<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
AMENDMENT NO. 1 TO FORM 10-Q
ON
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 September 30, 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 0-12489
SPECTRAN CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
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)
</TABLE>
Registrant's telephone number, including area code (508) 347-2261
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 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.
The number of shares of the registrant's Common Stock outstanding as of
November 18, 1999, was 7,196,930.
<PAGE> 2
PART I -- FINANCIAL INFORMATION
SPECTRAN CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
IN THOUSANDS EXCEPT PER SHARE AMOUNTS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------ ------------------
1999 1998 1999 1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net Sales........................................... $57,635 $50,758 $14,668 $19,288
Cost of Sales....................................... 43,857 37,680 12,310 13,874
------- ------- ------- -------
Gross Profit...................................... 13,778 13,078 2,358 5,414
Selling and Administrative Expenses................. 10,184 10,260 3,435 3,608
Research and Development Costs...................... 2,102 3,995 678 1,414
------- ------- ------- -------
Income (Loss) from Operations....................... 1,492 (1,177) (1,755) 392
------- ------- ------- -------
Other Income (Expense):
Interest Income................................... 209 181 82 34
Interest Expense.................................. (2,219) (938) (743) (462)
Other, Net (Note 8)............................... (1,005) 2,526 (1,046) 943
------- ------- ------- -------
Other Income (Expense), net....................... (3,015) 1,769 (1,707) 515
------- ------- ------- -------
Income (Loss) before Income Taxes and Equity in
Joint Venture..................................... (1,523) 592 (3,462) 907
Income Taxes (Benefit).............................. (204) 231 (960) 354
------- ------- ------- -------
Net Income (Loss) Before Joint Venture.............. (1,319) 361 (2,502) 553
------- ------- ------- -------
Joint Venture:
Loss from Equity in Joint Venture, less applicable
taxes.......................................... (235) (375) -- (49)
Loss on Sale of Joint Venture, including
applicable tax expense of $947................. (1,336) -- -- --
------- ------- ------- -------
Net Loss on Joint Venture........................... (1,571) (375) -- (49)
------- ------- ------- -------
Net Income (Loss)................................... $(2,890) $ (14) $(2,502) $ 504
======= ======= ======= =======
Net Income (Loss) per Common Share (Note 6):
Basic............................................. $ (0.41) $ (0.00) $ (0.35) $ 0.07
======= ======= ======= =======
Dilutive.......................................... $ (0.41) $ (0.00) $ (0.35) $ 0.07
======= ======= ======= =======
Weighted Average Number of Common Shares
Outstanding:
Basic............................................. 7,040 7,003 7,111 7,004
======= ======= ======= =======
Dilutive.......................................... 7,040 7,003 7,111 7,117
======= ======= ======= =======
</TABLE>
See accompanying notes to these condensed consolidated financial statements.
1
<PAGE> 3
SPECTRAN CORPORATION
CONSOLIDATED BALANCE SHEETS
DOLLARS IN THOUSANDS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- ------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and Cash Equivalents................................. $ 3,741 $ 1,690
Trade Accounts Receivable, net............................ 11,672 12,568
Inventories (Note 2)...................................... 12,618 8,279
Income Taxes Receivable................................... -- 644
Deferred Income Taxes..................................... 1,889 1,889
Prepaid Expenses and Other Current Assets................. 728 1,036
-------- --------
Total Current Assets...................................... 30,648 26,106
Investment in Joint Venture (Note 1)........................ -- 3,239
Property, Plant and Equipment, net (Note 3)................. 66,969 68,495
Other Assets:
License Agreements, net................................... 3,885 4,335
Goodwill, net............................................. 734 793
Other Long-term Assets.................................... 2,377 2,451
-------- --------
Total Other Assets........................................ 6,996 7,579
-------- --------
Total Assets...................................... $104,613 $105,419
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current Maturities of Long-term Debt (Note 4)............. $ 35,000 $ 3,200
Current Portion of License Fees Payable................... 1,000 1,250
Accounts Payable.......................................... 4,115 4,410
Income Taxes Payable...................................... (250) --
Accrued Defined Benefit Pension Liability................. 2,305 1,902
Deferred Income Taxes..................................... 478 478
Accrued Liabilities....................................... 5,226 3,317
-------- --------
Total Current Liabilities................................. 47,874 14,557
Long-term Portion of License Fee Payable.................... 1,750 2,750
Long-term Debt (Note 4)..................................... -- 30,800
Stockholders' Equity:
Common Stock, voting, $.10 par value; authorized
20,000,000 shares; outstanding 7,192,430 shares and
7,003,850 shares in 1999 and 1998, respectively........ 719 700
Common Stock, non-voting, $.10 par value; authorized
250,000 shares;
no shares outstanding.................................. -- --
Paid-in Capital........................................... 50,800 50,252
Retained Earnings......................................... 3,470 6,360
-------- --------
Total Stockholders' Equity................................ 54,989 57,312
-------- --------
Total Liabilities & Stockholders' Equity.......... $104,613 $105,419
======== ========
</TABLE>
See accompanying notes to these condensed consolidated financial statements.
2
<PAGE> 4
SPECTRAN CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
DOLLARS IN THOUSANDS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------
1999 1998
------- --------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Loss.................................................... $(2,890) $ (14)
Reconciliation of net income to net cash provided by
operating activities:
Depreciation and Amortization.......................... 6,665 4,721
Loss on disposition of equipment....................... 39 178
Changes in valuation accounts.......................... (762) 2,403
Loss in joint venture.................................. 235 375
Loss from Sale of Joint Venture........................ 1,336 --
Change in other long-term assets....................... 1 (322)
Changes in operating assets and liabilities:
Accounts receivable.................................... 1,135 (3,975)
Inventories............................................ (3,817) (1,314)
Prepaid expenses and other current assets.............. 308 665
Income taxes payable/receivable........................ (304) (1,084)
Accounts payable and accrued liabilities............... 768 255
------- --------
Net Cash Provided by Operating Activities................... 2,714 1,888
------- --------
Cash Flows from Investing Activities:
Acquisition of property, plant and equipment........... (4,596) (17,561)
Proceeds from Sale of Joint Venture.................... 2,367 --
Purchase of marketable securities...................... -- (9,652)
Proceeds from sale/maturity of marketable securities... -- 16,184
------- --------
Net Cash Used in Investing Activities....................... (2,229) (11,029)
------- --------
Cash Flows from Financing Activities:
Borrowings of long-term debt........................... 1,000 10,000
Proceeds from exercise of stock options and warrants... 566 30
------- --------
Net Cash Provided by Financing Activities................... 1,566 10,030
------- --------
Increase in Cash and Cash Equivalents....................... 2,051 889
Cash and Cash Equivalents at Beginning of Period............ 1,690 445
------- --------
Cash and Cash Equivalents at End of Period.................. $ 3,741 $ 1,334
======= ========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 5
SPECTRAN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The financial information for the three months and nine months ended
September 30, 1999 and 1998, is unaudited but reflects all adjustments
(consisting solely of normal recurring adjustments) which the Company considers
necessary for fair presentation of results for the interim periods. The results
of operations for the three months and nine months ended September 30, 1999 are
not necessarily indicative of the results for the entire year.
The consolidated results for the three months and nine months ended
September 30, 1999 and 1998, include the accounts of SpecTran Corporation (the
"Company") and its wholly-owned subsidiaries, SpecTran Communication Fiber
Technologies, Inc. ("SpecTran Communication"), SpecTran Specialty Optics Company
("SpecTran Specialty"), and Applied Photonic Devices, Inc. ("APD"), which held
the Company's investment in General Photonics, LLC, a 50-50 joint venture
between the Company and General Cable Corporation ("General Cable"), a former
subsidiary of Wassall plc. In December 1996, the Company sold certain of the
assets of APD to General Cable and then contributed the remaining non-cash
assets of APD to General Photonics for a 50% equity interest. The investment in
General Photonics is accounted for under the equity method of accounting
pursuant to which the Company records its 50% interest was General Photonics'
net operating results. Prior to the formation of General Photonics, APD's
results of operations, including net sales and expenses, were consolidated with
those of the Company. All significant intercompany balances and transactions
have been eliminated.
On June 30, 1999, APD sold its fifty-percent interest in General Photonics,
LLC to BICC General Cable Industries, Inc. (formerly known as General Cable
Industries, Inc.). The purchase price paid by BICC General Cable Industries,
Inc. for APD's interest in General Photonics was $2.4 million. As part of the
transaction, General Photonics repaid a loan to SpecTran for $325,000 and BICC
General Cable Industries, Inc. purchased approximately 30,000 kilometers of
optical fiber from SpecTran Communication.
These financial statements supplement, and should be read in conjunction
with, the Company's audited financial statements for the year ended December 31,
1998, as contained in the Company's Form 10-K as filed with the United States
Securities and Exchange Commission.
2. INVENTORIES
Inventories, net consisted of (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- ------------
<S> <C> <C>
Raw Materials...................................... $ 2,199 $ 3,096
Work in Process.................................... 4,289 1,277
Finished Goods..................................... 6,130 3,906
------- -------
$12,618 $ 8,279
======= =======
</TABLE>
4
<PAGE> 6
SPECTRAN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- ------------
<S> <C> <C>
Land and Land Improvements......................... $ 978 $ 978
Buildings and Improvements......................... 24,973 24,909
Machinery and Equipment............................ 66,560 48,983
Construction in Progress........................... 2,657 16,220
------- -------
95,168 91,090
Less Accumulated Depreciation and Amortization..... 28,199 22,595
------- -------
$66,969 $68,495
======= =======
</TABLE>
4. DEBT
Long-term debt consisted of (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- ------------
<S> <C> <C>
Revolving Credit Loan Facility at the Lower of $11,000 $10,000
Prime or LIBOR plus 1.5%.........................
Series A Senior Secured Notes at 9.24% Interest.... 16,000 16,000
Series B Senior Secured Notes at 9.39% Interest.... 8,000 8,000
------- -------
Subtotal...................................... 35,000 34,000
Less Current Portion............................... 35,000 3,200
------- -------
Total Long-term debt.......................... $ 0 $30,800
======= =======
</TABLE>
In December 1996, the Company sold to a limited number of selected
institutional investors an aggregate principal amount of $24.0 million of senior
secured notes consisting of $16.0 million of 9.24% interest Series A Senior
Secured Notes due December 26, 2003, and $8.0 million of 9.39% interest Series B
Senior Secured Notes due December 26, 2004. The Company also has a $20.0 million
revolving credit agreement with its principal bank, maturing in April 2000. As
of June 30, 1999, the Company had borrowed $11.0 million against the revolving
agreement. This was reclassified to current portion of long-term debt as of
April 1, 1999. On August 31, 1999, Acquisition, a wholly owned subsidiary of
Lucent, purchased 60.9% of the outstanding Common Stock of the Company
(approximately 53.3% on a fully diluted basis) pursuant to a tender offer that
began on July 21, 1999. This transaction constituted a "Change of Control" as
defined in the note purchase agreement with the Company's senior lenders and
also constituted an event of default under the credit agreement with the
Company's principal bank. On October 7, 1999 the outstanding balance on senior
secured notes of $24,000,000 plus accrued interest and pre-payment penalties of
$1,000,000, and on November 5, 1999 the outstanding balance of $11,000,000 on
the revolving credit agreement with the Company's principal bank were paid using
funds borrowed from Lucent that are due on December 2, 1999. These notes issued
to Lucent are: (i) a $17,000,000 note bearing interest at a rate of 9.24% per
annum; (ii) an $8,800,000 note bearing interest at a rate of 9.39% per annum;
and (iii) an $11,000,000 note bearing interest rate at a rate of 10.00% per
annum.
5. CORNING SETTLEMENT
On March 13, 1998 SpecTran and Corning Incorporated announced a settlement
of Corning's obligations to purchase multimode optical fiber from SpecTran under
a multi-year supply contract that the companies entered into in July 1996.
Corning terminated its purchases of multimode optical fiber from SpecTran in
exchange for a series of cash payments to SpecTran in 1998 totaling $4.056
million. For the three month and
5
<PAGE> 7
SPECTRAN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
nine month periods ended September 30, 1998, the Company recognized income on
the settlement of approximately $900 thousand and $2.7 million, respectively.
6. COMPUTATION OF LOSS PER COMMON SHARE
Effective December 31, 1997, the Company adopted Statement of Financial
Accounting Standards No. 128 "Earnings per Share" (SFAS 128) which has changed
the method of computing and presenting earnings per common share. All prior
periods presented have been restated in accordance with SFAS 128. This
restatement had an immaterial impact on prior periods' earnings per common share
amounts calculated under the previous method.
Under SFAS 128, primary earnings per common share has been replaced with
basic earnings per common share. The basic earnings per share computation is
based on the earnings applicable to common stock divided by the weighted average
number of shares of common stock outstanding at nine and three months ended
September 30, 1999 and 1998.
Fully diluted earnings per common share has been replaced with diluted
earnings per common share. The diluted earnings per common share computation
include the common stock equivalency of options granted to employees under the
stock incentive plan. Excluded from the diluted earnings per common share
calculation are options granted to employees that are anti-dilutive based on the
average stock price for the year.
Exercise of options and warrants or conversion of convertible securities is
not assumed if the result would be antidilutive, such as when a loss from
continuing operations is reported.
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------- -------------------
1999 1998 1999 1998
------- ------ -------- -------
(DOLLARS AND SHARES IN THOUSANDS)
<S> <C> <C> <C> <C>
Income (Loss) per common share-basic
Income (Loss) applicable to common stock.............. $(2,890) $ (14) $(2,502) $ 504
======= ====== ======= ======
Weighted average shares outstanding................. 7,040 7,003 7,111 7,004
======= ====== ======= ======
Income (Loss) per common share-basic................ $ (.41) $ (.00) $ (.35) $ .07
======= ====== ======= ======
Income (Loss) per common share-diluted
Income (Loss) applicable to common share............ $(2,890) $ (14) $(2,502) $ 504
======= ====== ======= ======
Weighted average shares outstanding................. 7,040 7,003 7,111 7,004
======= ====== ======= ======
Plus shares issuable on:
Exercise of dilutive options..................... -- -- -- 13
======= ====== ======= ======
Weighted average shares outstanding assuming
conversion
Basic............................................ 7,040 7,003 7,111 7,117
======= ====== ======= ======
Diluted.......................................... 7,040 7,003 7,111 7,117
======= ====== ======= ======
Income (Loss) per common share diluted
Basic............................................... $ (.41) $ (.00) $ (.35) $ .07
======= ====== ======= ======
Diluted............................................. $ (.41) $ (.00) $ (.35) $ .07
======= ====== ======= ======
</TABLE>
6
<PAGE> 8
SPECTRAN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
Options to purchase 1,035,000 and 692,000 shares of common stock were
outstanding at the nine month period ending September 30, 1999 and 1998
respectively, but were not included in the computation of diluted loss per share
because the effect of including such options would be anti-dilutive.
7. BUSINESS SEGMENTS
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 131 (SFAS 131), "Disclosures about Segments of an
Enterprise and Related Information" which has changed the method of reporting
information about its businesses. Based upon the criteria described in SFAS 131,
the Company now reports three business segments, Optical Fiber, Specialty
Products and Cable. All prior periods presented have been restated in accordance
with SFAS 131.
The Company conducts its operations through two business
segments -- Optical Fiber and Specialty Products. A third segment, Cable, was
sold in December 1996 in conjunction with the formation of General Photonics.
SpecTran retained a 50% equity interest in General Photonics through the first
half of the year and sold its interest on June 30, 1999. SpecTran's share of
General Photonics income (loss) for 1998 and 1999 is reported on the equity
method.
Optical Fiber develops, manufactures and markets multimode and single-mode
fiber for data communications and telecommunications applications.
Specialty Products develops, manufactures and markets multimode and
single-mode fiber and value-added fiber optic products for industrial,
transportation, communication, medical and geophysical applications.
Cable develops, manufactures and markets communications-grade fiber optic
cable primarily for the customer premises market.
Summarized financial information by business segment for the three and nine
months ended September 30 is as follows (in thousands):
REVENUES
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------ ------------------
1999 1998 1999 1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
Optical Fiber (see A)............................... $38,177 $36,449 $ 8,744 $14,288
Specialty Products.................................. 19,458 14,309 5,924 5,000
------- ------- ------- -------
$57,635 $50,758 $14,668 $19,288
======= ======= ======= =======
</TABLE>
INCOME (LOSS) FROM OPERATIONS
<TABLE>
<CAPTION>
1999 1998 1999 1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
Optical Fiber....................................... $ 2,548 $ 4,409 $(1,038) $ 2,879
Specialty Products.................................. 4,615 (1,853) 1,861 (1,050)
Corporate........................................... (5,671) (3,733) (2,578) (1,437)
------- ------- ------- -------
$ 1,492 $(1,177) $(1,755) $ 392
======= ======= ======= =======
</TABLE>
7
<PAGE> 9
SPECTRAN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- ------------
<S> <C> <C>
Optical Fiber............................................... $ 73,772 $ 72,447
Specialty Products.......................................... 19,675 19,953
Cable (Investment in JV).................................... -- 3,458
Corporate................................................... 11,116 9,561
-------- --------
$104,613 $105,419
======== ========
</TABLE>
- ---------------
A) Due to a change in accounting treatment of certain fiber sales, sales and
cost of sales for the third quarter and September year to date 1998 were
reduced by $775,000 and $1,564,000 respectively. This change had no affect on
previously reported net income or earnings per share. These changes related
to an agreement to supply Lucent with all of a certain product produced by
the Company. This supply agreement contained a provision permitting Lucent to
require the Company to purchase that same product back in the event Lucent
was not able to use all of that product. During the first three quarters of
1998, the Company purchased that product back from Lucent and sold it to
another customer. During these three quarters, the Company had booked as
sales the sale both to Lucent and the second customer and had booked as costs
both the costs of producing the product and the cost of purchasing the
product back from Lucent. In reviewing this treatment at year end, it was
determined that more appropriate accounting treatment would be to account for
this as one sale to the second customer with a concomitant cost of sale. As a
result sales and costs of sales for the first three quarters were reduced as
mentioned above which did not affect net income, gross margin or earnings per
share. This agreement did not extend beyond 1999.
8. ACQUISITION OF THE COMPANY BY LUCENT
On July 15, 1999 the Company entered into an Agreement of Merger (the
"Agreement of Merger") with Lucent Technologies Inc., a Delaware corporation
("Lucent") and its wholly-owned subsidiary Seattle Acquisition Inc., a Delaware
corporation ("Purchaser"). Pursuant to the Agreement of Merger, Purchaser made a
tender offer (the "Offer") disclosed in the Tender Offer Statement on Schedule
14D-1 dated July 21, 1999 (as amended or supplemented, the "Schedule 14D-1")
filed with the Securities and Exchange Commission (the "Commission") by Lucent
and the Purchaser to purchase all outstanding shares of the common stock, par
value $.10 per share of the Company (the "Shares") at a price of $9.00 per
share, net to the seller in cash, without interest thereon (the "Offer Price"),
upon the terms and subject to the conditions set forth in the Offer to Purchase
(the "Offer to Purchase") dated July 21, 1999, a copy of which is filed as an
Exhibit to the Company's Schedule 14D-9 dated July 21, 1999 and filed with the
Commission (as amended or supplemented, the "Schedule 14D-9"). The Agreement of
Merger provides that, among other things, as soon as practicable after the
purchase of Shares pursuant to the Offer and the satisfaction of the other
conditions set forth in the Agreement of Merger and in accordance with the
relevant provisions of the General Corporation Law of the State of Delaware
("Delaware Law" or the "DGCL"), the Purchaser will be merged with the Company
(the "Merger"). Following consummation of the Merger, the Company will continue
as the surviving corporation (the "Surviving Corporation") and will become a
wholly owned subsidiary of Lucent. At the effective time of the Merger (the
"Effective Time"), each Share issued and outstanding immediately prior to the
Effective Time (other than Shares (i) owned or held in treasury by the Company,
(ii) owned by the Purchaser or Parent, (iii) remaining outstanding held by any
subsidiary of the Company or Parent or (iv) owned by stockholders who shall have
demanded properly and perfected appraisal rights, if any, under Delaware Law)
will be canceled and converted automatically into the right to receive the Offer
Price (the "Merger Consideration"). The Agreement of Merger is summarized in
Section 12 of the Offer to Purchase. A copy of the Agreement of Merger is filed
as an Exhibit to the Schedule 14D-9 and is incorporated by reference herein.
8
<PAGE> 10
SPECTRAN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
In addition, attached to the Schedule 14D-9 as Annex A is the Information
Statement of the Company (the "Information Statement") which describes, among
other things, certain contracts, agreements, arrangements or understandings
known to the Company between the Company or its affiliates and (i) certain of
the Company's executive officers, directors or affiliates or (ii) certain of
Parent's executive officers, directors or affiliates. The Information Statement
was furnished to the Company's stockholders in connection with the Purchaser's
right (after consummation of the Offer) to designate persons to be appointed to
the Board of Directors of the Company other than at a meeting of the
stockholders of the Company. The Information Statement is incorporated by
reference herein.
The Board of Directors of the Company has unanimously approved the Offer
and the Merger and determined that the terms of the Offer and the Merger are
fair to, and in the best interests of the stockholders of the Company and
unanimously recommends that the stockholders of the Company accept the Offer and
tender their Shares to the Purchaser pursuant to the terms of the Offer.
As of August 4, 1999, the waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, relating to the purchase of the
Shares pursuant to the Offer had expired.
On September 1, 1999 Lucent announced that the Offer expired at midnight on
August 31, 1999, and that Lucent had accepted tendered Shares representing about
60.9% of the outstanding Shares (approximately 53.3% on a fully diluted basis),
thereby meeting the minimum condition for the Offer that at least 50% of the
Shares on a fully diluted basis be tendered.
Upon successful completion of the Offer the Company recorded a $1 million
advisory fee for services provided to the Company by Lazard Freres & Co. LLC.
9. SUBSEQUENT EVENTS
In October 1999, Lucent agreed to purchase 1 million kilometers of
depressed clad single-mode optical fiber in the Company's fiscal year 2000.
Lucent granted the Company a royalty free technology license to produce this
fiber. In order to provide the people and production assets necessary to
complete the Lucent order coupled with production and cost issues related to the
HVD process, the Company has suspended further work on the HVD process pending
further evaluation.
10. CONTINGENCIES
On November 6, 1998, the Company announced that it would contest a
complaint filed in the United States District Court in Boston, MA on October 2,
1998, purportedly as a class action suit. Titled Cruise v. Cannon, et al., the
complaint alleges that the Company and three of its current or former officers
and directors violated securities laws by misrepresenting the Company's
financial condition and financial results during 1998. The suit purports to be a
class action on behalf of all individuals who purchased the Company's stock on
the open market from February 25, 1998 to July 17, 1998. The suit alleges, among
other things, that there were public misrepresentations or failures to disclose
material facts during that period which allegedly artificially inflated the
price of the Company's common stock in the marketplace. The complaint seeks an
undisclosed amount of compensatory damages and costs and expenses, including
plaintiff's attorney's fees and such further relief as the Court may deem just
and proper. The Company believes the action is totally without merit, believes
that it has highly meritorious defenses and it intends to defend itself
vigorously.
After the announcement of the Agreement of Merger by the Company and Lucent
on July 15, 1999, two putative class action suits relating to the Merger were
filed in the Court of Chancery for the state of Delaware: Chase v. Harrison et
al., C.A. No. 17312-NC and Airmont Associates et al., v. SpecTran Corporation,
et al., C.A. No. 17314-NC.
9
<PAGE> 11
SPECTRAN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
The lawsuits were filed by plaintiffs claiming to be stockholders of the
Company, purportedly on behalf of all the Company's stockholders, against the
Company, members of the board of directors of the Company and Lucent. The
plaintiffs in both lawsuits allege, among other things, that the terms of the
proposed Merger were not the result of an auction process or active market
check, that $9.00 per share offered by Lucent is inadequate, and that the
Company's directors breached their fiduciary duties to the stockholders of the
Company in connection with the Agreement of Merger. Both lawsuits seek to have
the Merger enjoined, or if the Merger is completed, to have it rescinded and to
recover unspecified damages, fees and expenses. The Company and Lucent intend to
vigorously oppose these lawsuits.
On July 29, 1999, the plaintiff in Chase v. Harrison, et al., Civil Action
No. 17312-NC, filed an Amended Class Action Complaint (the "Amended Complaint")
in Delaware Chancery Court. In the Amended Complaint, the plaintiff alleges,
among other things, that (1) the proposed purchase price is inadequate; (2) the
Company's Solicitation/Recommendation Statement on Schedule 14D-9 is misleading
and omits material information in that it fails to disclose (a) the Company's
financial results for the second fiscal quarter ended June 30, 1999, (b) why the
Company's projected financial results, as announced by the Company on May 28,
1999, did not warrant that a substantial premium be paid for the Company
relative to the existing market price, (c) information concerning the identity
of other bidders for the Company and the terms of any competing bids or
expressions of interest, (d) why the Company did not wait until after its third
quarter ended September 30, 1999 financial results were available to determine
whether Company C would make an offer to acquire the Company, (e) the reasons
for Lazard Freres & Co. LLC's determination that the Merger was "fair", (f) the
total amount of benefits that each of the Company's executive officers and
directors will realize from the Merger, and (g) the value of the Company to
Lucent and the benefits Lucent will derive from the Merger, including the
equivalent amount that Lucent would have to spend to build the manufacturing
capacity that it will be buying from the Company and that Lucent had approved a
higher purchase price; and (3) the board of directors of the Company breached
its fiduciary duty to the stockholders of the Company to exercise due care,
loyalty and candor. The Amended Complaint further alleges that Lucent aided and
abetted the breach of fiduciary duty by the individual defendants. The foregoing
is qualified in its entirety by reference to the Amended Complaint, a copy of
which is filed as an exhibit to the Company's Amendment No. 1 to Schedule 14D-9,
dated August 4, 1999 and filed with the Commission on August 5, 1999, and is
incorporated by reference herein.
Concurrent with the filing of the Amended Complaint, the plaintiff in Chase
v. Harrison, et al. petitioned the Delaware Chancery Court for expedited
discovery and the scheduling of a hearing on a preliminary injunction. A
telephone conference call was held by the Delaware Chancery Court on July 30,
1999, at which time the court declined to permit expedited discovery and
declined to schedule a hearing on a preliminary injunction. Instead, the court
scheduled a hearing on August 13, 1999 to hear arguments as to whether an order
temporarily restraining consummation of the Merger should be issued. This
scheduled hearing was subsequently canceled when, by letter dated August 2,
1999, plaintiff's counsel withdrew plaintiff's application for a temporary
restraining order.
10
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Three and Nine Months Ended September 30, 1999 Compared to Three and Nine
Months Ended September 30, 1998
Third quarter revenues were $14.7 million down 24% from revenues of $19.3
million for the same period last year. Operating loss was $(1.8) million, down
from an operating income of $0.4 million in the same quarter in 1998. The
decreases in revenue and operating income were due primarily to a significant
reduction in orders for communications fiber in the third quarter related, at
least in part, to certain customers reluctance to purchase in light of the
Company's anticipated merger with Lucent. Operating income was also negatively
impacted by inefficiencies in the manufacturing process associated with bringing
the single mode HVD process into production after the early July one week plant
shutdown.
Net income (loss), before Joint Venture, for the quarter and nine months
ended September 30, 1999 were $(2.5) million and $(1.3) million, respectively,
compared to income of $0.6 million and $0.3 million for the same periods a year
ago. The loss from the Joint Venture for the nine month period ended September
30, 1999 was $1.6 million, and was primarily attributable to the loss and
associated tax expense incurred from the sale of the Company's Joint Venture
with General Cable, General Photonics in the second quarter. The Company's
overall net loss for the quarter was $2.5 million or $.35 per diluted share,
compared with a net income of $0.5 million or $.07 per share for the same period
last year.
Revenues for the first nine months of 1999 were $57.6 million, up 14% from
$50.8 million recognized during the same period for 1998. Revenue and net income
(loss) versus a year ago reflects the losses incurred as a result of the sale of
the Company's interest in General Photonics, a decrease in non-recurring income
recorded in 1998 from the settlement in the multi-year Corning supply contract,
the increase of interest expense in 1999 associated with servicing the Company's
debt and financial advisory fees of $1 million paid to Lazard Freres & Co. LLC
in connection with the successful Offer by Lucent. For the nine months ended
September 30, 1999, the Company incurred a net loss of $2.9 million or $.41 per
share, compared to a net loss of $14,000 or $.00 per share for the first nine
months of 1998.
The Company's actual results for the three and nine month periods ended
September 30, 1999 are substantially below the projected results provided to
Lazard for the purpose of rendering its fairness opinion.
11
<PAGE> 13
Results of Operations
The following table sets forth, for the periods indicated, certain
financial data as a percentage of net sales:
<TABLE>
<CAPTION>
NINE MONTHS THREE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------- --------------
1999 1998 1999 1998
----- ----- ----- -----
<S> <C> <C> <C> <C>
Net Sales................................................... 100.0% 100.0% 100.0% 100.0%
Cost of Sales............................................... 76.1 74.5 83.9 71.9
----- ----- ----- -----
Gross Profit.............................................. 23.9 25.5 16.1 28.1
Selling and Administrative Expenses......................... 17.7 20.2 23.4 18.7
Research and Development Costs.............................. 3.6 7.9 4.7 7.4
----- ----- ----- -----
Income (Loss) from Operations............................. 2.6 (2.7) (12.0) 2.0
Other Income (Expense), net................................. (5.2) 3.5 (11.6) 2.7
----- ----- ----- -----
Income (Loss) from Operations before Income Taxes and
Joint Venture.......................................... (2.6) 1.2 (23.6) 4.7
Income Tax (Benefits)....................................... (0.3) 0.5 (6.6) 1.8
----- ----- ----- -----
Income (Loss) before Joint Venture........................ (2.3) 0.7 (17.0) 2.9
Net Loss on Joint Venture................................... (2.7) (0.7) 0.0 (0.3)
----- ----- ----- -----
Net Income (Loss)......................................... (5.0)% 0.0% (17.0)% 2.6%
===== ===== ===== =====
</TABLE>
Net Sales
Net sales of $14.7 million and $57.6 million for the three months and nine
months ended September 30, 1999, was lower by $4.6 million, or 24%, and higher
by $6.9 million, or 14%, compared to the comparable periods in 1998. Although
third quarter revenues decreased at SpecTran Communication due to a significant
decline in orders for communications fiber, results for the nine months ended
September 30, 1999 still exceeded 1998 year-to-date results because of a slowing
of price erosion coupled with increased capacity availability due to production
capacity expansion. SpecTran Specialty continued to benefit from strong market
demand.
Gross Profit
Gross profit of $2.4 million and $13.8 million for the three months and
nine months ended September 30, 1999 was lower by $3.1 million, or 56%, and
higher by $700,000, or 5%, compared to the respective periods in 1998. As a
percentage of net sales, gross profit decreased to 16% from 28% for the quarter
and to 24% from 26% for the nine months as compared to 1998 results.
The third quarter 1999 margin decrease compared to the same period in 1998
is primarily due to higher cost per unit associated with the allocation of fixed
overhead over a decreased sales volume and to recurring manufacturing
inefficiencies associated with bringing the single mode HVD process into
production. These inefficiencies initially occurred after a one week plant
shutdown in early July.
Selling and Administration
Selling and administration expenses were lower by $173,000 for the quarter
and essentially flat for the nine months as compared to prior year results. As a
percentage of net sales, selling and administrative expenses increased to 23%
from 19% for the quarter and decreased to 18% from 20% for the nine months as
compared to the same periods a year ago.
Research and Development
Research and development costs for the three and nine month periods ended
September 30, 1999 decreased from the same period a year ago by $736,000 or 52%
and $1.9 million or 47%, respectively. Higher levels of research and development
resources were deployed during 1998 in bringing the HVD production process
on-line which are costs not recurring in 1999. This decrease is also
attributable to the reclassification of normal production support engineering
expenses from research and development to cost of sales. As
12
<PAGE> 14
products progress beyond the research and development stage into commercial
manufacture, expenses that previously were categorized as research and
development costs are reclassified as production support and become part of
costs of goods sold. In addition, as a result of the introduction of new
products, operating margins at SpecTran Specialty were negatively impacted by 8
percentage points. The Company believes that operating margins should improve as
more of these new products of SpecTran Specialty are sold. The Company is
continuing its initiative to improve manufacturing productivity and products
performance in both multimode and single-mode product lines while developing new
performance fiber products and alternative process technologies.
Other Income (Expense), Net
Other income (expense), net was lower by $2.2 million and $4.8 million for
the three and nine months ended September 30, 1999 as compared to the same
periods for 1998. This decline was attributable to the absence of approximately
$0.9 million and $2.7 million, respectively, of payments from Corning that
resulted from the 1998 settlement of the Company's contract dispute with
Corning, which were classified as other income and which are non-recurring for
1999. These payments were recognized by the Company as other income and recorded
during the periods in which the payments were received. The settlement adversely
affected net sales, but increased other income, which increase offsets, in part,
some of the fixed costs associated with the initial agreement. The remainder of
the differences with other, net are attributable to a $1 million financial
advisory fee paid to Lazard Freres & Co. LLC in connection with the successful
Offer by Lucent and a series of miscellaneous adjustments including a loss on
the sale of fixed assets, loan fees and an adjustment for the fair market value
of the Company's supplemental retirement programs. Additionally, the Company's
interest expense increased $281,000 or 61% and $1.3 million or 136% for the
three and nine months ended September 1999 as compared with the same periods for
1998. The Company's interest expense is net of capitalized interest that is
associated with the Company's expansion programs and which offsets interest
expense on debt. The Company's interest expense on its long-term debt decreased
for the quarter by $32,000 and increased for the nine months ended September 30,
1999 by $185,000. Capitalized interest decreased by $314,000 and $1.1 million,
respectively. Interest income increased for the quarter by $48,000 and $28,000
for the nine months period.
Income Taxes
The Company had a loss of approximately $1,523,000 before income taxes and
equity in joint venture for the nine months ended September 30, 1999.
(Loss) From Equity in Joint Venture
The Company realized losses of $235,000 for the nine months ended September
30, 1999 that are attributable to the operations of General Photonics. This
compares with a loss of $49,000 and $375,000 for the three and nine months ended
September 30, 1998.
Net Income (Loss)
Net loss for the three months and nine months ended September 30, 1999 was
$2.5 million and $2.9 million, respectively, as compared with a profit of
$504,000 and a loss of $14,000 for the same periods in 1998. The net loss for
the first nine months of 1999 was primarily attributable to the tax loss
associated with the Company's sale of its interest in General Photonics during
the second quarter of 1999 and a $1 million financial advisory fee paid to
Lazard Freres & Co. LLC in connection with the successful Offer by Lucent. The
results for the three month and nine month periods were also negatively impacted
by a significant reduction in orders for communication fiber coupled with
manufacturing inefficiencies associated with bringing the single mode HVD
process into production. These inefficiencies initially occurred after a one
week plant shutdown in early July.
Liquidity and Capital Resources
As of September 30, 1999 the Company had approximately $3.7 million in cash
and cash equivalents.
The Company's working capital position at September 30, 1999 declined to
$(17.2) million with a current ratio of .64 to 1 from $11.8 million with a
current ratio of 1.8 to 1 at December 31, 1998. This is
13
<PAGE> 15
principally due to the reclassification of the $11.0 million revolving credit
balance and $20.8 million of notes from long-term debt to current following a
"Change of Control" of the Company as a result of the tender offer by Lucent, as
more fully explained below.
During the first nine months of 1999 the Company generated $2.7 million in
positive cash flow from operating activities and borrowed $1.0 million under its
revolving credit agreement. The Company invested $4.6 million in the acquisition
of machinery and equipment.
The Company intends to continue to finance its capital and operational
needs for the remainder of the year through a combination of cash flow from
operations and borrowings from Lucent.
The Company had a $20.0 million revolving credit agreement with its
principal bank. At September 30, 1999, the Company had $11.0 million outstanding
under the revolving credit agreement. The interest rate on loans under the
credit agreement was Libor plus 150 basis points. The $11.0 million was
essentially broken into three, 90 day increments, with one 90 day increment
renewing every month. At September 30, 1999, the average interest rate on the
$11.0 million of loans was approximately 6.8%.
The remaining debt of $24.0 million was as follows:
<TABLE>
<S> <C> <C>
$16.0 million......................... Series A Senior Secured Notes 9.24%
8.0 million........................... Series B Senior Secured Notes 9.39%
</TABLE>
On August 31, 1999, Acquisition, a wholly owned subsidiary of Lucent,
purchased 60.9% of the outstanding Common Stock of the Company (approximately
53.3% on a fully diluted basis) pursuant to a tender offer that began on July
21, 1999. This transaction constituted a "Change of Control" as defined in the
note purchase agreement with the Company's senior lenders and also constituted
an event of default under the credit agreement with the Company's principal
bank. On October 7, 1999 the outstanding balance on the senior secured notes of
$24,000,000 plus accrued interest and pre-payment penalties which aggregate
$1,800,000, and on November 5, 1999 the outstanding balance of $11,000,000 on
the revolving credit agreement with the Company's principal bank were paid using
funds borrowed from Lucent that are due on December 2, 1999. These notes issued
to Lucent are: (i) a $17,000,000 note bearing interest at a rate of 9.24% per
annum; (ii) an $8,800,000 note bearing interest at a rate of 9.39% per annum;
and (iii) an $11,000,000 note bearing interest at a rate of 10.00% per annum.
The Year 2000 Issue
The Year 2000 issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any of the Company's
information technology systems (which the Company relies on to monitor and
manage its operations, accounting, sales and administrative functions), such as
computers, servers, networks, and software ("IT Systems") and other systems that
use embedded microchip technology ("Non-IT Systems") that are date sensitive may
recognize a date using "00" as the year 1900 rather than the year 2000. This
could result in system failure or miscalculations causing disruption of
operations. Similarly, the date-sensitive IT Systems and Non-IT Systems of third
party suppliers or customers with whom the Company has material relationships
could experience similar malfunctions which could, in turn, have a material
adverse impact of the Company.
The Company has completed an enterprise-wide assessment of all mission
critical IT Systems and Non-IT Systems to evaluate the state of its preparedness
for the Year 2000. The Company has established teams by business unit to address
the Year 2000 issue. The Company believes that it has effectively completed its
remediation efforts for the Year 2000 issue, with the exception of one piece of
production equipment, which the Company believes will be remediated before the
end of this year. A significant portion of production equipment was replaced or
upgraded as part of the recent capacity expansion at both facilities and such
replacements and upgrades are Year 2000 ready. The Company has revised its
estimate for Year 2000 spending down to approximately $400,000 from $800,000.
This includes $275,000 for software, which will be expensed in 1999. The costs
of the project and the date the Company plans to complete Year 2000
modifications are based on management's best estimates. However, there can be no
guarantee that these estimates will be achieved and actual results could differ
materially from those plans. The Company has
14
<PAGE> 16
completed development of contingency plans in case its remediation efforts are
unsuccessful. The contingency planning was performed in conjunction with the
implementation and testing of the critical business systems.
The Company has initiated formal communications with a majority of its
significant customers and suppliers to determine their plans to address the Year
2000 issue. While the Company expects a successful resolution of all issues
there can be no guarantee that the systems of other companies on which the
Company relies will be completed in a timely manner or that these issues would
not have a material adverse effect on the Company.
Other Events
On July 15, 1999 the Company entered into an Agreement of Merger (the
"Agreement of Merger") with Lucent Technologies Inc., a Delaware corporation
("Lucent") and its wholly-owned subsidiary Seattle Acquisition Inc., a Delaware
corporation ("Purchaser"). Pursuant to the Agreement of Merger, Purchaser made a
tender offer (the "Offer") disclosed in the Tender Offer Statement on Schedule
14D-1 dated July 21, 1999 (as amended or supplemented, the "Schedule 14D-1")
filed with the Securities and Exchange Commission (the "Commission") by Lucent
and the Purchaser to purchase all outstanding shares of the common stock, par
value $.10 per share of the Company (the "Shares") at a price of $9.00 per
share, net to the seller in cash, without interest thereon (the "Offer Price"),
upon the terms and subject to the conditions set forth in the Offer to Purchase
(the "Offer to Purchase") dated July 21, 1999, a copy of which is filed as an
Exhibit to the Company's Schedule 14D-9 dated July 21, 1999 and filed with the
Commission (as amended or supplemented, the "Schedule 14D-9"). The Agreement of
Merger provides that, among other things, as soon as practicable after the
purchase of Shares pursuant to the Offer and the satisfaction of the other
conditions set forth in the Agreement of Merger and in accordance with the
relevant provisions of the General Corporation Law of the State of Delaware
("Delaware Law" or the "DGCL"), the Purchaser will be merged with the Company
(the "Merger"). Following consummation of the Merger, the Company will continue
as the surviving corporation (the "Surviving Corporation") and will become a
wholly owned subsidiary of Lucent. At the effective time of the Merger (the
"Effective Time"), each Share issued and outstanding immediately prior to the
Effective Time (other than Shares (i) owned or held in treasury by the Company,
(ii) owned by the Purchaser or Parent, (iii) remaining outstanding held by any
subsidiary of the Company or Parent or (iv) owned by stockholders who shall have
demanded properly and perfected appraisal rights, if any, under Delaware Law)
will be canceled and converted automatically into the right to receive the Offer
Price (the "Merger Consideration"). The Agreement of Merger is summarized in
Section 12 of the Offer to Purchase. A copy of the Agreement of Merger is filed
as an Exhibit to the Schedule 14D-9 and is incorporated by reference herein.
In addition, attached to the Schedule 14D-9 as Annex A is the Information
Statement of the Company (the "Information Statement") which describes, among
other things, certain contracts, agreements, arrangements or understandings
known to the Company between the Company or its affiliates and (i) certain of
the Company's executive officers, directors or affiliates or (ii) certain of
Parent's executive officers, directors or affiliates. The Information Statement
was furnished to the Company's stockholders in connection with the Purchaser's
right (after consummation of the Offer) to designate persons to be appointed to
the Board of Directors of the Company other than at a meeting of the
stockholders of the Company. The Information Statement is incorporated by
reference herein.
The Board of Directors of the Company has unanimously approved the Offer
and the Merger and determined that the terms of the Offer and the Merger are
fair to, and in the best interests of the stockholders of the Company and
unanimously recommends that the stockholders of the Company accept the Offer and
tender their Shares to the Purchaser pursuant to the terms of the Offer.
As of August 4, 1999, the waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, relating to the purchase of the
Shares pursuant to the Offer had expired.
On September 1, 1999 Lucent announced that the Offer expired at midnight on
August 31, 1999, and that Lucent had accepted tendered Shares representing about
60.9% of the outstanding Shares (approximately 53.3% on a fully diluted basis),
thereby meeting the minimum condition for the Offer that at least 50% of the
Shares on a fully diluted basis be tendered.
Upon successful completion of the Offer the Company recorded a $1 million
advisory fee for services provided to the Company by Lazard Freres & Co. LLC.
Subsequent Events
In October 1999, Lucent agreed to purchase 1 million kilometers of
depressed clad single-mode optical fiber in the Company's fiscal year 2000.
Lucent granted the Company a royalty free technology license to produce this
fiber. In order to provide the people and production assets necessary to
complete the Lucent order coupled with production and cost issues related to the
HVD process, the Company has suspended further work on the HVD process pending
further evaluation.
Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative
Instruments and Hedging Activities, which establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts (collectively referred to as "derivatives") and for
hedging activities. This statement requires that an entity recognize all
derivatives as either assets or liabilities in the balance sheet and measure
those instruments at fair value. The statement also sets forth the criteria for
determining whether a derivative may be specifically designated as a hedge of a
particular exposure with the intent of measuring the effectiveness of the hedge
in the statement of operations.
In June 1999, the Financial Accounting Standards Board issued SFAS No. 137,
Accounting for Derivative Instruments and Hedging Activities, which amended the
effective date of SFAS No. 133. SFAS No. 137 is effective for all fiscal
quarters of fiscal years beginning after June 15, 2000. The Company is currently
evaluating SFAS No. 133 and has not determined the impact on the Company's
Financial Statements.
Forward Looking Statements
This document contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities and Exchange Act of 1934, as amended, which are intended
to be covered by the safe harbors created thereby. Investors are cautioned that
all forward-looking statements involve risks and uncertainties that may cause
results to differ materially from expectations, including without limitation,
the ability of the Company to market and develop its products, general economic
conditions and competitive conditions in markets served by the Company.
Forward-looking statements include, but are not limited to, global economic
conditions, product demand, competitive products and pricing, manufacturing
efficiencies, cost reductions, manufacturing capacity, facility expansions and
new plant start up cost, the rate of technology change and other risks.
Although the Company believes that the assumptions underlying the
forward-looking statements contained herein are reasonable, any of the
assumptions could be inaccurate, and therefore, there can be no assurance that
the forward-looking statements included in this filing will prove to be
accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such information
should not be regarded as a representation by the Company or any other person
that the objectives and plans of the Company will be achieved.
15
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities 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)
Date: November 26, 1999 BY: /s/ Charles B. Harrison
-------------------------------------
Charles B. Harrison
President,
Chief Executive Officer
(Acting Principal Financial Officer)
Date: November 26, 1999 BY: /s/ George J. Roberts
-------------------------------------
George J. Roberts
Senior Vice President,
Chief Financial Officer and
Chief Accounting Officer
16
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