-----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, TGjth/WVxMHExw0DW8FKjnHIkjv8d1vnq2g485s63AMlJbZW6c0fYHNaQsZz8OF8 +9qLxQdYQMvgDL2ywjCcBw== 0000927016-01-501005.txt : 20010515 0000927016-01-501005.hdr.sgml : 20010515 ACCESSION NUMBER: 0000927016-01-501005 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BENTHOS INC CENTRAL INDEX KEY: 0000011390 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS MANUFACTURING INDUSTRIES [3990] IRS NUMBER: 042381876 STATE OF INCORPORATION: MA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-29024 FILM NUMBER: 1633555 BUSINESS ADDRESS: STREET 1: 49 EDGARTON DRIVE CITY: NORTH FALMOUTH STATE: MA ZIP: 02556 BUSINESS PHONE: 5085631000 MAIL ADDRESS: STREET 1: 49 EDGERTON DR CITY: NORTH FALMOUTH STATE: MA ZIP: 02556 10QSB 1 d10qsb.txt FORM 10-Q U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-QSB [X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2001 [_] Transition report under Section 13 or 15(d) of the Exchange Act For the transition period from ____________ to ______________ Commission file number 0-29024 BENTHOS, INC. (Exact Name of Small Business Issuer as Specified in Its Charter) Massachusetts 04-2381876 (State or Other Jurisdiction of (I. R. S. Employer Corporation or Organization) Identification No.) 49 Edgerton Drive, North Falmouth, Massachusetts 02556 (Address of Principal Executive Offices) (508) 563-1000 Issuer's Telephone Number Including Area Code Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- State the number of shares outstanding of each of the issuer's classes of Common equity as of the latest practicable date: Common Stock par value $.06 2/3 1,387,149 (Class) (Outstanding stock at May 11, 2001) Transitional Small Business Disclosure Format (check one): Yes No X ------ ------ 2 BENTHOS, INC. AND SUBSIDIARY FORM 10-QSB FOR THE SECOND QUARTER AND SIX MONTHS ENDED MARCH 31, 2001 INDEX
Page No. --------- Face Sheet 1 Index 2 PART I FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheets (unaudited) 3 March 31, 2001 and September 30, 2000 Condensed Consolidated Statements of Operations (unaudited) 4 Quarter and Six Months Ended March 31, 2001 and March 31, 2000 Condensed Consolidated Statements of Cash Flow (unaudited) 5 Six Months Ended March 31, 2001 and March 31, 2000 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis 9 of Financial Condition and Results of Operations PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 14 Signatures 14
3 PART I - FINANCIAL INFORMATION Item 1. Financial Statements Benthos, Inc. and Subsidiary Condensed Consolidated Balance Sheets (in thousands, except per share amounts) (unaudited)
Assets March 31, 2001 September 30, 2000 -------------- ------------------ Current Assets: Cash and Cash Equivalents $ 51 $ 1,474 Accounts Receivable, Net 3,328 3,448 Inventories 5,813 4,974 Prepaid Expenses and Other Current Assets 80 159 Deferred Tax Asset 1,354 1,354 ------- ------- Total Current Assets 10,626 11,409 Property, Plant and Equipment, Net 1,981 1,960 Other Assets, Net 4,312 4,496 ------- ------- $16,919 $17,865 ======= ======= Liabilities and Stockholders' Investment Current Liabilities: Note Payable $ 50 $ -- Current Portion of Long-Term Debt 786 786 Accounts Payable 1,929 1,160 Accrued Expenses 1,277 1,729 Customer Deposits 388 350 ------- ------- Total Current Liabilities 4,430 4,025 ------- ------- Long-Term Debt, Net of Current Portion 3,470 3,863 Stockholders' Investment: Common stock, $.06 2/3 Par Value- Authorized - 7,500 Shares Issued - 1,653 Shares at March 31, 2001 and September 30, 2000 110 110 Capital in Excess of Par Value 1,569 1,569 Retained Earnings 7,971 8,959 Treasury Stock, at Cost (631) (661) ------- ------- Total Stockholders' Investment 9,019 9,977 ------- ------- $16,919 $17,865 ======= =======
See accompanying notes to Condensed Consolidated Financial Statements 4 Benthos, Inc. and Subsidiary Condensed Consolidated Statements of Operations (in thousands, except per share amounts) (unaudited)
Quarter Ended Six Months Ended March 31, March 31, 2001 2000 2001 2000 ------- ------ ------- ------- Net Sales $ 4,717 $5,237 $ 8,890 $10,648 Cost of Sales 3,056 2,638 6,102 5,924 ------- ------ ------- ------- Gross Profit 1,661 2,599 2,788 4,724 Selling, General & Administrative Expenses 1,400 1,601 2,680 2,945 Research and Development Expenses 590 457 1,098 922 Amortization of Goodwill and Other Acquired Intangibles 126 130 252 254 ------- ------ ------- ------- Income (Loss) from Operations (455) 411 (1,242) 603 Interest Income 6 12 27 41 Interest Expense (93) (96) (197) (205) ------- ------ ------- ------- Income before (Benefit) Provision for Income Taxes (542) 327 (1,412) 439 Provision (Benefit) for Income Taxes (162) 98 (423) 132 ------- ------ ------- ------- Net Income (Loss) $ (380) $ 229 $ (989) $ 307 ======= ====== ======= ======= Basic Earnings (Loss) Per Share $ (0.28) $ 0.17 $ (0.72) $ 0.22 ======= ====== ======= ======= Diluted Earnings (Loss) Per Share $( 0.28) $ 0.16 $( 0.72) $ 0.22 ======= ====== ======= ======= Weighted Average Common Shares Outstanding 1,382 1,376 1,380 1,372 ======= ====== ======= ======= Weighted Average Common Shares Outstanding, Assuming Dilution 1,382 1,419 1,380 1,416 ======= ====== ======= =======
See accompanying notes to Condensed Consolidated Financial Statements 5 Benthos, Inc. and Subsidiary Condensed Consolidated Statements of Cash Flow (in thousands) (unaudited)
Six Months Ended March 31, 2001 March 31, 2000 ----------------- --------------- Cash Flows from Operating Activities: Net Income (Loss) $ (989) $ 307 Adjustments to Reconcile Net Income (Loss) to Net Cash Used in Operating Activities: Depreciation and Amortization 601 638 Changes in Assets and Liabilities: Accounts Receivable 120 (1,236) Inventories (839) 148 Prepaid Expenses and Other Current Assets 79 604 Accounts Payable and Accrued Expenses 317 (656) Customer Deposits 38 (114) ------- ------- Net Cash Used in Operating Activities (673) (309) Cash Flows from Investing Activities: Purchases of Property, Plant and Equipment (325) (265) Increase in Other Assets (82) (263) ------- ------- Net Cash Used in Investing Activities (407) (528) Cash Flows from Financing Activities: Borrowings on Revolving Note 50 -- Exercise of Stock Options -- 23 Payments on Long-Term Debt (393) (393) ------- ------- Net Cash Used in Financing Activities (343) (370) ------- ------- Net Decrease in Cash and Cash Equivalents (1,423) (1,207) Cash and Cash Equivalents, Beginning of Period 1,474 2,930 ------- ------- Cash and Cash Equivalents, End of Period $ 51 $ 1,723 ======= ======= Supplemental Disclosure of Cash Flow Information: Interest Paid $ 199 $ 204 ======= ======= Income Taxes Paid, Net of Refunds $ 50 $ 100 ======= ======= Supplemental Disclosure of Noncash Activities: Issuance of Treasury Stock to the Company's ESOP $ 30 $ 74 ======= =======
See accompanying notes to Condensed Consolidated Financial Statements 6 Benthos, Inc. and Subsidiary Notes to Condensed Consolidated Financial Statements (in thousands, except per share amounts) 1. Fiscal Periods The fiscal year of Benthos, Inc. (the Company) ends on September 30 each year. Interim quarters are comprised of 13 weeks unless otherwise noted and end on the Sunday closest to December 31, March 31, and June 30. All references in the unaudited condensed consolidated financial statements to fiscal periods ended on December 31, March 31, or June 30 mean the interim quarters referred to above. 2. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements and should be read in conjunction with the consolidated financial statements and notes thereto for the fiscal year ended September 30, 2000, included in the Company's previously filed Form 10-KSB. The accompanying condensed consolidated financial statements reflect all adjustments (consisting solely of normal, recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of results for the interim periods presented. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full fiscal year. 3. Inventories Inventories are stated at the lower of cost (first-in, first-out) or market and consist of the following:
March 31, 2001 September 30, 2000 -------------- ------------------ Raw Materials $ 433 $ 423 Work-in-Process 5,363 4,538 Finished Goods 17 13 ------ ------ $5,813 $4,974 ====== ======
7 4. Earnings (Loss) Per Share A reconciliation of basic and diluted shares outstanding is as follows:
Quarter Ended Six Months Ended March 31, March 31, 2001 2000 2001 2000 ----- ----- ----- ----- Basic weighted average common shares outstanding 1,382 1,376 1,380 1,372 Weighted average common share equivalents -- 43 - - 44 ----- ----- ----- ----- Diluted weighted average shares outstanding 1,382 1,419 1,380 1,416 ===== ===== ===== =====
The following securities were not included in computing earnings per share because their effects would be anti-dilutive.
Quarter Ended Six Months Ended March 31, March 31, 2000 1999 2001 2000 ---- ---- ---- ------- Options to purchase common stock 232 133 215 134 ==== ==== ==== =======
5. Segment Reporting The Company views its operations and manages its business as two segments, Undersea Systems and Container Inspection Systems, as being strategic business units that offer different products. The Company evaluates performance of its operating segments based on revenues from external customers, income from operations and identifiable assets.
Quarter Ended Six Months Ended March 31, March 31, 2001 2000 2001 2000 ------ ------ ------- ------- Sales to Unafilliated Customers: Undersea Systems $3,468 $3,397 $ 6,383 $ 7,474 Container Inspection Systems 1,249 1,840 2,507 3,174 ------ ------ ------- ------- Total $4,717 $5,237 $ 8,890 $10,648 Income (Loss) from Operations: Undersea Systems $ (391) $ 96 $ (976) $ 309 Container Inspection Systems (64) 315 (266) 294 ------ ------ ------- ------- Total $ (455) $ 411 $(1,242) $ 603 Identifiable Assets: Undersea Systems $11,693 $11,990 Container Inspection Systems 3,275 2,481 Corporate Assets 1,951 3,557 ------- ------- Total $16,919 $18,028 ======= =======
8
Revenues by geographic area were as follows: Quarter Ended Six Months Ended March 31, March 31, 2001 2000 2001 2000 Geographic Area ------- ------ ----- ------ United States $3,269 $2,962 $6,148 $ 6,121 Other 1,448 2,275 2,742 4,527 ------ ------ ------ ------- Total $4,717 $5,237 $8,890 $10,648 ====== ====== ====== =======
6. Credit Facility The Company has a credit facility with a bank. This facility provides for loans under two notes: a $5,500 variable rate term note and a $700 variable rate revolving note. The term note is payable in 84 consecutive equal monthly installments of principal with interest at prime (8.0% at March 31, 2001) plus 0.50%. The term note matures in August 2006. The revolving note expires on January 31, 2002. Advances under the revolving note are payable as follows: monthly payments of interest only and unpaid principal and accrued and unpaid interest at maturity. The interest rate under the revolving note is prime (8.0% at March 31, 2001) plus 1.50%. There were $50 in advances outstanding under the revolving note as of March 31, 2001. The credit facility is secured by substantially all of the assets of the Company and requires the Company to meet certain covenants, including debt service coverage. During the second quarter, the bank reset the financial covenants under the credit facility for the remainder of the fiscal year based on updated projections received from the Company and reduced the amount of the variable rate revolving note from $2,000 to $700. As of March 31, 2001, the Company was in compliance with these revised covenants. 7. CEO Resignation In January of 2001, the CEO of the Company resigned. In connection with his resignation, the Company made a payment to the CEO of $55,000 in exchange for cancellation of his 64,500 outstanding stock options, continued availability to assist the Company for a specified period of time, and severance. This amount was recorded as compensation expense during the quarter ended March 31, 2001. 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Dollars in Thousands) Results of Operations -- Second quarter of fiscal year 2001 compared with second quarter of fiscal year 2000. The following table presents, for the periods indicated, the percentage relationship of Condensed Consolidated Statements of Operations items to total sales:
Quarter Ended March 31, 2001 March 31, 2000 --------------- --------------- (unaudited) Net Sales 100.0% 100.0% Cost of Sales 64.8% 50.4% ------ ----- Gross Profit 35.2% 49.6% Selling, General & Administrative Expenses 29.7% 30.6% Research and Development Expenses 12.5% 8.7% Amortization of Goodwill and Other Acquired Intangibles 2.6% 2.5% ------ ----- Income (Loss) from Operations (9.6)% 7.8% Interest Income .1% .2% Interest Expense (2.0)% (1.8)% ------ ----- Income (Loss) Before Provision (Benefit) for Income Taxes (11.5)% 6.2% Provision (Benefit) for Income Taxes (3.4)% 1.8% ------ ----- Net Income (Loss) (8.1)% 4.4% ====== =====
Sales. Net sales decreased by 9.9% in the second quarter of fiscal year 2001 to $4,717 as compared to $5,237 in the second quarter of fiscal year 2000. Sales of the Undersea Systems Division increased by 2.1% to $3,468 in the second quarter of fiscal year 2001 as compared to $3,397 in the second quarter of fiscal year 2000. This increase was experienced in the Company's acoustic and geophysical hydrophone product lines while the remaining product lines of the Undersea Systems Division experienced the continued softness in their served markets. Sales of the Container Inspection Systems Division decreased by 32.1% to $1,249 in the second quarter of fiscal year 2001 as compared to $1,840 in the second quarter of fiscal year 2000. The decrease resulted largely from large project orders in the second quarter of fiscal year 2000 which were not repeated in the second quarter of fiscal year 2001. Gross Profit. Gross Profit decreased by 36.1% to $1,661 for the second quarter of fiscal year 2001 as compared to $2,599 for the second quarter of fiscal year 2000. As a percentage of sales, gross profit was 35.2% in the second quarter of fiscal year 2001 as compared to 49.6% in the second quarter of fiscal year 2000. The decrease in gross profit percentage is attributed primarily to the higher sales mix of Undersea Systems Division products, which carry a lower gross profit than the products of the Container Inspection Systems Division and unabsorbed overhead resulting from decreased sales volume. 10 Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased by 12.6% to $1,400 for the second quarter of fiscal year 2001 as compared to $1,601 in the second quarter of fiscal year 2000. As a percentage of sales, selling, general and administrative expenses decreased to 29.7% in the second quarter of fiscal year 2001 as compared to 30.6% for the second quarter of fiscal year 2000. The decrease in selling, general, and administrative dollars and percent to sales is a result of the removal of duplicate expenses relating to the integration of the operations of Datasonics, Inc. and reduced headcount compared to the second quarter of fiscal year 2000. This was offset, somewhat, by expenses in the second quarter of fiscal year 2001 related to the resignation of the CEO, such as search fees for a successor and severance costs. Research and Development Expenses. Research and development expenses increased 29.1% to $590 for the second quarter of fiscal year 2001 as compared to $457 in the second quarter of fiscal year 2000. As a percentage of sales, research and development expenses increased to 12.5% of sales in the second quarter of fiscal year 2001 from 8.7% in the second quarter of fiscal year 2000. The increase in the overall level of expenditures is due to investments in new product development and is consistent with the Company's current operational plans. Amortization of Goodwill and Other Acquired Intangibles. Amortization of goodwill and other acquired intangibles was $126 in the second quarter of fiscal year 2001 as compared to $130 in the second quarter of fiscal 2000. The amortization of goodwill and other acquired intangibles relates to the Datasonics acquisition in fiscal year 1999. Interest Income. Interest income decreased to $6 in the second quarter of fiscal year 2001 as compared to $12 in the second quarter of fiscal year 2000. The decrease in interest income was a result of lower invested cash balances. Interest Expense. Interest Expense decreased to $93 in the second quarter of fiscal year 2001 as compared to $96 in the second quarter of fiscal year 2000. The decrease in interest expense dollars was a result of reduced principal on the variable rate term loan used to finance the Datasonics acquisition. Provision (Benefit) for Income Taxes. The provision (benefit) for income taxes decreased to $(162) in the second quarter of fiscal year 2001 as compared to $98 in the second quarter of fiscal year 2000. The effective tax rate used in the second quarter of fiscal years 2001 and 2000 was 30.0%. The rate used is lower than the statutory rate due primarily to the benefit from the Company's Foreign Sales Corporation. 11 Management's Discussion and Analysis of Financial Condition and Results of Operations (Dollars in thousands) Results of Operations - Six months of fiscal year 2001 compared with six months of fiscal year 2000. The following table presents, for the periods indicated, the percentage relationship of Condensed Consolidated Statements of Operations items to total sales:
Six Months Ended March 31, 2001 March 31, 2000 ----------------- --------------- Net Sales 100.0% 100.0% Cost of Sales 68.6% 55.6% ------ ----- Gross Profit 31.4% 44.4% Selling, General & Administrative Expenses 30.1% 27.6% Research and Development Expenses 12.4% 8.7% Amortization of Goodwill and Other Acquired Intangibles 2.8% 2.4% ------ ----- Income (Loss) from Operations (13.9)% 5.7% Interest Income .3% .4% Interest Expense (2.2)% (2.0)% ------ ----- Income (Loss) Before Provision (Benefit) for Income Taxes (15.8)% 4.1% Provision (Benefit) for Income Taxes (4.7)% 1.2% ------ ----- Net Income (Loss) (11.1)% 2.9% ====== =====
Sales. Net sales decreased by 16.5% in the first six months of fiscal year 2001 to $8,890 as compared to $10,648 in the first six months of fiscal year 2000. Sales of the Undersea Systems Division increased by 14.6% to $6,383 in the first six months of fiscal year 2001 as compared to $7,474 in the first six months of fiscal year 2000. This decrease is a result of continued softness in the markets served by the Undersea Systems Division. The decrease in sales extended to almost all of the product areas, with the exception of acoustic and geophysical hydrophone product lines, as compared to the first six months of fiscal year 2000. Sales of the Container Inspection Systems Division decreased by 21.0% to $2,507 in the first six months of fiscal year 2001 as compared to $3,174 in the first six months of fiscal year 2000. The decrease resulted largely from large project orders in the second quarter of fiscal year 2000 which were not repeated in the second quarter of fiscal year 2001. Gross Profit. Gross Profit decreased by 41.0% to $2,788 for the first six months of fiscal year 2001 as compared to $4,724 for the first six months of fiscal year 2000. As a percentage of sales, gross profit was 31.4% in the first six months of fiscal year 2001 as compared to 44.4% in the first six months of fiscal year 2000. The decrease in gross profit percentage is attributed primarily to the higher sales mix of Undersea Systems Division products, which carry a lower gross profit than the products of the Container Inspection Systems Division, unabsorbed overhead resulting from decreased sales volume, and inventory related provisions. 12 Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased by 9.0% to $2,680 for the first six months of fiscal year 2001 as compared to $2,945 in the first six months of fiscal year 2000. As a percentage of sales, selling, general and administrative expenses increased to 30.1% in the first six months of fiscal year 2001 as compared to 27.6% for the first six months of fiscal year 2000. The decrease in selling, general, and administrative expenses in dollars is a result of the removal of duplicate expenses relating to the integration of the operations of Datasonics, Inc. and reduced headcount compared to the first six months of fiscal year 2000. This was offset, somewhat, by expenses in the first six months of fiscal year 2001 related to the resignation of the CEO, such as search fees for a successor and severance costs. The increase in percent to sales is related to the decrease in sales volume. Research and Development Expenses. Research and development expenses increased 19.1% to $1098 for the first six months of fiscal year 2001 as compared to $922 in the first six months of fiscal year 2000. As a percentage of sales, research and development expenses increased to 12.4% of sales in the first six months of fiscal year 2001 from 8.7% in the first six months of fiscal year 2000. The increase in the overall level of expenditures is due to investments in new product development. The level of expenditures is consistent with the Company's current operational plans. Amortization of Goodwill and Other Acquired Intangibles. Amortization of goodwill and other acquired intangibles was $252 in the first six months of fiscal year 2001 as compared to $254 in the second quarter of fiscal 2000. The amortization of goodwill and other acquired intangibles relates to the Datasonics acquisition in fiscal year 1999. Interest Income. Interest income decreased to $27 in the first six months of fiscal year 2001 as compared to $41 in the first six months of fiscal year 2000. The decrease in interest income was a result of lower invested cash balances. Interest Expense. Interest expense was $197 in the first six months of fiscal year 2001 as compared to $205 in the first six months of fiscal year 2000. The decrease in interest expense dollars was a result of reduced principal on the variable rate term loan used to finance the Datasonics acquisition. Provision (Benefit) for Income Taxes. The provision (benefit) for income taxes decreased to $(423) in the first six months of fiscal year 2001 as compared to 132 in the first six months of fiscal year 2000. The effective tax rate used in the first halves of fiscal years 2001 and 2000 was 30.0%. The rate used is lower than the statutory rate due primarily to the benefit from the Company's Foreign Sales Corporation Liquidity and Capital Resources. The Company's cash and cash equivalents decreased $1,423 from September 30, 2000 to March 31, 2001. Cash of $673 was used in operating activities, primarily the result of the net loss incurred during the first six months of fiscal year 2001 offset by depreciation and amortization and changes in operational assets and liabilities. The Company also used $407 and $343 of cash in its investing and financing activities, respectively. Investing activities represents primarily the purchase of capital equipment and financing activities represents the payment of the installment payments on the term note and borrowing under the revolving note. The Company has a credit facility with a bank. This facility provides for loans under two notes: a $5,500 variable rate term note and a $700 variable rate revolving note. The term note is payable in 84 consecutive equal monthly installments of principal with interest at either prime (8.0% at March 31, 2001) plus 0.50%. The term note matures in August 2006. The revolving note expires on January 31, 2002. Advances under the revolving note are payable as follows: monthly payments of interest only and unpaid principal and accrued and unpaid interest at maturity. The interest rate under the revolving note is prime (8.0% at March 31, 2001) plus 1.5%. There were $50 in advances outstanding under the revolving note as of March 31, 2001. The credit facility is secured by substantially all of the assets of the Company and requires the Company to meet certain covenants, including debt service coverage. During the second quarter, the bank reset the financial covenants under the credit facility for the remainder of the fiscal year based on updated projections received from the Company and reduced the amount of the variable rate revolving note from $2,000 to $700. As of March 31, 2001, the Company was in compliance with these revised covenants. 13 The Company believes it is well positioned to finance future working capital requirements and capital expenditures during the next twelve months through cash on hand and available credit facilities. "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995. The statements in this Quarterly Report on Form 10-QSB and in oral statements which may be made by representatives of the Company relating to plans, strategies, economic performance and trends and other statements that are not descriptions of historical facts may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking information is inherently subject to risks and uncertainties, and actual results could differ materially from those currently anticipated due to a number of factors which include: the timing of large project orders, competitive factors, shifts in customer demand, government spending, economic cycles, availability of financing as well as the factors described in this report. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those described herein as anticipated, believed, estimated, expected or intended. 14 PART II -- OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits The exhibits set forth in the Exhibit Index on the following page are filed herewith as a part of this report. (b) Reports on Form 8-K None SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BENTHOS, INC By /s/ Francis E. Dunne, Jr. Francis E. Dunne, Jr. Vice President, Chief Financial Officer, and Treasurer (Principal Financial and Accounting Officer) DATE: May 14, 2001 BENTHOS, INC. EXHIBIT INDEX
Exhibit - ------- 3.1 Restated Articles of Organization (1) 3.2 Articles of Amendment dated April 28, 1997 (2) 3.3 Articles of Amendment dated April 20, 1998 (5) 3.4 By-Laws (1) 3.5 By-Law Amendments adopted January 23, 1998 (4) 4.1 Common Stock Certificate (1) 10.1 Employment Contract with Samuel O. Raymond (1) 10.2 Amendment to Employment Contract with Samuel O. Raymond (2) 10.3 Employment Contract with John L. Coughlin (1) 10.4 Amended and Restated Employment Agreement with John L. Coughlin (10) 10.5 Severance Agreement with John L. Coughlin (13) 10.6 Employment Agreement with Francis E. Dunne, Jr. (11) 10.7 Employee Stock Ownership Plan (1) 10.8 First Amendment to Employee Stock Ownership Plan (2) 10.9 Second Amendment to Employee Stock Ownership Plan (8) 10.10 Third Amendment to Employee Stock Ownership Plan (8) 10.11 Fourth Amendment to Employee Stock Ownership Plan (11) 10.12 Fifth Amendment to Employee Stock Ownership Plan (11) 10.13 401(k) Retirement Plan (1993)(1) 10.14 First Amendment to 401(k) Retirement Plan (2) 10.15 Second Amendment to 401(k) Retirement Plan (2) 10.16 Third Amendment to 401(k) Retirement Plan (3) 10.17 401(k) Retirement Plan (1999)(8)
10.18 First Amendment to 1999 401(k) Retirement Plan (11) 10.19 Second Amendment to 1999 401(k) Retirement Plan (11) 10.20 Third Amendment to 1999 401(k) Retirement Plan 10.21 Supplemental Executive Retirement Plan (1) 10.22 1990 Stock Option Plan (1) 10.23 Stock Option Plan for Non-Employee Directors(1) 10.24 1998 Non-Employee Directors' Stock Option Plan (4) 10.25 Benthos, Inc. 2000 Stock Incentive Plan (9) 10.26 License Agreement between the Company and The Penn State Research Foundation dated December 13, 1993 (1) 10.27 Technical Consultancy Agreement between the Company and William D. McElroy dated July 12, 1994 (1) 10.28 Technical Consultancy Agreement between the Company and William D. McElroy dated October 1, 1996 (3) 10.29 General Release and Settlement Agreement between the Company and Lawrence W. Gray dated February 8, 1996 (1) 10.30 Line of Credit Loan Agreement between the Company and Cape Cod Bank and Trust Company dated September 24, 1990, as amended (1) 10.31 Commercial Mortgage Loan Extension and Modification Agreement between the Company and Cape Cod Bank and Trust Company, dated July 6, 1994 (1) 10.32 Credit Agreement between the Company and Cape Cod Bank and Trust Company dated August 18, 1999 (8) 10.33 First Amendment to Credit Agreement dated March 23, 2001 10.34 License Agreement between the Company and Optikos Corporation dated July 29, 1997 (3) 10.35 Hydrophone License Agreement between the Company and Syntron, Inc. dated December 5, 1996 (6) 10.36 Amendment Number 1 to Hydrophone License Agreement between the Company and Syntron, Inc. dated September 11, 1998 (6) 10.37 Asset Purchase Agreement among Benthos, Inc., Datasonics, Inc., and William L. Dalton and David A. Porta (7) 21 Subsidiaries of the Registrant (1) (1) Previously filed as an exhibit to Registrant's Registration Statement on Form 10-SB filed with the Commission on December 17, 1996 (File No. O-29024) and incorporated herein by this reference. (2) Previously filed as an exhibit to Registrant's Quarterly Report on Form 10-QSB for the quarterly period ended March 30, 1997 (File No. O- 29024) and incorporated herein by this reference. (3) Previously filed as an exhibit to Registrant's Quarterly Report on Form 10-QSB for the quarterly period ended June 29, 1997 (File No. O-29024) and incorporated herein by this reference. (4) Previously filed as an exhibit to the Registrant's Quarterly Report on Form 10-QSB for the quarterly period ended December 31, 1997 (File No. O-29024) and incorporated herein by this reference. (5) Previously filed as an exhibit to the Registrant's Quarterly Report on Form 10-QSB for the quarterly period ended March 31, 1998 (File No. 0-29024) and incorporated herein by this reference. (6) Previously filed as an exhibit to the Registrant's Quarterly Report on Form 10-QSB for the quarterly period ended December 31, 1998 (File No. 0-29024) and incorporated herein by this reference. (7) Previously filed as an exhibit to Registrant's Current Report on Form 8-K filed on or about August 27, 1999 (File No. 0-29024) and incorporated herein by this reference. (8) Previously filed as an exhibit to Registrant's Annual Report on Form 10-KSB for the fiscal year ended September 30, 1999 (File No. 0-29024) and incorporated herein by this reference. (9) Previously filed as an exhibit to the Registrant's definitive proxy statement filed on Schedule 14A on or about January 18, 2000 and incorporated herein by this reference. (10) Previously filed as an exhibit to the Registrant's Quarterly Report on Form 10-QSB for the quarterly period ended December 31, 1999 (File No. 0-29024) and incorporated herein by this reference. (11) Previously filed as an exhibit to the Registrant's Quarterly Report on Form 10-QSB for the quarterly period ended June 30, 2000 (File No. 0-29024) and incorporated herein by this reference. (12) Previously filed as an exhibit to the Registrant's Annual Report on Form 10-KSB for the fiscal year ended September 30, 2000 (File No. 0- 29024) and incorporated herein by this reference. (13) Previously filed as an exhibit to Amendment No. 1 to the Registrant's Annual Report on Form 10-KSB for the fiscal year ended September 30, 2000 (File No. 0-29024) and incorporated herein by this reference. EX-10.20 2 dex1020.txt 3RD AMENDMENT TO 1999 401K PLAN EXHIBIT 10.20 ------------- THIRD AMENDMENT TO THE BENTHOS, INC. 401(K) RETIREMENT PLAN Benthos, Inc. (the "Employer") having heretofore adopted the Benthos, Inc. 401(k) Retirement Plan, a prototype plan document consisting of the Plan Agreement #001 and the Putnam Basic Plan Document #07 (the "Plan") effective as of July 1, 1999, pursuant to the power reserved to the Employer in Section 17.1 of the Plan, hereby amends the Plan Agreement as set forth below. 1. Subsection E. of Section 1., of the Plan Agreement is hereby amended effective October 1, 2000, by striking said subsection in its entirety and by substituting the following new paragraph in lieu thereof: "E. Employer Contract: Name: Francis E. Dunne, Jr. ----------------- --------------------- Title: Vice President, CFO, Treasurer ------------------------------ Phone #: 508-563-1000 ------------ Name: Robert J. Mulvaney ------------------ Title: Controller ---------- Phone #: 508-563-1000" ------------ 2. In all other respects, the Plan provisions remain in full force and effect. IN WITNESS WHEREOF, the Employer has caused the Third Amendment to the Plan to be duly executed in its name and behalf and its corporate seal to be affixed as of the date signed below.
ATTEST: BENTHOS, INC. PUTNAM FIDUCIARY TRUST COMPANY By: /s/ Francis E. Dunne, Jr. By: /s/ Tina A. Campbell ------------------------------ ------------------------------- Print Name: Francis E. Dunne, Jr. Print Name: Tina A. Campbell ------------------------------ ----------------------------- Title: Vice President, CFO, Treasurer Title: SVP Compliance and Consulting ------------------------------ ----------------------------- Date: 2/8/01 Date: 2/27/01 ------------------------------ -----------------------------
EX-10.33 3 dex1033.txt FIRST AMENDMENT TO CREDIT AGREEMENT DATED 3/23/2001 EXHIBIT 10.33 ------------- FIRST AMENDMENT TO CREDIT AGREEMENT AND AMENDMENT TO REVOLVING NOTE AND TERM NOTE --------------------------------------------- This First Amendment to Credit Agreement and Amendment to Revolving Note and Term Note is made as of this 23rd day of March, 2001, by and between Cape Cod Bank and Trust Company ("Lender"), a Massachusetts banking corporation, with a principal place of business at 2 Barlows Landing Road, Pocasset, Massachusetts 02559 and Benthos, Inc. ("Borrower"), a Massachusetts corporation with its principal place of business at 49 Edgerton Drive, North Falmouth, Massachusetts 02556. R E C I T A L S: - - - - - - - - A. Borrower and Lender entered into a certain Credit Agreement dated August 18, 1999 regarding certain Revolving Loans and a Term Loan as defined therein, pursuant to which Borrower executed and delivered to Lender a Revolving Note and a Term Note; B. Borrower and Lender have previously amended the Revolving Note pursuant to an Amendment of Promissory Note dated December 8, 2000, and amended the Term Note pursuant to an Amendment of Commercial Variable Rate Promissory Note dated October 17, 2000. C. Borrower and Lender now desire to amend the Credit Agreement and to further amend each of the Revolving Note and the Term Note as set forth herein and simultaneously herewith Borrower and Lender shall execute and deliver a Second Amendment To Commercial Variable Rate Revolving or Draw Note in the form of Exhibit A attached hereto and a Second Amendment to Commercial Variable Rate Promissory Note in the form of Exhibit B attached hereto. A G R E E M E N T S: - - - - - - - - - - Now, therefore, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Lender and the Borrower hereby agree as follows: 1. Capitalized terms used herein shall have the meaning given to them in the Credit Agreement unless separately defined herein. 2. As of March 22, 2001, the outstanding principal balance of this Revolving Loan under the Revolving Note is Three Hundred Thousand Dollars ($300,000.00) and the outstanding principal balance of the Term Loan under the Term Note is Four Million Two Hundred Fifty-Five Thousand Nine Hundred Fifty-Two and 39/100 Dollars ($4,255,952.39). 3. The Expiration Date of the Revolving Loan (and the maturity date of the Revolving Note) is hereby extended to January 31, 2002. 4. The Revolving Commitment Amount is hereby reduced from Two Million Dollars ($2,000,000.00) to Seven Hundred Thousand Dollars ($700,000.00). 5. The rate of interest payable on the Revolving Loans is hereby changed to a variable rate per annum equal to the Prime Rate plus one and one-half percent (1 1/2%). Accordingly, the second sentence of Section 2.04(a) of the Credit Agreement is hereby deleted and replaced with the following: "The rate of interest so payable shall be a fluctuating rate per annum which at all times shall be equal to the sum of the Prime Rate plus one and one-half percent (1 1/2%), but, in no event, in excess of the maximum rate then permitted by applicable law, with a change in such rate to become effective on the same day on which any change in the Prime Rate is effective." 6. The rate of interest payable on the Term Loan is hereby changed to a variable rate per annum equal to the Prime Rate plus one-half percent ( 1/2%). 7. Section 8.02 of the Credit Agreement is hereby deleted in its entirety and replaced with the following: "Section 8.02. Financial Covenants. ------------------- The Borrower covenants and agrees that, so long as any loan is outstanding or any obligation of the Borrower to the Lender, in any capacity, remains unpaid, or any commitment by the Lender to the Borrower is in effect: a. The Borrower will maintain a ratio of Current Assets to Current Liabilities of greater than or equal to 1.50 to 1.00; b. The Borrower shall maintain a ratio of Total Debt to Tangible Net Worth less than or equal to 2.00 to 1.00; and c. The Borrower shall maintain a ratio of Cash Flow to Debt Service Payments, which on a cumulative basis for the applicable calendar year, shall be greater than or equal to the following: (i) -.50 to 1.00 as of March 31, 2001; (ii) .34 to 1.00 as of June 30, 2001; and (iii) .74 to 1.00 as of September 30, 2001 and thereafter. d. Borrower shall monthly, on or before the fifteenth (15th) of each month for the immediately prior month, provide to Lender an accounts receivable aging report, an inventory report and a backlog backlog report. 2 8. Except as provided herein, the Credit Agreement shall remain unchanged and as amended hereby, the Credit Agreement is hereby ratified and confirmed. Witness: BENTHOS, INC. /s/ Francis E. Dunne, Jr. By: /s/ Stephen D. Fantone ------------------------- Name: Stephen D. Fantone Title: President & CEO Witness: CAPE COD BANK AND TRUST COMPANY /s/ Stephen Sooy By: /s/ Timothy F. Kelleher - ----------------- ---------------------------- Name: Timothy F. Kelleher Title: Senior Vice President 3 -----END PRIVACY-ENHANCED MESSAGE-----