-----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, GP9TN/jI+UnP/jsF4e/x8t5Nu28jQPKUzY2TumPt1NofINzng6rbIh28C0OUEXZm YZZnqI90Am3BhVflzHfdCA== 0000094538-96-000004.txt : 19961118 0000094538-96-000004.hdr.sgml : 19961118 ACCESSION NUMBER: 0000094538-96-000004 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: STOCKER & YALE INC CENTRAL INDEX KEY: 0000094538 STANDARD INDUSTRIAL CLASSIFICATION: OPTICAL INSTRUMENTS & LENSES [3827] IRS NUMBER: 042114473 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-27372 FILM NUMBER: 96666433 BUSINESS ADDRESS: STREET 1: 32 HAMPSHIRE ROAD CITY: SALEM STATE: NH ZIP: 03079 BUSINESS PHONE: 5082843248 10QSB 1 STOCKER & YALE FORM 10QSB U. S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ______________________________________________________________________________ FORM 10-QSB QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996 Commission file number: 0 - 5460 ____________________________________________________ STOCKER & YALE, INC. (Name of small business issuer in its charter) Massachusetts 04-2114473 (State or other jurisdiction of incorporation or organization) (I.R.S. employer identification no.) 32 Hampshire Road Salem, New Hampshire 03079 (Address of principal executive offices) (Zip Code) (603) 893-8778 (Issuer's telephone number) _____________________________________________________ Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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. X Yes No As of November 1, 1996 there were 2,562,914.6 shares of the issuer's common stock outstanding after giving effect to the issuance of 850,000 shares in the public offering completed on October 25, 1996. Transitional Small Business Disclosure Format (check one): Yes_____No X Page 1 of 9 PART I. FINANCIAL INFORMATION STOCKER & YALE, INC. AND SUBSIDIARIES ITEM 1.1-CONSOLIDATED BALANCE SHEETS
September 30, 1996 December 31, 1995 (unaudited) (audited) ASSETS CURRENT ASSETS Cash 29,176 22,033 Accounts Receivable 1,706,792 1,897,943 Prepaid Taxes 323,963 323,963 Inventory 3,930,434 3,836,653 Prepaid Expenses 94,430 159,013 Total Current Assets 6,084,795 6,239,605 PROPERTY, PLANT & EQUIPMENT, NET 3,143,612 3,365,949 NOTE RECEIVABLE 1,000,000 1,000,000 GOODWILL, NET 8,791,498 9,005,729 DEBT ISSUANCE COSTS, NET 148,708 169,687 19,168,613 19,780,970 LIABILITIES AND STOCKHOLDER'S EQUITY CURRENT LIABILITIES Current portion of long-term debt 299,756 266,358 Mortgage note payable 0 1,500,000 Subordinated notes payable 0 1,000,000 Accounts payable 1,814,831 1,527,468 Short-term lease obligation 17,073 58,560 Accrued expenses Income taxes 13,515 265,918 Other 497,860 475,136 Total Current Liabilities 2,643,035 5,093,440 LONG TERM LEASE OBLIGATION 66,687 82,909 LONG TERM DEBT Subordinated Convertible Notes 1,350,000 0 Mortgage Note 1,447,819 0 Senior Bank Debt 3,586,528 4,080,364 Total Long Term Debt 6,384,347 4,080,364 OTHER LONG TERM LIABILITIES 684,479 684,479 DEFERRED INCOME TAXES 1,110,280 1,215,280 10,888,828 11,156,472 STOCKHOLDER'S EQUITY Common stock, .001 par value Authorized - 10,000,000 Issued and Outstanding -1,712,914 1,713 1,713 Paid in capital 6,845,685 6,845,685 Retained Earnings 1,432,387 1,777,100 Total Stockholder's Equity 8,279,785 8,624,498 19,168,613 19,780,970
STOCKER & YALE, INC. AND SUBSIDIARIES ITEM 1.2 CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited) Three Months Ended Nine Months Ended September 30, September 30, 1996 1995 1996 1995 NET SALES 2,495,168 3,165,766 8,071,392 9,613,218 COST OF SALES 1,501,799 1,954,081 5,081,251 5,964,932 Gross profit 993,369 1,211,685 2,990,141 3,648,286 SELLING EXPENSES 362,370 386,302 1,193,497 1,248,380 GENERAL AND ADMINISTRATIVE EXPENSES 561,778 505,607 1,517,345 1,485,183 RESEARCH AND DEVELOPMENT EXPENSES 117,043 76,332 261,805 228,435 Operating income (47,822) 243,444 17,494 686,288 LOSS ON SALE OF REAL ESTATE 0 229,865 0 229,865 INTEREST EXPENSE 149,867 165,348 450,007 499,636 Loss before income tax provision (197,689) (151,769) (432,513) (43,213) INCOME TAX PROVISION (BENEFIT) (51,700) (31,250) (87,800) 71,000 Net loss (145,989) (120,519) (344,713) (114,213) LOSS PER SHARE (0.09) (0.07) (0.20) (0.07) WEIGHTED AVERAGE COMMON SHARES AND EQUIVALENTS 1,712,914 1,712,914 1,712,914 1,620,562
STOCKER & YALE, INC. AND SUBSIDIARIES ITEM 1.3 - CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited) Nine Months Ended September 30, 1996 1995 CASH FLOWS FROM OPERATING ACTIVITIES Net income ( 344,713) ( 114,213) Adjustments to reconcile net income to net cash provided by (used for) operating activities - Depreciation and amortization 635,324 716,629 Net loss on sale of building 0 229,865 Deferred income taxes and other (105,000) (82,377) Other changes in assets and liabilities - Accounts receivable, net 191,151 (193,250) Inventories ( 93,781) (688,534) Prepaid expenses 64,583 ( 33,272) Accounts payable 287,363 37,689 Accrued expenses 22,724 (123,333) Accrued and refundable taxes (252,403) ( 60,921) Net cash provided by (used for) operating activities 405,248 (311,717) CASH FLOWS FROM INVESTING ACTIVITIES Sales of land and building 0 1,114,964 Purchases of property, plant and equipment (138,778) 1,311,843) Net cash used for investing activities (138,778) ( 196,789) CASH FLOWS FROM FINANCING ACTIVITIES Sales of common stock 0 776,500 Repayment of Subordinated Note/ Bank Debt (2,500,000) (6,605,827) Proceeds from Short Term Note 0 200,000 Proceeds from Term Loan 0 2,767,000 Proceeds from Line of Credit 0 2,766,357 Proceeds from Mortgage note 1,500,000 1,500,000 Proceeds from Subordinated Notes payable 1,350,000 1,000,000 Repayment of bank debt ( 512,618) (1,676,014) Payments on capital lease ( 57,709) ( 35,943) Deferred financing cost ( 39,000) ( 169,864) Net cash provided by (used for) financing activities ( 259,327) 522,209 NET INCREASE IN CASH 7,143 13,613 CASH, BEGINNING OF PERIOD 22,033 8,344 CASH, END OF PERIOD 29,176 21,957
STOCKER & YALE, INC. AND SUBSIDIARIES Notes to Financial Statements 1. General The interim consolidated financial statements presented have been prepared by Stocker & Yale, Inc. (the "Company") without audit and, in the opinion of the management, reflect all adjustments of a normal recurring nature necessary for a fair statement of (a) the results of operations for the three month and nine month periods ended September 30, 1996 and September 30, 1995, (b) the financial position at September 30, 1996, and (c) the cash flows for the nine month periods ended September 30, 1996 and September 30, 1995. Interim results are not necessarily indicative of results for a full year. The consolidated balance sheet presented as of December 31, 1995, has been derived from the consolidated financial statements that have been audited by the Company's independent public accountants. The consolidated financial statements and notes are condensed as permitted by Form 10-QSB and do not contain certain information included in the annual financial statements and notes of the Company. The consolidated financial statements and notes included herein should be read in conjunction with the financial statements and notes included in the Company's Annual Report on Form 10-KSB. 2. Debt The 13.5% Subordinated Notes Payable of $1,000,000 which matured on May 6, 1996, were refinanced by a new issue of Subordinated Notes totaling $1,350,000. The new notes mature on May 1, 2001, bear interest at 7.25% and are convertible into shares of the Company's common stock at a price of $7.375 per share. The $1,500,000 Mortgage Note Payable, which was to mature on September 1, 1996, was refinanced by a new Mortgage Note totaling $1,500,000. The new mortgage note matures August 29, 2011 and bears interest at a fixed rate of 9.25% until August 29, 1999. Thereafter the interest rate will be annually adjusted to the Prime Rate plus 1%. 3. Subsequent Event On October 25, 1996, the Company completed a public offering of 850,000 shares of the Company's common stock, par value $0.001 per share, at a price of $5.00 per share, generating $4,250,000 in gross proceeds. All 850,000 shares of common stock in this public offering were offered directly by the Company. After deducting commissions and offering expenses, the net proceeds of the offering will be approximately $3,900,000. These net proceeds will be used to provide funds for certain capital expenditures relating to the development of the Company's fiber optic illumination product line and for working capital, capital expenditures, possible acquisitions and general corporate purposes. In order to reduce interest expense, the Company has paid down its revolving line of credit, retaining an availability to borrow an additional $2,577,299 as of November 6, 1996. ITEM 2. MANAGMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Quarterly Report on Form 10-QSB contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The Company's actual results could differ materially from those set forth in the forward-looking statements. Results of Operations The following discussion should be read in conjunction with the attached consolidated financial statements and notes thereto and with the Company's audited financial statements and notes thereto for the fiscal year ended December 31, 1995. Three-month periods ended September 30, 1996 and 1995 Revenues declined $670,598 from $3,165,766 in the quarter ended September 30, 1995 to $2,495,168 in the quarter ended September 30, 1996. Approximately 68% of the decline was attributable to reduced sales to the U.S. government and reduced sales of the Company's electronic ballasts. Sales to the U.S. government declined $279,950 from $363,669 in the quarter ended September 30, 1995 to $83,719 in the quarter ended September 30, 1996, reflecting the completion in August, 1995 of a contract for borescopes. Sales of the Company's electronic ballasts declined $174,627 from $196,921 in the quarter ended September 30, 1995 to $22,294 in the equivalent quarter in 1996, as a result of the Company's withdrawal from the electronic ballast market. Also, sales of the Company's printer and recorder products declined $172,060 from $654,551 in the quarter ended September 30, 1995, to $482,491 in the quarter ended September 30, 1996, as the Company's OEM customers are experiencing economy-related lower volumes and inventory overstocks. Gross Profit declined from $1,211,685 in the third quarter of 1995 to $993,369 in the third quarter of 1996 due primarily to decreased revenues. However, gross profit increased as a percentage of sales from 38.3% in third quarter 1995 to 39.8% in third quarter 1996, reflecting reduced volume in 1996 of low-margin government sales. Operating costs increased from $968,240 to $1,041,675, due primarily to increased personnel costs including the addition of a Vice President of Engineering. Interest expense decreased from $165,348 in 1995 to $149,867 in the comparable 1996 period. Operating results for the third quarter of 1995 included a $229,865 loss on the sale of real estate relating to the sale of the Company's former headquarters facility. In August, 1996, the $1,500,000 Mortgage Note Payable, which was to mature on September 1, 1996, was refinanced by a new Mortgage Note totaling $1,500,000. The new mortgage note matures August 29, 2011 and bears interest at a fixed rate of 9.25% until August 29, 1999. Thereafter the interest rate will be adjusted annually to the Prime Rate plus 1%. Nine month periods ended September 30, 1996 and 1995 Revenues declined $1,541,826 from $9,613,218 in the nine months ended September 30, 1995 to $8,071,392 in the nine months ended September 30, 1996. Approximately 43% of the sales drop was experienced in the Company's printer and recorder business, which declined $655,534 from $2,143,311 in the nine months ended September 30, 1995 to $1,487,777 in the equivalent period in the current year, largely due to the Company's OEM customers experiencing economy-related lower volumes and inventory overstocks in 1996 and the fact that 1995 sales benefited from final deliveries gainst a large order from a single customer. Another 38% of the revenue decline is attributable to reduced sales of the Company's electronic ballasts which declined $579,264 to $282,367 in the first three quarters of 1996 from $861,631 in the first three quarters of 1995. Reduced sales in this product line were the result of the Company's deliberate withdrawal from this market, which has become increasingly commodity price driven, to focus on sales of higher margin products. Primarily as a result of the Company's increased focus on industrial lighting products, sales of industrial task lighting products increased 12% from $1,529,471 in the nine months ended September 30, 1995 to $1,706,996 in the nine months ended September 30, 1996. Gross Profit declined from $3,648,286 in the first three quarters of 1995 to $2,990,141 in the first three quarters of 1996, primarily due to reduced cost absorption associated with lower revenues. Operating costs increased from $2,961,998 to $2,972,647 and interest expense decreased from $499,636 to $450,007 in the comparable periods. The 13.5% Subordinated Notes of $1,000,000 (the "13.5% Subordinated Notes"), which matured on May 6, 1996, were refinanced by a new issue of Convertible Subordinated Notes (the "7.25% Convertible Subordinated Notes") totaling $1,350,000. The new notes mature on May 1, 2001, bear interest at 7.25% and are convertible into shares of the Company's common stock at a price of $7.375 per share. The $1,500,000 Mortgage Note Payable, which was to mature on September 1, 1996, was refinanced by a new Mortgage Note totaling $1,500,000. The new mortgage note matures August 29, 2011 and bears interest at a fixed rate of 9.25% until August 29, 1999. Thereafter the interest rate will be adjusted annually to the Prime Rate plus 1%. Liquidity and Capital Resources The Company finances its operations primarily through third party credit facilities and cash from operations. Net cash provided by operations was $405,248 for the nine months ended September 30, 1996 compared to ($311,717) for the nine months ended September 30, 1995. The Company's primary third party financing relationship is with Fleet National Bank of Massachusetts, N.A. (the "Bank"). The initial Credit Agreement between the Company and the Bank, dated March 6, 1995, provided for a Short Term Loan due August 1, 1995, a Revolving Line of Credit Loan (the "Revolving Loan") due March 31, 1998, and a Long Term Loan due March 1, 2001. The Short Term Loan was paid as agreed in August, 1995. The Revolving Loan and the Long Term Loan bear interest at the Bank's base rate plus 1/2%. At September 30, 1996, there was a total of $3,747,568 borrowed under the Credit Agreement. Under the terms of the Credit Agreement, the Company is required to comply with a number of financial covenants including minimum equity, debt service coverage ratios, debt to equity ratios and minimum net income tests. The Company was in compliance with its debt covenants as of September 30, 1996. Company expenditures for capital equipment were $138,778 in the first nine months of 1996 as compared to $1,311,843 in the same period of 1995, which was offset by dispositions of $1,114,964 in transactions related to the purchase of a new headquarters facility and the sale of the former headquarters building. The 13.5% Subordinated Notes were refinanced by the 7.25 % Convertible Subordinated Notes which are convertible into shares of the Company's common stock at a price of $7.375 per share. Proceeds of the issuance of the 7.25% Convertible Subordinated Notes in excess of the amounts required to repay all amounts which were outstanding under the 13.5% Subordinated Notes will be used for general corporate purposes. The $1,500,000 Mortgage Note, which was to mature on September 1, 1996, was refinanced by a new Mortgage Note totaling $1,500,000. The new mortgage note matures August 29, 2011 and bears interest at a fixed rate of 9.25% until August 29, 1999. Thereafter the interest rate will be adjusted annually to the (Bank of Boston) Prime Rate plus 1%. On October 25, 1996, the Company completed a public offering of 850,000 shares of the Company's common stock, par value $0.001 per share, at a price of $5.00 per share, generating $4,250,000 in gross proceeds. All 850,000 shares of common stock in this public offering were offered directly by the Company. After deducting commissions and offering expenses, the net proceeds of the offering will be approximately $3,900,000. These net proceeds will be used to provide funds for certain capital expenditures relating to the development of the Company's fiber optic illumination product line and for working capital, capital expenditures,possible acquisitions and general corporate purposes. In order to reduce interest expense, the Company has paid down its revolving line of credit, retaining an availability to borrow an additional $2,577,299 at November 6, 1996. The Company believes that its available financial resources are adequate to meet its foreseeable working capital, debt service and capital expenditure requirements. PART II ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS A Special Meeting of Shareholders was held on September 17, 1996, to amend the Company's Amended and Restated Articles of Organization to increase the number of authorized shares of Common Stock, par value $0.001 per share, from 2,400,00 shares to 10,000,000 shares. Ofthe 1,712,914 shares outstanding and eligible to vote, a total of 1,198,021 shares were voted "for" the amendment. There were no votes "against" the amendment, and no abstentions or broker non-votes. No other matters came before the meeting. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) The following is a complete list of Exhibits filed as part of this Form 10-QSB : Exhibit Number Description 3.1 Amended and Restated Articles of Organization of the Company, incorporated by reference to the Company's Form SB-2, as amended, File No.333-10655. 27.1 ** Financial Data Schedule _______ ** filed electronically only b) There were no reports filed on Form 8-K SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereto duly authorized. Stocker & Yale, Inc. November 13, 1996 /s/Mark W. Blodgett Mark W. Blodgett Chairman and Chief Executive Officer November 13, 1996 /s/Susan A.H. Sundell Susan A. H. Sundell Sr. Vice President - Finance and Treasurer EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S UNAUDITED FINANCIAL STATEMENTS FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 1996M AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS DEC-31-1995 SEP-30-1996 29,176 0 1,706,792 0 3,930,434 6,084,795 3,143,612 0 19,168,613 2,643,035 0 0 0 1,713 8,278,072 19,168,613 8,071,392 8,071,392 5,081,251 2,972,647 0 0 450,007 (432,513) (87,800) (344,713) 0 0 0 (344,713) (0.20) (0.20)
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