-----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, RFe3cL0j8KnqfRwJEMBK4LOSW1nKd0paxAMtagZa4piFGVRIG3PAH8p2XAMyS/Pn xXwwltkG31N0MvqzhoMFzw== 0000891554-97-001047.txt : 19971111 0000891554-97-001047.hdr.sgml : 19971111 ACCESSION NUMBER: 0000891554-97-001047 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970927 FILED AS OF DATE: 19971110 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SAGE LABORATORIES INC CENTRAL INDEX KEY: 0000086166 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPONENTS, NEC [3679] IRS NUMBER: 042179082 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-03287 FILM NUMBER: 97710992 BUSINESS ADDRESS: STREET 1: 11 HURON DR STREET 2: EAST NATICK INDUSTRIAL PARK CITY: NATICK STATE: MA ZIP: 01760 BUSINESS PHONE: 5086530844 MAIL ADDRESS: STREET 1: 11 HURON DRIVE CITY: NATICK STATE: MA ZIP: 01760 10-Q 1 QUARTERLY REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended September 27, 1997 Commission File Number 1-7054 SAGE LABORATORIES, INC. (Exact name of registrant as specified in its charter) MASSACHUSETTS 04-2179082 (State or other jurisdiction of (I.R.S. Employer incorporation or organization Identification number) 11 Huron Drive, Natick Massachusetts 01760 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (508) 653 - 0844 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 ___ On September 27, 1997, the Company had outstanding 1,081,765 shares of common stock, $.10 par value, which is its only class of stock. PART 1 - FINANCIAL INFORMATION COMPANY OR GROUP OF COMPANIES FOR WHICH REPORT IS FILED: SAGE LABORATORIES, INC. AND SUBSIDIARIES Item I - Financial Statements A. Statements of Income For the Three Months Ended Sept. 27, 1997 Sept. 28, 1996 -------------- -------------- NET SALES AND CONTRACT REVENUES $ 2,346,021 $ 1,864,089 COST OF SALES AND CONTRACT COSTS 1,388,416 1,092,571 ENGINEERING AND NEW PRODUCT DEVELOPMENT COSTS 69,139 18,204 ----------- ----------- Gross profit 888,466 753,314 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 670,147 535,876 ----------- ----------- Operating income 218,319 217,438 INTEREST INCOME 61,870 72,640 INTEREST EXPENSE (12,033) (14,788) INCOME ON RENTAL PROPERTY 14,369 12,277 ----------- ----------- Income before provision for income taxes 282,525 287,567 PROVISION FOR INCOME TAXES: Federal 76,000 87,000 State 28,000 32,000 ----------- ----------- Net income $ 178,525 $ 168,567 =========== =========== NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE $ 0.16 $ 0.14 =========== =========== WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING 1,103,458 1,171,104 =========== =========== DIVIDENDS PAID $ 108,177 $ 116,127 =========== =========== The accompanying notes are an integral part of these consolidated financial statements. SAGE LABORATORIES, INC. AND SUBSIDIARIES B. CONSOLIDATED BALANCE SHEETS SEPTEMBER 27, 1997 AND JUNE 30, 1997
ASSETS Sept. 27, 1997 June 30, 1997 -------------- ------------- CURRENT ASSETS: Cash and cash equivalents $ 4,352,252 $ 5,280,584 Accounts receivable, net of reserve of approximately $65,000 at Sept.27, 1997 and $62,000 at June 30, 1997 2,038,781 1,749,778 Inventories 1,883,299 1,936,015 Prepaid expenses and other current assets 368,305 661,883 ----------- ----------- Total current assets 8,642,637 9,628,260 ----------- ----------- PROPERTY, PLANT AND EQUIPMENT, AT COST: Land, building and improvements 4,191,781 4,191,088 Machinery and laboratory equipment 2,200,166 2,180,492 Furniture, fixtures and motor vehicles 693,316 691,192 ----------- ----------- 7,085,263 7,062,772 Less--Accumulated depreciation and amortization 4,016,217 3,869,877 ----------- ----------- 3,069,046 3,192,895 ----------- ----------- OTHER ASSETS: Notes receivable from an officer/stockholder 23,047 23,047 Other assets 149,214 151,457 ----------- ----------- Total other assets 172,261 174,504 ----------- ----------- $11,883,944 $12,995,659 =========== =========== LIABILITIES AND STOCKHOLDERS' INVESTMENT CURRENT LIABILITIES: Current maturities of long-term debt $ 166,667 $ 166,667 Accounts payable 500,892 427,022 Accrued expenses- Compensation 437,364 635,297 Commissions 163,853 155,701 Other 390,123 256,191 ----------- ----------- Total current liabilities 1,658,899 1,640,878 ----------- ----------- LONG TERM DEBT, NET OF CURRENT MATURITIES 458,333 500,000 ----------- ----------- DEFERRED INCOME TAXES 144,000 144,000 ----------- ----------- STOCKHOLDERS' INVESTMENT Common stock, $.10 par value-- Authorized--10,000,000 shares Issued--2,681,980 shares at Sept. 27, 1997 and June 30, 1997 268,198 268,198 Capital in excess of par value 2,038,757 2,038,757 Retained earnings 13,923,165 13,852,814 ----------- ----------- 16,230,120 16,159,769 Less-- Cost of 1,600,215 shares of treasury stock at September 27, 1997 and 1,517,215 at June 30, 1997 6,607,408 5,448,988 ----------- ----------- Total stockholders' investment 9,622,712 10,710,781 ----------- ----------- $11,883,944 $12,995,659 =========== ===========
The accompanying notes are an integral part of these consolidated financial statements. SAGE LABORATORIES, INC. AND SUBSIDIARIES C. CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended Sept. 27, 1997 Sept. 28, 1996 -------------- -------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 178,525 $ 168,567 Adjustments to reconcile net income to net cash provided by operating activities-- Depreciation and Amortization 146,340 155,991 Amortization of deferred compensation -- 13,614 Changes in assets and liabilities-- Accounts receivable (289,003) 244,285 Inventories 52,716 (131,950) Prepaid expenses and other current assets 293,578 (5,203) Accounts payable 73,870 195,706 Accrued expenses (55,849) (390,753) ----------- ----------- Net cash provided by operating activities 400,177 250,257 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property, plant and equipment, net (22,491) (308,441) Increase in other assets 2,243 (67,183) ----------- ----------- Net cash used in investing activities (20,248) (375,624) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Purchase of treasury stock (1,158,420) -- Payment of cash dividend (108,174) (116,127) Payments on long-term debt (41,667) (41,665) ----------- ----------- Net cash used in financing activities (1,308,261) (157,792) ----------- ----------- NET DECREASE IN CASH AND CASH EQUIVALENTS (928,332) (283,159) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 5,280,584 5,878,691 ----------- ----------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 4,352,252 $ 5,595,532 =========== =========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid (refunded) during the period for-- Interest $ 12,691 $ 14,788 =========== =========== Income taxes $ (44,751) $ 448,000 =========== ===========
The accompanying notes are an integral part of these consolidated financial statements. SAGE LABORATORIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 27, 1997 (1) Basis of Presentation The unaudited consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission and include, in the opinion of management, all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of interim period results. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The Company believes, however, that its disclosures are adequate to make the information presented not misleading. The results for the three month period ended September 27, 1997, are not necessarily indicative of results to be expected for the full fiscal year. 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 reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. (2) Inventories Inventories, priced at the lower of cost (first-in, first-out) or market, are as follows: Sept. 27, June 30, 1997 1997 ---------- ---------- Raw materials and parts $ 689,071 $ 813,606 Work-in-process 1,019,154 943,453 Finished goods 175,074 178,956 ---------- ---------- $1,883,299 $1,936,015 ========== ========== Work-in-process and finished goods include material, labor and manufacturing overhead. (3) Put-and-Call Agreement The Company had a put-and-call agreement with a relative of the former chairman of the Company's Board of Directors providing that, in the event of the relative's death prior to August 31, 1998, the relative's estate could require the Company to acquire all of the relative's Company common stock (65,000 shares as of June 30, 1997) at the average market value, as defined, if the Company has achieved certain defined financial results. On July 3, 1997, the Company repurchased all 65,000 shares from the relative's estate for $13.95 per share, or a total of $906,420 pursuant to the put provision of this agreement. SAGE LABORATORIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 27, 1997 (4) Recently Issued Accounting Standards In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, Earnings Per Share. SFAS No.128 establishes standards for computing and presenting earnings per share and applies to entities with publicly held common stock or potential common stock. This statement is effective for annual and interim periods ending after December 15, 1997 and early adoption is not permitted. When adopted, the statement will require restatement of prior years' earnings per share. The Company will adopt this statement during its second quarter ended December 27, 1997. Pro-forma calculations of basic and diluted earnings per share as required by SFAS No. 128 are as follows: Three Months Ended Sept.27, 1997 Sept. 26, 1996 Basic EPS Net Income $ 178,525 $ 168,567 Weighted average common shares outstanding 1,093,765 1,161,265 Basic EPS $ .16 $ .15 ========== ========== Diluted EPS Net Income $ 178,525 $ 168,567 Weighted average common and common equivalent shares outstanding 1,103,458 1,171,104 Diluted EPS $ .16 $ .14 ========== ========== D. Management's Discussion and Analysis For the three months ended September 27, 1997, the Company realized net income of approximately $179,000, or $.16 per share, on sales of $2,346,000. This compares with net income of approximately $169,000, or $.14 per share, on sales of $1,864,000 for the same period a year ago. Total net sales for the three months ended September 27, 1997, increased by approximately $482,000, or 26%, compared to the same period a year ago. Sage Laboratories Active Microwave, Inc. (SLAM) recorded sales of $137,000 for the quarter, as compared with $155,000 for the same period a year ago. The increase in total net sales is due to an increase in shipments of catalog and adaptable or reorderable sales items, offset by decreased revenues from engineered items and SLAM. Gross profit as a percentage of sales was approximately 38% for the three months ended September 27, 1997, as compared to approximately 40% for the same period a year ago. The decrease in gross margin was primarily attributable to increased research and development costs of approximately $51,000. SAGE LABORATORIES, INC. AND SUBSIDIARIES September 27, 1997 Selling, General and Administrative expenses (S G & A) as a percentage of sales was 29% for both the quarter ended September 27, 1997, and for the same period a year ago. S G & A expense increased by $134,000 due to increases in commissions of $33,000, resulting from higher sales, and increases in salaries and related items of $131,000. Interest income for the three months ended September 27, 1997 decreased by approximately $6,000 from the same period a year ago. This decrease is attributable to reductions in cash available for investing. Interest expense for the period ended September 27, 1997 decreased by approximately $3,000, due to scheduled principal reductions on outstanding obligations. The Company's rental property continues to be fully leased. Profit on rental property increased by $2,000 to $14,000 for the period ended September 27, 1997, as compared to the same period a year ago. The Company's net book value of property held for rent (including renovations) at September 27, 1997 and September 28, 1996 is as follows: 1997 1996 -------- -------- 3 Huron Drive (old facility) $405,566 $481,814 11 Huron Drive (rented portion) 249,442 263,448 -------- -------- Total $655,088 $745,262 ======== ======== Federal and state income taxes for the three months ended September 27, 1997, and September 28, 1996 were provided for at their respective statutory rates. Liquidity and Capital Resources For the three months ended September 27, 1997 operating activities generated cash of $400,000, as compared to $250,000 for the three months ended September 28, 1996. Cash used in investing activities amounted to $20,000 and $376,000 respectively, while cash used for financing activities was $1,308,000 and $158,000, respectively. The details of these activities are provided in the consolidated statements of cash flows. The Company invests its excess cash only in short-term, highly liquid instruments with minimal risk. Having only the debt relating to the Company's facility, and with surplus cash, management believes that the Company will be able to finance its operations and necessary capital expenditures for the foreseeable future. Although the Company has a $2,000,000 bank line of credit, the Company does not presently anticipate a need to use the line. The Company anticipates that capital expenditures for fiscal year 1998 will be approximately $500,000 and that no outside funding will be required. During the three months ended September 27, 1997, the Company purchased 83,000 shares of its stock at a cost of $1,158,420, at an average price of $13.96 per share. The purchase of 65,000 shares was made pursuant to the put provision of a put-and-call agreement with a relative of the former chairman of the Company's Board of Directors, and the remaining balance of 18,000 shares were acquired on the open market. SAGE LABORATORIES, INC. AND SUBSIDIARIES SEPTEMBER 27, 1997 PART II. OTHER INFORMATION Item 1. Legal Proceedings: None 2. Changes in Securities: None 3. Defaults upon Senior Securities: None 4. Submission of Matters to a Vote of Security Holders: None 5. Other Information: None 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. Date: November 10, 1997 SAGE LABORATORIES, INC. AND SUBSIDIARIES /s/ Carl A. Marguerite ---------------------------- (Principal executive officer, principal financial officer) EX-27 2 FDS 10-Q
5 3-MOS JUN-30-1998 JUL-01-1997 SEP-27-1997 4,352,252 0 2,103,781 65,000 1,883,299 8,642,637 7,085,263 4,016,217 11,883,944 1,658,899 458,333 268,198 0 0 0 11,883,944 2,346,021 2,346,021 1,457,555 1,457,555 670,147 0 12,033 282,525 104,000 0 0 0 0 178,525 .16 .16
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