-----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, M5R6wci9vRNuCP8vpQFA7vITZAuogX0LeIgK//NYuBq1IaZzj2CRmKP1G/RqiL/M JrmbCH2+KSjd3uRyCYUsRQ== 0000950135-96-004750.txt : 19961113 0000950135-96-004750.hdr.sgml : 19961113 ACCESSION NUMBER: 0000950135-96-004750 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960928 FILED AS OF DATE: 19961112 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PCD INC CENTRAL INDEX KEY: 0001007594 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC CONNECTORS [3678] IRS NUMBER: 042604950 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-27744 FILM NUMBER: 96657880 BUSINESS ADDRESS: STREET 1: TWO TECHNOLOGY DR STREET 2: CENTENNIAL PARK CITY: PEABODY STATE: MA ZIP: 01960 BUSINESS PHONE: 5085328800 MAIL ADDRESS: STREET 1: 2 TECHNOLOGY DRIVE CITY: PEABODY STATE: MA ZIP: 01960 10-Q 1 PCD INC. FORM 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q (Mark One) /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 28, 1996 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 0-27744 PCD Inc. (Exact name of registrant as specified in its charter) Massachusetts 04-2604950 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 2 Technology Drive, Centennial Park, Peabody, Massachusetts (Address of principal executive offices) 01960-7977 (Zip Code) Registrant's telephone number, including area code: 508-532-8800 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 --- --- Number of shares of common stock, $0.01 par value, outstanding at November 1, 1996: 5,793,033 2 PCD Inc. FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 28, 1996 Statements in this report concerning the future financial condition, results of operations and business of the Company are "forward-looking" statements which are inherently uncertain. Actual performance and results are subject to many risk factors, including the Company's dependence on the integrated circuit package industry, the Company's dependence on its principal customers and independent distributors, fluctuations in demand for the Company's products, patent litigation involving the Company, rapid technological evolution in the electronics industry, and the like. These factors are set forth in the Company's Registration Statement on Form S-1 filed with the Securities and Exchange Commission. PART I FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS The Consolidated Balance Sheets (unaudited) at September 28, 1996 and December 31, 1995, the Consolidated Statements of Income (unaudited) and the Consolidated Statements of Cash Flows (unaudited) for the three months ended September 28, 1996 and September 30, 1995 are presented below. The accompanying notes are an integral part of the condensed consolidated financial statements. 3 PCD Inc. CONSOLIDATED BALANCE SHEETS (Condensed and unaudited) (In thousands)
9/28/96 12/31/95 -------- -------- ASSETS Current assets: Cash and cash equivalents .......................... $18,125 $ 3,958 Accounts receivable - trade, net ................... 4,011 3,564 Inventory .......................................... 2,338 2,867 Prepaid expenses and other current assets ............................................. 42 399 ------- ------- Total current assets ........................... 24,516 10,788 Equipment and improvements .............................. 10,098 8,680 Accumulated depreciation ................................ 4,804 3,749 ------- ------- Equipment and improvements, net ................ 5,294 4,931 Other assets ............................................ 229 210 ------- ------- Total assets ................................... $30,039 $15,929 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable, trade ............................ $ 352 $ 686 Accrued liabilities ................................ 2,544 2,431 ------- ------- Total current liabilities ...................... 2,896 3,117 Stockholders' equity .................................... 27,143 12,812 ------- ------- Total liabilities and stockholders' equity .......................... $30,039 $15,929 ======= =======
The accompanying notes are an integral part of the condensed, consolidated financial statements. 4 PCD Inc. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In thousands, except per share data)
Three Months Nine Months Ended Ended 9/28/96 9/30/95 9/28/96 9/30/95 ------- ------- ------- ------- Net sales .................................................. $6,222 $6,609 $20,532 $18,891 Cost of sales .............................................. 3,497 3,373 11,350 9,932 ------ ------ ------- ------- Gross profit .......................................... 2,725 3,236 9,182 8,959 Operating expenses ......................................... 1,236 1,591 4,012 3,965 ------ ------ ------- ------- Income from operations ................................ 1,489 1,645 5,170 4,994 Interest income, net ....................................... 217 22 480 63 ------ ------ ------- ------- Income before income taxes ............................................... 1,706 1,667 5,650 5,057 Provision for income taxes .................................................... 638 689 2,104 2,085 ------ ------ ------- ------- Net income ................................................. $1,068 $ 978 $ 3,546 $ 2,972 ====== ====== ======= ======= Net income per share ....................................... $ 0.16 $ 0.18 $ 0.58 $ 0.58 ====== ====== ======= ======= Weighted average number of common and common equivalent shares outstanding .............................................. 6,569 5,299 6,150 5,081 ====== ====== ======= =======
The accompanying notes are an integral part of the consolidated financial statements. 5 PCD Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (Condensed and unaudited) (In thousands)
Nine Months Ended 9/28/96 9/30/95 ------- ------- Cash from operating activities: Net income ............................ $ 3,546 $ 2,972 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation ........................ 1,055 854 Amortization of deferred compensation 43 49 Tax Benefit from stock options exercised .......................... 123 -- Changes in operating assets and liabilities: Accounts receivable - trade, net .. (448) (1,184) Inventory ......................... 530 (214) Prepaid expenses and other current assets ............................ 357 47 Other assets ...................... (19) (38) Accounts payable .................. (334) 193 Accrued liabilities ............... 113 700 ------- ------- Net cash provided by operating activities ...................... 4,966 3,379 Cash flows from investing activities: Purchase of property and equipment .... (1,418) (1,538) Cash flows from financing activities: Proceeds from public offering ......... 10,501 -- Exercise of common stock options ...... 118 41 Principal payment under long-term debt obligations .......................... -- (38) ------- ------- Net cash provided by financing activities ..................... 10,619 3 ------- ------- Net increase in cash ..................... $14,167 $ 1,844 ------- ------- Cash and cash equivalents at beginning of period ............................... $ 3,958 $ 928 ------- ------- Cash and cash equivalents at end of period ............................... $18,125 $ 2,772 ======= =======
The accompanying notes are an integral part of the condensed, consolidated financial statements. 6 PCD Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (September 28, 1996 Unaudited) Note 1. BASIS OF PRESENTATION: The condensed financial statements for the three months and nine months ended as of September 28, 1996 and September 30, 1995 are unaudited and reflect all adjustments, consisting of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods. This financial data should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 1995 which are included in the prospectus dated March 27, 1996 contained in the Company's registration statement on Form S-1. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of revenues and expenses during the reporting period and disclosure of contingent assets, liabilities and accrued litigation at the date of the financial statements. Actual performance could differ from those estimates and thereby impact future results of operations and financial condition. The results of operations for the three-month and nine-month periods ended September 28, 1996 are not necessarily indicative of the results expected for the full year ending December 31, 1996. Note 2. NET INCOME PER SHARE Net income per common share is computed using the weighted average number of shares of common stock outstanding and common equivalent shares outstanding. Common equivalent shares are included in the per share calculation where the effect of their inclusion would be dilutive. Pursuant to Securities and Exchange Commission Staff Accounting Bulletin No. 83, common and common equivalent shares issued during the twelve month period preceding the date of the initial filing on February 12, 1996, of the registration statement relating to the Company's initial public offering have been included in the calculation using the treasury stock method at the offering price ($11 per share), as if they were outstanding for all periods prior to January 1, 1996. Fully diluted net income per common share is not materially different from the reported primary net income per share. 7 Note 3. INVENTORY
(In Thousands) 9/28/96 12/31/95 ------- -------- Inventories Raw materials and finished subassemblies.............. $1,488 $1,945 Work in process....................... 398 260 Finished goods........................ 452 662 ------ ------ Total............................... $2,338 $2,867 ====== ======
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS QUARTER AND NINE MONTHS ENDED SEPTEMBER 28, 1996 COMPARED TO THE QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 1995 Net sales for the quarter ended September 28, 1996 were $6.2 million, a decrease of 6% from $6.6 million in the year-earlier period. This decrease was attributable to the summertime shutdown by a number of our customers as well as our own scheduled one week vacation plant closing. In the two previous third quarters, PCD did not experience this seasonality due to the exceptionally high rate of growth in the semiconductor market. This year, however, the seasonality was not offset due to weak demand in the semiconductor market. Net sales for the nine months ended September 28, 1996 were $20.5 million, an increase of 9% from the comparable nine month period in 1995. This increase was attributable to expanded sales volume in the avionic terminal blocks and sockets, industrial terminal blocks, and programmable-logic interconnect sockets product categories. Net income for the quarter rose 10% to $1.1 million from $1 million in the third quarter of 1995. Net earnings were $0.16 per share, compared with $0.18 per share for the same period a year ago. Net income for the nine months ended September 28, 1996 was $3.5 million, an increase of 19% from the comparable nine month period in 1995. Net earnings were $0.58 per share, compared with $0.58 per share for the same period a year ago. Incoming orders for the quarter ended September 28, 1996 were $6.7 million, down 13% compared to orders of $7.7 million in the year-earlier period and down 8% over the immediately 8 preceding quarter. The Company ended the quarter with an order backlog of $7.5 million, compared to $7.0 million at the end of the second quarter 1996. Gross profit declined from $3.2 million, or 49% of net sales in the previous corresponding quarter to $2.7 million, or 43.8% of net sales, which reflects the change to a heavier concentration of avionic and industrial sales and reduced overhead absorption. The current composition of customer orders and backlog indicate that this profit margin may only slightly improve in the fourth quarter. For the nine months ended September 28, 1996, gross profit decreased to 44.7% of net sales, or $9.2 million, from 47.4% of net sales, or $9.0 million from the year-earlier period. This decrease in the percentage of net sales is attributable to three factors: a shifting product mix from Burn-in to Avionics products; the effect of approximately $0.1 million of tooling sales for application-specific product (these tooling sales generate significantly lower than the average gross profit); and to a one-time expense for a design change to a non-standard product in the burn-in socket product category. Operating expenses for the quarter ended September 28, 1996 were $1.2 million, or 19.9% of net sales, a decrease of $0.4 million, compared to expenses of $1.6 million or 24.1% of net sales in the year-earlier period. This reduction is the result of significant professional fees associated with pending patent litigation in the prior comparable period and cost reductions in response to the lower volume due to seasonal and product line slowdowns in this quarter. For the nine months ended September 28, 1996, operating expenses were $4.0 million, or 19.5% of net sales compared with $4.0 million, or 21.0% of net sales in the year-earlier period. Other income for the third quarter and nine months increased to $0.2 million and $0.5 million in 1996 from $0.02 million and $0.06 million in 1995, respectively. Other income consists primarily of interest income which increased as of result of increased cash balances. The effective rate for income taxes for the quarter ended September 28, 1996 declined to 37.4% from 41.3% for the year- earlier period. The effective rate for income taxes was due to the application of the appropriate effective tax rates for each of the state tax jurisdictions in which the Company operates. In addition, PCD established a wholly-owned subsidiary which is engaged in holding PCD securities. The structure of this corporation allows for favorable tax treatment in the Commonwealth of Massachusetts. MATERIAL CHANGES IN FINANCIAL CONDITION As of September 28, 1996, the Company had cash and cash equivalents of approximately $18.1 million and working capital of approximately $21.6 million compared to $3.9 million in cash and $7.6 million in working capital as of December 31, 1995. Cash provided by operating activities totaled $5.0 million for the 9 nine month period ended September 28, 1996 compared to $3.4 million in the comparable year-earlier period. Capital expenditures were $0.3 million for the third quarter 1996 and are expected to reach $2.1 million by year end, down slightly from $2.5 million last year. The Company projects the level of capital expenditures to attain $3.0 million in 1997. The company believes that existing cash and cash equivalents and funds from operations will satisfy the company's working capital and capital expenditure needs for at least the next twelve months. 10 PCD Inc. PART II OTHER INFORMATION Item 1. Legal Proceeding There has been no material change to the information required to be furnished by this item since the date of the Company's previous Quarterly Report on Form 10-Q for the quarter ended June 29, 1996. The information contained in Part II, Item 1 of such Report is hereby incorporated herein by this reference. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 11.1 Statement re computation of per share earnings. 27.1 Financial Data Schedule. (b) Reports on Form 8-K There were no reports on Form 8-K filed during the period ended September 28, 1996. 11 S I G N A T U R E S 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. PCD INC. (Registrant) Dated: , 1996 /s/ John L. Dwight, Jr. ------------------------ John L. Dwight, Jr. Chairman of the Board, Chief Executive Officer and President (Principal Executive Officer) Dated: , 1996 /s/ Mary L. Mandarino ------------------------ Mary L. Mandarino Vice President, Finance and Administration, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) 12 Exhibit Index Exhibit Number Description 11.1 Statement re computation of per share earnings. 27.1 Financial Data Schedule. EX-11.1 2 COMPUTATION OF PER SHARE EARNINGS 1 Exhibit 11.1 PCD Inc. STATEMENT RE COMPUTATION OF EARNINGS PER SHARE (1) For the quarter ended September 28, 1996 Common stock outstanding, beginning of the period................................. 5,723,832 Weighted average common stock issued during the period....................................... 39,557 Dilutive effect of common stock equivalents................. 805,680 --------- Weighted average number of common and common equivalent shares outstanding........................... 6,569,069 ========= For the nine-months ended September 28, 1996 Common stock outstanding, beginning of the period................................. 4,597,032 Weighted average common stock issued during the period....................................... 764,572 Dilutive effect of common stock equivalents................. 788,619 --------- Weighted average number of common and common equivalent shares outstanding........................... 6,150,223 ========= For the quarter ended September 30, 1995 Common stock outstanding, beginning of the period................................. 4,561,032 Cheap stock outstanding during the period (2)............... 70,364 Weighted average common stock issued during the period....................................... - Dilutive effect of common stock equivalents................. 668,075 --------- Weighted average number of common and common equivalent shares outstanding........................... 5,299,471 ========= For the nine-months ended September 30, 1995 Common stock outstanding, beginning of the period................................. 4,561,032 Cheap stock outstanding during the period (2)............... 70,364 Weighted average common stock issued during the period....................................... - Dilutive effect of common stock equivalents................. 422,077 --------- Weighted average number of common and common equivalent shares outstanding........................... 5,053,473 =========
(1) All common and common equivalent shares have been restated to reflect a 12-for-1 stock split of the Company's common stock effected in February, 1996. 2 (2) In accordance with the Securities and Exchange Commission Staff Accounting Bulletin No. 83, issuances of common stock and common stock equivalents during the twelve month period preceding the date of the initial filing on February 12, 1996, of the registration statement relating to the Company's initial public offering have been included in the calculation using the treasury stock method at the public offering price ($11 per share), as if they were outstanding for all periods prior to January 1, 1996. EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS DEC-31-1996 JAN-01-1996 SEP-28-1996 18125 0 4233 222 2338 24516 10098 4804 30039 2896 0 0 0 58 27085 30039 20532 20532 11350 11350 4012 30 9 5650 2104 3546 0 0 0 3546 .58 .58
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