-----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, J/Cv4IwkIBf72hO98Lya6b8ZjX1Qej93jfe/zm2zMNfTUivnJvGyvAhuZSOMLyjt u0bYZbkZ7ZSG9FBkhIiLMA== 0000718487-99-000012.txt : 19990722 0000718487-99-000012.hdr.sgml : 19990722 ACCESSION NUMBER: 0000718487-99-000012 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990721 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SPECTRAN CORP CENTRAL INDEX KEY: 0000718487 STANDARD INDUSTRIAL CLASSIFICATION: GLASS, GLASSWARE, PRESSED OR BLOWN [3220] IRS NUMBER: 042729372 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 000-12489 FILM NUMBER: 99667781 BUSINESS ADDRESS: STREET 1: 50 HALL ROAD CITY: STURBRIDGE STATE: MA ZIP: 01566 BUSINESS PHONE: 5083472261 MAIL ADDRESS: STREET 1: 50 HALL ROAD CITY: STURBRIDGE STATE: MA ZIP: 01566 10-K/A 1 EXHIBIT 10.122 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 AMENDMENT NO. 1 TO FORM 10-K ON FORM 10-K/A (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934 For the fiscal year ended December 31, 1998 [ X ] OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OR THE SECURITIES ACT OF 1934 For the transition period from ........................to ..................... Commission file number 0-12489 SPECTRAN CORPORATION ............................................................................ (Exact name of the registrant as specified in its charter) Delaware 04-2729372 ..................................... ............. State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization 50 Hall Road, Sturbridge, Massachusetts 01566 ...................................................... ............ (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (508) 347-2261 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of each class which registered None Not Applicable .......... .................. Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.10 par value . .............................................................................. (Title of class) 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 by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ] 15 - Acquisitions/Joint Venture a) Applied Photonic Devices, Inc. On May 23, 1995 the Company purchased all the outstanding capital stock of Applied Photonic Devices, Inc. ("APD") for cash and common stock worth approximately $3.9 million. The Company also retired approximately $600,000 of APD bank debt. The purchase method of accounting was used and the results of operations of APD are included in the consolidated financial statements from May 23, 1995. Goodwill of $3.3 million resulted from the purchase and was being amortized over 15 years. Amortization expense amounted to $217,000 in 1996. In December 1996, the Company announced the formation of General Photonics, a 50-50 joint venture between the Company and General Cable. General Cable purchased certain assets of the Company's optical fiber cable subsidiary, APD, for approximately $5.8 million and then contributed them to General Photonics for a 50% equity interest. APD contributed its remaining assets to General Photonics in exchange for its 50% equity interest. The net assets, including goodwill, of General Photonics totaled $10.2 million at December 31, 1996. The Company accounts for its interest in the joint venture under the equity method and no gain or loss was recognized as a result of this transaction. The following pro forma statement of operations for the year ended December 31, 1996 presents the results of operations as if the Company had entered into the joint venture as of January 1, 1996 (in thousands): Statement of Operations (unaudited) 1996 Sales $51,413 Net Income $ 3,716 ------- Net income per Share of Common Stock $ .63 ======= b) General Photonics, LLC. The following is summarized financial information for the Company's joint venture. 1998 1997 ---- ---- Currents Assets $ 4,600 $ 7,006 Other Assets 4,480 3,908 Current Liabilities 1,853 1,640 Total Revenues $ 9,507 $12,583 Net Income $(2,047) $ (708)
17 - Quarterly Financial Information (unaudited) In thousands of dollars except per share data
Quarters First Second Third Fourth - ----------------------------------------- ---------- ------------ ------------ ---------- 1998 Net Sales (See A) $15,112 $16,358 $19,288 $20,098 Gross Profit 5,111 2,553 5,414 5,801 Net Income 864 (1,393) 504 536 Earnings per Common Share-Basic .(20) .07 .08 .12 Earnings per Common Share-Diluted (.20) .07 .08 .12 1997 Net Sales $16,228 $15,881 $15,638 $14,310 Gross Profit 6,542 5,777 4,795 6,162 Net Income 1,122 1,151 1,239 1,330 Earnings per Common Share-Basic .18 .19 .17 .18 Earnings per Common Share-Diluted .17 .18 .16 .17
A) Due to a change in accounting treatment of certain fiber sales, sales and cost of sales for the first three quarters of 1998 were reduced by $115,000, $674,000 and $775,000, respectively. This change had no effect on previously reported net income or earnings per share. SIGNATURES "Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SPECTRAN CORPORATION REGISTRANT Dated: June 30, 1999 /s/Charles B. Harrison Charles B. Harrison President, Chief Executive Officer and Chairman of the Board of Directors INDEPENDENT AUDITORS' REPORT To the Board of Directors General Photonics, LLC: We have audited the accompanying balance sheets of General Photonics, LLC (a joint venture) as of December 31, 1998 and 1997, and the related statements of operations, partners' equity, and cash flows for the year ended December 31, 1998 and for the period from December 23, 1996 (date of incorporation) to December 31, 1997. These financial statements are the responsibility of General Photonics, LLC's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the financial position of General Photonics, LLC at December 31, 1998 and 1997, and the results of its operations, its partners' equity and its cash flows for the year ended December 31, 1998 and for the period from December 23, 1996 (date of incorporation) to December 31, 1997 in conformity with generally accepted accounting principles. The accompanying financial statements for the year ended December 31, 1998 have been prepared assuming that the Joint Venture will continue as a going concern. As discussed in Note 3 to the financial statements, the Joint Venture's recurring losses, the demand notes due the Joint Venture partners and its dependence on its Joint Venture partners as both sources of funding and as key suppliers/customers, raise substantial doubt about its ability to continue as a going concern. Management's plans concerning these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. As described in Note 3, the Joint Venture is dependent on its partners for a majority of its sales, its inventory purchases, its support activities and its short-term cash flow needs. The accompanying financial statements may not necessarily be indicative of the conditions that would have existed or the results of operations had the Joint Venture been operated as an unaffiliated entity. February 16, 1999 GENERAL PHOTONICS, LLC (A Joint Venture) BALANCE SHEETS DECEMBER 31, 1998 AND 1997 - -------------------------------------------------------------------------------- ASSETS 1998 1997 CURRENT ASSETS: Cash $ 924,234 $ 622,627 Accounts receivable - Joint Venture Partners 913,297 1,292,590 Accounts receivable - trade (net of allowance for doubtful accounts of $214,000 and $367,000 in 1998 and 1997, respectively) 246,363 231,511 Inventories 2,487,561 4,845,334 Other current assets 28,778 13,869 ----------- ---------- Total current assets 4,600,233 7,005,931 PLANT AND EQUIPMENT, Net 1,970,252 1,188,511 GOODWILL, Net of accumulated amortization of $433,999 and $215,999 in 1998 and 1997, respectively 2,477,565 2,695,565 OTHER NONCURRENT ASSETS 31,749 23,719 TOTAL ASSETS $ 9,079,799 $ 10,913,726 ============ ============ LIABILITIES AND PARTNERS' EQUITY CURRENT LIABILITIES: Notes payable to Joint Venture partners $ 650,000 $ 400,000 Accounts payable -Joint Venture Partners 560,323 274,480 Accounts payable - trade 340,666 708,204 Accrued payroll 207,226 235,606 Accrued liabilities 95,709 22,089 ------------- ---------- Total current liabilities 1,853,924 1,640,379 PARTNERS' EQUITY 7,225,875 9,273,347 ----------- ----------- TOTAL LIABILITIES AND PARTNERS' EQUITY $ 9,079,799 $ 10,913,726 =========== ============ See notes to financial statements.
Exhibit 10.122 GENERAL PHOTONICS, LLC (A Joint Venture) STATEMENTS OF OPERATIONS YEAR ENDED DECEMBER 31, 1998 AND PERIOD FROM DECEMBER 23, 1996 (DATE OF INCORPORATION) TO DECEMBER 31, 1997 1998 1997 SALES: Joint Venture Partners $ 8,184,940 $ 7,809,691 Other 1,322,134 4,773,628 ----------- ---------- Total sales 9,507,074 12,583,319 COST OF SALES 9,085,011 10,549,476 ----------- ---------- GROSS PROFIT 422,063 2,033,843 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 2,425,468 2,724,792 ----------- ---------- OPERATING LOSS (2,003,405) (690,949) INTEREST EXPENSE (44,067) (17,000) ----------- ---------- NET LOSS $(2,047,472) $ (707,949) =========== ============
See notes to financial statements. GENERAL PHOTONICS, LLC (A Joint Venture) STATEMENTS OF PARTNERS' EQUITY YEAR ENDED DECEMBER 31, 1998 AND PERIOD FROM DECEMBER 23, 1996 (DATE OF INCORPORATION) TO DECEMBER 31, 1997 General Applied Cable Photonic Industries Devices, Inc. Total PERCENTAGE INTEREST 50% 50% 100% DECEMBER 23, 1996 (Date of incorporation) $ -- $ -- $ -- Contribution of assets 5,900,891 4,080,405 9,981,296 Net loss for the period from December 23, 1996 (date of incorporation) to December 31, 1997 (353,975) (353,974) (707,949) --------- ---------- ---------- DECEMBER 31, 1997 5,546,916 3,726,431 9,273,347 Net loss for the year ended December 31, 1998 (1,023,736) (1,023,736) (2,047,472) ---------- ----------- ---------- DECEMBER 31, 1998 $ 4,523,180 $ 2,702,695 $ 7,225,875 =========== =========== =========== See notes to financial statements.
GENERAL PHOTONICS, LLC (A Joint Venture) STATEMENTS OF CASH FLOWS YEAR ENDED DECEMBER 31, 1998 AND PERIOD FROM DECEMBER 23, 1996 (DATE OF INCORPORATION) TO DECEMBER 31, 1997 1998 1997 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (2,047,472) $ (707,949) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 528,242 431,573 Loss on sale of equipment 1,498 -- Changes in operating assets and liabilities: Accounts receivable, trade (14,852) 2,090,192 Accounts receivable - Joint Venture Partners 379,293 (1,292,590) Inventories 2,357,773 (723,263) Other assets (22,939) 19,014 Accounts payable and accrued expenses (322,298) 377,434 Accounts payable - Joint Venture Partners 285,843 274,480 ------------- ------------ Net cash provided by operating activities 1,145,088 468,891 ------------- ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of equipment (1,101,481) (446,264) Proceeds from sale of equipment 8,000 -- ------------- ----------- Net cash used in investing activities (1,093,481) (446,264) ------------- ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from demand notes payable to Joint Venture Partners 250,000 400,000 Contribution of cash by Joint Venture Partners -- 200,000 ------------- ------------ Net cash provided by financing activities 250,000 600,000 ------------- ------------ INCREASE IN CASH 301,607 622,627 CASH, BEGINNING OF PERIOD 622,627 -- CASH, END OF PERIOD $ 924,234 $ 622,627 ============ =============
See notes to financial statements. GENERAL PHOTONICS, LLC (A Joint Venture) NOTES TO FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 1998 AND PERIOD FROM DECEMBER 23, 1996 (DATE OF INCORPORATION) TO DECEMBER 31, 1997 - -------------------------------------------------------------------------------- 1. BASIS OF PRESENTATION General Photonics, LLC (the "Joint Venture") is a joint venture incorporated on December 23, 1996 between General Cable Industries ("GCI") (a wholly owned subsidiary of General Cable Corporation ("General Cable")) and Applied Photonic Devices, Inc. ("APD") (a wholly owned subsidiary of SpecTran Corporation ("SpecTran")) with each owning a fifty percent equity interest in the Joint Venture. The Joint Venture engages in the development, design, manufacture and marketing of fiber-optic cable for the communication and electrical markets. At December 31, 1998, the Joint Venture operated one manufacturing facility in the state of Connecticut, which also included the Joint Venture's corporate office. The Joint Venture is also provided certain administrative, technical and marketing support by the Joint Venture partners under services and support agreements and has been dependent on its partners to finance its operations. The accompanying financial statements may not necessarily be indicative of the conditions that would have existed or the results of operations had the Joint Venture been operated as an unaffiliated entity. 2. SIGNIFICANT ACCOUNTING POLICIES Revenue Recognition - Revenue is generally recognized when shipments are made or when title and risk of loss passes to the customer. Inventories - Inventories are stated at the lower of cost or market value, cost being determined using the first-in, first-out method. Goodwill - Goodwill associated with the assets contributed to the Joint Venture is recorded at its carryover basis and is being amortized on a straight-line basis over its remaining life of twelve and one-half years. The Joint Venture evaluates the carrying value of goodwill based upon current and anticipated operations and undiscounted cash flows, and recognizes an impairment when it is probable that such estimated future net income and/or cash flows will be less than the carrying value of goodwill. Measurement of the amount of impairment, if any, is based upon the difference between carrying value and estimated fair value. Plant and Equipment - Plant and equipment contributed to the Joint Venture have been recorded at its carryover basis from APD. Plant and equipment acquired subsequent to December 23, 1996 are recorded at cost. Depreciation is provided using the straight-line method over the remaining useful lives of the related assets as follows: Years Leasehold improvements Remaining life of leases Machinery and equipment 1-5 years Other 1-5 years 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Concentration of Credit Risk - The Joint Venture sells a majority of its product through GCI, and as a result, a majority of the Joint Venture's trade receivables are due from GCI. Sales to GCI approximated 86% and 62% of total sales for the year ended December 31, 1998 and for the period from December 23, 1996 to December 31, 1997, respectively, and comprised 77% and 83% of net accounts receivable at December 31, 1998 and 1997, respectively. Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Income Tax Status - The Joint Venture has claimed special tax status as a limited liability corporation. Under present income tax regulations, the Joint Venture pays no federal or state income tax. Any income or loss for tax purposes is included in the tax returns of the Joint Venture's partners. New Accounting Pronouncements - On January 1, 1998, the Joint Venture adopted the provisions of Statement of Financial Accounting Standard ("SFAS") No. 130, "Reporting Comprehensive Income." Statement No. 130 requires the reporting of comprehensive income in addition to net income from operations. Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income. Comprehensive income encompasses all changes in partners' capital (except those arising from transactions with partners). The Joint Venture had no other components of comprehensive income. As this new standard only requires additional information in the financial statements, it does not affect the Joint Venture's financial position or results of operations. In June 1998, the Financial Accounting Standards Board (the "FASB") issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," which the Joint Venture is required to adopt effective January 1, 2000. SFAS No. 133 will require the Joint Venture to record all derivatives on the balance sheet at fair value. The impact of SFAS No. 133 on the Joint Venture's financial statements will depend on a variety of factors, including future interpretative guidance from the FASB and the extent of the Joint Venture's derivative instruments and hedging activities. Reclassifications - Certain amounts within the 1997 financial statements have been reclassified to conform with the presentation in 1998. 3. FUNDING OF OPERATIONS As shown in the financial statements, the Joint Venture incurred net losses of $2,047,472 and $707,949 for the year ended December 31, 1998 and the period from December 23, 1996 to December 31, 1997, respectively. The Joint Venture's operating losses and working capital needs have been funded principally by the initial capital infusion and loans from the Joint Venture partners. As discussed in Note 10, the Joint Venture purchases a substantial portion of its inventory from one of the venture partners and sells and distributes its products through its other venture partner. Such transactions are solely in the control of the Joint Venture partners since the purchase and sale obligations are not contractual as to amounts. In addition, the Joint Venture partners have not committed to continue funding the losses of the Joint Venture, nor have they asserted that existing short-term loans will not be called. During 1998, management took a series of steps to reduce expenses and inventory levels and restructure operations in response to a downturn in the fiber-optic industry. This resulted in cash flow from operating activities of $1,145,088 for 1998. Management will continue to reduce expenses and inventory levels in 1999. This inventory reduction, coupled with preliminary projections of orders from one of its Joint Venture partners and third parties, leads management to conclude that positive cash flow will result from operations. These projections exclude a reduction of cash flows associated with the demand notes due to the Joint Venture partners. As a result of these steps, management believes that the Joint Venture will have sufficient capital to fund operations through December 31, 1999. However, given the above-mentioned dependence on the Joint Venture partners, the outstanding demand notes due to the partners, and the uncertainty concerning the intentions of the partners relative to the Joint Venture, there is no assurance that management's projections can be achieved. 4. FORMATION OF THE JOINT VENTURE On December 23, 1996, GCI and APD contributed certain assets and transferred certain liabilities to create the Joint Venture. The assets and liabilities contributed were recorded by the Joint Venture at the carryover basis of the two Joint Venture partners. Contributed to the Joint Venture by GCI were: Cash $ 100,000 Accounts receivable 1,678,820 Inventory 4,122,071 ----------- $5,900,891 Contributed to the Joint Venture by APD were: Cash $ 100,000 Accounts receivable 642,883 Prepaid expenses 44,915 Plant and equipment, net 957,821 Goodwill 2,911,564 Other assets 11,687 Accounts payable (542,032) Accrued expenses (46,433) ---------- $4,080,405 The Joint Venture was incorporated as a limited liability corporation by GCI and APD, subject to a contractual agreement (the "LLC Agreement"). The duration of the Joint Venture is perpetual; however, provisions in the LLC Agreement provide for the dissolution of the Joint Venture dependent upon certain events and approval of the other Joint Venture partners. Gains and losses resulting from the Joint Venture's operations are allocated equally to the partners' capital accounts. The Joint Venture is required to distribute cash to the Joint Venture partners, subject to certain financial ratios. No such amounts were due to the Joint Venture partners at December 31, 1998 and 1997. 5. INVENTORIES The following comprised inventories at December 31: 1998 1997 ---- ---- Raw materials $ 356,143 $ 1,649,286 Work in process 1,186,188 1,953,867 Finished goods 945,230 1,242,181 --------------- ------------- Total $ 2,487,561 $ 7,845,334 -------------- -------------
6. PLANT AND EQUIPMENT The following comprised plant and equipment at December 31: 1998 1997 Leasehold improvements $ 121,635 $ 92,337 Machinery and equipment 2,168,136 706,134 Other 143,291 154,488 Construction in progress 54,696 451,126 -------------- ------------ Total $ 2,487,758 $ 1,404,085 Less accumulated depreciation 517,506 215,574 Plant and equipment, net $ 1,970,252 $ 1,188,511 ============= ============
7. DEMAND NOTES PAYABLE TO PARTNERS On June 5, 1997, the Joint Venture entered into two separate $200,000 demand promissory notes with both GCI and SpecTran. The notes bear interest at 7.5% annually with interest due each calendar quarter and the full note payable on demand. One payment of interest has been made to date. SpecTran was paid $4,792 for the period June 5, 1997 to September 30, 1997. On April 2, 1998, the Joint Venture entered into two additional and separate $125,000 demand promissory notes with both GCI and SpecTran under similar terms. Accrued interest of $56,275 and $12,208 is included in accrued liabilities at December 31, 1998 and 1997, respectively. 8. LEASES The Joint Venture is obligated for lease payments for one facility located in Dayville, Connecticut. Future minimum payments required under operating leases approximate $242,000 in the years 1999 and 2000 and $40,000 in 2001. In addition to the base rent above, the lease contains requirements for "common charges" to be paid monthly. Common charges were fixed at $4,400 per month with an annual reconciliation to actual expenses due in the first quarter of each year. Total rent expense and common charges charged to operations for operating leases approximated $296,000 and $193,000 for the year ended December 31, 1998 and for the period December 23, 1996 to December 31, 1997, respectively. 9. COMMITMENTS The Joint Venture had issued purchase orders totaling $68,000 prior to December 31, 1998 to procure capital equipment. As of December 31, 1998, the equipment had not yet been received and no payments have been made. 10. RELATED-PARTY TRANSACTIONS The Joint Venture has entered into the following agreements with GCI and SpecTran and/or its affiliates: Optical Fiber Purchases - Under a fiber supply agreement, the Joint Venture is required to purchase all of its optical fiber from SpecTran Communication Fiber Technologies, Inc. ("SCFT") (a wholly owned subsidiary of SpecTran). Pursuant to the fiber supply agreement, SCFT may purchase optical fiber from other companies and resell such fiber to the Joint Venture. Under the fiber supply agreement, all purchases of fiber from SCFT by the Joint Venture are to be at the lowest price offered by SCFT to other customers for substantially the same or comparable products based upon similar volume and product mix. Purchases by the Joint Venture totaled approximately $2,424,000 and $4,449,000 for the year ended December 31, 1998 and for the period December 23, 1996 to December 31, 1997, respectively. Amounts owed to SCFT for purchases of optical fiber at December 31, 1998 and 1997 were approximately $484,000 and $274,000, respectively. Fiber-Optic Cable Sales - Under a product purchase agreement, the Joint Venture is required to supply GCI with all of its fiber-optic cable requirements. The selling price to GCI is dependent upon prevailing market rates and a standard sales discount to GCI. In accordance with the product purchase agreement, the discount offered to GCI for 1998 and 1997 ranged from 6.3% to 12.1% off the market price and will be reset in the first quarter of 1999. Sales under the product purchase agreement totaled approximately $8,185,000 and $7,809,000 for the year ended December 31, 1998 and the period December 23, 1996 to December 31, 1997, respectively. At December 31, 1998 and 1997, GCI's inventory, approximating $900,000 and $425,000, respectively, was stored at the Joint Venture for the convenience of GCI. A fee is charged for such storage in the form of a reduced sales discount of 5.8%. Outstanding receivables due from sales of products to GCI at December 31, 1998 and 1997 totaled approximately $897,000 and $1,268,000, respectively. Administrative Services and Technical Assistance - Under an administrative services and technical assistance agreement, each of the Joint Venture partners provides certain assistance to the Joint Venture. Through the years ended December 31, 1998 and 1997, GCI provided corporate tax assistance and SpecTran provided administrative and management information services assistance. No fees were charged or are due to the partners under this agreement. Sales and Marketing Support - Under a sales and marketing support agreement, GCI Joint Venture. The Joint Venture's obligations under this agreement include providing GCI with product training, product inspection and field service support. This agreement is effective until the termination of the LLC Agreement. No fees were charged or are due to GCI under this agreement. Other - The Joint Venture purchases certain raw materials from GCI and sells inventory to SpecTran. Purchases from GCI in 1998 approximated $106,000, and $75,700 is included in accounts payable at December 31, 1998. No amounts were purchased from GCI in 1997. Sales to SpecTran totaled $35,400 and $58,600 during 1998 and 1997, respectively. Amounts totaling $16,173 and $24,100 are included in accounts receivable for SpecTran purchases at December 31, 1998 and 1997, respectively. 11. PENSION PLAN The Joint Venture sponsors the General Photonics, LLC 401(k) Plan (the "Plan"), under which employees may make contributions to their respective accounts. The Plan generally covers all full-time employees of the Joint Venture who have completed ninety days of service and have reached the age of twenty-one. The Joint Venture, at its discretion, may make matching contributions equal to 100% of the employees' savings contributions up to 3% of their compensation, plus 50% of their salary savings contributions in excess of 3% of compensation but not to exceed 5% of their compensation. The Joint Venture may (but is not required to) make additional 401(k) employer contributions to participants' accounts. Employer contributions were approximately $42,100 and $47,600 for the year ended December 31, 1998 and for the period December 23, 1996 to December 31, 1997, respectively. The Plan commenced June 5, 1997. Prior to this date, employees were covered under the SpecTran retirement plan. Employee account balances under the SpecTran retirement plan were transferred to the Plan. 12. EVENT (UNAUDITED) SUBSEQUENT TO THE DATE OF THE INDEPENDENT AUDITORS' REPORT On June 30, 1999, BICC General Cable Industries (formerly General Cable Industries) purchased APD's 50% interest in the Joint Venture for $2,367,200. Additionally, loans totaling $325,000 were repaid to APD by the Joint Venture. Pursuant to this sale, the LLC Agreement was terminated and the Joint Venture was dissolved. Exhibit 10.123 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in (i) Registration Statement No. 333-60965 on Form S-8, and (ii) Registration Statement No. 33-46581 on Form S-8, of our report dated February 16, 1999 on the financial statements of General Photonics LLC, appearing in Exhibit 10.122 to the Annual Report on Form 10-K/A of SpecTran Corporation for the year ended December 31, 1998 as filed on, or about, July 14, 1999. Boston, Massachusetts July 14, 1999 -----END PRIVACY-ENHANCED MESSAGE-----