-----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, Bz2kW5xLhm8PnI+xSYVPKNqE+pxE8Z69cbKn8I9n2hOxA25PlVJXwVpH95RssWPb X8li3oSa6/+rzxmcwn9Wag== 0000814676-01-500003.txt : 20010515 0000814676-01-500003.hdr.sgml : 20010515 ACCESSION NUMBER: 0000814676-01-500003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010514 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: 1632889 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 q110q.txt 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 March 31, 2001 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 March 31, 2001: 12,289,653. CERAMICS PROCESS SYSTEMS CORPORATION Form 10-Q For The Fiscal Quarter Ended March 31, 2001 Index PART I: FINANCIAL INFORMATION Page Item 1: Consolidated Financial Statements Consolidated Balance Sheets as of March 31, 2001 and December 30, 2000 (unaudited) 3 Consolidated Statements of Operations for the fiscal quarters ended March 31, 2001 and April 1, 2000 (unaudited) 5 Consolidated Statements of Cash Flows for the fiscal quarters ended March 31, 2001 and April 1, 2000 (unaudited) 6 Notes to Consolidated Financial Statements 7 Item 2: Management`s Discussion and Analysis of Financial Condition and Results of Operations 9 PART II: OTHER INFORMATION Items 1-6 11 Signatures 11 PART I FINANCIAL INFORMATION ITEM 1 FINANCIAL STATEMENTS CERAMICS PROCESS SYSTEMS CORPORATION Consolidated Balance Sheets (Unaudited) March 31, December 30, 2001 2000 ASSETS ------------ ------------ Current assets: Cash and cash equivalents $313,707 $672,391 Net accounts receivable (net of allowance for doubtful accounts of $12,585 and $0 at March 31, 2001 and December 30, 2000 respectively) 686,595 800,223 Inventories 642,591 567,132 Prepaid expenses 44,826 5,142 ------------ ------------ Total current assets 1,687,719 2,044,888 Property and equipment: Production equipment 1,953,821 1,880,486 Furniture and office equipment 188,010 188,010 Accumulated depreciation (1,112,540) (1,029,006) and amortization ------------ ------------ Net property and equipment 1,029,291 1,039,490 ------------ ------------ Total Assets $2,717,010 $3,084,378 ============ ============ See accompanying notes to consolidated financial statements. CERAMICS PROCESS SYSTEMS CORPORATION Consolidated Balance Sheets (unaudited) (continued) March 31, December 30, LIABILITIES AND STOCKHOLDERS' 2001 2000 EQUITY ------------ ------------ Current liabilities: Accounts payable $244,893 $299,656 Accrued expenses 179,567 144,440 Deferred revenue 9,884 9,884 Current portion of obligations under capital leases 46,244 52,061 ------------ ------------ Total current liabilities 480,588 506,041 Deferred revenue 124,000 124,000 Obligations under capital leases less current portion 12,695 20,762 ------------ ------------ Total liabilities 617,283 650,803 ------------ ------------ Stockholders' Equity Common stock, $0.01 par value. Authorized 15,000,000 shares; issued 12,314,102 and 12,310,352 shares at March 31,2001 and December 30, 2000 respectively. 123,141 123,104 Additional paid-in capital 32,657,246 32,656,608 Accumulated deficit (30,619,825) (30,285,302) Less treasury stock, at cost, 22,883 common shares at March 31, 2001 and December 30, 2000 (60,835) (60,835) ------------ ------------ Total stockholders' equity 2,099,727 2,433,575 ------------ ------------ Total liabilities and stockholders' equity $2,717,010 $3,084,378 ============ ============ See accompanying notes to consolidated financial statements. CERAMICS PROCESS SYSTEMS CORPORATION Consolidated Statements of Operations (Unaudited) Fiscal Quarters Ended March 31, April 1, 2001 2000 Total Revenue $964,579 $1,354,459 Operating expenses: Cost of product sales 991,141 1,027,710 Selling, general, and administrative 312,482 232,811 ------------- ------------- Total operating expenses 1,303,623 1,260,521 ------------- ------------- Operating income (loss) (339,044) 93,938 Other income, net 4,521 14,963 ------------- ------------- Net income (loss) before taxes (334,523) 108,901 Net income (loss) (334,523) 108,901 ============= ============= Net income (loss) per basic common share $(0.03) 0.01 ------------- ------------- Weighted average number of basic common shares outstanding 12,289,653 12,286,178 ============= ============= Net income (loss) per diluted common share $(0.03) 0.01 ============= ============= Weighted average number of diluted common shares outstanding 12,289,653 12,581,786 ============= ============= See accompanying notes to consolidated financial statements. CERAMICS PROCESS SYSTEMS CORPORATION Consolidated Statements of Cash Flows (Unaudited) Fiscal Quarters Ended March 31, April 1, 2001 2000 ------------- ------------- Cash flows from operating activities: Net income (loss) $(334,523) $108,901 Adjustments to reconcile net income (loss) to cash used in operating activities: Depreciation & amortization 83,534 55,257 Allowance for doubtful accounts 12,585 - Changes in assets and liabilities Accounts receivable 101,043 (124,093) Inventories (75,459) (145,136) Prepaid expenses (39,684) (13,059) Accounts payable (54,763) 75,072 Accrued expenses 35,127 34,938 ------------- ------------- Net cash used in operating activities (272,140) (8,120) ------------- ------------- Cash flows from investing activities: Purchases of property and equipment (73,335) (112,295) Disposal of property and equipment - 94,065 Sale of marketable securities - 306,672 ------------- ------------- Net cash provided by (used in) investing activities (73,335) 288,442 ------------- ------------- Cash flows from financing activities: Payment of capital lease obligations (13,884) (12,544) Proceeds from issuance of common stock 675 180 ------------- ------------- Net cash used in financing activities (13,209) (12,364) ------------- ------------- Net increase (decrease) in cash (358,684) 267,958 Cash at beginning of period 672,391 1,033,522 ------------- ------------- Cash at end of period $313,707 $1,301,480 ============= ============= 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 infrastructure market, high-performance microprocessor market, motor controller market, and other microelectronic markets by developing, manufacturing, and marketing advanced metal-matrix composite 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 March 31, 2001 and April 1, 2000 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 net income (loss) 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 net income (loss) 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 March 31, April 1, 2001 2000 (Unaudited) (Unaudited) ----------- ----------- Basic EPS Computation: Numerator: Net income (loss) ($334,523) $108,901 Denominator: Weighted average common shares outstanding 12,289,653 12,286,178 Basic EPS ($0.03) $0.01 Diluted EPS Computation: Numerator: Net income (loss) ($334,523) $108,901 Denominator: Weighted average common shares outstanding 12,289,653 12,286,178 Stock options 295,608 ---------- --------- Total Shares 12,289,653 12,581,786 Diluted EPS ($0.03) $0.01 The common stock equivalents of the Company consist of stock options. The Company was in a net loss position at March 31, 2001; therefore, common stock equivalents were not used to compute diluted loss per share since the effect would have been antidilutive. Options to purchase 779,603 shares of common stock at a weighted-average price of $0.98, were outstanding at March 31, 2001. As of April 1, 2000 the Company had 59,500 securities in the form of options to purchase common stock that were antidilutive. (4) Inventory --------- Inventories consist of the following: March 31, Dec 30, 2001 2000 --------- ---------- Raw materials $ 47,386 $ 89,047 Work in process 248,542 262,313 Finished goods 346,663 215,772 --------- ---------- $ 642,591 $ 567,132 ========= ========== (5) Accrued Expenses - ---------------- Accrued expenses consist of the following: March 31, December 30, 2001 2000 --------- ---------- Accrued legal and accounting $ 16,902 $ 37,500 Accrued payroll 118,768 49,336 Accrued other 43,897 57,604 --------- ---------- $ 179,567 $ 144,440 ========= ========== 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 2001 Compared to First Quarter of 2000. - --------------------- The Company entered the first quarter of 2001 with staffing and expense levels appropriate to support customer forecasts which were slightly above fourth quarter 2000 revenues. As the quarter progressed demand dropped below customer forecasts as customers delayed shipment releases; few orders were cancelled outright. Demand in the first month of the quarter was near forecast, but in subsequent months fell increasingly below forecast. As a result, first quarter 2001 revenues were 29% lower than the same period a year ago. Despite lower product shipments, the Company continued to receive and fulfill prototype and evaluation orders for new products during the first quarter. In March 2001 management concluded that demand would remain weak, at least through the second quarter of 2001 and that it was necessary to reduce costs in the Company to a level consistent with lower levels of demand in the short-term. Cost reduction actions taken near the end of the first quarter included reducing employment levels, particularly in manufacturing, and placing tighter controls on expenses. In addition, budgeted capital expenditures were reduced to conserve cash. These actions were completed by the end of the first quarter so their effects will be seen in the second quarter and beyond. The first quarter loss of $335 thousand results primarily from lower demand than forecast, resulting in inefficiencies from lower utilization levels. Severance costs also contributed to the loss. Gross margins were negative during the first quarter at (3%) of revenues compared to positive margins of 24% of revenues in the same period a year ago primarily as a result of low labor utilization in our manufacturing operations. Sales, General and Administrative expenses (SG&A) increased to $312 thousand in the first quarter of 2001 from $233 thousand in the first fiscal quarter of 2000 primarily as a result of a higher staffing level in sales and severance costs incurred in connection with headcount reductions initiated near the end of the first quarter. Total operating expenses in the first quarter of 2001 were $1,304 thousand, a 3% increase over operating expenses in the first quarter of 2000 of $1,261 thousand. The increase was primarily the result of a 4% increase in direct labor costs partially offset by a decrease in material costs. Other income decreased to $5 thousand in the first quarter of 2001 compared to $15 thousand in the first fiscal quarter of 2000 primarily as a result of lower interest income. The cumulative effect of these revenues and costs resulted in a net loss of $335 thousand or ($0.03) per basic and dilutive common share in the first quarter of 2001 versus net income of $109 thousand, or $0.01 per basic and dilutive common share, in the first fiscal quarter of 2000. Liquidity - ------------------- The Company`s cash balance and cash equivalents at March 31, 2001 was $314 thousand compared to cash balance and cash equivalents at December 30, 2000 of $672 thousand, a decrease of 53%. Accounts receivable declined to $687 thousand at March 31, 2001 from $800 thousand at December 30, 2000. This change reflects lower shipments in March 2001 compared with December 2000 and an allowance for doubtful accounts of $13 thousand as of March 31, 2001. Inventory increased to $642 thousand at the end of the first fiscal quarter of 2000 from $567 thousand at December 30, 2000. The higher inventory level primarily results from customers delaying shipment releases. The Company builds product to meet specific demand, however, customers frequently modify desired shipment timing with little notice. In the first quarter of 2001 the Company purchased $73 thousand of production equipment. The Company financed its working capital during the first fiscal quarter of 2001 with funds generated by operations and existing cash balances. The Company expects it will continue to be able to fund its working capital requirements for the remainder of 2001 from its existing cash balance and from funds generated by operations. The Company continues to sell to a limited number of customers and loss of any one of these customers could cause the Company to require external financing. Failure to generate sufficient revenues, raise additional capital or reduce certain discretionary spending could have a material adverse effect on the Company's ability to achieve its business objectives. 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 14, 2001 /s/Grant C. Bennett Grant C. Bennett President and Treasurer (Principal Executive Officer) -----END PRIVACY-ENHANCED MESSAGE-----