|
|
|
|
|
|
|
|
|
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Amendment Number 1
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended February 29, 2000
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: 0-10843
CSP Inc.
Massachusetts
04-2441294
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
40 Linnell Circle, Billerica, Massachusetts
01821-3901
(Address of principal executive offices)
(Zip Code)
(978) 663-7598
(Registrant's
telephone number, including area code)
None
(Former name, former address, former fiscal year, if changed since last report)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 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. [X] Yes [ ] No
APPLICABLE ONLY TO CORPORATE
ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
Class
Outstanding April 11, 2000
Common Stock, $.01 par value
3,587,415 shares
This amendment is being filed to correct Part I, Item I, Financial Statements. We are amending Part I, Item 1, Financial Statements, solely to correct a typographical error in Note 4 to the Financial Statements. For convenience, the entire text of the Financial Statements is set forth below.
As originally filed, Note 4, "Stock Repurchase", stated that at February 29, 2000, the Company had repurchased 480,996 or 65% of the total shares authorized to be purchased. The figure of 480,996 was stated in error. The correct number was 482,823 or 65% of the total shares authorized to be purchased.
As a result, the number of shares repurchased by the Company during the second fiscal quarter, when the cumulative total of shares purchased increased from 481,645 to 482,823, was 1,178 shares.
CSP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except par value)
|
February 29, |
August 27, |
|
|
2000 |
1999 |
|
|
(Unaudited) |
(Audited) |
|
|
Assets |
||
|
Current assets: |
||
|
Cash and cash equivalents |
$1,351 |
$3,749 |
|
Short-term investments |
10,701 |
10,046 |
|
Accounts receivable, net |
12,023 |
7,395 |
|
Inventories |
5,933 |
5,805 |
|
Deferred income taxes |
1,104 |
1,104 |
|
Prepaid expenses |
1,273 |
1,545 |
|
Total current assets |
32,385 |
29,644 |
|
Property, equipment and improvements, net |
3,336
|
3,497 |
|
Other assets: |
||
|
Long-term investments |
468 |
470 |
|
Land held for future development |
163 |
163 |
|
Deferred income taxes |
735 |
735 |
|
Goodwill, net |
1,103 |
1,226 |
|
Other assets |
1,399 |
1,378 |
|
Total other assets |
3,868 |
3,972 |
|
Total assets |
$39,589 |
$37,113 |
|
Liabilities and Shareholders' Equity |
||
|
Current liabilities: |
||
|
Accounts payable and accrued expenses |
$8,155 |
$6,128 |
|
Income taxes payable |
468 |
47 |
|
Total current liabilities |
8,623 |
6,175 |
|
Deferred compensation and retirement plans |
3,603 |
3,573 |
|
Commitments and contingencies |
||
|
Shareholders' equity: |
||
|
Common stock, $.01 par; authorized, 7,500 shares; issued 4,051 |
||
|
and 4,020 shares |
41 |
40 |
|
Additional paid-in capital |
11,031 |
10,812 |
|
Retained earnings |
19,582 |
19,287 |
|
Accumulated other comprehensive income |
(794) |
(456) |
|
29,860 |
29,683 |
|
|
Less treasury stock, at cost, 483 and 449 shares |
2,497 |
2,318 |
|
Total shareholders' equity |
27,363 |
27,365 |
|
Total liabilities and shareholders' equity |
$39,589 |
$37,113 |
|
See accompanying notes to consolidated financial statements. |
CSP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Amounts in thousands, except for per share data)
(Unaudited)
/--For the three months ended-/ /-For the six months ended-/
|
February 29, |
February 26, |
February 29, |
February 26, |
|
|
2000 |
1999 |
2000 |
1999 |
|
|
Sales: |
||||
|
Systems |
$3,988 |
$4,376 |
$6,247 |
$9,420 |
|
Service and system integration |
13,264 |
10,252 |
25,889 |
16,136 |
|
E-Commerce software |
480 |
220 |
887 |
346 |
|
Other software |
628 |
737 |
1,071 |
1,198 |
|
Total sales |
18,360 |
15,585 |
34,094 |
27,100 |
|
Cost of Sales: |
||||
|
Systems |
1,522 |
1,999 |
2,627 |
3,963 |
|
Service and system integration |
10,748 |
8,141 |
21,508 |
12,099 |
|
E-Commerce software |
284 |
66 |
445 |
126 |
|
Other software |
207 |
197 |
370 |
292 |
|
Total cost of sales |
12,761 |
10,403 |
24,950 |
16,480 |
|
Gross profit |
5,599 |
5,182 |
9,144 |
10,620 |
|
Operating expenses: |
||||
|
Engineering and development |
957 |
976 |
2,050 |
2,105 |
|
Selling, general & administration |
3,492 |
3,498 |
6,681 |
6,846 |
|
Total operating expenses |
4,449 |
4,474 |
8,731 |
8,951 |
|
Operating income |
1,150 |
708 |
413 |
1,669 |
|
Other income |
64 |
143 |
142 |
229 |
|
Income before income taxes |
1,214 |
851 |
555 |
1,898 |
|
Provision for income taxes |
589 |
416 |
260 |
987 |
|
Net income |
$625 |
$435 |
$295 |
$911 |
|
Net income per share - basic |
$0.18 |
$0.12 |
$0.08 |
$0.25 |
|
Weighted average shares outstanding - basic |
3,567 |
3,597 |
3,566 |
3,589 |
|
Net income per share - diluted |
$0.16 |
$0.12 |
$0.08 |
$0.25 |
|
Weighted average shares outstanding - diluted |
3,825 |
3,664 |
3,809 |
3,645 |
See accompanying notes to consolidated financial statements.
CSP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
/---Three months ended---/ /--Six Months Ended--/
|
February |
February |
February |
February |
|
|
29, 2000 |
26, 1999 |
29, 2000 |
26, 1999 |
|
|
Cash flows from operating activities: |
||||
|
Net income |
$625 |
$435 |
$295 |
$911 |
|
Adjustments to reconcile net income to net cash |
||||
|
used in operating activities: |
||||
|
Depreciation and amortization |
334 |
154 |
680 |
609 |
|
Deferred compensation and retirement plans |
46 |
-- |
30 |
202 |
|
Deferred income taxes |
-- |
(94) |
-- |
(138) |
|
Other |
42 |
169 |
(21) |
3 |
|
Changes in current assets and liabilities: |
||||
|
Increase in accounts receivable, net |
(2,244) |
(3,976) |
(4,628) |
(4,060) |
|
(Increase) decrease in inventories |
(245) |
298 |
(128) |
816 |
|
(Increase) decrease in prepaid expenses |
235 |
(44) |
272 |
(219) |
|
Increase (decrease) in accounts payable and |
||||
|
and accrued expenses |
(162) |
3,859 |
2,027 |
2,802 |
|
Increase (decrease) in income taxes payable |
1,033 |
(727) |
421 |
(885) |
|
Net cash (used in) provided by operating activities |
(336) |
74 |
(1,052) |
41 |
|
Cash flows from investing activities: |
||||
|
Purchases of available-for-sale securities |
(68) |
(180) |
(147) |
(180) |
|
Purchases of held-to-maturity securities |
(19,622) |
(6,468) |
(28,364) |
(12,895) |
|
Sales of available-for-sale securities |
98 |
147 |
145 |
147 |
|
Maturities of held-to-maturity securities |
18,839 |
7,312 |
27,713 |
12,758 |
|
Property, equipment and improvements |
(285) |
(371) |
(396) |
(512) |
|
Net cash (used in) provided by investing activities |
(1,038) |
440 |
(1,049) |
(682) |
|
Cash flows from financing activities: |
||||
|
Proceeds from issuance of shares under employee |
||||
|
stock purchase plan |
-- |
81 |
36 |
81 |
|
Proceeds from stock options |
184 |
36 |
184 |
36 |
|
Purchase of treasury stock |
(6) |
-- |
(179) |
-- |
|
Net cash provided by financing activities |
178 |
117 |
41 |
117 |
|
Effects of exchange rate on cash |
(314) |
(183) |
(338) |
(109) |
|
Net increase (decrease) in cash |
(1,510) |
448 |
(2,398) |
(633) |
|
Cash and cash equivalents, beginning of period |
2,861 |
2,832 |
3,749 |
3,913 |
|
Cash and cash equivalents, end of period |
$1,351 |
$3,280 |
$1,351 |
$3,280 |
|
Supplementary cash flow information: |
||||
|
Cash paid for income taxes, net |
$333 |
$2,527 |
$626 |
$2,602 |
|
Cash paid for interest |
$63 |
$47 |
$80 |
$47 |
See accompanying notes to consolidated financial statements.
CSP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The accompanying financial statements have been prepared by the Company, without audit, and reflect all adjustments which, in the opinion of management, are necessary for a fair statement of the results of the interim periods presented. All adjustments were of a normal recurring nature. Certain information and footnote disclosures normally included in the annual financial statements, which are prepared in accordance with generally accepted accounting principles, have been condensed or omitted. Accordingly, the Company believes that although the disclosures are adequate to make the information presented not misleading, the financial statements should be read in conjunction with the footnotes contained in the Company's Annual Report on Form 10-K for the fiscal year ended August 27, 1999.
The Company has changed its fiscal year from the last Friday in August in Fiscal 1999 to the last day in August for Fiscal 2000. In Fiscal 1999 each quarter was 13 weeks in length ending on the last Friday of the quarter. Beginning in Fiscal 2000 each quarter will end on the last day of the last month of the quarter. Fiscal Year 2000 will be 53 weeks in length compared to 52 weeks in Fiscal 1999. The effect of the change is not expected to have a material effect on the Company's financial statements for Fiscal 2000.
Certain reclassifications were made to the 1999 financial statements to conform to the 2000 presentation.
Inventories consist of the following (in thousands):
|
February 29, |
August 27, |
|
|
2000 |
1999 |
|
|
Raw materials |
$1,641 |
$1,422 |
|
Work in process |
268 |
227 |
|
Finished goods |
4,024 |
4,156 |
|
Total |
$5,933 |
$5,805 |
On October 9, 1986 the Board of Directors authorized the Company to repurchase up to 344,892 additional shares of the outstanding stock at market price. On September 28, 1995 the Board of Directors authorized the Company to repurchase up to 199,650 additional shares of the outstanding stock at market price. The timing of stock purchases are made at the discretion of management. On October 19, 1999 the Board of Directors authorized the Company to repurchase up to 200,000 additional shares of the outstanding stock at market price. At February 29, 2000, the Company has repurchased 482,823 or 65% of the total shares authorized to be purchased.
The reconciliation of the numerators and denominators of the basic and diluted net income (loss) per common share computations for the Company's reported net income (loss) is as follows:
/-------Three months ended------/ /------Six months ended-----/
|
February 29, |
February 26, |
February 29, |
February 26, |
|
|
(In thousands, except per share |
2000 |
1999 |
2000 |
1999 |
|
Amounts) |
||||
|
Basic net income |
$625 |
$435 |
$295 |
$911 |
|
Weighted average number of shares |
||||
|
Outstanding - basic |
3,567 |
3,597 |
3,566 |
3,589 |
|
Incremental shares from the assumed |
|
|
||
|
Exercise of stock options |
258 |
67 |
243 |
56 |
|
Weighted average number of shares |
||||
|
Outstanding - dilutive |
3,825 |
3,664 |
3,809 |
3,645 |
|
Net income per share - basic |
$0.18 |
$0.12 |
$0.08 |
$0.25 |
|
Net income per share - diluted |
$0.16 |
$0.12 |
$0.08 |
$0.25 |
The Company's comprehensive income (loss) is as follows:
/----Three months ended-----/ /------Six months ended--------/
|
February 29, |
February 26, |
February 29, |
February 26, |
|
|
2000 |
1999 |
2000 |
1999 |
|
|
Net income |
$625 |
$435 |
$295 |
$911 |
|
Other comprehensive income (loss): |
||||
|
Foreign translation adjustment |
(293) |
(184) |
(391) |
(109) |
|
Unrealized gain (loss) on investments |
(21) |
(43) |
53 |
28 |
|
Total comprehensive income (loss) |
$311 |
$208 |
($43) |
$830 |
The following table presents certain operating segment information (Amounts in thousands).
|
System and |
|||||
|
Service |
E-Commerce |
Other |
|||
|
Systems |
Integration |
Software |
Software |
Total |
|
|
Quarter ended 2/29/00 |
|||||
|
Net Sales |
$3,988 |
$13,264 |
$480 |
$628 |
$18,360 |
|
Profit(loss) from operations |
486 |
1,183 |
(523) |
4 |
1,150 |
|
Identifiable assets |
21,720 |
15,436 |
556 |
1,877 |
39,589 |
|
Capital expenditures |
66 |
212 |
7 |
-- |
285 |
|
Depreciation |
180 |
82 |
3 |
7 |
272 |
|
Quarter ended 2/26/99 |
|||||
|
Net Sales |
$4,376 |
$10,252 |
$220 |
$737 |
$15,585 |
|
Profit(loss) from operations |
125 |
509 |
(17) |
91 |
708 |
|
Identifiable assets |
22,432 |
15,807 |
293 |
2,211 |
40,743 |
|
Capital expenditures |
279 |
84 |
2 |
6 |
371 |
|
Depreciation |
75 |
43 |
2 |
10 |
130 |
|
Six months ended 2/29/00 |
|||||
|
Net Sales |
$6,247 |
$25,889 |
$887 |
$1,071 |
$34,094 |
|
Profit(loss) from operations |
19 |
1,731 |
(1,117) |
(220) |
413 |
|
Identifiable assets |
21,720 |
15,436 |
556 |
1,877 |
39,589 |
|
Capital expenditures |
128 |
243 |
8 |
17 |
396 |
|
Depreciation |
377 |
158 |
5 |
17 |
557 |
|
Six months ended 2/26/99 |
|||||
|
Net Sales |
$9,420 |
$16,136 |
$346 |
$1,198 |
$27,100 |
|
Profit(loss) from operations |
976 |
880 |
(254) |
67 |
1,669 |
|
Identifiable assets |
22,432 |
15,807 |
293 |
2,211 |
40,743 |
|
Capital expenditures |
319 |
177 |
4 |
12 |
512 |
|
Depreciation |
349 |
151 |
3 |
20 |
523 |
Each segment is broken down by related business activities, which cross different business operations. These segments are based on the different customer activity of the Company. CSPI has four major segments: systems which includes company manufactured hardware products, systems integration and services which includes maintenance of the Company and other systems sold and integration and sale of third party hardware products and services, E-Commerce software, and other software products which are developed by the Company.
Profit from operations is sales less cost of sales, engineering and development, selling, general and administrative expenses but is not affected by either non-operating charges/income or by income taxes. Non operating charges/income consists principally of investment income and interest expense.
In calculating profit from operations for individual operating segments, substantial administration expenses incurred at the operating level are common to more than one segment and are allocated based on a sales basis except for those related to E-Commerce software which is allocated based upon employee headcount.
All intercompany transactions have been eliminated.
Identifiable assets include deferred income tax assets and other financial instruments managed by the Company. Capital expenditures common to more than one segment are allocated on a sales basis.
On March 2, 2000 the Company made a $2 million investment in exchange for two million shares of VerticalBuyer, Inc. which represents a 11.7% ownership interest. VerticalBuyer is a privately held holding company for a network of Internet sites formed to capitalize on business to business e-commerce opportunities. VerticalBuyer commenced initial operations in February 2000 in the global commercial lighting and electrical markets estimated to be approximately a $140 billion market. The Company has warrants to purchase an additional three million shares for $1 each. The warrants are callable at $.001 per warrant. The first 1,000,000 warrants are callable thirty days after the effective date of the registration. The second 1,000,000 warrants are callable thirty days after the stock has traded at $2 per share for twenty consecutive days. The third 1,000,000 warrants are callable after the stock has traded at $3 per share for twenty consecutive days.
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.
CSP Inc.
(Registrant)
Date: April 17, 2000
By: /s/ Alexander R. Lupinetti
Chief Executive Officer,
President and Chairman
Date: April 17, 2000
By: /s/ Gary W. Levine
Vice President of Finance,
Chief Financial Officer
|
|