-----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, WbH3RGA5vB7yL9c0mC5A3OWvt6j159O7qVc7ImH+WLQcBx89UbWn2bOFDu8VhOha mFIiDyMXNRNwjo1R0x/IZw== 0000950109-95-001236.txt : 19950420 0000950109-95-001236.hdr.sgml : 19950420 ACCESSION NUMBER: 0000950109-95-001236 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950228 FILED AS OF DATE: 19950413 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DATA TRANSLATION INC CENTRAL INDEX KEY: 0000713138 STANDARD INDUSTRIAL CLASSIFICATION: 3577 IRS NUMBER: 042532613 STATE OF INCORPORATION: MA FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14779 FILM NUMBER: 95528552 BUSINESS ADDRESS: STREET 1: 100 LOCKE DRIVE CITY: MARLBOROUGH STATE: MA ZIP: 01752-1192 BUSINESS PHONE: 5084813700 MAIL ADDRESS: STREET 2: 100 LOCKE DRIVE CITY: MARLBORO STATE: MA ZIP: 01752-1192 10-Q 1 QUARTERLY REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 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: February 28, 1995 ----------------- [ ] 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: 0-14779 ------- DATA TRANSLATION, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Massachusetts 04-2532613 -------------------------------- ------------------------------------- (State or other jurisdiction (I.R.S. Employer Identification Number) of organization or incorporation) 100 Locke Drive Marlborough, Massachusetts ------------------------------------------------------------ (Address of principal executive offices) 01752 ---------------------------------------------------------- (Zip code) (508) 481-3700 ---------------------------------------------------- (Registrant's telephone number, including area code) 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 ________ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, par value $.01 per share 2,998,612 shares -------------------------------------- --------------------------------- Class Outstanding at March 31, 1995 Page 2 of 13 DATA TRANSLATION, INC. AND SUBSIDIARIES INDEX ----- Page No. Financial Information: -------- Consolidated Balance Sheets as of November 30, 1994 and February 28, 1995 ................ 3 Consolidated Statements of Operations for the Three Months Ended February 28, 1994 and February 28, 1995 .................................... 4 Consolidated Statements of Stockholders' Equity For the Fiscal Year Ended November 30, 1994 and the Three Months Ended February 28, 1995 ......... 5 Consolidated Statements of Cash Flows for the Three Months Ended February 28, 1994 and February 28, 1995 .................................... 6 Notes to Consolidated Financial Statements ............... 7-9 Management's Discussion and Analysis of Financial Condition and Results of Operations .......... 10-11 Part II - Other Information ................................ 12 Signatures ................................................. 13 Page 3 of 13 DATA TRANSLATION, INC. & SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
November 30 February 28 1994 1995 ----------- ----------- (unaudited) Current Assets: Cash and cash equivalents $ 1,592,000 $ 2,517,000 Marketable securities (Note 2) 2,487,000 9,747,000 Accounts receivable, net of reserves of $435,000 in 1994 and $495,000 in 1995 9,045,000 9,675,000 Inventories 2,759,000 4,237,000 Prepaid expenses 647,000 1,010,000 Prepaid income taxes 61,000 61,000 ---------- ---------- Total current assets 16,591,000 27,247,000 Equipment and Leasehold Improvements, net 2,367,000 2,320,000 Other Assets - net 241,000 261,000 ---------- ---------- Total Assets $19,199,000 $29,828,000 ========== ========== Current Liabilities: Accounts payable $ 3,745,000 $ 4,502,000 Due to related party 546,000 273,000 Accrued expenses 3,922,000 4,332,000 ---------- ---------- Total current liabilities 8,213,000 9,107,000 Deferred Income Taxes 2,000 3,000 Stockholders' Equity: Preferred Stock, $.01 par value, Authorized - 1,000,000 shares, none issued - - Common Stock, $.01 par value, Authorized - 10,000,000 shares, issued - 3,383,000 in 1994 and 3,421,000 in 1995 34,000 34,000 Capital in excess of par value 8,773,000 14,893,000 Retained earnings 6,894,000 7,601,000 Cumulative translation adjustment 64,000 110,000 Less treasury stock, at cost, 1,127,000 shares in 1994 and 435,000 shares in 1995 (4,781,000) (1,843,000) Reserve for unrealized investment losses - (77,000) ---------- ---------- Total stockholders' equity 10,984,000 20,718,000 ---------- ---------- Total Liabilities and Stockholders' Equity $19,199,000 $29,828,000 ========== ==========
The accompanying notes are an integral part of these consolidated financial statements. Page 4 of 13 DATA TRANSLATION, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended ----------------------- February 28, February 28, 1994 1995 ------ ------ Net sales: Digital media $ 1,623,000 $ 5,207,000 Data acquisition and imaging 5,943,000 5,775,000 Networking distribution 3,386,000 3,855,000 ---------- ---------- Total net sales 10,952,000 14,837,000 Cost of sales 5,890,000 7,711,000 ---------- ---------- Gross profit 5,062,000 7,126,000 Research and development expenses 1,697,000 1,683,000 Selling and marketing expenses 2,811,000 3,936,000 General and administrative expenses 805,000 916,000 ---------- ---------- Income (loss) from operations (251,000) 591,000 Interest income 35,000 143,000 Interest expense (1,000) (8,000) Other expense (27,000) (5,000) ---------- ---------- Income (loss) before income taxes (244,000) 721,000 Income tax expense 12,000 14,000 ---------- ---------- Net income (loss) $ (256,000) $ 707,000 ========== ========== Net income (loss) per common share $ (0.12) $ 0.22 ===== ===== Weighted average number of common and common equivalent shares outstanding 2,162,000 3,211,000
The accompanying notes are an integral part of these consolidated financial statements. Page 5 of 13 DATA TRANSLATION, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited)
Common Stock $.01 Par Value ------------------------------- Reserve for Capital in Cumulative unrealized Total Issued Excess of Retained Translation Treasury investment Stockholders' Shares Amount Par Value Earnings Adjustment Stock losses Equity --------- -------- ---------- --------- ----------- ---------- ---------- ------------- Balance November 30, 1993 3,282,000 $33,000 $8,322,000 $6,574,000 ($102,000) ($4,781,000) - 10,046,000 Proceeds from stock plans 124,000 1,000 762,000 - - - - 763,000 Effect of stock-for-stock exercise (23,000) - (311,000) - - - - (311,000) Translation adjustment - - - - 166,000 - - 166,000 Net income - - - 320,000 - - - 320,000 --------- -------- ---------- -------------------- ---------- -------- ----------- Balance November 30, 1994 3,383,000 $34,000 $8,773,000 $6,894,000 $64,000 ($4,781,000) - $10,984,000 Proceeds from stock plans 38,000 - 256,000 - - - - 256,000 Public sale of treasury stock, net of issuance costs of $375,000 - - 5,864,000 - - 2,938,000 - 8,802,000 Translation adjustment - - - - 46,000 - - 46,000 Net income - - - 707,000 - - - 707,000 Reserve for unrealized investment losses - - - - - - ($77,000) (77,000) --------- -------- ---------- -------------------- ---------- -------- ----------- Balance February 28, 1995 3,421,000 $34,000 $14,893,000 $7,601,000 $110,000 ($1,843,000) ($77,000) $20,718,000 ========= ======== ========== ==================== ========== ======== ==========
The accompanying notes are an integral part of these consolidated financial statements. Page 6 of 13 DATA TRANSLATION, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Three Months Ended: February 28, February 28, 1994 1995 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ (256,000) $ 707,000 Adjustments to reconcile net income (loss) to net cash used in operating activities- Depreciation and amortization 434,000 418,000 Gain on sale of equipment (1,000) (2,000) Loss on sale of marketable securities 1,000 - Change in assets and liabilities- Accounts receivable (1,378,000) (630,000) Inventories (285,000) (1,478,000) Prepaid expenses (30,000) (363,000) Prepaid income taxes 3,000 - Bank overdraft 78,000 - Accounts payable 624,000 757,000 Due to related party (273,000) (273,000) Accrued expenses 172,000 410,000 --------- --------- Net cash used in operating activities $ (911,000) $ (454,000) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of equipment and leasehold improvements (240,000) (340,000) Proceeds from sale of equipment - 5,000 Increase in other assets (62,000) (45,000) Purchases of marketable securities (557,000) (7,345,000) Proceeds from sales of marketable securities 660,000 8,000 --------- --------- Net cash used in investing activities $ (199,000) $ (7,717,000) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from stock plans 88,000 256,000 Net proceeds from public sale of treasury stock - 8,802,000 --------- --------- Net cash provided by financing activities $ 88,000 $ 9,058,000 --------- --------- EXCHANGE RATE EFFECTS 29,000 38,000 --------- --------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ (993,000) $ 925,000 CASH AND CASH EQUIVALENTS, beginning of period 1,528,000 1,592,000 --------- --------- CASH AND CASH EQUIVALENTS, end of period $ 535,000 $ 2,517,000 ========= ========= OTHER TRANSACTIONS NOT PROVIDING (USING) CASH Decrease in marketable securities - 77,000 Increase in reserve for unrealized investment loss - (77,000) --------- --------- $ - $ - ========= ========= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for income taxes $ - $ 1,000 ========= ========= Cash paid for interest $ 1,000 $ 8,000 ========= =========
The accompanying notes are an integral part of these consolidated financial statements. Page 7 of 13 DATA TRANSLATION, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. Basis of Presentation In the opinion of management, these unaudited consolidated financial statements and disclosures reflect all adjustments necessary for fair presentation. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. 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 the rules and regulations of the Securities and Exchange Commission. It is suggested that these consolidated condensed financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's latest audited financial statements, which are contained in the Company's 1994 Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 28, 1995. 2. Cash Equivalents and Marketable Securities Cash equivalents are carried at cost which approximates market value and have maturities of less than three months. Cash equivalents include money market accounts and U.S. Treasury bills. Marketable securities held as of February 28, 1995, consist of the following:
Maturity Market Value --------------------------------- Investments held to maturity: U.S. Treasury Bills 4-10 months $7,330,000 Investments available for sale: U.S. Treasury Strips less than 1 year $ 377,000 U.S. Treasury Notes 1 - 5 years 1,168,000 U.S. Agency Bonds 1 - 5 years 380,000 U.S. Agency Bonds 6 - 10 years 180,000 -------- Total U.S. Agency Bonds 560,000 Utility Bonds 1 - 5 years 286,000 U.S. Agency Passthroughs 6 - 10 years 10,000 U.S. Agency Passthroughs 10+ years 16,000 -------- Total Investments Available for Sale $2,417,000 =========
Marketable securities had a cost of $2,600,000 and $9,824,000 at November 30, 1994 and February 28, 1995, respectively, and a market value of $2,487,000 and $9,747,000, respectively. To reduce the carrying amount of the portfolio to market value, a valuation allowance in the amount of $113,000 and $77,000 for November 30, 1994 and February 28, 1995 was established with a corresponding charge to net income on November 30, 1994 and as a separate component of shareholders' equity on February 28, 1995 due to the Company's adoption of the provisions of Statement of Financial Accounting Standard (SFAS) No. 115, "Accounting of Certain Investments in Debt and Equity Securities" as of December 1, 1994. Page 8 of 13 DATA TRANSLATION, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 3. Inventories Inventories are stated at the lower of first-in, first-out (FIFO) cost or market and consist of the following:
November 30, February 28, 1994 1995 ----------- ----------- Raw materials $ 617,000 $ 982,000 Work-in-process 434,000 670,000 Finished goods 1,708,000 2,585,000 --------- --------- $ 2,759,000 $ 4,237,000 ========= =========
Work-in-process and finished goods inventories include material, labor and manufacturing overhead. Management performs periodic reviews of inventory and disposes of items not required by their manufacturing plan. 4. Net Income (Loss) Per Common Share Net income (loss) per common share is based upon dividing net income (loss) by the weighted average number of common shares out- standing during each period. Common equivalent shares have been included for any period where their effect is dilutive. Fully diluted net income (loss) per common share has not been separately presented, as the amounts would not be materially different from the amounts presented. 5. Contingencies From time to time the Company is involved in disputes and/or litigation encountered in its normal course of business. The Company does not believe that the ultimate impact of the resolution of any outstanding matters will have a material effect on the Company's financial condition or results of operations. 6. Capitalized Software Development Costs The Company capitalizes certain computer software development costs. Such costs, net of accumulated amortization, were approximately $215,000 and $235,000 as of November 30, 1994 and February 28, 1995, respectively and are included in other assets. These costs are amortized on a straight-line basis over two years which approximates the life of the product. Amortization expense, included in cost of goods sold, was approximately $45,000 and $25,000 for the three months ended February 28, 1994 and 1995, respectively. 7. Income Taxes In February 1992, the Financial Accounting Standards Board issued SFAS No. 109, "Accounting for Income Taxes." The Company adopted the provisions of SFAS No. 109 on December 1, 1993. There was no effect on net income of adopting the provisions of SFAS No. 109. Page 9 of 13 DATA TRANSLATION, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 7. Income Taxes (continued) The tax provision of $14,000 for the first quarter of fiscal 1995 compares to a tax provision of $12,000 in fiscal 1994. Any potential tax provision resulting from operating income by the Company's domestic operations has been offset by net operating loss carryforwards. The components of the net deferred tax amount recognized in the accompanying balance sheets are:
November 30, February 28, 1994 1995 ------------ ------------- Deferred tax assets $ 3,563,000 $ 3,392,000 Deferred tax liabilities (271,000) (275,000) Valuation allowance (3,294,000) (3,120,000) ---------- ---------- $ (2,000) $ (3,000) ========== ==========
The approximate tax effect of each type of temporary difference and carryforward before allocation of the valuation allowance is: Net operating losses $ 1,638,000 $ 1,313,000 Other temporary differences 989,000 1,099,000 Alternative minimum tax credits 50,000 50,000 General business credits 615,000 655,000 ---------- ---------- $ 3,292,000 $ 3,117,000 ========== ==========
The tax credit and net operating loss carryforwards expire at various dates through 2008. Due to the uncertainty surrounding the timing of realizing the benefits of its favorable tax attributes in future tax returns, the Company has placed a valuation allowance against its otherwise recognizable net deferred tax assets. The United States Tax Reform Act of 1986 contains provisions which may limit the net operating loss and tax credit carryforwards available to be used in any given year in the event of significant changes in ownership, as defined. Page 10 of 13 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations The following table shows certain consolidated statement of operations data as a percentage of total net sales.
Three Months Ended February 28, -------------------- 1994 1995 ---- ---- Net sales: Digital media........................... 14.8% 35.1% Data acquisition and imaging............ 54.3 38.9 Networking distribution................. 30.9 26.0 ----- ----- Total net sales............................. 100.0 100.0 Gross margin................................ 46.2 48.0 Research and developement expenses.......... 15.5 11.3 Selling and marketing expenses.............. 25.7 26.5 General and administrative expenses......... 7.3 6.2 ----- ----- Income (loss) from operations............... (2.3) 4.0 Interest income (expense) and other, net.... 0.1 0.9 Provision for income taxes.................. 0.1 0.1 ----- ----- Net income (loss)........................... (2.3)% 4.8% ===== =====
Comparison of First Fiscal Quarter of 1995 to First Fiscal Quarter of 1994: Total net sales for the fiscal quarter ended February 28, 1995 were $14,837,000, which was an increase of 35.5% or $3,885,000 from the same period a year ago. This increase was primarily a result of higher net sales from the Company's digital media product, Media 100(R), which accounted for $5,207,000 or 35.1% of the Company's total net sales compared to $1,623,000 or 14.8% in the same period a year ago. This marks the seventh consecutive quarter of increased sales from Media 100 which began shipping in August of 1993. Networking distribution sales increased $469,000 or 13.9% from the comparable quarter in 1994 to $3,855,000 or 26% of the Company's total net sales. Net sales from the Company's data acquisition and imaging products were down 2.8% or $168,000 compared to the first quarter of fiscal 1994. While total net sales increased 35.5%, cost of sales increased only by 30.9% of total net sales. As a result, the gross margin increased to 48.0% of total net sales compared to 46.2% in the comparable quarter of the prior year. The increase in gross margin was primarily a result of higher gross margins on networking distribution sales as compared to the previous year. The gross margin improvement was also attributable, to a lesser extent, to the decrease in networking distribution sales as a percentage of total net sales as the margin on networking distribution sales are much lower than the Company's own manufactured product sales. Page 11 of 13 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Comparison of First Fiscal Quarter of 1995 to First Fiscal Quarter of 1994 (continued): The income from operations for the first fiscal quarter of 1995 was $591,000, compared to a loss of $251,000 in the comparable quarter of the prior year. The operating income reflects the higher net sales and gross margins as mentioned above, offset by an increase in operating expenses of $1,222,000. Selling and marketing expenses increased by $1,125,000 largely due to the additional cost associated with the sales and promotion of Media 100. General and administrative expenses were up slightly from the comparable quarter while research and development expenses remained relatively the same. The tax provision of $14,000 for the first fiscal quarter of 1995 compares to a tax provision of $12,000 in fiscal 1994. Any potential tax provision resulting from operating income by the Company's domestic operations has been offset by net operating loss carryforwards. The net income for the fiscal quarter ended February 28, 1995 was $707,000 compared to a net loss of $256,000 for the same period in 1994. As a result, net income per share was $0.22 compared to a net loss per share of $0.12 for the first quarter of 1994. Liquidity and Capital Resources During the first fiscal quarter of 1995, the Company's cash and cash equivalents balance increased by $925,000. This increase was primarily a result of a public stock offering generating net proceeds of approximately $8,802,000. The net proceeds were invested in U.S. Treasury bills with maturities ranging from three months to less than one year. Net cash used by operations was $454,000 reflecting higher working capital requirements for the Company's growing operations. At the end of February, the Company had available an unused line of credit in the United Kingdom equivalent to approximately $600,000. The Company plans to fund and support a business plan which includes continuing investment in research and development for both the digital media and other product areas. The Company believes that the net proceeds from its recent stock offering, together with cash generated from future operations, will be sufficient to meet the Company's cash requirements for the foreseeable future. Page 12 of 13 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K -------------------------------- a) Exhibits Exhibit Number Description ------- ------------------------ 27 Financial Data Schedule b) Reports on Form 8-K No reports on Form 8-K have been filed during the quarter for which this report is filed. Page 13 of 13 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. Data Translation, Inc. Date: April 13, 1995 By: /s/ Ellen W. Harpin -------------------------------- Ellen W. Harpin Vice President & Treasurer (Principal Financial Officer) Date: April 13, 1995 By: /s/ Gary B. Godin -------------------------------- Gary B. Godin Chief Accounting Officer & Corporate Controller EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS NOV-30-1994 DEC-01-1994 FEB-28-1995 2,517,000 9,747,000 9,675,000 495,000 4,237,000 27,247,000 19,548,000 17,228,000 29,828,000 9,107,000 0 34,000 0 0 20,684,000 29,828,000 14,837,000 14,837,000 7,711,000 7,711,000 6,535,000 15,000 8,000 721,000 14,000 707,000 0 0 0 707,000 .22 .22
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