-----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, DQG2JquE5u4rWSijikGrpJj6kKbdqkb9wLj6msP6qNbVzlxCwMnA1H+yQBEWTzsJ juP0tVOImKRe3vBpLUktyQ== 0000814676-99-000003.txt : 19990518 0000814676-99-000003.hdr.sgml : 19990518 ACCESSION NUMBER: 0000814676-99-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990403 FILED AS OF DATE: 19990517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CERAMICS PROCESS SYSTEMS CORP/DE/ CENTRAL INDEX KEY: 0000814676 STANDARD INDUSTRIAL CLASSIFICATION: POTTERY & RELATED PRODUCTS [3260] IRS NUMBER: 042832509 STATE OF INCORPORATION: DE FISCAL YEAR END: 1229 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-16088 FILM NUMBER: 99626354 BUSINESS ADDRESS: STREET 1: 111 SOUTH WORCESTER STREET STREET 2: PO BOX 338 CITY: CHARTLEY STATE: MA ZIP: 02712 BUSINESS PHONE: 508-222-0614 MAIL ADDRESS: STREET 1: 111 SOUTH WORCESTER STREET STREET 2: PO BOX 338 CITY: CHARTLEY STATE: MA ZIP: 02712 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the period ended April 3, 1999 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission file number 0-16088 CERAMICS PROCESS SYSTEMS CORPORATION (Exact Name of Registrant as Specified in its Charter) Delaware 04-2832509 (State or Other Jurisdiction (I.R.S. Employer of Incorporation or Organization) Identification No.) 111 South Worcester Street, P.O. Box 338, Chartley, Massachusetts 02712 (Address of Principal Executive Offices) (Zip Code) Registrant`s Telephone Number, including Area Code: (508) 222-0614 Former Name, Former Address and Former Fiscal Year if Changed since Last Report: Not Applicable. 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 than the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days. [X] Yes [ ] No APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer`s classes of common stock, as of the latest practicable date. Number of shares of common stock outstanding as of April 3, 1999: 12,285,969. CERAMICS PROCESS SYSTEMS CORPORATION Form 10-Q For The Fiscal Quarter Ended April 3, 1999 Index PART I: FINANCIAL INFORMATION Page Item 1: Consolidated Financial Statements 3 Consolidated Balance Sheets as of April 3, 1999 and December 26, 1998 3 Consolidated Statements of Operations for the fiscal quarters ended April 3, 1999 and March 28, 1998 5 Consolidated Statements of Cash Flows for the fiscal quarters ended April 3, 1999 and March 28, 1998 6 Notes to Consolidated Financial Statements 7 Item 2: Management`s Discussion and Analysis of Financial Condition and Results of Operations 10 PART II: OTHER INFORMATION Items 1-6 12 Signatures 12 PART I FINANCIAL INFORMATION ITEM 1 FINANCIAL STATEMENTS CERAMICS PROCESS SYSTEMS CORPORATION Consolidated Balance Sheets April 3, December 26, 1999 1998 ASSETS ---------- ---------- Current assets: Cash and cash equivalents $1,412,765 $1,498,774 Trade receivables 702,477 547,134 Inventories 318,035 204,200 Prepaid expenses 29,664 1,830 ---------- ---------- Total current assets 2,462,941 2,251,938 Property and equipment: Production equipment 1,677,094 1,569,021 Furniture and office equipment 155,232 155,232 Accumulated depreciation and amortization (1,050,956) (1,000,637) ---------- ---------- Net property and equipment 781,370 723,616 ---------- ---------- Deposits 8,772 8,772 ---------- ---------- Total assets $3,253,083 $2,984,326 ========== ========== See accompanying notes to consolidated financial statements. CERAMICS PROCESS SYSTEMS CORPORATION Consolidated Balance Sheets (continued) LIABILITIES AND STOCKHOLDERS` April 3, December 26, EQUITY 1999 1998 --------- ----------- Current liabilities: Accounts payable $ 228,916 $ 96,753 Accrued expenses 182,935 184,032 Deferred revenue 139,766 142,266 Current portion of obligations under capital leases 48,230 46,959 ------------ ------------ Total current liabilities 599,847 470,010 Obligations under capital leases less current portion 112,610 125,155 ------------ ------------ Total liabilities 712,457 595,165 ------------ ------------ Stockholders` Equity Common stock, $0.01 par value. Authorized 15,000,000 shares; issued 12,285,969 shares at April 3, 1999 and 7,824,582 at December 27, 1997 123,089 123,089 Additional paid-in capital 32,656,353 32,656,353 Accumulated deficit (30,177,981) (30,329,446) Less treasury stock, at cost, 22,883 common shares at April 3, 1999 and December 26, 1998 (60,835) (60,835) ------------ ------------ Total stockholders` equity 2,540,626 2,389,161 ------------ ------------ Total liabilities and stockholders' equity $ 3,253,083 $ 2,984,326 ============ ============ See accompanying notes to consolidated financial statements. CERAMICS PROCESS SYSTEMS CORPORATION Consolidated Statements of Operations Fiscal Quarters Ended April 3, March 28, 1999 1998 ---------- ----------- Product sales $1,245,414 $ 1,333,214 ---------- ----------- Total revenue $1,245,414 $ 1,333,214 ========== =========== Operating expenses: Cost of product sales 833,551 727,807 Selling, general, and administrative 260,656 157,957 ---------- ----------- Total operating expenses 1,094,207 885,764 ---------- ----------- Operating income 151,207 447,450 Other income (expense), net 10,100 (54,633) ---------- ----------- Net income before taxes $ 161,307 $ 392,817 ---------- ----------- Provision for income taxes 9,842 7,856 --------- ----------- Net income $ 151,465 $ 384,961 ========== =========== Net income per basic common share $ 0.01 $ 0.05 ---------- ----------- Weighted average number of basic common shares outstanding 12,308,852 7,978,197 ========== =========== Net income per diluted common share $ 0.01 $ 0.03 ---------- ----------- Weighted average number of diluted common shares outstanding 12,488,954 11,658,621 ========== =========== See accompanying notes to consolidated financial statements. CERAMICS PROCESS SYSTEMS CORPORATION Consolidated Statements of Cash Flows Fiscal Quarters Ended April 3, March 28, 1999 1998 --------- --------- Cash flows from operating activities: Net income $ 151,465 $ 384,961 Adjustments to reconcile net income to cash provided by operating activities Depreciation and amortization 50,319 43,891 Changes in assets and liabilities: Accounts receivable, trade (155,343) 193,144 Inventories (113,835) (262,522) Prepaid expenses (27,834) 207 Accounts payable 132,163 (12,155) Accrued expenses (1,097) (105,219) Deferred revenue (2,500) (7,869) --------- ---------- Net cash provided by operating activities 33,338 234,438 --------- ---------- Cash flows from investing activities: Additions to property and equipment (108,073) (174,489) --------- ---------- Net cash used in investing activities (108,073) (174,489) --------- ---------- Cash flows from financing activities: Principal payments of capital lease obligations (11,274) (11,983) Proceeds from issuance of common stock 2,131 Principal payments of notes payable obligations -- (82,237) --------- --------- Net cash used in financing activities (11,274) (92,089) --------- --------- Net decrease in cash and cash equivalents (86,009) (32,140) Cash and cash equivalents at beginning of period 1,498,774 561,166 --------- ---------- Cash and cash equivalents at end of period $1,412,765 $ 529,026 ========= ========== See accompanying notes to consolidated financial statements. CERAMICS PROCESS SYSTEMS CORPORATION Notes to Consolidated Financial Statement (Unaudited) (1) Nature of Business - ------------------ Ceramics Process Systems Corporation (the `Company` or `CPS`) serves the wireless communications, satellite communications, motor controller and other microelectronic markets by developing, manufacturing, and marketing advanced metal-matrix composite and ceramic components to house, interconnect and thermally manage microelectronic devices. The Company`s products are typically in the form of housings, packages, lids, substrates, thermal planes, or heat sinks, and are used in applications where thermal management and or weight are important considerations. The Company`s products are manufactured by proprietary processes the Company has developed including the QuicksetTM Injection Molding Process (`Quickset Process`) and the QuickCastTM Pressure Infiltration Process (`QuickCast Process`). The Company was incorporated on June 19, 1984. (2) Interim Consolidated Financial Statements ----------------------------------------- As permitted by the rules of the Securities and Exchange Commission applicable to quarterly reports on Form 10-Q, these notes are condensed and do not contain all disclosures required by generally accepted accounting principles. The accompanying financial statements for the fiscal quarters ended April 3, 1999 and March 28, 1998 are unaudited. In the opinion of management, the unaudited consolidated financial statements of CPS reflect all adjustments necessary to present fairly the financial position and results of operations for such periods. The consolidated financial statements include the accounts of CPS and its wholly-owned subsidiary, CPS Superconductor Corporation. All significant intercompany balances and transactions have been eliminated. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. (3) Net Income/Loss Per Common and Common Equivalent Share - ------------------------------------------------------ Basic EPS excludes the effect of any dilutive options, warrants or convertible securities and is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Diluted EPS is computed by dividing income available to common stockholders by the sum of the weighted average number of common shares and common share equivalents computed using the average market price for the period under the treasury stock method. requirements. The following table presents the calculation of both basic and diluted EPS: For the periods ended April 3, March 28, 1999 1998 ----------- ----------- Basic EPS Computation: Numerator: Net income $151,465 $384,961 Denominator: Weighted average common shares outstanding 12,308,852 7,978,197 Basic EPS $0.01 $0.05 Diluted EPS Computation: Numerator: Net income $151,465 $384,961 Interest on convertible debt -- $ 22,266 --------- -------- Total net income $151,465 $407,227 Denominator: Weighted average common shares outstanding 12,308,852 7,978,197 Stock options 180,102 231,111 Convertible debt -- 3,449,313 ---------- --------- Total Shares 12,488,954 11,658,621 Diluted EPS $0.01 $0.03 As of April 3, 1999 and March 28, 1998, the Company had 215,353 and 74,000 securities in the form of options to purchase common stock that were antidilutive, respectively. (4) Inventory --------- Inventories consist of the following: April 3 , December 26, 1999 1998 --------- ---------- Raw materials $ 107,338 $ 107,259 Work in process 210,697 96,941 --------- ---------- $ 318,035 $ 204,200 ========= ========== (5) Accrued Expenses - ---------------- Accrued expenses consist of the following: April 3, December 26, 1999 1998 --------- ---------- Accrued legal and accounting $ 10,750 $ 47,500 Accrued payroll 112,701 107,383 Accrued other 59,484 29,149 --------- ---------- $ 182,935 $ 184,032 ========= ========== (6) Supplemental Cash Flow Information - ---------------------------------- In the first fiscal quarter of 1999, the Company paid $5,491 interest on leases for production equipment compared to $5,595 in the first fiscal quarter of 1998. ITEM 2 MANAGEMENT`S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Quarterly Report on Form 10-Q contains forward-looking statements that involve a number of risks and uncertainties. There are a number of factors that could cause the Company`s actual results to differ materially from those forecasted or projected in such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date hereof. The Company undertakes no obligation to publicly release the results of any revisions to these forward- looking statements which may be made to reflect events or changed circumstances after the date hereof or to reflect the occurrence of unanticipated events. Results of Operations: First Quarter of 1999 Compared to First Quarter of 1998. - --------------------- The Company`s net revenue in the first fiscal quarter of 1999 of $1,245 thousand declined by 7% compared with net revenue in the first fiscal quarter of 1998 of $1,333 thousand. The reduced revenue was solely the result of reduced unit shipments compared to a year ago. In the opinion of management this decrease reflects fluctuations in timing of specific customer requirements, and does not reflect an underlying decline in demand, nor any inherent seasonality in the business. For example, on a sequential quarterly basis, revenues increased 13% from the fourth quarter of 1998 to the first quarter of 1999, and net income increased 10%. Gross margins declined to 33% of revenues from 45% over the same period as a result of increased costs in the manufacturing support area, and the fact that fixed costs were spread over a smaller base. Sales, General and Administrative expenses (SG&A) increased to $260 thousand in the first fiscal quarter of 1999 compared to $158 thousand in the first fiscal quarter of 1998 primarily as a result of increased personnel costs in the sales and marketing area. The Company has added personnel in sales to support future growth. Total operating expenses in the first fiscal quarter of 1999 were $1,094 thousand, a 23% increase over operating expenses in the first fiscal quarter of 1998 of $886 thousand. Other income increased to $10 thousand in the first fiscal quarter of 1999 compared to other expense of $55 thousand in the first fiscal quarter of 1998. In the first fiscal quarter of 1998 the other expense consisted primarily of interest expense on notes payable. There were no notes payable outstanding in the first fiscal quarter of 1999 so no interest expense was incurred. Higher cash balances during the first fiscal quarter of 1999 compared to the first quarter of 1998 resulted in higher interest income. The cumulative effect of these revenues and costs resulted in net income of $151 thousand, or $0.01 per basic common share, in the first fiscal quarter of 1999, versus net income of $385 thousand, or $0.05 per basic common share, in the first fiscal quarter of 1998. Liquidity - ------------------- The Company`s cash balance at April 3, 1999 was $1,413 thousand compared to the balance at December 26, 1998 of $1,499 thousand, a decline of 6%. Inventory increased to $318 thousand at the end of the first fiscal quarter of 1999 from $204 thousand at December 26, 1998. Management believes the higher inventory level will allow the Company to better address weekly fluctuations in demand from a major customer to whom the company supplies several products on a just-in-time basis. Accounts Receivable increased to $702 thousand at April 3, 1999 from $547 thousand at December 26, 1998. This change reflects fluctuations in timing of specific customer requirements, and, in the opinion of management, does not reflect any inherent seasonality in the business. The Company financed its working capital requirements during the first fiscal quarter of 1999 with funds generated by operations. The Company expects it will continue to be able to fund its working capital requirements for the remainder of 1999 from its existing cash balance and from funds generated by operations. Year 2000 Issue - --------------- The Company has identified three areas of possible exposure to Year 2000 problems: 1) Application programs (financial, CAD/CAM and management information programs) used by the company, 2) Embedded programs in production and analytical equipment used by the Company, and 3) Programs used by vendors, customers and other third parties with whom the Companies does business. The Company has completed an assessment of its exposure in each of these three areas and has developed a plan and timetable to address issues identified. The assessment indicated the area of greatest risk is the area of application programs. In the process of addressing the Year 2000 issue, the Company has concurrently sought to upgrade certain computer systems to provide greater functionality. In 1998, the Company purchased and installed new financial, accounting, and selected manufacturing computer systems which are Year 2000 compliant and which provide greater functionality. For the application programs which the Company does not intend to replace but which are not currently Year 2000 compliant, the Company has identified patches and upgrades which the company is implementing through the first half of 1999. Regarding the second area, the Company is testing production and analytical equipment one machine at a time to determine where Year 2000 problems exist, and to implement upgrades and or manual workarounds for problems identified. The Company's timetable calls for completion of this process by the end of the first half of 1999. If upgrades or manual workarounds are not possible for certain equipment, the Company believes it can replace the capital equipment in an orderly manner without disrupting production. The Company does not currently believe any capital equipment will need to be replaced, but there is no guarantee this will be the case. The Company does not believe the cost of upgrades and or manual workarounds will be material, but there is no guarantee this will be the case. Regarding the third area, the Company is interviewing vendors and customers to determine their exposure to Year 2000 issues. The Company has not yet established a contingency plan in the event of noncompliance by its customers and vendors. PART II OTHER INFORMATION Item 1 through Item 5: None Item 6: Exhibits and Reports on Form 8-K: None SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Ceramics Process Systems Corporation (Registrant) Date: May 17, 1999 /s/Grant C. Bennett Grant C. Bennett President and Treasurer (Principal Executive Officer) EX-27 2
5 This schedule contains summary financial information extracted from consolidated financial statements of Ceramics Process Systems Corporation and is qualified in its entirety by reference to such Form 10-Q for period ending April 3, 1999. 3-MOS Jan-01-2000 Apr-03-1999 1,412,765 0 702,477 0 318,035 2,462,941 781,370 1,050,956 3,253,083 599,847 0 0 0 12,285,969 0 3,253,083 1,245,414 1,245,414 833,551 1,094,207 0 0 0 161,307 9,842 151,465 0 0 0 151,465 0.01 0.01
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