-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KCYqw3JXgPhIZBhrOwvP1rcFAbFyBsDMOq1gQisDlhiCu7VUFDNlfZTOt9oVaoVZ KbifFttJAV41sPvmzvCWvQ== /in/edgar/work/20000815/0001025894-00-000234/0001025894-00-000234.txt : 20000922 0001025894-00-000234.hdr.sgml : 20000921 ACCESSION NUMBER: 0001025894-00-000234 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LABTEC INC /MA CENTRAL INDEX KEY: 0001002175 STANDARD INDUSTRIAL CLASSIFICATION: [3577 ] IRS NUMBER: 043116697 STATE OF INCORPORATION: MA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-27302 FILM NUMBER: 701154 BUSINESS ADDRESS: STREET 1: 1499 SOUTHEAST TECH CENTER PLACE STREET 2: SUITE 350 CITY: VANCOUVER STATE: WA ZIP: 98683 BUSINESS PHONE: 3608962000 MAIL ADDRESS: STREET 1: 1499 SOUTHEAST TECH CENTER PLACE STREET 2: SUITE 350 CITY: VANCOUVER STATE: WA ZIP: 98683 FORMER COMPANY: FORMER CONFORMED NAME: SPACETEC IMC CORP DATE OF NAME CHANGE: 19951013 10-Q 1 0001.txt QUARTERLY REPORT 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 JUNE 30, 2000. |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________ TO___________. Commission File No. 0-27302 LABTEC INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Massachusetts 04-3116697 ------------------------------- -------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1499 S.E. Tech Center Place, Suite 350, Vancouver, WA 98683 - ----------------------------------------------------------------- (Address of principal executive offices) Zip Code Registrant's telephone number, including area code: (360) 896-2000 -------------- 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 |_| There were 4,013,590 shares of Common Stock outstanding at August 14, 2000. LABTEC INC. INDEX PART I - FINANCIAL INFORMATION - ------------------------------ Item 1. Financial Statements Consolidated Balance Sheets as of June 30, 2000 (unaudited) and March 31, 2000...................................... 4 Consolidated Statements of Operations (unaudited) for the three and nine month periods ended June 30, 2000.............. 5 Consolidated Statements of Cash Flows (unaudited) for the three and nine month periods ended June 30, 2000.............. 6 Notes to Financial Statements (unaudited)..................... 7 Item 2. Management's Discussion and Analysis of Financial Statements (unaudited)............................ 10 Item 3. Quantitative and Qualitative Disclosures About Market Risk......... 14 PART II - OTHER INFORMATION - ----------------------------- Item 6. Exhibits and Reports on Form 8-K................................... 15 Signatures......................................................... 18 PART I. - FINANCIAL INFORMATION Item 1. Financial Statements --------------------
Labtec Inc. Consolidated Balance Sheets (In thousands, except per share amounts) Assets June 30, 2000 March 31, 2000 ------ ------------- -------------- (Unaudited) Current Assets: Cash........................................................... $ 1,475 $ 1,373 Accounts receivable, net....................................... 20,479 22,120 Interest and other receivables................................. 20 16 Inventories.................................................... 16,041 13,955 Prepaid expenses............................................... 172 171 Current deferred income taxes.................................. 1,743 1,854 --------- --------- Total current assets........................................ 39,930 39,489 Property and equipment, net....................................... 2,610 2,332 Noncurrent deferred income taxes.................................. 1,953 1,953 Debt issuance costs............................................... 2,176 2,277 Other noncurrent assets........................................... 179 180 Goodwill, net..................................................... 16,738 17,038 --------- --------- $ 63,586 $ 63,269 ========= ========= Liabilities and Shareholders' Equity (Deficit) Current Liabilities: Line of credit................................................. $ 11,226 $ 10,761 Current portion of long-term debt.............................. 2,688 2,900 Accounts payable............................................... 12,367 9,411 Income taxes payable........................................... 226 185 Accrued payroll and benefits................................... 813 1,359 Accrued interest............................................... 242 256 Other accrued expenses......................................... 1,430 1,539 --------- --------- Total current liabilities................................... 28,992 26,411 Long-term debt................................................... 26,068 28,747 --------- --------- 55,060 55,158 --------- --------- Commitments and contingencies.................................... --- --- Shareholders' Equity (Deficit): Preferred stock, par value $.01, 1,000 share authorized and no shares outstanding at June 30, or March 31, 2000 --- --- Common stock, par value $.01, 25,000 shares authorized, 4,013 shares issued and outstanding at June 30, and March 31, 2000, respectively...................................................... 40 40 Additional paid-in capital........................................ 23,824 23,806 Accumulated deficit............................................... (15,299) (15,688) Accumulated other comprehensive income (loss): Cumulative foreign currency translation adjustment.......... (39) (47) --------- --------- 8,526 8,111 --------- --------- $ 63,586 $ 63,269 ========= ========= The accompanying notes are an integral part of these financial statements
-4- Labtec Inc. Consolidated Statements of Operations and Comprehensive Income (Loss) (In thousands, except per share amounts) (Unaudited) Three Months Ended Three Months Ended June 30, 2000 June 30, 1999 ------------- ------------- Net sales $ 24,088 $ 15,512 Cost of sales 14,442 9,175 -------- -------- Gross profit 9,646 6,337 -------- -------- Operating expenses: Selling and marketing 5,225 3,349 General and administrative 1,279 1,037 Research and development 599 498 Depreciation 377 346 Amortization of goodwill 299 817 -------- -------- 7,779 6,047 -------- -------- Income from operations 1,867 290 Interest expense, net 1,172 762 Other nonoperating expense 57 27 -------- -------- Total other expense 1,229 789 -------- -------- Income (loss) before income taxes 638 (499) Provision for income taxes 249 49 -------- -------- Net income (loss) $ 389 $ (548) ======== ======== Weighted average shares outstanding Basic 4,011 3,453 Diluted 4,020 3,453 Net income (loss) per share Basic $ 0.10 $ (0.16) ======== ======== Diluted $ 0.10 $ (0.16) ======== ======== Comprehensive income (loss): Net income (loss) $ 389 $ (548) Change in cumulative translation adjustment (1) (31) -------- -------- Comprehensive income (loss) $ 388 $ (579) ======== ======== The accompanying notes are an integral part of these financial statements -5- Labtec Inc. Consolidated Statements of Cash Flows (In thousands) (Unaudited) Three Months Ended June 30, --------------------------- 2000 1999 ---- ---- Cash flow from operating activities Net income (loss) $ 389 $ (548) Adjustments to reconcile net income (loss) to net cash provided by operating activities Depreciation 377 346 Amortization of goodwill 300 817 Amortization of debt issuance costs 109 115 Change in deferred income taxes 111 87 Compensation expense on stock options 10 --- Write-off of debt issuance costs --- --- Changes in current assets and liabilities: Accounts receivable 1,641 2,937 Inventories (2,086) 318 Interest and other receivables (4) (24) Income taxes receivables --- 59 Prepaid expenses (1) 28 Accounts payable 2,956 (3,050) Income taxes payable 41 --- Accrued interest (14) 9 Accrued payroll and other expenses (655) (414) ------- ------- Net cash provided by operating activities 3,174 679 ------- ------- Cash flow from investing activities Capital expenditures (653) (299) Other assets --- 121 ------- ------- Net cash used for investing activities (653) (178) ------- ------- Cash flow from financing activities Net increase (decrease) in short-term credit facility 465 (800) Repayment of long-term debt (2,891) --- Debt issuance costs (8) --- Proceeds from exercise of stock options 7 12 ------- ------- Net cash used in financing activities (2,427) (788) ------- ------- Effect of foreign currency on cash 8 (31) ------- ------- Net increase (decrease) in cash 102 (318) Cash at beginning of period 1,373 768 ------- ------- Cash at end of period $ 1,475 $ 450 ======= ======= The accompanying notes are an integral part of these financial statements -6- Labtec Inc. Notes to Consolidated Financial Statements (Unaudited) 1. Basis of Presentation The accompanying consolidated financial statements are unaudited and have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission and in the opinion of management include all adjustments, consisting only of normal recurring adjustments, necessary for the fair statement of results for the interim periods. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. These consolidated financial statements and notes should be read in conjunction with the audited financial statements and notes thereto included in the Company's annual report on Form 10-K for the year ended March 31, 2000. The results of operations for the interim periods are not necessarily indicative of the results for the entire year. Reclassifications have been made to amounts in prior years to conform to the current year presentation. These changes had no impact on previously reported results of operations or shareholders' equity. 2. Accounts Receivable Accounts receivable are net of allowances for doubtful accounts and for sales returns of $1,303 and $1,290 at June 30 and March 31, 2000, respectively. At June 30 and March 31, 2000, 9% and 13%, respectively, of receivables were from one customer. 3. Inventories Inventories are manufactured by foreign factories subcontracted by the Company. Of total inventories, $219 and $450 was in transit at June 30, and March 31, 2000, respectively. 4. Property and Equipment Property and equipment consists of the following: June 30, 2000 March 31, 2000 ------------- -------------- Leasehold improvements $ 117 $ 256 Tooling and molds 1,603 2,588 Furniture and equipment 2,547 2,473 Retail displays 1,533 2,145 ---------- ---------- 5,800 7,462 Less: accumulated depreciation (3,190) (5,130) ---------- ---------- $ 2,610 $ 2,332 ========== ========== 5. Stock On December 1, 1999 the Company completed a one-for-two reverse stock split of its common stock. Subsequent to the reverse stock split, one of the Company's subordinate debt holders converted $1,500 principal amount of its Senior Subordinated Note due October 1, 2005 for 262 shares of common stock. Also, the Company's majority shareholder converted $824 of the Unsecured Subordinated Promissory Note due February 17, 2005 and $28 of accrued interest for 149 shares of common stock. -7- 6. Earnings Per Share Net income (loss) per share on a diluted basis is based on the weighted average number of shares of common stock and all potentially dilutive securities outstanding during the periods, computed using the treasury stock method for stock options. Given the Company's net loss for the three months ended June 30, 1999, the dilutive effect of stock options has been excluded from the computation of the weighted average shares outstanding. For the three months ended June 30, 2000, the dilutive impact of stock options are included in the computation of net income per share in accordance with FAS 128. On December 1, 1999 the Company had a one-for-two reverse stock split. The weighted average shares outstanding in 1999 have been adjusted to reflect the reverse split. Weighted average shares outstanding consist of the following: For the Three Months Ended June 30, -------- 2000 1999 ---- ---- Weighted average shares outstanding (basic) 4,011 3,453 Effect of dilutive stock options 9 --- ----- ----- Weighted average shares outstanding (diluted) 4,020 3,453 ===== ===== 7. Purchase of Connector Resources Unlimited, Inc. On August 20, 1999, Labtec, Inc. ("Labtec") completed the acquisition of Connector Resources Unlimited, Inc. ("CRU"). As a result, Labtec acquired all the outstanding shares of CRU for approximately $13,146 in cash and $1,500 in debt. Concurrent with the acquisition of CRU, Labtec entered into a $43,000 credit facility with a lender and also sold 156 shares of common stock for $1,000. The net proceeds from the credit facility and proceeds from the stock sale were used to retire outstanding debt and accrued interest totaling $23,400, to pay debt issuance costs and loan fees on the new credit facility, to pay for certain acquisition costs related to the purchase of CRU and to fund the purchase of CRU. CRU designs, develops and markets computer peripheral products principally in North America. The acquisition was accounted for as a purchase and therefore the operations of CRU have been included with those of the Company since August 20, 1999. The following sets forth the reconciliation of fair value of the assets acquired and the liabilities assumed. Purchase price $ 14,646 Fair value of tangible assets acquired (5,338) Liabilities assumed 2,098 Direct costs of acquisition 755 -------- Excess of purchase price over fair value of tangible assets $ 12,161 ======== The excess of the purchase price over fair value of tangible assets acquired is being amortized over an estimated useful life of twenty years. The following unaudited pro forma information presents the results of the Company's operations assuming the CRU acquisition occurred at the beginning of the respective three month periods, after giving effect to adjustments for amortization of goodwill, estimated increase in interest expense and the estimated impact on the income tax provision. -8- Three Months Ended June 30, -------- 2000 1999 ---- ---- (unaudited) Net sales $ 24,088 $ 19,390 Net income (loss) 389 (222) Net income (loss) per share: Basic $ 0.10 $ (0.06) Diluted 0.10 (0.06) The unaudited pro forma financial information is not necessarily indicative of the operating results that would have occurred had the CRU acquisition been consummated as of the beginning of each period, nor is it necessarily indicative of future operating results. The unaudited pro forma information should be read in conjunction with the current report of the Company on Form 8-K dated August 20, 1999 and the current report of the Company on Form 8-K/A filed November 2, 1999. 8. Borrowings In conjunction with the purchase of CRU in August 1999, the Company repaid its $7,500 revolving line of credit and $19,250 long-term loan with funds obtained from a $27,000 long-term loan and a $16,000 revolving line of credit with other lenders. Also, a $1,500 seven and one-half year promissory note was issued to the prior shareholders of CRU. Fees related to the extinguished credit line are included in the extraordinary loss on extinguishment of debt. At June 30, 2000, the long-term loans and a portion of the revolving line of credit were accruing interest at LIBOR plus 3.25-3.50% and the remaining portion of the revolving line of credit was accruing interest at the prime rate plus 1.75%. In December 1999, the Company entered into an interest rate swap agreement with its primary lender in order to fix the interest rate on a portion of its long-term debt. At June 30, 2000, the amount of debt subject to the fixed rate was $12,450, for which the rate was 9.78%. The bank line of credit is secured by substantially all of the Company's assets. Loan fees paid to the banks and transaction fees relating to the term loan, revolving line of credit and promissory note were $2,419 and have been recorded in debt issuance costs. The current line of credit expires in September 2005 and the long-term debt expires June 30, 2005. -9- Item 2. Management's Discussion and Analysis of Financial Condition and --------------------------------------------------------------- Results of Operations. ---------------------- Overview The following discussion and analysis should be read in conjunction with the financial statements and notes thereto appearing elsewhere herein. This Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve a number of risks and uncertainties. The following are among the factors that could cause actual results to differ materially from the forward-looking statements: business conditions and growth in the personal computer and workstation industries; general economies, both domestic and international; lower than expected customer orders or variations in customer order patterns; competitive factors, including increased competition, new product offerings by competitors and pricing pressures; the availability of parts and components; changes in product mix; resource constraints encountered in developing new products; and product shipment interruptions due to manufacturing difficulties. The forward-looking statements contained in the MD&A regarding industry trends, product development and liquidity and future business activities should be considered in light of these factors. Three Months Ended June 30, 2000 Compared to Three Months Ended June 30, 1999 Net sales for the three months ended June 30, 2000 increased $8,576,095 to $24,088,354 from $15,512,259 for the period in fiscal 2000. The increase in net sales over the periods was due to the increase in sales for the Company's personal audio, multimedia speaker and PC Voice Access(TM) line of products, and the addition of sales from the data storage product line. Also, the Company's North American retail business increased substantially. The Company's largest customer represented 9.8% of sales for the three months ended June 30, 2000, as compared to 8.1% of sales for three months ended June 30, 1999. Three Months Ended June 30, -------- (in thousands, except %) 2001 2000 %Change ---- ---- ------- Net Sales $24,088 $15,512 55% Cost of sales increased $5,266,604 to $14,441,798 in the three months ended June 30, 2000 from $9,175,194 in the period in fiscal 2000. The increase over the periods was primarily the result of an increase in net sales. As a percentage of net sales, the cost of sales increased slightly to 60.0% for fiscal 2001 as compared to 59.1% for fiscal 2000. The increase as a percentage of net sales is attributable to airfreight expense incurred because of the shortage of PC Voice Access(TM) products. Three Months Ended June 30, -------- (in thousands, except %) 2001 2000 %Change ---- ---- ------- Cost of Sales $14,442 $9,175 57% As a % of Net Sales 60.0% 59.1% -10- Selling and marketing expenses increased over the periods by $1,875,363 to $5,224,665 from $3,349,302. As a percentage of net sales, selling and marketing expenses increased slightly to 21.7% from 21.6%. The dollar increase is primarily a result of additional sales personnel, higher travel costs to support the increased sales volume, increased variable costs related to the increased sales volume, and increased marketing efforts in the North American retail portion of the business to maintain market share in this very competitive market. Three Months Ended June 30, -------- (in thousands, except %) 2001 2000 %Change ---- ---- ------- Selling and marketing $5,225 $3,349 56% As a % of Net Sales 21.7% 21.6% General and administrative expenses, which include the Company's corporate finance, legal, human resources, and administrative functions, increased over the periods by $241,800 to $1,279,448 from $1,037,648. As a percentage of net sales, general and administrative expenses decreased to 5.3% from 6.7%. The dollar increase is due primarily to labor costs related to the adding personnel for the CRU acquisition and bonuses accrued for to the Company's executives. As a percentage of net sales, general and administrative expenses decreased primarily due to increased net sales. Three Months Ended June 30, -------- (in thousands, except %) 2001 2000 %Change ---- ---- ------- General and administrative $1,279 $1,037 23% As a % of Net Sales 5.3% 6.7% Research and development expenses increased over the periods by $101,006 to $598,805 from $497,799, primarily due to the increased investment in the development of new speaker and PC Voice Access(TM) products and to the enhancement of current products. Also, the dollar increase reflects the increased hiring of employees working in research and development. As a percentage of net sales, research and development decreased primarily due to increased net sales. Three Months Ended June 30, -------- (in thousands, except %) 2001 2000 %Change ---- ---- ------- Research and development $599 $498 20% As a % of Net Sales 2.5% 3.2% Depreciation increased over the periods by $31,591 to $377,356 from $345,765. The increase was primarily the result of increased capital expenditures for tooling and molds for the new products being developed. Depreciation decreased as a percentage of net sales primarily due to the increase in net sales. -11- Three Months Ended June 30, -------- (in thousands, except %) 2001 2000 %Change ---- ---- ------- Depreciation $377 $346 9% As a % of Net Sales 1.6% 2.2% Amortization decreased over the periods by $517,328 to $299,370 from $816,698. This decrease was the result of changing the Spacetec amortization of goodwill from three (3) years to ten (10) years. Goodwill (the purchase price paid for Spacetec and CRU in excess of the fair value of net tangible assets) is being amortized over ten (10) years for Spacetec and twenty (20) years for CRU. Amortization decreased as a percentage of net sales primarily due to the increase in net sales. Three Months Ended June 30, -------- (in thousands, except %) 2001 2000 %Change ---- ---- ------- Amortization $299 $817 (63%) As a % of Net Sales 1.2% 5.3% Interest expense increased over the periods by $410,562 to $1,171,958 from $761,396, primarily as the result of the Company's refinancing and increasing its debt in conjunction with the purchase of CRU. Net interest expense as a percentage of net sales remained the same. Three Months Ended June 30, -------- (in thousands, except %) 2001 2000 %Change ---- ---- ------- Interest expense, net $1,172 $762 54% As a % of Net Sales 4.9% 4.9% The provision for income taxes was $248,862 for the three months ended June 30, 2000, as compared to $49,299 for the same period in fiscal 2000. The primary reason for the increase was the pre-tax income of $637,780 compared to a pre-tax loss of $498,903 for the prior year. Liquidity and Capital Resources As of June 30, 2000, the Company had $1,474,985 in cash and cash equivalents and working capital of $10,937,332. The working capital balance decrease from March 31, 2000, was primarily due to the increase in borrowing on the line of credit and increases in accounts payable, which was partially offset, by the increase in inventory. Net cash provided by operating activities was $3,174,111 for the three months ended June 30, 2000, compared to cash provided by operating activities of $678,578 for the same period in fiscal 2000. The increase in net cash provided by operating activities was primarily due to the increase in net income over the prior year net loss and the increase in accounts payable, which was partially offset by an increase in inventories. -12- Net cash used in investing activities was $653,122 for the three months ended June 30, 2000, compared to net cash used in investing activities of $177,558 in fiscal 2000. The increase was primarily due to capital expenditures for the purchase of tooling and molds for the new products being developed this fiscal year. Financing activities used net cash of $2,426,523 for the three months ended June 30, 2000, principally for repayment of long-term debt. At June 30, 2000, the long-term loans were accruing interest at the LIBOR rate plus 3.25 - 3.50%, the subordinated note at 12%, the line of credit at the prime rate plus 1.75%, and the promissory notes at 10% and 6%, respectively. In December 1999, the Company entered into an interest rate swap agreement with its primary lender in order to fix the interest rate on a portion of its long-term debt. At June 30, 2000, the amount of debt subject to the fixed rate was $12,450,000, for which the rate was 9.78%. The Company believes that its existing cash and revolving line of credit, together with future funds from operations, will satisfy its need for working capital and other cash requirements for at least the next twelve-month period. Year 2000 Issues The Year 2000 issue is the result of date-sensitive devices, systems and computer programs that were deployed using two digits rather than four to define the applicable year. Any such technologies may recognize a year containing "00" as the year 1900 rather than the year 2000. This could result in a system failure or miscalculation causing disruption of operations including, among other things, a temporary inability to process transactions or engage in similar normal business activities. The Company did not experience any significant malfunctions or errors in its information or business systems when the date changed from 1999 to 2000. Based on its operations since January 1, 2000, the Company does not expect any significant problems related to the Year 2000 issue. However, it is possible that the full impact of the date change has not been fully recognized. For example, it is possible that Year 2000 or similar issues, such as leap year related problems, may occur with financial closings. The Company believes that any such problems will be minor and easily corrected. In addition, the Company could still be negatively impacted if the Year 2000 or similar issues adversely affect its customers or suppliers. Currently, the Company is not aware of any significant Year 2000 or similar problems that have arisen with its customers or suppliers. -13- Disclosure Regarding Private Securities Litigation Reform Act of 1995 - --------------------------------------------------------------------- From time to time, the Company, through its management, may make forward-looking public statements in press releases or other communications, such as statements concerning then expected future revenues or earnings or alliances, product development, and commercialization, as well as other estimates relating to future operations. Forward-looking statements may be in reports filed under the Securities Exchange Act of 1934, as amended, in press releases, or in oral statements made with the approval of an authorized executive officer. The words or phrases "believe," "will likely result," "are expected to," "will continue," "is anticipated," "estimate," or similar expressions are intended to identify "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933, as enacted by the Private Securities Litigation Reform Act of 1995. The Company wishes to caution readers not to place undue reliance on these forward-looking statements which speak only as of the date on which they are made. Various factors could affect the Company's financial or other performance, and could cause the Company's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods or events in any current statement. These facts include, but are not limited to: business conditions and growth in the personal computer and workstation industries and general economies, both domestic and international; dependence on a limited number of retail customers; dependence on a limited number of source suppliers; lower than expected customer orders or variations in customer order patterns due to changes in demand for customers' products and customers' inventory levels; competitive factors, including increased competition, new product offerings by competitors and pricing pressures; changes in product mix; dependence on proprietary technology; assertion of intellectual property rights by third parties; technological difficulties and resource constraints encountered in developing new products; product shipment interruptions and other factors discussed herein and in the Company's other filings with the Securities and Exchange Commission. The Company will not undertake and specifically declines any obligation to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events which may cause management to reevaluate such forward-looking statements. Item 3. Quantitative and Qualitative Disclosures About Market Risk ---------------------------------------------------------- None. -14- PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits:
Number Description of Exhibit Method of Filing - ------ ---------------------- ---------------- 3.1 Restated Articles of Organization Incorporated by reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1999 (the "1999 Form 10-K") 3.2 Articles of Amendment Incorporated by reference to Exhibit 3.2 to the 1999 Form 10-K 3.3 Articles of Amendment Incorporated by reference to Exhibit 3.3 to the Form 10-Q for the quarterly period ended September 30, 1999 3.4 Articles of Amendment Incorporated by reference to Exhibit 3.4 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter entded December 31, 1999 3.5 Amended and Restated By-Laws of the Company Incorporated by reference to Exhibit 3.3 to the 1999 Form 10-K 4.1 Specimen certificate for shares of common Incorporated by reference to Exhibit 4.1 to the stock of the Company 1999 Form 10-K 10.1 Labtec Inc. Amended and Restated 1997 Employee Incorporated by reference to Exhibit 10.1 to the Stock Option Plan 1999 Form 10-K 10.2 1997 Employee Stock Option Plan - Option Incorporated by reference to Exhibit 10.2 to the Certificate and Agreement 1999 Form 10-K 10.3 Amended and Restated 1997 Employee Stock Incorporated by reference to Exhibit 10.3 to the Option Plan - Option Certificate and Agreement 1999 Form 10-K 10.4 Amended and Restated Stock Option Plan Incorporated by reference to Exhibit 10.1 to the Company's Registration Statement on Form S-1 (Commission File No. 33-98064) (the "Registration Statement") 10.5 Amended and Restated 1995 Director Stock Incorporated by reference to Exhibit 10.2 to the Option Plan Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1997 10.6 1995 Employee Stock Purchase Plan Incorporated by reference to Exhibit 10.3 to the Registration Statement
-15-
Number Description of Exhibit Method of Filing - ------ ---------------------- ---------------- 10.7 Amended and Restated Agreement and Plan of Incorporated by reference to Exhibit 2.1 to the Merger among Spacetec IMC Corporation, SIMC Company's Current Report on Form 8-K dated Acquisition Corporation and Labtec Inc., dated October 21, 1998 (date of earliest event as of October 2, 1998, as amended and restated reported) filed with the Commission (File No. as of November 13, 1998 0-27302) on November 17, 1998 10.8 Spacetec IMC Corporation Unsecured Incorporated by reference to Exhibit 10.8 to the Subordinated Promissory Note for $1,065,000 1999 Form 10-K dated February 17, 1999 10.9 Stock Purchase Agreement, dated as of August Incorporated by reference to Exhibit 2.1 to the 4, 1999, among the Purchaser, the Company and Company's Current Report on Form 8-K dated each of the stockholders of Connector August 20, 1999 (date of earliest event Resources Unlimited, Inc. reported) filed with the Commission (File No. 0-27302) on September 2, 1999 (the "1999 Form 8-K") 10.10 Promissory Note, dated as of August 20, 1999, Incorporated by reference to Exhibit 2.2 to the issued by the Company and payable to Carl 1999 Form 8-K Gromada, as collection agent for each of the stockholders of Connector Resources Unlimited, Inc. 10.11 Form of Credit Agreement, dated as of August Incorporated by reference to Exhibit 10.11 to 20, 1999, among the Company and certain the Form 10-Q for the quarterly period ended subsidiaries, various guarantors, various September 30, 1999 lending institutions and The Chase Manhattan Bank, as agent 10.12 Recapitalization Agreement and Plan of Merger Incorporated by reference to Exhibit 10.12 to between Speaker Acquisition Corp. and LEI the 1999 Form 10-K Holdings, Inc., dated as of August 26, 1997 10.13 Lease Agreement, dated April 24, 1997, between Incorporated by reference to Exhibit 10.13 to Pacific Realty Associates, L.P., and Labtec the 1999 Form 10-K Enterprises, Inc. 10.14 Lease Agreement, dated February 4, 1998, Incorporated by reference to Exhibit 10.14 to between Columbia Tech Center, L.L.C., and the 1999 Form 10-K Labtec Inc. 10.15 Labtec Enterprises, Inc. $6,000,000 Principal Incorporated by reference to Exhibit 10.16 to Amount of Senior Subordinated Notes and 50,000 the 1999 Form 10-K Shares of Common Stock Purchase Agreement, dated October 7, 1997
-16-
Number Description of Exhibit Method of Filing - ------ ---------------------- ---------------- 10.16 Amendment to Purchase Agreement, dated as of Incorporated by reference to Exhibit 10.17 to October 25, 1999 and effective as of August the Form 10-Q for the quarterly period ended 20, 1999, between Labtec Corporation and The September 30, 1999 KB Mezzanine Fund II, L.P. 10.17 Recognition, Non-Disturbance and Attorney Incorporated by reference to Exhibit 10.5 to the Agreement, dated December 26, 1995, between 1996 Form 10-K the Company and Historic Boott Mill Limited Partnership 10.18 Royalty Agreement, dated May 29, 1991, between Incorporated by reference to Exhibit 10.6 to the the Company and John A. Hilton Registration Statement 10.19 Resale Agreement, dated as of May 1, 1991, Incorporated by reference to Exhibit 10.8 to the between the Company and Electronic Data Registration Statement. See also footnote 1 Systems Corporation (as successors to below. McDonnell Douglas Corporation), as amended by Amendment No. 1 dated December 23, 1993, and Amendment No. 2 dated October 6, 1994 10.20 Distribution and Marketing Agreement, dated Incorporated by reference to Exhibit 10.9 to the April 28, 1994, between the Company and Registration Statement. See also footnote 1 Sumisho Electronic Devices Corporation below. 10.21 Form of Confidentiality and Inventions Incorporated by reference to Exhibit 10.11 to Agreement between the Company and its employees the Registration Statement. 10.22 Form of Non-Disclosure Agreement between the Incorporated by reference to Exhibit 10.12 to Company and its consultants the Registration Statement. 10.23 Severance Agreement, dated March 18, 1998, Incorporated by reference to Exhibit 10.15 to between the Company and Dennis T. Gain the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1998 10.24 Employment Agreement, dated June 1, 1998, Incorporated by reference to Exhibit 10.24 to between the Company and Gregory Jones the 1999 Form 10-K 27.1 Financial Data Schedule Filed herewith
- -------- (1) Certain confidential material contained in the document has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended, and Rule 24b-2 of the Securities Exchange Act of 1934, as amended. (b) Reports on Form 8-K The Company has not filed any reports on Form 8-K during the quarterly period ended June 30, 2000. -17- SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. LABTEC INC. Dated: August 14, 2000 By: /s/ Robert G. Wick ---------------------- Robert G. Wick President and Chief Executive Officer -18-
EXHIBIT INDEX ------------- Exhibit Number Description - -------------- ----------- 3.1 Restated Articles of Organization 3.2 Articles of Amendment 3.3 Articles of Amendment 3.4 Articles of Amendment 3.5 Amended and Restated By-Laws of the Company 4.1 Specimen certificate for shares of common stock of the Company 10.1 Labtec Inc. Amended and Restated 1997 Employee Stock Option Plan 10.2 1997 Employee Stock Option Plan - Option Certificate and Agreement 10.3 Amended and Restated 1997 Employee Stock Option Plan - Option Certificate and Agreement 10.4 Amended and Restated Stock Option Plan 10.5 Amended and Restated 1995 Director Stock Option Plan 10.6 1995 Employee Stock Purchase Plan 10.7 Amended and Restated Agreement and Plan of Merger among Spacetec IMC Corporation, SIMC Acquisition Corporation and Labtec Inc., dated as of October 2, 1998, as amended and restated as of November 13, 1998 10.8 Spacetec IMC Corporation Unsecured Subordinated Promissory Note for $1,065,000 dated February 17, 1999 10.9 Stock Purchase Agreement, dated as of August 4, 1999, among the Purchaser, the Company and each of the stockholders of Connector Resources Unlimited, Inc. 10.10 Promissory Note, dated as of August 20, 1999, issued by the Company and payable to Carl Gromada, as collection agent for each of the stockholders of Connector Resources Unlimited, Inc.
-19-
Exhibit Number Description - -------------- ----------- 10.11 Form of Credit Agreement, dated as of August 20, 1999, among the Company and certain subsidiaries, various guarantors, various lending institutions and The Chase Manhattan Bank, as agent 10.12 Recapitalization Agreement and Plan of Merger between Speaker Acquisition Corp. and LEI Holdings, Inc., dated as of August 26, 1997 10.13 Lease Agreement, dated April 24, 1997, between Pacific Realty Associates, L.P., and Labtec Enterprises, Inc. 10.14 Lease Agreement, dated February 4, 1998, between Columbia Tech Center, L.L.C., and Labtec Inc. 10.15 Labtec Enterprises, Inc. $6,000,000 Principal Amount of Senior Subordinated Notes and 50,000 Shares of Common Stock Purchase Agreement, dated October 7, 1997 10.16 Amendment to Purchase Agreement, dated as of October, 25, 1999 and effective as of August 20, 1999, between Labtec Corporation and The KB Mezzanine Fund II, L.P. 10.17 Recognition, Non-Disturbance and Attorney Agreement, dated December 26, 1995, between the Company and Historic Boott Mill Limited Partnership 10.18 Royalty Agreement, dated May 29, 1991, between the Company and John A. Hilton 10.19 Resale Agreement, dated as of May 1, 1991, between the Company and Electronic Data Systems Corporation (as successors to McDonnell Douglas Corporation), as amended by Amendment No. 1 dated December 23, 1993, and Amendment No. 2 dated October 6, 1994 10.20 Distribution and Marketing Agreement, dated April 28, 1994, between the Company and Sumisho Electronic Devices Corporation 10.21 Form of Confidentiality and Inventions Agreement between the Company and its employees 10.22 Form of Non-Disclosure Agreement between the Company and its consultants
-20-
Exhibit Number Description - -------------- ----------- 10.23 Severance Agreement, dated March 18, 1998, between the Company and Dennis T. Gain 10.24 Employment Agreement, dated June 1, 1998, between the Company and Gregory Jones 27.1 Financial Data Schedule
-21- EX-27 2 0002.txt FINANCIAL DATA SCHEDULE
5 0001002175 LABTEC INC. 3-MOS MAR-31-2001 APR-01-2000 JUN-30-2000 1,474,985 0 21,781,768 (1,303,048) 16,041,292 39,928,978 5,800,275 (3,190,232) 63,585,175 28,991,646 0 0 0 40,132 0 63,585,175 24,088,354 24,088,354 14,441,798 7,279,644 57,175 0 1,171,958 637,780 248,862 388,918 0 0 0 388,918 0.10 0.10
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