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 the Quarter Ended: September 27, 1997 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
SEPTEMBER 27, 1997 AND DECEMBER 31, 1996
(UNAUDITED)
ASSETS
SEPTEMBER 27, DECEMBER 31,
1997 1996
------------- -------------
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS $ 103,199 $ 615,949
ACCOUNTS RECEIVABLE, LESS RESERVES OF
$131,000 ON SEPTEMBER 27, 1997 AND
$131,000 ON DECEMBER 31, 1996 1,578,296 1,934,708
CURRENT PORTION OF INVESTMENT IN SALES-TYPE LEASES,
NET OF UNEARNED INTEREST INCOME OF $5,000 ON
SEPTEMBER 27, 1997 AND $34,000 ON DECEMBER 31, 1996 58,383 423,220
INVENTORIES 4,579,538 6,200,033
PREPAID TAXES - 2,335,295
PREPAID EXPENSES 73,078 135,721
-------------- --------------
TOTAL CURRENT ASSETS $ 6,392,494 $ 11,644,926
-------------- --------------
LONG-TERM INVESTMENT IN SALES-TYPE LEASES, NET
OF UNEARNED INTEREST INCOME OF $1,000 ON
SEPTEMBER 27, 1997 AND $5,000 ON DECEMBER 31, 1996 $ 40,993 $ 162,971
LEASED EQUIPMENT, AT COST, NET OF ACCUMULATED
DEPRECIATION OF $154,000 ON SEPTEMBER 27, 1997
AND $244,000 ON DECEMBER 31, 1996 $ 65,983 $ 140,417
PROPERTY AND EQUIPMENT, AT COST:
MACHINERY AND EQUIPMENT $ 3,027,962 $ 7,379,202
FURNITURE AND FIXTURES 247,173 304,666
LEASEHOLD IMPROVEMENTS 620,949 620,949
-------------- --------------
$ 3,896,084 $ 8,304,817
LESS - ACCUMULATED DEPRECIATION AND AMORTIZATION 3,349,135 7,258,383
-------------- --------------
NET PROPERTY AND EQUIPMENT $ 546,949 $ 1,046,434
OTHER ASSETS
TECHNOLOGY LICENSE/MARKETING AGREEMENT,
NET OF ACCUMULATED AMORTIZATION OF $8,500,000
ON SEPTEMBER 27, 1997 AND ON DECEMBER 31, 1996 $ - $ -
OTHER 37,830 37,830
-------------- --------------
TOTAL ASSETS $ 7,084,249 $ 13,032,578
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CONSOLIDATED BALANCE SHEETS
SEPTEMBER 27, 1997 AND DECEMBER 31, 1996
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' INVESTMENT
SEPTEMBER 27, DECEMBER 31,
1997 1996
------------- --------------
CURRENT LIABILITIES:
REVOLVING CREDIT AGREEMENT $ -- $ 1,800,000
ACCOUNTS PAYABLE 4,670,813 4,329,638
OBLIGATIONS FOR TRADE-IN MEMORY 1,014,250 1,036,235
ACCRUED EXPENSES 710,429 1,319,237
------------- --------------
TOTAL CURRENT LIABILITIES $ 6,395,492 $ 8,485,110
------------- --------------
DEFERRED REVENUE $ 555,352 $ 1,022,751
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 - 10,636,108 SHARES ON SEPTEMBER 27, 1997 AND
10,614,139 SHARES ON DECEMBER 31, 1996 $ 1,063,611 $ 1,061,414
CAPITAL IN EXCESS OF PAR VALUE 15,814,783 15,792,105
CUMULATIVE TRANSLATION ADJUSTMENT 246,819 183,355
RETAINED EARNINGS (DEFICIT) (16,137,042) (12,657,391)
LESS - COST OF SHARES HELD IN TREASURY -
1,534,356 ON SEPTEMBER 27, 1997 AND
ON DECEMBER 31, 1996 (854,766) (854,766)
------------- --------------
TOTAL STOCKHOLDERS' INVESTMENT $ 133,405 $ 3,524,717
------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT $ 7,084,249 $ 13,032,578
============= ==============
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CAMBEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 27, 1997 AND SEPTEMBER 28, 1996
(UNAUDITED)
QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 27, SEPTEMBER 28, SEPTEMBER 27, SEPTEMBER 28,
1997 1996 1997 1996
------------ ------------ ------------ ------------
REVENUES $ 1,225,125 $ 4,192,637 $ 8,627,760 $ 19,335,991
COST OF SALES 1,095,324 2,588,188 5,793,832 10,404,423
------------ ------------- ------------- -------------
GROSS PROFIT $ 129,801 $ 1,604,449 $ 2,833,928 $ 8,931,568
OPERATING EXPENSES:
RESEARCH AND DEVELOPMENT $ 555,043 $ 886,381 $ 2,067,447 $ 2,969,174
SELLING 705,902 1,679,713 2,912,404 5,483,343
GENERAL AND ADMINISTRATIVE 357,672 484,262 1,070,165 1,713,160
------------ ------------- ------------- -------------
$ 1,618,617 $ 3,050,356 $ 6,050,016 $ 10,165,677
------------ ------------- ------------- -------------
OPERATING INCOME (LOSS) $(1,488,816) $ (1,445,907) $ (3,216,088) $ (1,234,109)
OTHER INCOME (EXPENSE):
INTEREST EXPENSE $ (30,999) $ (61,681) $ (74,453) $ (196,814)
INTEREST INCOME 2,368 28,317 21,686 84,889
OTHER INCOME (EXPENSE) (166,886) (439,536) (210,796) (1,356,613)
------------ ------------- ------------- -------------
INCOME (LOSS) BEFORE INCOME TAXES $(1,684,333) $ (1,918,807) $ (3,479,651) $ (2,702,647)
PROVISION FOR INCOME TAXES $ 0 $ 0 $ 0 $ 0
------------ ------------- ------------- -------------
NET INCOME (LOSS) $(1,684,333) $ (1,918,807) $ (3,479,651) $ (2,702,647)
============ ============= ============= =============
NET INCOME (LOSS) PER COMMON SHARE $ (0.18) $ (0.21) $ (0.38) $ (0.30)
============ ============= ============= =============
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 9,090,000 9,000,000 9,090,000 8,975,000
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CAMBEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 27, 1997 AND SEPTEMBER 28, 1996
FOR THE NINE MONTHS ENDED
SEPTEMBER 27, SEPTEMBER 28,
1997 1996
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ (3,479,651) $ (2,702,647)
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization $ 587,258 $ 1,841,578
Amortization of prepaid expenses 28,990 14,074
Common stock issued in lieu of cash -- 161,715
Change in assets and liabilities:
Decrease (increase) in accounts receivable 356,412 (2,225,309)
Decrease in inventory 1,620,495 886,207
Decrease in investment in sales-type leases 486,815 10,255
Decrease in prepaid taxes 2,335,295 2,257,928
Decrease in prepaid expenses 33,653 3,787
Decrease in other assets -- 45
Increase in accounts payable 341,175 372,906
Decrease in obligations for trade-in memory (21,985) (319,456)
Increase (decrease) in accrued liabilities (608,808) 419,544
Increase (decrease) in deferred revenue (467,399) 172,539
------------- ------------
Total adjustments $ 4,691,901 $ 3,595,813
------------- ------------
Net cash provided by operating activities $ 1,212,250 $ 893,166
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of Equipment $ (13,339) $ (123,258)
------------ ------------
Net cash used in investing activities $ (13,339) $ (123,258)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock $ 24,875 $ 61,491
Repayments under revolving credit agreement (1,800,000) (920,000)
------------- ------------
Net cash used in financing activities $ (1,775,125) $ (858,509)
Effect of exchange rate changes on cash 63,464 (117,281)
------------ ------------
Net increase (decrease) in cash and cash equivalents $ (512,750) $ (205,882)
Cash and cash equivalents at beginning of period $ 615,949 $ 588,322
------------- ------------
Cash and cash equivalents at end of period $ 103,199 $ 382,440
============= ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 43,454 $ 196,814
Income Taxes -- 12,263
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FORM 10-Q
CAMBEX CORPORATION AND SUBSIDIARIES
For The Quarter Ended: September 27, 1997 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, relating
to reinstallation of IBM memory and maintenance.
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:
September 27, December 31,
1997 1996
Raw materials $2,463,054 $ 2,386,454
Work-in-process 1,004,292 861,073
Finished goods 1,072,192 2,765,066
Trade-in memory - 187,500
$4,579,538 $ 6,200,033
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FORM 10-Q
CAMBEX CORPORATION AND SUBSIDIARIES
For The Quarter Ended: September 27, 1997 Commission File: 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 third quarter ended September 27, 1997 decreased
71% from the comparable three months of the prior year due
to decreased sales of the Company's mainframe storage and
client/server storage products.
The gross profit of 11% for the third quarter of 1997 was lower
than the 38% achieved in 1996 due to product mix and to the
relative amount of fixed costs in relation to lower revenues.
Operating expenses for the three months ended September 27, 1997
decreased 47% from the comparable three months of the prior year
due principally to the cost savings achieved through a work force
reduction and other expense controls put in place.
Other expense for the three months ended September 28, 1996
included approximately $425,000 in amortization expenses relating
to the Company's technology license/marketing agreement, which
was amortized over a five year period, ending in 1996.
During the first quarter, the Company received approximately
$2,300,000 in cash from the Internal Revenue Service, which
represented the refund due from prior periods. This refund was
then used to repay the Company's outstanding debt under its
Revolving Credit Agreement. After the final payment to its bank,
the Revolving Credit Agreement was terminated and the bank
released its security interest in the Company's accounts
receivable, inventory and general intangibles.
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FORM 10-Q
CAMBEX CORPORATION AND SUBSIDIARIES
For The Quarter Ended: September 27, 1997 Commission File: 0-6933
Notes & Comments (Continued):
On July 25, 1997, the Cambex common stock ceased being traded
on the Nasdaq stock market and began trading on the OTC bulletin
board (symbol: CBEX).
On October 10, 1997, Cambex filed a petition for reorganization
under Chapter 11 of the United States Bankruptcy Code in
Boston, Massachusetts. By filing this petition, Cambex will be
given the opportunity to reorganize and restructure its
indebtedness under court protection. The Company plans to file
its Plan for Reorganization during the first quarter of 1998.
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FORM 10-Q
CAMBEX CORPORATION AND SUBSIDIARIES
For The Quarter Ended: September 27, 1997 Commission File: 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: November 10, 1997
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