ equity: |
||||||||
| Preferred stock, $0.01 par value: |
||||||||
| Authorized shares - 10,000,000 |
||||||||
| Issued shares – none |
— | — | ||||||
| Common stock, $0.01 par value: |
||||||||
| Authorized shares — 40,000,000 |
||||||||
| Issued shares — 11,979,862 at December 31, 2003 and 11,699,334 at March 31, 2003 |
119,798 | 116,993 | ||||||
| Additional capital |
25,024,651 | 24,406,702 | ||||||
| Deferred compensation |
(128,666 | ) | — | |||||
| Retained earnings (accumulated deficit) |
3,046,919 | (1,000,118 | ) | |||||
| Less treasury stock (496,476 shares at December 31, 2003 and March 31, 2003) |
(4,468,284 | ) | (4,468,284 | ) | ||||
| Total shareholders’ equity |
23,594,418 | 19,055,293 | ||||||
| Total liabilities and shareholders’ equity |
$ | 35,267,181 | $ | 30,480,030 | ||||
See accompanying notes.
3
CONSOLIDATED STATEMENTS OF OPERATIONS
| (Unaudited) Three Months Ended December 31, |
(Unaudited) Nine Months Ended December 31, |
|||||||||||||||
| 2003 |
2002 |
2003 |
2002 |
|||||||||||||
| Commercial system sales |
$ | 18,284,924 | $ | 17,472,044 | $ | 54,622,843 | $ | 55,066,558 | ||||||||
| Residential system sales |
3,090,523 | 2,795,678 | 8,356,573 | 7,622,849 | ||||||||||||
| Total sales |
21,375,447 | 20,267,722 | 62,979,416 | 62,689,407 | ||||||||||||
| Cost of sales |
10,018,931 | 10,152,669 | 29,343,033 | 30,951,756 | ||||||||||||
| Gross profit |
11,356,516 | 10,115,053 | 33,636,383 | 31,737,651 | ||||||||||||
| Selling and marketing expenses |
5,739,972 | 5,180,153 | 16,490,923 | 15,950,295 | ||||||||||||
| Research and development expenses |
2,516,061 | 2,460,789 | 7,826,626 | 6,851,638 | ||||||||||||
| General and administrative expenses |
1,823,607 | 1,988,450 | 5,390,248 | 6,196,406 | ||||||||||||
| Total operating expenses |
10,079,640 | 9,629,392 | 29,707,797 | 28,998,339 | ||||||||||||
| Operating income |
1,276,876 | 485,661 | 3,928,586 | 2,739,312 | ||||||||||||
| Interest expense |
(12,731 | ) | (89,158 | ) | (84,695 | ) | (331,861 | ) | ||||||||
| Other income (expense), net |
210,257 | 5,127 | 332,484 | 13,924 | ||||||||||||
| Income before income taxes |
1,474,402 | 401,630 | 4,176,375 | 2,421,375 | ||||||||||||
| Income tax expense |
34,035 | 16,278 | 129,338 | 227,660 | ||||||||||||
| Net income |
$ | 1,440,367 | $ | 385,352 | $ | 4,047,037 | $ | 2,193,715 | ||||||||
| Basic income per share |
$ | 0.13 | $ | 0.03 | $ | 0.36 | $ | 0.20 | ||||||||
| Diluted income per share |
$ | 0.12 | $ | 0.03 | $ | 0.34 | $ | 0.20 | ||||||||
See accompanying notes.
4
CONSOLIDATED STATEMENTS OF CASH FLOWS
| (Unaudited) Nine Months Ended December 31, |
||||||||
| 2003 |
2002 |
|||||||
| Operating Activities |
||||||||
| Net income |
$ | 4,047,037 | $ | 2,193,715 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation |
1,996,850 | 2,285,014 | ||||||
| Stock based compensation charge |
257,334 | — | ||||||
| Provision for losses on receivables |
292,434 | 376,378 | ||||||
| Provision for inventory obsolescence |
216,451 | 634,866 | ||||||
| Gain on sale of assets |
(9,607 | ) | — | |||||
| Changes in operating assets and liabilities: |
||||||||
| Receivables |
(1,218,098 | ) | 3,562,021 | |||||
| Inventories |
(18,633 | ) | 1,314,787 | |||||
| Prepaid expenses and other assets |
(952,151 | ) | (419,813 | ) | ||||
| Accounts payable |
722,097 | (3,192,758 | ) | |||||
| Accrued expenses |
1,770,867 | 196,409 | ||||||
| Income taxes |
72,082 | 1,555,958 | ||||||
| Net cash provided by operating activities |
7,176,663 | 8,506,577 | ||||||
| Investing Activities |
||||||||
| Purchase of property and equipment |
(1,880,383 | ) | (1,526,163 | ) | ||||
| Proceeds from the sale of assets |
9,607 | — | ||||||
| Net cash used in investing activities |
(1,870,776 | ) | (1,526,163 | ) | ||||
| Financing Activities |
||||||||
| Sale of common stock – net proceeds, and exercises of stock options |
234,754 | 75,992 | ||||||
| Decrease in line of credit |
(1,500,000 | ) | (3,600,000 | ) | ||||
| Repayments of long-term debt |
(766,088 | ) | (758,150 | ) | ||||
| Net cash used in financing activities |
(2,031,334 | ) | (4,282,158 | ) | ||||
| Net increase in cash and cash equivalents |
3,274,553 | 2,698,256 | ||||||
| Cash and cash equivalents at beginning of period |
4,960,700 | 1,245,452 | ||||||
| Cash and cash equivalents at end of period |
$ | 8,235,253 | $ | 3,943,708 | ||||
See accompanying notes.
5
Notes to Consolidated Financial Statements
1. Basis of Presentation
The accompanying consolidated financial statements, which should be read in conjunction with the consolidated financial statements and footnotes thereto included in the AMX Corporation (“AMX” or the “Company”) Annual Report on Form 10-K for the fiscal year ended March 31, 2003, are unaudited (except for the March 31, 2003 consolidated balance sheet, which was derived from the Company’s audited financial statements), but have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. Certain prior period amounts have been reclassified to conform to the current year presentation.
Operating results for the three and nine months ended December 31, 2003 are not necessarily indicative of the results that may be expected for the entire fiscal year ending March 31, 2004.
2. Net Income Per Common Share, Including Pro Forma Effects of Stock-Based Compensation
The Company accounts for stock-based compensation utilizing the provisions of Accounting Principles Board Opinion (APB) No. 25, Accounting for Stock Issued to Employees, and related interpretations. The Company accounts for stock-based compensation for non-employees under the fair value method prescribed by Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation.
The following table sets forth the computation of basic and diluted net income per share for the quarter and nine months ended December 31, 2003 and 2002, and illustrates the effect on net income and net income per share if the Company had applied the fair value recognition provisions of SFAS No. 123:
| Three Months Ended December 31, |
Nine Months Ended December 31, |
|||||||||||||||
| 2003 |
2002 |
2003 |
2002 |
|||||||||||||
| Numerator: |
||||||||||||||||
| Net income as reported |
$ | 1,440,367 | $ | 385,352 | $ | 4,047,037 | $ | 2,193,715 | ||||||||
| Add: Total stock-based compensation expense included in reported net income |
24,126 | — | 257,334 | — | ||||||||||||
| Deduct: Total stock-based compensation determined under fair value method for all awards |
(324,818 | ) | (318,923 | ) | (1,422,946 | ) | (1,196,415 | ) | ||||||||
| Net income – pro forma |
$ | 1,139,675 | $ | 66,429 | $ | 2,881,425 | $ | 997,300 | ||||||||