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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED COMMISSION FILE NUMBER
MARCH 30, 1996 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)
ONE JEWEL DRIVE, WILMINGTON, 01887
MASSACHUSETTS (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(508) 658-5800
FORMER NAME, FORMER ADDRESS AND FORMER
FISCAL YEAR, IF CHANGED SINCE LAST REPORT:
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 Common Stock of the Registrant outstanding as of
March 30, 1996 was 10,039,737 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--March 30, 1996 and December 30,
1995....................................................... 3
Consolidated Income Statements--Three Months Ended March 30,
1996 and April 1, 1995..................................... 4
Consolidated Statements of Cash Flows--Three Months Ended
March 30, 1996 and
April 1, 1995.............................................. 5
Notes to Consolidated Financial Statements.................. 6
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................. 7
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K............................ 8
Signatures.................................................. 9
</TABLE>
2
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PART I--FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ALTRON INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 30, DECEMBER 30,
1996 1995
----------- ------------
(IN THOUSANDS, EXCEPT SHARE DATA) (UNAUDITED)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents.............................. $ 14,991 $ 13,622
Short-term investments................................. 20,301 16,821
Accounts receivable, net............................... 23,697 22,687
Inventories............................................ 21,718 18,588
Other current assets................................... 3,000 3,009
-------- --------
Total Current Assets................................. 83,707 74,727
Property, Plant and Equipment, net....................... 31,307 29,613
Costs in Excess of Net Assets of Acquired Company........ 3,669 3,738
Long-term Investments.................................... 4,812 4,981
-------- --------
$123,495 $113,059
======== ========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
Current portion of long-term debt...................... $ 3,171 $ 3,169
Accounts payable....................................... 14,249 11,711
Accrued payroll and other employee benefits............ 4,324 3,937
Other accrued expenses................................. 3,901 3,633
-------- --------
Total Current Liabilities............................ 25,645 22,450
-------- --------
Long-term Debt........................................... 4,522 4,577
-------- --------
Deferred Income Taxes.................................... 7,800 5,378
-------- --------
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--10,196,791 and 10,148,691 shares.............. 510 507
Paid-in capital........................................ 36,507 36,301
Retained earnings...................................... 48,788 44,123
-------- --------
85,805 80,931
Less treasury stock, at cost (157,054 shares).......... 277 277
-------- --------
Total Stockholders' Investment....................... 85,528 80,654
-------- --------
$123,495 $113,059
======== ========
</TABLE>
None of the information in this Form 10-Q has been restated to reflect the
three-for-two split of the Company's Common Stock to be distributed May 10,
1996.
The accompanying notes are an integral part of these consolidated financial
statements.
3
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ALTRON INCORPORATED AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------
MARCH 30, APRIL 1,
1996 1995
--------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA, UNAUDITED)
<S> <C> <C>
Net Sales.................................................. $44,091 $32,662
Cost of Sales.............................................. 33,427 25,256
------- -------
Gross Profit............................................... 10,664 7,406
Selling, General and Administrative Expenses............... 3,130 2,593
------- -------
Income from Operations..................................... 7,534 4,813
Other Income............................................... 458 168
Interest Expense........................................... 86 116
------- -------
Income Before Provision for Income Taxes................... 7,906 4,865
Provision for Income Taxes................................. 3,241 1,945
------- -------
Net Income................................................. $ 4,665 $ 2,920
======= =======
Net Income Per Common and Common Equivalent Share.......... $ 0.44 $ 0.33
======= =======
Weighted Average Common and Common Equivalent Shares Out-
standing.................................................. 10,606 8,922
======= =======
</TABLE>
None of the information in this Form 10-Q has been restated to reflect the
three-for-two split of the Company's Common Stock to be distributed May 10,
1996.
The accompanying notes are an integral part of these consolidated financial
statements.
4
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ALTRON INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------
MARCH 30, APRIL 1,
1996 1995
--------- --------
(IN THOUSANDS, UNAUDITED)
<S> <C> <C>
Cash Flows from Operating Activities:
Net income............................................. $ 4,665 $ 2,920
Adjustments to reconcile net income to net cash pro-
vided by operating activities:
Depreciation and amortization........................ 1,151 1,147
Deferred income taxes................................ 2,422 1,097
Changes in current assets and liabilities:
Accounts receivable.................................. (1,010) (2,052)
Inventories.......................................... (3,130) (3,883)
Other current assets................................. 9 (115)
Accounts payable..................................... 2,538 2,719
Accrued expenses..................................... 655 1,519
------- -------
Net cash provided by operating activities................ 7,300 3,352
------- -------
Cash Flows from Investing Activities:
Purchases of investments, net.......................... (3,311) --
Capital expenditures................................... (2,776) (2,335)
------- -------
Net cash used in investing activities.................... (6,087) (2,335)
------- -------
Cash Flows from Financing Activities:
Principal payments of long-term debt................... (53) (200)
Proceeds from issuance of common stock................. 209 64
------- -------
Net cash provided by (used in) financing activities...... 156 (136)
------- -------
Net Change in Cash and Cash Equivalents.................. 1,369 881
Cash and Cash Equivalents, Beginning of Period........... 13,622 8,306
------- -------
Cash and Cash Equivalents, End of Period................. $14,991 $ 9,187
======= =======
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest............................................. $ 138 $ 145
Income taxes......................................... 1,700 600
</TABLE>
None of the information in this Form 10-Q has been restated to reflect the
three-for-two split of the Company's Common Stock to be distributed May 10,
1996.
The accompanying notes are an integral part of these consolidated financial
statements.
5
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ALTRON INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(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
industries located in the United States and Europe.
(2) INTERIM FINANCIAL STATEMENTS
In the opinion of the Company's management, these interim 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 ended March 30,
1996 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 30, 1995, 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) 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, March 30, 1996 unaudited):
<TABLE>
<CAPTION>
MARCH 30, DECEMBER 30,
1996 1995
--------- ------------
<S> <C> <C>
Raw Materials....................................... $10,405 $ 9,371
Work-in-process..................................... 11,313 9,217
------- -------
$21,718 $18,588
======= =======
</TABLE>
(4) 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 March 30, 1996 and
December 30, 1995.
(5) SIGNIFICANT CUSTOMERS
One customer, Motorola Inc., accounted for 16% and 17% of net sales for the
three month periods ended March 30, 1996 and April 1, 1995, respectively.
6
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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 first quarter of 1996 increased 35% to $44.1 million from
net sales of $32.7 million for the same quarter of 1995. The increase was
primarily the result of increased shipments of value added assembly products
to the Company's largest customers in the communication, computer and
industrial segments of the electronics industry. The Company's largest
customer in each of the first quarters of 1996 and 1995 was Motorola Inc.,
which accounted for 16% and 17% of net sales for each quarter, respectively.
Value added contract manufacturing sales for the first quarter of 1996
increased 39% to $33.1 million or approximately 75% of net sales, compared to
$23.9 million or 73% of net sales in the first quarter of 1995. Printed
circuit board sales for the first quarter of 1996 were approximately 25% of
net sales compared to 27% of net sales in the first quarter of 1995.
Gross margin as a percentage of net sales for the first quarter of 1996
increased to 24.2% as compared to 22.7% in 1995. Gross profit for the first
quarter of 1996 increased 44% to $10.7 million from $7.4 million in 1995. The
increase in the Company's gross profit resulted primarily from absorption of
fixed costs due to the higher volume of shipments 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 7.1% in the first quarter of 1996 from 7.9% for the same quarter
of 1995. The decline in selling, general and administrative expenses as a
percentage of net sales was principally the result of higher net sales.
Other income increased $290,000 in the first quarter of 1996 as compared to
the first quarter of 1995 principally as a result of receiving net proceeds of
approximately $24.3 million from the public offering of the Company's common
stock during the second quarter of 1995. Interest expense was $30,000 lower in
the first quarter of 1996 than 1995 as a result of reduced outstanding
borrowings.
LIQUIDITY AND CAPITAL RESOURCES
At March 30, 1996, the Company had working capital of $58.1 million compared
to $52.3 million at December 30, 1995. Cash and cash equivalents and short-
term investments were $35.3 million at March 30, 1996 and $30.4 million at
December 30, 1995. Long-term investments at March 30, 1996 were $4.8 million
compared to $5.0 million at December 30, 1995.
At March 30, 1996, the Company had a $5,000,000 unsecured line of credit
with its bank, all of which was available.
On April 2, 1996, the Board of Directors adopted a resolution to increase
the total number of authorized shares of common stock from 30,000,000 to
40,000,000 shares, with a par value of $.05 per share. The resolution will be
submitted for approval by the stockholders at the Annual Meeting of the
Stockholders scheduled to be held on May 16, 1996.
On April 2, 1996, the Board of Directors declared a 3 for 2 split of its
Common Stock effected as a 50% stock dividend payable May 10, 1996 to
stockholders of record on April 18, 1996.
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 $2.0 million of
capital expenditures as of March 30, 1996.
7
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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
March 30, 1996.
8
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SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) 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.
Altron Incorporated
NAME TITLE DATE
/s/ Samuel Altschuler Chairman of the Board of April 30,
- ------------------------- Directors and President 1996
SAMUEL ALTSCHULER (principal executive officer)
/s/ Burton Doo Executive Vice President and April 30,
- ------------------------- Director, President, Altron 1996
BURTON DOO Systems Corporation
/s/ Peter D. Brennan Vice President, Chief Financial April 30,
- ------------------------- Officer and Treasurer (principal 1996
PETER D. BRENNAN financial and accounting
officer)
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-START> DEC-31-1995
<PERIOD-END> MAR-30-1996
<CASH> 14,991
<SECURITIES> 20,301
<RECEIVABLES> 24,472
<ALLOWANCES> 775
<INVENTORY> 21,718
<CURRENT-ASSETS> 83,707
<PP&E> 59,020
<DEPRECIATION> 27,713
<TOTAL-ASSETS> 123,495
<CURRENT-LIABILITIES> 25,645
<BONDS> 4,522
0
0
<COMMON> 510
<OTHER-SE> 85,018
<TOTAL-LIABILITY-AND-EQUITY> 123,495
<SALES> 44,091
<TOTAL-REVENUES> 44,091
<CGS> 33,427
<TOTAL-COSTS> 36,557
<OTHER-EXPENSES> (458)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 86
<INCOME-PRETAX> 7,906
<INCOME-TAX> 3,241
<INCOME-CONTINUING> 4,665
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,665
<EPS-PRIMARY> 0.44
<EPS-DILUTED> 0.44
</TABLE>
