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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2 TO FORM 10-K
ON
FORM 10-K/A
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES ACT OF 1934
For the fiscal year ended December 31, 1998 [ X ]
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OR THE
SECURITIES ACT OF 1934
For the transition period from .................... to .....................
Commission file number 0-12489
SPECTRAN CORPORATION
...........................................................................
(Exact name of the registrant as specified in its charter)
Delaware 04-2729372
..................................... .................
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
50 Hall Road, Sturbridge, Massachusetts 01566
......................................... .................
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (508) 347-2261
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
None Not Applicable
................... .........................
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.10 par value
................................................................................
(Title of class)
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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
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15 - Acquisitions/Joint Venture
a) Applied Photonic Devices, Inc.
On May 23, 1995 the Company purchased all the outstanding capital stock
of Applied Photonic Devices, Inc. ("APD") for cash and common stock worth
approximately $3.9 million. The Company also retired approximately $600,000 of
APD bank debt. The purchase method of accounting was used and the results of
operations of APD are included in the consolidated financial statements from May
23, 1995. Goodwill of $3.3 million resulted from the purchase and was being
amortized over 15 years. Amortization expense amounted to $217,000 in 1996.
In December 1996, the Company announced the formation of General
Photonics, a 50-50 joint venture between the Company and General Cable. General
Cable purchased certain assets of the Company's optical fiber cable subsidiary,
APD, for approximately $5.8 million and then contributed them to General
Photonics for a 50% equity interest. APD contributed its remaining assets to
General Photonics in exchange for its 50% equity interest. The net assets,
including goodwill, of General Photonics totaled $10.2 million at December 31,
1996. The Company accounts for its interest in the joint venture under the
equity method and no gain or loss was recognized as a result of this
transaction.
b) General Photonics, LLC.
The following is summarized financial information for the Company's
joint venture.
1998 1997
---- ----
Currents Assets $ 4,600 $ 7,006
Other Assets 4,480 3,908
Current Liabilities 1,853 1,640
Total Revenues $ 9,507 $ 12,583
Net Income $(2,047) $ (708)
The following pro forma statement of operations for the year ended
December 31, 1996 presents the results of operations as if the Company had
entered into the joint venture as of January 1, 1996 (in thousands):
Statement of Operations (unaudited)
1996
------
Sales $51,413
Net Income $3,716
------
Net income per Share of Common Stock $ .63
=====
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17 - Quarterly Financial Information (unaudited)
In thousands of dollars except per share data
<TABLE>
Quarters First Second Third Fourth
- --------------------------------------------- ----------- ----------- ------------ -------------
1998
<S> <C> <C> <C> <C>
Net Sales (See A) $15,112 $16,358 $19,288 $20,098
Gross Profit 5,111 2,553 5,414 5,801
Net Income 864 (1,393) 504 536
Earnings per Common
Share-Basic (.20) .07 .08 .12
Earnings per Common
Share-Diluted (.20) .07 .08 .12
1997
Net Sales $16,228 $15,881 $15,638 $14,310
Gross Profit 6,542 5,777 4,795 6,162
Net Income 1,122 1,151 1,239 1,330
Earnings per Common
Share-Basic .18 .19 .17 .18
Earnings per Common
Share-Diluted .17 .18 .16 .17
</TABLE>
A) Due to a change in accounting treatment of certain fiber sales, sales and
cost of sales for the first three quarters of 1998 were reduced by
$115,000, $674,000 and $775,000, respectively. This change had no effect on
previously reported net income or earnings per share.
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SIGNATURE
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.
SPECTRAN CORPORATION
(Registrant)
Dated: November 30, 1999 /s/Charles B. Harrison
---------------------------
Charles B. Harrison
President,
Chief Executive Officer and
Chairman of the Board of Directors
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[Deloitte & Touche Letterhead] _______________________________________________
Deloitte & Touche LLP Telephone: (617) 437-2000
200 Berkeley Street Facsimile: (617) 437-2111
Boston, Massachusetts 02116-5022
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
General Photonics, LLC:
We have audited the accompanying balance sheets of General Photonics, LLC (a
joint venture) as of December 31, 1998 and 1997, and the related statements of
operations, partners' equity, and cash flows for the year ended December 31,
1998 and for the period from December 23, 1996 (date of incorporation) to
December 31, 1997. These financial statements are the responsibility of General
Photonics, LLC's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of General Photonics, LLC at December 31, 1998
and 1997, and the results of its operations, its partners' equity and its cash
flows for the year ended December 31, 1998 and for the period from December 23,
1996 (date of incorporation) to December 31, 1997 in conformity with generally
accepted accounting principles.
The accompanying financial statements for the year ended December 31, 1998 have
been prepared assuming that the Joint Venture will continue as a going concern.
As discussed in Note 3 to the financial statements, the Joint Venture's
recurring losses, the demand notes due the Joint Venture partners and its
dependence on its Joint Venture partners as both sources of funding and as key
suppliers/customers, raise substantial doubt about its ability to continue as a
going concern. Management's plans concerning these matters are also described in
Note 3. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
As described in Note 3, the Joint Venture is dependent on its partners for a
majority of its sales, its inventory purchases, its support activities and its
short-term cash flow needs. The accompanying financial statements may not
necessarily be indicative of the conditions that would have existed or the
results of operations had the Joint Venture been operated as an unaffiliated
entity.
/s/ Deloitte & Touche LLP
February 16, 1999
