-----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, S9LXhRKVBhjLMoDdcsg8K9fDcSfpZUzTifMk2JMkqakMbGp0b7o2BEVajtK2HaJ7 IqkBA7yBXdvHKrUZ4pNzfw== 0000912057-96-025481.txt : 19961113 0000912057-96-025481.hdr.sgml : 19961113 ACCESSION NUMBER: 0000912057-96-025481 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961112 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/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-15193 FILM NUMBER: 96658216 BUSINESS ADDRESS: STREET 1: 300 JUBILEE DRIVE STREET 2: P O BOX 6015 CITY: PEABODY STATE: MA ZIP: 01961-6015 BUSINESS PHONE: 5085385000 MAIL ADDRESS: STREET 1: 300 JUBILEE DRIVE STREET 2: P O BOX 6015 CITY: PEABODY STATE: MA ZIP: 01961-6015 10-Q/A 1 10-Q/A _______________________________________________________________________________ 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 28, 1996 OR [ ] TRANSITION REPORT PURSUANT TO 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) 300 JUBILEE DRIVE PEABODY, MASSACHUSETTS 01960 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) (508) 538-5000 (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 November 1, 1996. _______________________________________________________________________________ Boston Acoustics, Inc. INDEX PAGE Part I: Financial Information Item 1. Financial Statements Consolidated Balance Sheets (Unaudited)- March 30, 1996 and September 28, 1996 4 Consolidated Statements of Income (Unaudited)- Three months and Six months ended September 23, 1995 and September 28, 1996 6 Consolidated Statements of Cash Flows (Unaudited)- Six months ended September 23, 1995 and September 28, 1996 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 30, 1996 SEPTEMBER 28, 1996 -------------- ------------------ Current Assets: Cash and cash equivalents $ 4,702,299 $ 2,517,939 Short-term investments 6,678,735 4,848,705 Accounts receivable, net of allowance for doubtful accounts of approximately $307,000 and $366,000 respectively 8,401,038 9,102,819 Inventories 8,458,593 9,203,635 Deferred income taxes 730,000 805,000 Prepaid expenses 343,066 398,866 ------------ ------------ Total current assets 29,313,731 26,876,964 ------------ ------------ Property and Equipment, at cost: Land 1,433,365 1,433,365 Building 6,762,323 6,990,387 Machinery and equipment 6,344,220 7,149,819 Office equipment and furniture 1,448,950 1,571,514 Motor vehicles 373,177 373,177 ------------ ------------ 16,362,035 17,518,262 Less-accumulated depreciation and amortization 5,665,178 6,450,660 ------------ ------------ 10,696,857 11,067,602 ------------ ------------ Other Assets: Long-term investment securities, at cost 2,305,992 2,016,020 Other assets 807,012 2,679,471 ------------ ------------ Total other assets 3,113,004 4,695,491 ------------ ------------ $43,123,592 $42,640,057 ------------ ------------ ------------ ------------
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 30, 1996 SEPTEMBER 28, 1996 -------------- ------------------ Current Liabilities: Accounts payable $ 1,167,933 $ 1,723,600 Accrued payroll and payroll- related expenses 1,078,186 1,117,750 Dividends payable 551,088 534,538 Other accrued expenses 350,031 579,091 Accrued income taxes 83,617 48,774 -------------- ------------- Total current liabilities 3,230,855 4,003,753 -------------- ------------- Commitments Shareholders' Equity: Common stock, $.01 par value Authorized -- 6,000,000 shares Issued -- 4,602,621 at March 30, 1996 and September 28, 1996 46,026 46,026 Additional paid-in capital 4,966,918 4,966,918 Retained earnings 34,963,583 36,406,075 -------------- ------------- 39,976,527 41,419,019 Less-Treasury stock, 193,920 shares at March 30, 1996 and 326,320 shares at September 28, 1996, at cost 83,790 2,782,715 -------------- ------------- Total shareholders' equity 39,892,737 38,636,304 -------------- ------------- $43,123,592 $42,640,057 -------------- ------------- -------------- -------------
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 23, September 28, September 23, September 28, 1995 1996 1995 1996 ------------- ------------- ------------- ------------- Net sales $ 11,647,894 $ 12,199,188 $21,509,735 $23,251,045 Cost of goods sold 6,599,421 7,172,450 12,087,827 13,449,191 ------------ ------------ ------------ ----------- Gross profit 5,048,473 5,026,738 9,421,908 9,801,854 ------------ ------------ ------------ ----------- Selling and marketing expenses 1,414,984 1,789,233 2,722,643 3,359,305 General and administrative expenses 578,570 727,793 1,119,840 1,312,010 Engineering and development expenses 585,620 770,051 1,163,714 1,502,143 ------------ ------------ ------------ ----------- Total expenses 2,579,174 3,287,077 5,006,197 6,173,458 ------------ ------------ ------------ ----------- Income from operations 2,469,299 1,739,661 4,415,711 3,628,396 Interest income, net 190,169 110,561 396,750 252,171 ------------ ------------ ------------ ----------- Income before provision for income taxes 2,659,468 1,850,222 4,812,461 3,880,567 Provision for income taxes 869,000 647,000 1,558,000 1,358,000 ------------ ------------ ------------ ----------- Net income $ 1,790,468 $ 1,203,222 $ 3,254,461 $ 2,522,567 ------------ ------------ ------------ ----------- ------------ ------------ ------------ ----------- Net income per common share $ .41 $ .28 $ .75 $ .58 ------------ ------------ ------------ ----------- ------------ ------------ ------------ ----------- Weighted average number of common shares outstanding 4,327,482 4,313,499 4,326,272 4,355,990 ------------ ------------ ------------ ----------- ------------ ------------ ------------ ----------- Dividends per share $ .125 $ .125 $ .25 $ .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 23, 1995 SEPTEMBER 28, 1996 ------------------ ------------------ Cash flows from operating activities: Net income $ 3,254,461 $ 2,522,567 Adjustments to reconcile net income to net cash provided by operating activities- Depreciation and amortization 491,196 785,482 Changes in assets and liabilities, net of acquisition of Snell Acoustics- Accounts receivable (422,134) (348,827) Inventories (501,086) (202,925) Prepaid expenses 174,261 ( 18,500) Accounts payable 656,893 329,994 Accrued expenses 200,048 3,992 Accrued income taxes (331,125) (34,843) ------------- ------------ Net cash provided by operating activities 3,522,514 3,036,940 ------------- ------------ Cash flows from investing activities: Acquisition of Snell Acoustics --- (2,602,475) Purchase of property and equipment, net (2,119,611) (927,961) Purchase of investments (2,226,279) (1,854,391) Proceeds from sale and maturity of investments 4,247,883 3,974,393 Increase in other assets (23,941) (15,316) ------------- ------------ Net cash used in investing activities (121,948) (1,425,750) ------------- ------------ Cash flows from financing activities: Dividends paid (1,081,389) (1,096,625) Purchase of common stock for treasury --- (2,698,925) Exercise of stock options 63,363 --- ------------- ------------ Net cash used in financing activities (1,018,026) (3,795,550) ------------- ------------ Increase (decrease) in cash and cash equivalents 2,382,540 (2,184,360) Cash and cash equivalents, beginning of period 3,570,790 4,702,299 ------------- ------------ Cash and cash equivalents, end of period $ 5,953,330 $ 2,517,939 ------------- ------------ ------------- ------------ Items not affecting cash flows: Dividends payable $ 541,438 $ 534,538 ------------- ------------ ------------- ------------ Supplemental Disclosure: Cash paid for income taxes $ 1,889,125 $ 1,444,020 ------------- ------------ ------------- ------------
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 28, 1996 are not necessarily indicative of results to be expected for the full fiscal year. These financial statements should be read in conjunction with the Company's Annual Report included on Form 10-K filed on June 28, 1996 including its Annual Report to Stockholders and other exhibits thereto. (2) Inventories Inventories are stated at the lower of cost (first-in, first-out) or market and consist of the following: MARCH 30, 1996 SEPTEMBER 28,1996 -------------- ----------------- Raw materials and work-in process $ 4,518,656 $ 6,405,632 Finished goods 3,939,937 2,798,003 ----------- ----------- $ 8,458,593 $ 9,203,635 ----------- ----------- ----------- ----------- 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. (4) Acquisition of Snell Acoustics, Inc. Effective June 1, 1996, the Company acquired all of the assets and the business and assumed certain liabilities of Snell Acoustics, Inc. (Snell). Snell manufactures high-end home loudspeaker systems for the audiophile market at its factory in Haverhill, Massachusetts. The acquisition, which was financed with available cash, was accounted for as a purchase, and the results of operations of Snell have been included in the consolidated operating results since June 1, 1996. The excess of the purchase price over the fair value of the net assets acquired was allocated to goodwill and will be charged to operations over fifteen years. Unaudited pro forma results of operations to reflect the Snell acquisition have not been presented as they are not material. 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 23, 1995 and September 28, 1996 expressed as percentages of net sales.
THREE MONTHS ENDED SIX MONTHS ENDED ------------------ ----------------- September 23, September 28, September 23, September 28, 1995 1996 1995 1996 ------------- ------------- ------------- ------------- Net sales 100.0% 100.0% 100.0% 100.0% Cost of goods sold 56.7 58.8 56.2 57.8 ---- ---- ---- ---- Gross profit 43.3 41.2 43.8 42.2 ---- ---- ---- ---- Selling and marketing expenses 12.1 14.6 12.7 14.5 General & administrative expenses 5.0 6.0 5.2 5.6 Engineering & development expenses 5.0 6.3 5.4 6.5 ---- ---- ---- ---- 22.1 26.9 23.3 26.6 ---- ---- ---- ---- Income from operations 21.2 14.3 20.5 15.6 Interest income, net 1.6 0.9 1.8 1.1 ---- ---- ---- ---- Income before provision for income taxes 22.8 15.2 22.3 16.7 Provision for income taxes 7.5 5.3 7.2 5.9 ---- ---- ---- ---- Net income 15.3% 9.9% 15.1% 10.8% ---- ---- ---- ---- ---- ---- ---- ----
Net sales increased 5 percent, from approximately $11,648,000 during the second quarter of fiscal 1996 to approximately $12,199,000 during the second quarter of fiscal 1997. For the six months ended September 28, 1996 net sales increased approximately 8% from $21,510,000 to approximately $23,251,000. The new MicroReference product line, replacements for the SubSat series, were originally scheduled for July 1996 introduction but were not available until the last week of the quarter and then only for partial shipments. The Company ended the second quarter with slightly over $1 million in backorders for the new 9 MicroReference (MR) models. The models include the MR80 and MR90 3-piece systems and the MR90t, a 4-piece theater system. The Company's gross margin for the three-month and six-month periods ended September 28, 1996 decreased as a percentage of net sales due primarily to a shift in the sales mix to loudspeaker models with slightly lower margins in addition to production inefficiencies associated with new product introductions and increased freight costs associated with raw material purchases. Total operating expenses increased as a percentage of net sales during both the three-month and six-month periods ended September 28, 1996. Selling and marketing expenses have increased primarily due to increased advertising and literature costs associated with new product introductions including the MicroReference products shipped the last week of the quarter. General and administrative expenses have increased both in absolute dollars and as a percentage of net sales due primarily to costs associated with the acquisition of the business of Snell Acoustics, Inc. and related amortization of the goodwill recorded. Engineering and development expenses have increased primarily as a result of increased salaries and benefits relating to additional personnel, as well as increased material and supplies relating to new product development. Interest income has decreased both in absolute dollars and as a percentage of net sales for the three-month and six-month periods ended September 28, 1996 because of the utilization of certain investments for the construction of the Company's new facility during fiscal 1996, the repurchase of 132,400 shares of the Company's common stock under its Common Stock Repurchase Program, and the acquisition of the business of Snell Acoustics. The Company's effective income tax rate increased from 32% for both the three-month and six-month periods ended September 23, 1995 to approximately 35% in fiscal 1997, primarily as a result of non-recurring tax credits realized in fiscal 1996 in connection with capital expenditures. Net income for the second quarter decreased 33%, from approximately $1,790,000 in fiscal 1996 to $1,203,000 in fiscal 1997 while earnings per share decreased from $.41 to $.28 per share. Net income for the six-month period ended September 28, 1996 decreased 23% from approximately $3,254,000 in fiscal 1996 to approximately $2,523,000 in fiscal 1997, while earnings per share for the six-month period decreased from $.75 to $.58 per share. The decrease in net income for the three and six-month periods ended September 28, 1996 is primarily the result of the lower gross margins and the increased operating expenses as outlined above. Liquidity and Capital Resources During the first half of fiscal 1997, the Company financed its growth with cash generated by operations. As of September 28, 1996 the Company's working capital was approximately $22,873,000. The Company's cash and cash equivalents were approximately $2,518,000, short-term investments were approximately $4,849,000, and long-term investments were approximately $2,016,000. 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. 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 At the Annual Meeting of the Shareholders of the Company held on August 13, 1996, 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 4,087,123 16,800 Andrew G. Kotsatos 4,087,123 16,800 Fred E. Faulkner, Jr. 4,086,223 17,700 George J. Markos 4,084,287 19,636 Lisa M. Reed 4,083,598 20,325 Shareholders also approved the 1996 Stock Plan. A total of 4,004,798 votes were cast in favor of the proposal, 24,487 votes were cast against, and there were 22,502 abstentions. Shareholders also voted to ratify the action of the Directors in selecting Arthur Andersen LLP as auditors of the Company. A total of 4,084,143 votes were cast in favor of the proposal, 1,577 votes were cast against, and there were 18,202 abstentions. Item 5. OTHER INFORMATION None Item 6. EXHIBITS AND REPORTS ON FORM 8-K a) Reports on Form 8-K During the quarter the Company filed a report on Form 8-K which reported under Item 5 of Form 8-K the acquisition of the business of Snell Acoustics, Inc. No financial statements were required to be filed in connection with such report on Form 8-K. 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, 1996 By: s/Francis L. Reed ----------------- Francis L. Reed Director, Chief Executive Officer and Treasurer (Principal Financial Officer) Date: November 1, 1996 By: s/Andrew G. Kotsatos -------------------- Andrew G. Kotsatos Director, President and Assistant Clerk 12 EX-27 2 EX-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 28, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000805268 BOSTON ACOUSTICS INC 6-MOS MAR-29-1997 SEP-28-1996 2,517,939 4,848,705 9,102,819 366,000 9,203,635 26,876,964 17,518,262 6,450,660 42,640,057 4,003,753 0 0 0 46,026 41,372,993 42,640,057 23,251,045 23,251,045 13,449,191 6,173,458 0 0 0 3,880,567 1,358,000 2,522,567 0 0 0 2,522,567 .58 .58
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