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<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q / A
Amendment No. 1 to Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Quarter ended December 31, 1995
Commission File Number 0-18238
SEQUOIA SYSTEMS, INC.
---------------------
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 04-2738973
- -------- ----------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
400 Nickerson Road, Marlborough, Massachusetts 01752
- ---------------------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (508) 480-0800
--------------
Indicate by check mark whether 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 registrant's
classes of stock, as of the latest practicable date.
Class Outstanding at June 30, 1996
----- -------------------------------
Common Stock, $.40 par value 15,579,471
<PAGE>
CONSOLIDATED BALANCE SHEETS SEQUOIA SYSTEMS, INC. AND SUBSIDIARIES
(in thousands, except share data)
<TABLE>
<CAPTION>
ASSETS December 31, June 30,
1995 1995
(unaudited)
----------------------------------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $13,945 $15,317
Accounts receivable, net of allowance for doubtful accounts
of $1,047 at December 31, 1995 and $1,288 at June 30, 1995 17,628 12,739
Inventories 18,651 16,713
Other current assets 1,835 1,974
----------------------------------------
Total current assets 52,059 46,743
----------------------------------------
Equipment and Improvements, at cost:
Computer equipment 12,797 12,329
Machinery and equipment 4,866 4,687
Equipment under capital lease 2,666 2,666
Furniture and fixtures 1,461 1,306
Leasehold improvements 1,644 1,575
----------------------------------------
23,434 22,563
Less - Accumulated depreciation and amortization 18,807 17,828
----------------------------------------
4,627 4,735
----------------------------------------
Other Assets 780 763
----------------------------------------
Total Assets $57,466 $52,241
========================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 8,290 $6,809
Accrued expenses 9,068 9,037
Deferred revenue 886 888
Current portion of capital lease obligations 120 125
----------------------------------------
Total current liabilities 18,364 16,859
----------------------------------------
Obligations under capital lease, net of current portion - 56
----------------------------------------
Total long-term obligations - 56
----------------------------------------
Stockholders' Equity:
Preferred stock, $.40 par value:
Authorized--12,500,000 shares at December 31, 1995 and June 30, 1995
Issued--none - -
Common stock, $.40 par value:
Authorized--35,000,000 shares at December 31, 1995 and June 30, 1995
Issued and outstanding 15,422,000 shares at December 31, 1995
and 15,165,000 shares at June 30, 1995 6,169 6,066
Additional paid-in capital 79,872 79,395
Accumulated deficit (47,123) (50,288)
Cumulative translation adjustment 184 153
----------------------------------------
Total stockholders' equity 39,102 35,326
----------------------------------------
Total Liabilities and Stockholders' Equity $57,466 $52,241
========================================
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
2
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS SEQUOIA SYSTEMS, INC. AND
(Unaudited) SUBSIDIARIES
<TABLE>
<CAPTION>
For the three months ended, For the six months ended,
December 31, 1995 January 1, 1995 December 31, 1995 January 1, 1995
-------------------- ------------------ ------------------- -----------------
(in thousands except per share data)
<S> <C> <C> <C> <C>
Revenues
Product $24,382 $21,259 $48,268 $39,053
Service & Other 3,556 3,679 7,155 7,489
-------------------- ------------------ ------------------- -----------------
Total revenues 27,938 24,938 55,423 46,542
Cost of Revenues
Product 14,898 10,685 29,130 20,499
Service and Other 1,900 1,963 3,784 3,971
-------------------- ------------------ ------------------- -----------------
Total cost of revenues 16,798 12,648 32,914 24,470
Gross profit 11,140 12,290 22,509 22,072
Research and Development Expenses 3,270 3,110 6,388 6,136
Selling, General and Administrative Expenses 6,558 6,859 13,134 12,884
-------------------- ------------------ ------------------- -----------------
Total operating expenses 9,828 9,969 19,522 19,020
Income from operations 1,312 2,321 2,987 3,052
Interest Income 211 186 402 391
Interest Expense (3) (106) (10) (146)
Other Income 13 75 28 74
-------------------- ------------------ ------------------- -----------------
Income before provision for taxes 1,533 2,476 3,407 3,371
Provision for Income Taxes 108 453 242 644
-------------------- ------------------ ------------------- -----------------
Net income $1,425 $2,023 $3,165 $2,727
==================== =================== =================== ================
Net Income Per Common and Common Share
Equivalent $0.09 $0.13 $0.20 $0.18
==================== =================== =================== ================
Weighted Average Number of Common and Common
Share Equivalents Outstanding 15,987 15,459 16,048 15,514
==================== =================== =================== ================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS SEQUOIA SYSTEMS, INC. AND
(Unaudited ) SUBSIDIARIES
<TABLE>
<CAPTION>
For the six months ended: December 31, January 1,
1995 1995
-----------------------------------
($ in thousands)
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income $3,165 $2,727
Adjustments to reconcile net income to
net cash provided by (used in ) operating activities--
Depreciation 979 1,368
Amortization 333 107
Provision for bad debts (240) 114
Provision for deferred taxes (168) (266)
Changes in assets and liabilities:
Accounts receivable (4,649) (2,209)
Accounts receivable from related parties - 697
Inventories (1,938) (3,361)
Income taxes 297 624
Other current assets 307 149
Accounts payable 1,481 (281)
Accrued expenses (266) 1,242
Deferred revenue (2) (75)
-----------------------------------
Net cash provided by (used in)
operating activities (701) 836
Cash Flows From Investing Activities:
Purchase of equipment and improvements (871) (1,249)
Decrease (increase) in other assets (350) (475)
-----------------------------------
Net cash used in investing activities (1,221) (1,724)
Cash Flows From Financing Activities:
Repayment of obligations under capital leases (61) (54)
Long-term debt - (313)
Proceeds from issuance of common stock 580 210
-----------------------------------
Net cash provided by (used in) financing activities 519 (157)
Effect of exchange rates on cash 31 15
Net Decrease in Cash and Cash Equivalents (1,372) (1,030)
Cash and Cash Equivalents, beginning of period 15,317 21,024
-----------------------------------
Cash and Cash Equivalents, end of period $13,945 $19,994
===================================
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for:
Interest $11 $166
Income taxes paid $117 $297
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
4
<PAGE>
Notes to Consolidated Financial Statements
Sequoia Systems, Inc. and Subsidiaries
(unaudited)
NOTE 1 BASIS OF PRESENTATION
- ------
The financial statements included herein have been prepared by Sequoia
Systems, Inc. (the "Company") pursuant to the rules and regulations of the
Securities and Exchange Commission (the "Commission"). Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. The Company believes, however,
that the disclosures made are adequate to make the information not misleading.
It is suggested that these financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's latest audited
financial statements, which are contained in the Company's Annual Report on Form
10-K for the year ended June 30, 1995, filed with the Commission on September
26, 1995, as amended by Amendment No. 1 on Form 10-K/A, filed with the
Commission on October 26, 1995.
This information includes all adjustments, (consisting of normal, recurring
adjustments) which the Company considers necessary for a fair presentation of
such information. The results of operations for the three and six months
ended December 31, 1995 are not necessarily indicative of results to be expected
for the entire year.
NOTE 2 INVENTORIES
- ------
Inventories are stated at the lower of average cost (first-in, first-out)
or market which requires the periodic assessment of net realizable value. The
difference between cost and market is charged to income in the period the
impairment is determined. Inventory including materials, labor and manufacturing
overhead consists of the following:
<TABLE>
<CAPTION>
(in thousands)
December 31, June 30,
1995 1995
----------------------------
<S> <C> <C>
Raw materials $13,014 $ 9,966
Work-in-process 2,768 3,595
Finished goods 2,869 3,152
----------------------------
$18,651 $16,713
----------------------------
</TABLE>
5
<PAGE>
Notes to Consolidated Financial Statements
Sequoia Systems, Inc. and Subsidiaries
(unaudited)
NOTE 3 NET INCOME PER SHARE
- ------
For the three and six month periods ended December 31, 1995 and January 1,
1995, respectively, net income per share was based on the weighted average
number of common and common share equivalents outstanding during the period,
computed in accordance with the treasury stock method. Primary and fully diluted
earnings per share are not separately stated as they are substantially the same.
NOTE 4 ACCOUNTING FOR STOCK-BASED COMPENSATION
- ------
In November 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based
Compensation." The Company intends to adopt the disclosure requirements of SFAS
123 for the year ending June 30, 1997, therefore. the adoption of SFAS 123 will
have no impact on the Company's financial position or results of operations.
6
<PAGE>
SIGNATURES
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.
Dated: August 15, 1996
Sequoia Systems, Inc.
By:/s/ J. Michael Stewart
----------------------
J. Michael Stewart
President &
Chief Executive Officer
7
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