<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
[ X ] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 For the quarterly period ended March 31, 2000
--------------
[ ] Transition report under Section 13 or 15(d) of the Exchange Act For the
transition period from ____________ to ______________
Commission file number 0-29024
-------
BENTHOS, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
Massachusetts 04-2381876
(State or Other Jurisdiction of (I. R. S. Employer
Incorporation or Organization) Identification No.)
49 Edgerton Drive, North Falmouth, Massachusetts 02556
(Address of Principal Executive Offices)
(508) 563-1000
Issuer's Telephone Number Including Area Code
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for such
shorter period that the issuer was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date:
Common Stock par value $.06 2/3 1,375,294
(Class) (Outstanding stock at May 8, 2000)
Transitional Small Business Disclosure Format (check one):
Yes No X
--- ---
<PAGE>
2
BENTHOS, INC. AND SUBSIDIARY
FORM 10-QSB
FOR THE THIRTEEN WEEKS AND TWENTY-SIX WEEKS ENDED
MARCH 31, 2000
INDEX
<TABLE>
<CAPTION>
Page No.
<S> <C>
Face Sheet 1
Index 2
Part I
FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets (unaudited) 3
March 31, 2000 and
September 30, 1999
Condensed Consolidated Statements of Earnings (unaudited) 4
Thirteen Weeks And Twenty-Six Weeks Ended
March 31, 2000 and
March 31, 1999
Condensed Consolidated Statements of Cash Flow (unaudited) 5
Twenty-Six Weeks Ended
March 31, 2000 and
March 31, 1999
Notes to Financial Statements 6-8
Item 2. Management's Discussion and Analysis 9-13
of Financial Condition and Results
of Operations
PART II
OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
</TABLE>
<PAGE>
3
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
Benthos, Inc. and Subsidiary
Condensed Consolidated Balance Sheets
(in thousands, except per share amounts)
(unaudited)
Assets March 31, 2000 September 30, 1999
------------------- -----------------------
<S> <C> <C>
Current Assets:
Cash and Cash Equivalents $ 1,723 $ 2,930
Accounts Receivable, Net 3,668 2,432
Inventories 4,646 4,794
Prepaid Expenses and Other Current Assets 130 734
Deferred Tax Asset 1,299 1,299
-------------- --------------
Total Current Assets 11,466 12,189
Property, Plant and Equipment, Net 1,784 1,779
Other Assets, Net 4,778 4,819
-------------- --------------
$ 18,028 $ 18,787
============== ==============
Liabilities and Stockholders' Investment
Current Liabilities:
Current Maturities of Long Term Debt $ 786 $ 786
Accounts Payable 828 1,292
Accrued Expenses 2,119 2,311
Customer Deposits 277 391
-------------- --------------
Total Current Liabilities 4,010 4,780
-------------- --------------
Long-Term Debt, Net of Current Maturities 4,256 4,649
Stockholders' Investment:
Common Stock, $.06 2/3 par value-
Authorized - 7,500 shares
Issued - 1,653 shares at March 31, 2000
and 1,649 at September 30, 1999 110 110
Capital in Excess of Par Value 1,569 1,546
Retained Earnings 8,744 8,437
Treasury Stock, at Cost (661) (735)
-------------- --------------
Total Stockholders' Investment 9,762 9,358
-------------- --------------
$ 18,028 $ 18,787
============== ==============
</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements
<PAGE>
4
Benthos, Inc. and Subsidiary
Condensed Consolidated Statements of Earnings
(in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-Six Weeks Ended
March 31, March 31,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Net Sales $ 5,237 $ 4,361 $ 10,648 $ 8,196
Cost of Sales 2,638 2,376 5,924 4,721
-------- -------- -------- --------
Gross Profit 2,599 1,985 4,724 3,475
Selling, General &
Administrative Expenses 1,601 1,171 2,945 2,075
Research and Development
Expenses 457 347 922 631
Amortization of Goodwill
and Other Acquired
Intangibles 130 -- 254 --
-------- -------- -------- --------
Income from Operations 411 467 603 769
Interest Income 12 39 41 74
Interest Expense (96) -- (205) --
-------- -------- -------- --------
Income before Provision
for Income Taxes 327 506 439 843
Provision for Income Taxes 98 132 132 253
-------- -------- -------- --------
Net Income $ 229 $ 374 $ 307 $ 590
======== ======== ======== ========
Basic Earnings Per Share $ 0.17 $ 0.28 $ 0.22 $ 0.44
======== ======== ======== ========
Diluted Earnings Per Share $ 0.16 $ 0.27 $ 0.22 $ 0.43
======== ======== ======== ========
Weighted Average
Common Shares Outstanding 1,376 1,353 1,372 1,351
======== ======== ======== ========
Weighted Average
Common Shares Outstanding,
Assuming Dilution 1,419 1,389 1,416 1,385
======== ======== ======== ========
</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements
<PAGE>
5
Benthos, Inc. and Subsidiary
Condensed Consolidated Statements of Cash Flow
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Twenty-Six Weeks Ended
March 31, 2000 March 31, 1999
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income $ 307 $ 590
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation and Amortization 638 283
Changes in Assets and Liabilities:
Accounts Receivable (1,236) (41)
Inventories 148 (914)
Prepaid Expenses 604 583
Accounts Payable & Accrued Expenses (656) 344
Customer Deposits (114) 270
--------- --------
Net Cash (Used In) Provided by Operating Activities (309) 1,115
--------- --------
Cash Flows from Investing Activities:
Purchases of Property, Plant & Equipment (265) (145)
Decrease (Increase) in Other Assets (263) 241
--------- --------
Net Cash (Used In) Provided by Investing Activities (528) 96
--------- --------
Cash Flows from Financing Activities:
Exercise of Stock Options 23 4
Payments on long-term debt, net (393) --
--------- --------
Net Cash (Used In) Provided by Financing Activities (370) 4
--------- --------
Net (Decrease) Increase in Cash and Cash Equivalents (1,207) 1,215
Cash and Cash Equivalents, Beginning of Period 2,930 2,509
--------- --------
Cash and Cash Equivalents, End of Period $ 1,723 $ 3,724
========= ========
Supplemental Disclosure of Cash Flow Information:
Interest Paid $ 204 $ --
========= ========
Income Taxes Paid, Net of Refunds $ 100 $ (26)
========= ========
Supplemental Disclosure of Noncash Activities:
Sale of Treasury Stock to the Company's $ 74 $ 42
ESOP
========= ========
</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements
<PAGE>
6
Benthos, Inc. and Subsidiary
Notes to Financial Statements
(In thousands, except per share amounts)
1. Fiscal Periods
The fiscal year of Benthos, Inc. (the Company) ends on September 30 each year.
Interim quarters are comprised of 13 weeks unless otherwise noted and end on the
Sunday closest to December 31, March 31, and June 30. All references in the
unaudited condensed consolidated financial statements to fiscal periods ended on
December 31, March 31, or June 30 mean the interim quarters referred to above.
2. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared by the Company pursuant to the rules and regulations of the Securities
and Exchange Commission regarding interim financial reporting. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements and should be
read in conjunction with the consolidated financial statements and notes thereto
for the fiscal year ended September 30, 1999, included in the Company's
previously filed Form 10-KSB. The accompanying condensed consolidated financial
statements reflect all adjustments (consisting solely of normal, recurring
adjustments) which are, in the opinion of management, necessary for a fair
presentation of results for the interim periods presented. The results of
operations for the interim period are not necessarily indicative of the results
to be expected for the full fiscal year. Certain reclassifications have been
made to the 1999 financial statements to conform with the 2000 presentation.
3. Acquisition
On August 19, 1999, the Company acquired substantially all of the assets and
assumed certain liabilities of Datasonics, Inc. for approximately $6,891,
including acquisition costs. The acquisition was accounted for using the
purchase method of accounting in accordance with Accounting Principles Board
Opinion No. 16. Accordingly, the results of the operations of Datasonics have
been included in the accompanying consolidated financial statements from the
date of acquisition.
Unaudited pro forma operating results for the Company, assuming the acquisition
of Datasonics occurred on October 1, 1998 are as follows:
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-Six Weeks Ended
March 31, March 31,
1999 1999
<S> <C> <C>
Pro forma net sales $6,423 $12,396
====== =======
Pro forma net income $317 $498
====== =======
Pro forma net income per share -
Basic $ .23 $ .37
====== =======
Diluted $ .23 $ .36
====== =======
</TABLE>
<PAGE>
7
4. Inventories
Inventories are stated at the lower of cost (first-in, first-out) or market and
consist of the following:
<TABLE>
<CAPTION>
March 31, 2000 September 30, 1999
------------------------- --------------------------
<S> <C> <C>
Raw Materials $ 384 $ 891
Work-in-Process 4,247 3,861
Finished Goods 15 42
------- -------
$4,646 $4,794
======= =======
</TABLE>
5. Earnings Per Share
Basic earnings per share excludes the effect of dilutive securities and is
computed by dividing net earnings by the weighted average number of common
shares outstanding for the period. Diluted earnings per share reflects the
potential dilution that could occur if securities or other contracts to issue
common stock were exercised or converted into common stock. Diluted earnings per
share is computed based upon the weighted average number of common shares and
dilutive common equivalent shares outstanding. Common stock options have a
dilutive effect on earnings per share in all periods and are therefore included
in the computation of diluted earnings per share. The Company has stock options
for 133 shares of common stock in the thirteen and twenty-six week periods ended
March 31, 2000 and had options for 92 shares of common stock in the thirteen and
twenty-six week periods ended March 31, 1999, which have not been included in
diluted earnings per share as they are antidilutive.
A reconciliation of basic and diluted shares outstanding is as follows:
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-Six Weeks Ended
March 31, March 31,
2000 1999 2000 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
Weighted average of common
shares outstanding 1,376 1,353 1,372 1,351
Potential common shares
pursuant to stock options 43 36 44 34
------- ------- ------- -------
Diluted weighted average shares 1,419 1,389 1,416 1,385
======= ======= ======= =======
</TABLE>
<PAGE>
8
6. Segment Reporting
The Company views its operations and manages its business as two segments,
Undersea Systems and Container Inspection Systems, as being strategic business
units that offer different products. The Company evaluates performance of its
operating segments based on revenues from external customers, income from
operations and identifiable assets.
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-Six Weeks Ended
March 31, March 31,
2000 1999 2000 1999
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Sales to Unafilliated Customers:
Undersea Systems $ 3,397 $ 3,226 $ 7,474 $ 6,323
Container Inspection Systems 1,840 1,135 3,174 1,873
--------- ---------- ---------- ----------
Total $ 5,237 $ 4,361 $ 10,648 $ 8,196
Income (Loss) From Operations:
Undersea Systems $ 96 $ 509 $ 309 $ 961
Container Inspection Systems 315 (42) 294 (192)
---------- ---------- ---------- -----------
Total $ 411 $ 467 $ 603 $ 769
Identifiable Assets:
Undersea Systems $ 11,990 $ 5,048
Container Inspection Systems 2,481 2,087
Corporate Assets 3,557 4,747
---------- -----------
Total $ 18,028 $ 11,882
</TABLE>
Revenues by geographic area were as follows:
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-Six Weeks Ended
March 31, March 31,
<S> <C> <C> <C> <C>
Geographic Area 2000 1999 2000 1999
------- ------- ------- -------
United States $ 2,962 $ 1,750 $ 6,121 $ 3,097
Norway 30 875 271 1,546
United Kingdom 98 408 376 1,099
Other 2,147 1,328 3,880 2,454
---------- ---------- ---------- ----------
Total $ 5,237 $ 4,361 $ 10,648 $ 8,196
</TABLE>
<PAGE>
9
Item 2.
Management's Discussion and Analysis
of Financial Condition and Results of Operations
(Dollars in thousands)
Results of Operations -- Second quarter of fiscal year 2000 compared with second
quarter of fiscal year 1999.
The following table presents, for the periods indicated, the percentage
relationship of Condensed Consolidated Statements of Earnings items to total
sales:
<TABLE>
<CAPTION>
Thirteen Weeks Ended
March 31, 2000 March 31, 1999
------------------------- --------------------------
<S> <C> <C>
Net Sales 100.0% 100.0%
Cost of Sales 50.4% 54.5%
-------------- --------------
Gross Profit 49.6% 45.5%
Selling, General & Administrative Expenses 30.6% 26.8%
Research and Development Expenses 8.7% 8.0%
Amortization of Goodwill and Other
Acquired Intangibles 2.5% --
-------------- --------------
Income from Operations 7.8% 10.7%
Interest Income .2% .9%
Interest Expense (1.8)% --
-------------- --------------
Income Before Provision for Income Taxes 6.2% 11.6%
Provision for Income Taxes 1.8% 3.0%
-------------- --------------
Net Income 4.4% 8.6%
============== ==============
</TABLE>
Sales. Net sales increased by 20.1% in the second quarter of fiscal year 2000 to
$5,237 as compared to $4,361 in the second quarter of fiscal year 1999. Sales of
the Undersea Systems Division increased by 5.3% to $3,397 in the second quarter
of fiscal year 2000 as compared to $3,226 in the second quarter of fiscal year
1999. The increase resulted mainly from the inclusion of the sales of the
product lines acquired from Datasonics, Inc. in August 1999, which were not in
the results of the second quarter of fiscal year 1999, and reduced sales of
hydrophones in the second quarter of fiscal year 2000 as compared to the second
quarter of fiscal year 1999. Sales of the Container Inspection Systems Division
increased by 62.1% to $1,840 in the second quarter of fiscal year 2000 as
compared to $1,135 in the second quarter of fiscal year 1999. The increase
resulted largely from the timing of customer orders.
Gross Profit. Gross Profit increased by 30.9% to $2,599 for the second quarter
of fiscal year 2000 as compared to $1,985 for the second quarter of fiscal year
1999. As a percentage of sales, gross profit was 49.6% in the second quarter of
fiscal year 2000 as compared to 45.5% in the second quarter of fiscal year 1999.
The increase in gross profit percentage is attributed primarily to the higher
sales mix of Container Inspection Systems Division products, which carry a
higher gross profit than the products of the Undersea Systems Division.
<PAGE>
10
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by 36.7% to $1,601 for the second quarter of
fiscal year 2000 as compared to $1,171 in the second quarter of fiscal year
1999. As a percentage of sales, selling, general and administrative expenses
increased to 30.6% in the second quarter of fiscal year 2000 as compared to
26.8% for the second quarter of fiscal year 1999. The increase in selling,
general, and administrative expenses in dollars and in percentage of sales is a
result of the inclusion of expenses related to the acquisition of Datasonics,
Inc. in August 1999, which were not in the results of the second quarter of
fiscal year 1999, and other corporate expenses.
Research and Development Expenses. Research and development expenses increased
31.7% to $457 for the second quarter of fiscal year 2000 as compared to $347 in
the second quarter of fiscal year 1999. As a percentage of sales, research and
development expenses increased to 8.7% of sales in the second quarter of fiscal
year 2000 from 8.0% in the second quarter of fiscal year 1999. The increase in
the overall level of expenditures is due to investments in new product
development as well as the inclusion of the operating results of the acquisition
of Datasonics, Inc. in August 1999 which were not included in the results of the
second quarter of fiscal year 1999. The level of expenditures is consistent with
the Company's current operational plans.
Amortization of Goodwill and Other Acquired Intangibles. Amortization of
goodwill and other acquired intangibles was $130 in the second quarter of fiscal
year 2000 as a result of the acquisition of substantially all of the assets of
Datasonics, Inc. in August 1999.
Interest Income. Interest income decreased to $12 in the second quarter of
fiscal year 2000 as compared to $39 in the second quarter of fiscal year 1999.
The decrease in interest income was a result of lower invested cash balances,
due in part to the acquisition of Datasonics, Inc.
Interest Expense. Interest expense was $96 in the second quarter of fiscal year
2000. There was no interest expense in the second quarter of fiscal year 1999.
The increase in interest expense dollars was a result of the bank loan made in
August 1999 to finance the acquisition of Datasonics, Inc.
Provision for Income Taxes. The provision for income taxes decreased to $98 in
the second quarter of fiscal year 2000 as compared to $132 in the second quarter
of fiscal year 1999. The effective tax rate used in the second quarter of fiscal
year 2000 was 30.0% as compared to the rate of 26.1% used in the second quarter
of fiscal year 1999. The rate used in the second quarter of fiscal year 2000 is
lower than the statutory rate due primarily to the benefit from the Company's
Foreign Sales Corporation.
<PAGE>
11
Management's Discussion and Analysis
of Financial Condition and Results of Operations
(Dollars in thousands)
Results of Operations - First half of fiscal year 2000 compared with first half
of fiscal year 1999.
The following table presents, for the periods indicated, the percentage
relationship of Condensed Consolidated Statements of Earnings items to total
sales:
<TABLE>
<CAPTION>
Twenty-Six Weeks Ended
March 31, 2000 March 31, 1999
<S> <C> <C>
Net Sales 100.0% 100.0%
Cost of Sales 55.6% 57.6%
-------------- --------------
Gross Profit 44.4% 42.4%
Selling, General & Administrative Expenses 27.6% 25.3%
Research and Development Expenses 8.7% 7.7%
Amortization of Goodwill and
Other Acquired Intangibles 2.4% --
-------------- --------------
Income from Operations 5.7% 9.4%
Interest Income .4% .9%
Interest Expense (2.0)% --
-------------- --------------
Income Before Provision for Income Taxes 4.1% 10.3%
Provision for Income Taxes 1.2% 3.1%
-------------- --------------
Net Income 2.9% 7.2%
============== ==============
</TABLE>
Sales. Net sales increased by 29.9% in the first half of fiscal year 2000 to
$10,648 as compared to $8,196 in the first half of fiscal year 1999. Sales of
the Undersea Systems Division increased by 18.2% to $7,474 in the first half of
fiscal year 2000 as compared to $6,323 in the first half of fiscal year 1999.
The increase resulted mainly from the inclusion of the sales of the product
lines acquired from Datasonics, Inc. in August 1999, which were not in the
results of the first half of fiscal year 1999, and reduced sales of hydrophones
in the first half of fiscal year 2000 as compared to the first half of fiscal
year 1999. Sales of the Container Inspection Systems Division increased by 69.5%
to $3,174 in the first half of fiscal year 2000 as compared to $1,873 in the
first half of fiscal year 1999. The increase resulted largely from the timing of
customer orders.
Gross Profit. Gross Profit increased by 35.9% to $4,724 for the first half of
fiscal year 2000 as compared to $3,475 for the first half of fiscal year 1999.
As a percentage of sales, gross profit was 44.4% in the first half of fiscal
year 2000 as compared to 42.4% in the first half of fiscal year 1999. The
increase in gross profit percentage is attributed primarily to the higher sales
mix of Container Inspection Systems Division products, which carry a higher
gross profit than the products of the Undersea Systems Division.
<PAGE>
12
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by 41.9% to $2,945 for the first half of
fiscal year 2000 as compared to $2,075 in the first half of fiscal year 1999. As
a percentage of sales, selling, general and administrative expenses increased to
27.6% in the first half of fiscal year 2000 as compared to 25.3% for the first
half of fiscal year 1999. The increase in selling, general, and administrative
expenses in dollars and in percentage of sales is a result of the inclusion of
expenses related to the acquisition of Datasonics, Inc. in August 1999, which
were not in the results of the first half of fiscal year 1999, and other
corporate expenses.
Research and Development Expenses. Research and development expenses increased
46.1% to $922 for the first half of fiscal year 2000 as compared to $631 in the
first half of fiscal year 1999. As a percentage of sales, research and
development expenses increased to 8.7% of sales in the first half of fiscal year
2000 from 7.7% in the first half of fiscal year 1999. The increase in the
overall level of expenditures is due to investments in new product development
as well as the inclusion of the operating results of the acquisition of
Datasonics, Inc. in August 1999 which were not included in the results of the
first half of fiscal year 1999. The level of expenditures is consistent with the
Company's current operational plans.
Amortization of Goodwill and Other Acquired Intangibles. Amortization of
goodwill and other acquired intangibles was $254 in the first half of fiscal
year 2000 as a result of the acquisition of substantially all of the assets of
Datasonics, Inc. in August 1999.
Interest Income. Interest income decreased to $41 in the first half of fiscal
year 2000 as compared to $74 in the first half of fiscal year 1999. The decrease
in interest income was a result of lower invested cash balances, due in part to
the acquisition of Datasonics, Inc.
Interest Expense. Interest expense was $205 in the first half of fiscal year
2000. There was no interest expense in the first half of fiscal 1999. The
increase in interest expense dollars was a result of the bank loan made in
August 1999 to finance the acquisition of Datasonics, Inc.
Provision for Income Taxes. The provision for income taxes decreased to $132 in
the first half of fiscal year 2000 as compared to $253 in the first half of
fiscal year 1999. The effective tax rate used in the first half of fiscal years
2000 and 1999 was 30.0%. The rate used in the first half of fiscal year 2000 is
lower than the statutory rate due primarily to the benefit from the Company's
Foreign Sales Corporation.
Liquidity and Capital Resources. The Company's cash and cash equivalents
decreased $1,207 from September 30, 1999 to March 31, 2000. Cash of $309 was
used in operating activities. Inventories provided $148 as inventory levels were
more balanced with respect to shipments. Accounts receivable increased by $1,236
as a result of increased shipments and higher shipments in the latter part of
the first half of the fiscal year. Accounts payable and accrued expenses used
$656 as a result of profit sharing payments and inventory reduction. Cash of
$528 was used in investing activities. Purchases of plant and equipment used
$265 and other assets (including goodwill) used $263. Financing activities used
$370 as payments of $393 were made on the long term debt used to finance a
portion of the Datasonics acquisition in August 1999. The Company has a $2,000
secured line of credit with a bank expiring on January 31, 2001. At March 31,
2000 there were no amounts outstanding under this line of credit. The Company
believes it is well positioned to finance future working capital requirements
and capital expenditures during the next twelve months through cash on hand,
current earnings and available credit facilities.
YEAR 2000 UPDATE
The Company has monitored its Year 2000 program, and as of this date, no
material problems have arisen since the end of calendar year 1999. All of the
Company's computer systems are Year 2000 ready and no technology projects have
been delayed due to the Year 2000 date change.
<PAGE>
13
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995.
The statements in this Quarterly Report on Form 10-QSB and in oral statements
which may be made by representatives of the Company relating to plans,
strategies, economic performance and trends and other statements that are not
descriptions of historical facts may be forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. Forward-looking information is inherently subject to risks and
uncertainties, and actual results could differ materially from those currently
anticipated due to a number of factors which include: the timing of large
project orders, competitive factors, shifts in customer demand, government
spending, economic cycles, availability of financing as well as the factors
described in this report. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results or
outcomes may vary materially from those described herein as anticipated,
believed, estimated, expected or intended.
<PAGE>
14
Part II -- Other information
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of Shareholders of the Registrant (the "Meeting") was
held on March 3, 2000.
(b) The Registrant solicited proxies for the Meeting pursuant to Regulation
14A; there was no solicitation in opposition to management's nominees
for directors as listed in the Proxy Statement, and all such nominees
were elected.
(c) The following describes the matters voted upon at the Meeting and sets
forth the number of votes cast for, against or withheld and the number of
abstentions as to each such matter:
(i) Election of Directors:
Nominee For Withheld
John L. Coughlin 1,292,158 11,008
Gary K. Willis 1,291,845 11,321
The directors whose term of office as a director continued after the
Meeting are Stephen D. Fantone, Arthur L. Fatum, A. Theodore Mollegen, Jr.,
Thurman F. Naylor and Samuel O. Raymond.
(ii) Authorization of appointment of Arthur Andersen LLP as independent auditors
for 2000:
For Against Abstain
1,292,338 1,659 9,169
(iii) The Company's 2000 Stock Incentive Plan was approved. There were 719,519
votes cast in favor of the proposal, 51,931 votes cast against, 171,284
abstentions, and 360,432 broker non-votes.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The exhibits set forth in the
Exhibit Index on the following
page are filed herewith as a
part of this report.
(b) Reports on Form 8-K
None
<PAGE>
15
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.
BENTHOS, INC
By /s/ Francis E. Dunne, Jr.
Francis E. Dunne, Jr.
Vice President, Chief Financial Officer
and Treasurer
(Principal Financial and Accounting Officer)
DATE: May 8, 2000
<PAGE>
BENTHOS, INC.
EXHIBIT INDEX
EXHIBIT
- -------
3.1 Restated Articles of Organization (1)
3.2 Articles of Amendment dated April 28, 1997 (2)
3.3 Articles of Amendment dated April 20, 1998 (5)
3.4 By-Laws (1)
3.5 By-Law Amendments adopted January 23, 1998 (4)
4.1 Common Stock Certificate (1)
10.1 Employment Contract with Samuel O. Raymond (1)
10.2 Amendment to Employment Contract with Samuel O. Raymond (2)
10.3 Employment Contract with John L. Coughlin (1)
10.4 Amended and Restated Employment Agreement with John L. Coughlin (10)
10.5 Employee Stock Ownership Plan (1)
10.6 First Amendment to Employee Stock Ownership Plan (2)
10.7 Second Amendment to Employee Stock Ownership Plan (8)
10.8 Third Amendment to Employee Stock Ownership Plan (8)
10.9 401(k) Retirement Plan (1993)(1)
10.10 401(k) Retirement Plan (1999)(8)
10.11 First Amendment to 401(k) Retirement Plan (2)
10.12 Second Amendment to 401(k) Retirement Plan (2)
10.13 Third Amendment to 401(k) Retirement Plan (3)
<PAGE>
EXHIBIT
- -------
10.14 Supplemental Executive Retirement Plan (1)
10.15 1990 Stock Option Plan (1)
10.16 Stock Option Plan for Non-Employee Directors (1)
10.17 1998 Non-Employee Directors' Stock Option Plan (4)
10.18 Benthos, Inc. 2000 Stock Incentive Plan (9)
10.19 License Agreement between the Company and The Penn State Research
Foundation dated December 13, 1993 (1)
10.20 Technical Consultancy Agreement between the Company and William D.
McElroy dated July 12, 1994 (1)
10.21 Technical Consultancy Agreement between the Company and William D.
McElroy dated October 1, 1996 (3)
10.22 General Release and Settlement Agreement between the Company and
Lawrence W. Gray dated February 8, 1996 (1)
10.23 Line of Credit Loan Agreement between the Company and Cape Cod Bank
and Trust Company dated September 24, 1990, as amended (1)
10.24 Commercial Mortgage Loan Extension and Modification Agreement between
the Company and Cape Cod Bank and Trust Company, dated July 6, 1994
(1)
10.25 Credit Agreement between the Company and Cape Cod Bank and Trust
Company dated August 18, 1999.
10.26 License Agreement between the Company and Optikos Corporation dated
July 29, 1997 (3)
10.27 Hydrophone License Agreement between the Company and Syntron, Inc.
dated December 5, 1996 (6)
<PAGE>
EXHIBIT
- -------
10.28 Amendment Number 1 to Hydrophone License Agreement between the
Company and Syntron, Inc. dated September 11, 1998 (6)
10.29 Asset Purchase Agreement among Benthos, Inc., Datasonics, Inc., and
William L. Dalton and David A. Porta (7)
21 Subsidiaries of the Registrant (1)
27 Financial Data Schedule
- --------------
(1) Previously filed as an exhibit to Registrant's Registration
Statement on Form 10-SB filed with the Commission on December 17, 1996 (File No.
O-29024) and incorporated herein by this reference.
(2) Previously filed as an exhibit to Registrant's Quarterly Report
on Form 10-QSB for the quarterly period ended March 30, 1997 (File No. O-29024)
and incorporated herein by this reference.
(3) Previously filed as an exhibit to Registrant's Quarterly Report
on Form 10-QSB for the quarterly period ended June 29, 1997 (File No. O-29024)
and incorporated herein by this reference.
(4) Previously filed as an exhibit to the Registrant's Quarterly
Report on Form 10-QSB for the quarterly period ended December 31, 1997 (File No.
O-29024) and incorporated herein by this reference.
(5) Previously filed as an exhibit to the Registrant's Quarterly
Report on Form 10-QSB for the quarterly period ended March 31, 1998 (File No.
0-29024) and incorporated herein by this reference.
(6) Previously filed as an exhibit to the Registrant's Quarterly
Report on Form 10-QSB for the quarterly period ended December 31, 1998 (File No.
0-29024) and incorporated herein by this reference.
(7) Previously filed as an exhibit to Registrant's Current Report on
Form 8-K filed on or about August 27, 1999 (File No. O-29024) and incorporated
herein by this reference.
<PAGE>
EXHIBIT
-------
(8) Previously filed as an exhibit to Registrant's Annual Report on
Form 10-KSB for the fiscal year ended September 30, 1999 File No. 0-29024) and
incorporated herein by this reference.
(9) Previously filed as an exhibit to the Registrant's definitive
proxy statement filed on Schedule 14A on or about January 18, 2000
(10) Previously filed as an exhibit to the Registrant's Quarterly
Report on Form 10-QSB for the quarterly period ended December 31, 1999 (File No.
O-29024) and incorporated herein by reference.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF BENTHOS, INC. AND SUBSIDIARY
CONTAINED ELSEWHERE IN THIS QUARTERLY REPORT AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-END> MAR-31-2000
<CASH> 1,723
<SECURITIES> 0
<RECEIVABLES> 3,668
<ALLOWANCES> 220
<INVENTORY> 4,646
<CURRENT-ASSETS> 11,466
<PP&E> 6,906
<DEPRECIATION> 5,122
<TOTAL-ASSETS> 18,028
<CURRENT-LIABILITIES> 4,010
<BONDS> 4,256
0
0
<COMMON> 110
<OTHER-SE> 9,652
<TOTAL-LIABILITY-AND-EQUITY> 18,028
<SALES> 10,648
<TOTAL-REVENUES> 10,648
<CGS> 5,924
<TOTAL-COSTS> 3,199
<OTHER-EXPENSES> 922
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 205
<INCOME-PRETAX> 439
<INCOME-TAX> 132
<INCOME-CONTINUING> 307
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 307
<EPS-BASIC> .22<F1>
<EPS-DILUTED> .22<F1>
<FN>
<F1>The Earnings Per Share information has been prepared in accordance with SFAS
No. 128 and Basic and Diluted Earnings per share have been entered in place of
Primary and Fully Diluted, respectively.
</FN>
</TABLE>
