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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 September 30, 2003
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or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
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Commission file number: 1-11916
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WIRELESS TELECOM GROUP, INC.
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(Exact name of registrant as specified in its charter)
New Jersey 22-2582295
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
25 Eastmans Road
Parsippany, New Jersey 07054
- ---------------------------------------- ------
(Address of principal executive offices) (Zip Code)
(201) 261-8797
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Registrant's telephone number, including area code
Not Applicable
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(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 by check mark whether the registrant is an accelerated filer
(as defined on Exchange Act Rule 12b-2). YES NO X
--- ---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock - Par Value $.01 16,937,678
- ------------------------------ ------------------------
Class Outstanding Shares
At November 12, 2003
WIRELESS TELECOM GROUP, INC.
Table of Contents
PART I. FINANCIAL INFORMATION Page(s)
Item 1 -- Consolidated Financial Statements:
Condensed Balance Sheets as of September 30, 2003
(unaudited) and December 31, 2002 3
Condensed Statements of Operations for the Three and Nine
Months Ended September 30, 2003 and 2002 (unaudited) 4
Condensed Statements of Cash Flows for the Nine
Months Ended September 30, 2003 and 2002 (unaudited) 5
Notes to Interim Condensed Financial Statements (unaudited) 6 - 7
Item 2 -- Management's Discussion and Analysis of Financial
Condition and Results of Operations. 8 - 11
Item 3 -- Quantitative and Qualitative Disclosures About Market Risk. 12
Item 4 -- Controls and Procedures. 12
PART II. OTHER INFORMATION
Item 1 -- Legal Proceedings. 13
Item 2 -- Changes in Securities and Use of Proceeds. 13
Item 3 -- Defaults upon Senior Securities. 13
Item 4 -- Submission of Matters to a Vote of Security Holders. 13
Item 5 -- Other Information. 13
Item 6 -- Exhibits and Reports on Form 8-K. 13
Signatures 14
2
PART 1 - FINANCIAL INFORMATION
Item 1 - Financial Statements
WIRELESS TELECOM GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
- ASSETS -
SEPTEMBER 30, DECEMBER 31,
2003 2002
------------------ ------------------
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 16,236,110 $ 15,523,180
Accounts receivable -- net of allowance for doubtful accounts of
$186,686 and $175,838 for 2003 and 2002, respectively 2,908,057 3,087,983
Inventories 5,587,623 5,484,622
Current portion of deferred tax asset 106,000 106,000
Prepaid expenses, taxes and other current assets 418,153 508,447
------------- -------------
TOTAL CURRENT ASSETS 25,255,943 24,710,232
------------- -------------
PROPERTY, PLANT AND EQUIPMENT - NET 5,446,145 5,573,316
------------- -------------
OTHER ASSETS:
Goodwill (Note 4) 1,351,392 1,351,392
Deferred tax asset 386,956 386,956
Other assets 168,779 193,700
------------- -------------
TOTAL OTHER ASSETS 1,907,127 1,932,048
------------- -------------
TOTAL ASSETS $ 32,609,215 $ 32,215,596
============= =============
- LIABILITIES AND SHAREHOLDERS' EQUITY -
CURRENT LIABILITIES:
Accounts payable $ 606,925 $ 692,383
Accrued expenses and other current liabilities 556,427 469,645
Current portion of mortgage payable 39,576 37,401
Income taxes payable 218,023 -
------------- -------------
TOTAL CURRENT LIABILITIES 1,420,951 1,199,429
------------- -------------
LONG TERM LIABILITIES:
Mortgage payable 3,099,249 3,129,209
------------- -------------
TOTAL LONG TERM LIABILITIES 3,099,249 3,129,209
------------- -------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY (Notes 3 and 5):
Preferred stock, $.01 par value, 2,000,000 shares authorized,
none issued - -
Common stock, $.01 par value, 75,000,000 shares authorized, 19,987,378
and 19,875,378 issued for 2003 and 2002, respectively 199,874 198,754
Additional paid-in-capital 13,092,469 12,904,589
Retained earnings 22,498,101 22,379,333
Treasury stock at cost, - 3,049,700 and 2,994,500, in 2003 and 2002,
respectively (Note 3) (7,701,429) (7,595,718)
------------- -------------
TOTAL SHAREHOLDERS' EQUITY 28,089,015 27,886,958
------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 32,609,215 $ 32,215,596
============= =============
See accompanying notes
3
WIRELESS TELECOM GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
------------------------------------ -----------------------------------
2003 2002 2003 2002
---- ---- ---- ----
NET SALES $ 5,187,062 $ 5,105,392 $ 14,175,678 $ 15,728,595
----------- ----------- ------------- ------------
COSTS AND EXPENSES:
Cost of sales 2,371,621 2,571,432 6,893,014 8,049,638
Operating expenses 1,903,261 1,886,066 5,840,457 5,694,362
Interest and other income (126,502) (115,027) (469,282) (376,396)
Interest expense 59,447 60,132 178,866 180,883
----------- ----------- ------------- ------------
TOTAL COSTS AND EXPENSES 4,207,827 4,402,603 12,443,055 13,548,487
----------- ----------- ------------- ------------
INCOME BEFORE INCOME TAXES 979,235 702,789 1,732,623 2,180,108
PROVISION FOR INCOME TAXES 332,458 270,985 600,377 843,786
----------- ----------- ------------- ------------
NET INCOME $ 646,777 $ 431,804 $ 1,132,246 $ 1,336,322
=========== =========== ============= ============
NET INCOME PER COMMON
SHARE (Note 2):
BASIC $ 0.04 $ 0.03 $ 0.07 $ 0.08
=========== =========== ============= ============
DILUTED $ 0.04 $ 0.03 $ 0.07 $ 0.08
=========== =========== ============= ============
See accompanying notes
4
WIRELESS TELECOM GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
For the Nine Months
Ended September 30,
--------------------------------------
2003 2002
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,132,246 $ 1,336,322
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 345,651 463,084
Provision for losses on accounts receivable 10,848 97,760
Other income - (11,096)
Changes in assets and liabilities:
Decrease (increase) in accounts receivable 169,078 (411,403)
(Increase) decrease in inventories (103,001) 801,372
Decrease in prepaid expenses and other current assets 120,719 69,080
Increase (decrease) in accounts payable and accrued expenses 1,324 (294,183)
Increase in income taxes payable 218,023 138,600
------------ ------------
Net cash provided by operating activities 1,894,888 2,189,536
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (216,880) (584,006)
Increase in real estate escrow (7,104) (7,104)
------------ ------------
Net cash (used for) investing activities (223,984) (591,110)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments of mortgage note (27,785) (25,767)
Acquisition of treasury stock (105,711) (521,647)
Cash dividends paid (1,013,478) (1,028,872)
Proceeds from exercise of stock options/warrants 189,000 112,609
------------ ------------
Net cash (used for) financing activities (957,974) (1,463,677)
------------ ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 712,930 134,749
Cash and cash equivalents, at beginning of year 15,523,180 15,138,640
------------ ------------
CASH AND CASH EQUIVALENTS, AT END OF PERIOD $ 16,236,110 $ 15,273,389
============ ============
SUPPLEMENTAL INFORMATION:
Cash paid during the period for:
Taxes $ 154,259 $ 539,580
Interest $ 178,866 $ 180,883
See accompanying notes
5
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 September 30, 2003 and the
condensed, consolidated statements of operations for the three and nine
month periods ended September 30, 2003 and 2002 and the condensed,
consolidated statements of cash flows for the nine month periods ended
September 30, 2003 and 2002 have been prepared by the Company without
audit. The consolidated financial statements include the accounts of
Wireless Telecom Group, Inc. and its wholly-owned subsidiaries Boonton
Electronics Corporation, Microlab/FXR, WTG Foreign Sales Corporation and NC
Mahwah, Inc.
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, which are necessary to
present fairly the Company's results for the interim periods being
presented. The balances of certain accounts have been reclassified to
improve the ease of reading and understanding the financial statements,
including the reclassification of Microlab/FXR's engineering and research
and development expenses from cost of sales to operating expenses, similar
to the other subsidiaries, and of Noise Com, Inc.'s rental income and
building depreciation expense from operating expenses to interest and other
income. Such reclassifications have no effect on the Company's Total
Shareholders' Equity, Net Income, Net Income Per Common Share or Cash and
Cash Equivalents.
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, 2002, which is incorporated herein by
reference. Specific reference is made to that report for a description of
the Company's securities and the notes to financial statements included
therein, since certain information and footnote disclosures normally
included in financial statements in accordance with accounting principles
generally accepted in the United States of America have been condensed or
omitted from this report.
The results of operations for the three and nine month periods ended
September 30, 2003 and 2002 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. As promulgated in SFAS 128 "Earnings Per
Share" ("SFAS 128"), SFAS 128 requires the presentation of "basic" and
"diluted" earnings per share on the face of the income statement.
6
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited continued)
NOTE 3 - SHAREHOLDERS' EQUITY
During the nine months ended September 30, 2003, the Company repurchased
55,200 shares (no shares were repurchased during the quarter ended
September 30, 2003) of its common stock, pursuant to a stock repurchase
program authorized by the Board of Directors on November 27, 2000 and as
amended on October 5, 2001. The total cost of these shares was $105,711 and
the per share price ranged between $1.69 and $2.02.
NOTE 4 - GOODWILL AND OTHER INTANGIBLE ASSETS
Effective January 1, 2002, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible
Assets". In accordance with SFAS No. 142, intangible assets, including
purchased goodwill, must be evaluated for impairment. Those intangible
assets that will continue to be classified as goodwill or as other
intangibles with indefinite lives are no longer amortized, but will be
tested for impairment periodically. During 2002, the goodwill relating to
the acquisition of Microlab/FXR was tested for impairment by an independent
valuation consulting firm for the transition period and again for the year
ended December 31, 2002. The conclusions of both valuations were that this
goodwill was not impaired under Statement of Financial Accounting Standards
No. 142 requirements for goodwill impairment testing. Additional testing
will be done at the end of this year and each year going forward to
continue to test for impairment of goodwill.
NOTE 5 - ACCOUNTING FOR STOCK OPTIONS
The Company accounts for its stock-based compensation in accordance with
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees," and has adopted the disclosure-only alternative of Statement of
Financial Accounting Standards ("SFAS") No. 123, "Accounting for
Stock-Based Compensation," as amended by SFAS No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure."
The following table illustrates the effect on net income and earnings per
share had compensation expense for the employee stock-based plans been
recorded based on the fair value method under SFAS No. 123:
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2003 2002 2003 2002
-------- -------- ---------- ----------
Net income:
As reported $646,777 $431,804 $1,132,246 $1,336,322
Pro forma 592,026 380,646 969,404 1,182,848
Basic earnings per share:
As reported $.04 $.03 $.07 $.08
Pro forma .03 .02 .06 .07
Diluted earnings per share:
As reported $.04 $.03 $.07 $.08
Pro forma .03 .02 .06 .07
7
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
INTRODUCTION
- ------------
Wireless Telecom Group, Inc., and its operating subsidiaries, Boonton
Electronics Corporation and Microlab/FXR (collectively, the "Company"), develop,
manufacture and market a wide variety of electronic noise sources, electronic
testing and measuring instruments including power meters, voltmeters and
modulation meters and high-power passive microwave components. The Company's
products have historically been primarily used to test the performance and
capability of cellular/PCS and satellite communication systems and to measure
the power of RF and microwave systems. Other applications include radio, radar,
wireless local area network (WLAN) and digital television.
The financial information presented herein includes: (i) Condensed Consolidated
Balance Sheets as of September 30, 2003 and as of December 31, 2002 (ii)
Condensed Consolidated Statements of Operations for the three and nine month
periods ended September 30, 2003 and 2002 and (iii) Condensed Consolidated
Statements of Cash Flows for the nine month periods ended September 30, 2003 and
2002.
FORWARD LOOKING STATEMENTS
- --------------------------
The statements contained in this Quarterly Report on Form 10-Q that are not
historical facts, including, without limitation, the statements under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," are forward-looking statements as defined in the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements may be identified
by, among other things, the use of forward-looking terminology such as
"believes," "expects," "intends," "plans," "may," "will," "should,"
"anticipates" or "continues" or the negative thereof of other variations thereon
or comparable terminology, or by discussions of strategy that involve risks and
uncertainties. These statements are based on the Company's current expectations
of future events and are subject to a number of risks and uncertainties that may
cause the Company's actual results to differ materially from those described in
the forward-looking statements. These risks and uncertainties include, but are
not limited to, product demand and development of competitive technologies in
our market sector, the impact of competitive products and pricing, the loss of
any significant customers, the effects of adoption of newly announced accounting
standards, the effects of economic conditions and trade, legal and other
economic risks, among others. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may vary materially from those anticipated, estimated or projected. These risks
and uncertainties are disclosed from time to time in the Company's filings with
the Securities and Exchange Commission, the Company's press releases and in oral
statements made by or with the approval of authorized personnel. The Company
assumes no obligation to update any forward-looking statements as a result of
new information or future events or developments.
CRITICAL ACCOUNTING POLICIES
- ----------------------------
Management's discussion and analysis of the financial condition and results of
operations are based upon the Company's consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted
in the United States of America. The preparation of these financial statements
requires the Company to make estimates and judgments that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amount of
revenues and expenses for each period. The following represents a summary of the
Company's critical accounting policies, defined as those policies that the
Company believes are: (a) the most important to the portrayal of its financial
condition and results of operations, and (b) that require management's most
difficult, subjective or complex judgments, often as a result of the need to
make estimates about the effects of matters that are inherently uncertain.
8
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (Continued)
ALLOWANCES FOR DOUBTFUL ACCOUNTS
--------------------------------
The Company maintains allowances for doubtful accounts for estimated
losses resulting from the inability of its customers to make required payments.
If the financial condition of any of its customers were to decline, additional
allowances might be required.
INCOME TAXES
------------
As part of the process of preparing the consolidated financial
statements, the Company is required to estimate its income taxes in each of the
jurisdictions in which it operates. The process incorporates an assessment of
the current tax exposure together with temporary differences resulting from
different treatment of transactions for tax and financial statement purposes.
Such differences result in deferred tax assets and liabilities, which are
included within the consolidated balance sheet. The recovery of deferred tax
assets from future taxable income must be assessed and, to the extent that
recovery is not likely, the Company establishes a valuation allowance. Increases
in valuation allowances result in the recording of additional tax expense.
Further, if the ultimate tax liability differs from the periodic tax provision
reflected in the consolidated statements of operations, additional tax expense
may be recorded.
VALUATION OF LONG-LIVED ASSETS
------------------------------
The Company assesses the potential impairment of long-lived tangible
and intangible assets whenever events or changes in circumstances indicate that
the carrying value may not be recoverable. Changes in the operating strategy can
significantly reduce the estimated useful life of such assets.
RESULTS OF OPERATIONS
The following discussion of our financial condition and results of operations
should be read in conjunction with our interim condensed consolidated financial
statements and the notes to those statements included in Part I, Item I of this
Quarterly Report on Form 10-Q and in conjunction with the consolidated financial
statements contained in our Annual Report on Form 10-K for the year ended
December 31, 2002.
For the nine months ended September 30, 2003 as compared to the corresponding
period of the previous year, net sales decreased to $14,176,000 from
$15,729,000, a decrease of $1,553,000 or 9.9%. For the quarter ended September
30, 2003 as compared to the corresponding quarter of the previous year, net
sales increased to $5,187,000 from $5,105,000, an increase of $82,000 or 1.6%.
The decrease for the nine months ended September 30, 2003 is reflective of an
overall softness in the wireless telecommunications and infrastructure markets.
As a result, this decrease in net sales will be considered in the testing for
goodwill impairment to be performed at the end of this year by an independent
valuation consultant. The increase in the three months ended September 30, 2003
is a result of increased orders for electronic testing and measuring devices.
Gross profit on net sales for the nine months ended September 30, 2003 was
$7,283,000 or 51.4% as compared to $7,679,000 or 48.8% of net sales for the nine
months ended September 30, 2002. Gross profit on net sales for the quarter ended
September 30, 2003 was $2,815,000 or 54.3% as compared to $2,534,000 or 49.6% of
net sales for the three months ended September 30, 2002. Gross profit is lower
for the nine months ended September 30, 2003 than in the same period for 2002
primarily due to lower sales volume, but the gross margin, year to date, is
higher in 2003 due to lower manufacturing labor and overhead costs. The Company
can experience variations in gross profit based upon the mix of products sold as
well as variations due to revenue volume and economies of scale. The Company
continues to carefully monitor costs associated with material acquisition,
manufacturing and production.
9
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (Continued)
Operating expenses for the nine months ended September 30, 2003 were $5,840,000
or 41.2% of net sales as compared to $5,694,000 or 36.2% of net sales for the
nine months ended September 30, 2002. Operating expenses for the quarter ended
September 30, 2003 were $1,903,000 or 36.7% of net sales as compared to
$1,886,000 or 36.9% of net sales for the quarter ended September 30, 2002.
For the three months ended September 30, 2003 as compared to the same period of
the prior year, operating expenses increased in dollars by $17,000. This
increase is primarily due to an increase in sales and marketing salaries of
$81,000, an increase in commission expense of $44,000, partially offset by a
decrease in depreciation and amortization expense of $82,000, a decrease in bad
debts of $13,000 and a decrease in shareholders' expense of $12,000. For the
nine months ended September 30, 2003 as compared to the same period of the prior
year, operating expenses increased in dollars by $146,000. These increases are
primarily due to increases in sales and marketing salaries of $264,000 and
research and development expense of $160,000, partially offset by a decrease in
depreciation expense of $108,000, a decrease in commission expense of $83,000, a
decrease in general office expenses of $56,000 and a decrease in bad debt
expense of $38,000.
Interest and other income increased by $93,000 for the nine months ended
September 30, 2003 and by $11,000 for the quarter ended September 30, 2003.
These increases were primarily due to increased returns on short-term
investments in 2003.
Net income decreased to $1,132,000, or $.07 per share (diluted), for the nine
months ended September 30, 2003 as compared to $1,336,000, or $.08 per share
(diluted) for the nine months ended September 30, 2002.
The Company realized net income for the quarter ended September 30, 2003 of
$647,000 or $.04 per share (diluted) as compared to net income of $432,000 or
$.03 per share (diluted) for the three months ended September 30, 2002. The
explanation of these changes can be derived from the analysis given above of
operations for the three and nine month periods ending September 30, 2003 and
2002, respectively.
LIQUIDITY AND CAPITAL RESOURCES:
- --------------------------------
The Company's working capital has increased by $324,000 to $23,835,000 at
September 30, 2003, from $23,511,000 at December 31, 2002. At September 30, 2003
the Company had a current ratio of 17.8 to 1, and a ratio of debt to net worth
of 0.16 to 1. At December 31, 2002 the Company had a current ratio of 20.6 to 1,
and a ratio of debt to net worth of 0.16 to 1.
The Company realized cash provided by operations of $1,895,000 for the nine
month period ending September 30, 2003. This increase was primarily due to cash
provided by net income of $1,132,000, a non-cash adjustment for depreciation and
amortization of $346,000, an increase in income taxes payable of $218,000 and a
decrease in accounts receivable of $169,000, and a decrease in other current
assets of $121,000, partially offset by an increase in inventories of $103,000.
The Company has historically been able to collect its account receivables
approximately every two months. This average collection period has been
sufficient to provide the working capital and liquidity necessary to operate the
Company. The Company continues to monitor production requirements and delivery
times while maintaining manageable levels of goods on hand.
10
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (Continued)
Operating activities provided $2,190,000 in cash flows for the comparable period
in 2002. The source of these funds was primarily due to cash provided by net
income of $1,336,000, a decrease in inventories of $801,000 and a non-cash
adjustment for depreciation and amortization of $463,000, partially offset by an
increase in accounts receivable of $411,000 and an decrease in accounts payable
and accrued expenses of $294,000.
Net cash used for investing activities for the nine months ended September 30,
2003 was $224,000. The primary use of these funds was capital expenditures of
$217,000. For the nine months ended September 30, 2002, net cash used for
investing activities was $591,000. The primary use of these funds was capital
expenditures of $584,000.
Net cash used for financing activities for the nine months ended September 30,
2003 was $958,000. The primary use of these funds was for dividends paid in the
amount of $1,013,000 and the acquisition of treasury stock in the amount of
$106,000, partially offset by proceeds from the exercise of stock options in the
amount of $189,000. Net cash used for financing activities in the same period of
2002 was $1,464,000. The primary use of these funds in 2002 was for dividends
paid in the amount of $1,029,000, acquisition of treasury stock in the amount of
$522,000, partially offset by proceeds from the exercise of stock options in the
amount of $113,000.
The Company anticipates that its resources provided by its cash flow from
operations will be sufficient to meet its financing requirements for at least
the next twelve-month period. The Company does not believe it will need to
borrow during the next twelve-month period.
INFLATION AND SEASONALITY
- -------------------------
The Company does not anticipate that inflation will significantly impact its
business or its results of operations nor does it believe that its business is
seasonal.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
- ----------------------------------------------
In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities." This statement amends and
clarifies financial accounting and reporting for derivatives and for hedging
activities under SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities." This standard is effective for contracts entered into or
modified after June 30, 2003. This standard had no impact on the Company's
financial statements.
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Instruments
with Characteristics of Both Liabilities and Equity." This standard requires
that certain financial instruments embodying an obligation to transfer assets or
to issue equity securities be classified as liabilities. It is effective for
financial instruments entered into or modified after May 31, 2003, and otherwise
is generally effective July 1, 2003. This standard had no impact on the
Company's financial statements.
11
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company has a credit facility with its major bank for the express purpose of
purchasing components from an Asian supplier under a letter of credit. The
Company has paid for the components received thus far during 2003. Should the
Company not make payment directly, the credit facility would be utilized. The
credit facility bears interest based on interest rates tied to the prime rate,
which may fluctuate over time based on economic conditions.
ITEM 4 - CONTROLS AND PROCEDURES
The Company maintains disclosure controls and procedures designed to ensure that
information required to be disclosed in reports filed under the Securities
Exchange Act of 1934, as amended, is recorded, processed, summarized and
reported within the specified time periods. As of the end of the period covered
by this report, the Company's Chief Executive Officer and Chief Financial
Officer evaluated, with the participation of the Company's management, the
effectiveness of the Company's disclosure controls and procedures. Based on the
evaluation, the Company's Chief Executive Officer and Chief Financial Officer
concluded that the Company's disclosure controls and procedures are effective.
There were no changes in the Company's internal control over financial reporting
that occurred during the Company's most recent fiscal quarter that have
materially affected, or are reasonably likely to materially affect, the
Company's internal control over financial reporting.
12
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.
The Company is not aware of any material legal proceeding against
the Company or in which any of their property is subject.
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
None.
Item 3. DEFAULTS UPON SENIOR SECURITIES.
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
Item 5. OTHER INFORMATION.
None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
11.1 Computation of per share earnings
31.1 Certification Pursuant to Section 302 of The
Sarbanes-Oxley Act of 2002 (Principal Executive
Officer)
31.2 Certification Pursuant to Section 302 of The
Sarbanes-Oxley Act of 2002 (Principal Financial
Officer)
32.1 Certification Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of The Sarbanes-Oxley
Act of 2002 (Principal Executive Officer)
32.2 Certification Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of The Sarbanes-Oxley
Act of 2002 (Principal Financial Officer)
(b) Reports on Form 8-K:
None.
13
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: November 12, 2003 /S/Edward Garcia
---------------------------------------
Edward Garcia
Chairman and Chief Executive Officer
Date: November 12, 2003 /S/Paul Genova
---------------------------------------
Paul Genova
Chief Financial Officer
14
EXHIBIT LIST
- ------------
11.1 Computation of per share earnings
31.1 Certifications Pursuant to Section 302 of The Sarbanes-Oxley Act of
2002 (Principal Executive Officer)
31.2 Certifications Pursuant to Section 302 of The Sarbanes-Oxley Act of
2002 (Principal Financial Officer)
32.1 Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of The Sarbanes-Oxley Act of 2002 (Principal Executive
Officer)
32.2 Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of The Sarbanes-Oxley Act of 2002 (Principal Financial
Officer)
15