-----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, syLirGyR5SBMNvqPvcZG2RQFRYqPLI2rfNB3wfJtPWpzgKfSmg9uJ4GrZ5xQAoQU C5Kaed/KHdjCht9qld04kA== 0000950123-95-001433.txt : 19950518 0000950123-95-001433.hdr.sgml : 19950518 ACCESSION NUMBER: 0000950123-95-001433 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SPECTRAN CORP CENTRAL INDEX KEY: 0000718487 STANDARD INDUSTRIAL CLASSIFICATION: 3231 IRS NUMBER: 042729372 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-12489 FILM NUMBER: 95539255 BUSINESS ADDRESS: STREET 1: 50 HALL ROAD CITY: STURBRIDGE STATE: MA ZIP: 01566 BUSINESS PHONE: 5083472261 10-Q 1 FORM 10-Q, SECTRAN CORPORATION 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended 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 0-12489 SPECTRAN CORPORATION (Exact name of registrant as specified in its charter) Delaware 04-2729372 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 50 Hall Road, Sturbridge, Massachusetts 01566 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (508) 347-2261 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 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. The number of shares of the registrant's Common Stock outstanding as of April 30, 1995 was 5,207,409. -1- 2 PART I - FINANCIAL INFORMATION SPECTRAN CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED CONDENSED BALANCE SHEETS - ASSETS
March 31, 1995 December 31, 1994 -------------- ----------------- (unaudited) Current Assets: Cash and Cash Equivalents $ 176,960 $ 477,022 Current Portion of Marketable Securities 2,483,814 641,256 Accounts Receivable, Trade, net 6,218,532 6,183,461 Inventories 5,049,499 4,100,179 Current Deferred Income Taxes, net 303,000 303,000 Income Taxes Receivable 501,629 501,629 Prepaid Expenses and Other Current Assets 382,555 267,871 --------------- --------------- Total Current Assets 15,115,989 12,474,418 Property, Plant and Equipment: Land and Land Improvements 395,113 395,113 Buildings and Improvements 3,271,598 3,266,189 Machinery and Equipment 15,157,496 14,612,501 Construction in Progress 1,455,446 1,625,056 --------------- --------------- 20,279,653 19,898,859 Less Accumulated Depreciation and Amortization 10,848,966 10,482,710 --------------- --------------- 9,430,687 9,416,149 Other Assets: Long-term Marketable Securities 3,794,108 5,196,903 License Agreements, net 1,155,079 1,205,300 Deferred Income Taxes, net 1,702,000 1,702,000 Deposit on Acquisition 1,759,646 -- Goodwill, net 1,086,397 1,106,806 Other 110,894 260,361 --------------- --------------- 9,608,124 9,471,370 --------------- --------------- Total Assets $ 34,154,800 $ 31,361,937 =============== ===============
See accompanying notes to these consolidated condensed financial statements. -2- 3 SPECTRAN CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED CONDENSED BALANCE SHEETS - LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, 1995 December 31, 1994 -------------- ----------------- (unaudited) Current Liabilities: Accounts Payable $ 1,402,138 $ 751,455 Income Taxes Payable 57,774 -- Accrued Defined Benefit Pension Liability 65,571 65,571 Accrued Liabilities 2,462,128 2,200,825 --------------- --------------- Total Current Liabilities 3,987,611 3,017,851 Long-term Debt 6,891,942 5,240,000 Stockholders' Equity: Common Stock, voting, $.10 par value; authorized 20,000,000 shares; outstanding 5,207,409 shares 520,741 520,741 Common Stock, non-voting, $.10 par value; authorized 250,000 shares; no shares outstanding -- -- Paid-in Capital 26,028,279 26,028,279 Net Unrealized Loss on Marketable Securities (154,191) (242,438) Retained Earnings (Deficit) (3,119,582) (3,202,496) --------------- --------------- Total Stockholders' Equity 23,275,248 23,104,086 --------------- --------------- Total Liabilities & Stockholders' Equity $ 34,154,800 $ 31,361,937 =============== ===============
See accompanying notes to these consolidated condensed financial statements. -3- 4 SPECTRAN CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended March 31, --------------------------------------- 1995 1994 -------------- ------------- Net Sales $ 7,965,079 $ 5,786,219 Cost of Sales 5,071,503 3,724,817 -------------- ------------- Gross Profit 2,893,576 2,061,402 Selling & Administrative Expenses 2,037,649 1,312,526 Research & Development Costs 753,445 291,739 -------------- ------------- Income from Operations 102,482 457,137 Other Income (Expense): Interest Income 84,623 76,571 Interest Expense (101,813) (12,379) Other 56,146 19,689 -------------- ------------- 38,956 83,881 -------------- ------------- Income before Income Taxes 141,438 541,018 Income Tax Expense 58,524 222,000 -------------- ------------- Net Income $ 82,914 $ 319,018 ============== ============= Weighted Average Number of Shares of Common Stock Outstanding: Primary 5,228,710 5,484,748 ============== ============= Fully Diluted 5,228,710 5,484,748 ============== ============= Net Income per Share of Common Stock: Primary $.02 $.06 ==== ==== Fully Diluted $.02 $.06 ==== ====
See accompanying notes to these consolidated condensed financial statements. -4- 5 SPECTRAN CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN CASH FLOWS (UNAUDITED)
Three Months Ended March 31, ---------------------------- 1995 1994 ---- ---- Cash Flows from Operating Activities: Net Income $ 82,914 $ 319,018 Add (Deduct) Items Not Affecting Cash: Depreciation and Amortization 484,795 398,803 Other Non-Cash Charges (17,517) 114,500 Changes in Other Components of Working Capital (115,548) (445,328) --------------- --------------- Net Cash Provided by Operating Activities 434,644 386,993 Cash Flows from Investing Activities: Deposit on Acquisition of Business (1,613,062) (6,567,768) Acquisition of Property & Equipment (420,643) (262,897) Other -- 443 --------------- --------------- Cash Used in Investing Activities (2,033,705) (6,830,222) --------------- --------------- Cash Flows from Financing Activities: Borrowings of Long-term Debt 1,651,942 5,000,000 Reduction of Debt -- (33,333) Proceeds from Exercise of Stock Options and Warrants -- 99,115 Purchase of Marketable Securities (352,943) -- --------------- --------------- Cash Provided by Financing Activities 1,298,999 5,065,782 Decrease in Cash and Cash Equivalents (300,062) (1,377,447) Cash and Cash Equivalents at Beginning of Period 477,022 3,538,190 --------------- --------------- Cash and Cash Equivalents at End of Period $ 176,960 $ 2,160,743 =============== ===============
See accompanying notes to these consolidated condensed financial statements. -5- 6 SPECTRAN CORPORATION AND SUBSIDIARY COMPANIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PRESENTATION The financial information for the three months ended March 31, 1995 is unaudited but reflects all adjustments (consisting solely of normal recurring adjustments) which the Company considers necessary for a fair statement of results for the interim period. The results of operations for the three months ended March 31, 1995 are not necessarily indicative of the results for the entire year. The consolidated results for the three months ended March 31, 1995 include the accounts of SpecTran Corporation (the Company) and all wholly-owned subsidiaries; SpecTran Specialty Optics Company and EBOT Acquisition Corp. All significant intercompany balances and transactions have been eliminated. These financial statements supplement, and should be read in conjunction with, the Company's audited financial statements for the year ended December 31, 1994, as contained in the Company's Form 10-K as filed with the United States Securities and Exchange Commission. 2. INVENTORIES Inventories consisted of:
March 31, 1995 December 31, 1994 -------------- ----------------- Raw Materials $ 1,870,508 $ 1,751,859 Work in Process 852,938 779,067 Finished Goods 2,326,053 1,569,253 -------------- -------------- $ 5,049,499 $ 4,100,179 ============== ==============
3. INCOME PER SHARE OF COMMON STOCK Income per share of common stock is based on the weighted average of the number of shares outstanding during the periods, including common stock equivalents of stock purchase warrants and stock options for both primary and fully diluted earnings per share. -6- 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Three Months Ended March 31, 1995 Versus Three Months Ended March 31, 1994 Net Sales Consolidated net sales of $7,965,079 for the three months ended March 31, 1995 were $2,178,860 (37.7%) higher than for the same period in 1994. This increase reflects increased specialty product sales by SpecTran Specialty Optics Company and additional revenues resulting from sales of the Company's single-mode fiber. The Company's standard multimode fiber sales increased slightly from the first quarter of 1994 as a result of increased sales volume reflecting strong market conditions, with a slight decline in average sales price. Gross Profit SpecTran earned a consolidated gross profit of $2,893,576 during the 1995 first quarter which was $832,174 (40.4%) higher than 1994. The gross margin, as a percent of sales, increased to 36.3% in 1995 from 35.6% in 1994. Single-mode product costs have improved from the first quarter of 1994, but still reflect manufacturing development costs that were experienced during 1994. This was offset by improved margins on multimode product sales due to lower average unit production costs. Royalties expense was 5.7% and 7.3% of SpecTran's sales during the first quarter of 1995 and 1994, respectively. Selling and Administrative Expenses Consolidated selling and administrative expenses increased by $725,123 (55.2%) during the 1995 first quarter. As a percent of sales these expenses increased during 1995 to 25.6% from 22.7% in 1994. The increase is made up of a full quarter of expenses incurred by SpecTran Specialty Optics Company in the 1995 March quarter versus approximately half a quarter of expenses incurred in last year's first quarter. Parent company spending increased by $266,532 (24.1%) due to business development activities. Research and Development Expenses Consolidated spending for internal research and development increased by $461,706 (158.3%). As a percent of sales, consolidated research and development costs increased to 9.5% in the first quarter of 1995 versus 5.0% in the same period in 1994. The Company's increased research and development spending is primarily in programs designed to improve manufacturing cost and product performance in both the multimode and single-mode product lines and develop alternative process technologies. -7- 8 Other Income (Expense) Consolidated other income (expense) decreased by $44,925 (53.6%) during the 1995 first quarter. Interest income increased by $8,052 (10.5%) during the 1995 first quarter primarily as a result of improved investment yields. Interest expense increased during the first quarter of 1995 by $89,434 (722.5%) as a result of increased debt levels. The increase in other income of $36,457 during 1995 is related to royalty income. Income Taxes A tax provision of 41% of pre-tax income was provided in the first quarters of both 1995 and 1994. Net Income Net income for the 1995 first quarter was $82,914 which was a 1.0% return on sales. Net income for the same period in 1994 was $319,018, or 5.5% of sales, a decline of $236,104 (74.0%) primarily due to increased research and development and selling and administrative expenses. Liquidity and Capital Resources At March 31, 1995, the Company had net working capital of $11,128,378, a current ratio of 3.8 to 1, and an aggregate of $176,960 in cash and cash equivalents. In addition, the Company had total marketable securities of $6,277,922, including $3,794,108 classified at long-term which could be converted into cash if needed. The Company restructured the existing bank revolving term loan of $10 million on March 30, 1995. Under the amended agreement, the Company may borrow the lesser of $10 million or an amount based upon certain percentages of the value of cash on deposit, eligible accounts receivable and eligible inventory. The amount outstanding under this agreement at March 31, 1994 was $6.9 million, including a draw down under the agreement of $1.6 million used as a deposit on an agreement to acquire Applied Photonic Devices. The Company expects but can not assure that existing working capital should be sufficient to meet the Company's cash needs in 1995. Anticipated Acquisition It is anticipated, but cannot be assured, that a wholly-owned subsidiary of the Company will acquire all the issued and outstanding stock of Applied Photonic Devices ("APD") for cash and stock worth approximately $3.9 million. The Company will also retire approximately $600,000 of APD bank debt. APD manufactures and sells fiber optic cable and related components. -8- 9 PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits - not applicable (b) Reports on Form 8-K No reports on Form 8-K were filed by the Registrant during the quarter which this report was filed. 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. SPECTRAN CORPORATION (Registrant) Date: May 15, 1995 BY: /s/ R. E. Jaeger ------------------------- Raymond E. Jaeger President and Chief Executive Officer Date: May 15, 1995 BY: /s/ Bruce A. Cannon ------------------------- Bruce A. Cannon Senior Vice President and Chief Financial Officer -9- 10 EXHIBIT INDEX Exhibit 27 - Financial Data Schedule EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-1995 JAN-01-1995 MAR-31-1995 176,960 2,483,814 6,465,990 247,458 5,049,499 15,115,989 20,279,653 10,848,966 34,154,800 3,987,611 0 26,549,020 0 0 0 34,154,800 7,965,079 7,965,079 5,071,503 5,071,503 0 0 101,813 141,438 58,524 82,914 0 0 0 82,914 .02 .02
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