Delaware
|
11-2203988
|
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
incorporation
or organization)
|
Identification
No.)
|
June
30,
|
December
31,
|
||||||
2005
|
2004
|
||||||
Assets
|
(Unaudited)
|
||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
2,760
|
$
|
2,040
|
|||
Accounts
receivable - trade, less allowance for doubtful accounts
|
|||||||
of
$256 in 2005 and $1,045 in 2004
|
3,262
|
3,076
|
|||||
Inventories
|
4,811
|
4,576
|
|||||
Prepaid
expenses and other current assets
|
626
|
382
|
|||||
Total
current assets
|
11,459
|
10,074
|
|||||
Property,
plant and equipment, net
|
1,470
|
1,334
|
|||||
Goodwill,
net
|
2,961
|
2,961
|
|||||
Other
assets
|
64
|
69
|
|||||
Total
assets
|
$
|
15,954
|
$
|
14,438
|
|||
Liabilities
and Stockholders’ Deficit
|
|||||||
Current
liabilities:
|
|||||||
Senior
debt, including accrued interest
|
$
|
25,477
|
$
|
25,674
|
|||
Subordinated
notes
|
6,144
|
6,144
|
|||||
6%
convertible subordinated debentures
|
385
|
385
|
|||||
Accounts
payable
|
4,111
|
4,728
|
|||||
Accrued
expenses and other
|
2,891
|
2,760
|
|||||
Other
accrued interest payable
|
4,706
|
4,533
|
|||||
Total
current liabilities
|
43,714
|
44,224
|
|||||
Deferred
compensation
|
852
|
875
|
|||||
Total
long-term liabilities
|
852
|
875
|
|||||
Total
liabilities
|
44,566
|
45,099
|
|||||
Stockholders’
deficit:
|
|||||||
Preferred
stock, no par value; authorized 1,000,000 shares, none
issued
|
—
|
—
|
|||||
Common
stock, par value $.01; authorized 20,000,000 shares,
issued
|
|||||||
10,084,577
shares in 2005 and 10,003,224 shares in 2004
|
101
|
100
|
|||||
Additional
paid-in capital
|
76,124
|
76,059
|
|||||
Accumulated
deficit
|
(98,614
|
)
|
(100,705
|
)
|
|||
Accumulated
other comprehensive loss:
|
|||||||
Foreign
currency translation adjustment
|
(4,285
|
)
|
(4,177
|
)
|
|||
|
(26,674
|
)
|
(28,723
|
)
|
|||
Treasury
stock, at cost, 30,940 shares
|
(1,938
|
)
|
(1,938
|
)
|
|||
Total
stockholders’ deficit
|
(28,612
|
)
|
(30,661
|
)
|
|||
Total
liabilities and stockholders’ deficit
|
$
|
15,954
|
$
|
14,438
|
Six
Months Ended
|
|||||||
June
30,
|
June
30,
|
||||||
2005
|
2004
|
||||||
Sales
|
$
|
16,041
|
$
|
14,372
|
|||
Cost
of sales
|
9,655
|
8,875
|
|||||
Gross
profit
|
6,386
|
5,497
|
|||||
Selling,
general and administrative expenses
|
2,766
|
2,642
|
|||||
Research
and development expenses
|
861
|
1,021
|
|||||
Total
expenses
|
3,627
|
3,663
|
|||||
Operating
income
|
2,759
|
1,834
|
|||||
Interest
expense, net of interest income
|
(646
|
)
|
(660
|
)
|
|||
Other
income, net
|
1
|
—
|
|||||
Income
before income taxes
|
2,114
|
1,174
|
|||||
Income
tax expense
|
(23
|
)
|
(26
|
)
|
|||
Net
income
|
$
|
2,091
|
$
|
1,148
|
|||
Other
comprehensive loss:
|
|||||||
Foreign
currency translation adjustments
|
(108
|
)
|
(189
|
)
|
|||
Comprehensive
income
|
$
|
1,983
|
$
|
959
|
|||
Per
share data:
|
|||||||
Basic
per share amounts:
|
|||||||
Net
income per share of common stock
|
$
|
0.21
|
$
|
0.12
|
|||
Weighted
average shares outstanding
|
10,005
|
9,972
|
|||||
Diluted
per share amounts:
|
|||||||
Net
income per share of common stock
|
$
|
0.21
|
$
|
0.12
|
|||
Weighted
average shares outstanding
|
10,036
|
9,972
|
Three
Months Ended
|
|||||||
June
30,
|
June
30,
|
||||||
2005
|
2004
|
||||||
Sales
|
$
|
8,425
|
$
|
6,272
|
|||
Cost
of sales
|
5,183
|
3,905
|
|||||
Gross
profit
|
3,242
|
2,367
|
|||||
Selling,
general and administrative expenses
|
1,589
|
1,176
|
|||||
Research
and development expenses
|
439
|
508
|
|||||
Total
expenses
|
2,028
|
1,684
|
|||||
Operating
income
|
1,214
|
683
|
|||||
Interest
expense, net of interest income
|
(321
|
)
|
(337
|
)
|
|||
Other
income, net
|
1
|
—
|
|||||
Income
before income taxes
|
894
|
346
|
|||||
Income
tax expense
|
(7
|
)
|
(26
|
)
|
|||
Net
income
|
$
|
887
|
$
|
320
|
|||
Other
comprehensive loss:
|
|||||||
Foreign
currency translation adjustments
|
(46
|
)
|
(75
|
)
|
|||
Comprehensive
income
|
$
|
841
|
$
|
245
|
|||
Per
share data:
|
|||||||
Basic
per share amounts:
|
|||||||
Net
income per share of common stock
|
$
|
0.09
|
$
|
0.03
|
|||
Weighted
average shares outstanding
|
10,038
|
9,972
|
|||||
Diluted
per share amounts:
|
|||||||
Net
income per share of common stock
|
$
|
0.09
|
$
|
0.03
|
|||
Weighted
average shares outstanding
|
10,067
|
9,972
|
Six
Months Ended
|
|||||||
June
30,
|
June
30,
|
||||||
2005
|
2004
|
||||||
Cash
flows from operating activities:
|
|||||||
Net
income
|
$
|
2,091
|
$
|
1,148
|
|||
Adjustments
to reconcile net income to net cash
|
|||||||
provided
by operating activities:
|
|||||||
Depreciation
and amortization
|
204
|
191
|
|||||
Changes
in operating assets and liabilities:
|
|||||||
Accounts
receivable
|
(186
|
)
|
200
|
||||
Inventories
|
(235
|
)
|
(117
|
)
|
|||
Prepaid
expenses and other current assets
|
(245
|
)
|
8
|
||||
Other
assets
|
4
|
12
|
|||||
Accounts
payable, accrued expenses and other liabilities
|
(269
|
)
|
(1,100
|
)
|
|||
Net
cash provided by operating activities
|
1,364
|
342
|
|||||
Cash
flows from investing activities:
|
|||||||
Capital
expenditures, net
|
(351
|
)
|
(80
|
)
|
|||
Net
cash used in investing activities
|
(351
|
)
|
(80
|
)
|
|||
Cash
flows from financing activities:
|
|||||||
Increase
in senior debt
|
178
|
175
|
|||||
Repayments
of senior debt
|
(375
|
)
|
—
|
||||
Net
cash provided by (used in) financing activities
|
(197
|
)
|
175
|
||||
Effect
of exchange rate changes on cash
|
(96
|
)
|
(189
|
)
|
|||
Increase
in cash and cash equivalents
|
720
|
248
|
|||||
Cash
and cash equivalents - beginning of the year
|
2,040
|
469
|
|||||
Cash
and cash equivalents - end of the period
|
$
|
2,760
|
$
|
717
|
|||
Supplemental
cash flow disclosure:
|
|||||||
Cash
paid for interest expense
|
$
|
375
|
$
|
34
|
|||
Cash
paid for income taxes
|
$
|
73
|
$
|
34
|
|||
Common
stock issued for accrued director fees
|
$
|
66
|
$
|
—
|
June
30, 2005
|
December
31, 2004
|
||||||
(in
thousands)
|
|||||||
Parts
and components
|
$
|
3,170
|
$
|
2,650
|
|||
Work-in-process
|
548
|
654
|
|||||
Finished
goods
|
1,093
|
1,272
|
|||||
$
|
4,811
|
$
|
4,576
|
Six
Months Ended
|
Three
Months Ended
|
||||||||||||
June
30
|
June
30
|
||||||||||||
2005
|
2004
|
2005
|
2004
|
||||||||||
(In
thousands, except per share data)
|
|||||||||||||
Net
income, as reported
|
$
|
2,091
|
$
|
1,148
|
$
|
887
|
$
|
320
|
|||||
Deduct:
Total stock-based employee compensation expense
|
|||||||||||||
determined
under fair value method for all awards
|
(2
|
)
|
(1
|
)
|
(2
|
)
|
(1
|
)
|
|||||
Pro
forma net income
|
$
|
2,089
|
$
|
1,147
|
$
|
885
|
$
|
319
|
|||||
Income
per share of common stock:
|
|||||||||||||
Basic
and diluted - as reported
|
$
|
0.21
|
$
|
0.12
|
$
|
0.09
|
$
|
0.03
|
|||||
Basic
and diluted - pro forma
|
$
|
0.21
|
$
|
0.12
|
$
|
0.09
|
$
|
0.03
|
Six
Months Ended
|
Three
Months Ended
|
||||||||||||
June
30, 2005
|
June
30, 2004
|
June
30, 2005
|
June
30, 2004
|
||||||||||
Sales:
|
|||||||||||||
Line
|
$
|
12,281,000
|
$
|
10,399,000
|
$
|
6,574,000
|
$
|
4,427,000
|
|||||
Signal
|
3,255,000
|
2,591,000
|
1,598,000
|
1,289,000
|
|||||||||
OSS
|
410,000
|
1,346,000
|
202,000
|
536,000
|
|||||||||
|
$
|
15,946,000
|
$
|
14,336,000
|
$
|
8,374,000
|
$
|
6,252,000
|
|||||
Segment
profit (loss):
|
|||||||||||||
Line
|
$
|
3,109,000
|
$
|
2,755,000
|
$
|
1,537,000
|
$
|
1,120,000
|
|||||
Signal
|
1,387,000
|
1,036,000
|
689,000
|
580,000
|
|||||||||
OSS
|
(535,000
|
)
|
(900,000
|
)
|
(263,000
|
)
|
(602,000
|
)
|
|||||
|
$
|
3,961,000
|
$
|
2,891,000
|
$
|
1,963,000
|
$
|
1,098,000
|
Six
Months Ended
|
Three
Months Ended
|
||||||||||||
June
30, 2005
|
June
30, 2004
|
June
30, 2005
|
June
30, 2004
|
||||||||||
Sales:
|
|||||||||||||
Total
revenue for reportable
|
|||||||||||||
segments
|
$
|
15,946,000
|
$
|
14,336,000
|
$
|
8,374,000
|
$
|
6,252,000
|
|||||
Other
revenue
|
95,000
|
36,000
|
51,000
|
20,000
|
|||||||||
Consolidated
total revenue
|
$
|
16,041,000
|
$
|
14,372,000
|
$
|
8,425,000
|
$
|
6,272,000
|
|||||
Operating
income (loss):
|
|||||||||||||
Total
segment income
|
|||||||||||||
for
reportable segments
|
$
|
3,961,000
|
$
|
2,891,000
|
$
|
1,963,000
|
$
|
1,098,000
|
|||||
Corporate
and unallocated
|
(1,202,000
|
)
|
(1,057,000
|
)
|
(749,000
|
)
|
(415,000
|
)
|
|||||
Consolidated
total
|
|||||||||||||
operating
income
|
$
|
2,759,000
|
$
|
1,834,000
|
$
|
1,214,000
|
$
|
683,000
|
Six
Months Ended
|
Three
Months Ended
|
||||||||||||
June
30,
|
June
30,
|
||||||||||||
2005
|
2004
|
2005
|
2004
|
||||||||||
Sales
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
|||||
Cost
of sales
|
60
|
%
|
62
|
%
|
62
|
%
|
62
|
%
|
|||||
Gross
profit
|
40
|
%
|
38
|
%
|
38
|
%
|
38
|
%
|
|||||
Selling,
general and administrative expenses
|
17
|
%
|
18
|
%
|
19
|
%
|
19
|
%
|
|||||
Research
and development expenses
|
6
|
%
|
7
|
%
|
5
|
%
|
8
|
%
|
|||||
Operating
income
|
17
|
%
|
13
|
%
|
15
|
%
|
11
|
%
|
|||||
Interest
expense - net
|
(4
|
%)
|
(5
|
%)
|
(4
|
%)
|
(5
|
%)
|
|||||
Other
|
0
|
%
|
0
|
%
|
0
|
%
|
(1
|
%)
|
|||||
Net
income
|
13
|
%
|
8
|
%
|
11
|
%
|
5
|
%
|
Six
Months Ended June 30,
|
|||||||||||||
$(000)
|
|||||||||||||
2005
|
2004
|
||||||||||||
Line
connection/protection equipment
|
$12,281
|
77
|
% |
$10,399
|
72
|
% | |||||||
Signal
Processing
|
3,255
|
20
|
%
|
2,591
|
18
|
%
|
|||||||
OSS
equipment and maintenance revenue
|
410
|
3
|
%
|
1,346
|
10
|
%
|
|||||||
Other
|
95
|
0
|
%
|
36
|
0
|
%
|
|||||||
|
$
|
16,041
|
100
|
%
|
$
|
14,372
|
100
|
%
|
Three
Months Ended June 30,
|
|||||||||||||
$(000)
|
|||||||||||||
2005
|
2004
|
||||||||||||
Line
connection/protection equipment
|
$
|
6,574
|
78
|
%
|
$
|
4,427
|
71
|
%
|
|||||
Signal
Processing
|
1,598
|
19
|
%
|
1,289
|
21
|
%
|
|||||||
OSS
equipment and maintenance revenue
|
202
|
2
|
%
|
536
|
8
|
%
|
|||||||
Other
|
51
|
1
|
%
|
20
|
0
|
%
|
|||||||
|
$
|
8,425
|
100
|
%
|
$
|
6,272
|
100
|
%
|
31.1
|
Certificate
of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
31.2
|
Certificate
of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
32.1
|
Certificate
of Chief Executive Officer and Chief Financial Officer pursuant
to Section
906 of the Sarbanes-Oxley Act of
2002.
|
PORTA SYSTEMS CORP. | ||
|
|
|
Dated:
August 11, 2005
|
By: | /s/William V. Carney |
William V. Carney |
||
Chairman
of the Board and Chief Executive
Officer |
|
|
|
Dated:
August 11, 2005
|
By: | /s/Edward B. Kornfeld |
Edward B. Kornfeld |
||
President,
Chief Operating Officer
and
Chief Financial Officer
|