-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, s5goInHnFMsc3YmvlJxTxwTbkGP8vEPPoeemv+YwRBxf7O2RIhI25ToLitPAlYgO vrFoe1WOzQCIyO9rEF13lg== 0000912057-95-005919.txt : 19950807 0000912057-95-005919.hdr.sgml : 19950807 ACCESSION NUMBER: 0000912057-95-005919 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950624 FILED AS OF DATE: 19950804 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BOSTON ACOUSTICS INC CENTRAL INDEX KEY: 0000805268 STANDARD INDUSTRIAL CLASSIFICATION: HOUSEHOLD AUDIO & VIDEO EQUIPMENT [3651] IRS NUMBER: 042662473 STATE OF INCORPORATION: MA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-15193 FILM NUMBER: 95558941 BUSINESS ADDRESS: STREET 1: 70 BROADWAY CITY: LYNNFIELD STATE: MA ZIP: 01940 BUSINESS PHONE: 6175929000 MAIL ADDRESS: STREET 1: 70 BROADWAY CITY: LYNNFIELD STATE: MA ZIP: 01940 10-Q 1 1ST QUARTER 10-Q - ------------------------------------------------------------------------------- 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 JUNE 24, 1995 OR [ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO ---------- ---------- COMMISSION FILE NO. 33-9875 ------------------ BOSTON ACOUSTICS, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) MASSACHUSETTS 04-2662473 (STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER OF INCORPORATION OR IDENTIFICATION NO.) ORGANIZATION) 70 BROADWAY LYNNFIELD, MASSACHUSETTS 01940 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) (617) 592-9000 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] There were 4,326,704 shares of Common Stock issued and outstanding as of August 4, 1995. - ------------------------------------------------------------------------------- Boston Acoustics, Inc. Index ----- Page ---- Part I: Financial Information Item 1. Financial Statements Consolidated Balance Sheets (Unaudited)- March 25, 1995 and June 24, 1995 4 Consolidated Statements of Income (Unaudited)- Three months ended June 25, 1994 and June 24, 1995 6 Consolidated Statements of Cash Flow (Unaudited)- Three months ended June 25, 1994 and June 24, 1995 7 Notes to Unaudited Consolidated Financial Statements 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 Part II: Other Information Items 1 through 6 11 Signatures 12 2 PART I: FINANCIAL INFORMATION Item 1: Financial Statements 3 Boston Acoustics, Inc. and Subsidiaries Consolidated Balance Sheets (Unaudited) Assets ------
March 25, 1995 June 24, 1995 -------------- ------------- Current Assets: Cash and cash equivalents $ 3,570,790 $ 3,462,797 Short-term investments 8,132,145 8,620,420 Accounts receivable, net of allowance for doubtful accounts of approximately $207,000 and $233,000 respectively 7,759,876 7,816,179 Inventories 8,726,944 9,405,718 Deferred income taxes 585,000 585,000 Prepaid expenses 474,092 719,764 ----------- ----------- Total current assets 29,248,847 30,609,878 ----------- ----------- Property and Equipment, at cost: Land 1,164,800 1,419,544 Machinery and equipment 4,740,328 4,833,852 Office equipment and furniture 1,392,176 1,445,140 Leasehold improvements 440,413 440,413 Motor vehicles 345,454 345,454 Construction in Progress --- 217,061 ----------- ----------- 8,083,171 8,701,464 Less-accumulated depreciation and amortization 5,252,728 5,490,032 ----------- ----------- 2,830,443 3,211,432 ----------- ----------- Other Assets: Long-term investment securities, at cost 5,308,601 4,808,776 Other assets 991,129 991,055 ----------- ----------- Total other assets 6,299,730 5,799,831 ----------- ----------- $38,379,020 $39,621,141 ----------- ----------- ----------- -----------
The accompanying notes are an integral part of these consolidated financial statements. 4 Boston Acoustics, Inc. and Subsidiaries Consolidated Balance Sheets (Unaudited) Liabilities and Shareholders' Equity ------------------------------------
March 25, 1995 June 24, 1995 -------------- ------------- Current Liabilities: Accounts payable $ 876,031 $ 1,024,432 Accrued payroll and payroll- related expenses 941,319 905,304 Dividend payable 540,550 540,838 Other accrued expenses 325,594 412,598 Accrued income taxes 641,558 740,433 ----------- ----------- Total current liabilities 3,325,052 3,623,605 ----------- ----------- Commitments Shareholders' Equity: Common stock, $.01 par value Authorized -- 6,000,000 shares Issued -- 4,518,324 at March 25, 1995 and 4,520,624 shares at June 24, 1995 45,183 45,206 Additional paid-in capital 3,739,101 3,759,491 Retained earnings 31,353,474 32,276,629 ----------- ----------- 35,137,758 36,081,326 Less-Treasury stock, 193,920 shares, at cost 83,790 83,790 ----------- ----------- Total shareholders' equity 35,053,968 35,997,536 ----------- ----------- $38,379,020 $39,621,141 ----------- ----------- ----------- -----------
The accompanying notes are an integral part of these consolidated financial statements. 5 Boston Acoustics, Inc. and Subsidiaries Consolidated Statements of Income (Unaudited)
Three Months Ended ------------------ June 25, 1994 June 24, 1995 ------------- ------------- Net sales $ 8,531,296 $ 9,861,841 Cost of goods sold 4,736,013 5,488,406 ----------- ----------- Gross profit 3,795,283 4,373,435 ----------- ----------- Selling and marketing expenses 1,009,319 1,307,659 General and administrative expenses 564,541 541,270 Engineering and development expenses 469,125 578,094 ----------- ----------- Total expenses 2,042,985 2,427,023 ----------- ----------- Income from operations 1,752,298 1,946,412 Interest income 188,853 206,581 ----------- ----------- Income before provision for income taxes 1,941,151 2,152,993 Provision for income taxes 699,000 689,000 ----------- ----------- Net income $ 1,242,151 $ 1,463,993 ----------- ----------- ----------- ----------- Net income per common share $ .29 $ .34 ----------- ----------- ----------- ----------- Weighted average number of common shares outstanding 4,288,396 4,325,061 ----------- ----------- ----------- ----------- Dividends per share $ .10 $ .125 ----------- ----------- ----------- -----------
The accompanying notes are an integral part of these consolidated financial statements. 6 Boston Acoustics, Inc. and Subsidiaries Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended ------------------ June 25, 1994 June 24, 1995 ------------- ------------- Cash flows from operating activities: Net income $ 1,242,151 $ 1,463,993 Adjustments to reconcile net income to net cash provided by operating activities- Depreciation and amortization 201,076 237,304 Changes in assets and liabilities- Accounts receivable 67,329 (56,303) Inventories (364,885) (678,774) Prepaid expenses (55,461) (245,672) Accounts payable (111,806) 148,401 Accrued expenses (48,803) 50,989 Accrued income taxes 549,000 98,875 ----------- ----------- Net cash provided by operating activities 1,478,601 1,018,813 ----------- ----------- Cash flows from investing activities: Net additions to property and equipment (215,747) (618,293) Decrease (increase) in investments (1,080,639) 11,550 Decrease (increase) in other assets (69,925) 74 ----------- ----------- Net cash used in investing activities (1,366,311) (606,669) ----------- ----------- Cash flows from financing activities: Dividends paid (427,870) (540,550) Exercise of stock options 16,051 20,413 ----------- ----------- Net cash used in financing activities (411,819) (520,137) ----------- ----------- Decrease in cash and cash equivalents (299,529) (107,993) Cash and cash equivalents, beginning of period 5,099,151 3,570,790 ----------- ----------- Cash and cash equivalents, end of period $ 4,799,622 $ 3,462,797 ----------- ----------- ----------- ----------- Items not affecting cash flows: Dividends payable $ 428,951 $ 540,838 ----------- ----------- ----------- ----------- Supplemental Disclosure: Cash paid for income taxes $ 150,000 $ 590,125 ----------- ----------- ----------- -----------
The accompanying notes are an integral part of these consolidated financial statements. 7 Boston Acoustics, Inc. and Subsidiaries Notes to Unaudited Consolidated Financial Statements (1) Basis of Presentation The unaudited consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission and include, in the opinion of management, all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of interim period results. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The Company believes, however, that its disclosures are adequate to make the information presented not misleading. The results for the three-month period ended June 24, 1995 are not necessarily indicative of results to be expected for the full fiscal year. (2) Inventories Inventories are stated at the lower of cost (first-in, first-out) or market and consist of the following:
March 25, 1995 June 24, 1995 -------------- ------------- Raw materials and work-in process $ 5,288,966 $ 4,488,869 Finished goods 3,437,978 4,916,849 ------------ ------------ $ 8,726,944 $ 9,405,718 ------------ ------------ ------------ ------------
Work-in-process and finished goods inventories consist of materials, labor and manufacturing overhead. (3) Net Income Per Common Share Net income per common share is computed using the weighted average number of shares of common stock outstanding during each period. Common equivalent shares (stock options) have not been considered in the calculation of earnings per share as their effect would not be significant. Fully diluted earnings per share have not been presented as the amounts would not differ significantly from primary earnings per share. 8 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations The following table sets forth the results of operations for the three-month period ended June 25, 1994 and June 24, 1995 expressed as percentages of net sales.
Three Months Ended ------------------ June 25, 1994 June 24, 1995 ------------- ------------- Net sales 100.0% 100.0% Cost of goods sold 55.5 55.7 ---- ---- Gross profit 44.5 44.3 ---- ---- Selling and marketing expenses 11.8 13.3 General & administrative expenses 6.6 5.5 Engineering & development expenses 5.5 5.8 ---- ---- 23.9 24.6 ---- ---- Income from operations 20.6 19.7 Interest income 2.2 2.1 ---- ---- Income before provision for income taxes 22.8 21.8 Provision for income taxes 8.2 7.0 ---- ---- Net income 14.6% 14.8% ---- ---- ---- ----
Net sales increased 16 percent, from approximately $8,531,000 during the first quarter of fiscal 1995 to $9,862,000 during the first quarter of fiscal 1996. During the quarter, the Company completed its introduction of the Boston Rally - -TM- Coaxial Series of automotive products. The four models, the RX57, RX67, RX87 and RX97, with suggested retail prices ranging from $140 to $200 per pair, have been very well received. In addition, increases reflected in the home and automotive categories of loudspeakers, both 9 domestically and to International distributors, contributed to the overall sales increase during the three-month period ended June 24, 1995. The Company's gross margin as a percentage of net sales remained relatively stable during the three-month period ended June 24, 1995. Increases in labor related expenses, as well as scrap and rework costs, were offset by increased sales of loudspeaker models with higher margins. Total operating expenses increased from 23.9% of net sales for the first quarter of fiscal 1995 to 24.6% during the same quarter of fiscal 1996. Selling and marketing expenses have increased due to increased advertising expenditures. General and administrative expenses have decreased from 6.6% of net sales during the first quarter of fiscal 1995 to 5.5% of net sales for the same quarter of fiscal 1996. The decrease is due to non-recurring legal costs, primarily attributed to costs expensed during the first quarter of fiscal 1995 and associated with the Company's search for office and manufacturing space. Engineering and development expenses have increased primarily due to increased salaries and related expenses relating to additional personnel, as well as materials and supplies relating to new product development. Interest income remained relatively stable during the first quarter of fiscal 1996 due to funds generated by operations and invested in tax-free municipal bonds and money market instruments. The Company's effective tax rate decreased from 36% in fiscal 1995 to 32% in fiscal 1996, primarily due to a lower state effective tax rate resulting from the favorable tax treatment afforded the Company's foreign sales corporation and Massachusetts securities corporation, as well as tax credits relating to capital expenditures. Net income for the quarter increased 18%, from approximately $1,242,000 in fiscal 1995 to $1,464,000 in fiscal 1996. Earnings per share increased from $.29 to $.34, a gain of 17%. Liquidity and Capital Resources During the first quarter of fiscal 1996, the Company financed its growth with cash generated by operations. As of June 24, 1995 the Company's working capital was approximately $26,986,000. The Company's cash and cash equivalents were approximately $3,463,000, short-term investments were approximately $8,620,000, and long-term investments were approximately $4,809,000. The Company also has a $1,500,000 unsecured bank line of credit. The Company has had no borrowings under any line of credit since December 1985. During 1995, the Company purchased two parcels of land for approximately $1.2 million. In April 1995, the Company purchased a third parcel of land for approximately $255,000. The Company will use this land to construct its new manufacturing and office facility. Construction began in June 1995 and occupancy should occur by the end of fiscal 1996. The Company intends to use approximately $6 million of its available working capital to construct this facility. The Company believes that its resources are adequate to meet its requirements for working capital and capital expenditures through fiscal 1996. 10 PART II: OTHER INFORMATION Item 1. Legal Proceedings ----------------- None Item 2. Changes in Securities --------------------- None Item 3. Defaults Upon Senior Securities ------------------------------- None Item 4. Submission of Matters to a Vote of Security Holders --------------------------------------------------- None Item 5. Other Information ----------------- None Item 6. Exhibits and Reports on Form 8-K -------------------------------- a) List of Exhibits Exhibit 27 - Financial Data Schedule b) Reports on Form 8-K No reports were filed during the quarter ended June 24, 1995. 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. Boston Acoustics, Inc. ---------------------- Registrant Date: August 4, 1995 By: s/Francis L. Reed ----------------- Francis L. Reed Director, Chief Executive Officer and Treasurer (Principal Financial Officer) Date: August 4, 1995 By: s/Andrew G. Kotsatos -------------------- Andrew G. Kotsatos Director, President and Assistant Clerk 12 INDEX TO EXHIBIT Exhibit 27 - Financial Data Schedule EX-27 2 ART. 5 FDS FOR 1ST QUARTER 10-Q
5 This schedule contains summary financial information extracted from the Company's financial statements in its Quarterly Report on Form 10-Q for the quarterly period ended June 24, 1995, and is qualified in its entirety by reference to such financial statements. 3-MOS MAR-30-1996 JUN-24-1995 3,462,797 8,620,420 7,816,179 233,000 9,405,718 30,609,878 8,701,464 5,490,032 39,621,141 3,623,605 0 45,206 0 0 36,036,120 39,621,141 9,861,841 9,861,841 5,488,406 2,427,023 0 0 0 2,152,993 689,000 1,463,993 0 0 0 1,463,993 .34 0
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