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 March 31, 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)
382 East 720 South, Orem, Utah 84058
- ------------------------------------ -----------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (801) 225-6248
N/A
- --------------------------------------------------------------------------------
(Former Name, Former Address and Former
Fiscal Year, if Changed Since Last Report)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes / / No /X/
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: At May 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
March 31, 1997 and September 30, 1996 . . . . . . . . . . . . 3
Statements of Income
Three and Six Months Ended March 31, 1997 and 1996 . . . . . 4
Statements of Cash Flows
Six months ended March 31, 1997 and 1996 . . . . . . . . . . . 5
Notes to Financial Statements . . . . . . . . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . 8
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . 12
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . 12
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
NACT TELECOMMUNICATIONS, INC.
Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
Mar. 31, 1997 Sep. 30, 1996
(Unaudited)
--------------------------------------
<S> <C> <C>
ASSETS
Current Assets:
Cash $16,771 $695
Marketable securities 2,000 250
Accounts receivable, less allowance for doubtful
accounts of $81 in 1997 and $100 in 1996 4,647 3,171
Notes receivable, less allowance for doubtful
accounts of $333 in 1997 and $310 in 1996 2,414 561
Inventories 2,796 2,407
Prepaid expenses and other assets 96 16
Deferred tax asset - current 409 418
---------------------------------
Total current assets $29,133 $7,518
Fixed Assets:
Property, plant, and equipment $4,390 $1,145
Less: Accumulated depreciation (570) (427)
---------------------------------
Net fixed assets $3,820 $718
Notes receivable-long term $265 $1,180
Intangibles $5,080 $5,075
Other Assets $162 $194
---------------------------------
Total Assets $38,460 $14,685
=================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $813 $2,252
Accrued expenses 753 266
Current corporate tax liability 286 200
Deferred revenue 184 350
Capitalized leases-current 23 22
Intercompany payable 4,320 183
---------------------------------
Total current liabilities $6,379 $3,273
Long-Term Liabilities:
Capitalized leases-long term $51 $58
Deferred compensation liability 158 158
Deferred tax liability 975 986
---------------------------------
Total long-term liabilities $1,184 $1,202
Stockholders' Equity:
Common stock, $.01 par value $81 $61
Additional paid-in-capital 28,345 9,184
Retained earnings 2,471 965
Unrealized appreciation on marketable securities 0 0
---------------------------------
Total stockholders' equity $30,897 $10,210
=================================
Total liabilities and stockholders' equity $38,460 $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 Six Months Ended
(Unaudited) (Unaudited)
--------------------------------------------------------------------------
Mar. 31, 1997 Mar. 31, 1996 Mar. 31, 1997 Mar. 31, 1996
--------------------------------- ----------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Product sales $ 5,073 $ 1,612 $ 9,853 $ 3,581
Network carrier sales 1,213 1,498 2,823 2,348
---------------------------- -------------------------
Total revenues $ 6,286 $ 3,110 $12,676 $ 5,929
Cost of goods sold:
Products $ 1,772 $ 775 $ 3,502 $ 1,488
Network carrier usage 1,153 1,108 2,711 1,915
Amortization of acquired intangibles 90 90 181 181
---------------------------- -------------------------
Total cost of goods sold $ 3,015 $ 1,973 $ 6,394 $ 3,584
---------------------------- -------------------------
Gross profit $ 3,271 $ 1,137 $ 6,282 $ 2,345
Operating expenses:
Research and development $ 616 $ 332 $ 1,039 $ 627
Sales and marketing 567 236 924 443
General and administrative 737 699 1,573 1,277
Amortization of acquired intangibles 143 143 287 286
---------------------------- -------------------------
Total operating expenses $ 2,063 $ 1,410 $ 3,823 $ 2,633
---------------------------- -------------------------
Income (loss) from operations $ 1,208 ($ 273) $ 2,459 ($ 288)
Other Income (expense): $ 122 $ 16 $ 147 $ 36
---------------------------- -------------------------
Income before income taxes $ 1,330 ($ 257) $ 2,606 ($ 252)
Corporate Income taxes $ 532 ($ 74) $ 1,100 ($ 73)
---------------------------- -------------------------
Net income after taxes $ 798 ($ 183) $ 1,506 ($ 179)
============================ =========================
Net income per share $ 0.12 ($ 0.03) $ 0.23 ($ 0.03)
Weighted average shares outstanding 6,847 6,114 6,476 6,114
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
NACT TELECOMMUNICATIONS, INC.
Statements of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended
March 31,
1997 1996
(Unaudited) (Unaudited)
----------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,506 ($ 179)
Adjustments to reconcile net income to net cash
Provided by (used in) operating activities:
Depreciation and amortization 676 560
Provision for loss on accounts and notes receivable 412 357
Provision for loss on inventory 135 --
Capital contribution by parent company 900 (64)
Deferred taxes (2) 10
Decrease (increase) in operating assets:
Trade accounts and notes receivable (2,826) 259
Inventories (704) (553)
Prepaid expenses and other assets (48) 32
Increase (decrease) in operating liabilities:
Accounts payable (1,439) (468)
Accrued expenses 487 (6)
Income taxes payable 86 17
Payable to GST USA 4,137 (447)
Deferred revenue and deferred compensation (166) 22
-------- --------
Net cash provided by (used in)
operating activities 3,154 (460)
-------- --------
Cash flows from investing activities:
Purchase of land, property, plant and equipment (3,065) (303)
Proceeds from sale of marketable securities 250 194
Cash included in transfer of Wins to parent -- (174)
Purchase of marketable securities (2,000) --
Capitalization of software development costs (538) (248)
-------- --------
Net cash provided by (used in)
investing activities (5,353) (531)
Cash flows from financing activities:
Proceeds from issuance of common stock 18,281 --
Principle payments of capital lease obligations (6) (6)
-------- --------
Net cash provided by (used in)
Financing activities 18,275 (6)
-------- --------
Net (decrease) increase in cash 16,076 (997)
Cash at beginning of period 695 1,122
======== ========
Cash at end of period $ 16,771 $ 125
======== ========
Supplementaldisclosures of cash flow information
Cash paid during the period for:
Interest $ 4 $ 5
Income taxes $ 105 $ 70
</TABLE>
See accompanying notes to financial statements.
5
<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 March 31, 1997,
and the results of its operations for the three and six month periods ended
March 31, 1997 and 1996, and its cash flows for the six month periods ended
March 31, 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. The Company expects to use
approximately $2,900,000 of the net proceeds for product development,
approximately $3,500,000 for sales and marketing, and approximately $4,600,000
for the purchase of land and for the construction costs to complete the building
for the Company's headquarters. The Company expects to use the remainder of the
net proceeds for working capital and general corporate purposes and possible
acquisitions or investments in complementary businesses, products or otherwise
obtain the right to use complementary technologies that broaden or enhance the
Company's current product offerings. The principal purposes of the Company's IPO
are to improve the Company's financial position by obtaining additional working
capital, to create a public market for the Common Stock and to facilitate future
access by the Company to public equity markets. Pending such uses, the Company
is investing the net proceeds of this offering in investment-grade,
interest-bearing securities.
6
<PAGE>
4. EARNINGS PER SHARE
Earnings per share were calculated based on the following number of common
shares and common equivalent shares outstanding: 6,847,000 and 6,114,000 for the
three months ended March 31, 1997 and 1996 and 6,476,000 and 6,114,000 for the
six months ended March 31, 1997 and 1996.
5. STOCK PLANS
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 March 31, 1997, 1,250,000 shares were reserved for issuance under the Stock
Option Plan and options to purchase 859,200 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
Inventories are as follows:
March 31, 1997 September 30, 1996
--------------------------------------
Raw materials $1,187,146 $377,734
Work-in-process 307,442 346,273
Finished goods 361,009 317,392
Refurbished inventory held for sale 940,000 1,365,000
--------------------------------------
$2,795,597 $2,406,399
======================================
7. PROPERTY AND EQUIPMENT
Property and equipment are as follows:
March 31, 1997 September 30, 1996
--------------------------------------
Furniture and equipment $227,887 $212,525
Computer equipment 614,603 440,827
Switch and testing equipment 698,277 492,052
Land 563,309 0
Construction in progress 2,286,227 0
-----------------------------------
4,390,303 1,145,404
Less accumulated depreciation
and amortization 569,832 427,600
===================================
$3,820,471 $717,804
===================================
Property, plant and equipment increased from September 30, 1996 to March 31,
1997 primarily due to the purchase of land and the costs incurred on the
construction of the Company's new manufacturing and headquarters facility.
7
<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 Six Months Ended
----------------------------------- --------------------------------
Mar. 31, 1997 Mar. 31, 1996 Mar. 31, 1997 Mar. 31, 1996
----------------------------------- --------------------------------
(Unaudited)
<S> <C> <C> <C> <C>
Revenues:
Product sales 80.7% 51.8% 77.7% 60.4%
Network carrier sales 19.3% 48.2% 22.3% 39.6%
------------------------------- ------------------------------
Total revenues 100.0% 100.0% 100.0% 100.0%
Cost of goods sold:
Products 28.2% 24.9% 27.6% 25.1%
Network carrier usage 18.3% 35.6% 21.4% 32.3%
Amortization of acquired intangibles 1.4% 2.9% 1.4% 3.1%
------------------------------- ------------------------------
Total cost of goods sold 48.0% 63.4% 50.4% 60.4%
------------------------------- ------------------------------
Gross profit 52.0% 36.6% 49.6% 39.6%
Operating expenses:
Research and development 9.8% 10.7% 8.2% 10.6%
Sales and marketing 9.0% 7.6% 7.3% 7.5%
General and administrative 11.7% 22.5% 12.4% 21.5%
Amortization of acquired intangibles 2.3% 4.6% 2.3% 4.8%
------------------------------- ------------------------------
Total operating expenses 32.8% 45.4% 30.2% 44.4%
------------------------------- ------------------------------
Income (loss) from operations 19.2% (8.8%) 19.4% (4.9%)
Other Income (expense): 1.9% 0.5% 1.2% 0.6%
------------------------------- ------------------------------
Income before income taxes 21.2% (8.3%) 20.6% (4.3%)
Corporate Income taxes 8.5% (2.4%) 8.7% (1.2%)
------------------------------- ------------------------------
Net income after taxes 12.7% (5.9%) 11.9% (3.0%)
=============================== ==============================
</TABLE>
8
<PAGE>
TOTAL REVENUES. The Company's revenues increased 102.1% from $3.1 million for
the three months ended March 31, 1996 to $6.3 million in the equivalent 1997
quarter. Product sales, which includes switching application systems, software
and factory support, increased 214.7% from $1.6 million for the three months
ended March 31, 1996 to $5.1 million in the equivalent 1997 quarter due to sales
of the Company's new application switching application platform ("STX"), the
STX, which was released to the market in May 1996. Network carrier sales
decreased 19.0% from $1.5 million for the three months ended March 31, 1996 to
$1.2 million in the equivalent 1997 quarter primarily due to the discontinuance
of the Company providing carrier services to Wasatch International Network
Services, Inc. ("Wins"), a GST USA subsidiary, on October 1, 1996. Excluding the
Wins carrier sales, the Company's network carrier sales, for the three months
ended March 31, 1997, increased $309,000 over the equivalent quarter in 1996.
The Company's revenues increased 113.8% from $5.9 million for the six months
ended March 31, 1996 to $12.7 million in the equivalent 1997 period. Product
sales increased 175.1% from $3.6 million for the six months ended March 31, 1996
to $9.9 million in the equivalent 1997 period primarily due to sales of the STX,
which was released to the market in May 1996. Network carrier sales increased
20.2% from $2.3 million for the six months ended March 31, 1996 to $2.8 million
in the equivalent 1997 period primarily due to increased carrier usage volumes
from existing network carrier customers. Excluding the Wins carrier sales, the
Company's network carrier sales for the six months ended March 31, 1997
increased $1.6 million over the equivalent quarter in 1996.
GROSS PROFIT.
PRODUCT SALES. The Company's gross profit increased 329.9% from $.8 million for
the three months ended March 31, 1996 to $3.3 million in the equivalent 1997
quarter due to an increase in product sales resulting from sales of the STX,
which was introduced to the market in May 1996. Gross profit on product sales as
a percent of product sales was 46.3% and 63.3% for the three months ended March
31, 1996 and 1997, respectively.
The Company's gross profit increased 222.6% from $1.9 million for the six months
ended March 31, 1996 to $6.2 million in the equivalent 1997 period due to an
increase in product sales resulting from sales of the STX. Gross profit on
product sales as a percent of product sales was 53.4% and 62.6% for the six
months ended March 31, 1996 and 1997, respectively.
NETWORK CARRIER SALES. The Company's gross profit decreased 84.6% from $390,000
for the three months ended March 31, 1996 to $60,000 in the equivalent 1997
quarter primarily due to a decrease in network carrier sales resulting from the
discontinuance of the Company providing network carrier services to Wins and due
to a change in the Company's underlying carrier which 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 26.0% and 4.9% for the three
months ended March 31, 1996 and 1997, respectively.
The Company's gross profit decreased 74.1% from $433,000 for the six months
ended March 31, 1996 to $112,000 in the equivalent 1997 period primarily due to
a decrease in network carrier sales resulting from the discontinuance of the
Company providing network carrier services to Wins and due to a change in the
Company's underlying carrier which 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 18.4% and 4.0% for the six months ended
March 31, 1996 and 1997, respectively.
9
<PAGE>
Research and Development. The Company's research and development expenses
increased 85.5% from $332,000 for the three months ended March 31, 1996 to
$616,000 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. Capitalized software development costs were $83,000 and $417,000 for the
three months ended March 31, 1996 and 1997, respectively.
The Company's research and development expenses increased 65.7% from $.6 million
for the six months ended March 31, 1996 to $1.0 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. 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 $160,000 and $537,000 for the six months ended March 31,
1996 and 1997, respectively.
SALES AND MARKETING. The Company's sales and marketing expenses increased 140.3%
from $236,000 for the three months ended March 31, 1996 to $567,000 in the
equivalent 1997 quarter primarily due to the hiring of additional senior sales
personnel, the opening of new domestic sales offices, and increased advertising
and trade show expenditures.
The Company's sales and marketing expenses increased 108.6% from $443,000 for
the six months ended March 31, 1996 to $924,000 in the equivalent 1997 period
primarily due to the hiring of additional senior sales personnel, the opening of
new domestic sales offices, and increased advertising and trade show
expenditures made to enhance the Company's marketing program.
GENERAL AND ADMINISTRATIVE. The Company's general and administrative expenses
increased 5.4% from $699,000 for the three months ended March 31, 1996 to
$737,000 in the equivalent 1997 quarter primarily due to the expansion of the
administrative, technical support, and training departments.
The Company's general and administrative expenses increased 23.2% from $1.3
million for the six months ended March 31, 1996 to $1.6 million in the
equivalent 1997 period primarily due to the expansion of the manufacturing,
technical support, and training departments in order to support the Company's
increased unit shipments and installations of the STX.
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.
INCOME TAXES. The Company's effective tax rate for the six months ended March
31, 1997 was 42.2%. 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.
10
<PAGE>
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 six months
ended March 31, 1997, operating activities provided cash of $ 3.2 million.
Capital expenditures, including the purchase of land, totaled $3.1 million for
the six month period ended March 31, 1997. The Company had principal commitments
as of March 31, 1997 for approximately $1.8 million 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 March 31, 1997, the Company had cash, cash equivalents and short-term
investments totaling $18,771,000 an increase of $17,827,000 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.
No borrowings were outstanding under the line of credit at March 31, 1997.
As of March 31, 1997, the Company was contingently liable under repurchase
agreements for a maximum of $ 1,610,000 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.
11
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
On February 18, 1997, GST USA, Inc., the
former sole stockholder of the Registrant approved the
Registrant's Amended and Restated Stock Option Plan
which, among other things, enables compensation earned
upon exercise of options by the Registrant's chief
executive officer and two other highly compensated
officers to be treated as "performance-based"
compensation for purposes of Section 162 (m) of the
Internal Revenue Code of 1986, as amended.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27: Financial Data Schedule
(b) Reports on Form 8-K
None
12
<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: May 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
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's Form 10-Q for the quarter ended March 31, 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> MAR-31-1997
<CASH> $ 16,770,847
<SECURITIES> 2,000,000
<RECEIVABLES> 7,741,027
<ALLOWANCES> (414,491)
<INVENTORY> 2,795,597
<CURRENT-ASSETS> 29,132,215
<PP&E> 4,390,303
<DEPRECIATION> (569,832)
<TOTAL-ASSETS> 38,460,074
<CURRENT-LIABILITIES> 6,378,993
<BONDS> 0
<COMMON> 81,137
0
0
<OTHER-SE> 30,816,215
<TOTAL-LIABILITY-AND-EQUITY> 38,460,074
<SALES> 6,286,000
<TOTAL-REVENUES> 6,286,000
<CGS> 3,015,000
<TOTAL-COSTS> 2,063,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 185,918
<INTEREST-EXPENSE> 2,000
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