-----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, OHkW5suPyYG4KZ/d8OcqpuP+KU9H6g59vTbzxg1irIEVZpelKByeiPT4ZiqItcX9 uPTTaG40MmvAdfte09P6vg== 0000094538-97-000009.txt : 19971117 0000094538-97-000009.hdr.sgml : 19971117 ACCESSION NUMBER: 0000094538-97-000009 CONFORMED SUBMISSION TYPE: 10QSB/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 SROS: NASD 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/A SEC ACT: SEC FILE NUMBER: 000-27372 FILM NUMBER: 97721896 BUSINESS ADDRESS: STREET 1: 32 HAMPSHIRE ROAD CITY: SALEM STATE: NH ZIP: 03079 BUSINESS PHONE: 5082843248 10QSB/A 1 U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ________________________________________________________________________________ FORM 10-QSB/A QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997 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 (I.R.S. employer or organization) 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 14, 1997 there were 2,567,894.60 shares of the issuer's common stock outstanding. Transitional Small Business Disclosure Format: _______Yes ____X__No PART 1 FINANCIAL STATEMENTS Item 1.1 CONSOLIDATED BALANCE SHEETS STOCKER & YALE, INC. ASSETS
SEPTEMBER 30, 1997 DECEMBER 31, 1996 (unaudited) (unaudited) Current Assets: Cash $ 175,130 $ 1,244,418 Accounts Receivable 1,822,130 1,410,774 Prepaid Taxes 587,221 353,668 Inventory 4,810,209 3,701,019 Prepaid Expenses 193,297 131,478 _________ _________ Total current assets 7,587,987 6,841,357 Property, Plant and Equipment, Net 3,728,418 3,134,717 --------- --------- Note Receivable 1,000,000 1,000,000 --------- --------- Goodwill, Net of Accumulated Amortization 8,520,200 8,721,800 --------- --------- Other Assets 52,166 0 --------- --------- Debt Issuance Costs, Net of Accumulated Amortization 107,835 138,490 --------- --------- $ 20,996,606 $ 19,836,364 LIABILITIES AND STOCKHOLDER'S INVESTMENT Current Liabilities: Current Portion of long-term debt $ 211,141 $ 211,142 Hong Kong Line of Credit 178,482 124,799 Accounts Payable 1,349,892 1,373,121 Accrued Expenses 548,073 547,654 Short Term Lease Obligations 114,504 21,628 _________ _________ Total current liabilities 2,402,092 2,278,344 --------- --------- Long Term Debt 5,573,625 4,021,570 --------- --------- Other Long Term Liabilities 564,688 564,688 --------- --------- Deferred Income Taxes 972,685 1,012,685 Stockholder's Investment: Common stock, par value $0.001 Authorized -- 10,000,000 Issued and outstanding -- 2,567,894 2,568 2,568 Paid-in capital 10,822,705 10,822,705 Retained earnings 658,243 1,133,804 ---------- ---------- Total stockholder's investment 11,483,516 11,959,077 ---------- ---------- $ 20,996,606 $ 19,836,364
PART I FINANCIAL STATEMENTS Item 1.2 CONSOLIDATED STATEMENT OF OPERATIONS STOCKER & YALE, INC.
Three Months Ended Nine Months Ended September 30, September 30, 1997 1996 1997 1996 (unaudited) (unaudited) (unaudited) (unaudited) Net Sales $ 2,689,583 $ 2,495,168 $ 8,227,525 $ 8,071,392 Cost of Sales 1,882,681 1,501,799 5,139,564 5,081,251 __________ _________ _________ _________ Gross Profit 806,902 993,369 3,087,961 2,990,141 Selling Expenses 594,870 362,370 1,434,227 1,193,497 General and 635,895 561,778 1,488,138 1,517,345 Administrative Expenses Research and 222,415 117,043 553,940 261,805 Development _________ ________ _________ _________ Operating Income (646,278) (47,822) (388,344) 17,494 Interest Expense (107,913) (149,867) (272,217) (450,007) ________ _________ _________ _________ Income/(Loss) before (754,191) (197,689) (660,561) (432,513) income taxes Income Tax Expense/ (277,000) (51,700) (185,000) (87,800) (Benefit) Net Income/(Loss) $(477,191) (145,989) $(475,561) (344,713) ________ __________ ________ ________ ________ __________ -------- -------- Income/(Loss) $ (0.19) (0.09) $ (0.19) (0.20) Per Share -------- ---------- -------- -------- Weighted-Average Common Shares and 2,567,894 1,712,914 2,567,894 1,712,914 Equivalents
PART I FINANCIAL STATEMENTS Item 1.3 CONSOLIDATED STATEMENTS OF CASH FLOWS STOCKER & YALE, INC.
Nine Months Ended September 30 1997 1996 (unaudited) (unaudited) Cash Flows from Operating Activities: Net loss $ (475,561) $ (344,713) Adjustments to reconcile net loss to net cash used in/provided by operating activities Depreciation and Amortization 429,750 635,324 Deferred income taxes (40,000) (105,000) Other changes in assets and liabilities Accounts receivable, net (411,356) 191,151 Inventories (1,109,190) (93,781) Prepaid expenses (295,372) 64,583 Accounts payable (23,236) 287,363 Accrued expenses 419 22,724 Other assets (52,166) 0 Accrued and refundable taxes 0 (252,403) --------- --------- Net cash (used in)/provided by operating (1,976,712) 405,248 activities --------- --------- Cash Flows from Investing Activities: Purchases of property, plant and equipment (791,196) (138,778) --------- -------- Net cash used in investing activities (791,196) (138,778) Cash Flows from Financing Activities: Lease Financing 387,027 (57,709) Repayment of Subordinated Note 0 (2,500,000) Repayments/Advances of Bank Debt 1,257,910 (553,727) Proceeds from Notes Payable 0 1,500,000 Proceeds from Subordinated Notes Payable 0 1,350,000 Deferred financing costs 0 (39,000) Hong Kong Line of Credit Advances 53,683 41,109 -------- -------- Net cash (used in)/ provided by 1,698,620 (259,327) financing activities -------- -------- Net Increase/(Decrease) in Cash and (1,069,288) 7,143 Cash Equivalents Cash and Cash Equivalents, Beginning of Period 1,244,418 22,033 --------- -------- Cash and Cash Equivalents, End of Period $ 175,130 $ 29,176 ---------- --------- ---------- ---------
PART 1. FINANCIAL STATEMENTS Notes to Financial Statements 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, 1997 and September 30, 1996 (b) the financial position at September 30, 1997 and (c) the cash flows for the nine month periods ended September 30, 1997 and September 30, 1996. Interim results are not necessarily indicative of results for a full year. The consolidated balance sheet presented as of December 31, 1996 has been derived from the consolidated financial statements that have been audited by the Company's independent public accountants. Certain balances have been reclassified for financial statement purposes. 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. In March 1997, the Financial Accounting Standards Board issued SFAS 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. This statement is effective for fiscal years 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 for its fiscal year ending December 31, 1997 and does not believe that the effect of the adoption of this standard would be materially different from the amounts presented in the accompanying statements of income. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND OPERATING RESULTS 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, 1996. Three-month periods ending September 30, 1997 and 1996 Revenues increased 8% from $2,495,167 for the three months ended September 30,1996, to $2,689,583 for the three months ended September 30, 1997, due primarily to increases in sales of lighting products and sales to the U.S. Government. Sales of lighting products increased 84% from $542,149 in the third quarter of 1996 to $998,754 in the third quarter of 1997. Sales of military products (military-style watches and compasses) to civilian markets decreased 40%, from $407,123 in the three months ended September 30, 1996 to $243,984 in the equivalent period in 1997, primarily due to diminished sales through the Company's Hong Kong subsidiary. Sales of the Company's MFE products decreased 20% from $482,491 for the third quarter of 1996 to $383,717 for the third quarter of 1997, in large part because of a decrease in OEM contracts. Third quarter sales of machine tool components through the Company's Stilson division remained flat at $948,223 for the quarter ended September 30, 1997 as compared to sales of $957,391 for the quarter ended September 30, 1996. Gross profit margin decreased, by $186,467 to $806,902 for the quarter ended September 30, 1997 as compared to $993,369 for the quarter ended September 30, 1996, which is attributable to a write down of inventory at the Company's Stilson division. Selling expenses increased $232,500 as a result of increased payroll costs and marketing efforts associated with the Company's fiber optic product launch and the addition of a sales manager at the Stilson division. Research and development expenditures increased by $105,372 as a result of the Company's increased development efforts relating to its new fiber optic product line. The Company recorded a pretax loss of $(754,191) in the quarter ended September 30, 1997 as compared with the reported pretax loss of $(197,689) for the quarter ended September 30, 1996. This decrease is primarily attributable to the reduction in gross margin and the increase in selling and research and development expenses. Nine month periods ending September 30, 1997 and 1996 Revenues increased 2% from $8,071,392 for the nine months ended September 30, 1996, to $8,227,525 for the nine months ended September 30, 1997. Increased sales of lighting products represent the most significant product line growth in revenue. Lighting sales increased 55% from $1,904,406 in the nine month period ended September 30, 1996 to $2,948,616 in the equivalent period of 1997. Included in these lighting segment revenues are sales of the Company's fiber optic lighting products which were $202,485 as of September 30, 1997 compared to $0 in the comparable period of 1996. For the nine months ended September 30, 1997 sales of military products to civilian markets increased 8% to $920,050 from $852,776 for the first nine months of 1996. Sales to the U.S. Government decreased by 41% from $438,561 for the nine month period ended September 30, 1996 to $260,648 for the nine month period ended September 30, 1997. Sales of electronic ballast, which were discontinued as a product offering in 1996, decreased from $282,367 for the nine months ended September 30, 1996 to $26,963 for the comparable 1997 period. MFE product sales declined from $1,487,777 for the nine month period ended September 30, 1996 to $1,126,308 for the nine month period ended September 30, 1997. Sales of machine tool components through the Company's Stilson division decreased 5% from $3,105,504 for the nine months ended September 30, 1996 to $2,944,940 for the nine months ended September 30, 1997. In the nine month period ended September 30, 1997, the Company recorded a pretax loss of $(660,561) as compared to the reported pretax loss of $(432,513) for the comparable period ended September 30, 1996. Gross profit margin remained flat at 37% for the nine month periods ended September 30, 1996 and September 30, 1997, despite a negative $180,000 inventory adjustment at the Stilson division. Interest expense decreased by $177,790 as a result of reductions in the Company's outstanding debt. General and Administrative expenses decreased by $29,207 primarily due to a reduction in professional fees. The Company's pretax loss position was primarily a result of expenses incurred for selling and research and development associated with the Company's development and launch of its new fiber optic product line. Selling expenses increased by $240,730 as a result of increased payroll costs and marketing efforts. Research and development costs increased by $292,135 as a result of the Company's research efforts relating to its new fiber optic product line. Liquidity and Capital Resources The Company finances its operations primarily through third party credit facilities and cash from operations. Net cash (used in)/provided by operations was $(1,069,288) for the nine months ended September 30, 1997 and $7,143 for the nine months ended September 30, 1996. 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 (the "Credit Agreement"), provided for a Revolving Line of Credit Loan (the "Revolving Loan") due March 31, 1998 and a a Long Term Loan due March 1, 2001. The Revolving Loan and the Long Term Loan bear interest at the Bank's base rate plus 1/2%. At September 30, 1997 there was a total of $2,631,900 borrowed under the Credit Agreement and availability to borrow of $1,667,286 under the Revolving Loan. 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. For the period ending September 30, 1997, the Company was out of compliance with the minimum net income and debt service coverage covenants. On November 12, 1997 the Bank granted waivers of these covenants as of September 30, 1997 for the period then ended. In addition, the Credit Agreement was amended to increase the maximum annual limit on capital expenditures from $500,000 to $1,500,000 for the year ending December 31, 1997. The Company has issued and outstanding Subordinated Notes in an original principal amount of $1,350,000. These notes mature on May 1, 2001. The Subordinated Notes bear interest at 7.25% and are convertible into shares of the Company's common stock at a price of $7.375 per share. Company expenditures for capital equipment were $791,196 in the first nine months of 1997 as compared to $138,778 in the same period of 1996. The majority of the 1997 expenditures related to the Company's new fiber optic product line. On May 20, 1997 the Company entered into an equipment line of credit agreement with Primary Bank to finance capital equipment related to new product development. The facility provides that equipment purchases will be converted quarterly into a series of five year notes, not to exceed $500,000 in the aggregate, bearing interest at the prime rate plus .75%. As of September 30, 1997, the Company had borrowed $215,450 against the line of credit. The Company believes that its available financial resources are adequate to meet its foreseeable working capital, debt service and capital expenditure requirements. SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Stocker & Yale, Inc. - -------------------- November 14, 1997 /s/ Mark W. Blodgett - -------------- ---------------------- Mark W. Blodgett, Chairman and Chief Executive Officer November 14, 1997 /s/ Susan A. H. Sundell - -------------- ------------------------- Susan A.H. Sundell, Senior 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 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
9-MOS DEC-31-1997 SEP-30-1997 175,130 0 1,822,130 0 4,810,209 7,587,987 3,728,418 0 20,996,606 2,402,092 0 0 0 2,568 11,480,948 20,996,606 8,227,525 8,227,525 5,139,564 3,476,305 0 0 272,217 (660,561) (185,000) (475,561) 0 0 0 (475,561) (.19) (.19)
EX-99 3 WAIVER AND AMENDMENT OF CREDIT AGREEMENT FLEET 12 NOVEMBER, 1997 MS. SUSAN SUNDELL SENIOR VICE PRESIDENT STOCKER & YALE, INC. 32 HAMPSHIRE ROAD SALEM, NH 03079 DEAR MS. SUNDELL: Reference is made to the CREDIT AGREEMENT dated as of March 6, 1995 (as amended, the "Agreement") between Stocker & Yale, Inc., a Massachusetts corporation (the "Company"), and Fleet National Bank, successor by merger to Fleet National Bank of Massachusetts, formerly known as Shawmut Bank, N.A. (the "Bank"). All capitalized terms used and not defined herein shall have the meanings ascribed to such terms in the Agreement. Section 1. Waiver - The Bank confirms waiver of the Event of Default that has resulted from non-compliance with Subsections 6.01(m) and 6.01(n) of the Agreement. This waiver is effective as of September 30, 1997; provided however, that such waiver is effective only for the period ended September 30, 1997. Section 2. Amendment of Subsection 6.01 (p) of the Agreement - Subsection 6.01 (p) of the Agreement is hereby amended to read as follows: (p) The Company and its Subsidiaries will not make Consolidated Capital Expenditures aggregating in excess of $500,000 during any fiscal year; provided, however, that Consolidated Capital Expenditures may not aggregate in excess of $1,500,000 for the fiscal year ended December 31, 1997. Section 3. Payment for Waiver and Amendment - The Company agrees to pay to the Bank a fee of $5,000 plus expenses; including but not limited to reasonable attorney's fees, for this Waiver and Amendment. Except as amended by this Waiver and Amendment, all other provisions, terms and conditions of the Agreement shall continue to be effective. This Waiver and Amendment shall not be deemed a waiver of any defaults that exist under the Agreement other than those described in Section 1 hereof. Very truly yours, FLEET NATIONAL BANK By: /s/ H. Ellery Perkinson ----------------------- Its: Assistant Vice President Agreed: STOCKER & YALE, INC. By: /s/ Susan A. H. Sundell ----------------------- Its: Senior Vice President-Finance, Treasurer -----END PRIVACY-ENHANCED MESSAGE-----