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 July 3, 1999 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 0-27744
PCD Inc.
(Exact name of registrant as specified in its charter)
Massachusetts 04-2604950
(State or other jurisdiction of (I.R.S. Employer
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: 978-532-8800
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
July 26, 1999: 8,557,680.
<PAGE>
PCD Inc.
FORM 10-Q
FOR THE QUARTER ENDED
JULY 3, 1999
FORWARD LOOKING INFORMATION
Statements in this report concerning the future revenues,
expenses, profitability, financial resources, product mix, market
demand, product development and other statements in this report
concerning the future results of operations, financial condition
and business of PCD Inc. are "forward-looking statements" made
pursuant to the safe harbor provisions of the Securities Exchange
Act of 1934, as amended. Investors are cautioned that the
Company's actual results in the future may differ materially from
those projected in the forward-looking statements due to the risks
and uncertainties that exist in the Company's operations and
business environment, including the Company's dependence on the
integrated circuit package interconnect and semiconductor
industries, the Company's dependence on its principal customers
and independent distributors, acquisitions and indebtedness,
international sales and operations, fluctuations in demand for the
Company's products, patent litigation involving the Company, rapid
technological evolution in the electronics industry, Year 2000
compliance and the like.
In addition, the Company may experience unanticipated costs
or other difficulties in connection with the acquisition and
integration of a business such as Wells Electronics, Inc. The
Company's most recent filings with the Securities and Exchange
commission, including its Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q and current reports on Form 8-K, contain
additional information concerning such risk factors, and copies of
these filings are available from the Company upon request and
without charge.
2
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
PCD INC.
Consolidated Balance Sheets as of July 3, 1999 and
December 31, 1998.
Consolidated Statements of Income for the quarter and six
months ended July 3, 1999 and July 4, 1998.
Consolidated Statements of Cash Flows for the six months
ended July 3, 1999 and July 4, 1998.
Notes to Condensed Consolidated Financial Statements.
3
<PAGE>
PCD Inc.
CONSOLIDATED BALANCE SHEETS
(Condensed and unaudited)
(In thousands)
<TABLE>
<CAPTION>
7/3/99 12/31/98
------ --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................. $ 601 $ 852
Accounts receivable, net.................. 6,047 5,851
Inventory................................. 5,574 5,042
Prepaid expenses and other current assets. 524 643
-------- --------
Total current assets............... 12,746 12,388
Equipment and improvements
Equipment and improvements................ 27,523 25,569
Accumulated depreciation.................. 9,583 7,442
-------- --------
Equipment and improvements, net.............. 17,940 18,127
Deferred tax asset........................... 13,685 14,192
Goodwill..................................... 57,050 58,592
Intangible assets............................ 11,937 12,456
Debt financing fees.......................... 1,443 1,531
Other assets................................. 1,790 1,818
-------- --------
Total assets....................... $116,591 $119,104
======== ========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt........................... $ 10,600 $ 9,700
Current portion of long-term debt......... 8,600 8,400
Accounts payable.......................... 3,135 3,146
Accrued liabilities....................... 2,780 2,981
-------- --------
Total current liabilities.......... 25,115 24,227
Long-term debt, net of current portion....... 33,200 37,600
Accumulated other comprehensive income....... 69 146
Stockholders' equity......................... 58,207 57,131
-------- --------
Total liabilities and
stockholders' equity.......... $116,591 $119,104
======== ========
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
4
<PAGE>
PCD Inc.
CONSOLIDATED STATEMENTS OF INCOME
(Condensed and unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
----------------- ----------------
7/3/99 7/4/98 7/3/99 7/4/98
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net sales........................... $13,210 $18,553 $25,843 $35,279
Cost of sales....................... 6,617 7,706 12,996 14,947
------- ------- ------- -------
Gross profit........................ 6,593 10,847 12,847 20,332
Operating expenses.................. 3,613 4,139 7,136 7,901
Amortization........................ 1,047 1,024 2,095 2,095
------- ------- ------- -------
Income from operations.............. 1,933 5,684 3,616 10,336
Interest expense /
(other income), net............... 1,131 1,627 2,228 6,289
------- ------- ------- -------
Income before income taxes.......... 802 4,057 1,388 4,047
Provision for income taxes.......... 278 1,740 499 1,757
------- ------- ------- -------
Income before extraordinary item.... 524 2,317 889 2,290
Extraordinary item - charge for
early retirement of debt, net of
income tax benefit of $567 - 888 - 888
------- ------- ------- -------
Net income.......................... $ 524 $ 1,429 $ 889 $ 1,402
======= ====== ======= =======
Basic earnings per share:
Income before extraordinary item.. $ 0.06 $ 0.29 $ 0.10 $ 0.33
Extraordinary item................ $ - $ (0.11) $ - $ (0.13)
------- ------- ------- -------
Net income........................ $ 0.06 $ 0.18 $ 0.10 $ 0.20
======= ======= ======= =======
Diluted earnings per share
Income before extraordinary item $ 0.06 $ 0.27 $ 0.10 $ 0.30
Extraordinary item................ $ - $ (0.10) $ - $ (0.12)
------- ------- ------- -------
Net income........................ $ 0.06 $ 0.17 $ 0.10 $ 0.18
======= ======= ======= =======
Weighted average number of
common and common equivalent
shares outstanding:
Basic.......................... 8,513 7,888 8,482 7,021
======= ====== ======= =======
Diluted........................ 9,043 8,597 9,048 7,739
======= ====== ======= =======
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
<PAGE>
PCD Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Condensed and unaudited)
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended
------------------
7/3/99 7/4/98
------ ------
<S> <C> <C>
Cash flows from operating activities:
Net income...................................... $ 889 $ 1,402
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation................................. 2,141 1,711
Amortization of deferred compensation........ - 28
Amortization of intangible assets............ 2,060 2,186
Amortization of warrant...................... - 2,917
Tax benefit from stock options exercised..... 50 19
Deferred taxes............................... 495 654
Changes in operating assets and liabilities:
Accounts receivable........................ (287) (217)
Inventory.................................. (578) (89)
Prepaid expenses and other current assets.. 101 227
Other assets............................... 29 (888)
Accounts payable........................... 98 (1,032)
Accrued liabilities........................ (159) (3,008)
------- -------
Net cash provided by operating activities 4,839 3,910
Cash flows from investing activities:
Capital expenditures............................ (1,954) (2,688)
------- -------
Net cash used in investing activities.... (1,954) (2,688)
Cash flows from financing activities:
Borrowings (repayments) short term debt......... 900 (1,500)
Payments of long-term debt...................... (4,200) (19,705)
Payments of subordinated debt................... - (25,000)
Proceeds from issuance of warrant............... - 5
Proceeds from issuance of common stock, net..... - 42,567
Amortization of deferred financing costs........ 77 128
Exercise of common stock options................ 137 54
------- -------
Net cash used in financing activities.... (3,086) (3,451)
------- -------
Net (decrease) increase in cash................... (201) (2,229)
Effect of exchange rate on cash................... (50) (84)
Cash and cash equivalents at beginning of period.. 852 3,990
------- -------
Cash and cash equivalents at end of period........ $ 601 $ 1,677
======= =======
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
6
<PAGE>
PCD Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(July 3, 1999 Unaudited)
Note 1. INTERIM FINANCIAL STATEMENTS
The condensed consolidated financial statements included
herein have been prepared by the Company, without audit, pursuant
to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the
information presented not misleading. In the opinion of
management, the accompanying unaudited condensed consolidated
financial statements contain all adjustments, consisting of
normal recurring accruals, considered necessary for a fair
presentation. This financial data should be read in conjunction
with the audited financial statements and notes thereto for the
year ended December 31, 1998. Certain reclassifications in the
Company's Consolidated Statements of Cash Flows were made to
prior year's six month amounts to conform with the Annual Report
presentation.
Note 2. NET INCOME PER SHARE
The following tables reconcile net income and weighted
average shares outstanding to the amounts used to calculate basic
and diluted earnings per share for each of the periods ended July
3, 1999 and July 4, 1998:
<TABLE>
<CAPTION>
Per Share
Net Income Shares Amount
----------- --------- -------
<S> <C> <C> <C>
For the quarter ended July 3, 1999
Basic earnings.............................. $ 524,000 8,512,867 $ 0.06
Assumed exercise of options (treasury method) - 530,039 -
---------- --------- ------
Diluted earnings............................ $ 524,000 9,042,906 $ 0.06
========== ========= ======
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Per Share
Net Income Shares Amount
----------- --------- -------
<S> <C> <C> <C>
For the quarter ended July 4, 1998
Income before extraordinary item............ $2,317,000 7,887,993 $ 0.29
Assumed exercise of options (treasury method) - 708,995 -
---------- --------- ------
Diluted income before extraordinary item.... $2,317,000 8,596,988 $ 0.27
========== ========= ======
Extraordinary item.......................... $ (888,000) 7,887,993 $(0.11)
Assumed exercise of options (treasury method) - 708,995 -
---------- --------- ------
Diluted extraordinary item.................. $ (888,000) 8,596,988 $(0.10)
========== ========= ======
Net income.................................. $1,429,000 7,887,993 $ 0.18
Assumed exercise of options (treasury method) - 708,995 -
---------- --------- ------
Diluted net income.......................... $1,429,000 8,596,988 $ 0.17
========== ========= ======
For the six month period ended July 3, 1999
Basic earnings.............................. $ 889,000 8,481,577 $ 0.10
Assumed exercise of options (treasury method) - 566,787 -
---------- --------- ------
Diluted earnings............................ $ 889,000 9,048,364 $ 0.10
========== ========= ======
For the six month period ended July 4, 1998
Income before extraordinary item............ $2,290,000 7,021,457 $ 0.33
Assumed exercise of options (treasury method) - 717,369 -
---------- --------- ------
Diluted income before extraordinary item.... $2,290,000 7,738,826 $ 0.30
========== ========= ======
Extraordinary item.......................... $ (888,000) 7,021,457 $(0.13)
Assumed exercise of options (treasury method) - 717,369 -
---------- --------- ------
Diluted extraordinary item.................. $ (888,000) 7,738,826 $(0.12)
========== ========= ======
Net income.................................. $1,402,000 7,021,457 $ 0.20
Assumed exercise of options (treasury method) - 717,369 -
---------- --------- ------
Diluted net income.......................... $1,402,000 7,738,826 $ 0.18
========== ========= ======
</TABLE>
For the quarters ended July 3, 1999 and July 4, 1998, anti-
dilutive shares of 130,324 and 67,020, and for the six month
periods anti-dilutive shares of 121,281 and 63,978, respectively,
have been excluded from the calculation of EPS.
8
<PAGE>
Note 3. INVENTORY
7/3/99 12/31/98
------ --------
(In Thousands)
Inventory:
Raw materials and finished subassemblies $3,942 $3,536
Work in process......................... 596 491
Finished goods.......................... 1,036 1,014
------ ------
Total................................. $5,574 $5,042
====== ======
Note 4. COMPREHENSIVE INCOME
The Company's only other comprehensive income is foreign
currency translation adjustments. For the three and six months
ended July 3, 1999 and July 4, 1998 the Company's total
comprehensive income (in thousands) was as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
7/3/99 7/4/98 7/3/99 7/4/98
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net earnings (loss) $ 524 $1,429 $ 889 $1,402
Other comprehensive income (loss), net (14) 45 (46) (1)
------ ------ ------ ------
Total comprehensive earnings (loss) $ 510 $1,474 $ 843 $1,401
====== ====== ====== ======
</TABLE>
Note 5. NEW ACCOUNTING STANDARDS
In 1998, the Financial Accounting Standards Board released
Statement of Financial Accounting Standards No. 133, Accounting
for Derivative Instruments and Hedging Activities (FAS 133),
which initially would have been effective for all fiscal quarters
beginning after June 15, 1999. In June 1999, the Financial
Accounting Standards Board released Statement of Financial
Accounting Standards No. 137, Accounting for Derivative
Instruments and Hedging Activities -- Deferral of Effective Date
of FAS 133 (FAS 137). FAS 137 defers the effective date of FAS
133 until June 15, 2000. FAS 133 standardizes the accounting for
derivative instruments, including certain derivative instruments
embedded in other contracts, by requiring that an entity
9
<PAGE>
recognize those items as assets or liabilities in the statement
of financial position and measure them at fair value. The
Company is currently evaluating the impact that FAS 133 will have
on its future operating performance.
Note 6. LITIGATION
The Company and its subsidiaries are subject to legal
proceedings arising in the ordinary course of business. On the
basis of information presently available and advice received from
legal counsel, it is the opinion of management that the
disposition or ultimate determination of such legal proceedings
will not have a material adverse effect on the Company's
consolidated financial position, its consolidated results of
operations or its consolidated cash flows.
Note 7. SEGMENT INFORMATION:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------ ----------------
7/3/99 7/4/98 7/3/99 7/4/98
------ ------ ------ ------
(In thousands)
<S> <C> <C> <C> <C>
SALES:
Industrial/Avionics......... $ 4,551 $ 4,874 $ 9,492 $ 9,448
IC Package interconnect..... 8,659 13,679 16,351 25,831
-------- -------- -------- --------
Total sales............... $ 13,210 $ 18,553 $ 25,843 $ 35,279
======== ======== ======== ========
NET INCOME (loss):
Industrial/Avionics......... $ 590 $ 731 $ 1,347 $ 1,334
IC Package interconnect..... (73) 830 (500) 3
Corporate activities........ 7 (132) 42 65
-------- -------- -------- --------
Total net income.......... $ 524 $ 1,429 $ 889 $ 1,402
======== ======== ======== ========
</TABLE>
7/3/99 12/31/98
------ --------
(In thousands)
ASSETS:
Industrial/Avionics..................... $ 8,954 $ 8,960
IC Package interconnect................. 105,695 108,521
Corporate activities.................... 1,942 1,623
-------- --------
Total assets.......................... $116,591 $119,104
======== ========
10
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
QUARTER AND SIX MONTHS ENDED JULY 3, 1999 COMPARED TO THE QUARTER
AND SIX MONTHS ENDED JULY 4, 1998
NET SALES. Net sales decreased 28.8% to $13.2 million for
the quarter ended July 3, 1999 from $18.6 million for the quarter
ended July 4, 1998 and decreased 26.7% to $25.8 million for the
six months ended July 3, 1999 from $35.3 million for the six
months ended July 4, 1998. This decrease in sales was primarily
attributable to our Wells-CTi division. This division's sales
were $8.7 million and $16.3 million for the quarter and six
months ended July 3, 1999 compared to $13.7 million and $25.8
million for the same periods last year. This decrease in net
sales was attributable to the continued decline experienced in
parts of the burn-in industry.
GROSS PROFIT. Gross profit decreased to $6.6 million for
the quarter and $12.8 million for the six months ended July 3,
1999. This compares to gross profit of $10.8 million and $20.3
million for the quarter and six months ended July 4, 1998,
respectively. This decrease in gross profit was due to the
decrease in sales with less than a proportional decrease in
overhead expenses. Additionally, product mix and pricing
pressures on our more mature burn-in products contributed to the
decrease in gross profit.
OPERATING EXPENSES AND AMORTIZATION. Operating expenses
include selling, general and administrative expenses and costs of
product development. Operating expenses decreased 9.7% to $4.7
million for the quarter ended July 3, 1999 compared to $5.2
million for the quarter ended July 4, 1998. On a year-to-date
basis, operating expenses decreased 7.7% to $9.2 million for the
six months ended July 3, 1999 from $10.0 million for the six
months ended July 4, 1998. This decrease in operating expenses
was a result of the actions taken to reduce expenses in response
to the lower sales volume, specifically the merger of our Control
Systems Interconnect division with our Industrial/Avionic
division and the closure of our Pennsylvania sales office. Cost
reductions in our Wells-CTi division also contributed to the
lower operating expenses.
11
<PAGE>
INTEREST AND OTHER INCOME (EXPENSE). Interest expense and
other income, net decreased from $6.3 million for the six months
ended July 4, 1998 to $2.2 million for the six months ended July
3, 1999. On a quarterly comparison, interest expense and other
income, net decreased to $1.1 million for the three months ended
July 3, 1999 from $1.6 million for the three months ended July 4,
1998. This decrease in interest expense was due to a reduction
in bank debt from $83.0 million at December 31, 1997 to $52.4
million at July 3, 1999 and the $2.3 million amortization and
$600,000 interest expense associated with the Emerson Debenture
which was retired in April 1998.
PROVISION FOR INCOME TAXES. The provision for income taxes
for the quarter ended July 3, 1999 was 34.7% of pretax income
compared to 42.9% of pretax income for the quarter ended July 4,
1998. This decrease in the effective tax rate was due to losses
incurred in our Wells-CTi KK (Japan) division where the effective
tax rate is much greater than the combined Federal/State
effective tax rate. The losses incurred in Japan compare to
profits generated in the prior year. On a year-to-date basis for
the six months ended July 3, 1999, the effective tax rate was 36%
compared to last year's year-to-date effective rate of 43.4%,
also due to the Wells-CTi KK situation.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operating activities in the six months
ended July 3, 1999 was $4.8 million compared to $3.9 million in
the six months ended July 4, 1998. The Company's debt balance
decreased $3.3 million in the six month period to $52.4 million
from $55.7 million at December 31, 1998. The balance at July 3,
1999 consists of a $10.6 million revolving line of credit and
$41.8 million term loan. The Company currently anticipates that
its capital expenditures for 1999 will be approximately $4.3
million, which consists primarily of purchased tooling and
equipment required to support the Company's business. The amount
of these capital expenditures will frequently change based on
future changes in business plans and conditions of the Company
and changes in economic conditions.
The Company believes its existing working capital and
borrowing capacity, coupled with the funds generated from the
Company's operations, will be sufficient to fund its anticipated
working capital, capital expenditure and debt payment
12
<PAGE>
requirements through 1999. Because the Company's capital
requirements cannot be predicted with certainty, there can be no
assurance that any additional financing will be available on
terms satisfactory to the Company or not disadvantageous to the
Company's stockholders.
IMPACT OF YEAR 2000
The "Year 2000 Issue" is the result of computer programs
that were written using two digits rather than four to define the
applicable year. If the Company's computer programs with date-
sensitive functions are not Year 2000 compliant, they may
interpret a date using "00" in the year field as the Year 1900
rather than the Year 2000. This misinterpretation could result in
a system failure or miscalculations causing disruptions of
operations, including, among other things, an interruption of
design or manufacturing functions or an inability to process
transactions, send invoices or engage in similar normal business
activities until the problem is corrected.
The Company has identified its Year 2000 risk in three
categories: internal information technology ("IT") systems;
internal non-IT systems, including embedded technology such as
microcontrollers; and external noncompliance by customers and
suppliers.
INTERNAL IT SYSTEMS. The Company utilizes a significant
number of information technology systems across its entire
organization, including applications used in manufacturing,
product development, financial business systems and various
administrative functions. Since 1997, the Company has reviewed
the Year 2000 issue that encompassed operating and administrative
areas of the Company. Independent of the Year 2000 Issue and in
order to improve access to business information through common,
integrated computing systems across the Company, PCD began a
worldwide information technology systems replacement project with
systems that use programs from Oracle Corporation ("ORACLE"). As
of August 3, 1999, the Company has successfully completed the
implementation of this system in its United States operations and
our Japanese implementation has been temporarily suspended.
Prior to the implementation of ORACLE, we found that our South
Bend, Indiana location required an update to their internal IT
13
<PAGE>
systems and this was achieved at a cost of approximately $90,000.
The systems that required these updates were replaced by ORACLE.
During 1999, the Company has learned of potential Year 2000
problems within Microsoft Windows NT and Microsoft Office.
Microsoft has developed patches to correct the applications
affected, and has provided them to the Company. The Company is
presently in the process of evaluating these patches in a test
environment prior to installing them for broad use throughout the
organization. Testing is scheduled to be complete and patches
are scheduled to be installed by October 1, 1999.
The Company does not have a contingency plan in place for
Year 2000 failures of its internal IT systems. If the Company has
not achieved or does not timely achieve Year 2000 compliance for
its major IT systems, the Year 2000 Issue could have a material
adverse effect on the financial condition, results of operations
and business of the Company.
INTERNAL NON-IT SYSTEMS, INCLUDING EMBEDDED TECHNOLOGY. The
Company has completed its evaluation of all non-IT systems which
include embedded technology such as microcontrollers, and has
been in contact with all manufacturers of this equipment.
Letters of compliance have been obtained from 100% of the
manufacturers except as noted below.
Payroll time clocks at the Peabody and South Bend facilities
require a Year 2000 upgrade, which is available and scheduled for
installation by October 30, at a total cost to the Company of
approximately $10,000.
The Peabody facility telephone system requires a voice mail
upgrade. This is presently being prepared by the local service
provider and scheduled to be installed by October 30, 1999. This
is expected to cost approximately $1,000.
The Company does not currently have a contingency plan in
place for Year 2000 failures of its internal non-IT systems and
embedded technology. If the Company is unable to achieve Year
2000 compliance for its major non-IT systems, the Year 2000 Issue
could have a material adverse effect on the financial condition,
results of operations and business of the Company.
14
<PAGE>
EXTERNAL NONCOMPLIANCE BY CUSTOMERS AND SUPPLIERS. The
Company is in the process of identifying and contacting its
material suppliers, service providers and contractors to
determine the extent of the Company's vulnerability to those
third parties' failure to remedy their own Year 2000 issues. To
date, responses have been obtained from over 60% of all Wells-
CTi's suppliers - including all key suppliers - and there have
been no non-compliance problems indicated. The Company is also
in the process of conducting its survey of industrial/avionics
suppliers, service providers and contractors. The Company
expects the entire process to be substantially complete by
October 31, 1999.
To the extent that responses to Year 2000 readiness
inquiries are unsatisfactory, the Company intends to change
suppliers, service providers or contractors to those who have
demonstrated Year 2000 readiness, but the Company cannot assure
that it will be successful in finding such alternative suppliers,
service providers and contractors. The Company presently has
alternate sources of supply on its raw materials and most
purchased components, and maintains a safety stock on single
source components. The Company does not currently have any formal
information concerning the Year 2000 compliance status of its
customers but has received indications that most of its customers
are working on Year 2000 compliance. If any of the Company's
significant customers and suppliers (including alternate
suppliers) do not successfully and timely achieve Year 2000
compliance, and the Company is unable to replace them with new
customers or alternative suppliers, the Company's financial
condition, results of operations and business could be materially
adversely affected.
The above discussion of the Company's efforts, management's
expectations, and expected compliance dates relating to Year 2000
compliance contains forward-looking statements within the meaning
of the Securities Exchange Act of 1934. See "Forward Looking
Information." The Company's ability to achieve Year 2000
compliance, the level of incremental costs associated with
compliance and the timing of compliance, could be adversely
impacted by, among other things, the availability and cost of
programming and testing resources, vendors' ability to modify
proprietary software, and unanticipated problems identified in
the ongoing compliance review.
15
<PAGE>
PCD Inc.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
See Note 6 to the Company's Condensed Consolidated
Financial Statements (above).
Item 4. Submission of Matters to a Vote of Security Holders
At the annual meeting of stockholders of the Company on
May 7, 1999, the following votes were taken:
Two directors were elected to hold office for a three
year term expiring in the year 2002.
<TABLE>
<CAPTION>
Shares Voted Shares
------------------- not
Director For Withheld voted
----------------- --------- -------- -------
<S> <C> <C> <C>
John L. Dwight, Jr. 7,958,332 25,300 457,550
Theodore C. York 7,958,332 25,300 457,550
</TABLE>
The following directors will continue in office until
the years specified:
Term expires
------------
Harold F. Faught 2000
C. Wayne Griffith 2001
John E. Stuart 2001
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27.1 Financial Data Schedule.
(b) Reports on Form 8-K
NONE
16
<PAGE>
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 12, 1999 /s/ John L. Dwight, Jr.
--------------- ---------------------------
John L. Dwight, Jr.
Chairman of the Board, Chief
Executive Officer and
President (Principal Executive
Officer)
Dated: August 12, 1999 /s/ John J. Sheehan III
--------------- ---------------------------
John J. Sheehan III
Vice President, Finance and
Administration, Chief
Financial Officer and
Treasurer (Principal Financial
and Accounting Officer)
17
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM FORM 10-Q AND IS QUALIFIED IN ITS
ENTIRETY TO REFERENCE TO SUCH FINANCIAL INFORMATION
</LEGEND>
<S> <C>
<MULTIPLIER> 1,000
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUL-03-1999
<CASH> 601
<SECURITIES> 0
<RECEIVABLES> 6,360
<ALLOWANCES> 313
<INVENTORY> 5,574
<CURRENT-ASSETS> 12,746
<PP&E> 27,523
<DEPRECIATION> 9,583
<TOTAL-ASSETS> 116,591
<CURRENT-LIABILITIES> 25,115
<BONDS> 33,200
0
0
<COMMON> 85
<OTHER-SE> 58,191
<TOTAL-LIABILITY-AND-EQUITY> 116,591
<SALES> 25,843
<TOTAL-REVENUES> 25,843
<CGS> 12,996
<TOTAL-COSTS> 12,996
<OTHER-EXPENSES> 9,231
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,228
<INCOME-PRETAX> 1,388
<INCOME-TAX> 499
<INCOME-CONTINUING> 889
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 889
<EPS-BASIC> 0.10
<EPS-DILUTED> 0.10
</TABLE>
