10-K
1
FORM 10-K
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED COMMISSION FILE NUMBER
DECEMBER 31, 1994 0-13230
ALTRON INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MASSACHUSETTS 04-2464301
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
ONE JEWEL DRIVE, WILMINGTON, MASSACHUSETTS 01887
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code:
(508) 658-5800
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock
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 aggregate market value of the voting stock held by nonaffiliates of the
Registrant as of February 10, 1995 was $103,000,000.
The number of shares of Common Stock of the Registrant outstanding as of
December 31, 1994 was:
8,420,497.
DOCUMENTS INCORPORATED BY REFERENCE
Part III incorporates information by reference from the definitive proxy
statement for the 1995 Annual Meeting to be held May 25, 1995.
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.
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ITEM 1. BUSINESS
Altron is a leading contract manufacturer of interconnect products used in
advanced electronic equipment. The Company manufactures complex products in the
mid-volume sector of the electronic interconnect industry. Altron's products
generally require greater engineering and manufacturing expertise than mass-
produced, less complex products. The Company manufactures custom-designed
backplanes, surface mount assemblies and total systems, as well as multilayer,
high density printed circuit boards. Altron works closely with its customers
from the early stages of product design and development. The Company provides
original design, engineering prototype, preproduction and volume production
capabilities.
Altron believes its capabilities both in manufacturing multilayer, high
density printed circuit boards and in providing value added contract
manufacturing services advantageously position the Company to serve high growth
OEMs in the rapidly changing electronics markets. Altron's OEM customers
include a diversified base of manufacturers in the telecommunications, data
communications, computer, industrial and medical systems segments of the
electronics industry, such as AT&T Corp., Cabletron Systems, Inc., Cascade
Communications Corp., Cisco Systems, Inc., Data General Corporation, EMC
Corporation, General Datacomm Industries, Inc., General Electric Company,
Hewlett-Packard Company, Motorola, Inc., Pyramid Technology Corporation,
Siemens Rolm Communications, Inc., Silicon Graphics, Inc., and Stratacom, Inc.
Altron's strategy is to continue to use its well established high technology
printed circuit board manufacturing and engineering capabilities to further
expand into the rapidly growing contract manufacturing business, providing
products and services including backplanes, surface mount assemblies, power
supplies and total systems. Key elements of this strategy include providing its
customers with the highest levels of quality, superior service and leading edge
technology. In fiscal 1994, approximately 61% of Altron's net sales were
attributable to value added contract manufacturing, with the remaining 39% of
net sales attributable to printed circuit board manufacturing.
ELECTRONIC INTERCONNECT INDUSTRY OVERVIEW
Multilayer, High Density Printed Circuit Boards. According to The Institute
for Interconnecting and Packaging Electronic Circuits ("IPC"), the United
States printed circuit board market was approximately $6 billion in 1994, of
which approximately $4.9 billion was attributable to independent manufacturers
like Altron. IPC's data also shows that this market grew approximately 10% in
1994, with multilayer, high density printed circuit boards, the fastest growing
segment, accounting for approximately 62% of the 1994 market. IPC estimates
that the percentage of the printed circuit board market available to
independent printed circuit board manufacturers, such as Altron, has increased
from 66% to 82% since 1991.
Value Added Contract Manufacturing. According to IPC, the United States value
added contract manufacturing market was approximately $9.4 billion in 1994 and
is growing about 20% per year. Based on industry data, the Company believes
that OEMs are increasingly relying upon independent manufacturers of complex
electronic interconnect products, such as Altron, rather than on in-house
("captive") production. OEMs which have discontinued or curtailed domestic
captive printed circuit board or backplane production since 1990 include AT&T
Corp., Data General Corporation, Digital Equipment Corporation, General
Electric Company, GTE Corporation, Hewlett-Packard Company, Northern Telecomm
Limited, Raytheon Company, Unisys Corporation, and Xerox Corporation. Altron
believes that the current trend towards increased reliance by OEMs on
independent manufacturers reflects the OEMs' recognition that, for complex
electronic interconnect products, independent manufacturers can provide greater
specialization, expertise, responsiveness and flexibility and can offer shorter
delivery cycles than can be achieved by internal production.
2
Other factors which lead OEMs to utilize contract manufacturers include:
Reduced Time-to-Market. Due to intense competitive pressures in the
electronics industry, OEMs are faced with increasingly shorter product
life-cycles and therefore have a growing need to reduce the time required
to bring a product to market. OEMs can reduce their time to market by
using a contract manufacturer's established manufacturing expertise and
infrastructure.
Reduced Capital Investment Requirements. As electronic products have
become more technologically advanced, the manufacturing process has
become increasingly sophisticated and automated, requiring a greater
level of investment in capital equipment. By using contract
manufacturers, OEMs can reduce their overall capital equipment
requirements while maintaining access to advanced manufacturing
facilities.
Focused Resources. Because the electronics industry is experiencing
greater levels of competition and rapid technological change, many OEMs
increasingly are seeking to focus their resources on activities and
technologies in which they add the greatest value. By offering
comprehensive electronic assembly and turnkey manufacturing services,
contract manufacturers allow OEMs to focus on core technologies and
activities such as product development, marketing and distribution.
Access to Leading Manufacturing Technology. Electronic interconnect
products and electronic interconnect product manufacturing technology
have become increasingly sophisticated and complex, making it difficult
for OEMs to maintain the necessary technological expertise in process
development and control. OEMs are motivated to work with a contract
manufacturer in order to gain access to the contract manufacturer's
process expertise and manufacturing know-how.
Improved Inventory Management and Purchasing Power. Electronics industry
OEMs are faced with increasing difficulties in planning, procuring and
managing their inventories efficiently due to frequent design changes,
short product life-cycles, large investments in electronic components,
component price fluctuations and the need to achieve economies of scale
in materials procurement. OEMs can reduce production costs by using a
contract manufacturer's volume procurement capabilities. By utilizing a
contract manufacturer's expertise in inventory management, OEMs can
better manage inventory costs and increase their return on assets.
BUSINESS STRATEGY
In response to the foregoing industry trends, Altron has transitioned its
business from primarily supplying printed circuit boards to producing
sophisticated value added electronic interconnect products.
Altron's business strategy encompasses several elements:
. Focus on quality. The Altron team strives to insure the highest levels of
quality control in all phases of its operations, as quality is a critical
competitive factor in the electronic interconnect market. The Company
strives for continuous improvement of its processes and has adopted a
number of quality improvement and measurement techniques to improve its
performance. Altron's two principal plants are ISO 9002 registered.
. Provide service oriented manufacturing. The Company manufactures almost
all of the printed circuit boards used in its total systems, surface
mount assemblies and custom designed backplanes in order to maintain
control over costs, quality and timely delivery of its products. This
vertical integration also allows the Company to provide a broader range
of assembly services, including prototype and high technology products.
. Maintain technology leadership. Altron seeks to deliver advanced
manufacturing and test engineering, responsive materials management, and
technologically advanced, flexible and service-oriented manufacturing for
the complex, leading-edge products of its OEM customers throughout the
full product life cycle.
3
. Target high value added electronic interconnect products. Altron focuses
on leading manufacturers of advanced electronic equipment who generally
require custom-designed, more complex interconnect products and short
lead-time manufacturing services such as quick turn multilayer printed
circuit boards, backplanes and surface mount assemblies and in-house
power supply and total systems design. By focusing on such customer
needs, Altron has been able to achieve higher margins than many other
participants in the electronic interconnect industry.
. Maintain a diversified customer base. Altron services a diversified
customer base spread over a variety of growing industry segments,
including more than 100 customers in the telecommunications, data
communications, computer, industrial and medical systems segments of the
electronics industry. During fiscal 1994, in aggregate Altron's twelve
largest customers accounted for approximately 57% of the Company's net
sales.
. Pursue a "partnership" approach with customers. Altron seeks to establish
"partnerships" with its customers by involving Altron engineers and staff
in the early design stages of its customers' product development, and by
providing quick-turnaround manufacturing services and just-in-time, kanban
and dock-to-stock delivery. Through this approach, Altron seeks to forge
lasting customer relationships across a number of products and through
multiple product generations.
PRODUCTS AND SERVICES
Altron produces total systems, surface mount assemblies, custom designed
backplanes and multilayer printed circuit boards that are used in the
manufacture of sophisticated electronic equipment. For fiscal 1994, Altron's
sales of value added contract manufacturing products such as total systems,
surface mount assemblies and custom designed backplanes grew 37% and accounted
for approximately 61% of total sales. For fiscal 1994, Altron's sales of
printed circuit boards grew approximately 10% and accounted for approximately
39% of total sales. Approximately 85% of Altron's printed circuit board sales
in fiscal 1994 were sales of multilayer, high density printed circuit boards.
Total systems include printed circuit board assemblies, backplanes, card
racks, and power supplies that are enclosed in housings, which are usually
fabricated from steel or aluminum. Altron has developed a highly sophisticated
mechanical design capability to provide its customers with design services.
This capability allows Altron to establish a close partnership with its
customers and gives Altron visibility for potential future customer
requirements.
Custom designed backplanes are assemblies of stamped and plated pins, plastic
housings and other components on multilayer or two-sided printed circuit
boards. Backplanes are used in electronic systems to distribute power and
ground, and to connect printed circuit boards which plug into the backplane
with other printed circuit boards, power supplies, and other circuit elements.
They also are used to transfer information into and out of the system. As
semiconductor speeds have increased and design requirements have become more
stringent, backplane complexity has increased significantly, often requiring
the use of large multilayer printed circuit boards of six or more layers. The
Company manufactures backplanes with up to 32 layers, .300 inches thick, and 2
feet by 3 feet in size. Altron has recently added a complete fine-pitch surface
mount assembly operation to its backplane assembly capabilities, and also uses
press-fit technologies in backplane assembly.
Surface mount assembly is a largely automated advanced interconnect
technology that involves placing semiconductor components directly on the
surface of both sides of a printed circuit board. This surface mount technology
("SMT") allows the leads on integrated circuits and other electronic components
to be soldered to the surface of the backplane assembly or printed circuit
board rather than being inserted into holes, thereby accommodating a
substantially higher number of leads than can be accommodated with less
sophisticated pin-through-hole technology. More leads permit the printed
circuit board to interconnect a greater density of components, which permits a
reduction in the size of the backplane assembly or printed circuit board.
4
Additionally, SMT allows components to be placed on both sides of the printed
circuit board, thereby permitting even greater density.
Multilayer printed circuit boards consist of three or more layers of a
printed circuit board laminated together and interconnected by plated-through
holes. Printed circuit boards consist of metallic interconnecting paths on a
non-conductive material, typically laminated epoxy glass. Holes drilled in the
laminate and plated through with conductive material from one surface to
another, called plated-through holes, are used to receive component leads and
to interconnect the circuit layers. Multilayer boards increase packaging
density, improve power and ground distribution, and permit the use of higher
speed circuitry. The development of electronic components with increased speed,
higher performance and smaller size has stimulated a demand for multilayer
printed circuit boards, as they provide increased reliability, density and
complexity. Since even the most sophisticated two-sided printed circuit boards
cannot meet the requirements of today's circuit designers for packaging
density, an increasing number of designs use multilayer technology.
MANUFACTURING CAPABILITIES AND SERVICES
Altron seeks to establish "partnerships" with its customers by providing high
quality, responsive, flexible manufacturing capabilities and services which
include:
Advanced Manufacturing Equipment. Altron's concentration on more complex
electronic interconnect products has necessitated a substantial capital
investment in advanced equipment and the continued introduction of new
manufacturing processes. Altron has established an engineering capability to
select and implement the latest manufacturing technology. For example, the fine
lead spacing or "pitch" in SMT requires an exacting printed circuit board
manufacturing and assembly process, and Altron has state-of-the-art surface
mount assembly operations in all three of its plants. The Company also uses
numerically controlled pin installation and high voltage electrical test
equipment in its backplane assembly manufacturing, and has developed a design
and manufacturing capability for controlled impedance multilayer printed
circuit boards and backplane assemblies. Altron's printed circuit board
manufacturing operations also require state-of-the-art equipment and processes,
and Altron has a computerized artwork generation system, numerically controlled
drillers and routers, automatic electroless deposition, dry film photo-imaging,
automatic gold plating, computerized electrical testing and automatic optical
inspection. In addition, Altron has seven SMT machines, as well as Hewlett-
Packard and GenRad Test Equipment, new Nitrogen blanket flow soldering
equipment, and two automatic axial lead assembly lines. All three of Altron's
plants are staffed with highly experienced SMT engineering and manufacturing
teams which provide cost effective, high quality, assembled printed circuit
boards, backplanes and total systems.
Value Added Contract Manufacturing. Computer integrated manufacturing ("CIM")
services provided by Altron consist of developing manufacturing processes and
tooling and test sequences for new products from product designs received from
customers. In addition, Altron's interconnect products division provides design
and engineering services in the early stages of product development, thus
assuring that both mechanical and electrical considerations are integrated into
a total system approach to achieve a producible, high quality and cost
effective product. Altron also evaluates customer designs for manufacturability
and, when appropriate, recommends design changes to reduce manufacturing costs
or lead times or to increase manufacturing yields and the quality of finished
backplane assemblies and printed circuit boards.
Quick-turnaround. Altron's quick-turnaround manufacturing capabilities allow
it to better serve the needs of its customers for quick response to their
product designs. Shorter customer product life cycles and the need to bring new
products to market quickly have created a demand for small quantities of
complex multilayer printed circuit boards delivered in relatively short periods
of time, typically from three to ten days. Sales of printed circuit boards
produced in this manner accounted for approximately 21% of the Company's
printed circuit board sales in fiscal 1994. After engineering of an
interconnect product is completed, Altron has the capability to manufacture
prototype or preproduction versions of such product on a quick-turnaround
basis. Altron expects that the demand for engineering and quick-turnaround
prototype and preproduction
5
manufacturing services will increase as OEMs' products become more complex and
as product life cycles shorten. The Company's continued success depends upon
its ability to respond to the evolving needs of customers in a timely manner.
Multilayer Printed Circuit Board Manufacturing. Altron's ability to
manufacture printed circuit boards, including large, complex multilayer printed
circuit boards with close tolerance plated-through hole diameters and other
characteristics important to backplane applications, is one of the major
factors that has enabled it to become an important supplier of complex,
technologically advanced backplane assemblies and multilayer printed circuit
boards to the electronics industry. The Company began manufacturing multilayer
boards in 1979 and in fiscal 1994 multilayer sales constituted 85% of the
Company's printed circuit board revenues. Today Altron is capable of
efficiently producing commercial quantities of printed circuit boards with up
to thirty two layers and circuit track widths as narrow as four mils.
The manufacture of complex multilayer interconnect products often requires
the use of sophisticated circuit interconnections between certain layers
(called "blind or buried vias") and adherence to strict electrical
characteristics to maintain consistent circuit transmission speeds (referred to
as "controlled impedance boards"). These technologies require very tight
lamination and etching tolerances and are especially critical for printed
circuit boards with ten or more layers. The Company specializes in multilayer
boards requiring controlled impedance, and has developed the ability to
manufacture large, thick multilayer backplane boards using Cyanate Ester and
GETEK base materials for ultra high speed applications. By concentrating on the
multilayer segment of the printed circuit board market, where quality,
technology and customer service are more important than in the market for less
complex boards, the Company faces less direct competition.
The manufacture of printed circuit boards involves several steps including
dry film imaging, photoimageable soldermask processing, computer controlled
drilling and routing, automated plating and process controls and achievement of
controlled impedance. Manufacture of printed circuit boards used in backplane
assemblies requires specialized expertise and equipment because of the size of
the backplane relative to other printed circuit boards and the closer hole
diameter tolerances required for press-fit pin assembly. Multilayer
manufacturing, which involves placing multiple layers of electrical circuitry
within a single printed circuit board or backplane, expands the number of
circuits and components that can be contained on the interconnect product and
increases the operating speed of the system by reducing the distance that
electrical signals must travel. Increasing the density of the circuitry in each
layer is accomplished by reducing the width of the circuit tracks and placing
them closer together on the printed circuit board or backplane. Interconnect
products having narrow, closely spaced circuit tracks are known as "fine line"
products.
Materials Procurement and Handling. Materials procurement and handling
services provided by Altron include planning, purchasing and warehousing of
electronic components and metal housings used in interconnect products. Altron
uses a variety of materials in the manufacture of its products, including
copper clad laminates, dry film photo resists, connectors, terminals and pins.
The Company maintains more than one supply source wherever possible, however,
a component for a major OEM contract is obtained from a single source. An
interruption or loss of this component supply could have a material adverse
effect on the Company's business and results of operations.
ISO 9002 Registration. Altron's Wilmington, Massachusetts plant and its
surface mount assembly operations in its Fremont, California plant are ISO 9002
registered. The Company is currently pursuing such registration for its other
operations. ISO 9002 registration, which is based on successful implementation
of quality assurance requirements and includes continuous examination of every
aspect of the Company's business and compliance audits conducted by an
independent quality assessor, provides for worldwide acceptance of Altron's
quality systems. Altron was one of the first companies in the electronic
interconnect industry to achieve ISO 9002 registration. This achievement has
been well received by Altron customers, as certain customers will only do
business with ISO 9002 registered companies.
6
CUSTOMERS AND MARKETS
Altron's twenty-five years of experience is an important factor in attracting
and retaining customers, as its business is not protected by any patents.
Altron services a diversified customer base spread over a variety of growing
industry segments, including more than 100 customers in the telecommunications,
data communications, computer, industrial and medical systems segments of the
electronics industry. The following table illustrates the major industry
segments served by Altron and the products and services provided by the Company
to certain OEM customers.
OEM CUSTOMER OEM APPLICATION ALTRON PRODUCTS AND SERVICES
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TELECOMMUNICATIONS
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AT&T Corp. Transmission systems Printed circuit boards
Motorola, Inc. Cellular data communication Printed circuit boards, backplanes
Siemens Rolm PBX telecommunication equipment Backplanes, systems
Communications, Inc.
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DATA COMMUNICATIONS
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Cabletron Systems, Inc. LAN, bridges, repeaters Printed circuit boards
Cascade Communications ATM networks Backplanes
Corp.
Cisco Systems, Inc. Bridges, routers Printed circuit boards, backplanes
General Datacomm ATM network routing systems Design, systems
Industries, Inc.
Stratacom, Inc. ATM fast packet networks Backplanes
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COMPUTER
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Data General Corporation Storage systems Backplanes, systems
EMC Corporation Storage systems Printed circuit boards, backplanes
Hewlett-Packard Company Super mini computers Backplanes
Pyramid Technology High performance servers Backplanes, SMT assemblies
Corporation
Silicon Graphics, Inc. Graphic work stations Backplanes, systems
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INDUSTRIAL
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Adept Technology, Inc. Factory automation SMT assemblies
AEG Schneider Factory automation Printed circuit boards
Automation, Inc.
General Electric Company Drive controllers Printed circuit boards
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MEDICAL
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Clinical Diagnostic Systems, Blood analysers Design, systems
Inc.
Coulter Corporation Medical systems Printed circuit boards, backplanes,
SMT assemblies
General Electric Company Diagnostic CT and MRI Design, systems, backplanes
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Altron seeks to serve a sufficiently large and varied group of customers to
avoid dependence on any one major customer or industry segment. For the year
ended December 31, 1994, one of the Company's customers, Motorola, Inc.,
accounted for approximately 13% of the Company's revenues. In addition, in
aggregate the Company's twelve largest customers (including Motorola, Inc.)
accounted for approximately 57% of the Company's revenues during such period.
7
The Company markets its products and services through its marketing and
customer service organization of 39 employees, and utilizes 17 independent
sales representative organizations located in the major electronics market
areas in the United States.
COMPETITION
The electronic interconnect industry, which includes contract manufacturing,
is highly fragmented and is characterized by intense competition. Altron
competes in the technologically advanced segment of the electronic interconnect
industry, which is also highly competitive but is less fragmented than the
industry as a whole. The Company competes against numerous domestic electronic
interconnect product manufacturers. In addition, current and prospective
customers continually evaluate the merits of manufacturing products internally
and will from time to time offer manufacturing services to third parties in
order to utilize excess capacity. Certain of the Company's competitors have
substantially greater manufacturing, financial and marketing resources than the
Company. The Company may be operating at a cost disadvantage compared to
manufacturers who have greater direct buying power with component suppliers or
who have lower cost structures. During downturns in the electronics industry,
OEMs may become more price sensitive.
The Company believes that the principal competitive factors in the electronic
interconnect industry are quality, service, technology, manufacturing
capability, regional access, price, reliability, timeliness and flexibility.
There can be no assurance that competition from existing or potential
competitors will not have a material adverse effect on the Company's results of
operations.
The introduction of lower priced competitive products or significant price
reductions by the Company's competitors could result in price reductions that
would adversely affect the Company's results of operations, as would the
introduction of new technologies which would render existing electronic
interconnect technology less competitive or obsolete.
BACKLOG
Altron's sales are made principally through purchase orders for current
needs. The Company's backlog at February 25, 1995 was approximately $41.5
million compared to approximately $27.0 million at February 26, 1994, the
majority of which was scheduled to be shipped within 120 days. Variations in
the size and delivery schedules of purchase orders received by the Company, as
well as changes in customers' delivery requirements, may result in substantial
fluctuations in backlog from period to period; accordingly, the Company
believes that backlog cannot be considered a meaningful indicator of long-term
future financial results.
EMPLOYEES
The Company had 925 full-time employees as of December 31, 1994. The
employees are not represented by a union, and the Company believes its employee
relations to be satisfactory. A majority of Company management, officers and
executives have over five years of service with the Company.
ENVIRONMENTAL QUALITY
Proper waste disposal is a major consideration for printed circuit board
manufacturers because metals and chemicals are used in the manufacturing
process. Water used in the printed circuit board manufacturing process must be
treated to remove metal particles and other contaminants before it can be
discharged into the municipal sanitary sewer system. Altron has an existing
waste treatment system at its Wilmington plant which enables it to comply with
governmental regulations relating to the protection of the environment and
accommodate anticipated future growth. The Company believes that continued
compliance with governmental requirements relating to protection of the
environment will not have a material adverse effect on the Company.
Altron has been advised that contamination resulting from activities of prior
owners of an adjacent property has migrated under the Company's manufacturing
plant in Wilmington, Massachusetts. The present owner of the adjacent property
has assumed responsibility for any remediation activities that may be required
and has agreed to indemnify and hold the Company harmless from liabilities and
expenses arising from any requirement that the contamination be remediated.
Although the Company believes that the present owner's assumption of
responsibility will result in no remediation costs to the Company from the
contamination, there can be no assurance that the Company will not be subject
to some costs regarding this matter.
8
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company are as follows:
NAME AGE POSITIONS
---- --- ---------
Samuel Altschuler....................... 67 Chairman of the Board of Directors
and President
Burton Doo.............................. 64 Executive Vice President and
Director of Altron Incorporated and
President of Altron Systems
Corporation
Peter D. Brennan........................ 52 Vice President, Chief Financial
Officer and Treasurer
MR. ALTSCHULER, a founder of the Company, has been President and a Director
of the Company since 1970. In December 1983, Mr. Altschuler was elected
Chairman of the Board of Directors. Mr. Altschuler is also a director of
MASSBANK Corp.
MR. DOO, a founder of the Company, has been a Director of the Company since
1970. He was Treasurer from 1973 to 1992 and Senior Vice President from 1978 to
December 1983. In December 1983, he was elected Executive Vice President. Mr.
Doo has been President of Altron Systems Corporation since its inception.
MR. BRENNAN has been Chief Financial Officer and Treasurer since June 1992.
He has been Vice President of Finance and Corporate Controller since he began
his employment with the Company in 1987.
ITEM 2. PROPERTIES
Altron operates a 185,000 square foot manufacturing plant in Wilmington,
Massachusetts which is approximately 15 miles north of Boston. The plant
produces multilayer printed circuit boards and interconnect products. Altron
believes that this plant is one of the largest independent facilities of its
kind in the United States. In 1994, Altron began leasing a 70,000 square foot
facility in Fremont, California to manufacture interconnect systems, surface
mount assemblies and backplanes for its West Coast customers. Also in 1994,
Altron leased a 30,000 square foot plant in Woburn, Massachusetts for the
design and manufacture of interconnect systems, surface mount assemblies and
power supplies. The Company believes that its existing facilities are adequate
for its current needs. See "--Environmental Quality."
ITEM 3. LEGAL PROCEEDINGS
To the Company's knowledge there are no pending legal proceedings which are
material to the Company to which it is a party or to which any of its property
is subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted during the fourth quarter of the fiscal year
covered by this report to a vote of security holders through solicitation of
proxies or otherwise.
9
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The following table sets forth, for the periods indicated, the range of high
and low sale prices for the Company's common stock in 1994 and 1993 on The
Nasdaq Stock Market's National Market. Prices of the Company's common stock
have been retroactively restated to reflect the three-for-two splits of its
common stock distributed February 10, 1995 and September 3, 1993. The Company's
common stock has been traded under the Nasdaq symbol ALRN since the initial
public offering on August 8, 1984.
1994 1993
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QUARTER HIGH LOW HIGH LOW
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First............................................. 11 7/8 8 1/4 3 3/4 2 3/4
Second............................................ 12 8 8 1/4 3 3/8
Third............................................. 13 1/2 9 3/8 16 3/8 7
Fourth............................................ 16 3/8 12 3/8 15 1/4 7
The Company has not paid any cash dividends on its common stock and its Board
of Directors presently intends to continue this policy in order to retain
earnings for the development of the Company's business. As of December 31,
1994, there were approximately 5,000 beneficial shareholders of the Company's
common stock.
10
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
The income statement data for each of the years in the three-year period
ended December 31, 1994 and balance sheet data as of January 1, 1994 and
December 31, 1994 are derived from the audited Consolidated Financial
Statements included elsewhere in this Form 10-K. The income statement data for
each of the years in the two-year period ended December 28, 1991 and the
balance sheet data as of December 29, 1990, December 28, 1991, and January 2,
1993, are derived from audited Consolidated Financial Statements not included
in this Form 10-K. The information set forth below should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations," the Consolidated Financial Statements, related
Notes and other financial information included elsewhere in this Form 10-K.
FISCAL YEAR ENDED
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DECEMBER 29, DECEMBER 28, JANUARY 2, JANUARY 1, DECEMBER 31,
1990 1991 1993 1994 1994(2)
------------ ------------ ---------- ---------- ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
INCOME STATEMENT DATA:
Net sales............................. $53,493 $62,086 $68,158 $83,406 $104,202
Cost of sales......................... 45,841 53,424 58,571 67,020 81,161
------- ------- ------- ------- --------
Gross profit.......................... 7,652 8,662 9,587 16,386 23,041
Selling, general and administrative
expenses............................ 5,507 6,432 7,026 7,308 8,645
------- ------- ------- ------- --------
Income from operations................ 2,145 2,230 2,561 9,078 14,396
Other income.......................... 264 65 108 109 261
Interest expense...................... 466 502 613 582 574
------- ------- ------- ------- --------
Income before provision for income
taxes............................... 1,943 1,793 2,056 8,605 14,083
Provision for income taxes............ 663 718 818 3,445 5,633
------- ------- ------- ------- --------
Net income............................ $ 1,280 $ 1,075 $ 1,238 $ 5,160 $ 8,450
======= ======= ======= ======= ========
Net income per common and common
equivalent share(1)................. $ 0.17 $ 0.14 $ 0.16 $ 0.63 $ 0.98
======= ======= ======= ======= ========
Weighted average common and common
equivalent shares outstanding(1).... 7,542 7,559 7,770 8,247 8,653
======= ======= ======= ======= ========
DECEMBER 29, DECEMBER 28, JANUARY 2, JANUARY 1, DECEMBER 31,
1990 1991 1993 1994 1994
------------ ------------ ---------- ---------- ------------
(IN THOUSANDS)
BALANCE SHEET DATA:
Working capital....................... $10,090 $ 9,817 $13,346 $21,522 $24,542
Total assets.......................... 36,815 38,028 40,461 52,553 68,522
Long-term debt........................ 5,329 5,151 7,165 9,405 8,646
Stockholders' investment.............. 19,291 20,411 21,810 29,452 40,381
--------
(1) Adjusted to reflect the three-for-two splits of the Company's common stock
effected February 10, 1995 and September 3, 1993. See Note 8 of Notes to
Consolidated Financial Statements.
(2) Reflects the June 9, 1994 acquisition of Astrio, a manufacturer of complex
surface-mount assemblies, for $4,685,000, including $3,000,000 in cash and
167,108 shares of Common Stock. In connection with said acquisition, the
Company also assumed $1,565,000 in liabilities and incurred $64,000 in
acquisition costs. See Note 2 to Consolidated Financial Statements.
11
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the Selected
Consolidated Financial Data and the Consolidated Financial Statements and Notes
thereto contained elsewhere herein.
Printed circuit boards manufactured by the Company and used in its assembly
operations are included in value added contract manufacturing sales. Printed
circuit board sales represent sales to third parties.
On June 9, 1994, Altron acquired Astrio, a manufacturer of complex surface
mount assemblies, for $4,685,000, including $3,000,000 in cash and 167,108
shares of Common Stock (the "Astrio Acquisition").
The following table sets forth for the periods indicated the percentage of
net sales represented by each line item in the Company's statements of income:
FISCAL YEAR ENDED
----------------------------------
JANUARY 2, JANUARY 1, DECEMBER 31,
1993 1994 1994
---------- ---------- ------------
Net sales................................................ 100.0% 100.0% 100.0%
Cost of sales............................................ 85.9 80.4 77.9
----- ----- -----
Gross profit............................................. 14.1 19.6 22.1
Selling, general and administrative expenses............. 10.3 8.8 8.3
----- ----- -----
Income from operations................................... 3.8 10.8 13.8
Other income............................................. 0.1 0.1 0.2
Interest expense......................................... 0.9 0.6 0.5
----- ----- -----
Income before provision for income taxes................. 3.0 10.3 13.5
Provision for income taxes............................... 1.2 4.1 5.4
----- ----- -----
Net income............................................... 1.8% 6.2% 8.1%
===== ===== =====
RESULTS OF OPERATIONS
FISCAL 1994 COMPARED TO FISCAL 1993
Net sales for 1994 increased 25% to $104.2 million from net sales of $83.4
million for 1993. The increase was primarily the result of increased shipments
to the Company's largest customers in the data communications,
telecommunications and computer segments of the electronics industry, as well
as shipments to new customers in these industries. Improvement in general
economic conditions in the electronics industry has resulted in overall growth
for the Company's major customers in these industries. Data communications and
telecommunications customers accounted for approximately 54% of net sales in
each of 1994 and 1993. The Company's largest customer in each of 1994 and 1993
was Motorola, Inc., which accounted for approximately 13% of net sales in each
year.
Value added contract manufacturing sales for 1994 increased 37% to $63.1
million or approximately 61% of net sales, compared to 1993 value added
contract manufacturing sales of $46.1 million or 55% of net sales. Of the $17.0
million increase, $5.9 million is attributable to the Astrio Acquisition.
Printed circuit board sales for 1994 increased 10% to $41.1 million or
approximately 39% of net sales, compared to 1993 printed circuit board sales of
$37.3 million or 45% of net sales. Although the printed circuit board business
will continue to be an important part of the Company's operations, management
believes that printed circuit board sales growth will not keep pace with the
sales growth anticipated in the value added contract manufacturing business for
the foreseeable future.
Gross profit for 1994 increased 41% to $23.0 million from $16.4 million in
1993. Gross margin as a percentage of net sales for 1994 increased to 22.1% as
compared to 19.6% in 1993. The improvement in the
Company's gross margin was primarily a result of better absorption of fixed
costs due to higher shipment
12
levels, and was also due to manufacturing efficiencies gained through
productivity and product yield improvements resulting from additional automated
manufacturing systems and processes. Although there can be no assurance that
the Company can maintain its current gross margin, management expects to focus
on market niches and product mix where there is less competitive pricing
pressure and to continue to improve productivity, yields and utilization.
Selling, general and administrative expenses increased 18% to $8.6 million in
1994 from $7.3 million in 1993. Selling, general and administrative expenses as
a percentage of net sales decreased to 8.3% in 1994 from 8.8% in 1993. The
increase of $1.3 million in 1994 over 1993 was primarily due to added selling,
general and administrative expenses attributable to the Astrio operations since
the acquisition. The decline in selling, general and administrative expenses as
a percentage of net sales was principally the result of higher net sales
combined with management's ability to control expenses.
Other income for 1994 increased $152,000 to $261,000 from other income of
$109,000 in 1993. This increase was principally due to increased interest
income which resulted from higher rates of return earned on investments and
higher cash balances available for investment. Interest expense for 1994
decreased to $574,000 from $582,000 in 1993. This decrease resulted from a
reduced mortgage interest rate which was partially offset by higher term loan
borrowings.
The Company's effective tax rate in 1994 and 1993 reflects a provision of 40%
of pretax income.
FISCAL 1993 COMPARED TO FISCAL 1992
Net sales for 1993 increased 22% to $83.4 million from net sales of $68.2
million in 1992. This increase was primarily the result of a higher volume of
shipments to existing customers and shipments to major new customers in the
data communications and telecommunications segments of the electronics
industry. Value added contract manufacturing sales for 1993 increased 21% to
$46.1 million or 55% of net sales, compared to 1992 value added contract
manufacturing sales of $38.1 million or 56% of net sales. Printed circuit board
sales for 1993 increased 24% to $37.3 million or 45% of net sales, compared to
1992 printed circuit board sales of $30.1 million or 44% of net sales. During
1993, the Company continued to experience pricing pressures from excess
capacity in the industry.
Gross profit for 1993 increased 71% to $16.4 million from $9.6 million in
1992. Gross margin as a percentage of net sales for 1993 increased to 19.6% as
compared to 14.1% in 1992. The improvement in the Company's gross margin was
due to a higher volume of shipments, product mix, recovery of fixed costs over
higher volume and improvements in operating efficiencies resulting primarily
from productivity and yield improvements. These increases more than offset the
lower pricing which resulted from excess capacity in the industry.
Selling, general and administrative expenses increased 4% to $7.3 million in
1993 from $7.0 million in 1992. Selling, general and administrative expenses as
a percentage of net sales decreased to 8.8% in 1993 from 10.3% in 1992. The
increase of $282,000 in 1993 over 1992 was due primarily to higher sales
commission costs on increased commissionable sales made by independent sales
representatives. The improvement in selling, general and administrative
expenses as a percentage of net sales was principally the result of higher net
sales.
Other income for 1993 was approximately the same as for 1992. Interest
expense for 1993 decreased to $582,000 from $613,000 in 1992. This decrease
resulted from a reduced mortgage interest rate, lower borrowings under the line
of credit and higher interest capitalized, which were partially offset by
higher term loan borrowings.
The Company's effective tax rate in 1993 and 1992 reflects a provision of 40%
of pretax income.
13
LIQUIDITY AND CAPITAL RESOURCES
In 1994, the Company funded its growth primarily from cash generated from
operations. These funds were sufficient to meet increased working capital
needs, capital expenditures of approximately $7.0 million, and to fund the
Astrio Acquisition which utilized $3.0 million in cash.
At December 31, 1994, the Company had working capital of $24.5 million
compared to working capital of $21.5 million at January 1, 1994. Cash and cash
equivalents and short term investments at December 31, 1994 were $10.3 million
compared to $8.9 million at January 1, 1994.
At December 31, 1994, the Company had a $5.0 million unsecured line of credit
with its bank, all of which was available.
On February 10, 1995, the Board of Directors adopted a resolution to increase
the authorized shares of Common Stock outstanding from 10,000,000 shares to
30,000,000 shares with a par value of $.05 per share. The proposal will be
submitted for approval by the stockholders at a special meeting scheduled to be
held March 31, 1995.
The Company believes that its existing bank credit and working capital,
together with cash generated from operations, will be sufficient to satisfy
anticipated sales growth and investment in manufacturing facilities and
equipment. The Company had commitments for approximately $1.5 million of
capital expenditures as of December 31, 1994. Management anticipates that
capital expenditures in 1995 will approximate 1994 capital expenditures. On
March 29, 1995, the Company filed a Registration Statement on Form S-3 to
register shares of its common stock with the Securities and Exchange
Commission.
14
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Altron Incorporated:
We have audited the accompanying consolidated balance sheets of Altron
Incorporated (a Massachusetts corporation) and subsidiary as of January 1, 1994
and December 31, 1994 and the related consolidated income statements,
statements of stockholders' investment and cash flows for the years ended
January 2, 1993, January 1, 1994 and December 31, 1994. These financial
statements are the responsibility of the Company'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, the financial statements referred to above present fairly, in
all material respects, the financial position of Altron Incorporated and
Subsidiary as of January 1, 1994 and December 31, 1994, and the results of
their operations and their cash flows for the years ended January 2, 1993,
January 1, 1994 and December 31, 1994 in conformity with generally accepted
accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index at item
14(a)(2) is the responsibility of the Company's management and is presented for
purposes of complying with the Securities and Exchange Commission's rules and
is not part of the basic financial statements. The schedule has been subjected
to the auditing procedures applied in our audits of the basic financial
statements and, in our opinion, fairly states, in all material respects, the
financial data required to be set forth therein in relation to the basic
financial statements taken as a whole.
Arthur Andersen LLP
Boston, Massachusetts
March 2, 1995
15
ALTRON INCORPORATED AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
JANUARY 1, 1994 AND DECEMBER 31, 1994
1993 1994
------- -------
(IN THOUSANDS)
ASSETS
Current Assets:
Cash and cash equivalents................................................................. $ 8,877 $ 8,306
Short-term investments.................................................................... - 2,028
Accounts receivable, net of allowance for doubtful accounts of $475 and $625.............. 12,429 15,816
Inventories............................................................................... 8,306 11,519
Other current assets...................................................................... 2,045 2,324
------- -------
Total Current Assets.................................................................. 31,657 39,993
Property, Plant and Equipment, net............................................................ 20,896 24,510
Costs in Excess of Net Assets of Acquired Company............................................. - 4,019
------- -------
$52,553 $68,522
======= =======
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
Current portion of long-term debt......................................................... $ 738 $ 805
Accounts payable.......................................................................... 5,489 9,275
Accrued payroll and other employee benefits............................................... 2,443 2,882
Other accrued expenses.................................................................... 1,465 2,489
------- -------
Total Current Liabilities............................................................. 10,135 15,451
------- -------
Long-term Debt................................................................................ 9,405 8,646
------- -------
Deferred Income Taxes......................................................................... 3,561 4,044
------- -------
Stockholders' Investment:
Preferred stock, $1.00 par value --
Authorized -- 1,000,000 shares
Issued and outstanding--none............................................................ - -
Common stock, $.05 par value --
Authorized -- 10,000,000 shares
Issued -- 8,251,473 and 8,577,552 shares in 1993 and 1994............................... 413 429
Paid-in capital........................................................................... 8,201 10,664
Retained earnings......................................................................... 21,115 29,565
------- -------
29,729 40,658
Less treasury stock, at cost (157,055 shares in 1993 and 1994).............................. 277 277
------- -------
Total Stockholders' Investment............................................................ 29,452 40,381
------- -------
$52,553 $68,522
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
16
ALTRON INCORPORATED AND SUBSIDIARY
CONSOLIDATED INCOME STATEMENTS
FOR THE YEARS ENDED JANUARY 2, 1993, JANUARY 1, 1994
AND DECEMBER 31, 1994
1992 1993 1994
------------ ------------ -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Net Sales.............................. $68,158 $83,406 $104,202
Cost of Sales.......................... 58,571 67,020 81,161
------- ------- --------
Gross Profit........................... 9,587 16,386 23,041
Selling, General and Administrative Ex-
penses................................ 7,026 7,308 8,645
------- ------- --------
Income from Operations................. 2,561 9,078 14,396
Other Income........................... 108 109 261
Interest Expense....................... 613 582 574
------- ------- --------
Income Before Provision for Income Tax-
es.................................... 2,056 8,605 14,083
Provision for Income Taxes............. 818 3,445 5,633
------- ------- --------
Net Income............................. $ 1,238 $ 5,160 $ 8,450
======= ======= ========
Net Income Per Common and Common Equiv-
alent Share........................... $ 0.16 $ 0.63 $ 0.98
======= ======= ========
Weighted Average Common and Common
Equivalent Shares Outstanding......... 7,770 8,247 8,653
======= ======= ========
The accompanying notes are an integral part of these consolidated financial
statements.
17
ALTRON INCORPORATED AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT
FOR THE YEARS ENDED JANUARY 2, 1993, JANUARY 1, 1994
AND DECEMBER 31, 1994
COMMON STOCK
------------- PAID-IN RETAINED TREASURY
SHARES AMOUNT CAPITAL EARNINGS STOCK
------ ------ ------- -------- --------
(IN THOUSANDS)
Balance, December 28, 1991............. 7,596 $380 $ 5,547 $14,717 $(233)
Exercise of stock options............ 102 5 175 - -
Sale of common stock through employee
stock purchase plan................. 11 - 25 - -
Treasury stock purchased............. - - - - (44)
Net income........................... - - - 1,238 -
----- ---- ------- ------- -----
Balance, January 2, 1993............... 7,709 385 5,747 15,955 (277)
Exercise of stock options............ 527 27 953 - -
Income tax benefit from stock op-
tions............................... - - 1,265 - -
Nonqualified options granted......... - - 179 - -
Sale of common stock through employee
stock purchase plan................. 16 1 57 - -
Net income........................... - - - 5,160 -
----- ---- ------- ------- -----
Balance, January 1, 1994............... 8,252 413 8,201 21,115 (277)
Exercise of stock options............ 149 7 291 - -
Income tax benefit from stock op-
tions............................... - - 408 - -
Stock issuance for net assets of ac-
quired company...................... 167 8 1,677 - -
Sale of common stock through employee
stock purchase plan................. 10 1 87 - -
Net income........................... - - - 8,450 -
----- ---- ------- ------- -----
Balance, December 31, 1994............. 8,578 $429 $10,664 $29,565 $(277)
===== ==== ======= ======= =====
The accompanying notes are an integral part of these consolidated financial
statements.
18
ALTRON INCORPORATED AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JANUARY 2, 1993, JANUARY 1, 1994
AND DECEMBER 31, 1994
1992 1993 1994
------- ------- --------
(IN THOUSANDS)
Cash Flows from Operating Activities:
Net income....................................... $ 1,238 $ 5,160 $ 8,450
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization.................. 2,860 3,199 3,913
Deferred taxes and nonqualified options........ 91 304 348
(Gain) loss on disposal of property and equip-
ment.......................................... (85) 113 90
Changes in current assets and liabilities, net of
assets acquired:
Accounts receivable............................ (496) (3,246) (2,392)
Inventories.................................... (387) 423 (2,678)
Other current assets........................... 5 28 (126)
Accounts payable............................... (1,877) 916 3,144
Accrued expenses............................... 774 541 816
------- ------- --------
Net cash provided by operating activities........ 2,123 7,438 11,565
------- ------- --------
Cash Flows from Investing Activities:
Capital expenditures............................. (3,026) (5,833) (6,986)
Proceeds from sale of equipment.................. 200 115 46
Purchase of a company, net of cash acquired...... - - (2,994)
Net purchases of short-term investments.......... - - (2,028)
------- ------- --------
Net cash used in investing activities............ (2,826) (5,718) (11,962)
------- ------- --------
Cash Flows from Financing Activities:
Proceeds from issuance of common stock........... 205 1,038 386
Purchase of treasury stock....................... (44) - -
Income tax benefit from stock options............ - 1,265 408
Net decrease in short-term debt.................. (500) - (175)
Proceeds from long-term debt..................... 3,000 3,000 -
Principal payments of long-term debt............. (530) (707) (793)
------- ------- --------
Net cash provided by (used in) financing activi-
ties............................................ 2,131 4,596 (174)
------- ------- --------
Net Change in Cash and Cash Equivalents............ 1,428 6,316 (571)
Cash and Cash Equivalents at Beginning of Year..... 1,133 2,561 8,877
------- ------- --------
Cash and Cash Equivalents at End of Year........... $ 2,561 $ 8,877 $ 8,306
======= ======= ========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for:
Interest....................................... $ 690 $ 737 $ 652
Income taxes................................... 539 2,165 4,808
Supplemental Disclosure of Noncash Investing Activities: (See Note 2).
The accompanying notes are an integral part of these consolidated financial
statements.
19
ALTRON INCORPORATED AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS
Altron Incorporated ("the Company") is a leading contract manufacturer of
interconnect products used in advanced electronic equipment. The Company
manufactures complex products in the mid-volume sector of the electronic
interconnect industry including custom-designed backplanes, surface mount
assemblies and total systems, as well as multilayer, high density printed
circuit boards. Altron's customers include a diversified base of manufacturers
in the telecommunications, data communications, computer, industrial and
medical systems segments of the electronics industry.
On June 9, 1994, Altron Systems Corporation, a wholly-owned subsidiary,
completed the acquisition of Astrio Corporation, a manufacturer of complex
surface mount assemblies. The acquisition has been accounted for as a purchase,
and the results of operations have been included in the accompanying
consolidated income statements from the date of acquisition.
FISCAL YEAR
The Company's fiscal year ends on the Saturday closest to December 31. In the
financial statements, "1992" refers to the year ended January 2, 1993; "1993"
refers to the year ended January 1, 1994; and "1994" refers to the year ended
December 31, 1994. Operations for fiscal year 1992 include 53 weeks while all
other years presented include 52 weeks.
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
the Company and Altron Systems Corporation, its wholly owned subsidiary. All
significant intercompany balances and transactions have been eliminated in
consolidation.
REVENUE RECOGNITION
The Company recognizes product sales upon shipment.
CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
The Company considers all highly liquid investment instruments purchased with
a maturity of three months or less to be cash equivalents. Short-term
investments are carried at cost, which approximates market value, and have
maturities of less than one year.
The Company adopted Statement of Financial Accounting Standards (SFAS) No.
115, "Accounting for Certain Investments in Debt and Equity Securities." This
statement addresses the accounting and reporting for investments in marketable
equity securities that have readily determinable fair values and for all
investments in debt securities.
The Company classifies its investment in commercial paper and short-term
treasury bills as held-to-maturity given the Company's intent and ability to
hold the securities to maturity. In accordance with the statement, held-to-
maturity securities are carried at amortized cost.
In October 1994, the Financial Accounting Standards Board issued SFAS No.
119, "Disclosure about Derivative Financial Instruments and Fair Value of
Financial Instruments", which is effective for fiscal years ending after
December 15, 1994. As of December 31, 1994, the Company had no financial
instruments requiring disclosure under SFAS No. 119.
20
ALTRON INCORPORATED AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994
NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE
Net income per common and common equivalent share was computed based on the
weighted average number of common and common equivalent shares outstanding
during each year. Common equivalent shares include outstanding stock options.
Fully diluted net income per share has not been separately presented as it
would not be materially different from net income per share as presented.
(2) ACQUISITION
On June 9, 1994, Altron Systems Corporation, a wholly owned subsidiary,
completed the acquisition of Astrio Corporation, a manufacturer of complex
surface-mount assemblies, for $4,685,000 consisting of $3,000,000 cash and
$1,685,000 in Altron's common stock (167,108 shares). In addition, $1,565,000
in liabilities were assumed and related acquisition costs of $64,000 were
incurred.
The acquisition has been accounted for as a purchase, and the results of
operations of Altron Systems Corporation since June 9, 1994 have been included
in the accompanying consolidated income statements. The aggregate cost of the
acquisition exceeded the estimated fair value of the acquired net assets by
$4,154,000 which is being amortized on a straight-line basis over an estimated
useful life of 15 years. The allocation of the purchase price was based on the
fair value of the net assets acquired and is subject to adjustment. The Company
continually assesses whether a change in circumstances has occurred subsequent
to the acquisition that would indicate that the future useful life of the asset
(Costs in Excess of Net Assets of Acquired Company) should be revised. The
Company considers the future earnings potential of the original business in
assessing the recoverability of this asset.
The following table presents selected financial information for the Company
and its subsidiary on a proforma basis, assuming the companies had been
combined as of January 3, 1993. The proforma results are not necessarily
indicative of the actual results or future results of operations that would
have occurred had the acquisition been made on January 3, 1993.
YEAR ENDED YEAR ENDED
JANUARY 1, 1994 DECEMBER 31, 1994
--------------- -----------------
(IN THOUSANDS, EXCEPT PER SHARE
DATA, UNAUDITED)
Net sales................................. $93,027 $107,149
Net income................................ 5,395 8,330
Net income per common and common equiva-
lent share............................... $0.64 $0.95
Weighted average common and common equiva-
lent shares outstanding.................. 8,413 8,728
(3) INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out method) or
market. Cost includes materials, labor and manufacturing overhead. Inventories
are summarized as follows:
1993 1994
------ -------
(IN THOUSANDS)
Raw materials.............................................. $3,466 $ 5,120
Work-in-process............................................ 4,840 6,399
------ -------
$8,306 $11,519
====== =======
21
ALTRON INCORPORATED AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994
(4) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are recorded at cost and consist of the
following:
1993 1994
------- -------
(IN THOUSANDS)
Land..................................................... $ 465 $ 465
Buildings and improvements............................... 10,247 10,666
Equipment................................................ 30,537 36,237
------- -------
41,249 47,368
Less accumulated depreciation............................ 20,353 22,858
------- -------
$20,896 $24,510
======= =======
The Company provides for depreciation using the straight-line method over the
estimated useful lives of 7 to 40 years for buildings and improvements and 3 to
8 years for equipment.
(5) INCOME TAXES
Effective January 3, 1993, the Company adopted SFAS No. 109, "Accounting for
Income Taxes," which requires the liability method of accounting. This
accounting change had no material effect on net income or net worth.
The provision for income taxes shown in the accompanying statements of income
consists of the following (in thousands):
1992 1993 1994
---- ------ ------
Federal:
Current................................................ $541 $2,612 $4,100
Deferred............................................... 79 78 286
---- ------ ------
620 2,690 4,386
---- ------ ------
State:
Current................................................ 186 708 1,167
Deferred............................................... 12 47 80
---- ------ ------
198 755 1,247
---- ------ ------
Provision for income taxes............................... $818 $3,445 $5,633
==== ====== ======
The Company had federal and state income taxes currently payable of $81,000
and $154,000 at January 1, 1994 and December 31, 1994, respectively.
A reconciliation of the Company's effective income tax rate and the statutory
federal income tax rate is as follows:
1992 1993 1994
---- ---- ----
Federal statutory tax rate................................. 34.0% 34.0% 34.0%
State income taxes, net of federal tax benefit............. 6.3 5.8 5.8
Other, net................................................. (.5) .2 .2
---- ---- ----
Effective tax rate......................................... 39.8% 40.0% 40.0%
==== ==== ====
22
ALTRON INCORPORATED AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994
The tax effects of temporary differences included in other current assets as
of January 1, 1994 are $420,000 for inventory and receivables, $533,000 for
accruals, $72,000 for non-qualified stock options and $120,000 for other net
differences. The temporary differences as of December 31, 1994 are $555,000 for
inventory and receivables, $615,000 for accruals, $72,000 for non-qualified
stock options and $37,000 for other net differences.
Deferred income taxes as of January 1, 1994 and December 31, 1994 are
$3,561,000 and $4,044,000, respectively, and resulted principally from the
difference between book and tax depreciation methods.
For 1993 and 1994, the Company realized tax benefits of $1,265,000 and
$408,000, respectively, for disqualifying dispositions of stock options
exercised which are deemed compensation for tax purposes. For financial
reporting purposes, the benefit is accounted for as a credit to paid-in capital
rather than as a reduction of income tax expense.
(6) LONG AND SHORT-TERM DEBT
Long-term debt consists of the following (in thousands):
1993 1994
------- ------
Ten-year real estate mortgage note........................... $ 5,043 $4,892
Unsecured term loans......................................... 5,100 4,500
Other........................................................ - 59
------- ------
10,143 9,451
Less current portion......................................... 738 805
------- ------
Long-term debt............................................... $ 9,405 $8,646
======= ======
Maturities of long-term debt are as follows (in thousands):
FISCAL YEAR
-----------
1995............................................................. $ 805
1996............................................................. 3,769
1997............................................................. 4,877
------
$9,451
======
TEN-YEAR REAL ESTATE MORTGAGE NOTE
In October 1993, the Company renegotiated its ten-year, first mortgage note
with a bank. Under the amended terms, the loan is payable in monthly
installments of principal and interest of $37,300 at a fixed interest rate of
5.97% for three years, at which time the interest rate will be renegotiated.
The Company's facility, located in Wilmington, Massachusetts, is the security
for this loan.
UNSECURED TERM LOANS
On May 29, 1992, the Company borrowed $3,000,000 under a five-year, unsecured
term loan agreement with quarterly principal payments of $150,000 and monthly
interest payable at 7.5%. On September 15, 1993, the Company borrowed a
$3,000,000 three-year unsecured term loan at an interest rate of 5.8% payable
monthly, and principal payable on September 15, 1996, under an amendment to its
term loan agreement with its bank. The term loan agreement contains provisions
that the Company maintain certain financial ratios and covenants which the
Company met as of January 1, 1994 and December 31, 1994.
23
ALTRON INCORPORATED AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994
SHORT-TERM DEBT
The Company has an unsecured line of credit with its bank of $5,000,000 at
the bank's prime rate. There were no borrowings outstanding under the line of
credit and the entire line was available at January 1, 1994 and December 31,
1994.
(7) OPERATING LEASES
The Company leases computer equipment under noncancelable operating leases.
Rental expense for computer leases was $33,000 in 1992, $37,000 in 1993 and
$14,000 in 1994.
The Company rents manufacturing space under lease agreements. Aggregate
minimum lease payments under the leases at December 31, 1994 are $342,000,
$432,000, $552,000, $566,000 and $582,000 for each of the years 1995 through
1999, respectively, and $899,000 thereafter. Rental expense under the leases
was $103,000 in 1992, $120,000 in 1993 and $210,000 in 1994.
(8) STOCKHOLDERS' INVESTMENT
On August 3, 1993, the Board of Directors declared a three-for-two stock
split of its common stock, effected as a 50% stock dividend, to shareholders of
record on August 16, 1993 and distributed September 3, 1993. On January 5,
1995, the Board of Directors declared a three-for-two stock split of its common
stock effected as a 50% stock dividend to shareholders of record on January 20,
1995 and distributed February 10, 1995. Share quantities and related per share
amounts have been retroactively restated to reflect the stock splits.
On February 10, 1995, the Board of Directors adopted a resolution to increase
the authorized shares of common stock outstanding from 10,000,000 shares to
30,000,000 shares with a par value of $.05 per share. The proposal will be
submitted for approval by the stockholders at a special meeting scheduled to be
held March 31, 1995.
PREFERRED STOCK
The stockholders approved the authorization of 1,000,000 shares of preferred
stock, $1 par value, on February 14, 1984. The preferred stock is divisible and
issuable into one or more series. The rights and preferences of the different
series may be established by the Board of Directors without further action by
the stockholders. The Board of Directors is authorized, with respect to each
series, to fix and determine, among other things: (i) the dividend rate, (ii)
the liquidation preference, (iii) whether or not such shares will be
convertible into, or exchangeable for, any other securities and (iv) whether or
not such shares will have voting rights and, if so, the conditions under which
such shares will vote as a separate class.
STOCK OPTIONS
The 1981 Stock Option Plan provided for incentive stock options granted at
fair market value at the date of grant and nonqualified stock options granted
at prices determined by the Board of Directors. All options under the plan are
exercisable over a five-year period and expire 10 years from the date of grant.
In December 1991, this plan terminated and at December 31, 1994, 64,200 shares
were reserved.
The 1991 Stock Option Plan includes incentive stock options granted at fair
market value at the date of grant and nonqualified stock options granted at
prices determined by a committee of the Board of Directors. All options are
exercisable over a five-year period, commencing 12 months from the date of
grant unless
24
ALTRON INCORPORATED AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994
accelerated and expire 10 years from the date of grant. On May 19, 1994 the
stockholders approved an increase in the total number of shares of common stock
reserved for issuance under the Plan to 1,200,000. At December 31, 1994,
901,575 shares of common stock were reserved for issuance.
The 1989 Nonqualified Stock Option Plan for Non-Employee Directors provided
for options exercisable over five years commencing 12 months from the date of
grant and expiring 10 years from the date of grant. At December 31, 1994,
18,000 shares were reserved.
The 1992 and 1993 Stock Option Plans for Non-Employee Directors provided for
options exercisable over a two year period from the date of grant and expiring
10 years from the date of grant. The 1993 Stock Option Plan for Non-Employee
Directors was approved by the stockholders on May 19, 1994. At December 31,
1994, 67,500 and 75,000 shares were reserved for the 1992 and 1993 Plans,
respectively.
The following table summarizes the stock option activity for the three-year
period ended December 31, 1994 (restated for the stock splits):
INCENTIVE NONQUALIFIED
STOCK OPTIONS STOCK OPTIONS
----------------------- ---------------------
OPTION PRICE OPTION PRICE
SHARES PER SHARE SHARES PER SHARE
-------- ------------- ------- ------------
Outstanding at December 28,
1991........................ 803,475 $1.22- $ 2.67 50,625 $1.67-$2.22
Granted..................... 272,250 1.83- 2.83 33,750 1.67- 2.11
Exercised................... (67,500) 1.22- 2.17 (33,750) 1.67- 2.11
Canceled.................... (51,750) 2.11- 2.83 - -
-------- -------
Outstanding at January 2,
1993........................ 956,475 1.22- 2.83 50,625 1.67- 2.22
Granted..................... 280,500 3.22- 8.92 78,750 1.83- 6.61
Exercised................... (508,275) 1.22- 2.83 (18,000) 1.67- 2.22
Canceled.................... (37,800) 1.22- 1.83 - -
-------- -------
Outstanding at January 1,
1994........................ 690,900 1.22- 8.92 111,375 1.67- 6.61
Granted..................... 149,250 8.50- 13.17 45,000 7.08
Exercised................... (128,025) 1.53- 3.67 (20,475) 1.67- 6.61
Canceled.................... (28,575) 1.83- 7.08 (5,400) 6.61
-------- -------
Outstanding at December 31,
1994........................ 683,550 $1.22- $13.17 130,500 $1.83-$7.08
======== =======
Exercisable at December 31,
1994........................ 235,980 $1.22- $ 8.92 75,600 $1.83-$3.67
======== =======
Options outstanding at December 31, 1994 expire between April 2, 1996 and
December 12, 2004.
Compensation on nonqualified stock options granted during 1993 amounted to
$179,000. All options granted in 1994 were at fair market value.
EMPLOYEE STOCK PURCHASE PLAN
The Company maintains an Employee Stock Purchase Plan which provides for two
purchase periods during the Company's fiscal year. The purchase price of shares
under the Plan is 90% of the lower of the fair market value at the beginning
and the end of the period. Substantially all employees with more than one year
of service are eligible to participate in the Plan. At December 31, 1994,
147,915 shares of common stock were reserved for issuance.
25
ALTRON INCORPORATED AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994
(9) OTHER INCOME
Other income consists of interest income of $13,000, $218,000 and $351,000
for the years ended 1992, 1993 and 1994, respectively and other income
(expense), net of $95,000, $(109,000) and $(90,000) for these respective years.
(10) INTEREST EXPENSE
Interest expense was $709,000, $710,000 and $654,000 for the years ended
1992, 1993 and 1994, respectively, of which $96,000, $128,000 and $80,000 was
capitalized to property, plant and equipment.
(11) SIGNIFICANT CUSTOMERS
For 1992, no customer accounted for 10% or more of net sales. One customer,
Motorola Inc., accounted for approximately 13% of net sales for 1993 and 1994.
(12) EMPLOYEE BENEFIT PLAN
The Altron Savings and Investment Plan allows all full-time employees with at
least one year of service with the Company to participate. Plan participants
elect to have contributions made to the Plan under Section 401(k) of the
Internal Revenue Code. Company contributions become vested at the rate of 20%
for each year of service with the Company. Annual Company contributions to the
plan are at the discretion of the Board of Directors and are discretionary in
amount. The Company contributed approximately $134,000, $150,000 and $230,000
for the years 1992, 1993 and 1994.
The Company does not provide post-retirement benefits. Accordingly SFAS No.
106 "Accounting for Post-Retirement Benefits Other Than Pensions" has no impact
upon the Company. The Company does not provide benefits for periods after
employment but prior to retirement. Accordingly, SFAS No. 112 "Employers'
Accounting for Postemployment Benefits" has no impact upon the Company.
(13) QUARTERLY RESULTS (UNAUDITED)
The following summarized unaudited results of operations for the fiscal
quarters in the years ended January 1, 1994 and December 31, 1994 have been
accounted for using generally accepted accounting principles for interim
reporting purposes and include adjustments (consisting of normal recurring
adjustments) which the Company considers necessary for the fair presentation of
results for these interim periods:
FIRST SECOND THIRD FOURTH FISCAL
QUARTER QUARTER QUARTER QUARTER YEAR
------- ------- ------- ------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
1993
Net sales........................... $20,580 $21,230 $20,056 $21,540 $ 83,406
Gross profit........................ 3,540 4,115 4,158 4,573 16,386
Net income.......................... 875 1,280 1,402 1,603 5,160
Net income per share................ 0.11 0.16 0.17 0.19 0.63
1994
Net sales........................... $23,007 $25,372 $26,682 $29,141 $104,202
Gross profit........................ 5,100 5,670 5,799 6,472 23,041
Net income.......................... 1,825 2,070 2,107 2,448 8,450
Net income per share................ 0.21 0.24 0.24 0.28 0.98
26
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not Applicable
PART III
The information required by Items 10, 11, 12 and 13 is hereby incorporated by
reference from the Registrant's definitive Proxy Statement for the 1995 Annual
Meeting to be held on May 25, 1995.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K.
(a) The following documents are filed as a part of this Report:
(1) Financial Statements included in Part II of this Report:
Report of Independent Public Accountants
Consolidated Income Statements for the fiscal years ended January 2,
1993, January 1, 1994 and December 31, 1994.
Consolidated Balance Sheets as of January 1, 1994 and December 31,
1994.
Consolidated Statements of Stockholders' Investment for the fiscal
years ended January 2, 1993, January 1, 1994 and December 31,
1994.
Consolidated Statements of Cash Flows for the fiscal years ended
January 2, 1993, January 1, 1994 and December 31, 1994.
Notes to Consolidated Financial Statements
(2) Financial Statement Schedule Included in Part IV of this Report:
Schedule II--Valuation and Qualifying Accounts
Schedules other than those listed above have been omitted since they are
either not required or the information is otherwise included.
(3) Exhibits
The following exhibits are incorporated herein by reference:
3.1 Articles of Organization of Registrant, as amended (filed as Ex-
hibit 3.1 to the Registration Statement Form S-1 [Registration
No. 2-89704]).
3.2 By-laws of Altron Incorporated as amended through March 12, 1990
(filed as Exhibit 3.2 to the Annual Report on Form 10-K for fis-
cal year ended December 29, 1990).
10.1 Altron Incorporated Non-Qualified Stock Option Plan (filed as Ex-
hibit 4B to the Registration Statement on Form S-8 [Registration
No. 2-94712]).
10.2 Altron Incorporated 1981 Stock Option Plan (filed as Exhibit 4A
to the Registration Statement on Form S-8 [Registration No. 2-
94712]).
10.3 First Amendment to Altron Incorporated 1981 Stock Option Plan
(filed as Exhibit 4AA to Post-Effective Amendment No. 1 to Regis-
tration Statement on Form S-8 [Registration No. 2-94712]).
10.4 Altron Incorporated Employee Stock Purchase Plan (filed as Ex-
hibit 4A to the Registration Statement on Form S-8 [Registration
No. 2-94713]).
27
10.5 Altron Incorporated Stock Option Plan for Non-Employee Direc-
tors, adopted by the Board of Directors on December 17, 1984
(filed as Exhibit 10.11 to the Annual Report on Form 10-K for
fiscal year ended December 29, 1984 [Registration No. 2-89704]).
10.6 Second Amendment to the Altron Incorporated 1981 Stock Option
Plan (filed as Exhibit 10.12 to the Annual Report on Form 10-K
for fiscal year ended January 2, 1988 [Registration No. 2-
94712]).
10.7 Third Amendment to the Altron Incorporated 1981 Stock Option
Plan (filed as Exhibit 10.13 to the Annual Report on Form 10-K
for fiscal year ended January 3, 1987 [Registration No. 2-
94712]).
10.8 Mortgage with Massbank for Savings dated October 1, 1987 (filed
as Exhibit 10.14 to the Annual Report on Form 10-K for fiscal
year ended January 2, 1988 [Registration No. 2-94712]).
10.9 Commercial Real Estate Promissory Note with Massbank for Savings
dated October 1, 1987 (filed as Exhibit 10.15 to the Annual Re-
port on Form 10-K for fiscal year ended January 2, 1988 [Regis-
tration No. 2-94712]).
10.10 Altron Incorporated Stock Option Plan for Non-Employee Direc-
tors, adopted by the Board of Directors on December 14, 1989
(filed as exhibit 10.18 to the Annual Report on Form 10-K for
the fiscal year ended December 30, 1989).
10.11 Altron Savings and Investment Plan, adopted by the Board of Di-
rectors on December 14, 1989 (filed as exhibit 10.19 to the An-
nual Report on Form 10-K for the fiscal year ended December 30,
1989).
10.12 Altron Incorporated 1991 Stock Option Plan, adopted by the Board
of Directors on June 20, 1991 (filed as Exhibit 4A to the Regis-
tration Statement on Form S-8 [Registration No. 33-45884]).
10.13 Altron Incorporated Stock Option Plan for Non-Employee Direc-
tors, adopted by the Board of Directors on September 30, 1992
(filed as exhibit 10.13 to the Annual Report on Form 10-K for
the fiscal year ended January 2, 1993).
10.14 Altron Incorporated Stock Option Plan for Non-Employee Direc-
tors, adopted by the Board of Directors on December 22, 1993,
(filed as Exhibit 10.14 to the Annual Report on Form 10-K for
the fiscal year ended January 1, 1994.)
The following exhibits are filed herewith:
10.15 First Amendment to Altron Incorporated Employee Stock Purchase
Plan, adopted by the Board of Directors on December 21, 1994.
27 Financial Data Schedule
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the fourth quarter of the fiscal
year ended December 31, 1994.
28
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Altron Incorporated
By: /s/ Samuel Altschuler
-------------------------------
Samuel Altschuler
President
Date: March 28, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant in the capacities and on the dates indicated.
NAME TITLE DATE
---- ----- ----
/s/ Samuel Altschuler Chairman of the March 28, 1995
------------------------------------- Board of Directors
SAMUEL ALTSCHULER and President
(principal executive
officer)
/s/ Burton Doo Executive Vice March 28, 1995
------------------------------------- President and
BURTON DOO Director
/s/ Peter D. Brennan Vice President, March 28, 1995
------------------------------------- Chief Financial
PETER D. BRENNAN Officer and
Treasurer (principal
financial and
accounting officer)
/s/ Anthony J. Medaglia, Jr. Director March 28, 1995
-------------------------------------
ANTHONY J. MEDAGLIA, JR.
/s/ Daniel A. Cronin, Jr. Director March 28, 1995
-------------------------------------
DANIEL A. CRONIN, JR.
/s/ Thomas M. Claflin, II Director March 28, 1995
-------------------------------------
THOMAS M. CLAFLIN, II
29
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our report, included in this Form 10-K, into Altron Incorporated's previously
filed Registration Statements on Form S-8 (File Nos. 2-94712, 2-94713, 33-
39744, 33-39980 and 33-45884).
Arthur Andersen LLP
Boston, Massachusetts
March 28, 1995
30
SCHEDULE II
ALTRON INCORPORATED
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
BALANCE AT CHARGES TO DEDUCTIONS BALANCE AT
BEGINNING OF COSTS AND FROM END OF
PERIOD EXPENSES RESERVES PERIOD
------------ ---------- ---------- ----------
RESERVE FOR DOUBTFUL ACCOUNTS:
January 2, 1993................. $375 $123 $123(1) $375
January 1, 1994................. 375 128 28(1) 475
December 31, 1994............... 475 150 -- 625
--------
(1) Amounts deemed uncollectible.
31
EX-10.15
2
EMPLOYEE STOCK OPTION PLAN
Exibit 10.15
AMENDMENT TO ALTRON INCORPORATED EMPLOYEE STOCK PURCHASE PLAN
In accordance with the provisions of Section 18 of the Altron Incorporated
Employee Stock Purchase Plan (the "Plan"), the Plan is hereby amended effective
on January 1, 1995, as follows:
1. Section 2(b) of the Plan is hereby amended to read in its entirety as
follows:
"Company" shall mean Altron Incorporated, a Massachusetts corporation,
and any present or future subsidiaries.
2. Section 2(j) of the Plan is hereby amended to read in its entirety as
follows:
"Eligible Employees" shall mean all persons employed by the Company or
one of its subsidiaries (as defined in Section 425(f) of the Code), but
excluding:
(1) Persons who have been employed by the Company or its
subsidiaries (including any business acquired by the Company or its
subsidiaries) for less than one year on the first day of the Purchase
Period with the exception of persons previously eligible;
(2) Persons whose customary employment is less than twenty hours
per week or five months or less per year; or
(3) Persons who are, as of the day preceding the Purchase Period,
deemed for purposes of Section 423(b)(3) of the Code to own stock
possessing 5% or more of the total combined voting power or value of
all classes of stock of the Company or a subsidiary.
3. This Amendment shall take effect as of the date of its adoption by the
Board of Directors of the Company and upon its approval by the stockholders of
the Company in accordance with the provisions of Section 18 of the Plan.
4. Except as hereinabove provided, the Plan is hereby ratified and confirmed
in all respects.
Altron Incorporated
By: /s/ Anthony J. Medaglia, Jr.
--------------------------------
Anthony J. Medaglia, Jr.
Clerk
December 21, 1994
Adopted by Board of Directors:_______________________
Adopted by the Stockholders: ________________________
EX-27
3
FINANCIAL DATA SCHEDULE
5
1,000
12-MOS
DEC-31-1994
JAN-02-1994
DEC-31-1994
8,306
2,028
16,441
625
11,519
39,993
47,368
22,858
68,522
15,451
8,646
429
0
0
39,952
68,522
104,202
104,202
81,161
89,806
(261)
0
574
14,083
5,633
8,450
0
0
0
8,450
.98
.98