-----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, Q2kjxaC4eWZ3vgPsFcyAPKrxyAzj9tLc056UX7778JhCurs07jLtwpK8ouJN9a85 a5fGVLD7/gXKehPkoGvS1g== 0000092769-99-000008.txt : 19990416 0000092769-99-000008.hdr.sgml : 19990416 ACCESSION NUMBER: 0000092769-99-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990228 FILED AS OF DATE: 19990414 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SPECTRUM CONTROL INC CENTRAL INDEX KEY: 0000092769 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPONENTS, NEC [3679] IRS NUMBER: 251196447 STATE OF INCORPORATION: PA FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-08796 FILM NUMBER: 99594001 BUSINESS ADDRESS: STREET 1: 6000 WEST RIDGE ROAD CITY: ERIE STATE: PA ZIP: 16506 BUSINESS PHONE: 8148351507 MAIL ADDRESS: STREET 1: 6000 WEST RIDGE ROAD CITY: ERIE STATE: PA ZIP: 16506 10-Q 1 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 Period Ended February 28, 1999 Commission File Number 0-8796 Spectrum Control, Inc. Exact name of registrant as specified in its charter Pennsylvania 25-1196447 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 6000 West Ridge Road; Erie, Pennsylvania 16506 (Address) (Zip Code) Registrant's telephone number, including area code: (814) 835-4000 Not Applicable Former name, former address and former fiscal year, if changed since last report 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 the filing requirements for at least the past 90 days. Yes X No __ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date. Number of Shares Outstanding Class as of March 31, 1999 Common, no par value 10,887,008 SPECTRUM CONTROL, INC. AND SUBSIDIARIES INDEX PAGE NO. PART I FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Condensed Consolidated Balance Sheets -- February 28, 1999 and November 30, 1998 3-4 Condensed Consolidated Statements of Income -- Three Months Ended February 28, 1999 and 1998 5 Condensed Consolidated Statements of Cash Flows -- Three Months Ended February 28, 1999 and 1998 6 Notes to Condensed Consolidated Financial Statements 7-11 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 12-18 PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 19 Signature 20 SPECTRUM CONTROL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS DOLLAR AMOUNTS IN THOUSANDS (UNAUDITED)
February 28 November 30 1999 1998 ASSETS CURRENT ASSETS Cash and cash equivalents $ 43 $ 739 Accounts receivable, net of allowances 11,342 10,162 Inventories Finished goods 3,156 2,581 Work-in-process 5,056 5,070 Raw materials 5,778 5,234 Total inventories 13,990 12,885 Prepaid expenses and other current assets 1,024 593 Total current assets 26,399 24,379 PROPERTY, PLANT AND EQUIPMENT, at cost less accumulated depreciation of $17,520 in 1999 and $16,631 in 1998 16,246 16,289 OTHER ASSETS Goodwill 2,576 2,547 Deferred income taxes 383 383 Patents and patent rights 247 255 Debt issuance costs 158 139 Deferred charges 120 147 Total other assets 3,484 3,471 TOTAL ASSETS $46,129 $44,139 The accompanying notes are an integral part of the financial statements.
SPECTRUM CONTROL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS DOLLAR AMOUNTS IN THOUSANDS (UNAUDITED)
February 28 November 30 1999 1998 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Short-term debt $ 400 $ 336 Accounts payable 3,698 2,719 Accrued salaries and wages 1,042 1,438 Accrued interest 43 63 Accrued federal and state income taxes 525 93 Accrued other expenses 464 281 Current portion of long-term debt 812 830 Total current liabilities 6,984 5,760 LONG-TERM DEBT 2,481 2,500 DEFERRED INCOME TAXES 2,132 2,105 STOCKHOLDERS' EQUITY Common stock, no par value, authorized 25,000,000 shares, issued 10,957,008 shares in 1999 and 1998 14,470 14,470 Retained earnings 20,661 19,798 Treasury stock, 70,000 shares in 1999 and 1998, at cost (294) (294) 34,837 33,974 Accumulated other comprehensive income Foreign currency translation adjustment (305) (200) Total stockholders' equity 34,532 33,774 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $46,129 $44,139 The accompanying notes are an integral part of the financial statements.
SPECTRUM CONTROL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in Thousands Except Per Share Data) Three Months Ended February 28 1999 1998 Net sales $15,325 $14,641 Cost of products sold 10,913 10 222 Gross margin 4,412 4,419 Selling, general and administrative expense 2,980 2,905 Income from operations 1,432 1,514 Other income (expense) Interest expense (53) (53) Other income and expense, net 11 10 (42) (43) Income before provision for income taxes 1,390 1,471 Provision for income taxes 527 515 Net income $ 863 $ 956 Earnings per common share: Basic $ 0.08 $ 0.09 Diluted $ 0.08 $ 0.09 Dividends declared per common share $ - $ - The accompanying notes are an integral part of the financial statements.
SPECTRUM CONTROL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS DOLLAR AMOUNTS IN THOUSANDS (UNAUDITED)
Three Months Ended February 28 1999 1998 NET CASH PROVIDED BY OPERATING ACTIVITIES $ 128 $1,818 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment (867) (522) Net cash used in investing activities (867) (522) CASH FLOWS FROM FINANCING ACTIVITIES Net borrowings (repayment)of short-term debt 64 (40) Repayment of long-term debt (37) (35) Net proceeds from issuance of common stock - 114 Net cash provided by financing activities 27 39 Effect of Exchange Rate Changes on Cash 16 (20) Net Increase (Decrease) in Cash and Cash Equivalents (696) 1,315 Cash and Cash Equivalents, Beginning of Period 739 196 Cash and Cash Equivalents, End of Period $ 43 $1,511 Cash Paid During the Period For: Interest $ 73 $ 74 Income taxes 23 137 The accompanying notes are an integral part of the financial statements.
SPECTRUM CONTROL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS February 28, 1999 Note 1 - Basis of Presentation The accompanying unaudited condensed 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 Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the accompanying financial statements include all adjustments which are normal, recurring and necessary to present fairly the results for the interim periods. Operating results for interim periods are not necessarily indicative of the results that may be expected for the year. The balance sheet at November 30, 1998 has been derived from the audited financial statements at that date but does not include all of the information and notes required by generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and notes thereto included in the Spectrum Control, Inc. and Subsidiaries annual report on Form 10-K for the fiscal year ended November 30, 1998. Note 2 - Principles of Consolidation The condensed consolidated financial statements include the accounts of Spectrum Control, Inc. and its Subsidiaries (the Company). To facilitate timely reporting, the fiscal quarters of a foreign subsidiary are based upon a fiscal year which ends October 31. All significant intercompany accounts are eliminated upon consolidation. Note 3 - Foreign Currency Translation The assets and liabilities of the foreign subsidiary are translated into U.S. dollars at current exchange rates. Revenue and expense accounts of these operations are translated at average exchange rates prevailing during the period. These translation adjustments are accumulated in a separate component of stockholders' equity. Foreign currency transaction gains and losses are included in determining net income for the period in which the exchange rate changes. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 4 - Earnings Per Common Share The following table sets forth the computation of basic and diluted earnings per common share for the periods indicated:
Three Months Ended February 28 1999 1998 Numerator for basic and diluted earnings per common share (in thousands): Net income $ 863 $ 956 Denominator for basic earnings per common share (in thousands): Weighted average shares outstanding 10,887 10,846 Denominator for diluted earnings per common share (in thousands): Weighted average shares outstanding 10,887 10,846 Effect of dilutive stock options 70 141 10,957 10,987 Earnings per common share: Basic $ 0.08 $ 0.09 Diluted $ 0.08 $ 0.09
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 5 - Comprehensive Income The following table sets forth the computation of comprehensive income for the periods indicated: Three Months Ended February 28 1999 1998 (in thousands) Net income $ 863 $ 956 Foreign currency translation adjustment (105) (75) Comprehensive income $ 758 $ 881 Note 6 - Operating Segments The following table sets forth reportable segment information for the periods indicated (in thousands): Three Months Ended Interconnect Control February 28, 1999: Products Products Total Revenue from unaffiliated customers $ 9,660 $ 5,199 $ 14,859 Segment income 3,778 1,022 4,800 Three Months Ended February 28, 1998: Revenue from unaffiliated customers 11,375 3,068 14,443 Segment income 4,498 410 4,908 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) A reconciliation of total reportable segment income to consolidated income before provision for income taxes is as follows:
Three Months Ended February 28 1999 1998 (in thousands) Total income for reportable segments $4,800 $4,908 Unallocated amounts: Manufacturing expense related to the Company's ceramic capacitor operations (853) (866) Selling, general and administrative expense (2,515) (2,528) Interest expense (53) (53) Other income 11 10 Consolidated income before provision for income taxes $1,390 $1,471 For the periods indicated above, there were no material changes to reportable segment assets or the accounting policies and procedures used to determine segment income
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 7 - Subsequent Event On March 26, 1999, the Company acquired substantially all of the assets of the Signal Conditioning Products Division ("SCPD") of AMP Incorporated ("AMP"). AMP is a world leader in the manufacture of electrical, electronic, fiber-optic and wireless interconnection devices and systems. Through SCPD, AMP manufactured and sold a broad line of electromagnetic interference ("EMI") filters, filtered arrays, filtered connectors, and related products. During the year ended December 31, 1998, SCPD sales of these product offerings amounted to approximately $30.0 million. The aggregate purchase price of the acquired assets was approximately $20.0 million. To finance the acquisition, the Company secured a $20.0 million term loan from its principal lending institution. The term loan bears interest at variable rates at or below the prevailing prime rate and requires quarterly principal payments of $909,000 from December 26, 1999 through March 26, 2005. The acquisition will be accounted for as a purchase. Accordingly, the aggregate purchase price will be allocated to the acquired assets based upon their respective fair market values. The excess of the aggregate purchase price over the fair value of net assets acquired (goodwill) is expected to approximate $10.7 million and will be amortized ratably over a period of 20 years. The acquired assets and related operations will be included in the Company's Interconnect Products business segment. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis may be understood more fully by reference to the consolidated financial statements, notes to the consolidated financial statements, and management's discussion and analysis contained in the Spectrum Control, Inc. and Subsidiaries annual report on Form 10-K for the fiscal year ended November 30, 1998. General Spectrum Control, Inc. and its Subsidiaries (the "Company") design, manufacture and market a broad line of control products and systems. The Company was founded as a solutions-oriented company, designing and manufacturing products to suppress or eliminate electromagnetic interference ("EMI"). The Company has expanded its core EMI filter technology into a complete line of interconnect filter products (discrete filters, filtered arrays, and filtered connectors). In recent years, the Company broadened its focus by developing new lines of power products (commercial custom assemblies, military/aerospace multisection assemblies, power entry modules, power distribution units, and power line filters), microwave products (coaxial ceramic bandpass filters, duplexers, and dielectric resonators), and specialty ceramic capacitors (single layer, temperature compensating, high voltage, and switch mode). The Company's products are used in virtually all industries worldwide, including telecommunications, aerospace, military, medical, computer, and industrial controls. Forward-Looking Information Management's Discussion and Analysis of Financial Condition and Results of Operations includes certain forward-looking statements which reflect management's current views with respect to future operating performance, ongoing cash requirements, and the Year 2000 Issue. The words "believe", "expect", "anticipate" and similar expressions identify forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties which could cause actual results to differ materially from historical results or those anticipated. Factors that could cause or contribute to such differences include those discussed in "Risk Factors That May Affect Future Results", as well as those discussed elsewhere herein. Readers are cautioned not to place undue reliance on these forward-looking statements. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations The following table sets forth certain financial data, as a percentage of net sales, for the three months ended February 28, 1999 and 1998:
1999 1998 Net sales 100.0% 100.0% Cost of products sold 71.2 69.8 Gross margin 28.8 30.2 Selling, general and administrative expense 19.4 19.9 Income from operations 9.4 10.3 Other income (expense) Interest expense (0.3) (0.4) Other income and expense, net - 0.1 Income before provision for income taxes 9.1 10.0 Provision for income taxes 3.5 3.5 Net income 5.6% 6.5%
First Quarter 1999 Versus First Quarter 1998 Net Sales Net sales increased 4.7% during the period, with consolidated net sales of $15.3 million in the first quarter of 1999 and $14.6 million in the comparable quarter of 1998. The increase in sales primarily reflects additional shipment volume of the Company's commercial custom assemblies and power distribution units used in various communication equipment. Sales of these power products amounted to $5.0 million in the first quarter of 1999, an increase of $2.4 million or 92.7% from the same period last year. Sales of the Company's interconnect filter products decreased by $1.7 million during the period, reflecting reduced shipments of the Company's D-Subminiature connectors and filter plate assemblies used in cellular base stations and linear power amplifiers. Overall demand for the Company's products was very strong during the period with total customer orders of $23.1 million received in the first quarter of 1999, a 53.0% increase from the first quarter of last year. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Gross Margin Gross margin was constant throughout the period at $4.4 million in the first quarter of 1999 and 1998. As a percentage of sales, gross margin declined during the period, amounting to 28.8% in 1999 and 30.2% in 1998. The decrease in gross margin percentage primarily reflects changes in sales mix among the Company's interconnect filter products and power product offerings, as well as yield losses and resultant higher labor costs incurred at the Company's Ceramic Components Division in New Orleans, Louisiana. Management expects gross margin percentages for the remainder of 1999 to more closely approximate historical levels of 30.0% to 31.0% of sales. Selling, General and Administrative Expense As a percentage of sales, selling expense remained relatively stable during the period. Selling expense was $1.8 million or 11.5% of sales in 1999, compared to $1.6 million or 11.0% of sales in 1998. For the first quarter of 1999, general and administrative expense amounted to $1.2 million or 7.9% of sales, compared to $1.3 million or 8.9% of sales for the same period last year. The decrease in general and administrative expense primarily reflects lower personnel costs. Income Taxes The Company's effective income tax rate was 37.9% in 1999 and 35.0% in 1998, compared to an applicable statutory income tax rate of approximately 40.0%. Differences in the effective tax rates and statutory tax rate principally arise from state tax provisions and foreign income tax rates. Risk Factors That May Affect Future Results The Company's results of operations may be affected in the future by a variety of factors including: competitive pricing pressures, new product offerings by the Company and it's competitors, new technologies, product cost changes, changes in the overall economic climate, availability of raw materials, and changes in product mix. In 1999, management expects approximately 50.0% of the Company's sales will be to customers in the telecommunication industry. Accordingly, any significant change in the telecommunication industry's activity level would have a direct impact on the Company's performance. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Liquidity, Capital Resources and Financial Condition The Company has a $6.0 million line of credit with PNC Bank N.A. of Erie, Pennsylvania (the "Bank"). The revolving credit line is collateralized by substantially all of the Company's tangible and intangible property, with interest rates on borrowings at or below the Bank's prevailing prime rate. At February 28, 1999, the Company had borrowed $400,000 under this financing arrangement. The current line of credit agreement expires March 26, 2002. The Company's wholly-owned foreign subsidiary maintains unsecured Deutsche Mark lines of credit with several German financial institutions aggregating $1.7 million (3.0 million DM). At February 28, 1999, there were no outstanding borrowings under these lines of credit. Future borrowings, if any, under the lines of credit will bear interest at rates below the prevailing prime rate and will be payable upon demand. The Company's working capital continued to increase during the period. At February 28, 1999, the Company had net working capital of $19.4 million, compared to $18.6 million at November 30, 1998. The Company's current ratio remained strong during the first three months of fiscal 1999, with current assets at 3.78 times current liabilities at February 28, 1999, compared to 4.23 at November 30, 1998. As a result of increased working capital requirements, the Company's operating cash flow decreased during the period. During the first quarter of 1999, net cash generated from operations amounted to $128,000 compared to $1.8 million for the first quarter of 1998. During the first thirteen weeks of 1999, inventories increased by approximately $1.1 million. The increase in inventories primarily reflects additional customer consigned inventory requirements, as well as additional raw material and finished goods inventories to support anticipated future shipment requirements. During the first three months of fiscal 1999, the Company's cash expenditures for property, plant and equipment amounted to $867,000. These capital expenditures primarily related to metal fabrication machinery and other manufacturing equipment for capacity expansion at the Company's Control Products Division. Current financial resources, including working capital and existing lines of credit, and anticipated funds from operations are expected to be sufficient to meet operating cash requirements throughout 1999, including scheduled long-term debt repayment and planned capital expenditures. There can be no assurance, however, that unplanned capital replacement or other future events will not require the Company to seek additional debt or equity financing and , if so required, that it will be available on terms acceptable to the Company. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Impact of Year 2000 Issue The Year 2000 Issue is the result of computer programs being written using two digits rather than four to define the applicable year. As a result, any of the Company's computer programs that have time-sensitive software may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in a system failure or miscalculations causing disruptions of operations, including among other things, a temporary inability to process transactions, prepare invoices, or engage in similar normal business activities. The Company has completed an assessment and determined that it will have to modify or replace portions of its software so that its computer systems will function properly with respect to dates in the year 2000 and thereafter. The Company presently believes that with modifications and replacement of existing software, the Year 2000 Issue can be mitigated. However, if such modifications and replacements are not made, or are not completed timely, the Year 2000 Issue could have a material impact on the operations of the Company. The Company's plan to resolve the Year 2000 Issue involves four phases: assessment, remediation, testing, and implementation. To date, the Company has fully completed its assessment of all material systems that could be affected by the Year 2000 Issue. The completed assessment indicated that most of the Company's significant information technology systems could be affected. The assessment also indicated that software used in certain manufacturing equipment (hereafter also referred to as operating equipment) is also at risk. If not resolved on a timely basis, these systems could hamper the Company's ability to manufacture and ship product from which the Company derives a significant portion of its revenues. . For its information technology exposures, the Company has completed the remediation phase for all material systems including required software reprogramming and replacement. After completing the reprogramming and replacement of software, the Company commenced the testing and implementation of its information technology systems. To date, the Company has completed 80% of its testing and has implemented 80% of its remediated systems. Completion of the testing phase is expected by April, 1999, with all remediated systems fully implemented by May, 1999. With respect to operating equipment, the Company has completed the remediation phase of the resolution process. Testing of this equipment is currently 80% complete. Once testing is complete, the operating equipment will be ready for immediate use. Testing and implementation of affected equipment is expected to be completed by May, 1999. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) The Company has queried its important suppliers and vendors to assess their Year 2000 readiness. To date, the Company is not aware of any problems that would materially impact results of operations, liquidity, or capital resources. However, the Company has no means of ensuring that these suppliers and vendors will be Year 2000 ready. The inability of those parties to complete their Year 2000 resolution process could materially impact the Company. The Company is utilizing both internal and external resources to reprogram, or replace, test, and implement the software and operating equipment for Year 2000 modifications. Management anticipates that its total year 2000 project costs will not be material. The Company's plans to complete Year 2000 modifications are based on management's best estimates, which were derived utilizing numerous assumptions of future events, including the continued availability of certain resources and other factors. Estimates on the status of completion and the expected completion dates are based on hours expended to date compared to total expected hours. However, there can be no guarantee that these estimates will be achieved and actual results could differ materially from those plans. Specific factors that might cause such material differences include, but are not limited to, the availability and cost of personnel training in this area, the ability to locate and correct all relevant computer codes, and similar uncertainties. Other Matters In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and for Hedging Activities" ("SFAS No. 133"). SFAS No. 133 provides a comprehensive and consistent standard for the recognition and measurement of derivatives and hedging activities. SFAS No 133 is effective for fiscal years beginning after June 15, 1999, with earlier application permitted. Effective January 1, 1999, the European Monetary Union ("EMU") created a single currency (the "Euro") for its member countries and the exchange rates of the participating currencies have been fixed against the Euro. The EMU has established a three year transition period from January 1, 1999 to December 31, 2001, for the introduction of the Euro. The Company does not expect the adoption of SFAS No. 133 or the introduction of the Euro to have a material impact on the Company's financial position or results of operations. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) On March 26, 1999, the Company acquired substantially all of the assets of the Signal Conditioning Products Division ("SCPD") of AMP Incorporated ("AMP"). AMP is a world leader in the manufacture of electrical, electronic, fiber-optic and wireless interconnection devices and systems. Through SCPD, AMP manufactured and sold a broad line of electromagnetic interference ("EMI") filters, filtered arrays, filtered connectors, and related products. During the year ended December 31, 1998, SCPD sales of these product offerings amounted to approximately $30.0 million. The aggregate purchase price of the acquired assets was approximately $20.0 million. To finance the acquisition, the Company secured a $20.0 million term loan from its principal lending institution (PNC Bank N.A. of Erie, Pennsylvania). The term loan bears interest at variable rates at or below the prevailing prime rate and requires quarterly principal payments of $909,000 from December 26, 1999 through March 26, 2005. The acquisition will be accounted for as a purchase. Accordingly, the aggregate purchase price will be allocated to the acquired assets based upon their respective fair market values. The excess of the aggregate purchase price over the fair value of net assets acquired (goodwill) is expected to approximate $10.7 million and will be amortized ratably over a period of 20 years. The acquired assets and related operations will be included in the Company's Interconnect Products business segment. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) None (b) No reports on Form 8-K were filed during the quarter for which which this report is filed. SIGNATURE 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. SPECTRUM CONTROL, INC. (Registrant) Date: March 31, 1999 By: /s/ John P. Freeman John P. Freeman, Vice President and Chief Financial Officer (Principal Accounting and Financial Officer) EX-27 2
5 This schedule contains summary financial information extracted from the Spectrum Control, Inc. Condensed Consolidated Balance Sheet (Unaudited) at February 28, 1999 and Condensed Consolidated Statement of Income (Unaudited) for the three months ended February 28, 1999 and is qualified in its entirety by reference to its Form 10-Q for the period ended February 28, 1999 0000092769 SPECTRUM CONTROL, INC. 1,000 3-MOS NOV-30-1999 FEB-28-1999 43 0 11,745 403 13990 26399 33766 17520 46129 6984 2481 0 0 14470 20062 46129 15325 15325 10913 10913 0 0 53 1390 527 863 0 0 0 863 0.08 0.08
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