-----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, B4TI4ptLZJGcJQxYItihMMoMIJdeJtyGz1JVA9lbfFo2Sk0cfQb9Pmeoqc8F3ctd daLGsAinzWE+4+lEWmVYPA== 0001007594-99-000006.txt : 19990813 0001007594-99-000006.hdr.sgml : 19990813 ACCESSION NUMBER: 0001007594-99-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990703 FILED AS OF DATE: 19990812 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: SEC FILE NUMBER: 000-27744 FILM NUMBER: 99684831 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 AUDIT LETTER 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 July 3, 1999 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 of (I.R.S. Employer 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: 978-532-8800 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 July 26, 1999: 8,557,680. PCD Inc. FORM 10-Q FOR THE QUARTER ENDED JULY 3, 1999 FORWARD LOOKING INFORMATION Statements in this report concerning the future revenues, expenses, profitability, financial resources, product mix, market demand, product development and other statements in this report concerning the future results of operations, financial condition and business of PCD Inc. are "forward-looking statements" made pursuant to the safe harbor provisions of the Securities Exchange Act of 1934, as amended. Investors are cautioned that the Company's actual results in the future may differ materially from those projected in the forward-looking statements due to the risks and uncertainties that exist in the Company's operations and business environment, including the Company's dependence on the integrated circuit package interconnect and semiconductor industries, the Company's dependence on its principal customers and independent distributors, acquisitions and indebtedness, international sales and operations, fluctuations in demand for the Company's products, patent litigation involving the Company, rapid technological evolution in the electronics industry, Year 2000 compliance and the like. In addition, the Company may experience unanticipated costs or other difficulties in connection with the acquisition and integration of a business such as Wells Electronics, Inc. The Company's most recent filings with the Securities and Exchange commission, including its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and current reports on Form 8-K, contain additional information concerning such risk factors, and copies of these filings are available from the Company upon request and without charge. 2 PART I FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS PCD INC. Consolidated Balance Sheets as of July 3, 1999 and December 31, 1998. Consolidated Statements of Income for the quarter and six months ended July 3, 1999 and July 4, 1998. Consolidated Statements of Cash Flows for the six months ended July 3, 1999 and July 4, 1998. Notes to Condensed Consolidated Financial Statements. 3 PCD Inc. CONSOLIDATED BALANCE SHEETS (Condensed and unaudited) (In thousands)
7/3/99 12/31/98 ------ -------- ASSETS Current assets: Cash and cash equivalents................. $ 601 $ 852 Accounts receivable, net.................. 6,047 5,851 Inventory................................. 5,574 5,042 Prepaid expenses and other current assets. 524 643 -------- -------- Total current assets............... 12,746 12,388 Equipment and improvements Equipment and improvements................ 27,523 25,569 Accumulated depreciation.................. 9,583 7,442 -------- -------- Equipment and improvements, net.............. 17,940 18,127 Deferred tax asset........................... 13,685 14,192 Goodwill..................................... 57,050 58,592 Intangible assets............................ 11,937 12,456 Debt financing fees.......................... 1,443 1,531 Other assets................................. 1,790 1,818 -------- -------- Total assets....................... $116,591 $119,104 ======== ======== LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities: Short-term debt........................... $ 10,600 $ 9,700 Current portion of long-term debt......... 8,600 8,400 Accounts payable.......................... 3,135 3,146 Accrued liabilities....................... 2,780 2,981 -------- -------- Total current liabilities.......... 25,115 24,227 Long-term debt, net of current portion....... 33,200 37,600 Accumulated other comprehensive income....... 69 146 Stockholders' equity......................... 58,207 57,131 -------- -------- Total liabilities and stockholders' equity.......... $116,591 $119,104 ======== ========
The accompanying notes are an integral part of the consolidated financial statements. 4 PCD Inc. CONSOLIDATED STATEMENTS OF INCOME (Condensed and unaudited) (In thousands, except per share data)
Quarter Ended Six Months Ended ----------------- ---------------- 7/3/99 7/4/98 7/3/99 7/4/98 ------ ------ ------ ------ Net sales........................... $13,210 $18,553 $25,843 $35,279 Cost of sales....................... 6,617 7,706 12,996 14,947 ------- ------- ------- ------- Gross profit........................ 6,593 10,847 12,847 20,332 Operating expenses.................. 3,613 4,139 7,136 7,901 Amortization........................ 1,047 1,024 2,095 2,095 ------- ------- ------- ------- Income from operations.............. 1,933 5,684 3,616 10,336 Interest expense / (other income), net............... 1,131 1,627 2,228 6,289 ------- ------- ------- ------- Income before income taxes.......... 802 4,057 1,388 4,047 Provision for income taxes.......... 278 1,740 499 1,757 ------- ------- ------- ------- Income before extraordinary item.... 524 2,317 889 2,290 Extraordinary item - charge for early retirement of debt, net of income tax benefit of $567 - 888 - 888 ------- ------- ------- ------- Net income.......................... $ 524 $ 1,429 $ 889 $ 1,402 ======= ====== ======= ======= Basic earnings per share: Income before extraordinary item.. $ 0.06 $ 0.29 $ 0.10 $ 0.33 Extraordinary item................ $ - $ (0.11) $ - $ (0.13) ------- ------- ------- ------- Net income........................ $ 0.06 $ 0.18 $ 0.10 $ 0.20 ======= ======= ======= ======= Diluted earnings per share Income before extraordinary item $ 0.06 $ 0.27 $ 0.10 $ 0.30 Extraordinary item................ $ - $ (0.10) $ - $ (0.12) ------- ------- ------- ------- Net income........................ $ 0.06 $ 0.17 $ 0.10 $ 0.18 ======= ======= ======= ======= Weighted average number of common and common equivalent shares outstanding: Basic.......................... 8,513 7,888 8,482 7,021 ======= ====== ======= ======= Diluted........................ 9,043 8,597 9,048 7,739 ======= ====== ======= =======
The accompanying notes are an integral part of the consolidated financial statements. PCD Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (Condensed and unaudited) (In thousands)
Six Months Ended ------------------ 7/3/99 7/4/98 ------ ------ Cash flows from operating activities: Net income...................................... $ 889 $ 1,402 Adjustments to reconcile net income to net cash provided by operating activities Depreciation................................. 2,141 1,711 Amortization of deferred compensation........ - 28 Amortization of intangible assets............ 2,060 2,186 Amortization of warrant...................... - 2,917 Tax benefit from stock options exercised..... 50 19 Deferred taxes............................... 495 654 Changes in operating assets and liabilities: Accounts receivable........................ (287) (217) Inventory.................................. (578) (89) Prepaid expenses and other current assets.. 101 227 Other assets............................... 29 (888) Accounts payable........................... 98 (1,032) Accrued liabilities........................ (159) (3,008) ------- ------- Net cash provided by operating activities 4,839 3,910 Cash flows from investing activities: Capital expenditures............................ (1,954) (2,688) ------- ------- Net cash used in investing activities.... (1,954) (2,688) Cash flows from financing activities: Borrowings (repayments) short term debt......... 900 (1,500) Payments of long-term debt...................... (4,200) (19,705) Payments of subordinated debt................... - (25,000) Proceeds from issuance of warrant............... - 5 Proceeds from issuance of common stock, net..... - 42,567 Amortization of deferred financing costs........ 77 128 Exercise of common stock options................ 137 54 ------- ------- Net cash used in financing activities.... (3,086) (3,451) ------- ------- Net (decrease) increase in cash................... (201) (2,229) Effect of exchange rate on cash................... (50) (84) Cash and cash equivalents at beginning of period.. 852 3,990 ------- ------- Cash and cash equivalents at end of period........ $ 601 $ 1,677 ======= =======
The accompanying notes are an integral part of the consolidated financial statements. 6 PCD Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (July 3, 1999 Unaudited) Note 1. INTERIM FINANCIAL STATEMENTS The condensed consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation. This financial data should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 1998. Certain reclassifications in the Company's Consolidated Statements of Cash Flows were made to prior year's six month amounts to conform with the Annual Report presentation. Note 2. NET INCOME PER SHARE The following tables reconcile net income and weighted average shares outstanding to the amounts used to calculate basic and diluted earnings per share for each of the periods ended July 3, 1999 and July 4, 1998:
Per Share Net Income Shares Amount ----------- --------- ------- For the quarter ended July 3, 1999 Basic earnings.............................. $ 524,000 8,512,867 $ 0.06 Assumed exercise of options (treasury method) - 530,039 - ---------- --------- ------ Diluted earnings............................ $ 524,000 9,042,906 $ 0.06 ========== ========= ======
7
Per Share Net Income Shares Amount ----------- --------- ------- For the quarter ended July 4, 1998 Income before extraordinary item............ $2,317,000 7,887,993 $ 0.29 Assumed exercise of options (treasury method) - 708,995 - ---------- --------- ------ Diluted income before extraordinary item.... $2,317,000 8,596,988 $ 0.27 ========== ========= ====== Extraordinary item.......................... $ (888,000) 7,887,993 $(0.11) Assumed exercise of options (treasury method) - 708,995 - ---------- --------- ------ Diluted extraordinary item.................. $ (888,000) 8,596,988 $(0.10) ========== ========= ====== Net income.................................. $1,429,000 7,887,993 $ 0.18 Assumed exercise of options (treasury method) - 708,995 - ---------- --------- ------ Diluted net income.......................... $1,429,000 8,596,988 $ 0.17 ========== ========= ====== For the six month period ended July 3, 1999 Basic earnings.............................. $ 889,000 8,481,577 $ 0.10 Assumed exercise of options (treasury method) - 566,787 - ---------- --------- ------ Diluted earnings............................ $ 889,000 9,048,364 $ 0.10 ========== ========= ====== For the six month period ended July 4, 1998 Income before extraordinary item............ $2,290,000 7,021,457 $ 0.33 Assumed exercise of options (treasury method) - 717,369 - ---------- --------- ------ Diluted income before extraordinary item.... $2,290,000 7,738,826 $ 0.30 ========== ========= ====== Extraordinary item.......................... $ (888,000) 7,021,457 $(0.13) Assumed exercise of options (treasury method) - 717,369 - ---------- --------- ------ Diluted extraordinary item.................. $ (888,000) 7,738,826 $(0.12) ========== ========= ====== Net income.................................. $1,402,000 7,021,457 $ 0.20 Assumed exercise of options (treasury method) - 717,369 - ---------- --------- ------ Diluted net income.......................... $1,402,000 7,738,826 $ 0.18 ========== ========= ======
For the quarters ended July 3, 1999 and July 4, 1998, anti- dilutive shares of 130,324 and 67,020, and for the six month periods anti-dilutive shares of 121,281 and 63,978, respectively, have been excluded from the calculation of EPS. 8 Note 3. INVENTORY 7/3/99 12/31/98 ------ -------- (In Thousands) Inventory: Raw materials and finished subassemblies $3,942 $3,536 Work in process......................... 596 491 Finished goods.......................... 1,036 1,014 ------ ------ Total................................. $5,574 $5,042 ====== ====== Note 4. COMPREHENSIVE INCOME The Company's only other comprehensive income is foreign currency translation adjustments. For the three and six months ended July 3, 1999 and July 4, 1998 the Company's total comprehensive income (in thousands) was as follows:
Three Months Ended Six Months Ended ------------------ ---------------- 7/3/99 7/4/98 7/3/99 7/4/98 ------ ------ ------ ------ Net earnings (loss) $ 524 $1,429 $ 889 $1,402 Other comprehensive income (loss), net (14) 45 (46) (1) ------ ------ ------ ------ Total comprehensive earnings (loss) $ 510 $1,474 $ 843 $1,401 ====== ====== ====== ======
Note 5. NEW ACCOUNTING STANDARDS In 1998, the Financial Accounting Standards Board released Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities (FAS 133), which initially would have been effective for all fiscal quarters beginning after June 15, 1999. In June 1999, the Financial Accounting Standards Board released Statement of Financial Accounting Standards No. 137, Accounting for Derivative Instruments and Hedging Activities -- Deferral of Effective Date of FAS 133 (FAS 137). FAS 137 defers the effective date of FAS 133 until June 15, 2000. FAS 133 standardizes the accounting for derivative instruments, including certain derivative instruments embedded in other contracts, by requiring that an entity 9 recognize those items as assets or liabilities in the statement of financial position and measure them at fair value. The Company is currently evaluating the impact that FAS 133 will have on its future operating performance. Note 6. LITIGATION The Company and its subsidiaries are subject to legal proceedings arising in the ordinary course of business. On the basis of information presently available and advice received from legal counsel, it is the opinion of management that the disposition or ultimate determination of such legal proceedings will not have a material adverse effect on the Company's consolidated financial position, its consolidated results of operations or its consolidated cash flows. Note 7. SEGMENT INFORMATION:
THREE MONTHS ENDED SIX MONTHS ENDED ------------------ ---------------- 7/3/99 7/4/98 7/3/99 7/4/98 ------ ------ ------ ------ (In thousands) SALES: Industrial/Avionics......... $ 4,551 $ 4,874 $ 9,492 $ 9,448 IC Package interconnect..... 8,659 13,679 16,351 25,831 -------- -------- -------- -------- Total sales............... $ 13,210 $ 18,553 $ 25,843 $ 35,279 ======== ======== ======== ======== NET INCOME (loss): Industrial/Avionics......... $ 590 $ 731 $ 1,347 $ 1,334 IC Package interconnect..... (73) 830 (500) 3 Corporate activities........ 7 (132) 42 65 -------- -------- -------- -------- Total net income.......... $ 524 $ 1,429 $ 889 $ 1,402 ======== ======== ======== ========
7/3/99 12/31/98 ------ -------- (In thousands) ASSETS: Industrial/Avionics..................... $ 8,954 $ 8,960 IC Package interconnect................. 105,695 108,521 Corporate activities.................... 1,942 1,623 -------- -------- Total assets.......................... $116,591 $119,104 ======== ======== 10 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS QUARTER AND SIX MONTHS ENDED JULY 3, 1999 COMPARED TO THE QUARTER AND SIX MONTHS ENDED JULY 4, 1998 NET SALES. Net sales decreased 28.8% to $13.2 million for the quarter ended July 3, 1999 from $18.6 million for the quarter ended July 4, 1998 and decreased 26.7% to $25.8 million for the six months ended July 3, 1999 from $35.3 million for the six months ended July 4, 1998. This decrease in sales was primarily attributable to our Wells-CTi division. This division's sales were $8.7 million and $16.3 million for the quarter and six months ended July 3, 1999 compared to $13.7 million and $25.8 million for the same periods last year. This decrease in net sales was attributable to the continued decline experienced in parts of the burn-in industry. GROSS PROFIT. Gross profit decreased to $6.6 million for the quarter and $12.8 million for the six months ended July 3, 1999. This compares to gross profit of $10.8 million and $20.3 million for the quarter and six months ended July 4, 1998, respectively. This decrease in gross profit was due to the decrease in sales with less than a proportional decrease in overhead expenses. Additionally, product mix and pricing pressures on our more mature burn-in products contributed to the decrease in gross profit. OPERATING EXPENSES AND AMORTIZATION. Operating expenses include selling, general and administrative expenses and costs of product development. Operating expenses decreased 9.7% to $4.7 million for the quarter ended July 3, 1999 compared to $5.2 million for the quarter ended July 4, 1998. On a year-to-date basis, operating expenses decreased 7.7% to $9.2 million for the six months ended July 3, 1999 from $10.0 million for the six months ended July 4, 1998. This decrease in operating expenses was a result of the actions taken to reduce expenses in response to the lower sales volume, specifically the merger of our Control Systems Interconnect division with our Industrial/Avionic division and the closure of our Pennsylvania sales office. Cost reductions in our Wells-CTi division also contributed to the lower operating expenses. 11 INTEREST AND OTHER INCOME (EXPENSE). Interest expense and other income, net decreased from $6.3 million for the six months ended July 4, 1998 to $2.2 million for the six months ended July 3, 1999. On a quarterly comparison, interest expense and other income, net decreased to $1.1 million for the three months ended July 3, 1999 from $1.6 million for the three months ended July 4, 1998. This decrease in interest expense was due to a reduction in bank debt from $83.0 million at December 31, 1997 to $52.4 million at July 3, 1999 and the $2.3 million amortization and $600,000 interest expense associated with the Emerson Debenture which was retired in April 1998. PROVISION FOR INCOME TAXES. The provision for income taxes for the quarter ended July 3, 1999 was 34.7% of pretax income compared to 42.9% of pretax income for the quarter ended July 4, 1998. This decrease in the effective tax rate was due to losses incurred in our Wells-CTi KK (Japan) division where the effective tax rate is much greater than the combined Federal/State effective tax rate. The losses incurred in Japan compare to profits generated in the prior year. On a year-to-date basis for the six months ended July 3, 1999, the effective tax rate was 36% compared to last year's year-to-date effective rate of 43.4%, also due to the Wells-CTi KK situation. LIQUIDITY AND CAPITAL RESOURCES Cash provided by operating activities in the six months ended July 3, 1999 was $4.8 million compared to $3.9 million in the six months ended July 4, 1998. The Company's debt balance decreased $3.3 million in the six month period to $52.4 million from $55.7 million at December 31, 1998. The balance at July 3, 1999 consists of a $10.6 million revolving line of credit and $41.8 million term loan. The Company currently anticipates that its capital expenditures for 1999 will be approximately $4.3 million, which consists primarily of purchased tooling and equipment required to support the Company's business. The amount of these capital expenditures will frequently change based on future changes in business plans and conditions of the Company and changes in economic conditions. The Company believes its existing working capital and borrowing capacity, coupled with the funds generated from the Company's operations, will be sufficient to fund its anticipated working capital, capital expenditure and debt payment 12 requirements through 1999. Because the Company's capital requirements cannot be predicted with certainty, there can be no assurance that any additional financing will be available on terms satisfactory to the Company or not disadvantageous to the Company's stockholders. IMPACT OF YEAR 2000 The "Year 2000 Issue" is the result of computer programs that were written using two digits rather than four to define the applicable year. If the Company's computer programs with date- sensitive functions are not Year 2000 compliant, they may interpret a date using "00" in the year field as the Year 1900 rather than the Year 2000. This misinterpretation could result in a system failure or miscalculations causing disruptions of operations, including, among other things, an interruption of design or manufacturing functions or an inability to process transactions, send invoices or engage in similar normal business activities until the problem is corrected. The Company has identified its Year 2000 risk in three categories: internal information technology ("IT") systems; internal non-IT systems, including embedded technology such as microcontrollers; and external noncompliance by customers and suppliers. INTERNAL IT SYSTEMS. The Company utilizes a significant number of information technology systems across its entire organization, including applications used in manufacturing, product development, financial business systems and various administrative functions. Since 1997, the Company has reviewed the Year 2000 issue that encompassed operating and administrative areas of the Company. Independent of the Year 2000 Issue and in order to improve access to business information through common, integrated computing systems across the Company, PCD began a worldwide information technology systems replacement project with systems that use programs from Oracle Corporation ("ORACLE"). As of August 3, 1999, the Company has successfully completed the implementation of this system in its United States operations and our Japanese implementation has been temporarily suspended. Prior to the implementation of ORACLE, we found that our South Bend, Indiana location required an update to their internal IT 13 systems and this was achieved at a cost of approximately $90,000. The systems that required these updates were replaced by ORACLE. During 1999, the Company has learned of potential Year 2000 problems within Microsoft Windows NT and Microsoft Office. Microsoft has developed patches to correct the applications affected, and has provided them to the Company. The Company is presently in the process of evaluating these patches in a test environment prior to installing them for broad use throughout the organization. Testing is scheduled to be complete and patches are scheduled to be installed by October 1, 1999. The Company does not have a contingency plan in place for Year 2000 failures of its internal IT systems. If the Company has not achieved or does not timely achieve Year 2000 compliance for its major IT systems, the Year 2000 Issue could have a material adverse effect on the financial condition, results of operations and business of the Company. INTERNAL NON-IT SYSTEMS, INCLUDING EMBEDDED TECHNOLOGY. The Company has completed its evaluation of all non-IT systems which include embedded technology such as microcontrollers, and has been in contact with all manufacturers of this equipment. Letters of compliance have been obtained from 100% of the manufacturers except as noted below. Payroll time clocks at the Peabody and South Bend facilities require a Year 2000 upgrade, which is available and scheduled for installation by October 30, at a total cost to the Company of approximately $10,000. The Peabody facility telephone system requires a voice mail upgrade. This is presently being prepared by the local service provider and scheduled to be installed by October 30, 1999. This is expected to cost approximately $1,000. The Company does not currently have a contingency plan in place for Year 2000 failures of its internal non-IT systems and embedded technology. If the Company is unable to achieve Year 2000 compliance for its major non-IT systems, the Year 2000 Issue could have a material adverse effect on the financial condition, results of operations and business of the Company. 14 EXTERNAL NONCOMPLIANCE BY CUSTOMERS AND SUPPLIERS. The Company is in the process of identifying and contacting its material suppliers, service providers and contractors to determine the extent of the Company's vulnerability to those third parties' failure to remedy their own Year 2000 issues. To date, responses have been obtained from over 60% of all Wells- CTi's suppliers - including all key suppliers - and there have been no non-compliance problems indicated. The Company is also in the process of conducting its survey of industrial/avionics suppliers, service providers and contractors. The Company expects the entire process to be substantially complete by October 31, 1999. To the extent that responses to Year 2000 readiness inquiries are unsatisfactory, the Company intends to change suppliers, service providers or contractors to those who have demonstrated Year 2000 readiness, but the Company cannot assure that it will be successful in finding such alternative suppliers, service providers and contractors. The Company presently has alternate sources of supply on its raw materials and most purchased components, and maintains a safety stock on single source components. The Company does not currently have any formal information concerning the Year 2000 compliance status of its customers but has received indications that most of its customers are working on Year 2000 compliance. If any of the Company's significant customers and suppliers (including alternate suppliers) do not successfully and timely achieve Year 2000 compliance, and the Company is unable to replace them with new customers or alternative suppliers, the Company's financial condition, results of operations and business could be materially adversely affected. The above discussion of the Company's efforts, management's expectations, and expected compliance dates relating to Year 2000 compliance contains forward-looking statements within the meaning of the Securities Exchange Act of 1934. See "Forward Looking Information." The Company's ability to achieve Year 2000 compliance, the level of incremental costs associated with compliance and the timing of compliance, could be adversely impacted by, among other things, the availability and cost of programming and testing resources, vendors' ability to modify proprietary software, and unanticipated problems identified in the ongoing compliance review. 15 PCD Inc. PART II OTHER INFORMATION Item 1. Legal Proceedings See Note 6 to the Company's Condensed Consolidated Financial Statements (above). Item 4. Submission of Matters to a Vote of Security Holders At the annual meeting of stockholders of the Company on May 7, 1999, the following votes were taken: Two directors were elected to hold office for a three year term expiring in the year 2002.
Shares Voted Shares ------------------- not Director For Withheld voted ----------------- --------- -------- ------- John L. Dwight, Jr. 7,958,332 25,300 457,550 Theodore C. York 7,958,332 25,300 457,550
The following directors will continue in office until the years specified: Term expires ------------ Harold F. Faught 2000 C. Wayne Griffith 2001 John E. Stuart 2001 Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 27.1 Financial Data Schedule. (b) Reports on Form 8-K NONE 16 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: August 12, 1999 /s/ John L. Dwight, Jr. --------------- --------------------------- John L. Dwight, Jr. Chairman of the Board, Chief Executive Officer and President (Principal Executive Officer) Dated: August 12, 1999 /s/ John J. Sheehan III --------------- --------------------------- John J. Sheehan III Vice President, Finance and Administration, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) 17 EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY TO REFERENCE TO SUCH FINANCIAL INFORMATION 1,000 6-MOS DEC-31-1999 JUL-03-1999 601 0 6,360 313 5,574 12,746 27,523 9,583 116,591 25,115 33,200 0 0 85 58,191 116,591 25,843 25,843 12,996 12,996 9,231 0 2,228 1,388 499 889 0 0 0 889 0.10 0.10
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