UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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 June 30, 1997
-------------
OR
/ / TRANSISTION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________
Commission file number 000-22017
NACT TELECOMMUNICATIONS, INC.
- --------------------------------------------------------------------------------
(Exact name of Registrant as Specified in its Charter)
Delaware 87-0378662
- ---------------------------- ------------------------------------
(State or Other Jurisdiction (IRS Employer Identification Number)
of Incorporation or Organization)
191 West 5200 North, Provo, Utah 84604
- -------------------------------------------------------------- --------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (801) 802-3000
- --------------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report)
382 East 720 South, Orem, Utah 84058
- -------------------------------------------------------------- --------------
(Former Address of Principal Executive Offices) (Zip Code)
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 / /
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: At August 14, 1997,
there were outstanding 8,113,712 shares of Common Stock, $.01 par value per
share, of the Registrant.
<PAGE>
NACT TELECOMMUNICATIONS, INC.
INDEX
PART I. FINANCIAL INFORMATION
Page Number
-----------
Item 1. Financial Statements:
Balance Sheets
June 30, 1997 and September 30, 1996 . . . . . . . . . . . . . . 3
Statements of Income
Three and Nine Months Ended June 30, 1997 and 1996 . . . . . . . 4
Statements of Cash Flows
Nine months ended June 30, 1997 and 1996 . . . . . . . . . . . . 5
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . . .9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . 13
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
NACT TELECOMMUNICATIONS, INC.
Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
June 30, 1997
(Unaudited) Sep. 30, 1996
-------------------------------------
ASSETS
Current Assets:
<S> <C> <C>
Cash $10,081 $695
Marketable securities 2,240 250
Accounts receivable, less allowance for doubtful
accounts of $450 in 1997 and $100 in 1996 7,128 3,171
Notes receivable, less allowance for doubtful
accounts of $372 in 1997 and $310 in 1996 4,168 561
Inventories 2,396 2,406
Prepaid expenses and other assets 164 17
Deferred tax asset - current 383 418
---------------------------------
Total current assets $26,560 $7,518
Fixed Assets:
Property, plant, and equipment $5,636 $1,145
Less: Accumulated depreciation (428) (427)
---------------------------------
Net fixed assets $5,208 $718
Notes receivable-long term $302 $1,180
Intangibles $5,001 $5,075
Other Assets $162 $194
---------------------------------
Total Assets $37,233 $14,685
=================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $1,032 $2,252
Bank Line of Credit 50 0
Accrued expenses 934 616
Current corporate tax liability 853 200
Capitalized leases-current 24 22
Inter company payable 1,158 183
-------------------------------------
Total current liabilities $4,051 $3,273
Long Term Liabilities:
Capitalized leases-long term $45 $58
Deferred compensation liability 158 158
Deferred tax liability 1,048 986
-------------------------------------
Total long-term liabilities $1,251 $1,202
Stockholders' Equity:
Common stock, $.01 par value $81 $61
Additional paid-in-capital 28,285 9,184
Retained earnings 3,565 965
Unrealized appreciation on marketable securities 0 0
-------------------------------------
Total stockholders' equity $31,931 $10,210
-------------------------------------
Total liabilities and stockholders' equity $37,233 $14,685
=====================================
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
NACT TELECOMMUNICATIONS, INC.
Statements of Income
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
(Unaudited) (Unaudited)
------------------------------------ -----------------------------------
Jun 30, 1997 Jun 30, 1996 Jun 30, 1997 Jun 30, 1996
------------------------------------- -----------------------------------
Revenues:
<S> <C> <C> <C> <C>
Product sales $5,739 $3,228 $15,591 $7,899
Network carrier sales 1,472 1,139 4,296 $2,397
------------------------------------- -----------------------------------
Total revenues $7,211 $4,367 $19,887 $10,296
Cost of goods sold:
Products $1,457 $1,779 $4,959 $4,357
Network carrier usage 1,394 1,113 4,105 1,938
Amortization of acquired intangibles 91 91 272 272
------------------------------------- -----------------------------------
Total cost of goods sold $2,942 $2,983 $9,336 $6,567
------------------------------------- -----------------------------------
Gross profit $4,269 $1,384 $10,551 $3,729
Operating expenses:
Research and development $740 $328 $1,779 $955
Sales and marketing 824 241 1,748 684
General and administrative 891 813 2,464 2,090
Amortization of acquired intangibles 143 143 430 429
------------------------------------- -----------------------------------
Total operating expenses $2,598 $1,525 $6,421 $4,158
------------------------------------- -----------------------------------
Income (loss) from operations $1,671 ($141) $4,130 ($429)
Other Income (expense): $152 $34 $299 $70
------------------------------------- -----------------------------------
Income (loss) before income taxes $1,823 ($107) $4,429 ($359)
Income taxes $729 ($31) $1,829 ($104)
------------------------------------- -----------------------------------
Net income after taxes $1,094 ($76) $2,600 ($255)
===================================== ===================================
Net income per share $0.13 ($0.01) $0.37 ($0.04)
Weighted average shares outstanding 8,114 6,114 7,022 6,114
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
NACT TELECOMMUNICATIONS, INC.
Statements of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
Nine Months Ended
June 30,
1997 1996
(Unaudited) (Unaudited)
-------------------------------------------
Cash flows from operating activities:
<S> <C> <C>
Net income $2,600 ($255)
Adjustments to reconcile net income to net cash
Provided by (used in) operating activities:
Depreciation and amortization 1,029 961
Provision for loss on accounts and notes receivable 933 375
Provision for loss on inventory 270 -
Provision for loss on sale of equipment 47
Capital contribution by parent company 900 (64)
Deferred taxes 97 10
Decrease (increase) in operating assets:
Trade accounts and notes receivable (7,620) (80)
Inventories (439) (1,235)
Prepaid expenses and other assets (116) 210
Increase (decrease) in operating liabilities:
Accounts payable (1,220) (19)
Accrued expenses 680 (91)
Income taxes payable 655 26
Payable to GST USA 975 (309)
Deferred revenue and deferred compensation (363) 356
--------- ------
Net cash provided by (used in)
operating activities (1,572) ( 115)
--------- ------
Cash flows from investing activities:
Purchase of land, property, plant and equipment (4,576) (355)
Proceeds from sale of marketable securities 250 397
Cash included in transfer of Wins to parent - (174)
Purchase of marketable securities (2,240) -
Capitalization of software development costs (736) (330)
--------- ------
Net cash provided by (used in)
investing activities (7,302) (462)
Cash flows from financing activities:
Net borrowings under line of credit 50 -
Proceeds from issuance of common stock 18,222 -
Principle payments of capital lease obligations (12) (11)
--------- ------
Net cash provided by (used in)
Financing activities 18,260 (11)
--------- ------
Net (decrease) increase in cash 9,386 (588)
Cash at beginning of period 695 1,122
--------- ------
Cash at end of period $10,081 $534
================================
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
NACT TELECOMMUNICATIONS, INC.
Statements of Cash Flows (continued)
(In thousands)
<TABLE>
<CAPTION>
Nine Months Ended
June 30,
1997 1996
(Unaudited) (Unaudited)
------------------- ----------------------
Supplemental disclosures of cash flow information
Cash paid during the period for:
<S> <C> <C>
Interest $18 $9
Income taxes $62 $70
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
NACT TELECOMMUNICATIONS, INC.
Notes to financial statements
1. Basis of Presentation
The interim financial statements included herein have been prepared by NACT
Telecommunications, Inc. without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission (the "SEC"). 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 SEC rules and regulations. These condensed financial
statements should be read in conjunction with the financial statements and notes
thereto included in the Company's September 30, 1996 audited financial
statements filed with the SEC in January 1997 as part of the Company's initial
public offering prospectus (the "Prospectus"). In the opinion of management, the
condensed financial statements included herein reflect all adjustments necessary
to present fairly the financial position of the Company as of June 30, 1997, and
the results of its operations for the three and nine month periods ended June
30, 1997 and 1996, and its cash flows for the nine month periods ended June 30,
1997 and 1996. The results of operations for the interim periods are not
necessarily indicative of the results of operations for the full year.
2. Reincorporation
The Company was incorporated in Utah in January 1982. The Company reincorporated
in Delaware on February 13, 1997. The number of authorized shares of Common
Stock, $0.01 par value per share, of the Company is 25,000,000 and the number of
authorized shares of preferred stock, $0.01 par value per share, of the Company
is 10,000,000.
3. Initial Public Offering
The Company completed an initial public offering ("IPO") of its common stock in
February 1997. A total of 3,000,000 shares of Common Stock were sold, 2,000,000
shares by the Company and 1,000,000 shares by GST USA, Inc., the Company's
parent ("Selling Shareholder or GST USA"). The selling price per share was
$10.00. The Company and the Selling Shareholder received gross proceeds of
$20,000,000 and $10,000,000, respectively. The net proceeds to the Company from
the sale, after deducting underwriting discounts and estimated offering expenses
was approximately $18,167,000. The Company did not receive any proceeds from the
sale of Common Stock by the Selling Shareholder.
4. Earnings Per Share
Earnings per share is computed based on the weighted average number of common
shares and, as appropriate, dilutive common stock equivalents outstanding during
the period. Stock options are considered to be common stock equivalents. Fully
diluted earnings per share for the three months and nine months ended June 30,
1997 and June 30, 1996 were not materially different from primary earnings per
share.
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, Earnings per Share (SFAS 128). SFAS 128
established a different method of computing earnings per share than is currently
required under the provisions of Accounting Principles Board Opinion No. 15.
Under SFAS 128, the Company will be required to present both basic earnings per
share and diluted earnings per share. Basic earnings per share is expected to be
higher than the currently presented primary earnings per share as the effect of
dilutive stock options will not be considered in computing basic earnings per
share. Diluted earnings per share is expected to be comparable or slightly lower
than the currently presented primary earnings per share.
7
<PAGE>
SFAS 128 is effective for both interim and annual periods ending after December
15, 1997. Accordingly, the Company plans to adopt SFAS 128 in the first quarter
of fiscal 1998.
5. Stock Plan
The Company's 1996 Stock Option Plan (the "Stock Option Plan") was approved by
the Board of Directors and sole stockholder of the Company on November 26, 1996.
The purpose of the Stock Option Plan is to create additional incentives for the
Company's employees, directors and others who perform substantial services to
the Company by providing an opportunity to purchase shares of the Common Stock
pursuant to the exercise of options granted under the Stock Option Plan. The
Company may grant options that qualify as incentive stock options under Section
422 of the Internal Revenue Code, and non-qualified stock options. Incentive
stock options may be granted to employees (including officers and directors who
are employees). Non-qualified stock options may be granted to employees,
officers, directors, independent contractors and consultants of the Company. As
of June 30, 1997, 1,250,000 shares were reserved for issuance under the Stock
Option Plan and options to purchase 886,150 shares of Common Stock were
outstanding.
Options become exercisable at such times and in such installments as the Board
of Directors or Compensation Committee provides. The Stock Option Plan will
terminate on November 25, 2006, unless earlier terminated by the Board of
Directors.
6. Inventories
<TABLE>
<CAPTION>
Inventories are as follows (in thousands):
June 30, 1997 September 30, 1996
------------- -------------------------------
<S> <C> <C>
Raw materials $1,139 $378
Work-in-process 361 346
Finished goods 145 317
Refurbished inventory held for sale 751 1,365
------------------------------------------------------
$2,396 $2,406
======================================================
</TABLE>
7. Property and Equipment
Property and equipment are as follows (in thousands):
<TABLE>
<CAPTION>
June 30, 1997 September 30, 1996
------------- ------------------
<S> <C> <C>
Furniture and equipment $199 $212
Computer equipment 603 441
Switch and testing equipment 788 492
Automobile 22 0
Land 563 0
Construction in progress 3,461 0
---------------------------------------
5,636 1,145
Less accumulated depreciation and amortization 428 427
---------------------------------------
$5,208 $718
=======================================
</TABLE>
Property, plant and equipment increased from September 30, 1996 to June 30, 1997
primarily due to the purchase of land and the costs incurred on the construction
of the Company's new manufacturing and headquarters facility in Provo, Utah.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This report contains forward-looking statements that involve risks and
uncertainties. The actual future results of the Company could differ materially
from those statements. Factors that could cause or contribute to such
differences include, but are not limited to, uncertainties regarding market
acceptance of new products and product enhancements, delays in the introduction
of new products or enhancements, size and timing of individual orders,
competition and pricing in the software industry, general economic conditions in
the Company's geographic markets, seasonality of revenues, litigation involving
the Company, and the management of the Company's growth as well as factors
discussed in the Company's Prospectus.
Results of Operations
The following table sets forth certain statement of operations data presented as
a percentage of revenues, for the period indicated:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------------------ -----------------------------------
Jun. 30, 1997 Jun. 30, 1996 Jun. 30, 1997 Jun. 30, 1996
------------------------------------- -----------------------------------
(Unaudited)
Revenues:
<S> <C> <C> <C> <C>
Product sales 79.6% 73.9% 78.4% 76.7%
Network carrier sales 20.4% 26.1% 21.6% 23.3%
--------------------------------- -----------------------------------
Total revenues 100.0% 100.0% 100.0% 100.0%
Cost of goods sold:
Products 20.2% 40.7% 24.9% 42.3%
Network carrier usage 19.3% 25.5% 20.6% 18.8%
Amortization of acquired intangibles 1.3% 2.1% 1.4% 2.7%
--------------------------------- -----------------------------------
Total cost of goods sold 40.8% 68.3% 46.9% 63.8%
--------------------------------- -----------------------------------
Gross profit 59.2% 31.7% 53.1% 36.2%
Operating expenses:
Research and development 10.2% 7.5% 8.9% 9.3%
Sales and marketing 11.4% 5.5% 8.8% 6.6%
General and administrative 12.4% 18.6% 12.4% 20.3%
Amortization of acquired intangibles 2.0% 3.3% 2.2% 4.2%
--------------------------------- -----------------------------------
Total operating expenses 36.0% 34.9% 32.3% 40.4%
--------------------------------- -----------------------------------
Income (loss) from operations 23.2% (3.2%) 20.8% (4.2%)
Other Income (expense): 2.1% 0.8% 1.5% 0.7%
--------------------------------- -----------------------------------
Income before income taxes 25.3% (2.4%) 22.3% (3.5%)
Income taxes 10.1% (0.7%) 9.2% (1.0%)
--------------------------------- -----------------------------------
Net income after taxes 15.2% (1.7%) 13.1% (2.5%)
================================= ===================================
</TABLE>
9
<PAGE>
Total Revenues. The Company's revenues increased 63.6% from $4.4 million for the
three months ended June 30, 1996 to $7.2 million in the equivalent 1997 quarter.
Product sales, which includes switching application systems, software and
factory support, increased 78.1% from $3.2 million for the three months ended
June 30, 1996 to $5.7 million in the equivalent 1997 quarter primarily due to
sales of the larger port capacity STX switching system which has a higher
selling price. The STX is the Company's new switching application platform which
was released to the market in May 1996. Network carrier sales increased 36.4%
from $1.1 million for the three months ended June 30, 1996 to $1.5 million in
the equivalent 1997 quarter primarily due to increased carrier usage volumes
from existing network carrier customers.
The Company's revenues increased 93.2% from $10.3 million for the nine months
ended June 30, 1996 to $19.9 million in the equivalent 1997 period. Product
sales increased 97.5% from $7.9 million for the nine months ended June 30, 1996
to $15.6 million in the equivalent 1997 period primarily due to increased per
unit and larger port capacity sales of the STX, which was released to the market
in May 1996. Network carrier sales increased 79.2% from $2.4 million for the
nine months ended June 30, 1996 to $4.3 million in the equivalent 1997 period
primarily due to increased carrier usage volumes from existing network carrier
customers.
Gross Profit.
Product Sales. The Company's gross profit increased 207.1% from $1.4 million for
the three months ended June 30, 1996 to $4.3 million in the equivalent 1997
quarter due to an increase in product sales resulting from sales of the higher
margin, larger port capacity STX switch, which was introduced to the market in
May 1996. Gross profit on product sales as a percent of product sales was 44.9%
and 74.6% for the three months ended June 30, 1996 and 1997, respectively.
The Company's gross profit increased 186.5% from $3.7 million for the nine
months ended June 30, 1996 to $10.6 million in the equivalent 1997 period due to
an increase in product sales resulting from sales of the larger port capacity
STX. Gross profit on product sales as a percent of product sales was 44.8% and
68.2% for the nine months ended June 30, 1996 and 1997, respectively.
Network Carrier Sales. The Company's gross profit increased 200.0% from $26,000
for the three months ended June 30, 1996 to $78,000 in the equivalent 1997
quarter primarily due to an increase in network carrier sales resulting from
higher carrier usage volumes from existing network carrier customers. Gross
profit on network carrier sales as a percent of network carrier sales was 2.3%
and 5.3% for the three months ended June 30, 1996 and 1997, respectively.
The Company's gross profit decreased 58.4% from $459,000 for the nine months
ended June 30, 1996 to $191,000 in the equivalent 1997 period primarily due to
increased usage costs to several international countries in which the Company's
network carrier service customers were doing a high volume of traffic. Gross
profit on network carrier sales as a percent of network carrier sales was 19.1%
and 4.4% for the nine months ended June 30, 1996 and 1997, respectively.
10
<PAGE>
Research and Development. The Company's research and development expenses
increased 125.6% from $328,000 for the three months ended June 30, 1996 to
$740,000 in the equivalent 1997 quarter primarily due to an increase in
personnel and other expenditures for planning and implementation of several
hardware and software research and development projects designed to enhance the
STX switching platform and the NTS billing system. Capitalized software
development costs were $84,000 and $212,000 for the three months ended June 30,
1996 and 1997, respectively.
The Company's research and development expenses increased 80.0% from $1.0
million for the nine months ended June 30, 1996 to $1.8 million in the
equivalent 1997 period primarily due to an increase in personnel and other
expenditures for planning and implementation of several hardware and software
research and development projects designed to enhance the STX switching platform
and the NTS billing system. The Company expects that research and development
expenses will increase in the future to facilitate the rapid deployment of new
products and applications. Capitalized software development costs were $244,000
and $749,000 for the nine months ended June 30, 1996 and 1997, respectively.
Sales and Marketing. The Company's sales and marketing expenses increased 241.9%
from $241,000 for the three months ended June 30, 1996 to $824,000 in the
equivalent 1997 quarter primarily due to the hiring of additional senior sales
personnel, the opening of new domestic sales offices, increased advertising and
trade show expenditures, and increased commissions paid as a result of the
increase in STX switch sales.
The Company's sales and marketing expenses increased 155.6% from $684,000 for
the nine months ended June 30, 1996 to $1.7 million in the equivalent 1997
period primarily due to the hiring of additional senior sales personnel, the
opening of new domestic sales offices, increased advertising and trade show
expenditures made to enhance the Company's marketing program and increased
commissions paid as a result of the increase in STX switch sales.
General and Administrative. The Company's general and administrative expenses
increased 9.6% from $813,000 for the three months ended June 30, 1996 to
$891,000 in the equivalent 1997 quarter primarily due to the expansion of the
administrative and technical support departments.
The Company's general and administrative expenses increased 19.0% from $2.1
million for the nine months ended June 30, 1996 to $2.5 million in the
equivalent 1997 period primarily due to the expansion of the purchasing,
technical support, and training departments in order to support the Company's
increased shipments and installations of the STX switching platform and NTS
billing systems.
Amortization of Acquired Intangibles. The Company has included amortization of
acquired intangibles as a component of both cost of sales and operating
expenses. These intangibles arose as a result of the acquisition of the Company
by GST USA through a series of purchases of newly issued shares and shares owned
by former stockholders of the Company. Such purchases occurred from September
1993 through December 1994. GST USA accounted for the acquisition using the
purchase method of accounting. The excess of the purchase price over the fair
value of the assets acquired was assigned by GST USA as product support
contracts, software development costs and goodwill, and, in accordance with
requirements of the Securities and Exchange Commission, has been included in the
balance sheets of the Company with related amortization recorded in cost of
goods sold and other operating expenses. Product support contracts and software
development costs are being amortized over a five year straight-line period and
goodwill is being amortized over a 20 year straight-line period.
11
<PAGE>
Income Taxes. The Company's effective tax rate for the nine months ended June
30, 1997 was 40.0%. This is higher than the respective statutory federal and
state tax rates due to amortization of goodwill. This higher effective tax rate
is expected to continue during the amortization period of the acquired goodwill
from GST USA.
Fluctuations in quarterly operating results. Operating results have in the past
and may in the future fluctuate due to factors such as the timing of new product
introductions by the Company and its competitors, delays in new product
introductions by the Company, market acceptance of new or enhanced versions of
the Company's products, changes in the product or customer mix, changes in the
level of operating expenses, competitive pricing pressures, the gain or loss of
significant customers, increased research and development and sales and
marketing expenses associated with new product introductions and economic
conditions in general and in the Company's industry. Due to the high unit price
and long lead times associated with revenues derived from equipment orders, the
Company's financial results may fluctuate significantly depending upon the time
of the actual shipment of such orders. All of the above factors are difficult
for the Company to forecast, and these or other factors can materially adversely
affect the Company's business, financial condition and results of operations for
one quarter or a series of quarters. The Company's expense levels are based in
part on its expectations regarding future sales and are fixed in the short term
to a large extent. Therefore, the Company may be unable to adjust spending in a
timely manner to compensate for any unexpected shortfall in sales. Any
significant decline in demand relative to the Company's expectations or any
material delay of customer orders could have a material adverse effect on the
Company's business, financial condition and results of operations.
Liquidity and Capital Resources. The Company currently finances its operations,
and normal reoccurring capital expenditures through cash flow from operations
and its current cash and short-term investment balances. For the nine months
ended June 30, 1997, operating activities used cash of $ 1.6 million. Capital
expenditures, including the purchase of land, totaled $4.6 million for the nine
month period ended June 30, 1997. The Company had principal commitments as of
June 30, 1997 for approximately $679,000 to complete construction of and furnish
the Company's new headquarters building and approximately $200,000 for contract
design and completion of the new 68060 CPU processor for the STX.
As of June 30, 1997, the Company had cash, cash equivalents and marketable
securities totaling $12.3 million an increase of $11.4 million from September
30, 1996 primarily due to the cash proceeds received from the sale of common
stock from the Company's IPO in March 1997.
The Company maintains an unsecured bank line of credit expiring in February 1998
that provides borrowings up to $750,000 at the bank's prime rate plus one point.
Fifty thousand ($50,000) was outstanding under the line credit at June 30, 1997.
As of June 30, 1997, the Company was contingently liable under repurchase
agreements for a maximum of $2.3 million to Zions Credit Corporation ("Zions").
Zions provides lease financing to the Company's customers on a recourse basis.
The Company believes that the cash proceeds of the Company's IPO, anticipated
cash flows from operations and its line of credit will satisfy the Company's
working capital and capital expenditure requirements for at least the next
twelve months. However, there can be no assurance that the Company will not be
required to seek additional capital sooner or, if so required, that adequate
capital will be available on terms acceptable to the Company, or at all.
12
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27: Financial Data Schedule
(b) Reports on Form 8-K
None
13
<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.
Date: August 14, 1997
NACT TELECOMMUNICATIONS, INC.
(Registrant)
/S/ A. Lindsay Wallace
----------------------
A. Lindsay Wallace
President and Chief Executive Officer
/S/ Eric F. Gurr
----------------
Eric F. Gurr
Chief Financial Officer
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's Form 10-Q for the quarter ended June 30, 1997 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> JUN-30-1997
<CASH> $10,081,000
<SECURITIES> 2,240,000
<RECEIVABLES> 12,420,000
<ALLOWANCES> (822,000)
<INVENTORY> 2,396,000
<CURRENT-ASSETS> 26,560,000
<PP&E> 5,636,000
<DEPRECIATION> (428,000)
<TOTAL-ASSETS> 37,233,000
<CURRENT-LIABILITIES> 4,051,000
<BONDS> 0
<COMMON> 81,000
0
0
<OTHER-SE> 31,850,000
<TOTAL-LIABILITY-AND-EQUITY> 37,233,000
<SALES> 7,211,000
<TOTAL-REVENUES> 7,211,000
<CGS> 2,942,000
<TOTAL-COSTS> 2,598,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 521,000
<INTEREST-EXPENSE> 18,000
<INCOME-PRETAX> 1,823,000
<INCOME-TAX> 729,000
<INCOME-CONTINUING> 1,094,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,094,000
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</TABLE>
