-----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, DlfJ6p8Wg8tKv1LZIe9WIHfOLiWi1VvILKDDefYDdvX5DWAMSpPuZVo9LN8dy1gs MhU5ULvZSuowVO4QCrswwg== 0000814676-00-000004.txt : 20000515 0000814676-00-000004.hdr.sgml : 20000515 ACCESSION NUMBER: 0000814676-00-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000401 FILED AS OF DATE: 20000512 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: 627407 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 1, 2000 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 1, 2000: 12,286,969. CERAMICS PROCESS SYSTEMS CORPORATION Form 10-Q For The Fiscal Quarter Ended April 1, 2000 Index PART I: FINANCIAL INFORMATION Page Item 1: Consolidated Financial Statements 3 Consolidated Balance Sheets as of April 1, 2000 and January 1, 2000 3 Consolidated Statements of Operations for the fiscal quarters ended April 1, 2000 and April 3, 1999 5 Consolidated Statements of Cash Flows for the fiscal quarters ended April 1, 2000 and April 3, 1999 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 1, January 1, 2000 2000 (unaudited) ASSETS ---------- ---------- Current assets: Cash and cash equivalents $1,301,480 $1,033,522 Short-term investments -- 306,672 Accounts receivable-trade 511,662 387,569 Accounts receivable-other 15,000 109,065 Inventories 452,484 307,348 Prepaid expenses 43,253 30,194 ---------- ---------- Total current assets 2,323,879 2,174,370 Property and equipment: Production equipment 2,100,517 2,013,330 Furniture and office equipment 227,631 202,523 Accumulated depreciation and amortization (1,259,257) (1,204,000) ---------- ---------- Net property and equipment 1,068,891 1,011,854 ---------- ---------- Total assets $3,392,770 $3,186,223 ========== ========== See accompanying notes to consolidated financial statements. CERAMICS PROCESS SYSTEMS CORPORATION Consolidated Balance Sheets (continued) LIABILITIES AND STOCKHOLDERS` April 1, January 1, EQUITY 2000 2000 (unaudited) --------- ----------- Current liabilities: Accounts payable $ 217,738 $ 142,667 Accrued expenses 192,238 157,300 Deferred revenue 9,885 9,885 Current portion of obligations under capital leases 53,672 52,255 ------------ ------------ Total current liabilities 473,533 362,107 Deferred revenue 124,000 124,000 Obligations under capital leases less current portion 58,939 72,900 ------------ ------------ Total liabilities 659,472 559,007 ------------ ------------ Stockholders` Equity Common stock, $0.01 par value. Authorized 15,000,000 shares; issued 12,309,852 shares at April 1, 2000 and 12,308,852 at January 1, 2000 123,099 123,089 Additional paid-in capital 32,656,523 32,656,353 Accumulated deficit (29,982,489) (30,091,390) Less treasury stock, at cost, 22,883 common shares at April 1, 2000 and January 1, 2000 (60,835) (60,835) ------------ ------------ Total stockholders` equity 2,736,298 2,627,217 ------------ ------------ Total liabilities and stockholders' equity $ 3,392,770 $ 3,186,223 ============ ============ See accompanying notes to consolidated financial statements. CERAMICS PROCESS SYSTEMS CORPORATION Consolidated Statements of Operations (Unaudited) Fiscal Quarters Ended April 1, April 3, 2000 1999 ---------- ----------- Product sales $1,354,459 $ 1,245,414 ---------- ----------- Total revenue $1,354,459 $ 1,245,414 ========== =========== Operating expenses: Cost of product sales 1,027,710 833,551 Selling, general, and administrative 232,811 260,656 ---------- ----------- Total operating expenses 1,260,521 1,094,207 ---------- ----------- Operating income 93,938 151,207 Other income (expense), net 14,963 10,100 ---------- ----------- Net income before taxes $ 108,901 $ 161,307 ---------- ----------- Provision for income taxes -- 9,842 --------- ----------- Net income $ 108,901 $ 151,465 ========== =========== Net income per basic common share $ 0.01 $ 0.01 ---------- ----------- Weighted average number of basic common shares outstanding 12,286,178 12,308,852 ========== =========== Net income per diluted common share $ 0.01 $ 0.01 ---------- ----------- Weighted average number of diluted common shares outstanding 12,581,786 12,488,954 ========== =========== See accompanying notes to consolidated financial statements. CERAMICS PROCESS SYSTEMS CORPORATION Consolidated Statements of Cash Flows (Unaudited) Fiscal Quarters Ended April 1, April 3, 2000 1999 --------- --------- Cash flows from operating activities: Net income $ 108,901 $ 151,465 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 55,257 50,319 Changes in assets and liabilities: Trade accounts receivable (124,093) (155,343) Inventories (145,136) (113,835) Prepaid expenses (13,059) (27,834) Accounts payable 75,072 132,163 Accrued expenses 34,938 (1,097) Deferred revenue -- (2,500) --------- ---------- Net cash (used) provided by operating activities (8,120) 33,338 --------- ---------- Cash flows from investing activities: Additions to property and equipment (112,295) (108,073) Proceeds on disposal of property and equipment 94,065 -- Proceeds from sale of marketable securities 306,672 -- --------- ---------- Net cash provided (used) by investing activities 288,442 (108,073) --------- ---------- Cash flows from financing activities: Principal payments of capital lease obligations (12,544) (11,274) Proceeds from issuance of common stock 180 -- --------- --------- Net cash used in financing activities (12,364) (11,274) --------- --------- Net increase (decrease) in cash and cash equivalents 267,958 (86,009) Cash and cash equivalents at beginning of period 1,033,522 1,498,774 --------- ---------- Cash and cash equivalents at end of period $1,301,480 $1,412,765 ========= ========== 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 1, 2000 and April 3, 1999 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 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 1, April 3, 2000 1999 (Unaudited) ----------- ----------- Basic EPS Computation: Numerator: Net income $108,901 $151,465 Denominator: Weighted average common shares outstanding 12,286,178 12,308,852 Basic EPS $0.01 $0.01 Diluted EPS Computation: Numerator: Net income $108,901 $151,465 Denominator: Weighted average common shares outstanding 12,286,178 12,308,852 Stock options 295,608 180,102 ---------- --------- Total Shares 12,581,786 12,488,954 Diluted EPS $0.01 $0.01 As of April 1, 2000 and April 3, 1999 the Company had 59,500 and 215,353 securities in the form of options to purchase common stock that were antidilutive, respectively. (4) Inventory --------- Inventories consist of the following: April 1, January 1, 2000 2000 --------- ---------- Raw materials $ 67,817 $ 71,134 Work in process 384,667 236,214 --------- ---------- $ 452,484 $ 307,348 ========= ========== (5) Accrued Expenses - ---------------- Accrued expenses consist of the following: April 1, January 1, 2000 2000 --------- ---------- Accrued legal and accounting $ 27,875 $ 37,000 Accrued payroll 134,118 87,814 Accrued other 30,245 32,486 --------- ---------- $ 192,238 $ 157,300 ========= ========== (6) Supplemental Cash Flow Information - ---------------------------------- In the first fiscal quarter of 2000, the Company paid $3,184 interest on leases for production equipment compared to $5,491 in the first fiscal quarter of 1999. (7) Recent Accounting Pronouncements - -------------------------------- In December 1999, the United States Securities and Exchange Commission Issued Staff Accounting Bulletin 101, "Revenue Recognition in Financial Statements" ("SAB 101"). SAB 101 provides the staff's views in applying generally accepted accounting principles to selected revenue recognition issues, as well as examples of how the staff applies revenue recognition guidance to specific circumstances. The application of the guidance in SAB 101 will be required by the second quarter of 2000. The effect of applying this guidance, if any, will be reported as a cumulative effect adjustment resulting from a change in accounting principal. Our evaluation of SAB 101 is not yet complete. 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 2000 Compared to First Quarter of 1999. - --------------------- The Company`s net revenue in the first fiscal quarter of 2000 of $1,354 thousand increased by 9% compared with net revenue in the first fiscal quarter of 1999 of $1,245 thousand as a result of increased product shipments. Gross margins declined to 24% of revenues from 33% over the same period as a result of increased expenses associated with changes in product mix, and investments in manufacturing and quality infrastructure which the Company believes are necessary to support future growth. In the first quarter the Company's quality system was certified to the ISO 9001 quality standard by TUV Essen. Sales, General and Administrative expenses (SG&A) declined to $233 thousand in the first fiscal quarter of 2000 compared to $261 thousand in the first fiscal quarter of 1999 primarily as a result of lower travel expenses. Total operating expenses in the first fiscal quarter of 2000 were $1,261 thousand, a 15% increase over operating expenses in the first fiscal quarter of 1999 of $1,094 thousand. Material and labor costs increased primarily as a result of changes in the product mix. Other income increased to $15 thousand in the first fiscal quarter of 2000 compared to other income of $10 thousand in the first fiscal quarter of 1999 as a result of higher interest income. The cumulative effect of these revenues and costs resulted in net income of $109 thousand, or $0.01 per basic common share, in the first fiscal quarter of 2000, versus net income of $151 thousand, or $0.01 per basic common share, in the first fiscal quarter of 1999. Liquidity - ------------------- The Company`s cash balance and cash equivalents at April 1, 2000 was $1,301 thousand compared to the balance at January 1, 2000 of $1,034 thousand, a increase of 26%. In addition to cash, the Company had short-term investments at April 1, 2000 of $0 thousand compared to $307 thousand at January 1, 2000. Trade Accounts Receivable increased to $512 thousand at April 1, 2000 from $388 thousand at January 1, 2000. This change reflects increased product shipments in the first quarter of 2000 compared with the fourth quarter of 1999, and the later timing of the shipments in the first quarter of 2000. In 1999 the Company sold certain obsolete production equipment, payment of $94 thousand was received from the purchaser of this equipment in the first quarter of 2000. Inventory increased to $452 thousand at the end of the first fiscal quarter of 2000 from $307 thousand at January 1, 2000. The higher inventory level is a result of increased customer demand, as evidenced by customer- provided forecasts, as well as management's actions to smooth production activities in an environment in which customers' requested shipment dates can fluctuate significantly on a week-to-week basis. The Company consumed cash of $112 thousand by purchasing production equipment for $91 thousand and office equipment for $21 thousand. These equipment additions provide the Company with increased capacity for future growth and with increased ability to serve a broader range of customers. The Company financed its working capital requirements during the first fiscal quarter of 2000 with funds generated by operations, funds provided from the sale of obsolete equipment, and existing cash balances. The Company expects it will continue to be able to fund its working capital requirements for the remainder of 2000 from its existing cash balance and from funds generated by operations. Year 2000 Issue - --------------- In 1998 and 1999 the Company 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 Company conducts business. The Company completed an assessment of its exposure in each of these three areas and developed and implemented a plan to address issues identified. The assessment indicated the area of greatest risk was the area of application programs. In the process of addressing the Year 2000 issue, the Company concurrently sought to upgrade certain computer systems to provide greater functionality. In fiscal 1998 and 1999, the Company made capital expenditures of less than $100 thousand to purchase and install new financial, accounting, and selected manufacturing computer systems which are Year 2000 compliant and which provide greater functionality. Regarding the second area, the Company tested all production and analytical equipment to determine where Year 2000 problems existed, and implemented upgrades or other remedies as appropriate. No production or analytical equipment required replacement as a result of Year 2000 problems. Regarding the third area, the Company interviewed vendors and customers to determine their exposure to Year 2000 issues, and developed a contingency plan for sourcing materials and other services in the event of an interruption. As of April 1, 2000 the Company has not experienced any interruptions in its operations from the Year 2000 issue, and does not expect any interruptions in the future; however there can be no assurance this will be the case. Recent Accounting Pronouncements - -------------------------------- In December 1999, the United States Securities and Exchange Commission issued Staff Accounting Bulletin 101, "Revenue Recognition in Financial Statements" ("SAB 101"). SAB 101 provides the staff's views in applying generally accepted accounting principles to selected revenue recognition issues, as well as examples of how the staff applies revenue recognition guidance to specific circumstances. The application of the guidance in SAB 101 will be required by the second quarter of 2000. The effect of applying this guidance, in any, will be reported as a cumulative effect adjustment resulting from a change in accounting principal. Our evaluation of SAB 101 is not yet complete. 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 9, 2000 /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 1, 2000. 3-MOS Dec-30-2000 Apr-01-2000 1,301,480 0 526,662 0 452,484 2,323,879 1,068,891 1,259,257 3,392,770 473,533 0 0 0 12,286,969 0 3,392,770 1,354,459 1,354,459 1,027,710 1,260,521 0 0 0 108,901 0 108,901 0 0 0 108,901 0.01 0.01
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