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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 29, 1996 or
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-27744
PCD Inc.
(Exact name of registrant as specified in its charter)
Massachusetts 04-2604950
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2 Technology Drive,
Centennial Park,
Peabody, Massachusetts
(Address of principal executive offices)
01960-7977
(Zip Code)
Registrant's telephone number, including area code: 508-532-8800
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Number of shares of common stock, $0.01 par value, outstanding at
August 1, 1996: 5,723,832
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PCD Inc.
FORM 10-Q
FOR THE QUARTER ENDED
JUNE 29, 1996
Statements in this report concerning the future financial
condition, results of operations and business of the Company are
"forward-looking" statements and are inherently uncertain.
Actual performance and results are subject to many risk factors,
including the Company's dependence on the integrated circuit
package industry, the Company's dependence on its principal
customers and independent distributors, fluctuations in demand
for the Company's products, patent litigation involving the
Company, rapid technological evolution in the electronics
industry, and the like.
PART I
FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
The Consolidated Balance Sheets (unaudited) at June 29, 1996
and December 31, 1995, the Consolidated Statements of Income
(unaudited) and the Consolidated Statements of Cash Flows
(unaudited) for the three months ended June 29, 1996 and July 1,
1995 are presented below. The accompanying notes are an integral
part of the condensed consolidated financial statements.
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<TABLE>
PCD Inc.
CONSOLIDATED BALANCE SHEETS
(Condensed and unaudited)
(In thousands)
<CAPTION>
6/29/96 12/31/95
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents. . . . . . . .$16,114 $ 3,958
Accounts receivable - trade, net . . . . 4,531 3,564
Inventory. . . . . . . . . . . . . . . . 2,719 2,867
Prepaid expenses and other current
assets. . . . . . . . . . . . . . . . . 66 399
------- -------
Total current assets . . . . . . . . 23,430 10,788
Equipment and improvements
Equipment and improvements. . . . . . . 9,778 8,680
Accumulated depreciation. . . . . . . . 4,452 3,749
------- -------
Equipment and improvements, net . . . . . 5,326 4,931
Other assets. . . . . . . . . . . . . . . 233 210
------- -------
Total assets . . . . . . . . . . . . $28,989 $15,929
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, trade . . . . . . . . $ 518 $ 686
Accrued liabilities . . . . . . . . . . 2,664 2,431
------- -------
Total current liabilities . . . . . . . 3,182 3,117
Stockholders' equity. . . . . . . . . . . 25,807 12,812
------- -------
Total liabilities and
stockholders' equity. . . . . . . . $28,989 $15,929
======= =======
</TABLE>
The accompanying notes are an integral part
of the condensed, consolidated financial statements.
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<TABLE>
PCD Inc.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
<CAPTION>
Three Months Six Months
Ended Ended
6/29/96 7/1/95 6/29/96 7/1/95
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net sales . . . . . . . . . . $ 7,223 $ 6,260 $14,310 $12,282
Cost of sales . . . . . . . . 4,001 3,339 7,853 6,559
------- ------- ------- -------
Gross profit. . . . . . . . 3,222 2,921 6,457 5,723
Operating expenses. . . . . . 1,282 1,221 2,776 2,374
------- ------- ------- -------
Income from operations. . . 1,940 1,700 3,681 3,349
Interest income, net. . . . . 209 16 262 41
------- ------- ------- -------
Income before income
taxes . . . . . . . . . . 2,149 1,716 3,943 3,390
Provision for income
taxes . . . . . . . . . . . 802 706 1,465 1,396
------- ------- ------- -------
Net income. . . . . . . . . . $ 1,347 $ 1,010 $ 2,478 $ 1,994
======= ======= ======= =======
Net income per share. . . . . $ 0.21 $ 0.20 $ 0.42 $ 0.40
======= ======= ======= =======
Weighted average number of
common and common
equivalent shares
outstanding . . . . . . . . 6,552 4,930 5,940 4,930
======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
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<TABLE>
PCD Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Condensed and unaudited)
(In thousands)
<CAPTION>
Six Months Ended
6/29/96 7/1/95
------- -------
<S> <C> <C>
Cash from operating activities:
Net income. . . . . . . . . . . . . . . . . $ 2,478 $ 1,994
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation. . . . . . . . . . . . . . . . 703 565
Amortization of deferred compensation . . . 29 8
Changes in operating assets and
liabilities:
Accounts receivable - trade, net. . . . . (967) (696)
Inventory . . . . . . . . . . . . . . . . 148 (150)
Prepaid expenses and other current
assets. . . . . . . . . . . . . . . . . . 333 28
Other assets. . . . . . . . . . . . . . . (23) (34)
Accounts payable. . . . . . . . . . . . . (168) 206
Accrued liabilities . . . . . . . . . . . 189 92
------- -------
Net cash provided by operating
activities . . . . . . . . . . . . . . . 2,722 2,013
Cash flows from investing activities:
Purchase of property and equipment . . . . . (1,098) (1,025)
Cash flows from financing activities:
Proceeds from public offering. . . . . . . . 10,501 -
Exercise of common stock options . . . . . . 31 -
Principal payment under long-term debt
obligations . . . . . . . . . . . . . . . . - (38)
------- -------
Net cash provided (used in) financing
activities. . . . . . . . . . . . . . . 10,532 (38)
------- -------
Net increase in cash. . . . . . . . . . . . .$12,156 $ 950
------- -------
Cash and cash equivalents at beginning
of period. . . . . . . . . . . . . . . . . .$ 3,958 $ 928
------- -------
Cash and cash equivalents at end
of period. . . . . . . . . . . . . . . . . .$16,114 $ 1,878
======= =======
</TABLE>
The accompanying notes are an integral part
of the condensed, consolidated financial statements.
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PCD Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(June 29, 1996 Unaudited)
Note 1. BASIS OF PRESENTATION:
The condensed financial statements for the three months
ended June 29, 1996 and July 1, 1995 are unaudited and reflect
all adjustments, consisting of normal recurring adjustments,
which are, in the opinion of management, necessary for a fair
presentation of the results for the interim periods. This
financial data should be read in conjunction with the audited
financial statements and notes thereto for the year ended
December 31, 1995 which are included in the prospectus dated
March 27, 1996 contained in the Company's registration statement
on Form S-1.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets,
liabilities and accrued litigation and disclosure of contingent
assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the
reporting period. Actual peformance could differ from those
estimates and thereby impact future results of operations and
financial condition.
The results of operations for the three-month and six-month
periods ended June 29, 1996 and July 1, 1995 are not necessarily
indicative of the results expected for the full year endng
December 31, 1996.
Note 2. NET INCOME PER SHARE
Net income per common share is computed using the weighted
average number of shares of common stock outstanding and common
equivalent shares outstanding. Common equivalent shares are
included in the per share calculation where the effect of their
inclusion would be dilutive. Common equivalent shares result
when the assumed exercise of outstanding stock options, the
proceeds of which are then assumed to have been used to
repurchase outstanding common stock using the treasury stock
method. Pursuant to Securities and Exchange Commission Staff
Accounting Bulletin No. 83, common and common equivalent shares
issued during the twelve month period preceding the date of the
initial filing on February 12, 1996, of the registration
statement relating to the Company's initial public offering have
been included in the calculation using the treasury stock method
at the offering price ($11 per share), as if they were
outstanding for all periods prior to January 1, 1996. Fully
diluted net income per common share is not materially different
from the reported primary net income per share.
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<TABLE>
Note 3. INVENTORY
<CAPTION>
(In Thousands)
6/29/96 12/31/95
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<S> <C> <C>
Inventories
Raw materials and
finished subassemblies. . . . . . . . $1,815 $1,945
Work in process . . . . . . . . . . . . 296 260
Finished goods. . . . . . . . . . . . . 608 662
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Total . . . . . . . . . . . . . . . . $2,719 $2,867
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</TABLE>
Note 4. Public Offering
On March 26, 1996, the Securities and Exchange Commission
declared effective the Company's registration statement relating
to the initial public offering of 2,113,280 shares of common
stock, of which, 1,100,000 shares were sold by the Company, at an
offering price of $11.00 per share. This offering closed on
April 1, 1996.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITI ON AND RESULTS OF OPERATIONS
SECOND QUARTER 1996
Net sales for the quarter ended June 29, 1996 were $7.2
million, an increase of 15% from $6.3 million in the year-earlier
period. This increase was attributable to expanded sales volume
in the avionic terminal blocks and sockets, industrial terminal
blocks, and programmable-logic interconnect sockets product
categories. The greatest portion of this expansion in volume was
derived from higher volume of avionic terminal block and sockets.
Demand for the burn-in products has slowed for the second
consecutive quarter of 1996 with the softness in the
semiconductor market.
Customer bookings for the quarter ended June 29, 1996 were
$7.3 million, up 9% compared to orders of $6.7 million in the
year-earlier period. On a comparative basis, the increase in
customer orders was due primarily to the resurgence in demand for
the avionic terminal block and socket products. The Company
ended the quarter with an order backlog of $7.0 million compared
to $6.9 million at the end of the first quarter 1996.
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Gross profits in the quarter ended June 29, 1996 amounted to
$3.2 million or 44.6% of net sales, compared to $2.9 million or
46.7% of net sales in the year-earlier period. This reduction in
gross profit as a percentage of net sales in the quarter from the
prior period relates primarily to a shifting product mix from
Burn-in to Avionics products and the effect of approximately $0.1
million of tooling sales for application specific product. These
tooling sales generate significantly lower than the average gross
profit.
Operating expenses for the three months ended June 29, 1996
were $1.3 million, or 17.7% of net sales, an increase of $0.1
million or 5% compared to expenses of $1.2 million or 19.5% of
net sales in the year-earlier period.
Other income increased to $0.2 million for the second
quarter 1996 compared to $0.02 million for the year-earlier
period. Other income consists primarily of interest income.
The effective rate for income taxes for the quarter ended
June 29, 1996 declined to 37.3% from 41.1% for the year-earlier
period. The effective rate for income taxes was due to the
application of the appropriate effective tax rates for each of
the state tax jurisdictions in which the Company operates. In
addition, PCD established a wholly owned subsidiary which is
engaged in holding PCD securities. The structure of this
corporation allows for favorable tax treatment in the
Commonwealth of Massachusetts.
MATERIAL CHANGES IN FINANCIAL CONDITION
As of June 29, 1996, the Company had cash and cash
equivalents of approximately $16.1 million and working capital of
approximately $20.2 million. Cash provided by operating
activities totaled $1.5 million for the quarter ended June 29,
1996 compared to $1.2 million in the year-earlier period.
Capital expenditures were $0.6 million for the second
quarter 1996 and are expected to reach $2.2 million by year end,
down slightly from $2.5 million last year. The Company projects
the level of capital expenditures to attain $3.0 million in 1997.
Net proceeds of approximately $10.5 million from the sale of
1,100,000 shares of the Company's common stock were received on
April 1, 1996, which corresponded to the Company's second fiscal
quarter. The Company believes that funds generated from
operations together with the net proceeds of the offering and
existing cash balances will be sufficient to meet the Company's
cash requirements at least through fiscal 1996.
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PCD Inc.
PART II
OTHER INFORMATION
Item 1. Legal Proceeding
There has been no material change to the information
required to be furnished by this item since the date of the
Company's previous Quarterly Report on Form 10-Q for the quarter
ended March 30, 1996. The information contained in Part II, Item
1 of such Report is hereby incorporated herein by this reference.
Item 2. Changes in Securities
On March 26, 1996, the Securities and Exchange Commission
declared effective the Company's registration statement relating
to the initial public offering of 2,113,280 shares of common
stock, of which, 1,100,000 shares were sold by the Company, at an
offering price of $11.00 per share. This offering closed on April
1, 1996.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3.2* Restated Articles of Organization of Registrant, as
amended.
3.4* By-Laws of Registrant, as amended.
10.3* Registrant's 1992 Stock Option Plan and related
forms of stock option agreement.
10.4* Registrant's 1996 Stock Plan and related forms of
stock option agreement.
10.5* Registrant's 1996 Eligible Directors Stock Plan and
related form of stock option agreement.
11.1 Statement re computation of per share earnings.
21.1* Subsidiaries of Registrant.
27.1 Financial Data Schedule.
* A copy has been previously filed on Form S-1 (#333-
1266) and is incorporated in this document by
reference.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the period
ended June 29, 1996.
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S I G N A T U R E S
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.
PCD INC.
(Registrant)
Dated: August 13, 1996 /s/ John L. Dwight, Jr.
--------------- ------------------------
John L. Dwight, Jr.
Chairman of the Board, Chief
Executive Officer and
President (Principal Executive
Officer)
Dated: August 13, 1996 /s/ Mary L. Mandarino
--------------- ------------------------
Mary L. Mandarino
Vice President, Finance and
Administration, Chief
Financial Officer and
Treasurer (Principal Financial
and Accounting Officer)
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Exhibit Index
- --------------
Exhibit
Number Description
- ------- -----------
11.1 Statement re computation of per share earnings.
27.1 Financial Data Schedule.
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<TABLE>
Exhibit 11.1
PCD Inc.
STATEMENT RE COMPUTATION OF EARNINGS PER SHARE (1)
<S> <C>
For the quarter ended June 29, 1996
Common stock outstanding,
beginning of the period . . . . . . . . . . . .4,609,032
Weighted average common stock issued
during the period . . . . . . . . . . . . . . .1,099,705
Dilutive effect of common stock equivalents. . . . 843,403
---------
Weighted average number of common and common
equivalent shares outstanding . . . . . . . . .6,552,140
=========
For the six-months ended June 29, 1996
Common stock outstanding,
beginning of the period . . . . . . . . . . . .4,597,032
Weighted average common stock issued
during the period . . . . . . . . . . . . . . . 556,404
Dilutive effect of common stock equivalents. . . . 786,207
---------
Weighted average number of common and common
equivalent shares outstanding . . . . . . . . .5,939,643
=========
For the quarter ended July 1, 1995
Common stock outstanding,
beginning of the period . . . . . . . . . . . .4,561,032
Cheap stock outstanding during the period (2). . . 70,364
Weighted average common stock issued
during the period . . . . . . . . . . . . . . . -
Dilutive effect of common stock equivalents. . . . 299,078
---------
Weighted average number of common and common
equivalent shares outstanding . . . . . . . . .4,930,474
=========
For the six-months ended July 1, 1995
Common stock outstanding,
beginning of the period . . . . . . . . . . . .4,561,032
Cheap stock outstanding during the period (2). . . 70,364
Weighted average common stock issued
during the period . . . . . . . . . . . . . . . -
Dilutive effect of common stock equivalents. . . . 299,078
---------
Weighted average number of common and common
equivalent shares outstanding . . . . . . . . .4,930,474
=========
<FN>
(1) All common and common equivalent shares have been restated to
reflect a 12-for-1 stock split of the Company's common stock
effected in February, 1996.
(2) In accordance with the Securities and Exchange Commission
Staff Accounting Bulletin No. 83, issuances of common stock and
common stock equivalents during the twelve month period preceding
the date of the initial filing on February 12, 1996, of the
registration statement relating to the Company's initial public
offering have been included in the calculation using the treasury
stock method at the public offering price ($11 per share), as if
they were outstanding for all periods prior to January 1, 1996.
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLAR
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-29-1996
<EXCHANGE-RATE> 1
<CASH> 16,114
<SECURITIES> 0
<RECEIVABLES> 4,793
<ALLOWANCES> 262
<INVENTORY> 2,719
<CURRENT-ASSETS> 23,430
<PP&E> 9,778
<DEPRECIATION> 4,452
<TOTAL-ASSETS> 28,989
<CURRENT-LIABILITIES> 3,182
<BONDS> 0
0
0
<COMMON> 57
<OTHER-SE> 25,750
<TOTAL-LIABILITY-AND-EQUITY> 28,989
<SALES> 14,310
<TOTAL-REVENUES> 14,310
<CGS> 7,853
<TOTAL-COSTS> 7,853
<OTHER-EXPENSES> 2,776
<LOSS-PROVISION> 70
<INTEREST-EXPENSE> 3
<INCOME-PRETAX> 3,943
<INCOME-TAX> 1,465
<INCOME-CONTINUING> 2,478
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,478
<EPS-PRIMARY> .42
<EPS-DILUTED> .42
</TABLE>
