-----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, BvlpHW0rS+m0BlrFdKfEXbjWlTELLGmvHcmASrbbl8wg5KEfFH2DX+D0KDqENo46 w1xgPp5wmIWFaFRMWNPbOQ== 0000912057-95-009268.txt : 19951103 0000912057-95-009268.hdr.sgml : 19951103 ACCESSION NUMBER: 0000912057-95-009268 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950923 FILED AS OF DATE: 19951102 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: 95586715 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 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 SEPTEMBER 23, 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 4,332,504 shares of Common Stock issued and outstanding as of November 1, 1995. - -------------------------------------------------------------------------- Boston Acoustics, Inc. Index Page ----- Part I: Financial Information Item 1. Financial Statements Consolidated Balance Sheets (Unaudited)- March 25, 1995 and September 23, 1995 4 Consolidated Statements of Income (Unaudited)- Three months and Six months ended September 24, 1994 and September 23, 1995 6 Consolidated Statements of Cash Flows (Unaudited)- Six months ended September 24, 1994 and September 23, 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 September 23, 1995 -------------- ------------------ Current Assets: Cash and cash equivalents $ 3,570,790 $ 5,953,330 Short-term investments 8,132,145 7,514,143 Accounts receivable, net of allowance for doubtful accounts of approximately $207,000 and $247,000 respectively 7,759,876 8,182,010 Inventories 8,726,944 9,228,030 Prepaid income taxes 585,000 585,000 Prepaid expenses 474,092 299,832 ----------- ----------- Total current assets 29,248,847 31,762,345 ----------- ----------- Property and Equipment, at cost: Land 1,164,800 1,418,365 Machinery and equipment 4,740,328 5,708,330 Office equipment and furniture 1,392,176 1,492,789 Leasehold improvements 440,413 440,413 Motor vehicles 345,454 345,454 Construction in Progress --- 797,431 ----------- ----------- 8,083,171 10,202,782 Less-accumulated depreciation and amortization 5,252,728 5,743,924 ----------- ----------- 2,830,443 4,458,858 ----------- ----------- Other Assets: Long-term investment securities, at cost 5,308,601 3,904,999 Other assets 991,129 1,015,070 ----------- ----------- Total other assets 6,299,730 4,920,069 ----------- ----------- $38,379,020 $41,141,272 ----------- ----------- ----------- -----------
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 September 23, 1995 -------------- ------------------ Current Liabilities: Accounts payable $ 876,031 $ 1,532,924 Accrued payroll and payroll- related expenses 941,319 1,075,257 Dividend payable 540,550 541,438 Other accrued expenses 325,594 391,704 Accrued income taxes 641,558 310,433 ----------- ----------- Total current liabilities 3,325,052 3,851,756 ----------- ----------- Commitments Shareholders' Equity: Common stock, $.01 par value Authorized -- 6,000,000 shares Issued -- 4,518,324 at March 25, 1995 and 4,525,424 shares at September 23, 1995 45,183 45,254 Additional paid-in capital 3,739,101 3,802,393 Retained earnings 31,353,474 33,525,659 ----------- ----------- 35,137,758 37,373,306 Less-Treasury stock, 193,920 shares, at cost 83,790 83,790 ----------- ----------- Total shareholders' equity 35,053,968 37,289,516 ----------- ----------- $38,379,020 $41,141,272 ----------- ----------- ----------- -----------
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 Six Months Ended September 24, September 23, September 24, September 23, 1994 1995 1994 1995 ------------- ------------- ------------- ------------- Net sales $9,506,918 $11,647,894 $18,038,214 $21,509,735 Cost of goods sold 5,267,215 6,599,421 10,003,228 12,087,827 ---------- ----------- ----------- ----------- Gross profit 4,239,703 5,048,473 8,034,986 9,421,908 ---------- ----------- ----------- ----------- Selling and marketing expenses 1,305,125 1,414,984 2,314,444 2,722,643 General and administrative expenses 572,697 578,570 1,137,238 1,119,840 Engineering and development expenses 464,787 585,620 933,912 1,163,714 ---------- ----------- ----------- ----------- Total expenses 2,342,609 2,579,174 4,385,594 5,006,197 ---------- ----------- ----------- ----------- Income from operations 1,897,094 2,469,299 3,649,392 4,415,711 Interest income 194,751 190,169 383,604 396,750 ---------- ----------- ----------- ----------- Income before provision for income taxes 2,091,845 2,659,468 4,032,996 4,812,461 Provision for income taxes 753,000 869,000 1,452,000 1,558,000 ---------- ----------- ----------- ----------- Net income $1,338,845 $ 1,790,468 $ 2,580,996 $ 3,254,461 ---------- ----------- ----------- ----------- ---------- ----------- ----------- ----------- Net income per common share $ .31 $ .41 $ .60 $ .75 -------- --------- --------- --------- -------- --------- --------- --------- Weighted average number of common shares outstanding 4,294,581 4,327,482 4,291,489 4,326,272 ---------- ----------- ----------- ----------- ---------- ----------- ----------- ----------- Dividends per share $ .10 $ .125 $ .20 $ .25 -------- --------- --------- --------- -------- --------- --------- ---------
The accompanying notes are an integral part of these consolidated financial statements. 6 Boston Acoustics, Inc. and Subsidiaries Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended ---------------- September 24, 1994 September 23, 1995 ------------------ ------------------ Cash flows from operating activities: Net income $ 2,580,996 $ 3,254,461 Adjustments to reconcile net income to net cash provided by operating activities- Depreciation and amortization 411,242 491,196 Changes in assets and liabilities- Accounts receivable 317,735 (422,134) Inventories (1,133,391) (501,086) Prepaid expenses (130,325) 174,261 Accounts payable 280,490 656,893 Accrued expenses 274,964 200,048 Accrued income taxes (22,500) (331,125) ----------- ----------- Net cash provided by operating activities 2,579,211 3,522,514 ----------- ----------- Cash flows from investing activities: Net additions to property and equipment (372,460) (2,119,611) Decrease (increase) in investments (2,011,864) 2,021,604 Increase in other assets (101,681) (23,941) ----------- ----------- Net cash used in investing activities (2,486,005) (121,948) ----------- ----------- Cash flows from financing activities: Dividends paid (856,821) (1,081,389) Exercise of stock options 70,050 63,363 ----------- ----------- Net cash used in financing activities (786,771) (1,018,026) ----------- ----------- Increase (decrease) in cash and cash equivalents (693,565) 2,382,540 Cash and cash equivalents, beginning of period 5,099,151 3,570,790 ----------- ----------- Cash and cash equivalents, end of period $ 4,405,586 $ 5,953,330 ----------- ----------- ----------- ----------- Items not affecting cash flows: Dividends payable $ 429,550 $ 541,438 ----------- ----------- ----------- ----------- Supplemental Disclosure: Cash paid for income taxes $ 1,474,500 $ 1,889,125 ----------- ----------- ----------- -----------
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 and six-month periods ended September 23, 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 September 23,1995 -------------- ----------------- Raw materials and work-in process $5,288,966 $5,669,281 Finished goods 3,437,978 3,558,749 ---------- ---------- $8,726,944 $9,228,030 ---------- ---------- ---------- ---------- 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 and six-month periods ended September 24, 1994 and September 23, 1995 expressed as percentages of net sales.
Three Months Ended Six Months Ended ------------------ ---------------- September 24, September 23, September 24, September 23, 1994 1995 1994 1995 ------------- ------------- ------------- ------------- Net sales 100.0% 100.0% 100.0% 100.0% Cost of goods sold 55.4 56.7 55.5 56.2 ---- ---- ---- ---- Gross profit 44.6 43.3 44.5 43.8 ---- ---- ---- ---- Selling and marketing expenses 13.7 12.1 12.8 12.7 General and administrative expenses 6.0 5.0 6.3 5.2 Engineering and development expenses 4.9 5.0 5.2 5.4 ---- ---- ---- ---- 24.6 22.1 24.3 23.3 ---- ---- ---- ---- Income from operations 20.0 21.2 20.2 20.5 Interest income 2.0 1.6 2.1 1.8 ---- ---- ---- ---- Income before provision for income taxes 22.0 22.8 22.3 22.3 Provision for income taxes 7.9 7.5 8.0 7.2 ---- ---- ---- ---- Net income 14.1% 15.3% 14.3% 15.1% ---- ---- ---- ---- ---- ---- ---- ----
Net sales increased 23 percent, from approximately $9,507,000 during the second quarter of fiscal 1995 to approximately $11,648,000 during the second quarter of fiscal 1996. For the six months ended September 23, 1995 net sales increased approximately 19% from $18,038,000 to $21,510,000. Increases in sales of home and automotive products contributed to the overall increase in sales both domestically and to international distributors during the three-month and six-month periods ended September 23, 1995. Contributing to the increase in automotive products were the recent introductions of the Rally-Registered Trademark- RX 9 Coaxial series of component speakers (March 1995) and the new Boston Rally-Registered Trademark- Subwoofer Series of automotive products introduced during the three-month period ended September 23, 1995. The Rally-Registered Trademark- RS Subwoofers are high power handling, low distortion woofers that work in small enclosures. The three models, the RS8, RS10, and RS12, have suggested retail prices ranging from $200 to $260 per pair. The Company's gross margin for the three-month and six-month periods ended September 23, 1995 decreased as a percentage of net sales due primarily to a shift in the sales mix to loudspeaker models with slightly lower margins. Total operating expenses decreased as a percentage of net sales during both the three-month and six-month periods ended September 23, 1995. Selling and marketing expenses have decreased primarily due to decreased advertising expenditures as compared to the same three-month and six- month periods a year ago. General and administrative expenses have remained relatively stable in absolute dollars, and as a result have decreased as a percentage of net sales for both the three-month and six- month periods ended September 23, 1995. Engineering and development expenses have increased primarily due to increased salaries and benefits relating to additional personnel, as well as increased material and supplies relating to new product development. Interest income has decreased as a percentage of net sales due primarily to long-term investments maturing and designated for capital expenditures during fiscal 1996. The Company's effective income tax rate decreased from 36% for both the three-month and six-month periods ended September 24, 1994 to approximately 32.3% 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 second quarter increased 34%, from approximately $1,339,000 in fiscal 1995 to $1,790,000 in fiscal 1996 while earnings per share increased 32% from $.31 to $.41 per share. Net income for the six-month period ended September 23, 1995 increased 26% from approximately $2,581,000 in fiscal 1995 to approximately $3,254,000 in fiscal 1996, while earnings per share for the six-month period increased 25% from $.60 to $.75 per share. Liquidity and Capital Resources During the first half of fiscal 1996, the Company financed its growth with cash generated by operations. As of September 23, 1995 the Company's working capital was approximately $27,911,000. The Company's cash and cash equivalents were approximately $5,953,000, short-term investments were approximately $7,514,000, and long-term investments were approximately $3,905,000. 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, including approximately $797,000 utilized to date. 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 At the Annual Meeting of the Shareholders of the Company held on August 15, 1995, shareholders acted affirmatively to elect nominees for directors proposed by management. Each Director is to serve until the next Annual Meeting of Shareholders and thereafter until his/her successor is elected and qualified. Votes "For" Votes "Withheld" ----------- ---------------- Francis L. Reed 4,047,667 17,997 Andrew G. Kotsatos 4,047,667 17,997 Fred E. Faulkner, Jr. 4,047,267 18,397 John G. Markos 4,047,867 17,797 Dorothea T. Reed 4,047,867 17,797 Shareholders also voted to ratify the action of the Directors in selecting Arthur Andersen LLP as auditors of the Company. A total of 4,063,132 votes were cast in favor of the proposal, 1,930 votes were cast against, and there were 602 abstentions. Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K a) Exhibits required by Item 601 of Regulation S-K Exhibit 27. - Financial Data Schedule b) Reports on Form 8-K No reports were filed during the quarter ended September 23, 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: November 1, 1995 By: /s/ Francis L. Reed ------------------- Francis L. Reed Director, Chief Executive Officer and Treasurer (Principal Financial Officer) Date: November 1, 1995 By: /s/ Andrew G. Kotsatos ---------------------- Andrew G. Kotsatos Director, President and Assistant Clerk 12 EX-27 2 EXHIBIT 27
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 September 23, 1995 and is qualified in its entirety by reference to such financial statements. 6-MOS MAR-30-1996 SEP-23-1995 5953330 7514143 8182010 274000 9228030 31762345 10202782 5743924 41141272 3851756 0 45254 0 0 37328052 41141272 21509735 21509735 12087827 5006197 0 0 0 4812461 1558000 3254461 0 0 0 3254461 $.75 0
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