-----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, C6A9UatiW4iMN/Pif629wur28E/TV5glp6Xro5wAmZyCzVGWRwOg5EHmzPdkymka Km0QSKreVGYaTM4yY/RO+A== 0001047469-99-026025.txt : 19990701 0001047469-99-026025.hdr.sgml : 19990701 ACCESSION NUMBER: 0001047469-99-026025 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19990327 FILED AS OF DATE: 19990630 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-K SEC ACT: SEC FILE NUMBER: 000-15193 FILM NUMBER: 99656520 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-K 1 FORM 10-K - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------- FORM 10-K (MARK ONE) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED MARCH 27, 1999 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) 300 JUBILEE DRIVE PEABODY, MASSACHUSETTS 01960 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) (978) 538-5000 (REGISTRANT'S TELEPHONE NUMBER,INCLUDING AREA CODE) SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: None. SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: 8,000,000 shares of Common Stock ($.01 Par Value) (Title of Class) 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 / / Indicate by check mark if the disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. / / The aggregate market value of the voting stock held by nonaffiliates of the registrant was $60,226,559 as of June 24, 1999. There were 5,021,700 shares of Common Stock issued and outstanding as of June 24, 1999. - -------------------------------------------------------------------------------- DOCUMENTS INCORPORATED BY REFERENCE (1) Registrant's Annual Report to Stockholders for the fiscal year ended March 27, 1999 (Part II, Items 5, 6, 7, 8 and Part IV, 14 (a)(1)) (2) Proxy Statement for Registrant's Annual Meeting of Stockholders to be held on August 10, 1999 (Part III, Items 10, 11, 12 and 13) BOSTON ACOUSTICS, INC.
Securities and Exchange Commission Item Number and Description Page --------------------------- ---- PART I ITEM 1. Business 1 ITEM 2. Properties 8 ITEM 3. Legal Proceedings 8 ITEM 4. Submission of Matters to a Vote of Security Holders 8 PART II ITEM 5. Market for Registrant's Common Equity and Related Stockholder Matters 9 ITEM 6. Selected Financial Data 9 ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 ITEM 8. Financial Statements and Supplementary Data 9 ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 9 PART III ITEM 10. Directors and Executive Officers of the Registrant 10 ITEM 11. Executive Compensation 10 ITEM 12. Security Ownership of Certain Beneficial Owners and Management 10 ITEM 13. Certain Relationships and Related Transactions 10 PART IV ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 11 SIGNATURES 14
Inasmuch as the calculation of shares of the registrant's voting stock held by non-affiliates requires a calculation of the number of shares held by affiliates, such figure, as shown on the cover page hereof, represents the Registrant's best good faith estimate for purposes of this Annual Report on Form 10-K, and the Registrant disclaims that such figure is binding for any other purpose. The aggregate market value of Common Stock indicated is based upon $17.875, the price at which the Common Stock was last sold on June 24, 1999 as reported by The Nasdaq Stock Market. All outstanding shares beneficially owned by executive officers and directors of the registrant or by any shareholder beneficially owning more than 10% of registrant's Common Stock, as disclosed herein, were considered for purposes of this disclosure to be held by affiliates. -i- PART I ITEM 1. BUSINESS Boston Acoustics, Inc. (the "Company") engineers, manufactures and markets moderately-priced, high-quality audio systems for use in home audio and video entertainment systems, in after-market automotive audio systems and in multimedia computer environments. The Company believes that its products deliver better sound quality than other comparably priced audio systems. Most of the Company's products are assembled by the Company from purchased components, although certain automotive speakers are manufactured by others according to Company specifications. All of the Company's products and subassemblies, including those supplied by outside sources, have been designed by the Company's engineering department. Boston Acoustics' speakers are marketed nationwide through selected audio and audio-video specialty dealers and through distributors in many foreign countries. See "Management's Discussion and Analysis of Financial Condition and Results of Operations -- International Operations" which is included in the Company's 1999 Annual Report which is filed as Exhibit 13 hereto. The Company was organized as a Massachusetts corporation in 1979 by Andrew G. Kotsatos and former Chief Executive Officer, Francis L. Reed, who passed away in November 1996. Its principal executive offices and manufacturing facilities are located at 300 Jubilee Drive, Peabody, Massachusetts. PRODUCTS The Company has determined it has two reportable business industry segments: Core and original equipment manufacturer (OEM) and Multimedia. Prior to fiscal 1998, the Company operated as a single segment. The Company's reportable segments are strategic business units that sell the Company's products to distinct distribution channels. Both segments derive their revenues from the sale of audio systems. They are managed separately because each segment requires distinct selling and marketing strategies, as the class of customers within each segment is different. Each business segment has distinct product lines as discussed below. The Home Loudspeaker line consists of six bookshelf models currently ranging in price from $100 to $420 per pair, four floor-standing systems currently priced from $500 to $1600 per pair, two home theater subwoofer/satellite systems currently priced at $700 and $1000 per system, and three powered subwoofers priced at $400, $600 and $1200. Additional products for the home theater market include five different center-channel speakers currently ranging in price from $130 to $600 each and three diffuse-field surround speakers ranging in price from $200 to $500 per pair. The Company also produces magnetically shielded versions of most of its models and produces three indoor/outdoor speaker systems (Voyager-Registered Trademark-, Runabout-Registered Trademark- I, and Runabout II) currently priced from $200 to $400 per pair. The Company also produces a complete THX-Registered Trademark- Home Theater speaker system priced at $3,600 and the DigitalTheater-TM- 6000, a complete digital home theater sound system priced at $599.95. 1 The Designer Series line is a collection of speaker systems engineered for flush mounting in the walls or ceilings of homes, businesses and recreational vehicles. There are eleven models in the Designer Series line with prices currently ranging from $130 to $500 per pair. The Automotive Series consists of 39 models of automotive speakers with prices currently ranging from $60 to $700 per pair. The automotive line includes high-quality full-range replacement speakers, sophisticated component systems, and subwoofers. The component systems permit flexible speaker placement and provide sound rivaling that of fine home speakers. The automotive line includes the CX Series, the 700 Series of plate speakers, the Boston Rally-TM- RC Series of component speakers, the Boston Rally RX Coaxial Series, the Boston Rally RS Subwoofers and Band-Pass enclosure systems, the Boston Rally RM Series, and the premium performance ProSeries Speaker Systems. The Multimedia category of products sold through the Company's retailers and via a direct Internet-based sales channel currently consists of three high performance powered subwoofer/satellite speaker systems for computing environments priced from $99.95 to $249.95 per system. The OEM sales of Multimedia speaker systems sold to Gateway, Inc. ("Gateway"), a leading global direct marketer of PC products, include the BA635 three-piece system, the Digital MediaTheater-TM- three-piece system, and the DigitalTheater-TM- 6000, a complete Dolby-Registered Trademark- Digital 5.1 Channel Home Theater System. NEW PRODUCTS In fiscal 1999, as in previous years, the Company introduced new systems for all of our markets. These new products, described below, supplemented or replaced certain products which in the Company's opinion had matured. The Company believes that its new product offerings will increase penetration in current markets, and help gain footholds in new markets. A highlight of fiscal 1999 was the Company's introduction of the DigitalTheater 6000. The DigitalTheater 6000 system is the first complete home theater sound system with 5.1 channel Dolby-Registered Trademark- Digital processing (the step beyond Dolby analog processing). It includes five sonically matched satellite speakers and a powered subwoofer, driven by a powerful six-channel amplifier. It is designed to utilize minimal space while producing superior sound quality. It has a suggested retail price of $599.95. In fiscal 1999, the Company added an important new model to its highly-regarded Lynnfield VR Series of floorstanding speakers. The new Lynnfield VR940, priced at $500 per pair, utilizes an innovative new bass driver designed and built by the Company that delivers exceptional performance from a sleek enclosure. The VR940 received an "Innovations '99" award for new product design and engineering excellence at the International Consumer Electronics Show in Las Vegas. The Company expanded its home theater speaker offerings with the introduction of the System8000. This system is a complete six-speaker package with front and rear satellites, a center channel speaker, and a 65-watt powered subwoofer. It features the Company's MagnaGuard-Registered Trademark- magnetic shielding and a DCD-TM- long excursion bass driver. The suggested retail price is $700 per system. The Company added two new models to its line of Compact Reference Series bookshelf speakers. The CR4 and CR5 are both smaller than a typical hardcover book, but offer smooth, wide-range sound. These new models are suited for use in small, high-quality music systems, as extension speakers or as an upgrade for speakers that are packaged with "shelf" audio systems. The CR4 and CR5 have suggested retail prices of $100 per pair and $150 per pair, respectively. 2 The Company's new Digital MediaTheater-TM- desktop home theater system also debuted in fiscal 1999. Digital MediaTheater is a fully digital, self powered sound system for the personal computing environment. It uses Dolby Digital Decoding and Virtual Dolby to create a full 5.1 channel Dolby Digital sound experience for games, movies, music and other PC multimedia audio sources. The basic system includes two satellites and a hideaway subwoofer and has a suggested retail price of $299.95. Optional surround sound speakers are available for $50.00 a pair. In addition, the Company introduced the BA635 three-piece multimedia sound system. The system includes two diminutive desktop satellite speakers and a miniature hideaway subwoofer. It has quickly become one of the Company's best selling models. The suggested retail price is $99.95 per system. Introduced in fiscal 1999, the Company's new Designer Series DX Pro in-wall diffuse-field surround speaker is designed to be mounted flush with the wall surface. The DX Pro is designed to duplicate the performance of surround speakers in a movie theater, projecting sound along walls, ceilings, floors and other surfaces to provide a realistic three-dimensional sound field while remaining virtually invisible. DX Pro grilles and frames can be painted to match their surroundings. The suggested retail price is $500 per pair. In addition to the DX Pro, the Company added three additional new speakers to our popular Designer Series in fiscal 1999. Two of the new speakers are flush-mounted wall speakers--the Model 261, a 6 1/2-inch two way with a suggested retail price of $250per pair, and the Model 251, a 5 1/4-inch two way with a suggested retail price of $200 per pair. The third speaker, the Model 315, is a ceiling mounted speaker priced at $150 per pair and can be used to bring audio into hallways and small rooms, or to provide rear-channel surround in home theater systems. The Company also introduced in fiscal 1999, a completely new generation of its flagship ProSeries products for car audio enthusiasts. The ProSeries family is designed to handle high power without distortion and with accurate frequency response to produce detailed, clean sound. ProSeries components include woofers and distinctly small tweeters that can be mounted in a variety of places. These components can be installed in most stock factory locations without modifying car interiors, or in custom arrangements virtually anywhere in the vehicle. They have suggested retail prices ranging from $400 to $750 for the system. In addition to the ProSeries .5 component speakers, the Company also introduced completely redesigned 8-inch, 10-inch and 12-inch ProSeries .5 subwoofers for loud, undistorted bass sound in automotive environments and are priced from $220 to $300 each. In June 1996, the Company acquired the business of Snell-Registered Trademark- Acoustics ("Snell"), a manufacturer of high-quality speaker systems for traditional audio and home theater use. Snell specializes in creating furniture-quality speakers for discriminating customers. Snell's line of speakers includes products in four ranges - - compact speaker systems, floorstanding systems, in-wall speaker systems and THX home theater systems. Products range from $450 per pair for small bookshelf speakers, to $45,000 per system for a complete 7-speaker THX theater system with state-of-the-art digital room correction. 3 ENGINEERING AND DEVELOPMENT The Company's engineering and development department is actively engaged in the development of new products and manufacturing processes, the improvement of existing products and the research of new materials for use in the Company's products. The Company designs all of its products and subassemblies, including those supplied by outside sources. The Company's engineering and development staff includes 59 full-time employees and three outside consultants. During fiscal years 1997, 1998 and 1999 the Company spent approximately, $3,187,000, $3,513,000 and $5,106,000, respectively, for engineering and development. MARKETING The Company employs 29 salespersons and retains 13 manufacturer's representatives who service the Company's dealer network. In addition, the Company retains the services of two freelance public relations consultants (one in the United States, one in Europe) to assist in the professional promotion of the Company and its products. Boston Acoustics' home audio, Designer Series (in wall/in ceiling models) and outdoor speaker products are distributed in the United States and Canada through approximately 551 selected audio or audio specialist retailers, some of whom have multiple outlets. The Company's car audio products are sold through approximately 332 similarly specialized retailers, some of whom also sell the Company's home audio products. The Company's dealers usually stock and sell a broad range of audio products including, in most cases, the Company's competitor's products. The Company seeks dealers who emphasize quality products and who are knowledgeable about the products they sell. The Company's Multimedia products are sold through an OEM agreement with Gateway, through the Company's retailers and via a direct Internet-based sales channel (www.bostondirect.com). During the fiscal year ended March 27, 1999 one customer accounted for 49% of net sales. Boston Acoustics' products are also exported to dealers in Canada and sold through exclusive distributors in over 50 foreign countries, primarily in Europe, Asia/Pacific and South/Central America. Export sales accounted for approximately 21% of net sales in fiscal 1997, 19% in fiscal 1998, and 14% in fiscal 1999. See also Note 7 to Consolidated Financial Statements incorporated herein by reference, pursuant to Part II, Item 8. The Company emphasizes the high performance-to-price ratio of its products in its advertising and promotion. Boston Acoustics believes that specialty retailers can be effective in introducing retail customers to the high dollar value of the Company's products. The Company directly supports its domestic dealers and international distributors via a cooperative advertising program, prepared advertisements, detailed product literature and point of purchase materials. The Company also regularly advertises in national specialist magazines including SOUND AND VISION, AUDIO, CAR AUDIO AND ELECTRONICS, CAR STEREO REVIEW, VIDEO, HOME THEATER and AUDIO VIDEO INTERNATIONAL. During fiscal 1999 the Company spent approximately $2,704,000 (2.3% of net sales) for advertising. COMPETITION The Company competes primarily on the basis of product performance, price and the strength of its dealer organization. The market for branded loudspeaker systems is served by many manufacturers, both foreign and domestic. Many products are available over a broad price range, and the market is highly fragmented and competitive. The Company distributes its products primarily through specialty retailers where it 4 competes directly for space with other branded speaker manufacturers. Audio systems produced by many of the Company's competitors can be purchased by consumers through mass merchandisers, department stores, mail-order merchants, and catalogue showrooms. The Company believes it is more advantageous to distribute through specialty retailers who provide sales support and service to consumers. Boston Acoustics competes with a substantial number of branded speaker manufacturers, including Bose Corporation, Infinity and JBL (divisions of Harman International Industries), Advent (division of Recoton Corp.), Polk Audio, Inc., and Klipsch and Associates, Inc. Some of these competitors have greater technical and financial resources than the Company and may have broader brand recognition than Boston Acoustics. In addition to competition from branded loudspeaker manufacturers, the Company's products compete indirectly with single name "rack systems". Rack systems contain all the various components needed to form an audio system, and are sold by Sony, Pioneer, Technics, Yamaha and many others. Rack systems are generally sold through mass merchandisers and department stores, although many of the Company's dealers also sell rack systems. MANUFACTURING AND SUPPLIERS Most of the Company's products are assembled by the Company from components specially fabricated for the Company, although certain automotive speakers and multimedia audio systems are manufactured by others in certain foreign countries according to Company specifications. The Company purchases materials and component parts from approximately 274 suppliers located in the United States, Canada, Europe and the Far East. Although Boston Acoustics relies on single suppliers for certain parts, the Company could, if necessary, develop multiple sources of supply for these parts. The Company does not have long-term or exclusive purchase commitments. The Company does have a written agreement with one of its inventory suppliers, which accounted for more than 10% of the Company's purchases during fiscal year 1999. See "Management's Discussion and Analysis of Financial Condition and Results of Operations--International Operations" which is included in the Company's 1999 Annual Report which is filed as Exhibit 13 hereto. SEASONALITY AND CONSUMER DISCRETION The home and automotive audio markets are both somewhat seasonal, with a majority of home speaker retail sales normally occurring in the period October through March and a majority of automotive speaker retail sales normally occurring in the period April through October. The Company's sales and earnings can also be affected by changes in the general economy since purchases of home entertainment and automotive audio products, including loudspeakers, are discretionary for consumers. PATENTS AND TRADEMARKS Boston Acoustics holds seven United States patents and numerous international patents, which relate to certain speaker technologies, assemblies and cabinet design. The Company also currently has several registered trademarks including Boston-Registered Trademark-, Boston Acoustics-Registered Trademark-, PowerVent-Registered Trademark-, Tempo-Registered Trademark-, Voyager-Registered Trademark-, and Runabout-Registered Trademark- . Trademarks used by the Snell subsidiary include Snell Acoustics, Snell Multimedia, Snell Music & Cinema and Room Ready-Registered Trademark-. The Company believes that its growth, competitive position and success in the marketplace are more dependent on its technical and marketing 5 skills and expertise than upon the ownership of patent and trademark rights. There can be no assurance that any patent or trademark would ultimately be proven valid if challenged. SIGNIFICANT CUSTOMERS A significant portion of the Company's sales currently are to Gateway, Inc. ("Gateway") pursuant to a purchase agreement that extends through July 2, 1999. Since this purchase agreement with Gateway does not contain minimum or scheduled purchase requirements, purchase orders by Gateway may fluctuate significantly from quarter to quarter over the terms of the agreement. Although the Company expects Gateway to continue as a significant customer, the Company anticipates a decline in the quantity of products to be sold to Gateway in fiscal 2000. The loss of Gateway as a customer or any significant portion of orders from Gateway could have a material adverse affect on the Company's business, results of operation and financial condition. In addition, the Company also could be materially adversely affected by any substantial work stoppage or interruption of production at Gateway or if Gateway were to reduce or cease conducting operations. BACKLOG The Company currently has no significant backlog. The Company's policy is to maintain sufficient inventories of finished goods to fill all orders within two business days of receipt. WARRANTIES Boston Acoustics warrants its home speakers to be free from defects in materials and workmanship for a period of five years, its Designer Series speakers and its automotive speakers for one year and its multimedia audio speaker systems for a period of three years. During the years ended March 27, 1999, March 28, 1998 and March 29, 1997, warranty costs recorded by the Company were approximately $241,000, $193,000 and $232,000, respectively. EMPLOYEES As of June 24, 1999, the Company had 353 full-time employees who were engaged as follows: 219 in production and materials management; 59 in engineering and development; 49 in marketing and sales support; and 26 in administration. None of the Company's employees are represented by a collective bargaining agreement and the Company believes that its relations with its employees are satisfactory. 6 EXECUTIVE OFFICERS OF THE REGISTRANT Information concerning Andrew G. Kotsatos, who is Chairman of the Board, Chief Executive Officer and Treasurer of the Company, and Fred E. Faulkner, Jr., who is President and Chief Operating Officer of the Company, is incorporated herein by reference from the Company's definitive Proxy Statement for its Annual Meeting of Stockholders to be held on August 10, 1999, under the headings "Proposal No. 1 -- Election of Directors" and "Board of Directors." Information concerning the Company's other executive officers as of June 24, 1999 is set forth below.
Name Age Title - ---- --- ----- Moses A. Gabbay 54 Vice President - Engineering Paul F. Reed 35 Vice President - Administrative Services Debra A. Ricker-Rosato 43 Vice President - Finance Robert L. Spaner 38 Vice President - Sales Martin J. Harding 39 Vice President - Marketing
Moses A. Gabbay has been Vice President - Engineering since joining the Company in 1981. Mr. Gabbay was previously Director of Engineering at Avid Corporation and an acoustic engineer for Teledyne Acoustic Research. Paul F. Reed was named Vice President - Administrative Services in May 1993. He has been with the Company since its inception in 1979. From production and shipping, Mr. Reed moved to sales in 1986 and, in 1989, became a Regional Sales Manager. He was named Director of Administrative Services in 1990. Debra A. Ricker-Rosato was named Vice President - Finance in May 1993. Prior to joining the Company in October 1986 as Controller, Ms. Ricker-Rosato was employed by Babco-Textron from 1975, a manufacturer of small aircraft engine components. Her last position with Babco-Textron was that of Assistant Controller. She holds an MSF degree from Bentley College. Robert L. Spaner was named Vice President - Sales in May 1993. He joined the Company in 1987 as a regional sales manager. In 1990 he became National Sales Manager. Mr. Spaner was formerly employed by Kloss Video as Western Regional Manager and worked six years in retail sales at Tweeter, Etc. Martin J. Harding was named Vice President - Marketing in November 1998. He joined the Company in 1996 as International sales manager. In 1997 he became Director of International Sales and Marketing. Mr. Harding previously held positions specializing in International sales and marketing with Casio, Celestion and NAD Electronics. Each executive officer is elected for a term scheduled to expire at the meeting of Directors following the Annual Meeting of Stockholders or until a successor is duly chosen and qualified. There are no arrangements or understandings pursuant to which any executive officer was or is to be selected for election or reelection. There are no family relationships among any Directors or executive officers, except that Paul F. Reed, an executive officer, and Lisa M. Mooney, a director, are brother and sister. 7 ITEM 2. PROPERTIES The Company owns its principal executive offices and manufacturing facilities which sits on 11 acres of land at 300 Jubilee Drive, Peabody, Massachusetts. Snell Acoustics ("Snell"), a subsidiary of the Company, leases all of the properties used in its business. Snell maintains its principal executive offices and manufacturing facilities at 143 Essex Street, Haverhill, Massachusetts. A total of 65,090 square feet of space is leased from an unrelated party under an operating lease which expires in September 1999. ITEM 3. LEGAL PROCEEDINGS There are no material legal proceedings affecting the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There were no matters submitted to a vote of shareholders during the fourth quarter of fiscal 1999. 8 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The information required by this item is incorporated by reference to the section entitled "Stock Market Activity" on page 21 in the Registrant's 1999 Annual Report to Stockholders, which is filed herewith as Exhibit 13. ITEM 6. SELECTED FINANCIAL DATA The information required by this item is incorporated by reference to the section entitled "Selected Financial Data" on page 20 in the Registrant's 1999 Annual Report to Stockholders, which is filed herewith as Exhibit 13. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The information required by this item is incorporated by reference to the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" on pages 6 through 10 in the Registrant's 1999 Annual Report to Stockholders, which is filed herewith as Exhibit 13. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The information required by this item is incorporated by reference to the section entitled "Quantitative and Qualitative Disclosures about Market Risk" on page 9 in the Registrant's 1999 Annual Report to Stockholders, which is filed herewith as Exhibit 13. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information required by this item is incorporated by reference to the Consolidated Financial Statements at March 27, 1999 and notes thereto on pages 11 through 19 in the Registrant's 1999 Annual Report to Stockholders, which is filed herewith as Exhibit 13. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 9 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Pursuant to General Instruction G (3) of Form 10-K and Instruction 3 to Item 401(b), the information required by this item concerning executive officers, including certain information incorporated herein by reference to the information appearing in the Company's definitive Proxy Statement for its Annual Meeting of Stockholders to be held on August 10, 1999 concerning Andrew G. Kotsatos, who is the Chairman of the Board, Chief Executive Officer and Treasurer of the Company, and Fred E. Faulkner, Jr., who is President and Chief Operating Officer of the Company, is set forth in Part I, Item 1, hereof, under the heading "Executive Officers of the Registrant". Information concerning Directors, including Messrs. Kotsatos and Faulkner, is incorporated by reference to the sections entitled "Proposal No. 1 -- Election of Directors", "Board of Directors" and "Compensation Interlocks and Insider Participation" in the Registrant's definitive Proxy Statement for its Annual Meeting of Stockholders to be held August 10, 1999. There is incorporated herein by reference to the discussion under "Compliance with Section 16(a) of the Securities Exchange Act of 1934" in the Company's definitive Proxy Statement for its Annual Meeting of Stockholders to be held August 10, 1999 the information with respect to delinquent filings of reports pursuant to Section 16(a) of the Securities Exchange Act of 1934. ITEM 11. EXECUTIVE COMPENSATION The information required by this item is incorporated by reference to the sections entitled "Executive Compensation" in the Registrant's definitive Proxy Statement for its Annual Meeting of Stockholders to be held August 10, 1999. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by this item is incorporated by reference to the section entitled "Principal and Management Stockholders" in the Registrant's definitive Proxy Statement for its Annual Meeting of Stockholders to be held August 10, 1999. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by this item is incorporated by reference to the section entitled "Certain Relationships and Transactions" in the Registrant's definitive Proxy Statement for its Annual Meeting of Stockholders to be held August 10, 1999. 10 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. (a) The following documents are included as part of this report: (1) FINANCIAL STATEMENTS The following consolidated financial statements are incorporated by reference to the Registrant's 1999 Annual Report to Stockholders: Report of Independent Public Accountants. Consolidated Balance Sheets as of March 28, 1998 and March 27, 1999. Consolidated Statements of Income for the three years ended March 27, 1999. Consolidated Statements of Shareholders' Equity for the three years ended March 27, 1999. Consolidated Statements of Cash Flows for the three years ended March 27, 1999. Notes to Consolidated Financial Statements. (2) FINANCIAL STATEMENT SCHEDULES The following financial statement schedules are filed as part of this report and should be read in conjunction with the consolidated financial statements: Report of Independent Public Accountants. Schedule II -- Valuation and Qualifying Account. Other financial schedules have been omitted because they are not required or because the required information is included in the Consolidated Financial Statements or notes thereto. 11 (3) LISTING OF EXHIBITS
Exhibits -------- 3.1. - Articles of Organization (1) 3.2. - Amendment to Articles of Organization (1) 3.3. - Second Amendment to Articles of Organization (1) 3.4. - Bylaws (1) 4.1. - Specimen Share Certificate (1) 10.1.+ - 1996 Stock Plan adopted by Boston Acoustics, Inc. on February 20, 1996, as amended (3) 10.2.+ - 1986 Incentive Stock Option Plan adopted by Boston Acoustics, Inc. on October 15, 1986, as amended (2) 10.3.+ - 1997 Stock Plan adopted by Boston Acoustics, Inc. on May 28, 1997. 10.4.# - Purchase Agreement dated March 27, 1997 by and between Gateway 2000, Inc. and Boston Acoustics, Inc. (3) 10.5. - Boston Acoustics, Inc. Warrant naming Gateway 2000, Inc. as registered holder. (3) 10.6.# - Letter of Agreement (3) dated January 14, 1997 by and between Gateway 2000, Inc. and Boston Acoustics, Inc. (3) 10.7. - Loan Agreement dated as of June 13, 1997 between Boston Acoustics, Inc. and State Street Bank and Trust Company. (4) 10.8. - Revolving Credit Note dated as of June 13, 1997 in the amount of $25,000,000 made by Boston Acoustics, Inc. payable to the order of State Street Bank and Trust Company. (5) 10.9. - Stock Redemption Agreement dated as of June 13, 1997 by and among Boston Acoustics, Inc. and Valerie R. Cohen, Lisa M. Mooney and Paul F. Reed as Executors of the Estate of Francis L. Reed and the Estate of Dorothea T. Reed (6) 10.10.^ - Letter of Agreement dated December 22, 1997 by and between Gateway 2000, Inc. and Boston Acoustics, Inc. (7) 10.11.^ - Letter of Agreement dated May 14, 1998 by and between Gateway 2000, Inc. and Boston Acoustics, Inc. 13. * - 1999 Annual Report to Shareholders 21. - Subsidiaries of the Registrant (3) 23. * - Consent of Independent Public Accountants 27. * - Financial Data Schedule 99. - "Safe Harbor" Statement under Private Securities Litigation Reform Act of 1995 (8)
* Indicates an exhibit which is filed herewith. + Indicates an exhibit which constitutes an executive compensation plan. # Indicates that portions of the exhibit have been omitted pursuant to an order granting a request for confidential treatment. ^ Indicates that portions of the exhibit have been omitted pursuant to a request for confidential treatment. - ------------------- (1) Incorporated by reference to the similarly numbered exhibits in Part II of File No. 33-9875. (2) Incorporated by reference to the similarly numbered exhibit in Item 14 of the Company's Annual Report on Form 10-K for the year ended March 27, 1993. (3) Incorporated by reference to the similarly numbered exhibit in Item 14 of the Company's Annual Report on Form 10-K for the fiscal year ended March 29, 1997. 12 (4) Incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for fiscal quarter ended June 28, 1997. (5) Incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended June 28, 1997. (6) Incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended June 28, 1997. (7) Incorporated by reference to Exhibit 10.A. to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended December 27, 1997. (8) Incorporated by reference to the similarly numbered exhibit in Item 14 of the Company's Annual Report on Form 10-K for the fiscal year ended March 30, 1996. (b) REPORTS ON FORM 8-K: No reports on Form 8-K were filed by the Registrant during the last quarter covered by this report, and no other such reports were filed subsequent to March 27, 1999 through the date of this report. 13 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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, in the City of Peabody, Commonwealth of Massachusetts, on the 29th day of June 1999. BOSTON ACOUSTICS, INC. (Registrant) BY: s/Andrew G. Kotsatos ----------------------------- Andrew G. Kotsatos Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signatures Capacities Date s/Andrew G. Kotsatos 6/29/99 - ---------------------- Director, Chief Executive ------------ Andrew G. Kotsatos Officer and Treasurer s/Fred E. Faulkner, Jr. 6/29/99 - ---------------------- Director, President and ------------ Fred E. Faulkner, Jr. Chief Operating Officer s/Debra A. Ricker-Rosato 6/29/99 - ---------------------- Vice President and ------------ Debra A. Ricker-Rosato Chief Accounting Officer s/George J. Markos 6/29/99 - ---------------------- Director ------------ George J. Markos s/Lisa M. Mooney 6/29/99 - ---------------------- Director ------------ Lisa M. Mooney s/Gerald Walle 6/29/99 - ---------------------- Director ------------ Gerald Walle
14 EX-13 2 EXHIBIT 13 Boston Acoustics, Inc. 1999 Annual Report [Graphic Ex. 13] At Boston Acoustics, our goal is to build products that people will enjoy and recommend to others. We strive to earn the respect and support of our customers and firmly believe that the best relationships are long term. Net Sales (Amounts in thousands) '95 $41,046 '96 $46,325 '97 $50,309 '98 $82,399 '99 $117,968 Net Income (Amounts in thousands) '95 $5,949 '96 $6,631 '97 $5,485 '98 $9,576 '99 $11,264 Net Sales '80 Company incorporates in 1979 in East Boston. The start of 20 consecutive profitable years of increasing sales. Legendary A40 introduced, setting new standard for speakers under $100. We introduce our first automotive speaker product. '85 The first high performance magnetically shielded speaker, the A40V introduced. BA goes public December 1986. Introduce first in-wall speaker. For the second straight year, we make the "Best Small Companies" lists of both FORBES and BUSINESS WEEK. TWENTY YEARS AND OVER $117,000,000 IN NET SALES '90 Our first product with electronics, the SW10 powered subwoofer, appears. And we move again, to a 102,000 square foot building in Lynnfield. We address yet another market segment with our all-weather Voyager speaker system. '95 We break ground for a new 150,000 square foot building in Peabody, specifically designed and built for us. We acquire Snell Acoustics. We reach agreement to supply speaker systems to Gateway, Inc. We enter an entirely new market with the shipment of computer speaker systems. '99 Sales go over $100M and profits over $10M for the first time. NET SALES TO OUR SHAREHOLDERS: Fiscal 1999 was another year of record growth, record sales and record income for Boston Acoustics. Net sales increased by 43%, from $82.4 million to $118 million. Net income increased 18%, to $11.3 million. Diluted earnings per share increased 23% to $2.14. It was our twentieth year as a company, and -- by any measure -- our best ever. A DIFFERENT COMPANY In 1979, we started Boston Acoustics with a family of bookshelf and floor-standing stereo speakers for the home. They all offered high quality audio at reasonable prices. We were quickly recognized as a value-driven company. [photo] ANDREW G. KOTSATOS Today, we are still value-driven, but we are a much larger and more complex enterprise. Our products are used in home theaters as well as stereo systems, in cars and trucks, in home and office computer systems and in other environments. They are sold around the world. Today's products are not only more numerous; they are also very different. In 1979, we were selling two-speaker packages that buyers connected to stereo receivers. Today, more than 50% of our products are electrically powered. They incorporate signal processors, amplifiers, remote controls, subwoofers and other components that we did not have the skills to design when we first went into business. We continued to add electronic engineers and other high-tech specialists to our staff in fiscal 1999 in order to create and improve the new types of components and systems that are now at the heart of our business. [photo] "WE INTRODUCED THE PROSERIES .5 AUTOMOTIVE SPEAKERS IN GRAND STYLE, WITH THE CREATION OF THE BOSTON BUG. COMPLETELY OUTFITTED WITH A POWERFUL PROSERIES SOUND SYSTEM, THE BUG IS A MAJOR HIT AS IT TOURS THE COUNTRY FOR TRADE SHOWS, SOUND COMPETITIONS, AND DEALER EVENTS. NEW MARKET-FOCUSED ORGANIZATION Our business requirements have also changed a lot in the past twenty years. Our sales have passed the $100 million mark. We need to position ourselves for growth on an ever-increasing scale. Last year, our "core" business -- products for homes and cars -- grew by approximately 10%. We want to continue to grow this business. To help stimulate this growth, we've sharpened our market focus. 2 We've named managers for each of our business lines. Now we have car people talking to car people, and home theater people dealing with home theater people -- people with passions selling to other people with the same passions. CONTINUED RECOGNITION Once again, we were recognized for both our business accomplishments and our technical achievements. Here's a sampling: [photo] FRED E. FAULKNER, JR. -- FORBES again recognized Boston Acoustics as one of the 200 Best Small Companies in America. We were nineteenth in the overall ranking and were also highlighted as one of the "Ten to Watch" Companies. -- In its October issue, INDIVIDUAL INVESTOR magazine cited us as number 43 on its list of "America's Fastest Growing Companies." -- We moved up to number 23 (from 47 the previous year) on the BOSTON GLOBE'S "Globe 100" listing of the top publicly held companies in Massachusetts. -- Our new Lynnfield VR940 floor-standing speaker system received an "Innovations '99" award for both new product design and engineering excellence at the International Consumer Electronics Show in Las Vegas. -- Nine of our products earned awards in AUDIOVIDEO INTERNATIONAL'S Hi-Fi and AutoSound Grand Prix competitions. LOOKING AHEAD We expect OEM sales to flatten somewhat in fiscal 2000. At the same time, however, we have exciting new "core" products and the sales and marketing organization to sell them. We should see continued growth in these traditional home and automotive markets. Sincerely, /s/ Andrew G. Kotsatos /s/ Fred E. Faulkner, Jr. - ------------------------------------ ------------------------------------- Andrew G. Kotsatos Fred E. Faulkner, Jr. Chairman and Chief Executive Officer President and Chief Operating Officer 3 THE KEYS TO GROWTH Our growth depends on our ability to create and market new products that fill needs and take advantage of opportunities. New product introductions are a measure of our vitality. Over the past twenty years, our product lines have grown from a handful of stereo speaker models to a diversity of high performance audio systems for home entertainment, automotive after-market, and computer environments. Within each of these markets, today's systems and components are used in many applications that did not exist twenty years ago -- taking advantage of technologies that were not even imagined in 1979. The pace of change is accelerating, and the pressures to successfully anticipate future needs and opportunities are intensifying. In Fiscal 1999, as in previous years, we met the challenges of change with new systems for all of our markets. In January, at the International Consumer Electronics Show we introduced a variety of new products for home entertainment, desktop multimedia and automotive markets. Here are some of them: DIGITALTHEATER 6000 The DigitalTheater 6000 system is a home theater sound system with 5.1 channel Dolby Digital-TM- processing (the step beyond Dolby Prologic-TM- analog processing, which it also incorporates). It includes five sonically matched satellite speakers and a powered subwoofer, all driven by its own powerful six-channel amplifier. It takes up little space and produces great sound. While its sound quality is extraordinary, it is also easy to use. DigitalTheater 6000 eliminates the confusion of picking and matching separate electronics and speakers. There's no need for a separate amplifier with hard to understand audio options. The user simply connects the TV audio, DVD or CD player, VCR or any other source device directly to the system and the Boston Acoustics electronics choose the correct settings. The system is packaged with color-coded "mistake proof" speaker and hookup cables and a universal remote control that can operate virtually any TV, VCR or cable box. It is a state-of-the art electronic audio system, with a suggested retail price of only $599.95 -- less than the price of many mid-range receivers. 4 DIGITAL MEDIATHEATER Our new Digital MediaTheater is the first home theater system to use Virtual Dolby Digital decoding to create a full 5.1 channel Dolby Digital sound experience from only two satellites! The self-powered system includes Dolby Digital and Virtual Dolby electronics, two satellites and a hideaway subwoofer for $299.95 MSRP. Optional surround sound speakers are available for $50.00 a pair. DESIGNER SERIES Our new Designer Series DX Pro in-wall diffuse-field surround speaker adds a new dimension to home theater possibilities. Unlike other diffuse-field surround speakers, it can be mounted flush with the wall surface. DX Pro duplicates the performance of an array of surround speakers in a movie theater, projecting sound along walls, ceilings, floors and other surfaces to provide a realistic three-dimensional ambient sound field while remaining virtually invisible. In fact, DX Pro grilles and frames can be painted to perfectly match their surroundings. Along with the DX Pro, we added three other new speakers to our popular Designer Series in Fiscal 1999. Two of them are flush mounted wall speakers. The third is a ceiling mounted speaker that can be used to bring smooth audio into hallways and small rooms, or to provide rear-channel surround in home theater systems. THE PROSERIES .5 With four new component systems, we also introduced a completely new generation of flagship ProSeries products for car audio enthusiasts. The ProSeries family is known for its ability to handle incredible power without distortion and with dead-accurate frequency response and extremely tight, detailed, clean sound. ProSeries components include woofers and incredibly small tweeters that can be mounted in many different places. They can be installed in most stock factory locations without modifying car interiors, or in custom arrangements virtually anywhere in the vehicle where they can best do their jobs. In addition to the ProSeries .5 component speakers, we also introduced completely redesigned 8-inch, 10-inch and 12-inch ProSeries .5 subwoofers for incredibly clean bass in automotive environments. 5 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION RESULTS OF OPERATIONS The following table sets forth the results of operations as a percentage of sales for the years ended March 27, 1999, March 28, 1998, and March 29, 1997 expressed as percentages of net sales.
For the Years Ended -------------------------------------------------- March 27, March 28, March 29, 1999 1998 1997 - ----------------------------------------------------------------------------- Net sales 100.0% 100.0% 100.0% Cost of goods sold 66.8 61.1 57.4 Gross profit 33.2 38.9 42.6 Selling and marketing expenses 8.7 9.9 14.4 General & administrative expenses 4.2 4.8 5.9 Engineering & development expenses 4.3 4.3 6.3 --------------------------------------------------- 17.2 19.0 26.6 --------------------------------------------------- Income from operations 16.0 19.9 16.0 Interest income (expense), net (0.6) (1.0) 0.8 Income before provision for income taxes 15.4 18.9 16.8 Provision for income taxes 5.9 7.3 5.9 --------------------------------------------------- Net income 9.5% 11.6% 10.9% --------------------------------------------------- ---------------------------------------------------
FISCAL 1999 COMPARED WITH FISCAL 1998 Net Sales increased 43%, from approximately $82.4 million to $118.0 million. The overall sales increase was primarily due to an increase in the OEM sales of multimedia speaker systems to Gateway, Inc. ("Gateway"), a leading global direct marketer of PC products. These products included the BA635 three-piece system, the Digital MediaTheater-TM- three-piece system, and the DigitalTheater-TM- 6000, a complete Dolby-Registered Trademark- Digital 5.1 Channel Home Theater System. During the fiscal year, the Company's core business of home, Designer Series and automotive product sales increased approximately 10 percent. Contributing to the overall increase were sales of new products introduced during the fiscal year. The Company added a new model to its successful Lynnfield VR-Registered Trademark- Tower Series of floorstanding speakers. The VR940, with a suggested retail price of $500 per pair, uses an innovative new bass driver designed and built by Boston Acoustics that delivers exceptional performance from a sleek enclosure. The System8000, a complete six-speaker home theater package with a suggested retail price of $699 per system was launched during fiscal 1999. The CR4 and CR5 models, with suggested retails of $100 per pair and $150 per pair, respectively, were added to the line of Compact Reference Series bookshelf speakers. The Designer Series of products were complimented with the introduction of the DX Pro in-wall diffuse-field surround speaker. The DX Pro has a suggested retail of $500 per pair. In addition to the DX Pro, the Company supplemented the Designer Series with three additional models. The Model 251 and Model 261 are flush mounted wall speakers with suggested retail prices of $200 and $250 per pair, respectively. The third introduction was the Model 315, a ceiling mounted speaker with a suggested retail price of $150 per pair. During the fiscal year, the Company introduced a new generation of the Company's flagship ProSeries automotive speaker systems. The ProSeries .5 component speakers can be installed in most stock factory locations without modifying car interiors and have suggested retail prices ranging from $400 to $750 per system. In addition to the component speakers, the Company introduced its redesigned 8-inch, 10-inch and 12-inch ProSeries .5 subwoofers with suggested retail prices of $220, $270 and $300 each, respectively. The Company's gross margin increased in absolute dollars but decreased as a percentage of net sales from 38.9% to 33.2% due primarily to a shift in the sales mix to loudspeaker models with lower margins, particularly the Company's OEM Multimedia speaker systems. Total operating expenses increased in absolute dollars from approximately $15,645,000 to $20,277,000 but decreased as a percentage of net sales from 19.0% to 17.2% during fiscal 1999. Selling and marketing expenses have increased in absolute dollars primarily due to increased salaries and benefits relating to additional personnel, increased licensed royalty fees and the increased marketing expenses associated with the direct-to-consumer program for the Company's multimedia products. General and administrative expenses have increased in absolute dollars primarily due to increased depreciation expenses relating to updated computer systems. As a percentage of net sales, general and administrative expenses decreased slightly during the fiscal year ended March 27, 1999 as compared to the same period a year ago. Engineering and development expenses increased in absolute dollars primarily due to increased salaries and benefits relating to additional personnel and increased expenses associated with new product development. 6 Net interest expense has decreased during the twelve-month period ended March 27, 1999. The decrease is primarily due to lower interest expense as a result of the Company's repayments on the Company's line of credit borrowings during the year. The Company's effective income tax rate decreased slightly during the twelve-month period ended March 27, 1999 from 38.5% to 38.2% primarily due to lower state income taxes offset by a smaller proportion of the Company's income being derived outside the US thereby reducing the tax benefits associated with the Company's foreign sales corporation. Net income increased 18% to approximately $11.3 million, while diluted earnings per share increased 23% to $2.14 per share for the same period a year ago. FISCAL 1998 COMPARED WITH FISCAL 1997 Net sales increased 64% from approximately $50.3 million to $82.4 million. The overall sales increase was primarily due to OEM sales of the Company's MicroMedia-TM- and MediaTheater-TM- speaker systems to Gateway. Continued sales growth in our traditional home, Designer Series and automotive speaker business also contributed to the sales increase during the fiscal year ended March 28, 1998. During the fiscal year, the Company launched two products in the Multimedia category of speaker systems. The MicroMedia system was the Company's first three-piece powered subwoofer/satellite speaker system capable of reproducing the entire bandwidth of sound for music, games and multimedia applications. The suggested retail price of the MicroMedia is $149.95. The MediaTheater system was the first multimedia sound system utilizing Virtual Dolby-Registered Trademark- surround sound technology. MediaTheater creates the effect of a full five-speaker surround sound system with only two satellite speakers and a subwoofer. The suggested retail price of the MediaTheater is $249.95. Additionally, the Company introduced its new top-of-the line VR Tower speaker line. The VR950, VR960 and VR970 are floorstanding loudspeakers incorporating technology from the previous VR Series with added features like the powered subwoofers found in the VR960 and VR970 models. Suggested retail prices are $700, $1,000, and $1,600 per pair, respectively. The Company's gross margin increased in absolute dollars from approximately $21,433,000 to $32,055,000 but decreased from 42.6% to 38.9% as a percentage of net sales due primarily to a shift in the sales mix to loudspeaker models with slightly lower margins, particularly OEM sales of the Company's multimedia speaker systems. Total operating expenses increased in absolute dollars from approximately $13,372,000 to $15,645,000 but decreased as a percentage of net sales from 26.6% to 19.0% during fiscal 1998. Selling and marketing expenses have increased in absolute dollars primarily due to increased salaries and benefits relating to additional personnel. General and administrative expenses increased in absolute dollars due primarily to costs associated with the operating results of the Snell Acoustics subsidiary. Engineering and development expenses increased in absolute dollars primarily due to increased salaries and benefits relating to additional personnel, as well as increased expenses relating to new product development. Net interest income of a year ago was replaced by net interest expense during the twelve-month period ended March 28, 1998 primarily due to the utilization of working capital and borrowings under the Company's line of credit in conjunction with the common stock repurchase in June 1997. The Company's effective income tax rate increased from 35.3% in fiscal 1997 to 38.5% in fiscal 1998 primarily due to (1) the Company being subject to a higher tax rate (35%), (2) a decrease in tax-free instruments held by the Company and (3) a smaller proportion of the Company's income being derived outside the U.S. thereby reducing the tax benefits associated with the Company's foreign sales corporation. Net income increased 75% from approximately $5.5 million to $9.6 million, while diluted earnings per share increased 112% from $0.82 to $1.74. The increase in net income is primarily the result of the increased sales growth, which was offset by the decrease in interest income and the operating loss by the Snell subsidiary included in the consolidated results of operations. 7 LIQUIDITY AND CAPITAL RESOURCES During fiscal 1999 and 1998, the Company financed its growth with cash generated from operations and bank borrowings. During fiscal 1997, the Company financed its growth primarily with cash generated from operations. As of March 27, 1999, the Company's working capital was approximately $29,471,000, an increase of approximately $9,152,000 from March 28, 1998. The increase in working capital was primarily due to increases in inventory and accounts receivable which were partially offset by the borrowings on the Company's line of credit during fiscal 1999. At March 27, 1999 the Company's accounts receivables and inventory increased by approximately $1,148,000 and $9,035,000, respectively, compared to March 28, 1998 levels. Cash and cash equivalents decreased by approximately $1,774,000, compared to levels at the end of fiscal 1998 primarily due to increased inventory levels, increased accounts receivable balances and purchases of property and equipment relating to production tooling and computer equipment. The Company's increased inventory levels at March 27, 1999 compared to the same period a year ago was due to increased levels of both the OEM and Multimedia segment and certain core products during the first nine months of fiscal 1999 which were partially offset by decreases in inventory purchases during the last three months of fiscal 1999. The increase in the Company's accounts receivable balance is principally the result of the 33% increase in net sales for the three-month period ended March 27, 1999. Current liabilities decreased by approximately $228,000 to approximately $8,867,000 primarily as a result of decreases in accounts payable related to lower inventory purchases during the three-month period ended March 27, 1999, offset by increased accrued income taxes. Long-term debt increased by $1,000,000 as a result of borrowings under the Company's line of credit during the first nine months of fiscal 1999. The Company has two lines of credit with two banking institutions totaling $26,500,000. At March 27, 1999 the Company had borrowings totaling $13,500,000 under its $25 million revolving credit agreement. Net cash increased (decreased) in fiscal years 1999, 1998 and 1997 by ($1,774,000), ($1,067,000) and $235,000, respectively. Net cash provided by operating activities in fiscal years 1999, 1998 and 1997 was approximately $3,282,000, $9,710,000 and $5,174,000, respectively. Differences in cash flows from operating activities over this three-year period were primarily related to significant year-to-year changes in accounts receivable, inventories and accounts payable. Net cash provided by (used in) investing activities for fiscal years 1999, 1998 and 1997 were approximately ($4,439,000), $2,002,000, and $1,558,000, respectively. Net cash used in investing activities in fiscal 1999 was due to purchases of property and equipment relating to production tooling and computer equipment. Net cash provided by investing activities in fiscal 1998 and 1997 was primarily the result of the sale of marketable securities, partially offset by capital equipment purchases. In fiscal 1997, net cash provided by investing activities was partially offset by the purchase of Snell Acoustics. Net cash used in financing activities in fiscal years 1999, 1998 and 1997 were approximately ($617,000), ($12,779,000) and ($6,497,000), respectively. In fiscal 1998, net cash used in financing activities was partially offset by borrowings under one of the Company's credit facilities incurred in connection with the repurchase of common stock, a portion of which was repaid during the fiscal year. On June 13, 1997 the Company announced the redemption of an aggregate of 1,347,302 shares of its common stock from the estates of its co-founder, Francis L. Reed, and his wife, Dorothea T. Reed. The shares were repurchased at $17.75 per share. Funds to complete the redemption were obtained from an unsecured $25.0 million revolving credit agreement with a bank as discussed above. The Company believes that its current resources are adequate to meet its requirements for working capital and capital expenditures through fiscal 2000. 8 NEW ACCOUNTING STANDARDS In June 1998, the FASB issued SFAS No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS and HEDGING ACTIVITIES. The statement is effective for all fiscal quarters of all fiscal years beginning after June 15, 1999. SFAS No. 133 establishes accounting and reporting disclosure standards for derivative instruments including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities. The Company does not expect adoption of this statement to have a material impact on its consolidated financial position or results of operations. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK A. DERIVATIVE FINANCIAL INSTRUMENTS, OTHER FINANCIAL INSTRUMENTS, AND DERIVATIVE COMMODITY INSTRUMENTS. As of March 27, 1999, the Company did not participate in any derivative financial instruments, or other financial and commodity instruments for which fair value disclosure would be required under SFAS No. 107. All of the Company's investments are considered cash equivalents money market accounts that are carried on the Company's books at amortized cost, which approximates fair market value. Accordingly, the Company has no quantitative information concerning the market risk of participating in such investments. B. PRIMARY MARKET RISK EXPOSURES The Company's primary market risk exposures are in the areas of interest rate risk and foreign currency exchange rate risk. The Company's investment portfolio of cash equivalents is subject to interest rate fluctuations, but the Company believes this risk is immaterial due to the short-term nature of these investments. The Company's exposure to currency exchange rate fluctuations has been and is expected to continue to be modest due to the fact it currently sells its products primarily in United States dollars. At March 27, 1999 the Company had not engaged in any foreign currency hedging activities. SIGNIFICANT CUSTOMERS The Company's financial results for the fiscal year ended March 27, 1999 include significant OEM sales of multimedia speaker systems to Gateway, Inc. ("Gateway"). These sales are pursuant to the purchase agreement between Gateway and Boston Acoustics, Inc. that extends to July 2, 1999. Since this purchase agreement with Gateway does not contain minimum or scheduled purchase requirements, purchase orders by Gateway may fluctuate significantly from quarter to quarter over the terms of the agreement. Although the Company expects Gateway to continue as a significant customer, the Company anticipates a decline in the quantity of products to be sold to Gateway in subsequent quarters beginning in fiscal 2000. The loss of Gateway as a customer or any significant portion of orders from Gateway could have a material adverse affect on the Company's business, results of operations and financial condition. In addition, the Company also could be materially adversely affected by any substantial work stoppage or interruption of production at Gateway or if Gateway were to reduce or cease conducting operations. INTERNATIONAL OPERATIONS Export sales accounted for approximately 14%, 19% and 21% of the Company's net sales during fiscal 1999, 1998 and 1997, respectively, with sales concentrations in Europe, Asia and Canada. The Company also distributes its products through two foreign subsidiaries. The Company obtains a substantial supply of inventory from manufacturers located in foreign countries. The Company has no long-term, fixed price contracts or arrangements for inventory supplied by such foreign manufacturers. The Company could readily obtain such inventory from other sources, but there can be no assurance that it would not be at some delay. Any substantial delay in obtaining inventory from another supplier could have an adverse effect on the Company's business, results of operation and financial condition. A number of factors beyond the control of the Company, including, but not limited to, changes in world politics, unstable governments in foreign customer and manufacturer nations and inflation, may affect the operations or financial condition of the Company's foreign customers and manufacturers, as well as the timing of orders and deliveries of Boston Acoustics' products by such customers and manufacturers. 9 YEAR 2000 COMPLIANCE The Company has undertaken an internal assessment of its operations, including its information and financial systems and its manufacturing equipment in order to determine the extent to which the Company may be adversely affected by Year 2000 issues. During February 1999, the Company updated its computer systems and applications to improve the scalability and functionality of the Company's overall manufacturing, planning and inventory related systems and to ensure that they are Year 2000 compliant. The Company believes that the Company's updated computer system will be Year 2000 compliant. The financial impact to the Company of its Year 2000 compliance programs has not been and is not anticipated to be material to its financial position or results of operations in any given year. The Company also commenced a self-assessment survey of its suppliers' Year 2000 compliance status during fiscal 1999 and has received responses from approximately 67 percent of these suppliers. While the Company does not believe it will suffer any major effects from the Year 2000 issue, it is possible that such effects could materially impact future financial results, or cause reported financial information not to be necessarily indicative of future operating results or future financial condition. In addition, if any of the Company's significant customers or suppliers do not successfully and in a timely manner achieve Year 2000 compliance, the Company's business could be materially affected. At present, the Company's contingency plans include but is not limited to temporary solutions or work-arounds as part of the Company's Disaster Recovery Plan and continuous review of safety stock levels and shipment schedules from all suppliers. POSSIBLE ADVERSE EFFECT OF EURO CONVERSION On January 1, 1999, 11 of the 15 member countries of the European Union established fixed conversion rates between their existing currencies and a new common currency called the "euro." This represented an initial step in a process expected to culminate in the replacement of the existing currencies with the euro. The conversion to the euro will have operational and legal implications for some of our international business activities. The Company has begun evaluating these implications, but the Company has yet to estimate the potential impact on our business, operating results and financial condition. The Company's preliminary judgment, however, is that the nature of the Company's business and customers makes a material impact unlikely. CAUTIONARY STATEMENTS The Private Securities Litigation Reform Act of 1995 contains certain safe harbors regarding forward-looking statements. From time to time, information provided by the Company or statements made by its directors, officers, or employees may contain "forward-looking" information which involve risk and uncertainties. Any statements in this report that are not statements of historical fact are forward-looking statements (including, but not limited to, statements concerning the characteristics and growth of the Company's market and customers, the Company's objectives and plans for future operations, the Company's expected liquidity and capital resources and the Company's ability and the Company's suppliers' and customers' ability to replace, modify or upgrade computer programs in ways to adequately address the Year 2000 issue). Such forward-looking statements are based on a number of assumptions and involve a number of risks and uncertainties, and accordingly, actual results could differ materially. Factors that may cause such differences include, but are not limited to: the continued and future acceptance of the Company's products, the rate of growth in the audio industry; the presence of competitors with greater technical marketing and financial resources; the Company's ability to promptly and effectively respond to technological change to meet evolving consumer demands; capacity and supply constraints or difficulties; and the Company's ability to successfully integrate new operations. The words "believe," "expect," "anticipate," "intend" and "plan" and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. For a further discussion of these and other significant factors to consider in connection with forward-looking statements concerning the Company, reference is made to Exhibit 99 of the Company's Form 8-K filed on July 18, 1996. 10 CONSOLIDATED BALANCE SHEETS
March 27, 1999 March 28, 1998 - ------------------------------------------------------------------------------------------------------ ASSETS CURRENT ASSETS: Cash and cash equivalents $ 2,096,246 $ 3,870,569 Accounts receivable, net of reserve of approximately $463,000 and $402,000, respectively 12,586,919 11,439,178 Inventories 21,651,847 12,617,077 Deferred income taxes 1,524,000 1,092,000 Prepaid expenses and other current assets 478,174 395,087 ------------ ------------ Total current assets 38,337,186 29,413,911 ------------ ------------ PROPERTY AND EQUIPMENT, AT COST: Machinery and equipment 10,890,563 8,667,671 Building and improvements 7,113,384 7,061,479 Office equipment and furniture 3,862,578 1,847,326 Land 1,433,365 1,433,365 Motor vehicles 360,963 288,948 ------------ ------------ 23,660,853 19,298,789 Less-Accumulated depreciation and amortization 9,699,448 8,005,621 ------------ ------------ 13,961,405 11,293,168 ------------ ------------ OTHER ASSETS 940,226 1,792,125 ------------ ------------ $ 53,238,817 $ 42,499,204 ------------ ------------ ------------ ------------ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 2,465,201 $ 3,224,208 Accrued payroll and payroll-related expenses 1,553,933 1,392,171 Dividends payable 425,967 414,287 Other accrued expenses 796,795 922,216 Accrued income taxes 359,689 142,075 Current maturity of line of credit 3,265,018 3,000,000 ------------ ----------- Total current liabilities 8,866,603 9,094,957 ------------ ----------- LINE OF CREDIT, net of current portion 10,500,000 9,500,000 ------------ ----------- COMMITMENTS (NOTE 8) SHAREHOLDERS' EQUITY: Common stock, $.01 par value-- Authorized -- 8,000,000 shares Issued -- 5,011,700 and 6,936,328 shares in 1999 and 1998, respectively 50,117 69,363 Additional paid-in capital 636,581 5,831,724 Retained earnings 33,185,516 46,245,277 ------------ ------------ 33,872,214 52,146,364 Less -- Treasury stock, 1,964,882 shares in 1998, at cost -- 28,242,117 ------------ ------------ Total shareholders' equity 33,872,214 23,904,247 ------------ ------------ $ 53,238,817 $ 42,499,204 ------------ ------------ ------------ ------------
The accompanying notes are an integral part of these consolidated financial statements. 11 CONSOLIDATED STATEMENTS OF INCOME
For the Years Ended --------------------------------------------------------- March 27, 1999 March 28, 1998 March 29, 1997 - ----------------------------------------------------------------------------------------------------- NET SALES $117,968,407 $ 82,399,284 $ 50,308,962 COST OF GOODS SOLD 78,787,500 50,344,605 28,875,471 ------------ ------------ ------------- Gross profit 39,180,907 32,054,679 21,433,491 ------------ ------------ ------------- SELLING AND MARKETING EXPENSES 10,220,020 8,144,786 7,219,881 GENERAL AND ADMINISTRATIVE EXPENSES 4,951,075 3,986,437 2,965,267 ENGINEERING AND DEVELOPMENT EXPENSES 5,106,001 3,513,321 3,187,131 ------------ ------------ ------------- Total operating expenses 20,277,096 15,644,544 13,372,279 ------------ ------------ ------------- Income from operations 18,903,811 16,410,135 8,061,212 INTEREST INCOME 89,012 220,430 438,509 INTEREST EXPENSE (762,397) (1,059,330) (21,629) ------------ ------------ ------------- Income before provision for income taxes 18,230,426 15,571,235 8,478,092 PROVISION FOR INCOME TAXES 6,966,000 5,995,000 2,993,000 ------------ ------------ ------------- Net income $ 11,264,426 $ 9,576,235 $ 5,485,092 ------------ ------------ ------------- NET INCOME PER SHARE Basic $ 2.26 $ 1.83 $ .85 ------------ ------------ ------------- Diluted $ 2.14 $ 1.74 $ .82 ------------ ------------ ------------- WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (NOTE 2): Basic 4,987,730 5,232,341 6,427,461 ------------ ------------ ------------- Diluted 5,254,744 5,512,179 6,684,273 ------------ ------------ ------------- DIVIDENDS PER SHARE $ .34 $ .33 $ .33 ------------ ------------ ------------- ------------ ------------ -------------
12 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Common Stock ------------------------ Additional Total Number of $.01 Par Paid-in Retained Treasury Shareholders' Shares Value Capital Earnings Stock Equity - ----------------------------------------------------------------------------------------------------------------------------- BALANCE MARCH 30, 1996 6,903,932 $ 69,039 $ 4,943,905 $ 34,963,583 $ (83,790) $ 39,892,737 Exercise of stock options 500 5 6,489 -- -- 6,494 Purchase of 334,200 shares of common stock -- -- -- -- (4,348,725) (4,348,725) Dividends -- -- -- (2,126,593) -- (2,126,593) Net income -- -- -- 5,485,092 -- 5,485,092 ----------------------------------------------------------------------------------------------- BALANCE MARCH 29, 1997 6,904,432 69,044 4,950,394 38,322,082 (4,432,515) 38,909,005 Exercise of stock options 31,896 319 397,330 -- -- 397,649 Purchase of 1,347,302 shares of common stock -- -- -- -- (23,914,602) (23,914,602) Issuance of restricted common stock -- -- -- -- 105,000 105,000 Dividends -- -- -- (1,653,040) -- (1,653,040) Issuance of common stock warrants -- -- 484,000 -- -- 484,000 Net income -- -- -- 9,576,235 -- 9,576,235 ----------------------------------------------------------------------------------------------- BALANCE MARCH 28, 1998 6,936,328 69,363 5,831,724 46,245,277 (28,242,117) 23,904,247 Exercise of stock options 40,254 403 392,126 -- -- 392,529 Dividends -- -- -- (1,688,988) -- (1,688,988) Retirement of treasury stock (1,964,882) (19,649) (5,587,269) (22,635,199) 28,242,117 -- Net income -- -- -- 11,264,426 -- 11,264,426 ----------------------------------------------------------------------------------------------- BALANCE MARCH 27, 1999 5,011,700 $ 50,117 $ 636,581 $ 33,185,516 $ -- $ 33,872,214 ----------------------------------------------------------------------------------------------- -----------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated financial statements. 13 CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended ------------------------------------------------------ March 27, 1999 March 28, 1998 March 29, 1997 - --------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 11,264,426 $ 9,576,235 $ 5,485,092 Adjustments to reconcile net income to net cash provided by operating activities-- Depreciation and amortization 2,716,454 1,779,143 1,377,766 Deferred income taxes (377,000) (345,000) (37,000) Compensation expense related to issuance of restricted stock and warrants-- -- 589,000 -- Changes in assets and liabilities, net of acquisitions Accounts receivable (959,199) (2,110,297) (585,615) Inventories (8,673,052) (3,076,320) (540,047) Prepaid expenses and other current assets (6,069) 414,674 (365,693) Accounts payable (833,356) 2,204,062 (373,461) Accrued payroll and other accrued expenses (34,825) 604,840 228,070 Accrued income taxes 184,526 73,940 (15,482) ----------- ------------ ------------- Net cash provided by operating activities 3,281,905 9,710,277 5,173,630 ----------- ------------ ------------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of Snell Acoustics -- -- (2,818,925) Purchases of property and equipment, net (4,356,459) (1,578,291) (1,240,356) Purchase of held-to-maturity investments -- -- (2,012,856) Proceeds from sale of available-for-sale investments -- 1,274,734 Proceeds from sale of held-to-maturity investments -- 3,616,618 6,106,231 (Increase) decrease in other assets (82,384) (36,282) 249,108 ----------- ------------ ------------- Net cash (used in) provided by investing activities (4,438,843) 2,002,045 1,557,936 ----------- ------------ ------------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from exercise of stock options 392,529 397,649 6,494 Net proceeds from line of credit 667,393 12,500,000 -- Purchase of treasury stock -- (23,914,602) (4,348,725) Dividends paid (1,677,307) (1,762,032) (2,154,402) ----------- ------------ ------------- Net cash used in financing activities (617,385) (12,778,985) (6,496,633) ----------- ------------ ------------- NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (1,774,323) (1,066,663) 234,933 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 3,870,569 4,937,232 4,702,299 ----------- ------------ ------------- CASH AND CASH EQUIVALENTS, END OF YEAR $ 2,096,246 $ 3,870,569 $ 4,937,232 ----------- ------------ ------------- SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITIES: Dividends payable $ 425,967 $ 414,287 $ 523,279 ----------- ------------ ------------- Retirement of Treasury Stock $ 28,242,117 $ -- $ -- ----------- ------------ ------------- SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for income taxes $ 7,127,792 $ 6,265,799 $ 3,045,742 ----------- ------------ ------------- Cash paid for interest $ 785,763 $ 1,059,330 $ 21,629 ----------- ------------ ------------- SUPPLEMENTAL DISCLOSURE OF NONCASH ITEMS RELATED TO ACQUISITION OF BOSTON ACOUSTICS DEUTSCHLAND: Fair value of assets acquired, excluding cash $ 639,750 $ -- $ -- ----------- ------------ ------------- Post acquisition adjustment to intangible assets $ 236,477 $ -- $ -- ----------- ------------ ------------- Liabilities and debt assumed $ 876,227 $ -- $ -- ----------- ------------ ------------- ----------- ------------ -------------
The accompanying notes are an integral part of these consolidated financial statements. 14 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES Boston Acoustics, Inc. and subsidiaries (the Company) engineers, manufactures and markets home loudspeakers, automotive speakers and speakers for multimedia environments. The Company's products are principally marketed in the United States, Canada, Europe and Asia through selected audio and audio-video specialty dealers and distributors. The accompanying consolidated financial statements reflect the operations of the Company and its wholly owned subsidiaries, BA Acquisition Corp. d/b/a Snell Acoustics, Boston Acoustics Securities Corporation (a Massachusetts securities corporation), Boston Acoustics Foreign Sales Corporation, Boston Acoustics Italia, S.r.l (an Italian corporation) and Boston Acoustics Deutschland, GmbH (a German corporation). All significant intercompany amounts have been eliminated in consolidation. The accompanying consolidated financial statements reflect the application of the following significant accounting policies. A. REVENUE RECOGNITION Revenue is recognized when products are shipped to customers. B. CASH AND CASH EQUIVALENTS The Company considers all highly liquid investments with original maturities of 90 days or less to be cash equivalents. C. INVENTORIES Inventories are stated at the lower of cost (first-in, first-out) or market and consist of the following:
March 27, March 28, 1999 1998 - --------------------------------------------------------------------- Raw materials and work-in-process $ 9,425,814 $ 7,473,368 Finished goods 12,226,033 5,143,709 ----------- ----------- $21,651,847 $12,617,077 ----------- ----------- ----------- -----------
Work-in-process and finished goods inventories consist of materials, labor and manufacturing overhead. D. DEPRECIATION AND AMORTIZATION The Company provides for depreciation and amortization using both the straight-line and accelerated methods by charges to operations in amounts estimated to allocate the cost of the assets over their estimated useful lives, as follows:
Asset Classification Estimated Useful Life - ------------------------------------------------------------ Machinery and equipment 3--5 years Building and improvements 39 years Office equipment and furniture 3--5 years Motor vehicles 3 years
E. WARRANTY COSTS Warranty costs are estimated and recorded by the Company at the time of product shipment. During the years ended March 27, 1999, March 28, 1998 and March 29, 1997, warranty costs recorded by the Company were approximately $241,000, $193,000 and $232,000, respectively. F. FOREIGN CURRENCY TRANSLATION Boston Acoustics Italia, S.r.l., the Company's wholly owned subsidiary, is an Italian corporation that distributes product for the Company primarily in Italy. Boston Acoustics Deutschland, GmbH, the Company's wholly owned subsidiary, is a German corporation that distributes product for the Company primarily in Germany. In accordance with SFAS No. 52, FOREIGN CURRENCY TRANSLATION, the Company has determined that the functional currency of these entities is the U.S. dollar. Accordingly, all monetary assets and liabilities for these entities are translated at year-end exchange rates, while non-monetary items are translated at historical rates. Income and expense accounts are translated at the average rates in effect during the year. Gains or losses from changes in exchange rates are recognized in consolidated income in the year of occurrence. During the three-year period ended March 27, 1999, foreign currency exchange gains and losses were not significant. G. INCOME TAXES The Company provides for income taxes in accordance with SFAS No. 109, ACCOUNTING FOR INCOME TAXES. SFAS No. 109 requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities. 15 H. POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS The Company has no obligation for postretirement or postemployment benefits. I. USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. J. CONCENTRATION OF CREDIT RISK SFAS No. 105, DISCLOSURE OF INFORMATION ABOUT FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK AND FINANCIAL INSTRUMENTS WITH CONCENTRATIONS OF CREDIT RISK, requires disclosure of any significant off-balance-sheet and credit risk concentrations. The Company has no significant off-balance-sheet concentration of credit risk such as foreign exchange contracts, option contracts or other foreign hedging arrangements. The Company maintains the majority of its cash balances with three financial institutions. The Company's accounts receivable credit risk is not concentrated within any geographic area and does not represent a significant credit risk to the Company. During fiscal 1999, 1998 and 1997, one customer represented 49%, 34% and 11%, respectively, of the Company's sales. As of March 27, 1999, three customers represented 43% of the Company's accounts receivable balance. As of March 28, 1998, four customers represented 59% of the Company's accounts receivable balance. K. FINANCIAL INSTRUMENTS SFAS No. 107, DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS, requires disclosure about fair value of financial instruments. Financial instruments consist of cash equivalents, accounts receivable, accounts payable and debt. The estimated fair value of these financial instruments approximates their carrying value and, except for accounts receivable and accounts payable, is based primarily on market quotes. The Company's cash equivalents are generally obligations of the federal government or investment-grade corporate or municipal issuers. The Company, by policy, limits the amount of credit exposure to any one financial institution. L. IMPAIRMENT OF LONG-LIVED ASSETS The Company follows the provisions of SFAS No. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF. SFAS No. 121 addresses accounting and reporting requirements for impairment of long-lived assets based on their fair market values. The carrying value of intangible assets, principally goodwill, is periodically reviewed by the Company based on the expected future undiscounted operating cash flows of the related business unit. Based on its most recent analysis, the Company believes that no material impairment of intangible assets exists as of March 27, 1999. M. COMPREHENSIVE INCOME In June 1997, the FASB issued SFAS No. 130, REPORTING COMPREHENSIVE INCOME. The Company adopted SFAS No. 130 effective March 29, 1998. There was no impact to the Company as a result of adopting SFAS No. 130, as there were no differences between net income and comprehensive income for all periods presented. N. RECENT ACCOUNTING PRONOUNCEMENTS In June 1998, the FASB issued SFAS No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES. The statement is effective for all fiscal quarters of all fiscal years beginning after June 15, 1999. SFAS No. 133 establishes accounting and reporting disclosure standards for derivative instruments including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities. The Company does not expect adoption of this statement to have a material impact on its consolidated financial position or results of operations. 2. NET INCOME PER SHARE The Company follows the provision of SFAS No. 128, EARNINGS PER SHARE. This standard requires presentation of both basic and diluted earnings per share on the face of the statements of income. These financial statements have been prepared and presented based on this standard. For the year ended March 28, 1998, 1,929 shares have been excluded from the weighted average number of common and dilutive potential shares outstanding, as their effect would be antidilutive. For the years ended March 27, 1999 and March 29, 1997, no antidilutive shares have been excluded from the weighted average number of common and dilutive potential common shares outstanding. 16 The computation of basic and diluted shares outstanding, as required by SFAS No. 128, is as follows:
For the Years Ended ---------------------------------------------------------- March 27, March 28, March 29, 1999 1998 1997 - ----------------------------------------------------------------------------------------- Basic weighted average common shares outstanding 4,987,730 5,232,431 6,427,461 Dilutive effect of assumed exercise of stock options and warrant 267,014 279,748 256,812 --------------------------------------------------------- Weighted average common shares outstanding assuming dilution 5,254,744 5,512,179 6,684,273 --------------------------------------------------------- ---------------------------------------------------------
3. INCOME TAXES The components of the Company's deferred tax assets consist of the tax effects of temporary differences between the financial reporting and tax bases of assets and liabilities. A valuation allowance has not been provided, as the Company expects to realize all deferred tax amounts. The approximate tax effect of each temporary difference is as follows:
March 27, March 28, 1999 1998 - ------------------------------------------------------------- Current deferred tax asset Accruals not currently deductible $ 803,000 $ 363,000 Receivable reserves 362,000 404,000 Inventory reserves 359,000 325,000 ----------- ----------- 1,524,000 1,092,000 Noncurrent deferred tax asset Depreciation 232,000 287,000 ----------- ----------- Total deferred tax assets $ 1,756,000 $ 1,379,000 ----------- ----------- ----------- -----------
The noncurrent deferred income taxes are included in other assets in the accompanying consolidated balance sheets. The components of the provision for income taxes shown in the accompanying consolidated statements of income consist of the following:
March 27, March 28, March 29, 1999 1998 1997 - ----------------------------------------------------------------------------- Current-- Federal $ 6,089,000 $ 4,776,000 $ 2,402,000 State 1,254,000 1,564,000 628,000 --------------------------------------------- 7,343,000 6,340,000 3,030,000 --------------------------------------------- Deferred-- Federal (348,000) (297,000) (29,000) State (29,000) (48,000) (8,000) --------------------------------------------- (377,000) (345,000) (37,000) --------------------------------------------- Provision for income taxes $ 6,966,000 $ 5,995,000 $ 2,993,000 --------------------------------------------- ---------------------------------------------
The effective income tax rate varies from the amount computed using the statutory U.S. income tax rate, as follows:
March 27, March 28, March 29, 1999 1998 1997 - ----------------------------------------------------------------------- Federal statutory rate 34.4% 34.3% 34.0% Increase in taxes resulting from state income taxes, net of federal income tax benefit 4.3 5.0 4.9 Municipal bond interest -- (.2) (1.3) Foreign sales corporation (.7) (1.5) (2.7) Other .2 .9 .4 ---------------------------------------- 38.2% 38.5% 35.3% ---------------------------------------- ----------------------------------------
4. SHAREHOLDERS' EQUITY A. STOCK SPLIT On August 17, 1998, the stockholders approved a 3-for-2 split of the Company's common stock. This stock split was effected in the form of a stock dividend. The effect of the stock split has been retroactively reflected in the accompanying consolidated financial statements. B. STOCK OPTIONS The Company maintained an incentive stock option plan (the 1986 Plan), which expired in October 1996. The Company has 39,150 options outstanding under the 1986 Plan as of March 27, 1999. In February 1996, the Board of Directors approved a new incentive stock option plan (the 1996 Plan) authorizing the issuance of incentive stock options and nonqualified stock options for the purchase of 300,000 shares of common stock. The 1996 Plan is administered by the Board of Directors, and options are granted at not less than the fair market value of the Company's common stock on the date of grant. As of March 27, 1999, the Company has 276,000 options outstanding under the 1996 Plan. In May 1997, the Board of Directors approved a new stock option plan (the 1997 Plan) authorizing the issuance of incentive stock options and nonqualified stock options for the purchase of 450,000 shares of common stock. The 1997 Plan permits the granting of nonqualified stock options and incentive stock options. As of March 27, 1999, the Company has 209,100 options outstanding under the 1997 Plan. 17 The following is a summary of all stock option activity:
Weighted Number Average of Options Price Range Price - ----------------------------------------------------------------------------- Outstanding at March 30, 1996 108,000 $ 11.33 -- $ 13.00 $ 12.67 Granted 147,000 11.67 -- 12.83 12.14 Exercised (500) 13.00 13.00 Canceled (16,500) 11.33 -- 13.00 12.24 ------------------------------------------ Outstanding at March 29, 1997 238,000 11.33 -- 13.00 12.37 Granted 303,750 14.67 -- 19.89 16.49 Exercised (31,896) 11.33 -- 13.00 12.47 Canceled (8,000) 11.67 -- 13.00 12.33 ------------------------------------------ Outstanding at March 28, 1998 501,854 11.33 -- 19.89 14.86 Granted 63,750 20.25 20.25 Exercised (40,254) 11.33 -- 18.08 13.15 Canceled (1,100) 18.08 18.08 ------------------------------------------ Outstanding at March 27, 1999 524,250 $ 11.67 -- $ 20.25 $ 15.64 ------------------------------------------ Exercisable at March 27, 1999 211,953 $ 11.67 -- $ 19.89 $ 14.30 ------------------------------------------ ------------------------------------------
The Company follows the provisions of SFAS No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION, which requires the measurement of the fair value of stock options and warrants to be included in the statement of income or, for options to employees, to be disclosed in the notes to the financial statements. The Company has determined that it will continue to account for stock-based compensation for employees under Accounting Principles Board Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, and elect the disclosure-only alternative under SFAS No. 123 for options granted after January 1, 1996 using the Black-Scholes option pricing model prescribed by SFAS No. 123. The weighted average assumptions used are as follows:
March 27, March 28, March 29, 1999 1998 1997 - -------------------------------------------------------------------- Risk-free interest rate 4.18% 6.15% 6.33% Expected dividend yield (per share) $ .34 $ .33 $ .33 Expected lives (years) 5--7 510 5 Expected volatility 52% 26% 42%
The weighted average grant date fair value per share of options granted during the years ended March 27, 1999, March 28, 1998 and March 29, 1997 under these plans is, $9.23 $5.72 and $3.51, respectively. As of March 27, 1999, March 28, 1998 and March 29, 1997, the weighted average remaining contractual life of outstanding options under these plans is, 6.80 years, 7.25 years and 7.21 years, respectively. Had compensation cost for these plans been determined consistent with SFAS No. 123, the Company's net income and basic and diluted net income per share would have been reduced to the following pro forma amounts:
March 27, March 28, March 29, 1999 1998 1997 - ------------------------------------------------------------------------ Net income-- As reported $11,264,426 $ 9,576,235 $ 5,485,092 Pro forma 10,455,893 9,031,049 5,438,212 Net income per share, as reported Basic $ 2.26 $ 1.83 $ .85 Diluted 2.14 1.74 .82 Net income per share, pro forma Basic $ 2.10 $ 1.73 $ .85 Diluted 1.99 1.64 .81
C. WARRANT In connection with a supply agreement entered into in March 1997, the Company granted a customer a warrant to purchase up to 150,000 shares of common stock at an exercise price of $11.67 per share, which is fully exercisable at March 27, 1999. The Company has the right to purchase any or all of the unexercised warrants at a price of $4.67 per warrant if at any time after March 31, 1999 the price of the Company's common stock exceeds $16.67 per share. The warrants expire in March 2000. In accordance with SFAS No. 123, the Company has calculated the value of these warrants at $484,000, which was charged to operations during fiscal 1998, as product was shipped to the customer. D. ISSUANCE OF RESTRICTED COMMON STOCK In July 1997, the Company issued 7,500 shares of restricted common stock to an officer at no cost. The shares vested immediately. The Company recorded the fair value of the restricted common stock as a charge to operations in fiscal 1998. E. PURCHASE OF COMMON STOCK On June 13, 1997, the Company entered into an agreement with the estates of its founder and former Chief Executive Officer and his spouse. Under the terms of the agreement, the Company acquired approximately 1,347,000 shares of the Company's common stock owned by the estate for approximately $23,915,000. The Company obtained a $25,000,000 unsecured line of credit with a bank to finance this transaction (see Note 5). 5. LINE OF CREDIT In June 1997, the Company entered into a unsecured revolving loan agreement with a bank for $25,000,000. The loan matures on July 1, 2002. Interest is charged at LIBOR on the first day of the interest period plus a fixed rate spread based on 18 certain financial ratios (5.25% as of March 27, 1999). As of March 27, 1999, $13,500,000 was outstanding under this revolving loan agreement, of which $3,000,000 has been classified as short-term, as the Company expects to repay this amount during fiscal 2000. In connection with this agreement, the Company must comply with certain restrictive covenants, including maintaining minimum levels of profitability. As of March 27, 1999, the Company was in compliance with all covenants. The Company also has a $1,500,000 unsecured line of credit with another bank available for letters of credit, bankers' acceptances and direct advances. Interest on letters of credit and bankers' acceptances is based on the prevailing rate (1.5% at March 27, 1999). Direct advances accrue interest at the banks commercial base rate (7.75% at March 27, 1999). No amounts were outstanding under the line of credit at March 27, 1999 and March 28, 1998. During fiscal 1999, the Company entered in a line of credit with a German bank denominated in deutschemarks. At March 27, 1999, there was $265,018 outstanding under this line of credit. 6. SEGMENT REPORTING The Company adopted SFAS No. 131, DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION effective March 27, 1999. SFAS No. 131 requires certain financial and supplementary information to be disclosed on an annual basis for each reportable segment of an enterprise. The Company has determined it has two reportable segments: Core and original equipment manufacturer (OEM) and Multimedia. Prior to fiscal 1998, the Company operated as a single segment. The Company's reportable segments are strategic business units that sell the Company's products to distinct distribution channels. Both segments derive their revenues from the sale of audio systems. They are managed separately because each segment requires different selling and marketing strategies as the class of customers within each segment is different. The Company's disclosure of segment performance is based on the way that management organizes the segments within the enterprise for making operating decisions and assessing performance. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Company does not allocate operating expenses between its two reportable segments. Accordingly, the Company's measure of profit for each reportable segment is based on gross profit.
OEM and 1999 Core Multimedia Total - --------------------------------------------------------------------- Net sales $55,484,371 $62,484,036 $117,968,407 Gross profit 23,968,152 15,212,755 39,180,907 Depreciation and amortization $ 753,611 $ 58,236 $ 811,847 Capital expenditures $ 4,076,372 $ 280,087 $ 4,356,459
OEM and 1998 Core Multimedia Total - -------------------------------------------------------------------- Net sales $51,703,187 $30,696,097 $82,399,284 ------------------------------------------- Gross profit 21,141,874 10,912,805 32,054,679 ------------------------------------------- Depreciation and amortization $ 656,342 $ 22,818 $ 679,160 ------------------------------------------- Capital expenditures $ 1,427,154 $ 151,137 $ 1,578,291 ------------------------------------------- -------------------------------------------
Total assets specifically identifiable within each reportable segment are as follows:
March 27, March 28, 1999 1998 - --------------------------------------------------- Core $ 43,974,112 $ 37,829,941 OEM and Multimedia 9,264,705 4,669,263 -------------------------------- $ 53,238,817 $ 42,499,204 -------------------------------- --------------------------------
The following table identifies sales by geographic region. Sales are attributed to countries based on location of customer:
For the Years Ended ----------------------------------------------- March 27, March 28, March 29, 1999 1998 1997 - ------------------------------------------------------------------ United States $101,452,830 $ 66,743,420 $ 39,744,080 Other 16,515,577 15,655,864 10,564,882 ----------------------------------------------- $117,968,407 $ 82,399,284 $ 50,308,962 ----------------------------------------------- -----------------------------------------------
No individual country included in Other accounted for more than 10% of net sales for the fiscal years presented above. 7. EMPLOYEE BENEFIT PLAN The Company has a 401(k) Retirement Plan (the 401(k) Plan). The 401(k) Plan is a defined contribution plan established under the provisions of Section 401(k) of the Internal Revenue Code. The Company may make a matching contribution of 25% of each participant's contribution, up to a maximum of 5% of a participants compensation for the plan year. The Company contributed approximately $73,000, $58,000 and $53,000 to the 401(k) Plan during fiscal 1999, 1998 and 1997, respectively. 8. COMMITMENTS The Company has facilities under operating lease agreements that expire in fiscal 2000. The leases require payments of approximately $125,000 through 2000. Total rent expense for fiscal 1999, 1998 and 1997 was $217,900, $142,916 and $130,972. 19 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS TO BOSTON ACOUSTICS, INC.: We have audited the accompanying consolidated balance sheets of Boston Acoustics, Inc. (a Massachusetts corporation) and subsidiaries as of March 27, 1999 and March 28, 1998, and the related consolidated statements of income, shareholders' equity and cash flows for each of the three years in the period ended March 27, 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Boston Acoustics, Inc. and subsidiaries as of March 27, 1999 and March 28, 1998, and the results of their operations and their cash flows for each of the three years in the period ended March 27, 1999, in conformity with generally accepted accounting principles. Arthur Andersen LLP Boston, Massachusetts May 12, 1999 FIVE YEAR SELECTED FINANCIAL DATA
1999 1998 1997 1996 1995 - --------------------------------------------------------------------------------------------------- INCOME STATEMENT DATA Net Sales $117,968 $ 82,399 $ 50,309 $ 46,325 $ 41,046 Net Income 11,264 9,576 5,485 6,631 5,949 Basic Earnings Per Share 2.26 1.83 0.85 1.01 0.92 Diluted Earnings Per Share 2.14 1.74 0.82 1.01 0.91 Weighted Average Shares Outstanding Basic 4,988 5,232 6,427 6,530 6,449 Diluted 5,255 5,512 6,684 6,532 6,525 Dividends Per Share $ 0.34 $ 0.33 $ 0.33 $ 0.33 $ 0.28 BALANCE SHEET DATA Working Capital $ 29,471 $ 20,319 $ 24,681 $ 26,083 $ 25,924 Total Assets 53,239 42,499 42,230 43,124 38,379 Shareholders' Equity 33,872 23,904 38,909 39,893 35,054
QUARTERLY FINANCIAL DATE
First Second Third Fourth Quarter Quarter Quarter Quarter Year - ---------------------------------------------------------------------------------------------------- YEAR ENDED MARCH 27, 1999 Net Sales $ 21,500 $ 26,350 $ 37,306 $ 32,812 $117,968 Gross Profit 7,510 8,888 12,235 10,548 39,181 Net Income 2,019 2,563 3,953 2,729 11,264 Basic Earnings Per Share 0.41 0.51 0.79 0.55 2.26 Diluted Earnings Per Share 0.39 0.48 0.75 0.52 2.14 - ---------------------------------------------------------------------------------------------------- YEAR ENDED MARCH 28, 1998 Net Sales $ 12,415 $ 18,136 $ 27,187 $ 24,661 $ 82,399 Gross Profit 5,441 7,227 10,460 8,927 32,055 Net Income 1,134 1,976 3,613 2,853 9,576 Basic Earnings Per Share 0.19 0.40 0.73 0.57 1.83 Diluted Earnings Per Share 0.18 0.39 0.70 0.55 1.74
20 SHAREHOLDER INFORMATION Boston Acoustic, Inc. encourages investors to become informed about its business. Additional information, copies of this report and the Company's Form 10-K filed with the Securities and Exchange Commission may be obtained by writing to Debra A. Ricker-Rosato, Vice President-Finance. DIVIDEND POLICY In August of 1992 the Company authorized a 50% increase in its annual dividend rate from $.133 to $.20 per share. In February 1993 the Company authorized an increase to $.267 per share and in February 1995 authorized an increase to $.333 per share. In August 1998, after announcing a 3:2 stock split, the Company authorized an increase to $.34 per share. Dividends are declared and paid quarterly. Four quarterly dividends totalling $.34 were declared during fiscal 1999. STOCK MARKET ACTIVITY The common stock of Boston Acoustics, Inc. has been listed on the NASDAQ National Market System under the symbol BOSA since its initial public offering on December 12, 1986. The following table sets forth high and low closing prices by quarter reported by NASDAQ:
Fiscal 1999 High Low - ------------------------------------- First Quarter 27.170 20.000 Second Quarter 31.000 21.000 Third Quarter 26.500 20.250 Fourth Quarter 30.500 18.000
Fiscal 1998 High Low - ------------------------------------- First Quarter 17.667 14.833 Second Quarter 16.167 14.000 Third Quarter 22.833 17.500 Fourth Quarter 21.292 17.250
There were 139 shareholders of record as of March 27, 1999. Shareholders who beneficially own common stock held in nominee of street name are not included in the number of shareholders of record. CORPORATE INFORMATION CORPORATE HEADQUARTERS Boston Acoustics, Inc. 300 Jubilee Drive Peabody, MA 01960 Telephone: (978) 538-5000 Fax: (978) 538-5091 Website: www.bostonacoustics.com AUDITORS Arthur Anderson LLP Boston, Massachusetts LEGAL COUNSEL Peabody & Arnold LLP Boston, Massachusetts TRANSFER AGENT BankBoston c/o Boston EquiServe, LP Boston, Massachusetts BOARD OF DIRECTORS ANDREW G. KOTSATOS CHAIRMAN, CHIEF EXECUTIVE OFFICER AND TREASURER Boston Acoustics, Inc. FRED E. FAULKNER, JR. PRESIDENT AND CHIEF OPERATING OFFICER Boston Acoustics, Inc. GEORGE J. MARKOS SENIOR VICE PRESIDENT AND GENERAL COUNSEL Yell-O-Glow Corporation LISA M. MOONEY GERALD WALLE VICE PRESIDENT AND GENERAL MANAGER Millipore Corporation Microelectronics Divisions EXECUTIVE OFFICERS ANDREW G. KOTSATOS CHAIRMAN, CHIEF EXECUTIVE OFFICER AND TREASURER FRED E. FAULKNER, JR. PRESIDENT AND CHIEF OPERATING OFFICER MOSES A. GABBAY VICE PRESIDENT -- ENGINEERING MARTIN J. HARDING VICE PRESIDENT -- MARKETING PAUL F. REED VICE PRESIDENT -- ADMINISTRATIVE SERVICES DEBRA A. RICKER-ROSATO VICE PRESIDENT -- FINANCE ROBERT L. SPANER VICE PRESIDENT -- SALES BOSTON BOSTON ACOUSTICS.COM The most visible sign of our new marketing emphasis is the new logo that will carry us into the 21st Century. It focuses attention on BOSTON, our highly respected brand name and features our Internet Web address. Boston Acoustics, Inc. 300 Jubilee Drive Peabody, MA 01960 (978) 538-5000 www.bostonacoustics.com> EX-23 3 EXHIBIT 23 Exhibit 23 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference of our report dated May 12, 1999 included in this Annual Report on Form 10-K, into the Company's previously filed Registration Statement No. 333-75559, No. 33-18793 and No.333-62581. Boston, Massachusetts June 25, 1999 EX-27 4 EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S FINANCIAL STATEMENTS IN ITS ANNUAL REPORT TO SHAREHOLDERS FOR FISCAL YEAR ENDED MARCH 27, 1999, WHICH ARE INCORPORATED BY REFERENCE INTO THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR SUCH FISCAL YEAR AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000805268 BOSTON ACOUSTICS, INC. YEAR MAR-27-1999 MAR-27-1999 2096246 0 12586919 463000 21651847 38337186 23660853 9699448 53238817 8866603 0 0 0 50117 33822097 53238817 117968407 117968407 78787500 20277096 0 0 762397 18230426 6966000 11264426 0 0 0 11264426 2.26 2.14
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