<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE QUARTER ENDED OCTOBER 1, 2000 COMMISSION FILE NO. 0-12942
PARLEX CORPORATION
(Exact Name of Registrant as Specified in its Charter)
MASSACHUSETTS 04-2464749
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
ONE PARLEX PLACE
METHUEN, MASSACHUSETTS 01844
(Address of principal executive offices, including zip code)
978-685-4341
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
TITLE OF EACH CLASS NAME OF EXCHANGE ON WHICH REGISTERED
Common Stock ($.10 par value) Nasdaq National Market
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None
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
--- ---
The number of shares of the Registrant's Common Stock, par value
$.10 per share, outstanding at October 13, 2000 was 6,279,700 shares.
================================================================================
1
<PAGE>
PARLEX CORPORATION
INDEX
<TABLE>
<CAPTION>
Part I - Financial Information
Page
----
<S> <C>
Item 1. Consolidated Financial Statements:
Consolidated Balance Sheets - October 1, 2000 and June 30, 2000..... 3
Consolidated Statements of Income - For the Three Months Ended
October 1, 2000 and September 26, 1999.............................. 4
Consolidated Statements of Cash Flows - For the Three Months
Ended October 1, 2000 and September 26, 1999....................... 5
Notes to Unaudited Consolidated Financial Statements................ 6
Management's Discussion and Analysis of Financial Condition
And Results of Operations........................................... 8
Part II - Other Information......................................... 13
Signatures.......................................................... 14
Exhibit Index....................................................... 15
</TABLE>
2
<PAGE>
PARLEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
October 1, 2000 and June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
October 1, 2000 June 30, 2000
--------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $1,669,389 $11,949,858
Short-term investments 6,396,175 -0-
Accounts receivable - net 22,140,530 19,167,016
Inventories 24,200,009 21,148,660
Deferred income taxes 1,079,073 1,079,073
Other current assets 3,423,863 2,781,661
------------- --------------
Total current assets 58,909,039 56,126,268
-------------- --------------
Property, plant and equipment:
Land 893,865 893,865
Buildings 20,240,949 20,240,949
Machinery and equipment 52,107,273 50,457,494
Leasehold improvements and other 5,832,591 5,746,720
Construction in progress 5,666,917 5,003,002
-------------- --------------
Total 84,741,595 82,342,030
Less accumulated depreciation and
amortization (29,720,216) (28,114,968)
------------ ------------
Property, plant and equipment - net 55,021,379 54,227,062
------------ ------------
Goodwill - net 4,498,803 4,447,358
Other assets 474,416 539,950
------------ ------------
Total $118,903,637 $115,340,638
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 2,190,785 $ 1,482,524
Accounts payable 13,607,481 11,292,256
Accrued liabilities 3,975,383 4,599,549
---------- ----------
Total current liabilities 19,773,649 17,374,329
---------- ----------
Long-term debt 277,846 360,386
------- -------
Other non-current liabilities 6,097,720 5,932,931
--------- ---------
Minority interest in Parlex (Shanghai) 4,100,765 3,883,416
--------- ---------
Stockholders' equity
Preferred stock -0- -0-
Common stock 649,145 648,588
Additional paid-in capital 60,737,382 60,678,009
Retained earnings 28,495,876 27,623,632
Accumulated other comprehensive income (loss) (191,121) (123,028)
Less treasury stock, at cost (1,037,625) (1,037,625)
----------- -----------
Total Stockholders' equity $88,653,657 $87,789,576
----------- -----------
Total $118,903,637 $115,340,638
============ ============
</TABLE>
See Notes to Unaudited Consolidated Financial Statements
3
<PAGE>
PARLEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
October 1, 2000 September 26, 1999
--------------- ------------------
<S> <C> <C>
Product sales $29,572,306 $20,119,207
License fees and royalties 116,496 246,352
----------- -----------
Total Revenues 29,688,802 20,365,559
----------- -----------
Costs and Expenses:
Cost of products sold 24,134,225 15,913,733
Selling, general and administrative expenses 4,145,919 2,321,107
----------- -----------
Operating costs and expenses 28,280,144 18,234,840
----------- -----------
Operating income 1,408,658 2,130,719
Other income 129,368 12,289
Interest expense (27,619) (58,136)
----------- -----------
Income before provision for income taxes and
minority interest 1,510,407 2,084,872
Provision for income taxes (420,814) (506,861)
----------- -----------
Net income before minority interest 1,089,593 1,578,011
Minority interest (217,349) (237,517)
----------- -----------
Net income $872,244 $ 1,340,494
=========== ===========
Basic income per share $.14 $.28
==== ====
Diluted income per share $.14 $.28
==== ====
Weighted average shares - basic 6,277,751 4,794,858
=========== ===========
Weighted average shares - diluted 6,456,174 4,843,188
=========== ===========
</TABLE>
See Notes to Unaudited Consolidated Financial Statements
4
<PAGE>
PARLEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
October 1, 2000 September 26, 1999
--------------- ------------------
<S> <C> <C>
CASH FLOWS PROVIDED BY
OPERATING ACTIVITIES:
Net Income $ 872,244 $ 1,340,494
------------ ------------
Adjustments to reconcile net income to cash (used for)
provided by operating activities:
Depreciation and amortization of property, plant
and equipment and other assets 1,776,350 1,016,892
Minority interest 217,349 237,517
Changes in current assets and liabilities:
Accounts receivable - net (2,973,514) (1,708,769)
Inventories (3,051,349) (1,209,040)
Other assets (601,574) 19,146
Accounts payable and accrued liabilities 1,855,848 493,644
------------ ------------
Total adjustments: (2,776,890) (1,150,610)
------------ ------------
Net cash (used for) provided by operating activities: (1,904,646) 189,884
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
(Purchases) maturities of investments available for sale, net (6,396,175) 676,363
Additions to property, plant and equipment (2,431,052) (1,667,022)
Increase in other assets (166,154) (3,371)
------------ ------------
Net cash used for investment activities (8,993,381) (994,030)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from bank loans 1,550,000 900,000
Payment of bank loans (924,279) (255,144)
Exercise of stock options 59,930 85,331
------------ ------------
Net cash provided by financing activities 685,651 730,187
------------ ------------
Effect of exchange rate changes on cash (68,093) (19,514)
------------ ------------
Net decrease in cash and cash equivalents (10,280,469) (93,473)
Cash and cash equivalents, beginning of year 11,949,858 1,175,889
------------ ------------
Cash and cash equivalents, end of period $ 1,669,389 $ 1,082,416
============ ============
</TABLE>
See Notes to Unaudited Consolidated Financial Statements
5
<PAGE>
PARLEX CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. MANAGEMENT STATEMENT
The financial statements as reported in Form 10-Q reflect all
adjustments which are, in the opinion of management, necessary to present fairly
the financial position as of October 1, 2000 and the results of operations and
cash flows for the three months ended October 1, 2000 and September 26, 1999.
All adjustments made to the interim financial statements were of a normal
recurring nature.
The Company followed the same accounting policies in the preparation of
this interim financial statement as described in the Company's annual filing on
Form 10-K for the year ended June 30, 2000, and this filing should be read in
conjunction with that annual report.
2. COMPREHENSIVE INCOME
Comprehensive income for the three months ended October 1, 2000 and
September 26, 1999 is as follows:
<TABLE>
<CAPTION>
October 1, 2000 September 26, 1999
--------------- ------------------
<S> <C> <C>
Net Income $872,244 $1,340,494
Other Comprehensive Income:
Unrealized (loss) on short term investments (7,556) (1,886)
Cumulative translation adjustments (60,537) (19,514)
-------- ----------
Total Comprehensive Income $804,151 $1,319,094
======== ==========
</TABLE>
The accumulated other comprehensive income balance is as follows:
<TABLE>
<CAPTION>
Unrealized gains Cumulative
(losses) on Translation
Short Term Investments Adjustments Total
---------------------- ------------------ -----
<S> <C> <C> <C>
Beginning Balance -0- $(123,028) $(123,028)
Current Period Change (7,556) (60,537) (68,093)
-------- ---------- ----------
Ending Balance $(7,556) $(183,565) $(191,121)
======== ========== ==========
</TABLE>
3. POLY-FLEX ACQUISITION
On March 1, 2000, we acquired the businesses of Poly-Flex Circuits,
Inc. and Poly-Flex Circuits, Limited (collectively "Poly-Flex") from Cookson
Group plc and Cookson Investment, Inc. (together, "Cookson") pursuant to the
Stock Purchase Agreement (the "Agreement") dated as of January 21, 2000.
6
<PAGE>
Poly-Flex is engaged in the manufacture of polymer thick film, flexible
circuits and flexible interconnect assemblies. The acquisition was accounted
for using the purchase method of accounting. The purchase price has been
allocated to the assets acquired and liabilities assumed based on estimated
fair values as of the date of acquisition. Approximately $3.7 million
representing an allocation of purchase price over the estimated fair value of
net assets acquired has been recorded as goodwill and will be amortized over
a ten year period. The terms of the Agreement provide that the purchase price
may be adjusted based upon the earnings of Poly-Flex for the ten months
ending December 31, 2000 and the Combined Net Asset Value, as defined in the
Agreement. Cookson is currently disputing our calculation of the Combined Net
Asset Value. Accordingly, the purchase price is subject to adjustment.
The results of operations of the Poly-Flex are included in the
consolidated financial statements for the three months ended October 1, 2000.
4. RECENT ACCOUNTING PRONOUNCEMENTS
In June, 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards, or SFAS, No. 133, "Accounting for
Derivative Instruments and Hedging Activities." SFAS No. 133 establishes
accounting and reporting standards for derivative instruments, including
derivative instruments embedded in other contracts and for hedging activities.
The adoption of SFAS No. 133 on July 1, 2000 did not have a material impact on
the consolidated financial statements.
On December 3, 1999, the Securities and Exchange Commission ("SEC")
issued Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in
Financial Statements." SAB No. 101 provides guidance on the recognition,
presentation and disclosure of revenues in financial statements filed with
the SEC. The implementation date of SAB No. 101 has been delayed until no
later than the fourth fiscal quarter of fiscal years beginning after December
15, 1999. The Company is currently evaluating, and has not determined the
effect, if any, SAB No. 101 will have on the Company's financial position and
its results of operations.
5. RECLASSIFICATIONS
Certain prior period amounts have been reclassified to conform to the
current period presentation.
6. STOCKHOLDER'S EQUITY
During the quarter ended October 1, 2000, a Special Meeting of
Stockholders approved an amendment to our Restated Articles of Organization
increasing the number of authorized shares of Common Stock, par value $.10
per share, from 10,000,000 shares to 30,000,000 shares.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL
INFORMATION INCLUDED IN THIS QUARTERLY REPORT ON FORM 10-Q AND WITH "FACTORS
THAT MAY AFFECT FUTURE RESULTS" SET FORTH ON PAGE 12. THE FOLLOWING DISCUSSION
CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. OUR
ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THE RESULTS CONTEMPLATED BY THESE
FORWARD-LOOKING STATEMENTS AS A RESULT OF MANY FACTORS, INCLUDING THOSE
DISCUSSED BELOW AND ELSEWHERE IN THIS QUARTERLY REPORT ON FORM 10-Q.
OVERVIEW
We are a leading supplier of flexible interconnects principally for
sale to the automotive, telecommunications and networking, diversified
electronics, aerospace and computer markets. We believe that our development of
innovative materials and processes provides us with a competitive advantage in
the markets in which we compete. During the past three fiscal years, we have
invested approximately $33.2 million in property and equipment and approximately
$11.1 million in research and development to develop materials and enhance our
manufacturing processes. We believe that these expenditures will help us to meet
increased customer demand for our products, and enable us to continue to be a
technological leader in the flexible interconnect industry. Our research and
development expenses are included in our cost of products sold.
RECENT ACQUISITIONS
On March 1, 2000, we acquired the businesses of Poly-Flex Circuits,
Inc. and Poly-Flex Circuits, Limited (collectively "Poly-Flex") from Cookson
Group plc and Cookson Investment, Inc. (together, "Cookson") pursuant to the
Stock Purchase Agreement (the "Agreement") dated as of January 21, 2000.
Poly-Flex is engaged in the manufacture of polymer thick film, flexible
circuits and flexible interconnect assemblies. The acquisition was accounted
for using the purchase method of accounting. The purchase price has been
allocated to the assets acquired and liabilities assumed based on estimated
fair values as of the date of acquisition. Approximately $3.7 million
representing an allocation of purchase price over the estimated fair value of
net assets acquired has been recorded as goodwill and will be amortized over
a ten year period. The terms of the Agreement provide that the purchase price
may be adjusted based upon the earnings of Poly-Flex for the ten months
ending December 31, 2000 and the Combined Net Asset Value, as defined in the
Agreement. Cookson is currently disputing our calculation of the Combined Net
Asset Value. Accordingly, the purchase price is subject to adjustment.
The results of operations of Poly-Flex are included in the consolidated
financial statements for the three months ended October 1, 2000.
8
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, selected
items in our statements of income as a percentage of total revenue. You should
read the table and the discussion below in conjunction with our Consolidated
Financial Statements and the Notes thereto.
<TABLE>
<CAPTION>
Three Months Ended
October 1, 2000 September 26, 1999
--------------- ------------------
<S> <C> <C>
Total revenues 100.0% 100.0%
Cost of products sold 81.3% 78.1%
------- -------
Gross profit 18.7% 21.9%
Selling, general and administrative expenses 14.0% 11.4%
------- -------
Operating income 4.7% 10.5%
Income from operations before provision for
income taxes and minority interest 5.1% 10.2%
Net income 2.9% 6.6%
======= =======
</TABLE>
THREE MONTHS ENDED OCTOBER 1, 2000 COMPARED TO THREE MONTHS ENDED SEPTEMBER 26,
1999
TOTAL REVENUES. Our total revenues were $29.7 million in the three
months ended October 1, 2000, an increase of $9.3 million or 46% from $20.4
million in the three months ended September 26, 1999. Revenues were generated
primarily from product sales. The increase in total revenues was attributed
to the inclusion of Poly-Flex, which we acquired in March 2000, and an
increase in the volume of units shipped from our China and Laminated Cable
operations. Revenues from our Poly-Flex, China and Laminated Cable operations
represented approximately $9.0 million of the revenue increase.
Total revenues included licensing and royalty fees of $116,000 for
the three months ended October 1, 2000 of which $105,000 was the recognition
of the final installment of our patent assignment agreement with Polyclad
Laminates, Inc. Although we intend to continue developing materials and
processes that we can license to third parties, we do not expect that
licensing and royalty revenues will represent a significant portion of total
revenues in the near term.
COST OF PRODUCTS SOLD. Cost of products sold were $24.1 million, or
81% of total revenues, for the three months ended October 1, 2000, versus
$15.9 million, or 78% of total revenues for the comparable period in the
prior year. The percentage growth in costs of products sold was attributed to
unfavorable manufacturing variances, production start-up costs associated
with a previously announced cell phone project, unanticipated production
costs associated with outsourcing production at our Shanghai facility because
of limited manufacturing space and the inclusion of the Poly-Flex operations.
Additional space in China has been secured and is expected to be operational
by the end of the second quarter of fiscal 2001.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were $4.1 million, or 14% of total revenues, for the
three months ended October 1, 2000, and $2.3 million for the comparable
period in the prior year, or 11% of total revenues for that period. The
percentage growth in selling, general and administrative expenses was
primarily due to an increase in certain corporate expenses including salaries
and associated fringe benefits, depreciation and 401(k) costs and the
inclusion of the Poly-Flex operations.
9
<PAGE>
OTHER INCOME, INTEREST EXPENSE, AND PROVISION FOR INCOME TAXES.
Other income in the current quarter totaled $129,000 while the Company
recognized other income of $12,000 for the same quarter last year. The change
is due to an increase in interest income which result from our higher cash
and investment balances. In June 2000, we sold 1,452,500 shares of our common
stock in a public offering. Our proceeds were approximately $35.9 million,
net of expenses associated with the offering.
Interest expense was $28,000 for the three months ended October 1,
2000, compared to $58,000 for the comparable period in the prior year. The
decrease is due to the smaller amount of borrowings required to finance our
increased working capital requirements and capital expenditure needs. We used
a portion of the proceeds from our June 2000 offering to repay the
outstanding indebtedness under our revolving credit agreement and retire our
$15 million term loan.
Our income before provision for income taxes and for the minority
interest in our Chinese joint venture, Parlex Shanghai, was $1.5 million for
the three months ended October 1, 2000, a decrease of 28% from $2.1 million
for the three months ended September 26, 1999. We own 50.1% of the equity
interest in Parlex Shanghai and, accordingly, include Parlex Shanghai's
results of operations, cash flows and financial position in our consolidated
financial statements.
Our effective tax rate was approximately 28% in the three months
ended October 1, 2000, versus a 24% effective tax rate for the comparable
period in the prior year. The increase in the effective tax rate resulted
from a reduced amount of available tax credits and a greater proportion of
our income earned in higher tax jurisdictions.
Our income after provision for income taxes and for the minority
interest in Parlex Shanghai was $872,000 for the three months ended October
1, 2000, a decrease of 35% from $1.3 million for the three months ended
September 26, 1999.
LIQUIDITY AND CAPITAL RESOURCES
As of October 1, 2000, we had approximately $8.1 million in cash and
short-term investments.
Net cash used in operations during the three months ended October 1,
2000 was $1.9 million. This cash was used to support our working capital
requirements including receivables associated with sales growth at our
Poly-Flex and China operations. Cash used in investing activities was $9.0
million for the three months ended October 1, 2000. These funds were used to
purchase $6.4 million of higher-yielding investment grade corporate and
United States Government debt securities and $2.6 million of capital and
other expenditures. Cash provided by financing activities was $0.7 million
for the three months ended October 1, 2000 which represents the net
borrowings and repayments of our bank debt and cash received through the
exercise of stock options.
On March 1, 2000, we renegotiated our unsecured Revolving Credit
Agreement (the "Agreement") (originally dated June 22, 1994) making available
up to a total of $15,000,000 through December 31, 2001. On January 1, 2002,
the Agreement converts to a term loan with principal and interest payments
due monthly over a forty-five-month period ending on September 30, 2005. At
our discretion, borrowings under the Agreement accrue interest at either a
variable rate equal to the bank's prime rate (9.5% at October 1, 2000) or a
fixed rate equal to LIBOR rate plus a margin that varies from 1.5% to 2.0%.
The Agreement carries an annual commitment fee of 1/4% on the average daily
unused portion of the bank's commitment. Interest is payable
10
<PAGE>
monthly. At October 1, 2000, the unused commitment amounted to $14.2 million.
The Agreement has restrictive covenants related to tangible net worth, current
ratio, working capital, debt service ratio, and the ratio of total liabilities
to equity.
In June 2000, we sold 1,452,500 shares of our common stock in a public
offering. Our proceeds were approximately $35.9 million, net of expenses
associated with the offering. We used a portion of the proceeds to repay the
outstanding indebtedness under our revolving credit agreement and retire our $15
million term loan. The remaining balance is being used for general corporate
purposes, including working capital.
We believe that our cash on hand, our anticipated cash flow from
operations, and the amount available under our revolving credit facility should
be sufficient to meet our anticipated needs for at least the next 12 months.
RECENT ACCOUNTING PRONOUNCEMENTS
In June, 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards, or SFAS, No. 133, "Accounting
for Derivative Instruments and Hedging Activities." SFAS No. 133 established
accounting and reporting standards for derivative instruments, including
derivative instruments embedded in other contracts and for hedging
activities. The adoption of SFAS No. 133 on July 1, 2000 did not have a
material impact on the consolidated financial statements.
On December 3, 1999, the Securities and Exchange Commission ("SEC")
issued Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in
Financial Statements." SAB No. 101 provides guidance on the recognition,
presentation and disclosure of revenues in financial statements filed with
the SEC. The implementation date of SAB No. 101 has been delayed until no
later than the fourth fiscal quarter of fiscal years beginning after December
15, 1999. We are currently evaluating, and have not determined the effect, if
any, SAB No. 101 may have on our financial position and its results of
operations.
MARKET RISK
The following discussion about our market risk disclosures involves
forward-looking statements. Actual results could differ materially from those
projected in the forward-looking statements. We are exposed to market risk
related to changes in interest rates and foreign currency exchange rates. We do
not use derivative financial instruments for speculative or trading purposes.
As of October 1, 2000, we maintained a portion of our cash and cash
equivalents in financial instruments with varying maturities up to 18 months.
These financial instruments are subject to interest rate risk and will decline
in value if interest rates decrease. Due to the short duration of these
financial instruments, an immediate decrease in interest rates would not have a
material adverse effect upon our financial position.
We are exposed to market risks, which include changes in U.S. and
foreign interest rates and fluctuations in exchange rates.
We also have a revolving credit line, at our lender's prime rate or
LIBOR plus a margin that varies from 1.5% to 2.0%. Both the prime and LIBOR
rates are affected by changes in market interest rates. We owed approximately
$825,000 as of October 1, 2000. We have the option to repay borrowings at
anytime without penalty, other than breakage fees in the case of prepayment of
LIBOR rate borrowings, and therefore believe that our market risk is not
material.
11
<PAGE>
The remainder of our long-term debt bears interest at fixed rates and
is therefore not subject to market risk.
Sales of Parlex Shanghai and Poly-Flex Circuits Limited are typically
denominated in their local currency, which is their functional currency. This
creates exposure to changes in exchange rates. The changes in the Chinese/U.S.
and U.K./U.S. exchange rates may positively or negatively impact our sales,
gross margins and retained earnings. Based upon the current volume of
transactions in China and the United Kingdom and the stable nature of the
exchange rate between China and the U.S. and the United Kingdom and the U.S., we
do not believe the market risk is material. We do not engage in regular hedging
activities to minimize the impact of foreign currency fluctuations. Parlex
Shanghai had net assets as of June 30, 2000, which are reported in our financial
statements for the quarter ended October 1, 2000, of approximately $8.2 million.
Poly-Flex Circuits Limited had net assets as of October 1, 2000 of approximately
$6.9 million. We believe that a 10% change in exchange rates would not have a
significant impact upon Parlex Shanghai's or Poly-Flex Circuits Limited's
financial position, results of operation or outstanding debt. As of June 30,
2000, Parlex Shanghai had outstanding debt of $1.1 million. As of October 1,
2000, Poly-Flex Circuits Limited had no outstanding debt.
FACTORS THAT MAY AFFECT FUTURE RESULTS
This Quarterly Report on Form 10-Q contains certain "forward-looking
statements" as defined under the federal securities laws. Our actual results of
operations may differ significantly from those contemplated by such
forward-looking statements as a result of various risk factors beyond our
control, including, but not limited to, economic conditions in the electronics
industry, particularly in the principal industry sectors we serve, changes in
customer requirements and in the volume of sales to principal customers,
competition and technological change, and other one-time events and other
important factors disclosed previously and from time to time in other filings we
have made with the U.S. Securities and Exchange Commission.
12
<PAGE>
PART II - OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
A Special Meeting of Stockholders was held on August 30, 2000.
The sole purpose for the meeting was to consider and act upon
a proposed amendment to our Restated Articles of Organization
increasing the number of authorized shares of Common Stock,
par value $.10 per share, from 10,000,000 shares to 30,000,000
shares. The result of the vote for the proposal was as
follows:
1. To amend our Restated Articles of Organization:
For:........................................ 3,576,574
Against:.................................... 2,198,850
Abstain:.................................... 1,555
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - See Exhibit Index
(b) Reports on Form 8-K - We did not file a report on Form 8-K
during the three months ended October 1, 2000.
13
<PAGE>
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.
PARLEX CORPORATION
By: /s/ Peter J. Murphy
-----------------------------
Peter J. Murphy
President and Chief
Executive Officer
By: /s/ Robert A. Rieth
-----------------------------
Robert A. Rieth
Senior Vice President & CFO
(Principal Accounting and
Financial Officer)
November 14, 2000
----------------------------
Date
14
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description of Exhibit Page
------- ---------------------- ----
<S> <C> <C>
3-E Articles of Amendment to Restated Articles of Organization,
dated August 30, 2000
11 Statement Regarding Computation of Per Share Earnings 16
27 Financial Data Schedule 17
</TABLE>
15
