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: March 29, 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
<PAGE>
<TABLE>
CAMBEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 29, 1997 AND DECEMBER 31, 1996
(UNAUDITED)
ASSETS
<S> <C>
MARCH 29, DECEMBER 31,
1997 1996
------------- -------------
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS $ 430,949 $ 615,949
ACCOUNTS RECEIVABLE, LESS RESERVES OF
$131,000 ON MARCH 29, 1997 AND
$131,000 ON DECEMBER 31, 1996 2,050,167 1,934,708
CURRENT PORTION OF INVESTMENT IN SALES-TYPE LEASES,
NET OF UNEARNED INTEREST INCOME OF $16,000 ON
MARCH 29, 1997 AND $34,000 ON DECEMBER 31, 1996 221,639 423,220
INVENTORIES 6,303,531 6,200,033
PREPAID TAXES - 2,335,295
PREPAID EXPENSES 178,582 135,721
-------------- --------------
TOTAL CURRENT ASSETS $ 9,184,868 $ 11,644,926
-------------- --------------
LONG-TERM INVESTMENT IN SALES-TYPE LEASES, NET
OF UNEARNED INTEREST INCOME OF $3,000 ON
MARCH 29, 1997 AND $5,000 ON DECEMBER 31, 1996 $ 91,862 $ 162,971
LEASED EQUIPMENT, AT COST, NET OF ACCUMULATED
DEPRECIATION OF $270,000 ON MARCH 29, 1997
AND $244,000 ON DECEMBER 31, 1996 $ 114,234 $ 140,417
PROPERTY AND EQUIPMENT, AT COST:
MACHINERY AND EQUIPMENT $ 7,384,095 $ 7,379,202
FURNITURE AND FIXTURES 304,666 304,666
LEASEHOLD IMPROVEMENTS 620,949 620,949
-------------- --------------
$ 8,309,710 $ 8,304,817
LESS - ACCUMULATED DEPRECIATION AND AMORTIZATION 7,433,080 7,258,383
-------------- --------------
NET PROPERTY AND EQUIPMENT $ 876,630 $ 1,046,434
OTHER ASSETS
TECHNOLOGY LICENSE/MARKETING AGREEMENT,
NET OF ACCUMULATED AMORTIZATION OF $8,500,000
ON MARCH 29, 1997 AND ON DECEMBER 31, 1996 $ - $ -
OTHER 37,830 37,830
-------------- --------------
TOTAL ASSETS $ 10,305,424 $ 13,032,578
============== ==============
</TABLE>
-2-
<PAGE>
<TABLE>
<S> <C>
CONSOLIDATED BALANCE SHEETS
MARCH 29, 1997 AND DECEMBER 31, 1996
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' INVESTMENT
MARCH 29, DECEMBER 31,
1997 1996
------------- --------------
CURRENT LIABILITIES:
REVOLVING CREDIT AGREEMENT $ -- $ 1,800,000
ACCOUNTS PAYABLE 4,576,271 4,329,638
OBLIGATIONS FOR TRADE-IN MEMORY 1,071,772 1,036,235
ACCRUED EXPENSES 1,517,142 1,319,237
------------- --------------
TOTAL CURRENT LIABILITIES $ 7,165,185 $ 8,485,110
------------- --------------
DEFERRED REVENUE $ 855,641 $ 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 - 10,615,039 SHARES ON MARCH 29, 1997 AND
10,614,139 SHARES ON DECEMBER 31, 1996 $ 1,061,504 $ 1,061,414
CAPITAL IN EXCESS OF PAR VALUE 15,792,240 15,792,105
CUMULATIVE TRANSLATION ADJUSTMENT 155,099 183,355
RETAINED EARNINGS (DEFICIT) (13,869,479) (12,657,391)
LESS - COST OF SHARES HELD IN TREASURY -
1,534,356 ON MARCH 29, 1997 AND
ON DECEMBER 31, 1996 (854,766) (854,766)
------------- --------------
TOTAL STOCKHOLDERS' INVESTMENT $ 2,284,598 $ 3,524,717
------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT $ 10,305,424 $ 13,032,578
============= ==============
</TABLE>
-3-
<PAGE>
<TABLE>
<S> <C>
CAMBEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED
MARCH 29, 1997 AND MARCH 30, 1996
(UNAUDITED)
FOR THE THREE MONTHS ENDED
MARCH 29, MARCH 30,
1997 1996
------------ ------------
REVENUES $ 3,026,733 $ 8,019,681
COST OF SALES 1,847,546 4,481,745
------------ -------------
GROSS PROFIT $ 1,179,187 $ 3,537,936
OPERATING EXPENSES:
RESEARCH AND DEVELOPMENT $ 764,888 $ 1,166,448
SELLING 1,180,346 2,042,147
GENERAL AND ADMINISTRATIVE 398,110 699,993
------------ -------------
$ 2,343,344 $ 3,908,588
------------ -------------
OPERATING INCOME (LOSS) $(1,164,157) $ (370,652)
OTHER INCOME (EXPENSE):
INTEREST EXPENSE $ (33,578) $ (70,255)
INTEREST INCOME 15,276 26,464
OTHER INCOME (EXPENSE) (29,629) (573,590)
------------ -------------
INCOME (LOSS) BEFORE INCOME TAXES $(1,212,088) $ (988,033)
CREDIT (PROVISION) FOR INCOME TAXES $ - $ -
------------ -------------
NET INCOME (LOSS) $(1,212,088) $ (988,033)
============ =============
NET INCOME (LOSS) PER COMMON SHARE $ (0.13) $ (0.11)
============ =============
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 9,080,000 8,940,000
</TABLE>
-4-
<PAGE>
<TABLE>
<S> <C>
CAMBEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED
MARCH 29, 1997 AND MARCH 30, 1996
FOR THE THREE MONTHS ENDED
MARCH 29, MARCH 30,
1997 1996
------------ -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ (1,212,088) $ (988,033)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization $ 200,880 $ 614,403
Amortization of prepaid expenses 24,740 7,037
Common stock issued in lieu of cash - - 110,938
Change in assets and liabilities:
Increase in accounts receivable (115,459) (427,427)
Decrease (increase) in inventory (103,498) 1,446,782
Decrease in investment in sales-type leases 272,690 118,746
Decrease in prepaid taxes 2,335,295 282
Decrease (increase) in prepaid expenses (67,601) 11,674
Decrease in other assets - - 15
Increase in accounts payable 246,633 260,205
Increase in obligations for trade-in memory 35,537 214,110
Increase (decrease) in accrued liabilities 197,905 (89,599)
Increase (decrease) in deferred revenue (167,110) 119,460
------------- -------------
Total adjustments $ 2,860,012 $ 2,386,626
------------- -------------
Net cash provided by operating activities $ 1,647,924 $ 1,398,593
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of Equipment (4,893) (70,374)
------------ -------------
Net cash used in investing activities $ (4,893) $ (70,374)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock $ 225 $ 29,707
Net borrowings (repayments) under revolving credit agreement (1,800,000) - -
------------- -------------
Net cash provided by (used in) financing activities $ (1,799,775) $ 29,707
Effect of exchange rate changes on cash (28,256) (64,736)
------------ -------------
Net increase in cash and cash equivalents $ (185,000) $ 1,293,190
Cash and cash equivalents at beginning of period $ 615,949 $ 588,322
------------- -------------
Cash and cash equivalents at end of period $ 430,949 $ 1,881,512
============= =============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 33,578 $ 70,255
Income Taxes - - - -
</TABLE>
-5-
<PAGE>
FORM 10-Q
CAMBEX CORPORATION AND SUBSIDIARIES
For The Quarter Ended: March 29, 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, 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 29, December 31,
1977 1966
Raw materials $3,079,579 $ 2,386,454
Work-in-process 693,903 861,073
Finished goods 2,328,549 2,765,066
Trade-in memory 201,500 187,500
$ 6,303,531 $ 6,200,033
- 6 -
<PAGE>
FORM 10-Q
CAMBEX CORPORATION AND SUBSIDIARIES
For The Quarter Ended: March 29, 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 three months ended March 29, 1997 decreased
62% from the comparable three months of the prior year due
principally to decreased sales of the Company's mainframe
storage products.
The gross profit (39%) for the first quarter of 1997 was lower
than the 44% achieved in 1996 due primarily to the relative
amount of fixed costs in relation to lower revenues.
Operating expenses for the three months ended March 29, 1997
decreased 40% 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 March 30, 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.
- 7 -
<PAGE>
FORM 10-Q
CAMBEX CORPORATION AND SUBSIDIARIES
For The Quarter Ended: March 29, 1997 Commission File: 0-6933
Notes & Comments (Continued):
The Company's present operating plans indicate that cash flow
generated from operations will be adequate to meet its
obligations.
Subsequent to the end of the first quarter, the Company
announced that Cambex and Jupiter Technology, Inc. agreed to
terminate the proposed acquisition of Jupiter by Cambex due to
business and stock market conditions.
- 8 -
<PAGE>
FORM 10-Q
CAMBEX CORPORATION AND SUBSIDIARIES
For The Quarter Ended: March 29, 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: May 9, 1997
- 9 -
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-29-1997
<CASH> 431
<SECURITIES> 0
<RECEIVABLES> 2181
<ALLOWANCES> 131
<INVENTORY> 6304
<CURRENT-ASSETS> 9185
<PP&E> 8310
<DEPRECIATION> 7433
<TOTAL-ASSETS> 10305
<CURRENT-LIABILITIES> 7165
<BONDS> 0
0
0
<COMMON> 1062
<OTHER-SE> 1223
<TOTAL-LIABILITY-AND-EQUITY> 10305
<SALES> 3027
<TOTAL-REVENUES> 3027
<CGS> 1848
<TOTAL-COSTS> 1848
<OTHER-EXPENSES> 2357
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 34
<INCOME-PRETAX> (1212)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1212)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1212)
<EPS-PRIMARY> (0.13)
<EPS-DILUTED> (0.13)
</TABLE>
