<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 1996
OR
[ ] 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 0-27022
OPTICAL CABLE CORPORATION
(Exact name of registrant as specified in its charter)
Virginia 54-1237042
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
5290 Concourse Drive
Roanoke, Virginia 24019
(Address of principal executive offices, including zip code)
(540) 265-0690
(Registrant's telephone number, including area code)
N/A
(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 such
filing requirements for the past 90 days.
(1) Yes X No (2) Yes X No
--- --- --- ---
As of June 14, 1996 (after giving effect to the 2-for-1 stock split
declared on June 5, 1996), 38,676,856 shares of the registrant's Common Stock,
no par value, were outstanding. Of these outstanding shares, 36,000,000 shares
were held by Robert Kopstein, Chairman of the Board, President and Chief
Executive Officer of the registrant.
<PAGE>
OPTICAL CABLE CORPORATION
Form 10-Q Index
Six Months Ended April 30, 1996
- --------------------------------------------------------------------------------
Page
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets - April 30, 1996 and
October 31, 1995.................................... 2
Condensed Statements of Income - Three Months
and Six Months Ended April 30, 1996 and 1995........ 3
Condensed Statement of Changes in Stockholders'
Equity - Six Months Ended April 30, 1996............ 4
Condensed Statements of Cash Flows - Six Months
Ended April 30, 1996 and 1995....................... 5
Condensed Notes to Condensed Financial Statements..... 6-10
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition................. 11-14
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K..................... 15
- --------------------------------------------------------------------------------
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
OPTICAL CABLE CORPORATION
Condensed Balance Sheets
<TABLE>
<CAPTION>
(Unaudited)
- --------------------------------------------------------------------------------------------
April 30, October 31,
Assets 1996 1995
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $4,092,506 $535,235
Trade accounts receivable, net of allowance for doubtful
accounts of S250,000 in 1996 and $200,000 in 1995 7,588,023 6,186,888
Other receivables 113,565 98,297
Due from employees 2,600 3,225
Inventories 6,721,603 6,033,042
Prepaid expenses 89,528 86,553
Deferred income taxes 186,563 -
- --------------------------------------------------------------------------------------------
Total current assets 18,794,388 12,943,240
Other assets - 201,237
Property and equipment, net 6,040,425 5,674,232
- --------------------------------------------------------------------------------------------
Total assets $24,834,813 $ 18,818,709
- --------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
- --------------------------------------------------------------------------------------------
Current liabilities:
Notes payable $1,348,000 $309,000
Accounts payable and accrued expenses 3,351,121 2,726,727
Accrued compensation and payroll taxes 511,164 831,197
Income taxes payable 319,397 -
- --------------------------------------------------------------------------------------------
Total current liabilities 5,529,682 3,866,924
Deferred income taxes 51,106 -
- --------------------------------------------------------------------------------------------
Total liabilities 5,580,788 3,866,924
- --------------------------------------------------------------------------------------------
Stockholders' equity:
Common stock; no par value, authorized 50,000,000
shares; issued and outstanding 38,676,856 shares
at April 30, 1996 and 36,000,000 at October 31,
1995 18,653,860 596
Additional paid-in capital - 767,849
Retained earnings 600,165 14,183,340
- --------------------------------------------------------------------------------------------
Total stockholders' equity 19,254,025 14,951,785
Commitments and contingencies
- --------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $24,834,813 $18,818,709
- --------------------------------------------------------------------------------------------
</TABLE>
See accompanying condensed notes to condensed financial statements.
2
<PAGE>
OPTICAL CABLE CORPORATION
Condensed Statements of Income
<TABLE>
<CAPTION>
(Unaudited)
- ------------------------------------------------------------------------------------------------------------------
Tbree Months Ended Six Months Ended
April 30, April 30,
--------- ---------
1996 1995 1996 1995
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 10,183,960 $9,500,186 $ 20,526,432 $ 17,632,822
Cost of goods sold 6,087,121 5,524,936 11,722,572 10,176,339
- ------------------------------------------------------------------------------------------------------------------
Gross profit 4,096,839 3,975,250 8,803,860 7,456,483
Selling, general and administrative expenses 1,973,115 1,795,862 3,911,919 3,721,492
- ------------------------------------------------------------------------------------------------------------------
Income from operations 2,123,724 2,179,388 4,891,941 3,734,991
Other income (expense):
Interest income 22,572 175 29,450 175
Interest expense (3,493) (152,351) (3,493) (296,104)
Other, net 109,425 1,636 109,324 25,536
- ------------------------------------------------------------------------------------------------------------------
Other income (expense), net 128,504 (150,540) 135,281 (270,393)
- ------------------------------------------------------------------------------------------------------------------
Income before income tax expense 2,252,228 2,028,848 5,027,222 3,464,598
Income tax expense 183,940 - 183,940 -
- ------------------------------------------------------------------------------------------------------------------
Net income $2,068,288 $2,028,848 $4,843,282 $3,464,598
- ------------------------------------------------------------------------------------------------------------------
Pro forma income data:
Net income before pro forma income tax
provision, as reported $2,068,288 $4,843,282
Pro forma income tax provision 680,916 1,746,513
- ------------------------------------------------------------------------------------------------------------------
Pro forma net income $1,387,372 $3,096,769
- ------------------------------------------------------------------------------------------------------------------
Pro forma net income per share $0.04 $0.08
- ------------------------------------------------------------------------------------------------------------------
Pro forma weighted average shares outstanding 38,692,284 38,246,142
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying condensed notes to condensed financial statements.
3
<PAGE>
OPTICAL CABLE CORPORATION
Condensed Statement of Changes in Stockholders' Equity
Six Months Ended April 30, 1996
<TABLE>
<CAPTION>
(Unaudited)
- ---------------------------------------------------------------------------------------------------------------
Common Stock Additional Total
------------------------- Paid-in Retained Stockholders'
Shares Amount Capital Earnings Equity
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balances, October 31, 1995 36,000,000 $ 596 767,849 14,183,340 14,951,785
Net income - five months
ended March 31, 1996 - - - 4,243,117 4,243,117
Issuance of common stock for
cash ($2.50 per share, less
issuance costs of
$1,083,182) 2,676,856 5,608,958 - - 5,608,958
Distributions to stockholder - - - (6,150,000) (6,150,000)
Recapitalization - 13,044,306 (767,849) (12,276,457) -
Net income - month ended
April 30, 1996 - - - 600,165 600,165
- ---------------------------------------------------------------------------------------------------------------
Balances, April 30, 1996 38,676,856 $ 18,653,860 - 600,165 19,254,025
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying condensed notes to condensed financial statements.
4
<PAGE>
OPTICAL CABLE CORPORATION
Condensed Statements of Cash Flows
<TABLE>
<CAPTION>
(Unaudited)
- -----------------------------------------------------------------------------------------------
Six Months Ended
April 30,
-------------------------------
1996 1995
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 4,843,282 $ 3,464,598
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 256,952 187,315
Bad debt expense 43,893 (3,018)
Deferred income taxes (135,457) -
Gain on sale of property and equipment - (20)
(Increase) decrease in:
Trade accounts receivable (1,445,028) (1,988,472)
Other receivables (15,268) 52,783
Due from employees 625 (3,572)
Inventories (688,561) 2,882,856
Prepaid expenses (2,975) 1,814
Other assets 201,237 -
Increase (decrease) in:
Accrued interest payable - (8,458)
Accounts payable and accrued expenses 624,394 1,149,372
Accrued compensation and payroll taxes (320,033) 176,854
Income taxes payable 319,397 -
- -----------------------------------------------------------------------------------------------
Net cash provided by operating activities 3,682,458 5,912,052
- -----------------------------------------------------------------------------------------------
Cash flows from investing activities:
Purchase of property and equipment (623,145) (160,502)
Proceeds from sale of property and equipment - 20
- -----------------------------------------------------------------------------------------------
Net cash used in investing activities (623,145) (160,482)
- -----------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net change in notes payable 1,039,000 (4,296,485)
Payments on long-term debt - (250,000)
Proceeds from issuance of common stock, net of issuance costs 5,608,958 -
Cash distributions to stockholder (6,150,000) (1,080,000)
- -----------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 497,958 (5,626,485)
- -----------------------------------------------------------------------------------------------
Net increase in cash 3,557,271 125,085
Cash and cash equivalents at beginning of period 535,235 105,720
- -----------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 4,092,506 $ 230,805
- -----------------------------------------------------------------------------------------------
</TABLE>
See accompanying condensed notes to condensed financial statements.
5
<PAGE>
OPTICAL CABLE CORPORATION
Condensed Notes to Condensed Financial Statements
Six Months Ended April 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
(1) General
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial reporting information and 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, all material adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the six months ended April 30, 1996, are not
necessarily indicative of the results that may be expected for the fiscal
year ending October 31, 1996. The unaudited condensed financial statements
and condensed notes are presented as permitted by Form 10-Q and do not
contain certain information included in the Company's annual financial
statements and notes. For further information, refer to the financial
statements and notes thereto included in the Company's annual report on
Form 10-K for the fiscal year ended October 31, 1995.
(2) Recapitalization and Initial Public Offering
The Company's Board of Directors authorized the filing of a registration
statement for a public offering of the Company's common stock. In
connection with the public offering, the Board and the previously sole
stockholder approved an increase in the number of authorized shares of
common stock from 50,000 shares to 50,000,000 shares, a recapitalization
involving an exchange of all outstanding $1 par value common stock (596
shares) on a 60,403-for-1 basis for no par value common stock (36,000,000
shares) and the authorization of 1,000,000 shares of preferred stock, no
par value, issuable in multiple series.
On April 1, 1996, the Company completed a public offering of 2,676,856
shares of the Company's common stock from which it received net proceeds
of approximately $5.6 million.
At October 31, 1995, included in noncurrent other assets are deferred
costs related to the public offering in the amount of $201,237. These
deferred costs were charged against the gross proceeds of the public
offering.
Common Stock
In connection with the recapitalization, additional paid-in capital as of
March 31, 1996 has been reclassified to no par value common stock.
(Continued)
6
<PAGE>
OPTICAL CABLE CORPORATION
Condensed Notes to Condensed Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
(2) (Continued)
Undistributed Earnings
In connection with the recapitalization, the amount of the undistributed
taxable S Corporation earnings remaining as of March 31, 1996 has been
reclassified to no par value common stock.
Distributions
Since November 1, 1995 and in connection with the termination of the
Company's status as an S Corporation, the Company has made distributions
to the previously sole stockholder representing a portion of the
undistributed taxable S Corporation earnings. The Company made
distributions totaling $6,150,000 to the previously sole stockholder
during the six months ended April 30, 1996.
(3) Inventories
Inventories at April 30, 1996 and October 31, 1995 consist of the
following:
April 30, October 31,
1996 1995
- --------------------------------------------------------------------------------
Finished goods $ 2,772,172 $ 2,331,995
Work in process 1,394,548 1,594,193
Raw materials 2,515,807 2,067,949
Production supplies 39,076 38,905
- --------------------------------------------------------------------------------
$ 6,721,603 $ 6,033,042
- --------------------------------------------------------------------------------
(4) Notes Payable
On March 1, 1996, the Company and its bank executed a loan commitment
letter renewing its $5 million revolving line of credit arrangement for
another year under substantially similar terms; however, the line of
credit as renewed does not contain the restrictive financial covenants
contained in the previous agreement.
(Continued)
7
<PAGE>
OPTICAL CABLE CORPORATION
Condensed Notes to Condensed Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
(5) Income Taxes
Through March 31, 1996, the Company was not subject to federal and state
income taxes since it had elected to be taxed as an S Corporation. In
connection with the closing of the Company's initial public offering, the
Company terminated its status as an S Corporation effective March 31, 1996
and became subject to federal and state income taxes. Accordingly, the
statements of income include income taxes from April 1, 1996 and for
informational purposes, the statements of income for the three months and
six months ended April 30, 1996 include a pro forma adjustment for income
taxes which would have been recorded if the Company had been subject to
income taxes for the entire period presented.
Income Tax Expense
Income tax expense for the six months ended April 30, 1996 consists of:
Current Deferred Total
- --------------------------------------------------------------------------------
U.S. Federal $ 268,913 (114,047) 154,866
State 50,484 (21,410) 29,074
- --------------------------------------------------------------------------------
Totals $ 319,397 (135,457) 183,940
- --------------------------------------------------------------------------------
Deferred Income Taxes
The Company recorded a $114,045 net benefit for deferred income taxes upon
termination of the Company's S Corporation status. The adjustment reflects
the net deferred income tax asset balance at March 31, 1996 in accordance
with the provisions of Statement of Financial Accounting Standards No.
109, Accounting for Income Taxes, which requires an asset and liability
approach for the accounting and financial reporting of income taxes.
(Continued)
8
<PAGE>
OPTICAL CABLE CORPORATION
Condensed Notes to Condensed Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
(5) (Continued)
The tax effects of temporary differences that give rise to significant
portions of the Company's net deferred tax asset as of April 30, 1996 are
presented below:
<TABLE>
<CAPTION>
<S> <C>
Deferred tax assets:
Accounts receivable, due to allowance for doubtful accounts $ 94,900
Inventories, due to additional costs inventoried for tax
purposes pursuant to the Tax Reform Act of 1986 60,175
Self-insured health care costs, due to accrual for financial
reporting purposes 40,816
-----------------------------------------------------------------------------
Total gross deferred tax assets 195,891
Less valuation allowance -
-----------------------------------------------------------------------------
Net deferred tax assets 195,891
Deferred tax liabilities:
Plant and equipment, due to differences in depreciation and
capital gain recognition (51,106)
Prepaid expenses, due to deduction for tax purposes (9,328)
-----------------------------------------------------------------------------
Total gross deferred tax liabilities (60,434)
-----------------------------------------------------------------------------
Net deferred tax asset, including current net tax asset of $186,563
and noncurrent net tax liability of $51,106 $135,457
-----------------------------------------------------------------------------
</TABLE>
Based on the Company's historical and current pretax earnings, management
believes that it is more likely than not that the recorded deferred tax
assets will be realized.
(6) Pro Forma Net Income Per Share
Pro forma net income per share was computed by dividing pro forma net
income by the pro forma weighted average number of common shares
outstanding during the period (as adjusted for the recapitalization) and
the number of shares (1,800,000) that the Company would have needed to
issue at the initial public offering price per share ($2.50) to pay a $1
million cash distribution to the sole stockholder in December 1995 and a
$3.5 million cash distribution to the previously sole stockholder out of
the proceeds of the initial public offering.
(Continued)
9
<PAGE>
OPTICAL CABLE CORPORATION
Condensed Notes to Condensed Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
(7) Stock Incentive Plan
The Company and its previously sole stockholder adopted on March 1, 1996 a
stock incentive plan which is called the Optical Cable Corporation 1996
Stock Incentive Plan (the "Plan"). The Plan is intended to provide a means
for selected key management employees to increase their personal financial
interest in the Company, thereby stimulating the efforts of these
employees and strengthening their desire to remain with the Company
through the use of stock incentives. The Company has reserved 4,000,000
shares of Common Stock for issuance pursuant to incentive awards under the
Plan. Incentive awards may be in the form of either incentive stock
options, nonstatutory stock options, stock appreciation rights, restricted
stock or incentive stock.
The aggregate number of shares under option pursuant to the Plan is as
follows:
Number Option Price
of Shares Per Share
- --------------------------------------------------------------------------------
Options outstanding at October 31, 1995 - -
Granted 460,000 $ 2.50
Forfeited (4,000) $ 2.50
- -------------------------------------------------------------------
Options outstanding at April 30, 1996 456,000 $ 2.50
- -------------------------------------------------------------------
(8) Stock Dividends
On May 14, 1996, the Board of Directors declared a 2-for-1 stock split
effected in the form of a one hundred percent (100%) stock dividend paid
on May 31, 1996 to stockholders of record at the close of business on May
15, 1996. On June 5, 1996, the Board of Directors declared a 2-for-1 stock
split effected in the form of a one hundred percent (100%) stock dividend
to be paid on June 21, 1996 to stockholders of record at the close of
business on June 6, 1996. All share and per share data have been adjusted
to reflect these stock dividends.
- --------------------------------------------------------------------------------
10
<PAGE>
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
Results of Operations
Three Months Ended April 30, 1996 and 1995
Net Income
Net income increased 1.9 percent to $2.1 million in second quarter 1996 from
$2.0 million in second quarter 1995. This increase was primarily due to
increased sales volume and a reduction in interest expense. This was offset by
the recording of income tax expense of $184,000 for second quarter 1996 as a
result of the Company's termination of its S Corporation status effective March
31, 1996.
Net Sales
Net sales consists of gross sales of products, less discounts, refunds and
returns. Net sales increased 7.2 percent to $10.2 million in second quarter 1996
from $9.5 million for the same period in 1995. This increase was attributable to
the Company's continued effort to reach a broader customer base throughout the
United States and internationally with increased advertising, trade show
attendance, and direct sales presence in more states. This effort resulted in
greater sales in all market segments and product types. Sales from orders less
than $50,000 increased 14.0 percent to $8.1 million in second quarter 1996 from
$7.1 million for the same period in 1995, and sales from orders $50,000 or more
decreased 12.8 percent to $2.1 million from $2.4 million.
Gross Profit Margin
Cost of goods sold consists of the cost of materials, compensation costs and
overhead related to the Company's manufacturing operations, and warranty
expenses. The Company's gross profit margin (gross profit as a percentage of net
sales) decreased to 40.2 percent in second quarter 1996 from 41.8 percent in
second quarter 1995. This decrease was due primarily to a change in the
Company's product mix sold during the quarter.
Selling, General and Administrative Expenses
Selling, general and administrative expenses consist of the compensation costs
(including sales commissions) for sales and marketing personnel, travel
expenses, customer support expenses, trade show expenses, advertising, the
compensation cost for administration, finance and general management personnel,
as well as legal and accounting fees. Selling, general and administrative
expenses as a percentage of net sales were 19.4 percent in second quarter 1996
compared to 18.9 percent in second quarter 1995. This higher percentage was
primarily due to an increase in bad debt expense of $47,000.
Interest Expense
The reduction in interest expense in second quarter 1996 is due to the Company
generating adequate amounts of cash from operations to meet its cash needs
thereby requiring limited use of its revolving line of credit in second quarter
1996.
(Continued)
11
<PAGE>
Six Months Ended April 30, 1996 and 1995
Net Income
Net income increased 39.8 percent to $4.8 million for the six months ended April
30, 1996 from $3.5 million for the six months ended April 30, 1995. This
increase was primarily due to increased sales volume, increased gross profit
margin and a reduction in interest expense. This was offset by the recording of
income tax expense of $184,000 for second quarter 1996 as a result of the
Company's termination of its S Corporation status effective March 31, 1996.
Net Sales
Net sales consists of gross sales of products, less discounts, refunds and
returns. Net sales increased 16.4 percent to $20.5 million for the six months
ended April 30, 1996 from $17.6 million for the same period in 1995. This
increase was attributable to the Company's continued effort to reach a broader
customer base throughout the United States and internationally with increased
advertising, trade show attendance, and direct sales presence in more states.
This effort resulted in greater sales in all market segments and product types.
Additionally, net sales were favorably impacted by increases in both large and
small orders. Sales from orders less than $50,000 increased 17.8 percent to
$16.8 million for the six months ended April 30, 1996 from $14.3 million for the
same period in 1995, and sales from orders $50,000 or more increased 10.6
percent to $3.7 million from $3.3 million.
Gross Profit Margin
Cost of goods sold consists of the cost of materials, compensation costs and
overhead related to the Company's manufacturing operations, and warranty
expenses. The Company's gross profit margin (gross profit as a percentage of net
sales) increased slightly to 42.9 percent for the six months ended April 30,
1996 from 42.3 percent for the six months ended April 30, 1995. This increase
was due primarily to a change in the Company's product mix sold during the
period.
Selling, General and Administrative Expenses
Selling, general and administrative expenses consist of the compensation costs
(including sales commissions) for sales and marketing personnel, travel
expenses, customer support expenses, trade show expenses, advertising, the
compensation cost for administration, finance and general management personnel,
as well as legal and accounting fees. Selling, general and administrative
expenses as a percentage of net sales were 19.1 percent for the six months ended
April 30, 1996 compared to 21.1 percent for the six months ended April 30, 1995.
This lower percentage was primarily the result of the fact that net sales for
the six months ended April 30, 1996 increased 16.4 percent for the six months
ended April 30, 1995.
Interest Expense
The reduction in interest expense for the six months ended April 30, 1996 is due
to the Company generating adequate amounts of cash from operations to meet its
cash needs thereby not requiring the use of its revolving line of credit for the
six months ended April 30, 1996.
(Continued)
12
<PAGE>
Financial Condition
Total assets at April 30, 1996 were $24.8 million, an increase of $6.0 million,
or 32.0 percent over October 31, 1995. This increase was primarily due to an
increase of $1.4 million in trade accounts receivable resulting from the
increased sales volume during the six months ended April 30, 1996, an increase
of $.7 million in inventory and an increase in cash and cash equivalents of $3.6
million resulting from the initial public offering of the Company's common
stock.
Total stockholders' equity at April 30, 1996 increased $4.3 million from October
31, 1995 as a result of the initial public offering and net income for the six
months ended April 30, 1996, less cash distributions totaling $6.2 million to
the Company's previously sole stockholder.
Liquidity and Capital Resources
The Company has financed its cash requirements through cash flows from
operations along with short-term borrowings. On March 1, 1996, the Company and
its bank executed a loan commitment letter renewing its $5 million revolving
line of credit arrangement for another year under substantially similar terms;
however, the line of credit as renewed does not contain the restrictive
financial covenants contained in the previous agreement.
The Company's primary capital needs have been to (i) fund working capital
requirements, (ii) repay indebtedness, (iii) purchase property and equipment for
expansion and (iv) fund distributions to its previously sole stockholder
primarily to satisfy his tax liabilities resulting from S Corporation status.
The Company's primary sources of financing have been cash from operations, bank
borrowings and the initial public offering of the Company's common stock. The
Company believes that its cash flow from operations, available lines of credit
and the portion of the net proceeds from the public offering that the Company
intends to use for general corporate purposes will be adequate to fund its
operations for at least the next twelve months. The Company is not aware of any
trends, commitments or events that will result in or that are reasonably likely
to result in a material increase or decrease in liquidity thereafter. As of the
date hereof, the Company has no additional material sources of financing.
Cash flows from operations were approximately $3.7 million and $5.9 million for
the six months ended April 30, 1996 and 1995, respectively. For the six months
ended April 30, 1996, cash flows from operations were primarily provided by
operating income, offset by an increase in trade accounts receivable of $1.4
million and an increase in inventory of $0.7 million. Cash flows from operations
for the six months ended April 30, 1995 were primarily provided by operating
income and a decrease in inventory of $2.9 million. In 1995, the Company reduced
its inventory of optical fiber because it had additional access to ready
supplies.
Net cash used in investing activities was primarily for expenditures related to
facilities and equipment and was $623,000 and $161,000 for the six months ended
April 30, 1996 and 1995, respectively. In fiscal 1996 and 1997, the Company
expects to make additional investments in facilities expansion; however, as of
April 30, 1996, there are no material commitments for capital expenditures.
(Continued)
13
<PAGE>
Net cash provided by (used in) financing activities was $0.5 million and $(5.6)
million for the six months ended April 30, 1996 and 1995, respectively. The net
cash provided by financing activities for the six months ended April 30, 1996
consisted of an increase in debt outstanding under the line of credit of $1.0
million and net proceeds from the issuance of common stock of $5.6 million,
offset by $6.2 million in cash distributions to the Company's previously sole
stockholder. The net cash used in financing activities for the six months ended
April 30, 1995 consisted primarily of a decrease in debt outstanding under the
line of credit of $4.3 million and cash distributions to the Company's
previously sole stockholder of $1.1 million.
14
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits required by Item 601 of Regulation S-K for the six
months ended April 30, 1996.
(27) Financial Data Schedule.
(b) Reports on Form 8-K filed during the three months ended April
30, 1996.
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OPTICAL CABLE CORPORATION
(Registrant)
Date: June 14, 1996 /s/Robert Kopstein
-----------------------------------------
Robert Kopstein
Chairman of the Board, President and
Chief Executive Officer
Date: June 14, 1996 /s/Kenneth W. Harber
------------------------------------------
Kenneth W. Harber
Vice President of Finance, Treasurer
and Secretary
(principal financial and accounting officer)
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE SIX MONTHS ENDED APRIL 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIALS STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> APR-30-1996
<CASH> $ 4,093
<SECURITIES> 0
<RECEIVABLES> 7,838
<ALLOWANCES> 250
<INVENTORY> 6,722
<CURRENT-ASSETS> 18,794
<PP&E> 8,752
<DEPRECIATION> 2,712
<TOTAL-ASSETS> 24,835
<CURRENT-LIABILITIES> 5,530
<BONDS> 0
<COMMON> 18,654
0
0
<OTHER-SE> 600
<TOTAL-LIABILITY-AND-EQUITY> 24,835
<SALES> 20,526
<TOTAL-REVENUES> 20,665
<CGS> 11,723
<TOTAL-COSTS> 15,634
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<LOSS-PROVISION> 44
<INTEREST-EXPENSE> 4
<INCOME-PRETAX> 5,027
<INCOME-TAX> 184
<INCOME-CONTINUING> 4,843
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,843
<EPS-PRIMARY> 0.08
<EPS-DILUTED> 0.08
</TABLE>
