-----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, MbbrFQh7jZRkTfH509ZcHw/Lyce+pZTw+Bw64v7GlTUfek03XJcZSsrQjn4nFPe6 1klkzc+72xQEcD8NUH5TdA== 0000727010-97-000002.txt : 19970221 0000727010-97-000002.hdr.sgml : 19970221 ACCESSION NUMBER: 0000727010-97-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961228 FILED AS OF DATE: 19970211 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ELEXSYS INTERNATIONAL INC CENTRAL INDEX KEY: 0000727010 STANDARD INDUSTRIAL CLASSIFICATION: PRINTED CIRCUIT BOARDS [3672] IRS NUMBER: 953534864 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-11691 FILM NUMBER: 97524544 BUSINESS ADDRESS: STREET 1: 1188 BORDEAUX DR CITY: SUNNYVALE STATE: CA ZIP: 94089 BUSINESS PHONE: 7148330870 MAIL ADDRESS: STREET 1: 1188 BORDEAUX DR CITY: SUNNYVALE STATE: CA ZIP: 94089 FORMER COMPANY: FORMER CONFORMED NAME: DICEON ELECTRONICS INC DATE OF NAME CHANGE: 19920703 10-Q 1 1997 FIRST QUARTER REPORT 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 December 28, 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 number 0-11691 ELEXSYS INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) Delaware 95-3534864 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 4405 Fortran Court, San Jose, California 95134 (Address of principal executive offices) (Zip Code) (408) 935-6300 (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__ At January 31, 1997 there were 9,397,545 outstanding shares of common stock. This report consists of 11 pages ELEXSYS INTERNATIONAL, INC. FORM 10-Q INDEX Part I. Financial Information: Item 1. Consolidated Balance Sheets as of December 28, 1996 and September 30, 1996............................................ 2 Consolidated Statements of Operations for the Three Months Ended December 28, 1996 and December 30, 1995................. 3 Consolidated Statements of Cash Flows for the Three Months Ended December 28, 1996 and December 30, 1995..................4 Notes to the Consolidated Financial Statements................ 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations......................................7 Part II. Other Information: Item 4. Submission of Matters to a Vote of Security Holders............9 Item 6. Exhibits.......................................................9 1 ELEXSYS INTERNATIONAL, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share data)
December 28, September 30, 1996 1996 ------------ ------------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 320 $ 1,075 Accounts receivable, net 20,421 20,463 Inventories 13,359 10,690 Prepaid expenses and other current assets 1,450 1,447 ---------------- ---------------- Total current assets 35,550 33,675 ---------------- ---------------- Property, plant and equipment, net 29,384 24,818 Other assets 3,258 3,612 ---------------- --------------- Total assets $ 68,192 $ 62,105 ================ ================ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 14,497 $ 12,629 Accrued payroll and related costs 3,310 2,611 Other current liabilities 1,545 1,321 Short-term borrowings 4,884 5,310 Current portion of long-term debt 1,222 1,234 ---------------- ---------------- Total current liabilities 25,458 23,105 ---------------- ---------------- Long-term debt 3,095 2,448 Convertible subordinated debentures 12,000 12,000 Stockholders' equity: Preferred stock, $1.00 par value, 1,000,000,000 shares authorized, none issued and outstanding at December 28, 1996 and September 30, 1996. Common stock, $1.00 par value, 20,000,000 shares authorized, 9,364,105 shares issued and outstanding at December 28, 1996 and 9,300,810 shares issued and outstanding at September 30, 1996 9,364 9,301 Additional paid-in capital 7,476 7,294 Cumulative foreign currency translation adjustment 181 (22) Retained earnings 10,618 7,979 ---------------- ---------------- Total stockholders' equity 27,639 24,552 ---------------- ---------------- Total liabilities and stockholders' equity $ 68,192 $ 62,105 ================ ================
The accompanying notes are an integral part of these consolidated financial statements. 2 ELEXSYS INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) Three Months Ended December, 28, December 30, 1996 1995 ------------------ ------------------ Net sales $ 36,501 $ 28,911 Cost of sales 29,713 23,533 ------------------ ------------------ Gross profit 6,788 5,378 Operating expenses: Selling, general and administrative 3,471 2,941 Research and development 49 43 ------------------ ------------------ Total operating expenses 3,520 2,984 ------------------ ------------------ Income from operations 3,268 2,394 Interest expense, net 465 365 ------------------ ------------------ Income before income taxes 2,803 2,029 Provision for income taxes 164 19 ------------------ ------------------ Net Income $ 2,639 $ 2,010 ================== ================== Earnings per share $ 0.27 $ 0.21 ================== ================== Weighted average common shares and common equivalent shares outstanding 9,777 9,474 ================== ==================
The accompanying notes are an integral part of these consolidated financial statements. 3 ELEXSYS INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Three Months Ended December 28, December 30, 1996 1995 ---------------- ---------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 2,639 $ 2,010 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,585 1,070 Decrease in accounts receivable 132 3,086 (Increase) decrease in inventories (2,616) 248 (Increase) decrease in prepaid expenses and other current assets 16 (20) Increase in accounts payable 1,787 131 Increase (decrease) in accrued payroll and related taxes 688 (211) Increase (decrease) in other current liabilities 213 (171) Other - 64 ---------------- ---------------- Net cash provided by operating activities 4,444 6,207 ---------------- ---------------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property, plant and equipment (5,158) (1,952) (Increase) decrease other long-term assets 290 - ---------------- ---------------- Net cash used by investing activities (4,868) (1,952) ---------------- ---------------- CASH FLOWS FROM FINANCING ACTIVITIES: Principle Payments on debt (144) (30) Proceeds from exercise of stock options 245 300 Net change in short-term borrowings (426) (2,981) ---------------- ---------------- Net cash used by financing activities (325) (2,711) ---------------- ---------------- Effects of exchange rate changes on cash (6) (25) ---------------- ---------------- Net increase (decrease) in cash and cash equivalents (755) 1,519 Cash and cash equivalents, beginning of period 1,075 903 ---------------- --------------- Cash and cash equivalents, end of period $ 320 $ 2,422 ================ ================ NON-CASH INVESTING AND FINANCING ACTIVITIES: Equipment acquired under capital leases $ 692 - ================ ================ SUPPLEMENTAL CASH FLOW INFORMATION: Interest payments $ 253 $ 62 ================ ================ Income tax payments $ 170 $ 40 ================ ================
The accompanying notes are an integral part of these consolidated financial statements. 4 ELEXSYS INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 - Basis of Presentation The accompanying unaudited consolidated financial statements of Elexsys International, Inc. and its subsidiaries (the "Company") contain all adjustments, consisting of only normal recurring adjustments, which, in the opinion of management, are necessary to present fairly the financial position of the Company as of December 28, 1996 and September 30, 1996, the results of its operations and cash flows for the three months ended December 28, 1996 and December 30, 1995. Certain information and footnote disclosures normally included in the financial statements have been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission, although the Company believes that the disclosures in the consolidated financial statements are adequate to make the information presented not misleading. The consolidated financial statements included herein should be read in conjunction with the consolidated financial statements of the Company for the year ended September 30, 1996, included in the Company's Annual Report on Form 10-K for that fiscal year. Note 2 - Inventories Inventories consist of the following (in thousands): December 28, September 30, 1996 1996 ---------------- ---------------- (Unaudited) Raw materials $ 6,907 $ 5,434 Work in progress 6,452 5,256 ---------------- ---------------- Totals $13,359 $10,690 ================ ================
Note 3 - Earnings Per Share Primary and fully diluted earnings per common share for the three months ended December 28, 1996 and December 30, 1995 have been computed based on weighted average common shares outstanding and common stock equivalents (stock options) as of the above dates and do not include the assumed conversion of the 5 1/2 percent Convertible Subordinated Debentures due 2012 into common stock as such effect would have been antidilutive. Note 4 - Income Taxes In the first three months of fiscal 1997, the Company provided $164,000 for income taxes. This tax provision primarily relates to federal alternative minimum tax and state taxes. As of September 30, 1996, the Company had net operating loss carryforwards for federal, state, and foreign income tax purposes of approximately $24,416,000, $19,402,000, and $672,000, respectively. These carryforwards, for which future benefits are not assured, expire in various amounts through 2008. 5 ELEXSYS INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 5 - Translation of Foreign Currencies Assets and liabilities of the Company's United Kingdom subsidiary are translated into US dollars at the exchange rates in effect at the end of the period. Revenue and expense accounts are translated at a weighted average of exchange rates which are in effect during the year. Translation adjustments that arise from translating the Company's United Kingdom subsidiary's financial statements from pound sterling to US dollars are accumulated in a separate component of stockholders' equity. Transaction gains and losses that arise from exchange rate changes on transactions denominated in a currency other than the local currency are included in results of operations as incurred. For the three months ended December 28, 1996, there were no material transaction gains or losses. Note 6 - Subsequent Event On January 17, 1997, the Company terminated its existing working capital line of credit and entered into a new loan agreement with Sanwa Bank California. The loan agreement consists of a $13 million working capital line of credit and a $7 million term loan. The borrowings under the working capital line of credit and the term loan bear interest at prime rate plus 1/2 percent and 1 percent, respectively. At the Company's request, interest on the line of credit or the term loan can be converted to a fixed rate at 250 basis points and 300 basis points, respectively, over the cost of funds. The line of credit and the term loan are collateralized by substantially all of the Company's assets. The line of credit will remain in effect until January 31, 1998. The amount of term loan can fluctuate and interest only will be payable until January 31, 1998, at which point the amount outstanding will become due and payable in 36 equal monthly installments of principal and interest ending on January 31, 2001. The credit facility contains covenants including the maintenance of certain levels of working capital, tangible net worth and certain financial ratios. In addition, the company is restricted from incurring additional indebtedness, dividends, and certain other payments. In December 1996, the Business Finance Authority of the State of New Hampshire (the "Issuer") issued a tax-exempt qualified small issue private placement bond, the proceeds of which were loaned to the company on January 27, 1997 to reimburse the Company for the $2.3 million it paid to purchase its Nashua, New Hampshire manufacturing facility in November 1996, with approximately another $400,000 available to reimburse the Company for improvements it intends to make to the premises. In connection with the loan, the Company entered into a Loan Agreement among the Issuer, GE Capital Public Finance, Inc., as lender to the Issuer, and the Company, as borrower, dated as of December 1, 1996 (the "Loan Agreement"). Under the terms of the Loan Agreement, the loan has a ten year term with interest payable monthly in arrears at a rate of 6.33%. Principal payments are also due monthly based on a twenty year amortization schedule. The loan is secured by a standby letter of credit issued by Sanwa Bank California under the Company's line of credit facility for 100% of the principal amount plus 120 days interest. 6 ELEXSYS INTERNATIONAL, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the Consolidated Financial Statements and Notes thereto contained elsewhere within this Report on Form 10-Q. Except for the historical information contained herein, the following discussion contains forward-looking statements that involve risks and uncertainties. The actual future results of the Company could differ materially from those discussed here. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this section and those discussed in the Company's Form 10-K for the year ended September 30, 1996. Results of Operations Net Sales Net sales increased 26 percent for the three months ended December 28, 1996 compared to the first quarter of fiscal 1996. The increase in net sales for the three months ended December 28, 1996 resulted from an increased demand for backpanel assemblies from the Company's existing customer base and new customers, and sales generated due to the May 1996 acquisition of Anetec Technologies. The Company has unused capacity in its Printed Circuit Board and Backpanel Assembly operations of approximately 30 and 50 percent respectively, allowing the Company to substantially increase its sales in its existing facilities. Gross Margin Gross Margin for the first quarter of fiscal 1997 as a percentage of net sales was consistent with the first quarter of fiscal 1996. Selling, General and Administrative Selling, general and administrative (SG&A) expenses for the three months ended December 28, 1996 increased 18 percent as compared to the first quarter of fiscal 1996. The increase in SG&A for the first quarter of fiscal 1997, as compared to the same quarter in fiscal 1996, was due to the inclusion of the SG&A expenses of the Company's Anetec Technologies subsidiary, increases in employee and other costs to support 26 percent higher revenues in the first quarter of fiscal 1997, and additions to senior management. As a percentage of net sales, SG&A decreased from 10.2 percent for the first quarter of fiscal 1996 to 9.5 percent for the first quarter of fiscal 1997 due to higher sales revenues. Research and Development Research and development expenditures for the three months ended December 28, 1996 was consistent with the first quarter of fiscal 1996. Interest Expense, Net Interest expense, net of interest income, increased 27 percent for the first quarter of fiscal 1997 as compared to the same quarter in fiscal 1996. The increase is mainly attributable to an increase in borrowings from an asset-based lender in the first quarter of 1997, partially offset by a lower overall cost of borrowing. Factors That May Affect Future Results The Company's future operating results may be adversely affected by a number of factors, including general economic conditions, foreign competition, industry consolidation, the Company's ability to develop, manufacture, and sell its products profitably, and the cyclical nature of the business of some of the Company's customers. The Company participates in a highly competitive industry. The printed circuit board industry has been characterized by stringent customer demands for timely deliveries, service and quality of products and by aggressive pricing practices. The Company's operating results could be materially adversely affected should the Company be unable to meet any one of these customer demands. Liquidity and Capital Resources The Company had cash flows from operating activities of $4.4 million during the first quarter of fiscal 1997 compared to $6.2 million during the same period of the previous year. The decrease in cash flows from operating activities in the first quarter of fiscal 1997, as compared to the same quarter in fiscal 1996, was primarily attributable to additional working capital required to support the growth in revenues. The increase in inventories of $2.6 million in the first quarter of fiscal 1997 was primarily due to build up of inventory to support two new assembly customers. The working capital during the first quarter of fiscal 1997 was positively impacted by an aggregate increase of $2.7 million for accounts payable, accrued expenses, and other current liabilities. 7 Cash provided by operating activities of $4.4 million was offset by cash used by investing and financing activities of $5.2 million. Cash from investing activities was used for the purchase of capital equipment and for a $2.3 million cash payment for the purchase of the building for the Company's operations in Nashua, New Hampshire. Capital equipment was purchased for manufacturing processes that the Company had previously outsourced, for the enhancement of manufacturing capabilities, and for normal replacement. As of December 28, 1996, the Company had borrowed $4.9 million under a working capital line of credit with an asset-based lender. The Company was in compliance with all of the covenants as defined within the agreement. On January 17, 1997, the Company terminated its existing working capital line of credit and entered into a new loan agreement with Sanwa Bank California. The loan agreement consists of a $13 million working capital line of credit and a $7 million term loan. The borrowings under the working capital line of credit and the term loan bear interest at prime rate plus 1/2 percent and 1 percent, respectively. The line of credit and the term loan are collateralized by substantially all of the Company's assets and will remain in effect until January 31, 1998 and January 31, 2001, respectively. The credit facility contains covenants including the maintenance of certain levels of working capital, tangible net worth and certain financial ratios. In addition, the company is restricted from incurring additional indebtedness, dividends, and certain other payments. As of December 28, 1996, the Company's ratio of current assets to current liabilities was 1.4 to 1. Management believes that the Company's existing working capital, its remaining borrowing capacity and funds generated from operations will be sufficient to meet projected working capital requirements and other cash requirements through fiscal 1997. 8 Part II. OTHER INFORMATION Item 4 Submission of Matters to a Vote of Security Holders The Company held its Annual Meeting of Shareholders ("Annual Meeting") on January 29, 1997. At the Annual Meeting the shareholders voted upon and approved the Board's nominees as directors by the votes indicated: Nominee Votes in Favor Votes Against Abstentions Non-votes - --------------- -------------- ------------- -------------- -------------- Milan Mandaric 5,673,223 0 50 0 Roger W. Johnson 5,672,373 0 900 0 C. Bradford Jeffries 5,672,473 0 800 0
Item 6 a. Exhibits 10.46 Loan Agreement dated January 17, 1997 between Sanwa Bank California and the registrant.* 10.47 Loan Agreement dated as of December 1, 1996 among GE Capital Public Finance, Inc., Business Finance Authority of the State of New Hampshire and the registrant.* 27 Financial Data Schedule b. Current reports on Form 8-K None 9 - --------------------- * To be filed by amendment. 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. ELEXSYS INTERNATIONAL, INC. --------------------------- (Registrant) Date: February 11, 1997 By: /s/ W.F. Hegarty ----------------- ---------------- W.F. Hegarty President and Chief Operating Officer By: /s/ Michael S. Shimada ---------------------- Michael S. Shimada Principal Financial Officer and Duly Authorized Officer 10 EX-27 2 FDS FOR 10-Q
5 0000727010 Elexsys International, Inc. 1000 3-MOS Sep-30-1997 Dec-28-1996 320 0 20731 310 13359 35550 88312 58928 68192 25458 15095 0 0 9364 18275 68192 36501 36501 29713 29713 49 30 465 2803 164 2639 0 0 0 2639 .27 .27
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