FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Quarterly Report Under Section 13 Or 15(d)
Of The Securities Exchange Act Of 1934
For Quarter Ended: March 4, 1995 Commission File No: 0-6933
CAMBEX CORPORATION
(Exact name of registrant as specified in its charter)
Massachusetts 04-244-2959
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
360 Second Avenue, Waltham, Massachusetts
(Address of principal executive offices)
02154
(Zip Code)
Registrant's telephone number, including area code: (617) 890-6000
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 [ ]
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CAMBEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 4, 1995 AND AUGUST 31, 1994
(UNAUDITED)
ASSETS
MARCH 4, AUGUST 31,
1995 1994
------------- -------------
<S> <C> <C>
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS $ 2,137,912 $ 6,126,289
ACCOUNTS RECEIVABLE, LESS RESERVES OF
$140,000 ON MARCH 4, 1995 AND
$138,000 ON AUGUST 31, 1994 8,509,191 6,853,233
CURRENT PORTION OF INVESTMENT IN SALES-TYPE LEASES,
NET OF UNEARNED INTEREST INCOME OF $32,000 ON
MARCH 4, 1995 AND $45,000 ON AUGUST 31, 1994 361,070 404,622
INVENTORIES 18,310,174 14,153,739
PREPAID TAXES 2,089,410 2,946,025
PREPAID EXPENSES 621,253 757,072
-------------- --------------
TOTAL CURRENT ASSETS $ 32,029,010 $ 31,240,980
-------------- --------------
LONG-TERM INVESTMENT IN SALES-TYPE LEASES, NET
OF UNEARNED INTEREST INCOME OF $22,000 ON
MARCH 4, 1995 AND $35,000 ON AUGUST 31, 1994 $ 305,749 $ 475,900
LEASED EQUIPMENT, AT COST, NET OF ACCUMULATED
DEPRECIATION OF $223,000 ON MARCH 4, 1995 AND
$167,000 ON AUGUST 31, 1994 $ 374,580 $ 302,410
PROPERTY AND EQUIPMENT, AT COST:
MACHINERY AND EQUIPMENT $ 7,972,428 $ 7,932,084
FURNITURE AND FIXTURES 243,194 240,239
LEASEHOLD IMPROVEMENTS 554,507 357,796
-------------- --------------
$ 8,770,129 $ 8,530,119
LESS - ACCUMULATED DEPRECIATION AND AMORTIZATION 7,044,325 6,647,467
-------------- --------------
NET PROPERTY AND EQUIPMENT $ 1,725,804 $ 1,882,652
OTHER ASSETS
TECHNOLOGY LICENSE/MARKETING AGREEMENT,
NET OF ACCUMULATED AMORTIZATION OF $5,242,000
ON MARCH 4, 1995 AND $4,392,000 ON AUGUST 31, 1994 $ 3,258,341 $ 4,108,343
OTHER 37,926 37,958
-------------- --------------
TOTAL ASSETS $ 37,731,410 $ 38,048,243
============== ==============
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CAMBEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 4, 1995 AND AUGUST 31, 1994
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' INVESTMENT
MARCH 4, AUGUST 31,
1995 1994
------------- --------------
CURRENT LIABILITIES:
NOTES PAYABLE $ 23,874 $ 159,152
ACCOUNTS PAYABLE 5,298,596 4,408,747
OBLIGATIONS FOR TRADE-IN MEMORY 1,870,317 662,067
ACCRUED EXPENSES 2,305,499 4,374,102
------------- --------------
TOTAL CURRENT LIABILITIES $ 9,498,286 $ 9,604,068
------------- --------------
REVOLVING CREDIT AGREEMENT $ 2,300,000 $ 3,900,000
DEFERRED REVENUE $ 2,133,209 $ 1,431,311
STOCKHOLDERS' INVESTMENT:
PREFERRED STOCK, $1.00 PAR VALUE PER SHARE
AUTHORIZED - 3,000,000 SHARES
ISSUED - NONE -- --
COMMON STOCK, $.10 PAR VALUE PER SHARE -
AUTHORIZED - 25,000,000 SHARES
ISSUED - 10,257,873 SHARES ON MARCH 4, 1995 AND
10,157,064 SHARES ON AUGUST 31, 1994 $ 1,025,787 $ 1,015,706
CAPITAL IN EXCESS OF PAR VALUE 14,512,260 14,154,516
CUMULATIVE TRANSLATION ADJUSTMENT 75,978 68,862
RETAINED EARNINGS 9,040,656 8,728,546
LESS - COST OF SHARES HELD IN TREASURY -
1,534,356 ON MARCH 4, 1995
AND 1,534,356 ON AUGUST 31, 1994 (854,766) (854,766)
------------- --------------
TOTAL STOCKHOLDERS' INVESTMENT $ 23,799,915 $ 23,112,864
------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT $ 37,731,410 $ 38,048,243
============= ==============
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</TABLE>
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<TABLE>
CAMBEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED MARCH 4, 1995 AND FEBRUARY 26, 1994
(UNAUDITED)
QUARTER ENDED SIX MONTHS ENDED
MARCH 4, FEBRUARY 26, MARCH 4, FEBRUARY 26,
1995 1994 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUES $10,511,618 $ 10,060,061 $ 20,678,350 $ 19,148,426
COST OF SALES 5,892,428 5,285,358 11,309,581 9,640,356
------------ ------------- ------------- -------------
GROSS PROFIT $ 4,619,190 $ 4,774,703 $ 9,368,769 $ 9,508,070
OPERATING EXPENSES:
RESEARCH AND DEVELOPMENT $ 1,673,059 $ 1,640,748 $ 3,160,724 $ 3,134,716
SELLING 2,136,905 1,833,532 4,109,236 3,797,333
GENERAL AND ADMINISTRATIVE 703,940 748,941 1,319,911 1,351,107
------------ ------------- ------------- -------------
$ 4,513,904 $ 4,223,221 $ 8,589,871 $ 8,283,156
------------ ------------- ------------- -------------
OPERATING INCOME $ 105,286 $ 551,482 $ 778,898 $ 1,224,914
OTHER INCOME (EXPENSE):
INTEREST EXPENSE $ (76,854) $ (37,630) $ (139,721) $ (66,866)
INTEREST INCOME 18,888 29,079 46,333 61,107
OTHER INCOME (EXPENSE) 211,724 (380,993) (165,400) (805,994)
------------ ------------- ------------- -------------
INCOME BEFORE INCOME TAXES $ 259,044 $ 161,938 $ 520,110 $ 413,161
PROVISION FOR INCOME TAXES $ 103,000 $ 71,000 $ 208,000 $ 194,000
------------ ------------- ------------- -------------
NET INCOME $ 156,044 $ 90,938 $ 312,110 $ 219,161
============ ============= ============= =============
NET INCOME PER COMMON SHARE $ 0.02 $ 0.01 $ 0.04 $ 0.03
============ ============= ============= =============
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 8,675,000 8,600,000 8,675,000 8,600,000
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CAMBEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED MARCH 4, 1995 AND FEBRUARY 26, 1994
FOR THE SIX MONTHS ENDED
MARCH 4, FEBRUARY 26,
1995 1994
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 312,110 $ 219,161
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization $ 1,336,636 $ 1,364,615
Provision for losses on accounts receivable -- --
Provision for losses on inventory -- --
Amortization of prepaid expenses 15,424 17,290
Common stock issued in lieu of cash 365,148 225,118
Change in assets and liabilities:
Decrease (increase) in accounts receivable (1,655,958) (1,943,174)
Increase in inventory (4,156,435) (3,437,693)
Decrease in investment in sales-type leases 213,703 56,686
Decrease in prepaid taxes 856,615 1,477,263
Decrease (increase) in prepaid expenses 120,395 (79,731)
Decrease in other assets 32 32
Increase in accounts payable 889,849 241,769
Increase (decrease) in obligations for trade-in memory 1,208,250 (2,051,900)
Increase (decrease) in accrued liabilities (2,068,603) 170,523
Increase (decrease) in deferred revenue 701,898 (122,510)
------------- ------------
Total adjustments $ (2,173,046) $ (4,081,712)
------------- ------------
Net cash used in operating activities $ (1,860,936) $ (3,862,551)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of Equipment $ (401,956) $ (405,708)
------------ ------------
Net cash used in investing activities $ (401,956) $ (405,708)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of notes payable $ (135,278) $ (102,898)
Proceeds from sale of common stock 2,677 24,298
Repayments under revolving credit agreement (1,600,000) (50,000)
------------- ------------
Net cash used in financing activities $ (1,732,601) $ (128,600)
Effect of exchange rate changes on cash 7,116 83,046
------------ ------------
Net decrease in cash and cash equivalents $ (3,988,377) $ (4,313,813)
Cash and cash equivalents at beginning of period $ 6,126,289 $ 5,827,673
------------- ------------
Cash and cash equivalents at end of period $ 2,137,912 $ 1,513,860
============= ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 163,213 $ 74,972
Income Taxes 14,003 23,161
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<PAGE>
FORM 10-Q
CAMBEX CORPORATION AND SUBSIDIARIES
For Quarter Ended: March 4, 1995 Commission File No. 0-6933
Notes & Comments:
(1)Significant Accounting Policies
The accompanying consolidated financial statements include the accounts
of the Company and its wholly-owned subsidiaries. All material
intercompany transactions and balances have been eliminated in
consolidation.
The Company has deferred revenue associated with the sale of certain
products which have future performance obligations, principally relating
to reinstallation of IBM memory.
The condensed financial statements included herein have been prepared by
the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although
the Company believes that the disclosures are adequate to make the
information presented not misleading. The information furnished
includes all adjustments and accruals consisting only of normal
recurring accrual adjustments which are, in the opinion of management,
necessary for a fair presentation of results for the interim period. It
is suggested that these condensed financial statements be read in
conjunction with the financial statements and the notes thereto included
in the Company's latest annual report on Form 10-K.
Inventories, which include raw materials, labor and manufacturing
overhead are stated at the lower of cost (first-in, first-out) or market
and consist of the following:
March 4, August 31,
1995 1994
Raw materials $ 2,751,765 $ 2,192,939
Work-in-process 1,709,225 790,892
Finished goods 3,891,184 3,593,472
Trade-in memory 9,958,000 7,576,436
$18,310,174 $14,153,739
=========== ===========
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<PAGE>
FORM 10-Q
CAMBEX CORPORATION AND SUBSIDIARIES
For Quarter Ended: March 4, 1995 Commission File No. 0-6933
Notes & Comments (Continued):
(2) Income and Dividends Per Share
Per share amounts are based on the weighted average number of
shares outstanding during each year plus applicable common stock
equivalents. There were no material differences for per share
amounts assuming full dilution in either year.
(3) Management's Discussion and Analysis of Financial Condition and
Results of Operations
Revenues for the second quarter of fiscal 1995 increased by
approximately $450,000 or 4% from the second quarter of fiscal
1994 due to higher sales of client/server products.
Gross profit as a percentage of revenues was 44% for the second
quarter of fiscal 1995 as compared to 47% in the second quarter
of fiscal 1994, with the decrease primarily due to an increasing
percentage of the Company's revenues being generated from
client/server products for which gross profit margins are
typically lower than those realized on add-in memory sales for
IBM mainframe computers and lower average selling prices and
consequently, lower gross margins on the Company's mainframe
memory products.
Operating expenses for the second quarter of fiscal 1995
increased 6% from the second quarter of fiscal 1994. Selling
expenses increased 17%, from $1,834,000 to $2,137,000, due
primarily to increased staffing relating to the recently
announced disk storage products and expenses in Europe.
Interest expense increased 104%, from $38,000 to $77,000, due to
higher bank borrowings and a higher interest rate on the
Company's Revolving Credit Agreement.
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FORM 10-Q
CAMBEX CORPORATION AND SUBSIDIARIES
For Quarter Ended: March 4, 1995 Commission File No. 0-6933
Notes & Comments (Continued):
(3) Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued)
Other income (expense) in the second quarter of fiscal 1995
included a reversal of an overaccrual of the Company match on the
Company's 401(k) profit sharing retirement plan of $400,000,
favorable European exchange rates of $150,000 and sale of excess
inventory of $75,000, partially offset by approximately $425,000
in amortization expenses relating to the Company's technology
license/marketing agreement. Other expense in the second quarter
of fiscal 1994 included approximately $425,000 in amortization
expenses relating to the Company's technology license/marketing
agreement.
The Company's cash position decreased by $3,988,000 from the end
of fiscal 1994. A significant portion of the Company's business
during the first six months of fiscal 1995 involved the
acceptance of IBM trade-in memory as payment for the Company's
newest mainframe central storage memory. Consequently, the
Company's inventory of IBM memory accounted for $2,382,000 of the
total $4,156,000 increase in inventories. The Company believes
that the trade-in memory is fairly stated at its net realizable
value and will be liquidated for cash.
The Company's prepaid tax asset is realizable through carry-backs
against taxes paid in prior periods or future profitability.
The Company's present operating plans indicate that cash flow
generated from operations will be adequate to meet its
obligations.
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FORM 10-Q
CAMBEX CORPORATION AND SUBSIDIARIES
For Quarter Ended: March 4, 1995 Commission File No. 0-6933
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.
CAMBEX CORPORATION
By: /s/ JOSEPH F. KRUY
Joseph F. Kruy
President
By: /s/ SHELDON M. SCHENKLER
Sheldon M. Schenkler
Chief Financial Officer
Dated:
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-END> MAR-04-1995
<CASH> 2,138
<SECURITIES> 0
<RECEIVABLES> 8,649
<ALLOWANCES> 140
<INVENTORY> 18,310
<CURRENT-ASSETS> 32,029
<PP&E> 8,770
<DEPRECIATION> 7,044
<TOTAL-ASSETS> 37,731
<CURRENT-LIABILITIES> 9,498
<BONDS> 0
<COMMON> 1,026
0
0
<OTHER-SE> 22,774
<TOTAL-LIABILITY-AND-EQUITY> 37,731
<SALES> 20,678
<TOTAL-REVENUES> 20,678
<CGS> 11,310
<TOTAL-COSTS> 11,310
<OTHER-EXPENSES> 8,755
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 140
<INCOME-PRETAX> 520
<INCOME-TAX> 208
<INCOME-CONTINUING> 312
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 312
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
