<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q/A
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 27, 1999
-------------
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to _____________
Commission file number 012378
------
CARLETON CORPORATION
--------------------
(Exact name of registrant as specified in its charter)
Minnesota 41-1349953
--------- ----------
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification Number)
10729 Bren Road East, Minnetonka, Minnesota 55343
------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (612) 238-4000
---------------
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
---------------- ----------------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $.25 par value 3,346,244
____________________________ _____________________________________
Class Shares outstanding on August 16, 1999
1
<PAGE>
Carleton Corporation (the "Company") hereby amends its Quarterly Report on Form
10-Q for the fiscal quarter ended June 27, 1999, to correct a typographical
error in the first sentence in the Results of Operations section in Item 2 of
Part I. As revised, this sentence will provide as follows: Total revenues for
the Company in the quarter ended June 27, 1999 decreased by $195,000 or 15% to
$1,127,000 from $1,322,000 in the quarter ended June 28, 1998.
<TABLE>
<CAPTION>
Part I. Financial Information
Page
<S> <C> <C>
Item 1. Financial Statements
Consolidated Statements of Operations - Three Months Ended
June 27, 1999 and June 28, 1998............................................... 3
Consolidated Balance Sheets - June 27, 1999 and March 28, 1999................ 4
Consolidated Statements of Cash Flows - Three Months Ended
June 27, 1999 and June 28, 1998............................................... 5
Notes to Financial Statements................................................. 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources............................................... 8
Results of Operations......................................................... 8
Part II. Other Information
Item 1. Legal Proceedings..................................................... 13
Item 2. Changes in Securities................................................ 13
Item 3. Defaults Upon Senior Securities....................................... 13
Item 4. Submission of Matters to a Vote of Security Holders................... 13
Item 5. Other Information..................................................... 13
Item 6. Exhibits and Reports on Form 8-K...................................... 13
</TABLE>
2
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
June 27, 1999 June 28, 1998
----------------- ------------------
(restated)
Revenues
<S> <C> <C>
License $ 215 $ 501
Professional services 665 522
Other services 247 299
-------- --------
Total Revenues 1,127 1,322
Costs of Revenues
License 35 126
Professional services 685 590
Other services 48 67
-------- --------
Total Costs of Revenues 768 783
-------- --------
Gross Profit 359 539
Operating Expenses
Research, development and engineering 772 927
Selling, general and administrative 1,252 1,385
Other charges 661 659
-------- --------
Total Operating Expenses 2,685 2,971
-------- --------
(Loss) from Operations (2,326) (2,432)
Other Income (Expense)
Investment income 28 152
Interest expense and other ( 21) (18)
-------- --------
Total Other Income (Expense) 7 134
-------- --------
(Loss) from Operations before Income Taxes (2,319) (2,298)
Income tax expense - -
Net (Loss) ($2,319) ($2,298)
======== ========
(Loss) per Common Share - Basic and Diluted ($.69) ($.69)
======== ========
Weighted Average Shares Outstanding 3,346 3,323
</TABLE>
See accompanying Notes to Financial Statements
3
<PAGE>
Consolidated Balance Sheets
(Dollars in thousands)
<TABLE>
<CAPTION>
(unaudited)
June 27, 1999 March 28, 1999
----------------- ------------------
Assets
Current Assets
<S> <C> <C>
Cash and cash equivalents $ 2,349 $ 3,168
Cash in escrow 66 65
Accounts receivable - net 1,119 2,016
Other 303 296
-------- --------
Total Current Assets 3,837 5,545
Property and Equipment
Property and equipment 2,683 2,666
Less accumulated depreciation (1,927) (1,845)
-------- --------
Net Property and Equipment 756 821
Other Assets
Intangible assets - net of accumulated amortization 3,523 4,184
Capitalized software - net of accumulated 212 231
amortization -------- --------
Total Other Assets 3,735 4,415
Total Assets $ 8,328 $ 10,781
======== ========
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable $ 409 $ 183
Accrued expenses 1,224 1,421
Deferred revenue 796 962
Note payable 1,000 1,000
-------- --------
Total Current Liabilities 3,429 3,566
Long-term Notes Payable 177 174
Shareholders' Equity
Common stock - authorized 6,000,000 shares at $.25 par
value; issued and outstanding at:
June 27, 1999 - 3,346,244 shares
March 28, 1999 - 3,345,918 shares 836 836
Additional paid-in capital 62,779 62,779
Retained deficit (58,893) (56,574)
-------- --------
Total Shareholders' Equity 4,722 7,041
Total Liabilities and Shareholders' Equity $ 8,328 $ 10,781
======== ========
</TABLE>
See accompanying Notes to Financial Statements
4
<PAGE>
Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
June 27, 1999 June 28, 1998
----------------- ------------------
(restated)
Operating Activities:
<S> <C> <C>
Net Loss ($2,319) ($2,298)
Adjustments to reconcile net loss to net cash (used in)
operations:
Depreciation 81 106
Amortization 680 661
Accounts receivable 785 67
Other assets (7) ( 89)
Accounts payable, accrued expenses and
deferred revenue (25) ( 700)
-------- --------
Net cash (used in) operating activities ( 805) ( 2,253)
Investing Activities:
Purchases of property and equipment ( 17) ( 26)
Change in cash held in escrow - 549
-------- --------
Net cash flows from (used in) investing ( 17) 523
activities
Financing Activities:
Notes payable 3 ( 4)
Other stock transactions including option - 29
exercises -------- --------
Net cash flows from financing activities 3 25
-------- --------
Net (decrease) in cash and cash equivalents ( 819) ( 1,705)
Beginning cash and cash equivalents 3,168 11,111
-------- --------
Ending cash and cash equivalents $ 2,349 $ 9,406
======== ========
Supplemental disclosures of cash flow information:
Cash paid for interest 18 19
Cash paid for income taxes 18 8
</TABLE>
See accompanying Notes to Financial Statements
5
<PAGE>
Notes to Financial Statements
(Unaudited)
1. Management Representation
The accompanying unaudited interim financial statements have been prepared
in accordance with the instructions to Form 10-Q and do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. The results of
interim periods are not necessarily indicative of results for the year.
These statements should be read in conjunction with the financial
statements and related notes included in the Company's Annual Report on
Form 10-K for the year ended March 28, 1999.
2. Reverse Stock Split
The Company completed a one-for-five reverse stock split effective with the
close of business on September 15, 1998. Accordingly, all share, per share
and weighted average share information for periods prior to the split have
been restated to reflect the split.
3. Net Loss Per Share
Net loss per share was computed using the weighted average number of common
stock outstanding during the applicable period. There was no impact on the
calculation of the net loss per share resulting from adoption of Financial
Accounting Standards Board Statement No. 128, "Earnings Per Share."
4. Reclassification
Certain prior year items have been reclassified to conform to current year
presentation.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private
Securities Litigation Reform Act of 1995
This Quarterly Report on Form 10-Q contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements involve risks and uncertainties that may cause the
Company's actual results to differ materially from the results discussed in the
forward-looking statements. Factors that might cause such differences include,
but are not limited to, the following: decreased demand for the Company's
products; heightened competition; market acceptance risk; risk of lengthening
sales cycles; risk of technological obsolescence of the Company's products;
inability to manage the Company's cost structure; risks associated with sales of
products outside the United States; increased expenses; failure to obtain new
customers or retain existing customers; inability to carry out marketing and
sales plans; loss or retirement of key executives; risks associated with the
Company's dependence on proprietary technology, including those related to
adequacy of copyright, trademark and trade secret protection; risks associated
with single sources of supply for certain components used in the Company's
products; and changes in interest rates. The Company cautions that any forward-
looking statements made by the Company in this Form 10-Q or in other
announcements made by the Company are further qualified by important factors
that could cause actual results to differ materially from those in the forward-
looking statements, including without limitation the factors set forth on
Exhibit 99.1 to the Company's Annual Report on Form 10-K for the year ended
March 28, 1999.
Restatement of Financial Statements
On October 31, 1997, the Company acquired the former Carleton Corporation in a
transaction accounted for using the purchase method. In accordance with
Accounting Principles Board Opinion No. 16, "Accounting for Business
Combinations," the Company allocated costs of the acquisition to the assets
acquired and liabilities assumed based on their estimated fair values using
valuation methods believed to be appropriate at the time. The Company expensed
in-process research and development (IPR&D) ($9.5 million) related to the
acquisition in accordance with FASB Interpretation No. 4, "Applicability of FASB
Statement No. 2 to Business Combinations Accounted for by the Purchase Method."
In response to the Securities and Exchange Commission letter to the American
Institute of Certified Public Accountants dated September 9, 1998 regarding its
views on IPR&D, the Company re-evaluated its original IPR&D charge taken in
connection with the acquisition. As a result of the re-evaluation, the Company
revised the purchase price allocation and restated its financial statements for
the fiscal year ended March 29, 1998. The effect of this restatement on the
reported consolidated financial statements as of and for the fiscal year ended
March 29, 1998 is disclosed in Note 4 to the Consolidated Financial Statements -
"Acquisition of the former Carleton Corporation" included in Exhibit 13 to the
Company's Annual Report on Form 10-K for the year ended March 28, 1999.
The Consolidated Statement of Operations for the three months ended June 28,
1998 and the Consolidated Statement of Cash Flows for the three months ended
June 28, 1998 included in this Quarterly Report on Form 10-Q differ from the
statements originally filed in the Company's Quarterly Report on Form 10-Q for
the quarter ended June 28, 1998 due to the retrospective effect of the
restatement. As a result, the Company has increased the net loss for the quarter
ended June 28, 1998 by $661,000 to $2,298,000 from $1,637,000 and increased the
amount of amortization of goodwill by $661,000 to $661,000 from $0 from the
amounts previously reported.
7
<PAGE>
Liquidity and Capital Resources
The Company had cash and cash equivalents of approximately $2,349,000 and
$3,168,000 at June 27, 1999 and March 28, 1999, respectively. The Company does
not anticipate any significant capital asset investment in the short term. The
Company currently does not have any outside credit arrangement other than a
$1,000,000 note with U.S. Bank. The note is secured by investments of the
Company. On June 30, 1999, the entire note was rolled over for a new term of
June 30, 1999 to August 30, 1999 at an interest rate of 7.0625%.
The Company's working capital has been declining significantly. The Company
estimates that its current cash balances will not be sufficient to fund
operations of the Company through the end of fiscal 2000. The Company has
retained Dougherty Summit Securities LLC, an investment banking firm that
specializes in financing emerging growth companies, to advise the Company on
strategic financing alternatives. There can be no assurance that the Company
will be able to obtain additional financing on satisfactory terms, or at all. If
the Company is unable to obtain additional financing, it will be forced to cease
operations and it may be forced to seek protection under bankruptcy laws.
Results of Operations
Revenues and Costs of Revenues
- ------------------------------
Total revenues for the Company in the quarter ended June 27, 1999 decreased by
$195,000 or 15% to $1,127,000 from $1,322,000 in the quarter ended June 28,
1998. Lower license revenues and other services revenues in the quarter ended
June 27, 1999 more than offset the increase in professional services revenues
and caused total revenues for the quarter to decline from the level of the
comparable prior year quarter. License revenues accounted for 19% of total
revenues in the quarter ended June 27, 1999 compared to 38% of total revenues in
the quarter ended June 28, 1998. Professional services revenues accounted for
59% of total revenues in the quarter ended June 27, 1999 compared to 39% of
total revenues in the quarter ended June 28, 1998. Other services revenues
accounted for 22% of total revenues in the quarter ended June 27, 1999 compared
to 23% of total revenues in the quarter ended June 28, 1998. The Company
believes that licensing revenues must grow significantly in total and as a
proportion of total revenues in order to achieve profitability.
License revenues decreased by $286,000 or 58% to $215,000 in the quarter ended
June 27, 1999 from $501,000 in the quarter ended June 28, 1998. All of the
license revenue in the quarter ended June 27, 1999 was derived from the
Company's internally developed software and did not include any third party
software that the Company sells under reseller agreements. License revenues were
significantly less than the Company's forecast. Two large license sales that the
Company expected to book in the quarter ended June 27, 1999 did not close. The
Company believes that both of these license sales will close in the second
quarter and that license revenues in fiscal 2000 will exceed fiscal 1999 license
revenues. There can be no assurance, however, that these two sales will close in
the second quarter, or at all, or that the Company's expectations regarding
fiscal 2000 license revenues will be realized. Costs of license revenues
decreased by $91,000 or 72% to $35,000 in the quarter ended June 27, 1999 from
$126,000 in the quarter ended June 28, 1998. The gross profit margin for license
revenues increased to 84% from 75% between the two quarters compared. Due to the
lower level of license sales in the quarter ended June 27, 1999 compared to the
quarter ended June 28, 1998, license costs for commissions and royalties were
significantly lower in the quarter ended June 27, 1999 than in the comparable
prior year quarter and more than offset the increase in capitalized software
amortization recorded in the current quarter ($19,000). The Company expects that
gross profit margins for license revenues will decrease during the remainder of
fiscal 2000. Anticipated license revenues derived from Pure View, the Company's
integrated product suite, include software products that the Company sells under
reseller agreements with third party vendors. The royalties due to third party
vendors are generally 50% or more of the third party component product revenue
that the Company would record in connection with any license sale that includes
the third party component products.
8
<PAGE>
Professional services revenues increased by $143,000 or 27% to $665,000 in the
quarter ended June 27, 1999 from $522,000 in the quarter ended June 28, 1998.
This increase was less than the Company's forecast. Costs of professional
services increased by $95,000 or 16% to $685,000 in the quarter ended June 27,
1999 from $590,000 in the quarter ended June 28, 1998. The gross profit margin
for professional services improved to -3% from -13% between the two quarters
compared. The increase in professional services revenues and the improved gross
profit margin for professional services is the result of an increased
utilization rate of the professional services consultants in the quarter ended
June 27, 1999 compared to the utilization rate of the consultants in the quarter
ended June 28, 1998. During the quarter ended June 27, 1999, one large, long-
term Passport professional services engagement concluded and two large, long-
term Passport engagements began to wind down. The Company has begun cross
training its professional services consultants on all of the Company's products
so that they can be efficiently deployed across any Pure View professional
services engagement. The Company expects professional services revenues and
margins to be negatively impacted by these events at least through the second
quarter of fiscal 2000.
Other services revenues decreased by $52,000 or 17% to $247,000 in the quarter
ended June 27, 1999 from $299,000 in the quarter ended June 28, 1998. Other
services revenues were less than the Company's forecast. The decrease was
primarily the result of non-renewals for the Company's maintenance and support
services by Passport customers acquired in the acquisition of the former
Carleton Corporation. The Company believes that many of the non-renewals were
due to computer hardware upgrades that customers have undertaken in connection
with Year 2000 compliance because the non-renewals related primarily to the
Company's older mainframe product. The Company expects other services revenues
to increase above first quarter levels during the remainder of fiscal 2000.
There can be no assurance, however, that the Company will be able to control the
loss of customers through non-renewal of maintenance and service agreements and
replace that loss through new installations at levels above the rate of
attrition. Costs of other services revenues decreased by $19,000 or 28% to
$48,000 in the quarter ended June 27, 1999 from $67,000 in the quarter ended
June 28, 1998. The gross profit margin for other services revenues increased
slightly to 81% from 78% between the two quarters compared. The decrease in
costs of other services revenues is due entirely to a one-time charge of $34,000
that the Company recorded in the quarter ended June 28, 1998 for an extended
warranty that was sold in connection with a license sale recorded in that
quarter. Absent that one-time charge, costs of other services revenues increased
by $15,000 between the two quarters. To improve customer support for the
Company's Passport products, the Company increased the staffing level for its
technical support group in the quarter ended June 27, 1999. The Company
anticipates that gross profit margins for other services revenues will stabilize
at first quarter levels for the remainder of fiscal 2000.
Expenses
- --------
Research, development and engineering expenses decreased by $155,000 or 17% to
$772,000 in the quarter ended June 27, 1999 from $927,000 in the quarter ended
June 28, 1998. Research, development and engineering expenses consist primarily
of personnel expenses, facility expenses and equipment and software expenses.
The decrease in expenses is primarily the result of personnel expense reductions
($91,000) and decreased facility-related expenses ($26,000) realized between the
two quarters. The Company anticipates that it will continue to invest in
research, development and engineering at current expense levels during the
remainder of fiscal 2000. The focus of the Company's fiscal 2000 investment in
research, development and engineering will be in the areas of ease of use and
increased functionality of the Company's existing products. No software costs
were capitalized either in the quarter ended June 27, 1999 or in the quarter
ended June 28, 1998.
Selling, general and administrative expenses decreased by $133,000 or 10% to
$1,252,000 in the quarter ended June 27, 1999 from $1,385,000 in the quarter
ended June 28, 1998. Selling, general and administrative expenses consist
primarily of personnel expenses, facility expenses and marketing and other
professional fees. The decrease in expenses is primarily the result of the
following factors: personnel reductions that were realized between the two
quarters ($17,000); decreased facility-related expenses ($68,000); and lower
marketing and other professional fees ($24,000). The Company expects selling,
9
<PAGE>
general and administrative expenses to increase above the level experienced in
the quarter ended June 27, 1999 for the remainder of fiscal 2000 but to remain
under comparable fiscal 1999 levels.
Other charges increased by $2,000 or less than 1% to $661,000 in the quarter
ended June 27, 1999 from $659,000 in the quarter ended June 28, 1998. Other
charges consist primarily of amortization of goodwill recorded in connection
with the acquisition of the former Carleton Corporation.
Other Income and Expenses
- -------------------------
Net interest income decreased by $127,000 or 95% to $7,000 in the quarter ended
June 27, 1999 from $134,000 in the quarter ended June 28, 1998. The decrease in
net interest income is due to the decrease in funds that the Company had
available to invest between the two quarters because of its need to fund its
operating losses.
Year 2000 Compliance
Introduction
- ------------
The Company relies heavily on sophisticated information technology ("IT") and
non-information technology ("Non-IT") for its business operations. In addition,
the Company's products consist of sophisticated software products that interface
directly with customers' information technology systems. The Company's Year 2000
(Y2K) compliance issues are, therefore, broad and complex. The Company
established a Y2K Committee in December 1998 to coordinate and support the
Company's Y2K compliance effort.
The Company's Y2K compliance efforts are focused on business-critical items.
Hardware, software (including the Company's software products), systems,
technologies and applications are considered "business-critical" if a failure
would have a material adverse effect on the Company's business, financial
condition or results of operations. The Company believes that its Y2K compliance
effort is on schedule and believes that it will achieve Y2K compliance prior to
January 1, 2000.
Carleton Corporation Software Products
- --------------------------------------
The Company has, and continues to, take significant actions to ensure Y2K
compliance with customers' use of the Carleton family of data integration tools.
The Company has developed a comprehensive suite of Y2K tests and has performed
those tests against its products. The testing of Enterprise Integrator 4.3.1
(now named Pure Integrate), Passport 5.1 for the Mainframe, Passport 5.7.02 (now
named Pure Extract) and Pure Dimension has been completed, and these products
meet the Company's Y2K compliance requirements. The Company completed the
shipment of Y2K compliant versions of its software products to all customers
current on their support agreements during the quarter ended June 27, 1999.
Although the Company believes its Y2K testing has been extensive and rigorous,
in the event that unforeseen compliance issues arise, they will be corrected and
delivered to customers as part of the support agreements between the customer
and the Company. The Company will also take steps to ensure that all releases
subsequent to the above releases and all new products will also be Y2K
compliant.
Internal Business-Critical Infrastructure and Applications Software
- --------------------------------------------------------------------
The Company's compliance efforts for all business-critical infrastructure and
applications software ("IT Systems") have been substantially completed as of
June 27, 1999. The Company has inventoried all of its IT Systems. All of the
Company's internal hardware systems are Y2K compliant. The software packages
that the Company uses for internal processing to support its operations and to
support its ongoing development efforts are obtained from outside vendors. The
Company has acquired and installed Y2K compliant versions of all of its
externally supplied software packages. These products are in operation.
10
<PAGE>
Interfaces with Material Third Parties
- --------------------------------------
The Company is making concerted efforts to understand the Y2K status of third
parties, including property owners of the Company's leased office facilities,
telecommunications vendors, utilities, banks, payroll processors and the trustee
of the Company's 401(k) Investment and Savings Plan. The Y2K non-compliance of
any of these third parties could have a material adverse effect on the Company's
business, financial condition or results of operations. The Company is actively
encouraging Y2K compliance on the part of third parties and is developing
contingency plans in the event of their Y2K non-compliance.
The Company's vendor and product compliance program includes the following
tasks: assessing vendor compliance status; tracking vendor compliance progress;
addressing contract and lease language; developing contingency plans, including
identifying alternate suppliers and assessing the availability of redundant or
backup sources; and sending questionnaires. The Company is requesting assurances
from its vendors and other third party suppliers that they are addressing Y2K
issues and that the products and services purchased by the Company from these
vendors and suppliers will function properly in the year 2000 and beyond. If
third parties fail to respond to these questionnaires, the Company sends further
mail or phone correspondence. Continued failure to respond to these
questionnaires could lead to replacement of these vendors or other third party
suppliers.
Costs to Address Y2K Compliance
- -------------------------------
The total estimated cost for resolving the Company's Y2K issues is not expected
to exceed $110,000, of which approximately $100,000 has been spent through June
27, 1999. This includes the cost of testing the Company's products for Y2K
compliance and costs relating to internal processing systems or vendor-provided
systems that may be incurred in making such systems Y2K compliant. Estimates of
Y2K costs are based on numerous assumptions, and there can be no assurance that
the estimates are correct or that actual costs will not be materially greater
than anticipated.
Contingency Planning and Risks
- ------------------------------
The Company has begun developing contingency plans for Y2K non-compliance. These
plans include identifying alternate suppliers, vendors, procedures, conducting
staff training and developing communication plans. Any significant incremental
costs associated with these plans will not become known until these plans are
fully developed. The Company's standing Y2K Committee has been assigned the task
of developing and coordinating the Y2K non-compliance contingency plan. The
Company's goal is to complete its Y2K non-compliance contingency plan by
September 30, 1999.
Based on its assessments to date, the Company does not believe that it will
experience any material disruption of its internal information processing,
interfacing with customers or processing of orders and billing due to Y2K non-
compliance. However, if certain critical third-party providers, such as those
providers supplying electricity, water or telephone service, experience
difficulties resulting in disruption of service to the Company, a shutdown of
certain of the Company's operations at individual facilities could occur for the
duration of the disruption. The Company believes that the greatest Y2K exposure
exists in the following areas: failure of the electric infrastructure and
failure of the telecommunications (both voice and data) infrastructure. The
Company is working closely with the property owners of the Company's leased
facilities to assess the possibility of providing backup systems to provide
power in the event of an electric infrastructure failure and with its major
telecommunications vendors to provide alternate or redundant telecommunications
availability in the event of a telecommunications infrastructure failure. A
temporary slowdown or cessation of operations at one or more of the Company's
facilities could result in delays in meeting customers' orders, the timing of
billings to and receipt of payment from customers and could result in
complaints, charges or claims. The Y2K non-compliance of customers could
potentially delay the receipt of orders for the Company's products and also the
timing of payments for products already delivered.
11
<PAGE>
The Company believes that its Y2K compliance program, including related
contingency planning, should significantly lessen the possibility of significant
interruptions of normal operations. While costs related to the Y2K non-
compliance of third parties, business interruptions, litigation and other
liabilities related to Y2K issues could materially and adversely affect the
Company's business, results of operations and financial condition, the Company
believes its Y2K compliance effort will enable the Company to manage its Y2K
transition without any material adverse effect on its business, financial
condition or results of operations.
The most reasonably likely worst-case scenario of failure by the Company or its
suppliers or customers to resolve Y2K issues could potentially be a temporary
slowdown or cessation of operations at one or more of the Company's facilities
and/or a temporary inability on the part of the Company to process orders in a
timely manner and to deliver finished products to customers. Delays in meeting
customers' orders could potentially affect the timing of billings to and
payments received from customers and could result in complaints, charges or
claims. Customers' Y2K issues could potentially also delay the receipt of orders
for the Company's products and also the timing of payments to the Company for
products already delivered.
12
<PAGE>
Part II. Other Information
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during this quarter.
13
<PAGE>
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CARLETON CORPORATION
Date: August 18, 1999 By /s/ Robert D. Gordon
--------------------
Robert D. Gordon
President and Chairman of the Board,
Chief Executive Officer,
Chief Financial Officer and
Chief Accounting Officer
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-02-2000
<PERIOD-START> MAR-29-1999
<PERIOD-END> JUN-27-1999
<CASH> 2,415
<SECURITIES> 0
<RECEIVABLES> 1,168
<ALLOWANCES> 49
<INVENTORY> 0
<CURRENT-ASSETS> 3,837
<PP&E> 2,683
<DEPRECIATION> 1,927
<TOTAL-ASSETS> 8,328
<CURRENT-LIABILITIES> 3,429
<BONDS> 177
0
0
<COMMON> 836
<OTHER-SE> 3,886
<TOTAL-LIABILITY-AND-EQUITY> 8,328
<SALES> 215
<TOTAL-REVENUES> 1,127
<CGS> 768
<TOTAL-COSTS> 768
<OTHER-EXPENSES> 2,685
<LOSS-PROVISION> 0
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<INCOME-PRETAX> (2,319)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,319)
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,319)
<EPS-BASIC> (.69)
<EPS-DILUTED> (.69)
</TABLE>
