-----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, IFJuWQfMt2W+AipQGA0kTCfmLhSfJyJYTICvaG8coulRLaNSBtPIZGTUqFjxU6RK R+Ky5t9YpfsCMktGaP3XdQ== 0001047469-99-023231.txt : 19990607 0001047469-99-023231.hdr.sgml : 19990607 ACCESSION NUMBER: 0001047469-99-023231 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981226 FILED AS OF DATE: 19990604 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTENNIAL TECHNOLOGIES INC CENTRAL INDEX KEY: 0000919006 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER PERIPHERAL EQUIPMENT, NEC [3577] IRS NUMBER: 042978400 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 001-12912 FILM NUMBER: 99640858 BUSINESS ADDRESS: STREET 1: 7 LOPEZ ROAD CITY: WILMINGTON STATE: MA ZIP: 01887 BUSINESS PHONE: 9789888848 MAIL ADDRESS: STREET 1: 7 LOPEZ ROAD CITY: WILMINGTON STATE: MA ZIP: 01887 10-Q/A 1 10-Q/A SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ----------------- FORM 10-Q/A (MARK ONE) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE __________ SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 26, 1998 __________ 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 1-12912 CENTENNIAL TECHNOLOGIES, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 04-2978400 (STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER) 7 LOPEZ ROAD, WILMINGTON, MASSACHUSETTS 01887 (Address of Principal Executive Offices) (Zip Code) (978) 988-8848 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) 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 [ ] As of January 29, 1999, there were 20,546,683 shares of Common Stock, $.01 par value per share (the "Common Stock"), of the Registrant outstanding. CENTENNIAL TECHNOLOGIES, INC. TABLE OF CONTENTS
PAGE NUMBER ----------- PART I. FINANCIAL INFORMATION (UNAUDITED) Item 1. Financial Statements 3 Consolidated Balance Sheets at December 26, 1998 and March 31, 3 1998 Consolidated Statements of Operations for three and nine 4 months ended December 26, 1998 and December 27, 1997 Consolidated Statements of Cash Flows for nine months 5 ended December 26, 1998 and December 27, 1997 Notes to Consolidated Financial Statements 6 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 12
On February 8, 1999, the Registrant filed its Quarterly Report on Form 10-Q for the quarterly period ended December 31, 1998 (the "Original Form 10-Q"). The Registrant hereby amends Part I, Item 1 of the Original Form 10-Q to include in its earnings per share calculations those shares of its Common Stock that were approved for issuance in settlement of its class action litigation as of July 20, 1998, the date upon which the Registrant's settlement of the class action litigation became effective. See Note 8 of the Notes to the Unaudited Consolidated Financial Statements. 2 The Registrant hereby amends Part I, Item 1 of its Quarterly Report on Form 10-Q for the period ended December 26, 1998 to read in its entirety as follows: PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CENTENNIAL TECHNOLOGIES, INC. CONSOLIDATED BALANCE SHEETS (AMOUNTS IN THOUSANDS)
DECEMBER 26, MARCH 31, 1998 1998 ---- ---- (UNAUDITED) ASSETS Current assets: Cash and cash equivalents............................................. $ 8,686 $ 5,358 Trade accounts receivable............................................. 4,059 3,677 Less allowances.................................................. (856) (868) ---------- --------- 3,203 2,809 Recoverable income taxes.............................................. 337 337 Inventories........................................................... 2,204 2,309 Other current assets.................................................. 172 684 ---------- --------- Total current assets....................................................... 14,602 11,497 Equipment and leasehold improvements....................................... 3,630 3,973 Less accumulated depreciation and amortization........................ (1,298) (1,242) ----------- ---------- 2,332 2,731 Other assets............................................................... 388 417 Investment in former affiliate............................................. 1,700 2,433 ---------- --------- Total assets............................................................... $ 19,022 $ 17,078 ---------- --------- ---------- --------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Obligations under capital leases...................................... $ 54 $ 70 Accounts payable and accrued expenses................................. 8,199 8,070 ---------- --------- Total current liabilities.................................................. 8,253 8,140 Long-term obligations under capital leases................................. -- 36 Contingencies (Note 8) Stockholders' equity: Preferred Stock, $.01 par value; 1,000,000 shares authorized, none issued............................................... -- -- Common Stock, $.01 par value; 50,000,000 shares authorized, 20,549,000 issued and outstanding at December 26, 1998 and 18,499,000 issued and outstanding at March 31, 1998................... 205 185 Additional paid-in capital............................................ 84,200 84,220 Foreign currency translation adjustment............................... (6) -- Accumulated deficit................................................... (73,630) (75,503) ----------- ---------- Total stockholders' equity................................................. 10,769 8,902 ---------- --------- Total liabilities and stockholders' equity................................. $ 19,022 $ 17,078 ---------- --------- ---------- ---------
The accompanying notes are an integral part of the consolidated financial statements. 3 CENTENNIAL TECHNOLOGIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA) (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED -------------------------- --------------------------- DECEMBER 26, DECEMBER 27, DECEMBER 26, DECEMBER 27, 1998 1997 1998 1997 ------------ ------------ ------------ ------------- Net sales ................................................. $ 7,568 $ 7,567 $ 19,954 $ 21,041 Cost of goods sold ........................................ 4,978 5,362 13,809 17,866 -------- -------- -------- -------- Gross profit ......................................... 2,590 2,205 6,145 3,175 Operating expenses: Engineering, research and development costs ............ 205 249 574 683 Selling, general and administrative expenses ........... 1,808 1,725 4,706 6,185 -------- -------- -------- -------- Operating income/(loss) ............................. 577 231 865 (3,693) Provision for loss on inventory subject to customer dispute -- -- -- 1,841 Proceeds from resolution of customer dispute .............. -- -- (1,600) -- Loss on investment activities ............................. -- 5,156 733 14,065 Other expenses, net ....................................... 83 -- 83 855 Net interest (income)/expense ............................ (79) (51) (224) 96 -------- -------- -------- -------- Income/(loss) before equity in earnings of affiliate ... 573 (4,874) 1,873 (20,550) Equity in earnings of former affiliate .................... -- -- -- 423 -------- -------- -------- -------- Net income/(loss) ................................... $ 573 $ (4,874) $ 1,873 $(20,127) -------- -------- -------- -------- -------- -------- -------- -------- Net income/(loss) per share - basic ....................... $ .02 $ (.26) $ .08 $ (1.09) Net income/(loss) per share - diluted ..................... $ .02 $ (.26) $ .08 $ (1.09) Weighted average shares outstanding - basic ............... 25,334 18,513 22,524 18,446 Weighted average shares outstanding - diluted ............. 25,391 18,513 22,654 18,446
The accompanying notes are an integral part of the consolidated financial statements. 4 CENTENNIAL TECHNOLOGIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (AMOUNTS IN THOUSANDS) (UNAUDITED)
NINE MONTHS ENDED ------------------------------- DECEMBER 26, DECEMBER 27, 1998 1997 ------------ ------------ Cash flows from operating activities: Net income/(loss).............................................................. $ 1,873 $ (20,127) Adjustments to reconcile net income/(loss) to net cash from operating activities: Depreciation and amortization.................................................. 782 665 Loss on disposal of capital equipment.......................................... 85 -- Equity in earnings of former affiliate......................................... -- (423) Provision for loss on accounts receivable...................................... 130 310 Provision for loss on investments.............................................. 733 12,161 Change in operating assets and liabilities: Accounts receivable.......................................................... (524) 1,317 Inventories.................................................................. 105 4,935 Notes receivable from former affiliate....................................... -- 4,129 Recoverable income taxes..................................................... -- 7,019 Other assets................................................................. 541 (5) Accounts payable and accrued expenses........................................ 129 (3,236) -------- --------- Net cash provided by operating activities.................................... 3,854 6,745 Cash flows from investing activities: Capital expenditures........................................................... (500) (848) Disposal of capital equipment.................................................. 32 607 Advances from affiliate (net).................................................. -- 1,017 -------- --------- Net cash provided by/(used in) investing activities.......................... (468) 776 Cash flows from financing activities: Net borrowings under line of credit............................................ -- (7,941) Borrowings from term loans..................................................... -- 938 Payments on term loans......................................................... -- (167) Payments on capital leases..................................................... (52) (549) Proceeds from exercise of stock options........................................ -- 209 Foreign currency translation adjustment........................................ (6) 77 ---------- --------- Net cash used in financing activities........................................ (58) (7,433) ---------- --------- Net increase in cash and cash equivalents........................................ 3,328 88 Cash and cash equivalents at beginning of period................................. 5,358 57 -------- --------- Cash and cash equivalents at end of period....................................... $ 8,686 $ 145 -------- --------- -------- ---------
The accompanying notes are an integral part of the consolidated financial statements. 5 CENTENNIAL TECHNOLOGIES, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION AND CHANGE IN FISCAL YEAR BASIS OF PRESENTATION The consolidated financial statements of Centennial Technologies, Inc. (the "Company") include the accounts of the Company and all wholly owned subsidiaries. Investments in companies in which ownership interests range from 20 to 50 percent and the Company exercises significant influence over operating and financial policies are accounted for using the equity method. Other investments are accounted for using the cost method. All significant intercompany balances and transactions have been eliminated. Certain reclassifications have been made to prior reported financial statements to conform to the fiscal 1999 presentation. The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all financial information and disclosures required by generally accepted accounting principles for complete financial statements. In the opinion of management, these financial statements include all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the results of operations for the interim periods reported and of the financial condition of the Company as of the date of the interim balance sheet. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the Company's consolidated financial statements and related notes included in the Company's Annual Report on Form 10-K for the fiscal period ended March 31, 1998. CHANGE IN FISCAL YEAR On March 24, 1997, the Company's Board of Directors voted to change the fiscal year end from June 30 to March 31. All references to fiscal 1999 and fiscal 1998 in the accompanying financial statements relate to the twelve months ended March 31, 1999 and 1998, respectively. All references to fiscal 1997 in the accompanying financial statements relate to the nine months ended March 31, 1997. References to fiscal 1996, 1995 and 1994 relate to the respective years ended June 30. The Company's fiscal year begins on April 1. Each fiscal quarter ends on the Saturday of the thirteenth week following the beginning of the quarter, except for the fourth quarter, which ends on March 31. CASH AND CASH EQUIVALENTS The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The Company has no requirements for compensating balances. 2. CONCENTRATION OF CREDIT RISK Financial instruments, which potentially subject the Company to concentration of credit risk, consist principally of trade receivables. If any of the Company's major customers fail to pay the Company on a timely basis, it could have a material adverse effect on the Company's business, financial condition and results of operations. For the three and nine months ended December 26, 1998, two customers accounted for approximately 28% and 27% of the Company's sales, respectively. At December 26, 1998, these customers accounted for approximately $1.2 million, or 39% of the Company's net accounts receivable balance. 6 For the three and nine months ended December 27, 1997, two customers accounted for approximately 39% and 32% of the Company's sales, respectively. At December 27, 1997, these customers accounted for approximately $1.7 million, or 42% of the Company's net accounts receivable balance. Approximately 14% and 16% of the Company's sales for the three months ended December 26, 1998 and December 27, 1997, respectively, and approximately 12% of the Company's sales for each of the nine months ended December 26, 1998 and December 27, 1997, respectively, were outside the United States, primarily in several Western European countries. No one area comprised more than 10% of the Company's sales. 3. INVENTORIES Inventories consisted of (in thousands):
DECEMBER 26, MARCH 31, 1998 1998 ------------ ------------ Raw material, primarily electronic components....... $ 1,307 $ 1,239 Work in process..................................... 421 620 Finished goods...................................... 476 450 --------- -------- $ 2,204 $ 2,309 --------- --------- --------- ---------
The Company maintains levels of inventories that it believes are necessary based upon assumptions concerning its growth, mix of sales and availability of raw materials. Changes in those underlying assumptions could affect management's estimates of inventory valuation. In fiscal 1998, the Company reserved fully $1.8 million of costs related to inventory specifically purchased and manufactured pursuant to a customer purchase order (the "Custom Inventory"). The customer later attempted to cancel the purchase order. The Company disputed the customer's claim that the purchase order cancellation was effective, and sought legal remedies related thereto. During fiscal 1999, the Company agreed to settle its claims against the customer, in return for a $1.6 million cash payment and the right to retain and sell the Custom Inventory at issue. The Company sold portions of the Custom Inventory during the three months and the nine months ended December 26, 1998 for approximately $0.5 million and $1.0 million, respectively, which has been included in net sales. At December 26, 1998, the costs related to the Custom Inventory still on hand remained fully reserved. 4. INVESTMENT IN CENTURY ELECTRONICS MANUFACTURING, INC. During fiscal 1997, the Company completed three separate business acquisitions of contract manufacturing activities. On July 10, 1996, the Company acquired a majority equity position in Design Circuits, Inc. ("DCI") for approximately $3.2 million in cash, 250,000 shares of the Company's Common Stock and assumption of certain liabilities. In October 1996, the Company and the minority shareholders in DCI exchanged their DCI shares for shares of capital stock in a newly formed entity, Century Electronics Manufacturing, Inc. ("Century"). Pursuant to a joint venture agreement executed in May 1996, the Company invested $1.3 million during fiscal 1997 as its initial capital contribution into its 51% owned contract manufacturing joint venture in Thailand. The Company's joint venture partner's initial capital contribution was $3.7 million. On November 5, 1996, Century purchased Triax Technology Group Limited ("Triax"), a provider of contract manufacturing services located in the United Kingdom for approximately $4.2 million in cash and approximately 2.2 million shares of common stock of Century. The Company also contributed 25,000 shares of Centennial Common Stock as a finder's fee. At the conclusion of the Triax transaction, Triax and DCI were wholly-owned subsidiaries of Century, and Centennial owned approximately 67% of Century. On March 14, 1997, Century entered into an agreement in principal with the Company, whereby Century agreed to redeem a portion of its shares in exchange for $1.3 million in cash and a $6.0 million subordinated debenture, reducing the Company's equity ownership position to 45%. The debentures bore interest at a rate of 6% and were to mature in ten years. Under certain conditions, the debentures would have been convertible into the capital stock of an entity with which Century might merge. In addition, the Company 7 agreed to contribute to Century its interest in the Thailand joint venture. Century also agreed to repay an 8.5% note payable to Centennial in the amount of $4.1 million and to take the necessary steps to remove all outstanding guarantees of third-party indebtedness. On July 1, 1997, the aforementioned transaction was completed. In order to remove certain guarantees of equipment subleased to DCI, Centennial executed lease buyouts amounting to $2.4 million and sold the underlying equipment to Century for cash and a $1.9 million 9% promissory note due December 1998. On February 4, 1998, the Company entered into a transaction with Century whereby Century redeemed the Company's remaining holdings of Century common stock, repurchased its $1.9 million 9% promissory note due December 1998, recovered a warrant for the purchase of 250,000 shares of Century common stock, and satisfied its $6 million 6% Convertible Subordinated Debenture due June 2007, in exchange for $9.7 million in cash and $4.0 million of Century Series B Convertible Preferred Stock and the forgiveness of interest due on the note and debenture. The Series B Convertible Preferred Stock is equivalent upon conversion to approximately 7%, non-diluted, of Century's outstanding shares, is non-voting, has no dividend, and has a liquidation preference of $4 million senior to the common shareholders and subordinate to the holders of Century Series A Convertible Preferred Stock. The Company recorded a loss on investment activities of $5.1 million during fiscal 1998 to reflect the difference between the fair value of the consideration received from Century and the carrying value of the Company's investment in Century. During the second quarter of fiscal 1999, the Company reduced the carrying value of its investment in Century by $733,000 to $1.7 million, reflecting management's assessment of the deterioration in value of contract manufacturing businesses in general and a permanent decline in the value of its investment. During the third quarter of fiscal 1999, Century agreed to redeem the Company's remaining interest in Century for $1.7 million. The Company expects to complete this transaction in February 1999. 5. OTHER INVESTMENTS During fiscal 1996, the Company began a strategy of making investments, financed through a combination of cash and common stock, in technology companies for the expressed purpose of market development for its PC card business as well as investment gain. Management has decided to focus its financial resources on its core business, and to suspend new investment activities. The Company fully reserved the carrying value of its investments in these development stage companies during fiscal 1997 and 1998. On December 13, 1996, the Company completed merger agreements with Intelligent Truck Project, Inc., Fleet.Net, Inc. and Smart Traveler Plazas, Inc. (collectively, "ITP/Fleet.Net") agreeing to exchange 792,960 shares of Common Stock of the Company for all of the outstanding common stock of the acquired businesses. Subsequent to the Company's February announcement of financial irregularities, the principal shareholder of ITP/Fleet.Net filed suit, alleging, among other things, breach of representations and warranties as to the financial statements of Centennial. On March 4, 1997, the Company and the principal shareholder of ITP/Fleet.Net entered into a memorandum of understanding pursuant to which the companies would unwind the merger agreements. The parties were unable to reach mutually satisfactory terms to complete the unwinding and on May 15, 1997 agreed to complete the merger and exchange mutual releases of certain claims. Based on the material uncertainties surrounding the value of consideration on the original merger date, which uncertainties were not resolved until the execution of a settlement and mutual release agreement, the Company recorded the merger and corresponding issuance of Common Stock as of May 15, 1997. Advances to ITP/Fleet.Net made during fiscal 1996 and fiscal 1997, certain of which were previously characterized as advance payments for technology license arrangements, were included in loss on investment activities in the periods the advances were made. The merger was recorded using purchase accounting, and the excess (approximately $3.2 million) of the purchase price over the fair value of assets acquired was written off as of the agreement date (May 15, 1997) because of the uncertainties related to the future operations of ITP/Fleet.Net. 6. DEBT On August 14, 1997, the Company entered into a credit agreement, effective through August 13, 2000 unless terminated sooner, with Congress Financial Corp. ("Congress Financial"), a commercial credit institution, for a revolving credit facility and term loan facility of up to $4.1 million and $0.9 million, respectively, and a $2.0 million capital equipment acquisition facility, based on certain limitations and covenants. On August 15, 1997, the Company paid in full its line of credit and lease financing obligations with the bank that was previously providing the Company with its credit facilities. 8 On November 24, 1998, the Company terminated its credit agreement with Congress Financial and entered into a new credit agreement with Fleet National Bank ("Fleet") for a revolving credit facility, equipment term loan facility and foreign exchange facility of $3.5 million, $1.5 million and $2.0 million, respectively. Allowable borrowings are based on accounts receivable and the cost of equipment, are secured by substantially all of the Company's assets, and are based on certain limitations and covenants. At December 26, 1998 and March 31, 1998, the Company had no outstanding borrowings under either of these credit agreements. 7. EARNINGS (LOSS) PER SHARE The Company computes basic and diluted earnings per share in accordance with Statement of Financial Accounting Standards ("SFAS") 128, "Earnings Per Share," which the Company adopted as of March 31, 1998. Basic earnings per share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. The computation of diluted earnings per share is similar to the computation of basic earnings per share except that the denominator is generally increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued. Common equivalent shares result from the assumed exercise of outstanding stock options and warrants, the proceeds of which are then assumed to have been used to repurchase outstanding common stock using the treasury stock method. The following table reconciles the numerator and denominator of the basic and diluted earnings per share computations shown on the Consolidated Statements of Operations. All shares issuable in connection with the settlement of the Consolidated Litigation described in Note 8 are included in the weighted average shares outstanding calculation as of July 20, 1998.
THREE MONTHS ENDED NINE MONTHS ENDED -------------------------- -------------------------- DECEMBER 26, DECEMBER 27, DECEMBER 26, DECEMBER 27, 1998 1997 1998 1997 ------------ ------------ ------------ ------------ BASIC EARNINGS PER SHARE Numerator Net income/(loss) $ 573 $ (4,874) $ 1,873 $(20,127) Denominator Weighted average common shares outstanding 25,334 18,513 22,524 18,446 -------- -------- -------- -------- Basic earnings (loss) per share $ 0.02 $ (0.26) $ 0.08 $ (1.09) -------- -------- -------- -------- -------- -------- -------- -------- DILUTED EARNINGS PER SHARE Numerator Net income/(loss) $ 573 $ (4,874) $ 1,873 $(20,127) Denominator Weighted average common shares outstanding 25,334 18,513 22,524 18,446 Effective of dilutive securities: Employee stock options 57 -- 130 -- -------- -------- -------- -------- Denominator for diluted earnings per share 25,391 18,513 22,654 18,446 -------- -------- -------- -------- Diluted earnings (loss) per share $ 0.02 $ (0.26) $ 0.08 $ (1.09) -------- --------- -------- --------- -------- --------- -------- ---------
Options to purchase 2,885,000 shares of Common Stock on December 27, 1997 were excluded from the three and nine months ended calculations of diluted net income/(loss) per share as the effect of their inclusion would have been anti-dilutive. Earnings per share data have been restated for all periods presented to reflect the adoption of SFAS 128. 8. CONTINGENCIES CLASS ACTION LITIGATION. Since the Company's announcement on February 11, 1997 that it was undertaking an inquiry into the accuracy of its prior reported financial results, and that preliminary information had raised questions as to whether reported results contained material misstatements, approximately 35 purported class action lawsuits have been filed in or transferred to the United States District Court for the District of Massachusetts. These complaints assert claims against the Company under Section 10(b) of the Securities Exchange Act of 1934 (the "1934 Act") and Rule 10b-5 promulgated thereunder, and related state law claims of fraud, 9 deceit and negligent misrepresentation. The complaints also assert claims against some or all of the Company's Board of Directors, and some complaints assert claims against certain of the Company's nondirector officers, under Section 20(a) of the 1934 Act, as well as the same state law claims asserted against the Company. The Company's independent accountants, Coopers & Lybrand L.L.P. ("Coopers & Lybrand"), the Company's lead underwriter for its March 1996 subsequent public offering, Needham & Company, Inc., and a financial advisory subscription company, Cabot Heritage Corporation, have also been named in some of the suits. These class action lawsuits were purportedly brought by and on behalf of purchasers of the Company's Common Stock between the Company's initial public offering on April 12, 1994 and February 10, 1997 (the "Centennial Securities Litigation"). On February 20, 1997, the Company received a subpoena from the United States Department of Justice ("DOJ") to produce documents in connection with a grand jury investigation regarding various irregularities in the Company's previous press releases and financial statements. The DOJ also requested certain information regarding some of the Company's former officers, certain stock transactions by the Company's former Chief Executive Officer, and correspondence with the Company's auditors. The DOJ has subsequently subpoenaed additional Company records and files. The Company has not been notified by the DOJ that it is a target or subject of this investigation. On and after February 26, 1997, four complaints were filed in the United States District Court for the District of Massachusetts by plaintiffs purporting to represent classes of shareholders who purchased the Company's Common Stock on February 25, 1997. The complaint also names the Company's former Interim Chief Executive Officer, Lawrence J. Ramaekers, and alleges violations of Sections 10(b) and 20(a) of the 1934 Act (the "February 25 Securities Litigation"). In mid-February 1997, the Company was notified that the Boston District Office of the Securities and Exchange Commission ("SEC") was conducting an investigation of the Company. The SEC has requested that the Company provide the SEC with certain documents concerning the Company's public reports and financial statements. The SEC indicated that its inquiry should not be construed as an indication by the SEC or its staff that any violations have occurred, or as a reflection upon the merits of the securities involved or upon any person who effected transactions in such securities. The Company is cooperating with the SEC in connection with this investigation, the outcome of which cannot yet be determined. On and after March 26, 1997, several complaints were filed in the United States District Court for the District of Massachusetts by plaintiffs purporting to represent classes of shareholders who purchased stock of WebSecure, Inc. ("WebSecure") between December 5, 1996 and February 27, 1997 (the "WebSecure Complaints"). The WebSecure Complaints assert claims against WebSecure, certain officers, directors and underwriters of WebSecure, and the Company. Claims against the Company include alleged violations of Sections 11 and 15 of the Securities Act of 1933 (the "1933 Act") (the "WebSecure Securities Litigation"). In addition, several shareholder derivative lawsuits have been filed by purported holders of the Company's Common Stock seeking recovery for certain alleged breach of fiduciary duties, alleged gross negligence, alleged breach of contract and alleged insider trading by members of the Company's Board of Directors between August 21, 1996 and February 10, 1997 (the "Derivative Litigation"). On January 13, 1998, a plaintiff purporting to represent classes of shareholders who purchased the Company's Common Stock on February 27, 1997 filed a complaint in the United States District Court for the District of Massachusetts. The complaint also names the Company's former Interim Chief Executive Officer, Lawrence J. Ramaekers, and Mr. Ramaekers' employer, Jay Alix & Co., and alleges violations of Sections 10(b) and 20(a) of the 1934 Act (the "February 27 Securities Litigation"). On February 9, 1998, a consolidated amended complaint combining the Centennial Securities Litigation, the February 25 Securities Litigation, the February 27 Securities Litigation and the Derivative Litigation was filed in the United States District Court for the District of Massachusetts (the "Consolidated Litigation"). Also on February 9, 1998, the Company and lead counsel representing the plaintiffs in the Consolidated Litigation filed a Stipulation of Settlement (the "Settlement Agreement"), whereby the Company and certain of its officers and directors would be released from liability arising from the allegations included in the Consolidated Litigation. In return, the Company agreed to pay the plaintiffs in the Consolidated Litigation $1.475 million in cash and to issue to these plaintiffs 37% of the Company's Common Stock. The Company also agreed to adopt certain corporate governance policies and procedures. The plaintiffs in the Consolidated Litigation have not yet reached an agreement with the Company's former Interim Chief Executive Officer, Lawrence J. Ramaekers, regarding their alleged claims against him. The plaintiffs have agreed to release the 10 Company from any direct liability related to those alleged claims. In the agreement under which Mr. Ramaekers provided services to the Company, the Company agreed to provide Mr. Ramaekers with the same indemnification as is applicable to other officers of the Company pursuant to the Company's By-Laws. The Company has agreed to indemnify, hold harmless, and defend Mr. Ramaekers from and against certain claims arising out of his engagement with the Company. The Court granted final approval of the Settlement Agreement of the Consolidated Litigation on April 29, 1998, which became effective on July 20, 1998. All shares issuable in connection with the Consolidated Litigation are included in weighted average shares outstanding from July 20, 1998 forward. As of March 31, 1997, the Company recorded a provision for the settlement of the Consolidated Litigation of $20.0 million, representing the cash portion of the Settlement Agreement, together with an amount equal to 37% of the estimated market capitalization of the Company. The Company satisfied its obligations regarding the cash portion ($1,475,000) of the Settlement Agreement by remitting that amount into a settlement fund during fiscal 1998. The Company distributed 2,050,321 shares of the common stock component of the Settlement Agreement during the second quarter of fiscal 1999, and expects to satisfy its remaining obligation to distribute 4,784,083 shares of Common Stock by the end of fiscal 1999. A significant number of class members opted not to participate in the Settlement Agreement. No assurance can be given that claims by class members who declined to participate in the Settlement Agreement will not have a material adverse effect on the Company's business, financial condition and results of operations. On November 13, 1998, the Company reached an agreement to settle the WebSecure Securities Litigation. The settlement agreement contemplates that the Company and certain of its officers and directors would be released from any and all liability arising from the allegations included in the WebSecure Securities Litigation in return for the issuance to the WebSecure Securities Litigation class of 345,000 shares of the Company's Common Stock and the payment to the class of up to $50,000 for notice and administrative costs. The settlement agreement must be submitted to the Court for review and approval and, thereafter, presented to class members for consideration. If a sufficiently large number of class members opt not to participate in the settlement agreement, the agreement may by withdrawn. No assurance can be given that the Court will approve the settlement agreement, or that, if such approval is obtained, that a material number of class members will not decline to participate in the settlement. 9. COMPREHENSIVE INCOME Effective January 1, 1998, the Company adopted Financial Accounting Standards Board Statement No. 130, "Reporting Comprehensive Income." Statement 130 establishes rules for the reporting and display of comprehensive income and its components; however, the adoption of this Statement had no impact on the Company's net income (loss) or stockholders' equity. During the third quarter and first nine months of fiscal 1999, total comprehensive income was not materially different than net income. 10. SEGMENT DISCLOSURES In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information" (Statement 131), which is effective for years beginning after December 15, 1997. Statement 131 establishes standards for the way that public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in interim financial reports. It also establishes standards for related disclosures about products and services, geographic areas, and major customers. Statement 131 is effective for financial statements for fiscal years beginning after December 15, 1997, and therefore the company will adopt the new requirements retroactively in fiscal 1999. Management has not completed its review of Statement 131, but does not anticipate that the adoption of this statement will have a significant effect on the Company's reported segments. 11 PART II OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits. The exhibits listed on the Exhibit Index filed as a part of this Amendment #1 to Quarterly Report on Form 10-Q are incorporated herein by reference. (b) Reports on Form 8-K. During the quarter ended December 26, 1998, the Company filed no reports on Form 8-K. 12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Amendment #1 to Quarterly Report to be signed on its behalf by the undersigned thereunto duly authorized. CENTENNIAL TECHNOLOGIES, INC. Dated: June 4, 1999 BY: /s/ L. MICHAEL HONE ------------------- -------------------------- L. Michael Hone President and Chief Executive Officer Dated: June 4, 1999 BY: /s/ DONALD R. PECK ------------------- -------------------------- Donald R. Peck Secretary, Treasurer and General Counsel ------------------------------- EXHIBIT INDEX
ITEM NO. DESCRIPTION - --- 3.1 -- Amended and Restated Bylaws of Centennial Technologies, Inc. (1) 10.1 -- Key Employee Agreement between Centennial Technologies, Inc. and Jacques Assour, as of April 1, 1998(2) 10.2 -- Employment Agreement between Centennial Technologies, Inc. and John C. Nugent, as of January 12, 1998(2) 10.3 -- $3,500,000 Revolving Note, dated November 20, 1998, made by Centennial Technologies, Inc. and payable to the order of Fleet National Bank(2) 10.4 -- $1,500,000 Term Note, dated November 20, 1998, made by Centennial Technologies, Inc. and payable to the order of Fleet National Bank(2) 10.5 -- Letter Agreement, dated November 20, 1998, by and between Centennial Technologies, Inc. and Fleet National Bank(2) 27 -- Financial Data Schedule
(1) Incorporated by reference to the Registration Statement on Form 8-A filed with the Securities and Exchange Commission on November 19, 1998. (2) Previously filed. 13 EX-27 2 EXHIBIT 27 - FDS
5 1,000 U.S. DOLLARS 9-MOS MAR-31-1999 APR-01-1998 DEC-26-1998 1 8,686 0 4,059 856 2,204 14,602 3,630 1,298 19,022 8,253 0 0 0 205 10,564 19,022 19,954 19,954 13,809 13,809 6,096 130 0 1,873 0 1,873 0 0 0 1,873 .08 .08
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