<PAGE>
- -------------------------------------------------------------------------------
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED SEPTEMBER 30, 1995
COMMISSION FILE NUMBER 0-13230
ALTRON INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MASSACHUSETTS 04-2464301
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
01887
ONE JEWEL DRIVE, WILMINGTON, MA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)
(508) 658-5800
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NONE
(FORMER NAME, FORMER ADDRESS AND FORMER
FISCAL YEAR, IF CHANGED SINCE LAST REPORT.)
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 Common Stock of the Registrant outstanding as of
September 30, 1995 was 9,957,834 shares.
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ALTRON INCORPORATED AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<C> <S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Consolidated Balance Sheets--September 30, 1995 and December
31, 1994.................................................... 3
Consolidated Income Statements--Three and Nine Months Ended
September 30, 1995 and October 1, 1994...................... 4
Consolidated Statements of Cash Flows--Nine Months Ended
September 30, 1995 and October 1, 1994...................... 5
Notes to Consolidated Financial Statements................... 6-7
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 8
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K............................. 9
Signatures................................................... 10
</TABLE>
2
<PAGE>
PART I--FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ALTRON INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1995 1994
------------- ------------
(UNAUDITED)
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents........................... $ 9,539 $ 8,306
Short-term investments.............................. 24,714 2,028
Accounts receivable, less allowances of $725 and
$625............................................... 19,894 15,816
Inventories......................................... 19,644 11,519
Other current assets................................ 2,967 2,324
-------- -------
Total Current Assets.............................. 76,758 39,993
-------- -------
Property, Plant and Equipment, net.................... 28,230 24,510
-------- -------
Costs in Excess of Net Assets of Acquired Company..... 3,808 4,019
-------- -------
$108,796 $68,522
======== =======
<CAPTION>
LIABILITIES AND STOCKHOLDERS' INVESTMENT
<S> <C> <C>
Current Liabilities:
Current portion of long-term debt................... $ 3,171 $ 805
Accounts payable.................................... 12,957 9,275
Accrued payroll and other employee benefits......... 4,255 2,882
Other accrued expenses.............................. 3,160 2,489
-------- -------
Total Current Liabilities......................... 23,543 15,451
-------- -------
Long-term Debt........................................ 4,622 8,646
-------- -------
Deferred Income Taxes................................. 5,279 4,044
-------- -------
Stockholders' Investment:
Preferred stock, $1.00 par value--
Authorized--1,000,000 shares
Issued and outstanding--none...................... -- --
Common stock, $.05 par value--
Authorized--30,000,000 shares
Issued--10,114,888 and 8,577,552 shares........... 506 429
Paid-in capital..................................... 35,459 10,664
Retained earnings................................... 39,664 29,565
-------- -------
75,629 40,658
Less treasury stock, at cost, 157,054 shares........ 277 277
-------- -------
Total Stockholders' Investment.................... 75,352 40,381
-------- -------
$108,796 $68,522
======== =======
</TABLE>
The accompanying notes are an integral part
of these consolidated financial
statements.
3
<PAGE>
ALTRON INCORPORATED AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA, UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------------ ------------------------
SEPTEMBER 30, OCTOBER 1, SEPTEMBER 30, OCTOBER 1,
1995 1994 1995 1994
------------- ---------- ------------- ----------
<S> <C> <C> <C> <C>
Net Sales.................... $34,753 $26,682 $102,139 $75,061
Cost of Sales................ 26,280 20,883 78,171 58,492
------- ------- -------- -------
Gross Profit................. 8,473 5,799 23,968 16,569
Selling, General and
Administrative Expenses..... 2,535 2,200 7,735 6,284
------- ------- -------- -------
Income from Operations....... 5,938 3,599 16,233 10,285
Other Income................. 475 25 897 120
Interest Expense............. 88 116 300 407
------- ------- -------- -------
Income before Provision for
Income Taxes................ 6,325 3,508 16,830 9,998
Provision for Income Taxes... 2,530 1,401 6,731 3,996
------- ------- -------- -------
Net Income................... $ 3,795 $ 2,107 $ 10,099 $ 6,002
======= ======= ======== =======
Net Income Per Common and
Common Equivalent Share..... $ .36 $ .24 $ 1.05 $ .70
======= ======= ======== =======
Weighted Average Common and
Common Equivalent Shares
Outstanding................. 10,641 8,776 9,634 8,628
======= ======= ======== =======
</TABLE>
The accompanying notes are an integral part
of these consolidated financial
statements.
4
<PAGE>
ALTRON INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS, UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
------------------------
SEPTEMBER 30, OCTOBER 1,
1995 1994
------------- ----------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income........................................... $ 10,099 $ 6,002
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization...................... 3,654 2,826
Deferred income taxes.............................. 1,235 1,136
Changes in current assets and liabilities, net of
assets acquired:
Accounts receivable.............................. (4,078) (2,710)
Inventories...................................... (8,125) (2,434)
Other current assets............................. (643) (679)
Accounts payable................................. 3,682 2,118
Accrued expenses................................. 2,044 1,533
-------- -------
Net cash provided by operating activities............ 7,868 7,792
-------- -------
Cash Flows from Investing Activities:
Purchases of short-term investments................ (78,352) --
Sales of short-term investments.................... 55,666 --
Capital expenditures............................... (7,163) (4,974)
Purchase of a company, net of cash acquired........ -- (2,994)
-------- -------
Net cash used in investing activities................ (29,849) (7,968)
-------- -------
Cash Flows from Financing Activities:
Net decrease in short-term debt.................... -- (175)
Principal payments of long-term debt............... (1,658) (577)
Proceeds from issuance of common stock............. 24,872 192
-------- -------
Net cash provided by (used in) financing activities.. 23,214 (560)
-------- -------
Net Change in Cash and Cash Equivalents.............. 1,233 (736)
Cash and Cash Equivalents, Beginning of Period....... 8,306 8,877
-------- -------
Cash and Cash Equivalents, End of Period............. $ 9,539 $ 8,141
======== =======
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest......................................... $ 385 $ 517
Income taxes..................................... 5,485 3,598
</TABLE>
The accompanying notes are an integral part
of these consolidated financial
statements.
5
<PAGE>
ALTRON INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) BUSINESS
Altron Incorporated (the "Company") is a leading contract manufacturer of
interconnect products used in advanced electronic equipment. The Company
manufactures complex products in the mid-volume sector of the electronic
interconnect industry including custom-designed backplanes, surface mount
assemblies and total systems, as well as multilayer, high density printed
circuit boards. Altron's customers include a diversified base of manufacturers
in the telecommunication, data communication, computer, industrial and medical
segments of the electronics industry.
On May 26, 1995, the Company completed a public offering of 1,395,000 shares
of its common stock, resulting in net proceeds of approximately $24.4 million.
On June 9, 1995, the Company formed Altron Securities Corporation, a wholly-
owned Massachusetts investment subsidiary.
(2) INTERIM FINANCIAL STATEMENTS
In the opinion of the Company's management, these financial statements
contain all adjustments (consisting of normal recurring adjustments) necessary
for a fair presentation of the results for such periods. The unaudited results
of operations for the quarter and nine months ended September 30, 1995 are not
necessarily an indication of the results of operations for the full year.
The accompanying consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries, Altron Systems Corporation and
Altron Securities Corporation. All significant intercompany balances and
transactions have been eliminated in consolidation.
Printed circuit boards manufactured by the Company and used in its assembly
operations are included in value added contract manufacturing sales. Printed
circuit board sales represent sales to third parties.
For information as to the significant accounting policies followed by the
Company and other financial and operating information, see the Company's Form
10-K for the year ended December 31, 1994 as filed with the Securities and
Exchange Commission (Commission File No. 0-13230). These interim financial
statements should be read in conjunction with the financial statements
included in the Form 10-K.
(3) INVESTMENTS
At September 30, 1995, the Company's investments consisted primarily of debt
securities issued by the U.S. Treasury, other U.S. Government agencies and
municipalities. These investments were classified as available-for-sale and
recorded at amortized cost which was not materially different from fair value.
The value of investments with maturities less than one year was $19,947,000
and greater than one year was $4,767,000 at September 30, 1995. Debt
obligations with contractual maturities greater than one year are classified
as current assets because the Company has the option to liquidate them in the
short-term.
(4) INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out method) or
market. Cost includes materials, labor and manufacturing overhead. Inventories
are summarized as follows (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1995 1994
------------- ------------
<S> <C> <C>
Raw materials................................... $ 9,989 $ 5,120
Work-in-process................................. 9,655 6,399
------- -------
$19,644 $11,519
======= =======
</TABLE>
6
<PAGE>
ALTRON INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(5) SHORT-TERM DEBT
The Company has a $5,000,000 unsecured line of credit available with its
bank at the bank's prime rate. There were no borrowings outstanding under the
line of credit and the entire line was available at September 30, 1995 and
December 31, 1994.
(6) SIGNIFICANT CUSTOMERS
One customer, Motorola Inc., accounted for approximately 18% and 13% of net
sales for the nine month periods ended September 30, 1995 and October 1, 1994,
respectively.
7
<PAGE>
ALTRON INCORPORATED AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net sales for the third quarter of 1995 increased 30% to $34.8 million from
net sales of $26.7 million for the same quarter of 1994. Net sales for the
first nine months of 1995 increased 36% to $102.1 million compared to $75.1
million for the same period last year. The increase was primarily the result
of increased shipments of value added assembly products to the Company's
largest customers in the communication and computer segments of the
electronics industry.
Value added contract manufacturing sales for the third quarter and nine
months of 1995 were $25.3 million and $74.3 million, respectively, or 73% of
the Company's net sales for each period. Net sales for the comparable third
quarter and nine months of 1994 were $16.0 million and $44.6 million
respectively, or 60% of the Company's net sales for each period. Printed
circuit board sales for the third quarter and nine months of 1995 were 27% of
the Company's net sales compared to 40% of net sales for the third quarter and
nine months of 1994.
Gross margin as a percentage of net sales for the third quarter of 1995
increased to 24.4% as compared to 21.7% in 1994. Gross margin as a percentage
of net sales for the first nine months of 1995 increased to 23.5% compared to
22.1% in 1994. The improvement in the Company's gross margin was primarily a
result of better absorption of fixed costs due to the higher shipment levels
and was also due to manufacturing efficiencies gained through productivity and
product yield improvements.
Selling, general and administrative expenses as a percentage of net sales
decreased to 7.3% in the third quarter of 1995 from 8.2% for the same quarter
of 1994. In the first nine months of 1995, selling, general and administrative
expenses decreased to 7.6% of net sales compared to 8.4% for the same period
in 1994. The decline in selling, general and administrative expenses as a
percentage of net sales was principally the result of higher net sales and
tight expense controls in all areas.
Other income increased $450,000 in the third quarter and $777,000 for the
first nine months of 1995 as compared to the respective periods of 1994. The
increases resulted primarily from higher cash balances available for
investment mainly due to net proceeds of approximately $24.4 million received
from the sale of the Company's common stock during the second quarter.
Interest expense was $28,000 lower in the third quarter and $107,000 lower for
the first nine months of 1995 as compared to the same periods in 1994 as a
result of the payoff of $1.2 million on the Company's term loan in the prior
quarter and lower outstanding borrowings.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1995, the Company had working capital of $53.2 million
compared to $24.5 million at December 31, 1994. Cash and cash equivalents and
short-term investments were $34.3 million at September 30, 1995 and $10.3
million at December 31, 1994. The increase in cash and cash equivalents and
working capital in 1995 was principally due to net proceeds from the public
offering of the Company's common stock completed on May 26, 1995. At September
30, 1995, the Company's $3 million unsecured term loan was reclassified from
long-term debt to a current obligation due to the maturity date being less
than one year.
At September 30, 1995, the Company had a $5 million line of credit
arrangement with its bank, all of which was available.
The Company believes that its existing bank credit and working capital,
together with funds generated from operations, will be sufficient to satisfy
anticipated sales growth and investment in manufacturing facilities and
equipment. The Company had commitments for approximately $1.4 million of
capital expenditures as of September 30, 1995.
8
<PAGE>
ALTRON INCORPORATED AND SUBSIDIARIES
PART II--OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a)Exhibits
27 -- Financial Data Schedule
(b)Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the quarter ended
September 30, 1995.
9
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THE REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
Altron Incorporated and Subsidiaries
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<S> <C> <C>
/s/ Samuel Altschuler Chairman of the Board of November 9, 1995
- ----------------------------------- Directors and President
SAMUEL ALTSCHULER (principal executive
officer)
/s/ Burton Doo Executive Vice President and November 9, 1995
- ------------------------------------ Director, President, Altron
BURTON DOO Systems Corporation
/s/ Peter D. Brennan Vice President, Chief November 9, 1995
- ------------------------------------ Financial Officer and
PETER D. BRENNAN Treasurer (principal
financial and accounting
officer)
</TABLE>
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 9,539
<SECURITIES> 24,714
<RECEIVABLES> 20,619
<ALLOWANCES> 725
<INVENTORY> 19,644
<CURRENT-ASSETS> 76,758
<PP&E> 54,140
<DEPRECIATION> 25,910
<TOTAL-ASSETS> 108,796
<CURRENT-LIABILITIES> 23,543
<BONDS> 4,622
<COMMON> 506
0
0
<OTHER-SE> 74,846
<TOTAL-LIABILITY-AND-EQUITY> 108,796
<SALES> 102,139
<TOTAL-REVENUES> 102,139
<CGS> 78,171
<TOTAL-COSTS> 85,906
<OTHER-EXPENSES> (897)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 300
<INCOME-PRETAX> 16,830
<INCOME-TAX> 6,731
<INCOME-CONTINUING> 10,099
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,099
<EPS-PRIMARY> 1.05
<EPS-DILUTED> 1.05
</TABLE>
