-----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, TW/LAZgR/dKQd0S7//WYwSTM5GxF25qJUhJDMfdCrCrKmEgT0SW/rsxqwYqZyIoC +k1Q3jMw/XUbHjaoM7yDPQ== 0000950123-95-003272.txt : 19951119 0000950123-95-003272.hdr.sgml : 19951119 ACCESSION NUMBER: 0000950123-95-003272 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SPECTRAN CORP CENTRAL INDEX KEY: 0000718487 STANDARD INDUSTRIAL CLASSIFICATION: GLASS PRODUCTS, MADE OF PURCHASED GLASS [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: 95589892 BUSINESS ADDRESS: STREET 1: 50 HALL ROAD CITY: STURBRIDGE STATE: MA ZIP: 01566 BUSINESS PHONE: 5083472261 10-Q 1 FORM 10-Q 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 September 30, 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 October 31, 1995, was 5,353,353. - 1 - 2 PART I - FINANCIAL INFORMATION SPECTRAN CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED CONDENSED BALANCE SHEETS - ASSETS
September 30, 1995 December 31, 1994 ------------------ ----------------- (unaudited) Current Assets: Cash and Cash Equivalents $ 954,558 $ 477,022 Current Portion of Marketable Securities 3,891,881 641,256 Accounts Receivable, Trade, net 7,892,381 6,183,461 Inventories 6,347,493 4,100,179 Current Deferred Income Taxes, net 303,000 303,000 Income Taxes Receivable 119,031 501,629 Prepaid Expenses and Other Current Assets 705,297 267,871 ----------------- ----------------- Total Current Assets 20,213,641 12,474,418 Property, Plant and Equipment: Land and Land Improvements 395,113 395,113 Buildings and Improvements 3,611,566 3,266,189 Machinery and Equipment 16,239,005 14,612,501 Construction in Progress 1,727,416 1,625,056 ----------------- ----------------- 21,973,100 19,898,859 Less Accumulated Depreciation and Amortization 12,143,926 10,482,710 ----------------- ----------------- 9,829,174 9,416,149 Other Assets: Long-term Marketable Securities 1,129,102 5,196,903 License Agreements, net 1,054,637 1,205,300 Deferred Income Taxes, net 1,737,446 1,702,000 Goodwill, net 4,228,050 1,106,806 Other 104,803 260,361 ----------------- ----------------- 8,254,038 9,471,370 ----------------- ----------------- Total Assets $ 38,296,853 $ 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
September 30, 1995 December 31, 1994 ------------------ ----------------- (unaudited) Current Liabilities: Accounts Payable $ 1,911,105 $ 751,455 Income Taxes Payable 82,539 -- Accrued Defined Benefit Pension Liability 85,514 65,571 Accrued Liabilities 2,226,825 2,200,825 --------------- ------------- Total Current Liabilities 4,305,983 3,017,851 Long-term Debt 10,000,000 5,240,000 Stockholders' Equity: Common Stock, voting, $.10 par value; authorized 20,000,000 shares; outstanding 5,353,353 shares 535,335 520,741 Common Stock, non-voting, $.10 par value; authorized 250,000 shares; no shares outstanding -- -- Paid-in Capital 26,441,246 26,028,279 Net Unrealized Loss on Marketable Securities (53,185) (242,438) Retained Earnings (Deficit) (2,932,526) (3,202,496) --------------- ------------- Total Stockholders' Equity 23,990,870 23,104,086 --------------- ------------- Total Liabilities & Stockholders' Equity $ 38,296,853 $ 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)
Nine Months Ended Three Months Ended September 30, September 30, ------------------------------- ------------------------------- 1995 1994 1995 1994 ------------ ------------- ------------- -------------- Net Sales $ 27,035,049 $ 18,560,632 $ 9,970,586 $ 6,135,369 Cost of Sales 17,940,556 13,128,982 6,611,149 4,868,553 ------------ ------------ ----------- ------------ Gross Profit 9,094,493 5,431,650 3,359,437 1,266,816 Selling & Administrative Expenses 6,697,996 4,655,277 2,532,301 1,715,817 Research & Development Costs 2,103,447 1,360,817 690,902 759,003 ------------ ------------ ----------- ------------ Income (Loss) from Operations 293,050 (584,444) 136,234 (1,208,004) Other Income (Expense): Interest Income 239,928 248,745 71,744 90,531 Interest Expense (434,087) (212,376) (180,356) (123,476) Other 358,684 126,250 274,586 42,775 ------------ ------------ ----------- ------------ 164,525 162,619 165,974 9,830 ------------ ------------ ----------- ------------ Income (Loss) before Taxes 457,575 (421,825) 302,208 (1,198,174) Income Tax Expense(Benefit) 187,605 (156,800) 123,371 (477,800) ------------ ------------ ----------- ------------ Net Income (Loss) $ 269,970 $ (265,025) $ 178,837 $ (720,374) ============ ============ =========== ============ Weighted Average Number of Shares of Common Stock Outstanding: Primary 5,409,585 5,201,002 5,478,445 5,207,409 ========= ========= ========= ========= Fully Diluted 5,358,701 5,201,002 5,420,290 5,207,409 ========= ========= ========= ========= Net Income (Loss) per Share of Common Stock: Primary $.05 $(.05) $.03 $(.14) ==== ====== ===== ====== Fully Diluted $.05 $(.05) $.03 $(.14) ==== ====== ===== ======
See accompanying notes to these consolidated condensed financial statements. - 4 - 5 SPECTRAN CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended September 30, ------------------------------- 1995 1994 ---- ---- Cash Flows from Operating Activities: Net Income (Loss) $ 269,970 $ (265,025) Add (Deduct) Items Not Affecting Cash: Depreciation and Amortization 1,688,263 1,270,070 Other Non-Cash Charges (150,195) (82,000) Changes in Other Components of Working Capital (1,722,247) (225,502) ----------- ------------ Net Cash Provided by (Used for) Operating Activities 85,791 697,543 Cash Flows from Investing Activities: Acquisition of Business (4,245,786) (6,636,284) Acquisition of Property & Equipment (1,552,698) (1,559,975) Net Proceeds from Sales (Purchases) of Marketable Securities 1,002,668 (32,647) ----------- ------------ Cash Used in Investing Activities (4,795,816) (8,228,906) Cash Flows from Financing Activities: Borrowings of Long-term Debt 4,760,000 5,000,000 Reduction of Debt -- (366,673) Proceeds from Exercise of Stock Options and Warrants 5,063 100,802 Proceeds from Issuance of Stock 422,498 -- ----------- ------------ Cash Provided by Financing Activities 5,187,561 4,734,129 Increase (Decrease) in Cash and Cash Equivalents 477,536 (2,797,234) Cash and Cash Equivalents at Beginning of Period 477,022 3,538,190 ----------- ------------ Cash and Cash Equivalents at End of Period $ 954,558 $ 740,956 =========== ============
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 nine months and three months ended September 30, 1995, is unaudited but reflects all adjustments (consisting solely of normal recurring adjustments) which the Company considers necessary for a fair presentation of results for the interim periods. The results of operations for the nine months ended September 30, 1995, are not necessarily indicative of the results for the entire year. The consolidated results for the nine months and three months ended September 30, 1994, include the results of operations of the Company and its two subsidiaries, SpecTran Specialty Optics Company and EBOT Acquisition Corp., from the date of acquisition, February 18, 1994, through September 30, 1994. The consolidated results for the nine months and three months ended September 30, 1995, also include results of operations of Applied Photonic Devices, Inc., a wholly-owned subsidiary, from the date of its acquisition on May 23, 1995. 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:
September 30, 1995 December 31, 1994 ------------------ ----------------- Raw Materials $ 2,803,338 $ 1,751,859 Work in Process 1,121,765 779,067 Finished Goods 2,422,390 1,569,253 ---------------- ---------------- $ 6,347,493 $ 4,100,179 ================ ================
- 6 - 7 3. INCOME (LOSS) 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 for the nine months and three months ended September 30, 1995. For the nine months and three months ended September 30, 1994, the stock purchase warrants and stock options have not been included in the computations since the effect would be antidilutive. 4. ACQUISITION On May 23, 1995, the Company purchased all of the outstanding capital stock of Applied Photonic Devices, Inc. (APD) for cash and stock totaling $4.4 million, including the retirement of approximately $614,000 of APD bank debt. The results of APD are included in the consolidated financial statements from May 23, 1995. Goodwill of $3,327,000 resulted from the purchase and is being amortized over 15 years. 5. REORGANIZATION In October 1995 the Company reorganized its operations into three business units: SpecTran Communication Fiber Technologies, Inc., SpecTran Specialty Optics Company, and Applied Photonic Devices, Inc. SpecTran Communication Fiber Technologies, Inc., a wholly-owned subsidiary, consists of the Company's original communication fiber operation located in Sturbridge, MA. SpecTran Specialty Optics Company and Applied Photonic Devices, Inc. are wholly-owned subsidiaries formed as a result of SpecTran's acquisition of Ensign-Bickford Optics Company in 1994 and the acquisition of Applied Photonic Devices, Inc. in May of 1995. These business units will be headed respectively by John E. Chapman, William B. Beck and Crawford L. Cutts. - 7 - 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1995 VERSUS 1994 Net Sales Consolidated net sales for the three and nine month periods ended September 30, 1995, were $9,970,586 and $27,035,049, an increase of 62.5% and 45.7% from each of the comparable periods in the prior year when net sales were $6,135,369 and $18,560,632, respectively. Included in 1995 are revenues from Applied Photonic Devices from the May 23, 1995, acquisition date. Sales volumes increased in both periods for both the Company's standard datacommunication multimode fiber and single-mode optical fiber, with a significant increase in single-mode optical fiber sales. Market selling prices have remained stable during 1995. Compared to the three and nine month periods of 1994, however, unit selling prices have declined in the comparable periods of 1995, primarily in the single-mode product line. Sales continue to remain strong in the specialty product area for SpecTran Specialty Optics Company and the sales generated by Applied Photonic Devices for its first full quarter were as expected. Gross Profit SpecTran earned a consolidated gross profit of $3,359,437 and $9,094,493 for the three and nine months ended September 30, 1995, respectively, which was $2,092,621 (165.2%) and $3,662,843 (67.4%) higher than in the comparable periods of the prior year, respectively. The gross margin, as a percentage of sales, increased to 33.7% and 33.6% for the three and nine month periods ended September 30, 1995, compared to 20.6% and 29.3% in the comparable periods of the prior year, respectively. Improved yields and increased production volumes in the communication fiber product lines are the primary reasons for the improved gross profit margins in the 1995 periods. Royalty expenses was 1.9% and 4.2% of SpecTran's sales for the three and nine month periods, respectively, compared to 4.3% and 5.2% in the comparable periods of 1994. The three month period of 1995 reflects a retroactive adjustment made in the third quarter. Selling and Administrative Consolidated selling and administrative expenses increased by $816,484 (47.6%) and $2,042,719 (43.9%) during the three and nine month periods ended September 30, 1995. As a percentage of sales these expenses declined slightly during 1995 to 25.4% and 24.8% compared to 28.0% and 25.1% for the comparable three and nine month periods in 1994. The selling and administrative expenses in 1995 reflect a full nine months of expenses incurred by SpecTran Specialty Optics Company compared with seven and a half months during 1994 and four months of expenses incurred by Applied Photonic Devices, acquired in May 1995. Increased expenditures in 1995 for - 8 - 9 business development activities and market development of single-mode fiber also contributed to the increase. Research and Development Consolidated spending for internal research and development decreased in the third quarter by $68,101 (9.0%) and increased by $742,630 (54.6%) for the nine month period ended September 30, 1995, compared to the prior year three and nine month periods. As a percentage of sales, consolidated research and development costs were 6.9% and 7.8% versus 12.4% and 7.3% for the three and nine months ended September 30, 1995 and 1994, respectively. The third quarter of 1994 included increased spending levels related to the Company's single-mode fiber product line. The Company continues to invest in programs to improve manufacturing cost and product performance in both the single-mode and multimode product lines. Other Income (Expense), net Consolidated other income (expense) improved by $156,144 (a factor of 16) and $1,906 (1.2%) during the three and nine months ended September 30, 1995, compared with the 1994 comparable periods. The third quarter of 1995 includes other income of $274,586 primarily from non-recurring material recovery income. Offsetting the income is decreased interest income of $18,787 and $8,817 for the three and nine month periods of 1995 and increased interest expense of $56,880 (46.1%) and $221,711(104.4%) for these same periods. Interest expense increased during the three and nine month periods of 1995 as a result of increased debt levels associated with the acquisition of Applied Photonic Devices. Net Income Net income for the three and nine months of 1995 was $178,837, or 1.8% of net sales and $269,970, or 1.0% of net sales, respectively. Net loss for the same periods in 1994 was $720,374 and $265,025, respectively. This was a positive difference of $899,211 and $534,995 for the three and nine month periods, respectively. Liquidity and Capital Resources At September 30, 1995, the Company had net working capital of $15,907,658, a current ratio of 4.7 to 1, and an aggregate of $954,558 in cash and cash equivalents. In addition, the Company had total marketable securities of $5,020,983, which could be converted to cash if needed, including $1,129,102 classified as long-term. On May 23, 1995, the Company borrowed an additional $2,200,000 under its existing bank loan agreement for the purchase of Applied Photonic Devices. On September 5, 1995, the Company borrowed an additional $900,000 for working capital purposes. The amount outstanding under this agreement at September 30, 1995, was $10.0 million. The Company expects but cannot assure that existing working capital and cash flow from operations should be sufficient to meet the Company's cash needs in 1995. - 9 - 10 PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibit 11.1 - Schedule of Earnings Per Share Calculation (b) Reports on form 8-K A report on Form 8-K was filed by the Registrant on June 6, 1995, to report the acquisition of stock of Applied Photonic Devices, Inc. A report on Form 8-K/A was filed on August 9, 1995, to provide the audited financials and proforma information of the acquired entities. 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: November 10, 1995 BY: /s/ R. E. Jaeger ---------------------------- Raymond E. Jaeger President and Chief Executive Officer Date: November 10, 1995 BY: /s/ Bruce A. Cannon ---------------------------- Bruce A. Cannon Senior Vice President and Chief Financial Officer - 10 - 11 EXHIBIT INDEX Exhibit 11.1 - Schedule of Earnings Per Share Calculation Exhibit 27 - Financial Data Schedule EX-11.1 2 SCHEDULE OF EARNINGS PER SHARE CALCULATION 1 EXHIBIT 11.1 SPECTRAN CORPORATION EARNINGS PER SHARE CALCULATION The following is a calculation of earnings per share for the nine months and three months ended September 30, 1995 and 1994.
Nine Months Ended Three Months Ended September 30, September 30, --------------------------- -------------------------- Calculation of Primary Earnings per Share 1995 1994 1995 1994 ----------------------------------------- ---- ---- ---- ---- Average common shares outstanding 5,280,048 5,201,002 5,353,103 5,207,409 Shares assumed to be repurchased under treasury stock method for stock options and stock purchase warrants 129,537 -- 125,342 -- ---------- ---------- --------- ---------- Total Shares 5,409,585 5,201,002 5,478,445 5,207,409 ========== ========== ========= ========== Net Income (loss) $ 269,970 $ (265,025) $ 178,837 $ (720,374) ========== ========== ========= ========== Per Share Amount $.05 $(.05) $.03 $(.14) ==== ====== ==== ====== Calculation of Fully Diluted Earnings per Share ----------------------------------------------- Average common shares outstanding 5,280,048 5,201,002 5,353,103 5,207,409 Shares assumed to be repurchased under treasury stock method for stock options and stock purchase warrants 78,653 -- 67,187 -- --------- --------- --------- --------- Total Shares 5,358,701 5,201,002 5,420,290 5,207,409 ========= ========= ========= ========= Net Income (loss) $ 269,970 $(265,025) $ 178,837 $(720,374) ========= ========== ========= ========= Per Share Amount $.05 $(.05) $.03 $(.14) ==== ===== ==== =====
EX-27 3 FINANCIAL DATA SCHEDULE
5 9-MOS DEC-31-1994 JAN-01-1995 SEP-30-1995 954,558 3,891,881 8,045,455 153,074 6,347,493 20,213,641 21,973,100 12,143,926 38,296,853 4,305,983 0 535,335 0 0 0 38,296,853 27,035,049 27,035,049 17,940,556 17,940,556 0 0 434,087 457,575 187,605 269,970 0 0 0 269,970 .05 .05
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