<PAGE>
SECURITIES AND EXCHANGE COMMISSSION
WASHINGTON, D.C. 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 September 30, 1997
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: 0-28822
ROCKSHOX, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 77-0396555
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
401 Charcot Avenue, San Jose, California 95131
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code (408) 435-7469
NO CHANGE
--------------------------------------------------------------
(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.
YES [ X ] NO [ ]
As of November 3, 1997 there were 13,757,231 shares of the registrant's common
stock outstanding.
This quarterly report on Form 10-Q contains 14 pages, of which this is page 1.
1
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ROCKSHOX, INC.
INDEX
Page
Part I: Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of September 30, 1997
and March 31, 1997. . . . . . . . .. . . . . . . . . . . . . . . 3
Condensed Consolidated Statements of Operations for the three-
and six-months ended September 30, 1997 and 1996 . . . . . . . . 4
Condensed Consolidated Statements of Cash Flows for the
six-months ended September 30, 1997 and 1996 . . . . . . . . . . 5
Notes to Condensed Consolidated Financial Statements. . . . . . . 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. . . . . . . . . . . . . . . . . . . . . . 8
Item 3. Quantitative and Qualitative Disclosures about Market Risks . . . 10
Part II: Other Information
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . 10
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . 10
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . . 11
(a) Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(b) Reports on Form 8-K
None
2
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Part I: Item 1.
ROCKSHOX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
Sept. 30, 1997 March 31, 1997
-------------- --------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents. . . . . . . . . . . . . . $ 9,899 $ 14,747
Trade accounts receivable, net of allowance
of $1,127 and $1,589, respectively . . . . . . . . 15,455 6,618
Inventories. . . . . . . . . . . . . . . . . . . . . 14,702 10,800
Prepaid expenses and other current assets. . . . . . 632 1,132
Deferred income taxes. . . . . . . . . . . . . . . . 4,739 4,739
-------- --------
Total current assets . . . . . . . . . . . . . . 45,427 38,036
Property, plant and equipment, net . . . . . . . . . . 12,777 7,700
Other assets . . . . . . . . . . . . . . . . . . . . . 211 139
-------- --------
Total assets . . . . . . . . . . . . . . . . . $ 58,415 $ 45,875
-------- --------
-------- --------
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . $ 10,369 $ 3,459
Accrued liabilities. . . . . . . . . . . . . . . . . 9,033 10,855
-------- --------
Total current liabilities. . . . . . . . . . . . 19,402 14,314
Stockholders' equity:
Common stock . . . . . . . . . . . . . . . . . . . . . 138 136
Additional paid-in capital . . . . . . . . . . . . . . 65,907 64,828
Distributions in excess of net book value. . . . . . . (45,422) (45,422)
Retained earnings. . . . . . . . . . . . . . . . . . . 18,390 12,019
-------- --------
Total stockholders' equity . . . . . . . . . . . 39,013 31,561
-------- --------
Total liabilities and stockholders' equity . . $ 58,415 $ 45,875
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of
these condensed consolidated financial statements.
3
<PAGE>
Part I: Item 1.
ROCKSHOX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
Sept. 30, 1997 Sept. 30, 1996 Sept. 30, 1997 Sept. 30, 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Net sales. . . . . . . . . . . . . . . . . . . . . . . $28,878 $28,181 $53,584 $49,559
Cost of sales. . . . . . . . . . . . . . . . . . . . . 19,076 17,806 35,136 31,539
------- ------- ------- -------
Gross profit. . . . . . . . . . . . . . . . . . . . . 9,802 10,375 18,448 18,020
Selling, general and administrative expense. . . . . . 3,300 3,125 6,263 6,041
Research, development and engineering expense . . . . 1,233 921 2,542 2,164
Non-recurring charge . . . . . . . . . . . . . . . . . -- 6,580 -- 6,580
------- ------- ------- -------
Operating expenses. . . . . . . . . . . . . . . . . . 4,533 10,626 8,805 14,785
------- ------- ------- -------
Income (loss) from operations . . . . . . . . . . . . 5,269 (251) 9,643 3,235
Interest income. . . . . . . . . . . . . . . . . . . . 155 52 348 101
Interest expense . . . . . . . . . . . . . . . . . . . -- (1,329) -- (2,670)
------- ------- ------- -------
Income (loss) before taxes and extraordinary item . . 5,424 (1,528) 9,991 666
Income tax benefit (expense) . . . . . . . . . . . . . (1,953) 588 (3,620) (257)
------- ------- ------- -------
Income (loss) before extraordinary item . . . . . . . 3,471 (940) 6,371 409
Extraordinary loss from early extinguishment
of debt (net of tax benefit of $885) . . . . . . . . -- (1,328) -- (1,328)
------- ------- ------- -------
Income (loss) before accretion. . . . . . . . . . . . 3,471 (2,268) 6,371 (919)
Accretion for dividends on mandatorily redeemable
preferred stock . . . . . . . . . . . . . . . . . . . -- (92) -- (184)
------- ------- ------- -------
Net income (loss) available to common stockholders. . $ 3,471 $ (2,360) $ 6,371 $(1,103)
------- ------- ------- -------
------- ------- ------- -------
Income (loss) per share before extraordinary item. . . $ 0.25 $ (0.11) $ 0.45 $ 0.03
Loss per share from extraordinary item . . . . . . . . -- (0.15) -- (0.15)
------- ------- ------- -------
Net income (loss) per share . . . . . . . . . . . . . $ 0.25 $ (0.26) $ 0.45 $ (0.12)
------- ------- ------- -------
------- ------- ------- -------
Shares used in per share calculations. . . . . . . . . 14,057 9,240 14,053 9,240
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
The accompanying notes are an integral part of
these condensed consolidated financial statements.
4
<PAGE>
PART I: ITEM 1.
ROCKSHOX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
Sept. 30, 1997 Sept. 30, 1996
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss). . . . . . . . . . . . . . . . . . . . . . . . $ 6,371 $ (919)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . 2,131 1,616
Write-off of capitalized financing costs. . . . . . . . . . --- 2,213
Provisions for excess and obsolete inventory. . . . . . . . 270 724
Changes in operating assets and liabilities:
Trade accounts receivable . . . . . . . . . . . . . . . . . (8,837) (3,521)
Inventories . . . . . . . . . . . . . . . . . . . . . . . . (4,172) (2,945)
Prepaid expenses and other current assets . . . . . . . . . 500 (2,121)
Accounts payable and accrued liabilities. . . . . . . . . . 5,088 12,164
--------- --------
Net cash provided by operating activities . . . . . . . . . 1,351 7,211
--------- --------
Cash flows from investing activities:
Purchases of property and equipment. . . . . . . . . . . . . . . (7,205) (3,003)
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (75) (16)
--------- --------
Net cash used in investing activities . . . . . . . . . . . . (7,280) (3,019)
--------- --------
Cash flows from financing activities:
Repayment of short-term borrowings and bank debt . . . . . . . . --- (1,500)
Proceeds from exercise of stock options. . . . . . . . . . . . . 606 ---
Tax benefits from disqualifying dispositions of common stock . . 475 ---
--------- --------
Net cash provided by (used in) financing
activities. . . . . . . . . . . . . . . . . . . . . . . . . 1,081 (1,500)
--------- --------
Net increase (decrease) in cash and cash equivalents. . . . . (4,848) 2,692
Cash and cash equivalents, beginning of period . . . . . . . . . 14,747 1,808
--------- --------
Cash and cash equivalents, end of period . . . . . . . . . . . . $ 9,899 $ 4,500
--------- --------
--------- --------
Supplemental disclosure of non-cash transactions:
Income taxes paid. . . . . . . . . . . . . . . . . . . . . . . . $ 1,453 $ 907
Interest paid. . . . . . . . . . . . . . . . . . . . . . . . . . --- 587
Accretion for dividends on mandatorily redeemable
preferred stock . . . . . . . . . . . . . . . . . . . . . . . . --- 184
</TABLE>
The accompanying notes are an integral part of
these condensed consolidated financial statements.
5
<PAGE>
PART I: ITEM 1.
ROCKSHOX, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION:
The accompanying unaudited condensed consolidated financial statements of
ROCKSHOX, INC. (the "Company") have been prepared in accordance with generally
accepted accounting principles for interim financial information and with
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they
do not include all the information and footnotes required by generally accepted
accounting principles ("GAAP") for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation have been included.
The year-end consolidated balance sheet data was derived from the audited
financial statements and does not include all disclosures required by GAAP.
Operating results for the three- and six-month periods ended September 30, 1997
are not necessarily indicative of the results that may be expected for the year
ending March 31, 1998. The unaudited condensed, consolidated interim financial
statements contained herein should be read in conjunction with the audited
consolidated financial statements and footnotes for the year ended March 31,
1997 included in the Company's Annual Report on Form 10-K.
2. INVENTORY:
The components of inventory are as follows (in thousands):
Sept. 30, 1997 March 31, 1997
-------------- --------------
Raw materials . . . . . . . . . $10,167 $ 6,357
Finished goods. . . . . . . . . 4,535 4,443
---------- ---------
$14,702 $ 10,800
---------- ---------
---------- ---------
3. NET INCOME (LOSS) PER SHARE AMOUNTS:
Net income (loss) per share is computed using the weighted average
number of common shares outstanding during the period and, pursuant to
Securities and Exchange Commission Staff Accounting Bulletin No. 83, all
common and common equivalent shares issued during the twelve months preceding
the filing date of the Company's initial public offering (the "IPO") have
been included in the calculation of the number of shares used to determine
net income (loss) per share as if the shares had been outstanding for the
three- and six-month periods ended September 30, 1996 using the treasury
stock method. For periods subsequent to the IPO, the Company has used the
treasury stock method to compute net income per share. Under this method,
the weighted average number of common shares outstanding during the period is
added to the weighted average of all dilutive common equivalent shares
outstanding during the period. All per share data has been restated to
reflect the merger of the Company's former parent into the Company (the
"Merger"), which was effected concurrent with the IPO.
6
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PART I: ITEM 1.
ROCKSHOX, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
4. CONTINGENCIES:
As previously reported, on September 26, 1996, Answer Products, Inc.
("Answer"), filed a complaint naming RockShox as the defendant in an action in
the United States District Court for the Southern District of Indiana entitled
ANSWER PRODUCTS, INC. V. ROCKSHOX, INC. (the "Indiana Action"). Answer's
complaint in the Indiana Action alleges that certain RockShox suspension forks
infringe a patent that was issued in 1995 and is exclusively licensed to Answer.
The complaint seeks preliminary and permanent injunctive relief, destruction of
the equipment used to make the allegedly infringing forks, and accounting,
compensatory damages, treble damages, attorney' fees, interest and costs. The
Company believes, after consultation, that it has meritorious defenses to
Answer's claims in the Indiana Action.
On September 27, 1996, RockShox commenced an action against Answer in
the United States District Court for the Northern District of California
entitled ROCKSHOX, INC. V. ANSWER PRODUCTS, INC. (the "California Action").
RockShox' complaint in the California Action seeks a declaratory judgment
that the patent at issue in the Indiana Action is invalid, unenforceable and
not infringed by RockShox, as well as preliminary and permanent injunctions
against Answer, compensatory damages, attorneys' fees and costs. On October
21, 1996, Answer filed an answer to RockShox' complaint denying that RockShox
was entitled to the relief requested in the California Action and requesting
that the court declare the patent valid and infringed.
On December 30, 1996, the Indiana Action was transferred to Federal
Court in San Jose for consolidation with the California Action. On
September 3, 1997, Answer filed a motion seeking leave to amend its answer in
the California Action to add claims under three additional patents
purportedly owned by Answer. The Court has not yet set a briefing schedule
on Answer's motion to amend. Discovery in these cases is ongoing. While the
Company has estimated the cost of resolving this matter and has accrued such
amounts in the accompanying financial statements, due to the uncertainties
surrounding litigation, the ultimate outcome of this matter is not
determinable.
In addition, the Company is involved in certain trademark and employment
related legal matters in the ordinary course of business. No provision for any
liability that may result upon the resolution of these matters has been made
in the accompanying financial statements nor is the amount or range of
possible loss, if any, reasonably estimable. While the Company has accrued
certain amounts for the estimated costs associated with defending these
matters, there can be no assurance that the Answer complaint or other third
party assertions will be resolved without costly litigation, in a manner that
is not adverse to the Company's financial position or results of operations,
or without requiring royalty payments in the future which may adversely
impact gross margins.
5. RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued Statement No.
130 (SFAS 130), Reporting Comprehensive Income. SFAS 130 establishes standards
of disclosure and financial statement display for reporting total comprehensive
income and its individual components. It is effective for the Company's fiscal
year ending March 31, 1999.
The Company is studying the implication of this new statement and the
impact of its implementation on its financial statements.
7
<PAGE>
PART I: ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
Net sales. Net sales for the quarter ended September 30, 1997 increased
by 2.5% to $28.9 million from $28.2 million for the corresponding period of
the prior year. Net sales for the six months ended September 30, 1997
increased by 8.1% to $53.6 million compared to $49.6 million for the
corresponding period of the prior year. For the quarter ended September 30,
1997, OEM sales declined by 8.7% to $21.6 million compared to $23.7 million
for the corresponding period of the prior year due to reduced volume from OEM
customers reflecting soft demand for mountain bikes principally in the U.S.
market. For the six months ended September 30, 1997, OEM sales increased by
6.1% to $39.2 million compared to $37.0 million for the corresponding period
of the prior year. Sales to the retail accessory market increased in the
quarter ended September 30, 1997 by 6.2% to $7.3 million compared to $4.5
million for the corresponding period of the prior year, reflecting a shift in
the seasonal pattern of dealer ordering as well as demand for the 1998 model
year product lines in the aftermarket. For the six months ended September
30, 1997, sales to the retail accessory market increased by 14.1% to $14.4
million from $12.6 million for the corresponding period of the prior year.
The Company believes that net sales for the second half of the fiscal year
ending March 31, 1998 will be below the levels for the corresponding period
of the prior year principally due to continued soft demand for mountain bikes
as discussed above.
Gross margin. Gross margin (gross profit as a percentage of net sales)
for the quarter ended September 30, 1997 decreased to 33.9% compared to 36.8%
for the corresponding period of the prior year. For the first six months of
this year, gross margin decreased to 34.4% compared to 36.4% for the
corresponding period of the prior year. The decreases in gross margin were
primarily due to fixed overhead costs not being fully absorbed due to lower
than anticipated sales and some manufacturing inefficiencies encountered
during the first two quarters of fiscal 1998. The Company believes that
gross margins will continue to be below the levels recorded in the
corresponding period of the prior year for the second half of the fiscal year
ending March 31, 1998.
Selling, general and administrative expense. Selling, general and
administrative ("SG&A") expense for the quarter ended September 30, 1997
increased by 5.6% to $3.3 million (or approximately 11.4% of net sales)
compared to $3.1 million (or approximately 11.1% of net sales) in the
corresponding period of the prior year. SG&A expense for the six months
ended September 30, 1997 increased by 3.7% to $6.3 million (or approximately
11.7% of net sales) compared to $6.0 million (or approximately 12.2% of net
sales) for the corresponding period of the prior year.
Research, development and engineering expense. Research, development and
engineering ("R&D") expense for the quarter ended September 30, 1997
increased by 33.9% to $1.2 million (or approximately 4.3% of net sales)
compared to $921,000 (or approximately 3.3% of net sales) for the
corresponding period of the prior year. R&D expense for the six months ended
September 30, 1997 increased by 17.5% to $2.5 million (or approximately 4.7%
of net sales) compared to $2.2 million (or approximately 4.4% of net sales)
for the corresponding period of the prior year. The increase in R&D expense
was principally due to increased engineering headcount and related expenses
and certain development expenses incurred for new products.
Non-recurring charge. In the quarter ended September 30, 1996, the
Company incurred a non-recurring charge of $6.6 million related to the
termination of an incentive based bonus plan with the Company's President and
Vice President of Advanced Research.
Interest income (expense). For the three-and six-month periods ended
September 30, 1997 the Company incurred no interest expense and had interest
income of $155,000 and $348,000, respectively, from its cash and cash
equivalent balances. During the three- and six-month periods ended September
30, 1996,
8
<PAGE>
the Company incurred net interest expense of $1.3 million and $2.6 million,
respectively (which included the amortization of capitalized financing
costs). The change was due to the elimination of the Company's outstanding
debt upon the closing of the Company's IPO in October 1996.
Income tax expense. The Company's effective tax rate for the six months
ended September 30, 1997 was 36.2% compared to 38.5% for the corresponding
period of the prior year. The decrease was principally due to certain
capital investment tax credits and a lower state tax rate.
Extraordinary item. In the quarter ended September 30, 1996, the Company
recognized a one-time pre-tax charge, reflected as an extraordinary item,
from the write-off of capitalized financing costs, totaling approximately
$2.2 million before income taxes, in connection with the repayment of all of
the Company's outstanding debt that occurred on October 2, 1996 upon the
closing of the Company's IPO.
LIQUIDITY AND CAPITAL RESOURCES:
For the six months ended September 30, 1997, net cash provided by
operating activities was $1.4 million, which was comprised of net income of
$6.4 million increased by non-cash charges for depreciation and amortization
of $2.1 million, provisions for inventory of $270,000, and an increase of $5.1
million in accounts payable and accrued liabilities, offset by increases of
$8.8 million in trade accounts receivable and $4.2 million in inventories.
For the six months ended September 30, 1997, net cash used in investing
activities was $7.3 million, which principally consisted of acquisitions of
property and equipment. Net cash provided by financing activities was $1.1
million, which consisted of proceeds and tax benefits from the exercise of
employee stock options.
At September 30, 1997, the Company had cash and cash equivalents of $9.9
million and working capital of $26.0 million. The Company believes that its
current cash balances will be sufficient to provide operating liquidity for
at least the next twelve months.
RECENT ACCOUNTING PRONOUNCEMENTS:
In June 1997, the Financial Accounting Standards Board issued Statement
No. 130 (SFAS 130), Reporting Comprehensive Income. SFAS 130 establishes
standards of disclosure and financial statement display for reporting total
comprehensive income and its individual components. It is effective for the
Company's fiscal year ending March 31, 1999.
The Company is studying the implication of this new statement and the
impact of its implementation on its financial statements.
FORWARD LOOKING STATEMENTS:
Certain statements made in this document constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform
Act of 1995. Such forward-looking statements involve known and unknown
risks, uncertainties and other facts that may cause the actual results,
performance or achievements of the Company, or industry results, to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors are
discussed in detail in the Company's Annual Report on Form 10-K. Given these
uncertainties, prospective and current investors are cautioned not to place
undue reliance on such forward-looking statements. The Company disclaims any
obligation to update any such factors or to publicly announce the result of
any revisions to any of the forward-looking statements contained in the
Annual Report on Form 10-K or this document.
9
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YEAR 2000:
The Company expects the cost of upgrading its computer systems to be year
2000 compliant will be immaterial.
ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISKS
None applicable
PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As previously reported, on September 26, 1996, Answer Products, Inc.
("Answer"), filed a complaint naming RockShox as the defendant in an action
in the United States District Court for the Southern District of Indiana
entitled ANSWER PRODUCTS, INC. V. ROCKSHOX, INC. (the "Indiana Action").
Answer's complaint in the Indiana Action alleges that certain RockShox
suspension forks infringe a patent that was issued in 1995 and is exclusively
licensed to Answer. The complaint seeks preliminary and permanent injunctive
relief, destruction of the equipment used to make the allegedly infringing
forks, and accounting, compensatory damages, treble damages, attorney' fees,
interest and costs. The Company believes, after consultation, that it has
meritorious defenses to Answer's claims in the Indiana Action.
On September 27, 1996, RockShox commenced an action against Answer in the
United States District Court for the Northern District of California entitled
ROCKSHOX, INC. V. ANSWER PRODUCTS, INC. (the "California Action"). RockShox'
complaint in the California Action seeks a declaratory judgment that the
patent at issue in the Indiana Action is invalid, unenforceable and not
infringed by RockShox, as well as preliminary and permanent injunctions
against Answer, compensatory damages, attorneys' fees and costs. On October
21, 1996, Answer filed an answer to RockShox' complaint denying that RockShox
was entitled to the relief requested in the California Action and requesting
that the court declare the patent valid and infringed.
On December 30, 1996, the Indiana Action was transferred to Federal Court
in San Jose for consolidation with the California Action.
On September 3, 1997, Answer filed a motion seeking leave to amend its
answer in the California Action to add claims under three additional patents
purportedly owned by Answer. The Court has not yet set a briefing schedule
on Answer's motion to amend. Discovery in these cases is ongoing.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On August 14, 1997, the Company held its first annual meeting of
stockholders (the "Annual Meeting"). At the Annual Meeting, the Company's
stockholders re-elected the Company's Board of Directors in its entirety.
Specifically, 12,954,034 votes were cast for the election of Stephen W.
Simons and 12,985 votes were withheld for Mr. Simons' election; and
12,954,934 votes were cast for the election of each of Paul Turner, John W.
Jordan II, Adam E. Max, Michael R. Gaulke and George Napier, and 12,085 votes
were withheld for each of such other persons. Also at the Annual Meeting,
the Company's stockholders approved Amendment No. 1 to the Company's 1996
Stock Plan (the "1996 Stock Plan") which increased the number of shares
of the Company's common stock, par value $.01 per share, reserved and
available for issuance pursuant to grants of stock options and/or stock
purchase rights under the 1996 Stock Plan by an additional 300,000 shares, as
well as ratified the selection of Coopers & Lybrand L.L.P. (the "Ratification
of Accountants") as the Company's independent accountants for the fiscal year
ending March 31, 1998. A total of 11,523,510 votes were cast in favor of
the 1996 Stock Plan,
10
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS (CONTINUED).
1,132,065 votes were cast against, and 307,885 votes abstained. With respect
to the Ratification of Accountants, a total of 12,954,924 votes were cast in
favor, 11,385 were cast against and 710 votes abstained.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
2 Form of Agreement and Plan of Merger between RSx Holdings, Inc.
and RockShox, Inc. *
3.1 Form of Amended and Restated Certificate of Incorporation of
RockShox, Inc. *
3.2 Form of Amended and Restated Bylaws of RockShox, Inc. *
4 Form of Common Stock Certificate of RockShox, Inc. *
11 Statement regarding computation of net income (loss) per share.
27 Financial Data Schedule.
(b) Reports on Form 8-K:
None
* Previously filed with the Registration Statement on Form S-1 of
RockShox Inc. (Registration No. 333-8069).
11
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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.
ROCKSHOX, INC.
Dated: November 12, 1997 /s/ CHARLES E. NOREEN, JR.
----------------------
Charles E. Noreen, Jr.
Chief Financial Officer and
Duly Authorized Officer
12
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ITEM 6. EXHIBIT 11
ROCKSHOX, INC.
Statement regarding computation of net income (loss) per share
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
Sept. 30, 1997 Sept. 30, 1996 Sept. 30, 1997 Sept. 30, 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Weighted average shares of
common stock . . . . . . . . . . . . . . . . . . . . 13,710 8,820 13,677 8,820
Dilutive effect of stock options
pursuant to SAB 83 . . . . . . . . . . . . . . . . . --- 420 --- 420
Dilutive effect of stock options . . . . . . . . . . . 347 --- 376 ---
------- ------ ------- -------
Shares used in per share calculations. . . . . . . 14,057 9,240 14,053 9,240
------- ------ ------- -------
------- ------ ------- -------
Income (loss) before extraordinary loss. . . . . . . . $ 3,471 $ (940) $ 6,371 $ 409
Accretion for dividends on
mandatorily redeemable preferred stock . . . . . . . --- (92) --- (184)
------- ------ ------- -------
Net income (loss) before
extraordinary loss available
to common stockholders . . . . . . . . . . . . . . . 3,471 (1,032) 6,371 225
Extraordinary loss from early extinguishment
of debt, (net of tax benefit of $885). . . . . . . . --- (1,328) --- (1,328)
------- ------ ------- -------
Net income (loss) available
to common stockholders . . . . . . . . . . . . . $ 3,471 $ (2,360) $ 6,371 $ (1,103)
------- ------ ------- -------
------- ------ ------- -------
Income (loss) per share before extraordinary item. . . $ 0.25 $ (0.11) $ 0.45 $ 0.03
Loss per share from extraordinary item . . . . . . . . --- (0.15) --- (0.15)
------- ------ ------- -------
Net income (loss) per share. . . . . . . . . . . . . $ 0.25 $ (0.26) $ 0.45 $ (0.12)
------- ------ ------- -------
------- ------ ------- -------
</TABLE>
The difference in per share amounts computed under both the primary and fully
diluted basis is not material.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 9,899
<SECURITIES> 0
<RECEIVABLES> 16,582
<ALLOWANCES> 1,127
<INVENTORY> 14,702
<CURRENT-ASSETS> 45,427
<PP&E> 18,724
<DEPRECIATION> 5,947
<TOTAL-ASSETS> 58,415
<CURRENT-LIABILITIES> 19,402
<BONDS> 0
0
0
<COMMON> 138
<OTHER-SE> 38,875
<TOTAL-LIABILITY-AND-EQUITY> 58,415
<SALES> 53,584
<TOTAL-REVENUES> 53,584
<CGS> 35,136
<TOTAL-COSTS> 8,805
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 9,991
<INCOME-TAX> 3,620
<INCOME-CONTINUING> 6,371
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,371
<EPS-PRIMARY> .45
<EPS-DILUTED> .45
</TABLE>
