-----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, OVNCsYRm/iNS7b1TkI1rRFRly3s3Kl9xJ+1zQEyErB5+J0F9QrDig88W4Bzjw1Zn HGhUTqWBJT4euzAwNj9tNw== 0000910647-96-000056.txt : 19960515 0000910647-96-000056.hdr.sgml : 19960515 ACCESSION NUMBER: 0000910647-96-000056 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PARLEX CORP CENTRAL INDEX KEY: 0000724988 STANDARD INDUSTRIAL CLASSIFICATION: PRINTED CIRCUIT BOARDS [3672] IRS NUMBER: 042464749 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-12942 FILM NUMBER: 96562658 BUSINESS ADDRESS: STREET 1: 145 MILK ST CITY: METHUEN STATE: MA ZIP: 01844 BUSINESS PHONE: 5086854341 10-Q 1 BODY OF 10Q--FOR 3RD QUARTER 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 March 31, 1996 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 No. 0-12942 PARLEX CORPORATION (Exact Name of Registrant As Specified in its Charter) Massachusetts 04-2464749 (State or other jurisdiction of (IRS Employer Identification Number) incorporation or organization) 145 Milk Street, Methuen, Massachusetts 01844 (Address of principal executive offices) (Zip Code) 508-685-4341 (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 ___ The number of shares of the Registrant's Common Stock, par value $.10 per share, outstanding at April 29, 1996 was 2,371,534 shares. 1 PARLEX CORPORATION INDEX Financial Statements: Consolidated Balance Sheets - March 31, 1996 and June 30, 1995 .......... 3 Consolidated Statements of Income - For the Three Months and Nine Months Ended March 31, 1996 and April 2, 1995 .................. 4 Consolidated Statements of Cash Flows - For the Nine Months ended March 31, 1996 and April 2, 1995 .................................. 5 Notes to Unaudited Consolidated Financial Statements ...................... 6 Management's Discussion and Analysis of Financial Condition and Results of Operations ................................................. 7 Part II - Other Information ............................................... 9 Signatures ................................................................ 10 2 PARLEX CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS MARCH 31, 1996 AND JUNE 30, 1995 (Unaudited)
March 31, 1996 June 30, 1995 -------------- ------------- ASSETS Current assets: Cash and cash equivalents .............................................. $ 365,627 $ 161,392 Accounts receivable - net .............................................. 7,522,523 7,171,553 Inventories: Raw material ........................................................ 2,509,851 1,867,370 Work in process ..................................................... 4,199,991 4,216,706 Refundable income taxes ................................................ 32,811 206,669 Deferred income taxes .................................................. 263,150 263,150 Other current assets ................................................... 501,473 441,866 ------------ ------------ Total current assets ................................................. 15,395,426 14,328,706 ------------ ------------ Property, plant and equipment: Land ................................................................... 468,864 468,864 Buildings .............................................................. 6,869,220 6,629,301 Machinery and equipment ................................................ 23,283,944 21,140,403 Leasehold improvements and other ....................................... 825,732 737,863 ------------ ------------ Total ................................................................ 31,447,760 28,976,431 Less accumulated depreciation and amortization ........................................................... (19,801,408) (19,047,539) ------------ ------------ Property, plant and equipment - net ................................. 11,646,352 9,928,892 ------------ ------------ Other assets .............................................................. 836,372 259,503 ------------ ------------ Total ................................................................ $ 27,878,150 $ 24,517,101 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt ...................................... $ 150,000 $ 200,000 Loan payable - current ................................................. 383,919 -- Accounts payable ....................................................... 4,568,371 3,405,642 Accrued liabilities .................................................... 1,612,770 2,257,184 ------------ ------------ Total current liabilities ........................................... 6,715,060 5,862,826 ------------ ------------ Long-term debt ............................................................ 3,350,000 2,300,000 ------------ ------------ Other non-current liabilities ............................................. 1,739,536 1,686,816 ------------ ------------ Minority interest ......................................................... 1,085,417 -- ------------ ------------ Stockholders' equity Preferred stock ........................................................ -0- -0- Common stock ........................................................... 258,153 257,941 Additional paid-in capital ............................................. 3,236,572 3,226,316 Retained earnings ...................................................... 12,531,037 12,220,827 Less treasury stock at cost ............................................ (1,037,625) (1,037,625) ------------ ------------ Total Stockholders' equity .......................................... 14,988,137 14,667,459 ------------ ------------ Total ............................................................... $ 27,878,150 $ 24,517,101 ============ ============
See Notes to Unaudited Consolidated Financial Statements 3 PARLEX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME For the Three Months and Nine Months Ended March 31, 1996 and April 2, 1995 (Unaudited)
Three Months Ended Nine Months Ended March 31, 1996 April 2, 1995 March 31, 1996 April 2, 1995 -------------- ------------- -------------- ------------- Product sales ....................... $11,580,017 $ 9,946,585 $34,745,995 $29,246,220 License fees and royalty income ..... 123,000 84,500 253,000 184,500 ----------- ----------- ----------- ----------- Total Revenue ....................... 11,703,017 10,031,085 34,998,995 29,430,720 ----------- ----------- ----------- ----------- Cost and Expenses: Cost of products sold ............. 9,883,495 8,285,192 30,323,791 23,884,405 Selling, general and administrative expenses 1,470,281 1,380,592 4,053,149 3,731,173 ----------- ----------- ----------- ----------- Operating costs and expenses ...... 11,353,776 9,665,784 34,376,940 27,615,578 ----------- ----------- ----------- ----------- Operating income .................... 349,241 365,301 622,055 1,815,142 Other income - (Note 3) 22,482 75,517 89,022 88,818 Interest expense .................... (90,149) (38,151) (243,367) (95,923) ----------- ----------- ----------- ----------- Income before income taxes .......... 281,574 402,667 467,710 1,808,037 Provision for income taxes .......... (96,700) (161,600) (171,900) (722,150) ----------- ----------- ----------- ----------- Net income - before minority interest 184,874 241,067 295,810 1,085,887 Minority interest - loss 10,710 -- 14,400 -- ----------- ----------- ----------- ----------- Net income .......................... $ 195,584 $ 241,067 $ 310,210 $ 1,085,887 =========== =========== =========== =========== Net income per share $ .08 $ .10 $ .13 $ .45 =========== =========== =========== =========== Weighted average number of common and common stock equivalent shares outstanding 2,437,640 2,482,733 2,445,256 2,424,835 =========== =========== =========== ===========
See Notes to Unaudited Consolidated Financial Statements 4 PARLEX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Nine Months Ended March 31, 1996 and April 2, 1995 (Unaudited)
Nine Months Ended March 31, 1996 April 2, 1995 -------------- ------------- Cash Flows Provided by Operating Activities: Net income ................................................ $ 295,810 $ 1,085,887 ----------- ----------- Adjustments to reconcile net income to net cash provided by (used for)operating activities: Depreciation and amortization ........................... 1,273,575 1,146,184 Loss (gain) on sale of equipment ........................ 13,652 (500) Deferred compensation ................................... 52,720 46,375 Increase (decrease) in cash from: Accounts receivable - net ............................ (350,970) (526,744) Inventories .......................................... (625,766) (619,063) Other current assets ................................. (59,607) (233,353) Accounts payable ..................................... 1,162,729 521,442 Accrued liabilities .................................. (644,414) 45,416 Income taxes payable ................................. 173,858 (424,625) ----------- ----------- Total adjustments ......................................... 995,777 (44,868) ----------- ----------- Net cash provided by operating activities ................. 1,291,587 1,014,019 ----------- ----------- Investment Activities: Additions to property, plant and equipment ................ (1,977,081) (1,984,754) Increase in other assets .................................. (576,869) (59,341) Proceeds from the sale of equipment ....................... 32,295 500 ----------- ----------- Net cash used for investment activities ................... (2,521,655) (2,043,595) ----------- ----------- Financing Activities: Borrowings under revolving credit agreement ............... 1,150,000 850,000 Payments of long term debt ................................ (150,000) (150,000) Loan payable - Joint Venture .............................. 383,919 -- Capital contributions to Joint Venture - minority interests 39,915 -- Exercise of stock options ................................. 10,469 224,763 ----------- ----------- Net cash from financing activities ........................ 1,434,303 924,763 ----------- ----------- Net Increase (Decrease) in Cash and Cash Equivalents ...... 204,235 (77,813) Cash and Cash Equivalents at Beginning of Period .......... 161,392 194,048 ----------- ----------- Cash and Cash Equivalents at End of Period ................ $ 365,627 $ 116,235 =========== ===========
See Notes to Unaudited Consolidated Financial Statements 5 PARLEX CORPORATION AND SUBSIDIARIES Notes to Unaudited Consolidated Financial Statements ---------------------------------------------------- 1. Management Statement -------------------- The financial statements as reported in Form 10-Q reflect all adjustments which are, in the opinion of management, necessary to present fairly the financial position as of March 31,1996 and the results of operations and cash flows for the three and nine months ended March 31, 1996 and April 2, 1995. All adjustments made to the interim financial statements were of a normal recurring nature. The Company followed the same accounting policies in the preparation of this interim financial statement as described in the Company's annual filing on Form 10-K for the year ended June 30, 1995 and this filing should be read in conjunction with that annual report. 2. Income Per Share ---------------- In the third quarter and first nine months of this year, the income per share computations are based on the weighted average number of common and common stock equivalent shares outstanding during the respective periods. 3. Other Income ------------ Other income, in both the current and preceding year's results, is comprised entirely of items of miscellaneous nature. 4. Joint Venture ------------- In May 1995, the Company entered into an agreement to establish a limited liability company in the form of a joint venture in the People's Republic of China. The Company owns 50.1% of the Joint Venture. The Joint Venture commenced operations September 1, 1995. The Company reports the financial results of this venture on a three month time lag. 6 Management's Discussion and Analysis of Financial Condition and Results of Operations Operations - ---------- Total revenue in the third quarter of the current fiscal year was $11,703,017, an increase of approximately 17% from $10,031,085 reported for the same quarter last year. For the first nine months of the year, revenue totalled $34,998,995 versus $29,430,720 for the comparable period last year, an increase of about 19%. Revenues were generated principally from product sales, while some was derived from licensing and royalty fees. These results reflect increased shipments in both the Laminated Cable and the Flexible Circuit Products Divisions. The cost of products sold as a percentage of sales was 84% and 87% for the third quarter and first nine months, respectively. This compares to 83% and 81% in the respective periods last year. The increase in the cost of sales percentage related to a major contract in the Flexible Circuit Products Division. Although the Company was making consistent progress over the past six months, it wasn't until the month of March 1996 when the Company overcame virtually all of the technical issues that were impacting upon the yields and profitability on this large contract. These issues encompassed the use of very thin materials involving new technology, new equipment, and special handling requirements. The Company anticipates a reduction in the cost of sales percentage as a result of resolving these issues on this major program. Selling, general, and administrative expenses as a percentage of revenue was 13% in the current quarter versus 14% for the comparable quarter last year. For the first nine months, selling, general and administrative expenses were 12% and 13% in the current quarter and preceding year, respectively. The improvement was a result of the Company's ability to generate additional revenue without incurring a commensurate increase in expenses. Interest expense was $90,149 this quarter as compared to $38,151 last year. For the first nine months, interest expense was $243,367 versus $95,923 last year. Although the Company generated nearly $1,300,000 in positive cash flow from operating activities, the Company borrowed money to facilitate its growth through the purchase of equipment, as well as to finance a portion of its investment in a Chinese Joint Venture (see Note 4 to Consolidated Financial Statements) that commenced operations September 1, 1995. These additional borrowings are responsible for the increase in interest expense. Other income this quarter was $22,482 and $89,022 for the first nine months. Last year, other income totalled $75,517 and $88,818 for the third quarter and first nine months, respectively. Other income was comprised entirely of items of a miscellaneous nature for all time periods. 7 The above factors resulted in income before income taxes of $281,574 and $467,710 for the third quarter and first nine months, respectively. This compares to income before income taxes of $402,667 in the third quarter and $1,808,037 for the first nine months last year. The Company's effective tax rate was 34% in the third quarter and 37% for the first nine months this year. This compares to 40% for both the third quarter and first nine months last year. The net income for the quarter, as a result of the above factors, was $195,584 versus $241,067 last year. For the first nine months, net income was $310,210 as compared to $1,085,887 last year. Liquidity and Capital Revenues - ------------------------------ The Company is envisioning additional working capital requirements, as well as additional capital expenditures to accommodate its future growth. The recently negotiated $5,000,000 unsecured line of credit that was made available in December 1995 under its Revolving Credit Facility, together with the Company's internally generated cash flow from operations, should be adequate to provide for the Company's future needs. 8 PART II - OTHER INFORMATION --------------------------- Items 1-5 THESE ITEMS ARE INAPPLICABLE Item 6 Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibits - None (b) The Company filed no reports on Form 8-K during the quarter for which this report is filed. 9 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. PARLEX CORPORATION ------------------ /s/ Peter J. Murphy ________________________ Peter J. Murphy President /s/ Steven M. Millstein _________________________ Steven M. Millstein Vice President of Finance May 13, 1996 _________________________ Date 10 EX-27 2 ARTICLE 5 OF FDS FOR 3RD QUARTER OF 10-Q
5 This schedule contains a summary of financial information extracted from the Condensed Consolidated Balance Sheet and Condensed Consolidated Statement of Operations and is qualified in its entirety by reference to such financial statements. 1 9-MOS JUN-30-1996 MAR-31-1996 365,627 0 7,633,415 110,892 6,709,842 15,395,426 31,447,760 19,801,408 27,878,150 6,565,060 150,000 0 0 258,153 0 27,878,150 34,745,995 34,998,995 30,323,791 34,376,940 0 0 243,367 467,710 171,900 310,210 0 0 0 310,210 .13 .13
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