-----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, RZanQA1Tb/+ofSGktWTSUXH1BU5W2N/hb2F1ikvkuu9zprJhxMjHqoOLuUyJqEMr KjQ4XtbbDh3NX/PK3ZU1Fw== 0000950135-96-001963.txt : 19960521 0000950135-96-001963.hdr.sgml : 19960521 ACCESSION NUMBER: 0000950135-96-001963 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960509 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BROOKTROUT TECHNOLOGY INC CENTRAL INDEX KEY: 0000754516 STANDARD INDUSTRIAL CLASSIFICATION: 7373 IRS NUMBER: 042184792 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-20698 FILM NUMBER: 96558673 BUSINESS ADDRESS: STREET 1: 410 FIRST AVE CITY: NEEDHAM STATE: MA ZIP: 02194 BUSINESS PHONE: 6174494100 MAIL ADDRESS: STREET 2: 410 FIRST CITY: NEEDHAM STATE: MA ZIP: 02194 10-Q 1 BROOKTROUT TECHNOLOGY, INC. 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------- FORM 10-Q (Mark One) /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF - - --- THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1996 / / TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF - - --- THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission File No. 0-20698 BROOKTROUT TECHNOLOGY, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Massachusetts 04-2814792 (State or other (I.R.S. employer jurisdiction of identification incorporation or number) organization) 410 First Avenue Needham, Massachusetts 02194 - - ---------------------------------------- ---------- (Address of principal executive offices) (Zip code) Registrant's telephone number including area code: (617) 449-4100 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 - - --- --- As of May 1, 1996, 6,058,904 shares of Common Stock, $.01 par value per share, were outstanding. Page 1 of 13 pages Exhibit Index Appears on Page 12 2 BROOKTROUT TECHNOLOGY, INC. FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1996 TABLE OF CONTENTS Page ---- PART I FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements Condensed Consolidated Balance Sheets as of March 31, 1996 and December 31, 1995 3 Condensed Consolidated Statements of Income for the Three Months Ended March 31, 1996 and March 31, 1995 4 Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1996 and March 31, 1995 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 PART II OTHER INFORMATION Item 5. Other 10 Item 6. Exhibits 10 Signatures 11 Exhibit Index 12 3 BROOKTROUT TECHNOLOGY, INC. Condensed Consolidated Balance Sheets (In thousands, except share data)
March 31, December 31, 1996 1995 --------- ------------ ASSETS Current assets: Cash and equivalents................................ $14,515 $14,230 Marketable securities............................... 7,585 7,924 Accounts receivable (less allowance for doubtful accounts of $435 in 1996 and $377 in 1995)........ 4,839 4,499 Inventory........................................... 4,310 3,807 Deferred tax assets................................. 577 454 Prepaid expenses.................................... 389 366 ------- ------- TOTAL CURRENT ASSETS.............................. 32,215 31,280 ------- ------- Equipment and furniture: Computer equipment.................................. 1,499 1,346 Furniture and office equipment...................... 1,916 327 ------- ------- Total ............................................ 3,415 1,673 Less accumulated depreciation and amortization.... (914) (824) ------- ------- EQUIPMENT AND FURNITURE - NET..................... 2,501 849 Investment and other assets........................... 574 585 ------- ------- TOTAL............................................. $35,290 $32,714 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt................... $ 6 Accounts payable.................................... $ 3,466 2,293 Customer deposits................................... 364 376 Accrued warranty costs.............................. 384 336 Accrued compensation and commission................. 1,160 1,185 Other accrued expenses.............................. 3,204 2,224 Accrued income taxes................................ 105 1,063 ------- ------- TOTAL CURRENT LIABILITIES......................... 8,683 7,483 ------- ------- Deferred rent......................................... 35 10 Stockholders' equity: Common stock, $.01 par value; authorized, 7,500,000 shares; issued and outstanding 6,016,803 shares in 1996 and 5,989,586 in 1995........................ 60 60 Additional paid-in capital.......................... 17,153 16,921 Unrealized gains on marketable securities........... 14 49 Retained earnings................................... 9,345 8,191 ------- ------- STOCKHOLDERS' EQUITY................................ 26,572 25,221 ------- ------- TOTAL............................................... $35,290 $32,714 ======= =======
See notes to condensed consolidated financial statements. 4 BROOKTROUT TECHNOLOGY, INC. Condensed Consolidated Statements of Income (In thousands, except per share data)
Three Months Ended March 31, ---------------------------- 1996 1995 ---- ---- REVENUE ......................................... $10,183 $6,694 Cost and expenses: Cost of product sold .......................... 4,752 3,266 Research and development ...................... 1,380 916 Selling, general and administrative ........... 2,400 1,565 ------- ------ Total cost and expenses ................... 8,532 5,747 ------- ------ INCOME FROM OPERATIONS .......................... 1,651 947 ------- ------ Interest income, net ............................ 263 212 Income before income tax provision .............. 1,914 1,159 Income tax provision ............................ 760 449 ------- ------ NET INCOME ...................................... $ 1,154 $ 710 ======= ====== NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE $ 0.18 $ 0.12 ======= ====== Weighted average number of common and common equivalent shares outstanding .......... 6,569 6,104 ======= ======
See notes to condensed consolidated financial statements. 5 BROOKTROUT TECHNOLOGY, INC. Condensed Consolidated Statements of Cash Flows (In thousands)
Three Months Ended March 31, ------------------ 1996 1995 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net income ............................................ $ 1,154 $ 710 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization ................ 97 73 Amortization of net premium (discount) on marketable securities ....................... 9 (4) Deferred income taxes ........................ (123) (30) Increase (decrease) in cash from: Accounts receivable ................. (340) (457) Inventory ........................... (503) (107) Other prepaid expenses .............. (23) 66 Accounts payable and accrued expenses 1,231 411 ------- ------- Cash provided by operating activities ...... 1,502 662 ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Expenditures for equipment and furniture .............. (1,738) (87) Purchases of marketable securities .................... (296) (500) Maturities and sales of marketable securities ......... 591 3,900 ------- ------- Cash provided by investing activities ...... (1,443) 3,313 ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from the sale of common stock ................ 232 25 Repayment of long-term debt ........................... (6) (6) ------- ------- Cash provided by financing activities ...... 226 19 ------- ------- INCREASE IN CASH AND EQUIVALENTS ................................ 285 3,994 CASH AND EQUIVALENTS, BEGINNING OF PERIOD ....................... 14,230 10,407 ------- ------- CASH AND EQUIVALENTS, END OF PERIOD ............................. $14,515 $14,401 ======= =======
See notes to condensed consolidated financial statements. 6 BROOKTROUT TECHNOLOGY, INC. Notes to Condensed Consolidated Financial Statements - Unaudited 1. Basis of presentation The accompanying unaudited condensed consolidated financial statements have been prepared by Brooktrout Technology, Inc.(the "Company") pursuant to the rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles and should be read in conjunction with the audited consolidated financial statements incorporated by reference in the Company's 1995 Annual Report on Form 10K and 10K/A. In the opinion of management, the accompanying unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the interim periods presented. The operating results for the interim periods presented are not necessarily indicative of the results which could be expected for the full year. 2. Earnings per share Earnings per common and common equivalent share are computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period. Dilutive common equivalent shares represent shares issuable upon exercise of stock options, calculated using the treasury stock method. 3. Inventory Inventory is valued at the lower of cost (first-in, first-out basis) or market and consisted of the following:
March 31, December 31, --------- ------------ 1996 1995 ---- ---- Raw materials $3,486,000 $2,979,000 Work in process 495,000 605,000 Finished goods 329,000 223,000 ---------- ---------- Total $4,310,000 $3,807,000 ========== ==========
4. Major Customers One customer accounted for approximately 29% and 52% of net revenue for the three months ended March 31, 1996 and 1995, respectively. 7 5. Marketable Securities Marketable securities consist mainly of U.S. government securities purchased with remaining maturities in excess of three months. The amortized cost of these securities at March 31, 1996 was $7,571,000. Net unrealized holding gains of $14,000 were comprised of unrealized gains of $20,000 and unrealized losses of $6,000 at March 31, 1996. 6. Income Taxes The provision for income taxes is approximately as follows:
Three Months Ended March 31, --------- 1996 1995 ---- ---- Federal $570,000 $340,000 State 190,000 109,000 -------- -------- Income tax provision $760,000 $449,000 ======== ========
A reconciliation of the statutory federal rate to the effective rate is as follows:
Three Months Ended March 31, --------- 1996 1995 ---- ---- Statutory tax rate 34% 34% State taxes, net of federal benefit 7 6 Other (1) (1) -- -- Effective tax rate 40% 39% == ==
7. International Sales International sales, principally exported from the United States, accounted for approximately 20% and 12% of net revenue for the three months ended March 31, 1996 and 1995, respectively. 8. Merger with Technically Speaking, Inc. On March 8, 1996, the Company entered into an agreement to merge with Technically Speaking, Inc. (TSI), a company which develops and markets software products for the computer telephony marketplace. To consummate the transaction, the Company expects to issue approximately 475,000 shares of common stock in exchange for all of the outstanding common stock of TSI. The transaction is expected to be accounted as a pooling-of-interests, and consummated at the close of the Company's annual meeting of stockholders on May 29, 1996. 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. RESULTS OF OPERATIONS Three Months Ended March 31, 1996 and 1995 Revenue during the first three months of 1996 increased by approximately 52% to $10,183,000, up from $6,694,000 during the first three months of 1995. This growth was primarily attributable to increased shipments of TR Series products. Increased sales reflect the growth of the principal market segments served by the Company's products, especially manufacturers of fax applications for use on local area networks and manufacturers of fax and voice systems for sale to end users. Cost of product sold was $4,752,000, or 47% of revenue, during the three months ended March 31, 1996, compared to $3,266,000, or 49% of revenue, for the same period in 1995. Gross profit percentage was approximately 53% and 51% for the three months ended March 31, 1996 and 1995, respectively. This increase in gross profit percentage is the result of a much higher proportion of TR Series product shipments, which carry a comparatively higher gross margin than OEM voice systems, coupled with decreases in product costs on OEM voice systems. Research and development expense was $1,380,000, or 14% of revenue, compared with $916,000, or 14% of revenue, for the three months ended March 31, 1996 and 1995, respectively. The dollar increase in 1996 reflects the Company's continuing development efforts for its TR Series product family as well as OEM systems development in both voice and fax. The Company intends to continue to commit significant resources to product development and expects that research and development expenditures will be approximately 12% to 14% of revenue for the foreseeable future. Selling, general and administrative expense was $2,400,000 during the first three months of 1996, compared with $1,565,000 during the first three months in 1995. This higher expense level resulted from increased staffing, promotional activities and facility expenses. As a percentage of revenue, selling, general and administrative expense for the first quarter of 1996 was 24% of revenue, compared with 23% for the first quarter of 1995. For the three months ended March 31, 1996, interest income was $263,000, compared with $212,000 for the same period in 1995. The Company's effective tax rate was 40% for the first quarter of 1996, based on the Company's estimated effective tax rate for the full year, and 39% for the first quarter of 1995. 9 Liquidity and Capital Resources For the three months ended March 31, 1996, the Company funded its operations principally through operating revenue. In July 1995, the Company renewed its working capital line of credit. Under the renewed line of credit, the Company may borrow up to $5,000,000 on an unsecured basis, all of which may be used for issuance of letters of credit, subject to compliance with certain covenants. The line of credit will expire in July 1996 and at that time any outstanding balances would be payable in full. The Company expects to renew the line of credit on similar terms as those in place at present. Any amounts borrowed under the line would be subject to interest at the bank's prime rate. At March 31, 1996 commitments outstanding on letters of credit totaled $69,800 which are to be used for future inventory purchases; no borrowings have been made during any period presented. The Company's working capital decreased from $23.8 million at December 31, 1995 to $23.5 million at March 31, 1996. The decrease was attributable, in part, to higher accounts payable, accrued warranty costs, other accrued expenses and lower cash and investment balances which were partially offset by higher accounts receivable, inventory, deferred tax assets and lower accrued income tax balances. In addition, the Company made a large investment in capital assets during the period following the Company's move to a new facility. The Company's aggregate cash, cash equivalents and marketable securities position decreased primarily as a result of increases in accounts receivable, inventory and capital equipment expenditures which were partially offset by higher accounts payable balances and maturities of marketable securities. During the first three months of 1996, the Company invested approximately $1.7 million in capital equipment. The Company currently has no material commitments for additional capital expenditures. The Company anticipates that cash flows from operations, together with current cash and marketable securities balances and funds available under the Company's line of credit, will be sufficient to meet the Company's working capital and capital equipment expenditure requirements for the foreseeable future. 10 Part II. OTHER INFORMATION Items 1. through 5. None Item 6. Exhibits (a) Exhibits 11. Computation of earnings per share 11 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. BROOKTROUT TECHNOLOGY, INC. Date: May 08, 1996 By: ----------------------------- Eric R. Giler President (Principal Executive Officer) Date: May 08, 1996 By: ------------------------- Robert C. Leahy Vice President of Finance and Operations and Treasurer (Principal Financial and Accounting Officer) 12 EXHIBIT INDEX Sequentially Exhibit Number Exhibit Numbered Page 11 Computation of Earnings 13 Per Share EX-11 2 COMPUTATION OF EARNINGS PER SHARE 1 Exhibit 11 BROOKTROUT TECHNOLOGY, INC. COMPUTATION OF INCOME PER COMMON SHARE (In thousands, except per share data, unaudited)
Three Months Ended March 31, ------------------ 1996 1995 ---- ---- Primary Income Per Share: Weighted average number of common and common equivalent shares outstanding: Common stock ...................... 6,002 5,945 Common equivalent shares resulting from options .................... 567 159 ------ ------ Total ......................... 6,569 6,104 ====== ====== Net income .............................. $1,154 $ 710 ====== ====== Net income per common share ............. $ 0.18 $ 0.12 ====== ====== Fully Diluted Income Per Share: Weighted average number of common and common equivalent shares outstanding: Common stock ...................... 6,002 5,945 Common equivalent shares resulting from options .................... 644 273 ------ ------ Total ......................... 6,646 6,218 ====== ====== Net income .............................. $1,154 $ 710 ====== ====== Net income per common shares ............ $ 0.17 $ 0.11 ====== ======
EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) BROOKTROUT TECHNOLOGY INC.'S CONDENSED CONSOLIDATED BALANCE SHEET AND STATEMENTS OF INCOME FOR THE PERIOD ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) BROOKTROUT TECHNOLOGY INC.'S 10-Q FOR THE PERIOD ENDED MARCH 31, 1996. 1,000 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 14,515 7,585 5,274 435 4,310 32,215 3,415 914 35,290 8,683 0 60 0 0 0 35,290 10,183 10,183 4,752 4,752 3,780 0 0 1,914 760 1,154 0 0 0 1,154 .18 .17
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