-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, EQGkGj5Y4rZzjJHINaZg2VWXzZ6bYhn0dFamnea8j4L1S7I+aYvw6Z9WfwzwWOfM vlmZGSygChzvJFePfeR5Eg== 0000950135-95-001166.txt : 19950607 0000950135-95-001166.hdr.sgml : 19950607 ACCESSION NUMBER: 0000950135-95-001166 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950512 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: IPL SYSTEMS INC CENTRAL INDEX KEY: 0000351810 STANDARD INDUSTRIAL CLASSIFICATION: 3572 IRS NUMBER: 042511897 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-10370 FILM NUMBER: 95538020 BUSINESS ADDRESS: STREET 1: 124 ACTON ST CITY: MAYNARD STATE: MA ZIP: 01754 BUSINESS PHONE: 5084611000 MAIL ADDRESS: STREET 2: 124 ACTON STREET CITY: MAYNARD STATE: MA ZIP: 01754 10-Q 1 IPL SYSTEMS, INC. 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ----------------------------- X Quarterly Report Under Section 13 or 15(d) of the Securities Exchange - - --- Act of 1934 FOR QUARTER ENDED MARCH 31, 1995. --------------- 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 0-10370 IPL SYSTEMS, INC. (Exact name of Registrant as specified in its charter) ----------------------------- MASSACHUSETTS 04-2511897 (State or jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 124 ACTON STREET, MAYNARD, MASSACHUSETTS 01754 (Address of principal executive offices and Zip Code) (508) 461-1000 (Registrant s Telephone Number, including area code) ----------------------------- ________________________________________________________________________ Former name, former address, and former fiscal year, if changed since last report. Indicate by a 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 periods 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 --- --- APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. CLASS OUTSTANDING AT MARCH 31, 1995 ----- ----------------------------- Class A $.01 par value 4,504,776 Class C $.01 par value 879,743 1 2 IPL SYSTEMS, INC. ----------------- FORM 10-Q INDEX ---------------
Page No. -------- Part I. Financial Information Item 1. Consolidated Financial Statements Consolidated Balance Sheets - March 31, 1995 (Unaudited) and December 31, 1994....................................... 3 Consolidated Statements of Operations (Unaudited) - Three Months Ended March 31, 1995 and March 31, 1994 ..................................................... 4 Consolidated Statements of Cash Flows (Unaudited) - Three Months Ended March 31, 1995 and March 31, 1994.................................................................... 5 Notes to Unaudited Quarterly Consolidated Statements.................... 6-7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations .................................... 8-9 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K ....................................... 10 Signatures ............................................................. 11
2 3 PART I. FINANCIAL INFORMATION - - ----------------------------- Item 1. Consolidated Financial Statements IPL SYSTEMS, INC. ----------------- CONSOLIDATED BALANCE SHEETS --------------------------- (Thousands of Dollars)
ASSETS ------ (Unaudited) March 31, 1995 December 31, 1994 -------------- ----------------- Current Assets: Cash and equivalents $ 4,400 $ 2,239 Accounts receivable - net 4,477 8,615 Inventories 3,283 3,060 Refundable income taxes 1,425 1,425 Prepaid expenses and other current assets 449 358 ------- ------- Total Current Assets 14,034 15,697 Equipment and Improvements, net 2,820 3,067 ------- ------- Total Assets $16,854 $18,764 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ Current Liabilities: Accounts payable and accrued expenses $ 6,279 $ 7,412 Shareholders' Equity: Class A Common Stock, par value $.0l: Authorized, 20,000,000 shares; issued and outstanding, 4,504,776 and 4,501,776 shares 45 45 Convertible Class C Common Stock, par value $.0l: Authorized, 2,250,000 issued and outstanding 879,743 shares 9 9 Additional paid-in capital 16,585 16,577 Deficit (6,064) (5,279) ------- ------- Total Shareholders' Equity 10,575 11,352 ------- ------- Total Liabilities and Shareholders' Equity $16,854 $18,764 ======= =======
See notes to unaudited quarterly consolidated financial statements. 3 4 PART I. FINANCIAL INFORMATION - Continued - - ------------------------------------------- IPL SYSTEMS, INC. ----------------- CONSOLIDATED STATEMENTS OF OPERATIONS ------------------------------------- (Unaudited) (Thousands of Dollars, Except Per Share Amounts)
Three Months Ended March 31, March 31, 1995 1994 ---------- ---------- Revenue $ 6,517 $ 7,542 Cost of sales 4,193 4,861 ---------- ---------- Gross profit 2,324 2,681 Expenses: Selling, general and administrative 2,833 4,007 Engineering and development 330 513 ---------- ---------- Operating loss ( 839) (1,839) Other income: Interest 35 22 Other, net 19 51 ---------- ---------- 54 73 ---------- ---------- Loss before income taxes ( 785) ( 1,766) Income tax benefit - 600 ---------- ---------- Net loss $ ( 785) $ ( 1,166) ========== ========== Net loss per share $ (0.15) $ (0.22) ========== ========== Common and common equivalent shares used in the calculation of loss per share 5,382,119 5,381,519 ========== ==========
See notes to unaudited quarterly consolidated financial statements. 4 5 PART I. FINANCIAL INFORMATION - Continued - - ------------------------------------------ IPL SYSTEMS, INC. ----------------- CONSOLIDATED STATEMENTS OF CASH FLOWS ------------------------------------- (Unaudited) (Thousands of Dollars)
Three Months Ended ------------------ March 31, March 31, 1995 1994 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss........................................................... $ (785) $ (1,166) --------- --------- Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization.................................. 290 431 Changes in assets and liabilities: Accounts receivable.......................................... 4,138 6,489 Inventories ................................................. (223) 1,034 Prepaid expenses and other current assets ................... (91) (849) Accounts payable and accrued expenses ....................... (1,133) (4,429) --------- --------- Total adjustments .............................. 2,981 2,676 --------- --------- Net cash provided by operating activities......................... 2,196 1,510 CASH FLOWS FROM INVESTING ACTIVITIES: Additions to equipment and improvements........................... (43) (536) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of stock .................................. 8 - --------- --------- CASH AND EQUIVALENTS: Net increase ..................................................... 2,161 974 BALANCE, beginning of period...................................... 2,239 4,131 --------- --------- BALANCE, end of period............................................ $ 4,400 $ 5,105 ========= ========= SUPPLEMENTARY CASH FLOW INFORMATION: Taxes paid........................................................ $ - $ 15 ========= =========
See notes to unaudited quarterly consolidated financial statements. 5 6 PART I. FINANCIAL INFORMATION - Continued - - ------------------------------------------ IPL SYSTEMS, INC. ----------------- NOTES TO UNAUDITED QUARTERLY CONSOLIDATED STATEMENTS ---------------------------------------------------- 1. Financial Statements -------------------- The consolidated balance sheet as of March 31, 1995, and the consolidated statements of operations and cash flows for the three month periods ended March 31, 1995 and March 31, 1994 have been prepared by the Company without audit. The consolidated financial statements include the accounts for the Company and its wholly-owned subsidiaries, IPL Investments, Inc. and IPL Foreign Sales Corporation. All intercompany accounts and transactions have been eliminated. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position of the Company as of March 31, 1995, and for all periods presented, have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to the Securities and Exchange Commission rules and regulations. It is suggested that these financial statements be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 1994, including the audited financial statements and related notes included therein. The results of operations for the period ended March 31, 1995 are not necessarily indicative of the operating results for the full year. 2. Accounts Receivable ------------------- Accounts receivable consist of the following:
(Thousands of dollars) March 31, 1995 December 31, 1994 -------------- ----------------- Total accounts receivable $7,776 $12,283 Less allowance for doubtful accounts 3,299 3,668 ------ ------- Net Accounts Receivable $4,477 $ 8,615 ====== =======
6 7 PART I. FINANCIAL INFORMATION - Continued - - ------------------------------------------ 3. Equipment and Improvements -------------------------- Equipment and improvements consist of the following:
(Thousands of dollars) March 31, 1995 December 31, 1994 -------------- ----------------- Customer support $3,191 $3,167 Manufacturing equipment 4,836 4,815 Office equipment & fixtures 2,410 2,412 Leasehold improvements 1,335 1,335 ------ ------ 11,772 11,729 Less accumulated depreciation 8,952 8,662 ------ ------ $2,820 $3,067 ====== ======
4. Income Taxes ------------ There was no income tax benefit recorded in the first quarter of 1995 as the Company fully utilized the benefit from its tax net operating loss carryback in 1994. The deferred tax asset of approximately $250,000 resulting from the operating loss has been fully reserved. The $600,000 income tax benefit recorded in the first quarter of 1994 was the result of the operating loss and the anticipated utilization of that loss during the remainder of 1994. 5. Restructuring ------------- In November 1994, the Company approved and executed a restructuring program (the "Plan") to focus future product development and sales efforts in the open systems market. As a result of this change, the Company streamlined its operations by reducing its workforce, consolidating and closing certain facilities and writing off idle and excess assets. A restructuring charge of $1,971,000 was recorded in 1994. The payments made in the first quarter of 1995 and the accrual at December 31, 1994 and March 31, 1995 are as follows:
Remaining Accrual at Paid in Accrual at December 31, 1994 First Quarter March 31, 1995 ----------------- ------------- -------------- Occupancy Costs $ 471 $ 114 $ 357 Severance Costs 88 80 8 ----- ----- ----- $ 559 $ 194 $ 365 ===== ===== =====
The occupancy costs will be paid out in 1995 through 1998 and the remaining severance costs will be paid out in the second quarter of 1995. There have been no changes to the Plan, the estimate of Plan costs or to the original Plan assumptions. 7 8 Item 2. Management s Discussion and Analysis of Financial Condition and --------------------------------------------------------------- Results of Operations --------------------- RESULTS OF OPERATIONS --------------------- Quarterly Results ----------------- Revenue for the first quarter of 1995 was $6,517,000 compared with $7,542,000 for the first quarter of 1994. This decline in revenue is the result of the Company's 1994 reengineering of its sales strategy focusing on new, more profitable markets. U.S. sales declined 22% from $4,363,000 in the first quarter of 1994 to $3,400,000 in the first quarter of 1995, primarily the result of reduced sales through the AS/400 STAR channel of distribution. The Company's transition to sales of open systems products is in the early stages and has not fully offset the changes in AS/400 product sales. International revenues were approximately the same in the first quarter of 1995 compared with the first quarter of 1994. Disk revenue decreased 21% to $4,876,000 in the first quarter of 1995 compared with $6,142,000 in the first quarter of 1994. Tape revenue increased 18% to $976,000 in the first quarter of 1995 compared with $830,000 in the first quarter of 1994. The first quarter revenues are historically significantly lower than the fourth quarter of the previous year. The first quarter of 1995 revenue was at 80% of the fourth quarter of 1994 revenue, following the last three years in which the first quarter revenues were 50-60% lower than the revenues of the prior fourth quarter. Management believes this is the result of open systems sales which represented approximately 18% of total first quarter sales and 26% of U.S. sales. Gross margins in the first quarter of 1995 were 35.7% compared to 35.5% in the first quarter of 1994. The gross margins for the second and third quarters of 1994 were 21.0% and 25.7%. The gross margin was (36.8%) for the fourth quarter of 1994 and 10% for the year ended 1994 and reflected certain charges recorded in the fourth quarter (see the Company's Annual Report on Form 10-K for 1994). Compared with 1994, the improved gross margin for the first quarter of 1995 reflected the lower cost structures resulting from the 1994 reengineering, sales to the open systems market, and a partial recovery of a doubtful accounts receivable. Selling, general and administrative expenses decreased approximately 29% to $2,833,000 in the first quarter of 1995 compared with $4,007,000 in the first quarter of 1994. This $1,174,000 decrease is primarily related to the reengineering of the Company's operations during 1994 and ongoing aggressive expense management. Engineering and development expenses declined $183,000 in the first quarter of 1995 compared with the first quarter of 1994. This decrease is principally due to lower overhead resulting from the 1994 restructuring and reduced costs associated with the development of open systems products. 8 9 In the fourth quarter of 1994, the Company recorded a $1,971,000 charge to restructure the Company's operations. The Company's restructuring plan substantially reduced its cost structure and refocused product development and sales efforts on the open systems market in addition to the Company's traditional AS/400 markets. There were no changes in the first quarter of 1995 to the restructure plan, the estimate of plan costs or to the original plan assumptions. The loss before income taxes for the first three months of 1995 was $785,000 compared with $1,766,000 for the comparable period of 1994. The improvement is primarily due to the reduction in operating expenses. Due to the absence of any income tax benefit, the Company's reported net loss was also $785,000, or $(0.15) per share compared with a net loss of $1,166,000, or $(0.22) per share, for the first quarter last year. There was no income tax benefit recorded in the first quarter of 1995 as the Company fully utilized the benefit from its tax net operating loss carryback in 1994. The deferred tax asset of approximately $250,000 resulting from the operating loss has been fully reserved. The $600,000 income tax benefit recorded in the first quarter of 1994 was the result of the operating loss and the anticipated utilization of that loss during the remainder of 1994. LIQUIDITY AND CAPITAL RESOURCES ------------------------------- The Company's cash and equivalents as of March 31, 1995 increased 97% to $4,400,000 compared to the 1994 year end level of $2,239,000. Accounts receivable balances decreased by 48% to $4,477,000 at March 31, 1995 from $8,615,000 at December 31, 1994. There was a 25 day improvement in the days sales outstanding from 96 days in the fourth quarter of 1994 to 71 days at March 31, 1995. Inventories increased slightly from $3,060,000 at December 31, 1994 to $3,283,000 at March 31, 1995. Management continues to focus its efforts toward aggressive asset management. Accounts payable and accrued expenses decreased by $1,133,000, or 15%, primarily due to reduced material requirements. Cash provided by operations through the first three months of 1995 was $2,196,000 compared to $1,510,000 in the same period of 1994, an increase of $686,000, or 45%. The Company is continuing to evaluate its external financing requirements for future growth of its business and alternatives for such financing during 1995. Management believes that its cash and equivalents, cash provided by operations, and other capital resources will be sufficient to meet its operating and capital requirements for its existing business. The Company remains free of any short-term and long-term debt obligations. 9 10 PART II. OTHER INFORMATION - Continued - - -------------------------------------- Item 6. Exhibits and Reports on Form 8-K ----------------------------------------- (a) Exhibits -------- Exhibit 11 - Computation of Net Loss Per Common Share - Page 13 Exhibit 27 - Financial Data Schedule (b) Reports on Form 8-K ------------------- No reports on Form 8-K were filed with the Securities and Exchange Commission during the fiscal quarter ended March 31, 1995. 10 11 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. IPL SYSTEMS, INC. ----------------- DATE: May 8, 1995 By: Gregory R. Grodhaus ---------------------------- Gregory R. Grodhaus President Chief Executive Officer By: Eugene F. Tallone ---------------------------- Eugene F. Tallone Chief Financial Officer Principal Accounting Officer 11 12 IPL SYSTEMS, INC. FORM 10-Q, MARCH 31, 1995 EXHIBIT INDEX -------------
Exhibit No. Description Page No. ------- ----------- -------- 11 Computation of weighted average shares used in computing earnings per share amounts. Filed herewith 13 27 Financial Data Schedule
12 EX-11 2 COMPUTATION OF NET LOSS PER COMMON SHARE 1 EXHIBIT 11 IPL SYSTEMS, INC. ----------------- COMPUTATION OF NET LOSS PER COMMON SHARE ---------------------------------------- (Thousands of dollars except per share amounts)
Three Months Ended ------------------ March 31, March 31, 1995 1994 ---------- ---------- Primary - - ------- Net loss $ ( 785) $ (1,166) ========== ========== Weighted average shares outstanding 5,382,119 5,381,519 Dilutive stock options based on the treasury stock method using average market price for the period - - ---------- ---------- Common shares used in calculation of net loss per share 5,382,119 5,381,519 ========== ========== Net loss per share $ ( 0.15) $ (0.22) ========== ========== Fully Diluted - - ------------- Net loss $ ( 785) $ (1,166) ========== ========== Weighted average shares outstanding 5,382,119 5,381,519 Dilutive stock options based on the treasury stock method using the higher of average or period end market price (A) 179,680 52,218 ---------- ---------- Common shares used in calculation of net loss per share 5,561,799 5,433,737 ========== ========== Net loss per share $ (0.14) $ (0.21) ========== ========== (A) This calculation is presented in accordance with Item 601 of Regulation S-X although it is not required by Paragraph 14 of APB Opinion No 15.
13 EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 U.S. DOLLARS 3-MOS DEC-31-1995 JAN-01-1995 MAR-31-1995 1 4,400 0 7,776 3,299 3,283 14,034 11,772 8,952 16,854 6,279 0 54 0 0 10,521 16,854 6,517 6,517 4,193 4,193 0 0 0 (785) 0 (785) 0 0 0 (785) (.15) (.14)
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