-----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, NhUSwftpkAM8nJLq4PKoCRtxilv8SDovygITNs0tmppyP3fv5gF7eqhZMa7y3Kxg E8b1BNmYi3BiBT+0zptj+g== 0000912057-96-002020.txt : 19960213 0000912057-96-002020.hdr.sgml : 19960213 ACCESSION NUMBER: 0000912057-96-002020 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951230 FILED AS OF DATE: 19960212 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: 96514823 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 DECEMBER 30, 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 4,408,701 shares of Common Stock issued and outstanding as of February 2, 1996. - ------------------------------------------------------------------------------ Boston Acoustics, Inc. Index Page ---- Part I: Financial Information Item 1. Financial Statements Consolidated Balance Sheets (Unaudited)- March 25, 1995 and December 30, 1995 4 Consolidated Statements of Income (Unaudited)- Three months and Nine months ended December 24, 1994 and December 30, 1995 6 Consolidated Statements of Cash Flows (Unaudited)- Nine months ended December 24, 1994 and December 30, 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 December 30, 1995 -------------- ----------------- Current Assets: Cash and cash equivalents $ 3,570,790 $ 4,406,762 Short-term investments 8,132,145 7,237,444 Accounts receivable, net of allowance for doubtful accounts of approximately $207,000 and $339,000 respectively 7,759,876 9,041,742 Inventories 8,726,944 8,920,335 Prepaid income taxes 585,000 585,000 Prepaid expenses 474,092 522,590 ---------- ---------- Total current assets 29,248,847 30,713,873 ---------- ---------- Property and Equipment, at cost: Land 1,164,800 1,418,365 Machinery and equipment 4,740,328 5,993,065 Office equipment and furniture 1,392,176 1,412,526 Leasehold improvements 440,413 440,413 Motor vehicles 345,454 345,454 Construction in Progress --- 4,731,200 ---------- ---------- 8,083,171 14,341,023 Less-accumulated depreciation and amortization 5,252,728 5,998,548 ---------- ---------- 2,830,443 8,342,475 ---------- ---------- Other Assets: Long-term investment securities, at cost 5,308,601 2,291,626 Other assets 991,129 1,017,500 ---------- ---------- Total other assets 6,299,730 3,309,126 ---------- ---------- $38,379,020 $42,365,474 ---------- ---------- ---------- ----------
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 December 30, 1995 Current Liabilities: Accounts payable $ 876,031 $ 1,168,330 Accrued payroll and payroll- related expenses 941,319 876,756 Dividend payable 540,550 546,617 Other accrued expenses 325,594 368,294 Accrued income taxes 641,558 371,433 ---------- ---------- Total current liabilities 3,325,052 3,331,430 ---------- ---------- Commitments Shareholders' Equity: Common stock, $.01 par value Authorized -- 6,000,000 shares Issued -- 4,518,324 at March 25, 1995 and 4,569,233 shares at December 30, 1995 45,183 45,692 Additional paid-in capital 3,739,101 4,327,945 Retained earnings 31,353,474 34,744,197 ---------- ---------- 35,137,758 39,117,834 Less-Treasury stock, 193,920 shares, at cost 83,790 83,790 ---------- ---------- Total shareholders' equity 35,053,968 39,034,044 ---------- ---------- $38,379,020 $42,365,474 ---------- ---------- ---------- ----------
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 Nine Months Ended ------------------ ----------------- December 24, December 30, December 24, December 30, 1994 1995 1994 1995 ------------ ------------ ------------ ------------ Net sales $12,125,861 $13,557,816 $30,164,075 $35,067,551 Cost of goods sold 6,740,636 7,751,217 16,743,864 19,839,044 ---------- ---------- ---------- ---------- Gross profit 5,385,225 5,806,599 13,420,211 15,228,507 ---------- ---------- ---------- ---------- Selling and marketing expenses 1,501,977 1,558,890 3,816,421 4,281,533 General and administrative expenses 621,070 657,247 1,758,308 1,777,087 Engineering and development expenses 509,316 647,828 1,443,228 1,811,542 ---------- ---------- ---------- ---------- Total expenses 2,632,363 2,863,965 7,017,957 7,870,162 ---------- ---------- ---------- ---------- Income from operations 2,752,862 2,942,634 6,402,254 7,358,345 Interest income 172,888 207,449 556,492 604,199 ---------- ---------- ---------- ---------- Income before provision for income taxes 2,925,750 3,150,083 6,958,746 7,962,544 Provision for income taxes 1,053,000 1,030,000 2,505,000 2,588,000 ---------- ---------- ---------- ---------- Net income $1,872,750 $2,120,083 $4,453,746 $5,374,544 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net income per common share $ .44 $ .49 $ 1.04 $ 1.24 ------ ------- ------- -------- ------ ------- ------- -------- Weighted average number of common shares outstanding 4,296,586 4,345,166 4,293,188 4,332,885 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Dividends per share $ .10 $ .125 $ .30 $ .375 ------ ------- ------- -------- ------ ------- ------- --------
The accompanying notes are an integral part of these consolidated financial statements. 6 Boston Acoustics, Inc. and Subsidiaries Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended ----------------- December 24, 1994 December 30, 1995 ----------------- ----------------- Cash flows from operating activities: Net income $ 4,453,746 $ 5,374,544 Adjustments to reconcile net income to net cash provided by operating activities- Depreciation and amortization 731,153 745,820 Changes in assets and liabilities- Accounts receivable (1,777,753) (1,281,866) Inventories (1,776,570) (193,391) Prepaid expenses (304,719) (48,498) Accounts payable 1,048,711 292,299 Accrued expenses 161,638 (21,863) Accrued income taxes (162,132) (270,125) ---------- ---------- Net cash provided by operating activities 2,374,074 4,596,920 ---------- ---------- Cash flows from investing activities: Net additions to property and equipment (959,023) (6,257,852) Decrease (increase) in investments (1,974,528) 3,911,676 Increase in other assets (134,893) (26,371) ---------- ---------- Net cash used in investing activities (3,068,444) (2,372,547) ---------- ---------- Cash flows from financing activities: Dividends paid (1,286,371) (1,622,827) Exercise of stock options 115,175 234,426 ---------- ---------- Net cash used in financing activities (1,171,196) (1,388,401) ---------- ---------- Increase (decrease) in cash and cash equivalents (1,865,566) 835,972 Cash and cash equivalents, beginning of period 5,099,151 3,570,790 ---------- ---------- Cash and cash equivalents, end of period $ 3,233,585 $ 4,406,762 ---------- ---------- ---------- ---------- Items not affecting cash flows: Dividends payable $ 430,100 $ 546,617 ---------- ---------- ---------- ---------- Supplemental Disclosure: Cash paid for income taxes $ 2,667,132 $ 2,858,125 ---------- ---------- ---------- ----------
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 nine-month periods ended December 30, 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 December 30,1995 Raw materials and work-in process $5,288,966 $5,832,177 Finished goods 3,437,978 3,088,158 ----------- ----------- $8,726,944 $8,920,335 ----------- ----------- ----------- ----------- 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 nine-month periods ended December 24, 1994 and December 30, 1995 expressed as percentages of net sales.
Three Months Ended Nine Months Ended ------------------ ----------------- December 24, December 30, December 24, December 30, 1994 1995 1994 1995 ------------ ------------ ------------ ------------ Net sales 100.0% 100.0% 100.0% 100.0% Cost of goods sold 55.6 57.2 55.5 56.6 ----- ----- ----- ----- Gross profit 44.4 42.8 44.5 43.4 ----- ----- ----- ----- Selling and marketing expenses 12.4 11.5 12.7 12.2 General & administrative expenses 5.1 4.8 5.8 5.1 Engineering & development expenses 4.2 4.8 4.8 5.1 ----- ----- ----- ----- 21.7 21.1 23.3 22.4 ----- ----- ----- ----- Income from operations 22.7 21.7 21.2 21.0 Interest income 1.4 1.5 1.9 1.7 ----- ----- ----- ----- Income before provision for income taxes 24.1 23.2 23.1 22.7 Provision for income taxes 8.7 7.6 8.3 7.4 ----- ----- ----- ----- Net income 15.4% 15.6% 14.8% 15.3% ----- ----- ----- ----- ----- ----- ----- -----
Net sales increased 12 percent, from approximately $12,126,000 during the third quarter of fiscal 1995 to approximately $13,558,000 during the third quarter of fiscal 1996. For the nine months ended December 30, 1995 net sales increased 16% from approximately $30,164,000 to approximately $35,068,000. The third quarter of fiscal 1996 covers 14 weeks of sales and earnings compared to 13 weeks for the third quarter of fiscal 1995. During the quarter, the Company introduced two new Lynnfield VR Series of products. Shipments of the VR10 center channel and the VR2000 powered subwoofer, with suggested retail prices of $300 and $1200, respectively, began in November 1995. In addition, sales increases in the home and automotive loudspeaker categories, both domestically and to international distributors, 9 contributed to the overall sales increase during the three-month and nine-month periods ended December 30, 1995. The Company's gross margin for the three-month and nine-month periods ended December 30, 1995 decreased as a percentage of net sales due primarily to a shift in the sales mix to loudspeaker models with slightly lower margins, as well as to increased labor and related expenses and costs associated with temporary additional offsite warehousing. Total operating expenses increased in absolute dollars but decreased as a percentage of net sales during both the three-month and nine-month periods ended December 30, 1995 as compared to the corresponding periods in fiscal 1995. Selling and marketing expenses have decreased as a percentage of net sales primarily due to lower advertising and literature expenditures as compared to the corresponding three-month and nine-month periods in the preceding fiscal year. 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 nine-month periods ended December 30, 1995. Engineering and development expenses as a percentage of net sales and in absolute dollars have increased primarily due to increased salaries and benefits relating to additional personnel, as well as increases in the cost of materials and supplies relating to new product development. Interest income has decreased as a percentage of net sales for the nine- month period ended December 30, 1995 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 nine-month periods ended December 24, 1994 to approximately 32.7% for the three-month and 32.5% for the nine-month period ended December 30, 1995, primarily due to a lower effective state tax rate resulting from the favorable tax treatment afforded the Company's foreign sales corporation and Massachusetts securities corporation, as well as to tax credits relating to capital expenditures. Net income for the third quarter increased 13% from approximately $1,873,000 in fiscal 1995 to $2,120,000 in fiscal 1996 while earnings per share increased 11% from $.44 to $.49 per share. Net income for the nine-month period ended December 30, 1995 increased 21% from approximately $4,454,000 in fiscal 1995 to approximately $5,375,000 in fiscal 1996, while earnings per share for the nine-month period increased 19% from $1.04 to $1.24 per share. Liquidity and Capital Resources During the first nine months of fiscal 1996, the Company financed its growth with cash generated by operations. As of December 30, 1995 the Company's working capital was approximately $27,382,000. The Company's cash and cash equivalents were approximately $4,407,000, short-term investments were approximately $7,237,000, and long-term investments were approximately $2,292,000. 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 adjacent parcels of land for approximately $1.2 million. In April 1995, the Company purchased a third adjacent parcel of land for approximately $255,000. The Company has begun construction of its new manufacturing and office facility on this land. A total of $6 million of working capital is expected to be used to construct this facility with approximately $4.7 million used since construction began in June 1995. Full occupancy is expected by the end of fiscal 1996. The Company believes that its resources are adequate to meet its requirements for working capital and capital expenditures through the next twelve months. 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) Exhibits required by Item 601 of Regulation S-K Exhibit 27. - Financial Data Schedule b) Reports on Form 8-K No reports on Form 8-K were filed during the quarter ended December 30, 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: February 2, 1996 By: /s/ Francis L. Reed ------------------- Francis L. Reed Director, Chief Executive Officer and Treasurer (Principal Financial Officer) Date: February 2, 1996 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 December 30, 1995 and is qualified in its entirety by reference to such financial statements. 9-MOS MAR-30-1996 DEC-30-1995 4406762 7237444 9041742 339000 8920335 30713873 14341023 5998548 42365474 3331430 0 0 0 45692 39072142 42365474 35067551 35067551 19839044 7870162 0 0 0 7962544 2588000 5374544 0 0 0 5374544 $1.24 $1.24
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