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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED COMMISSION FILE NUMBER
DECEMBER 28, 1996 0-13230
ALTRON INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MASSACHUSETTS 04-2464301
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
ONE JEWEL DRIVE, WILMINGTON, 01887
MASSACHUSETTS (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)
Registrant's telephone number, including area code:
(508) 658-5800
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock
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 aggregate market value of the voting stock held by nonaffiliates of the
Registrant as of February 22, 1997 was $243,000,000.
The number of shares of Common Stock of the Registrant outstanding as of
December 28, 1996 was:
15,242,195
DOCUMENTS INCORPORATED BY REFERENCE
Part III incorporates information by reference from the definitive proxy
statement for the 1997 Annual Meeting to be held May 22, 1997.
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X
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<PAGE>
ITEM 1. BUSINESS
Altron 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. Altron's
products generally require greater engineering and manufacturing expertise
than mass-produced, less complex products. The Company manufactures custom-
designed backplanes, surface mount assemblies and total systems, as well as
multilayer, high density printed circuit boards. Altron works closely with its
customers from the early stages of product design and development. The Company
provides original design, engineering prototype, preproduction and volume
production capabilities.
Altron believes its capabilities both in manufacturing multilayer, high
density printed circuit boards and in providing value added contract
manufacturing services advantageously position the Company to serve high
growth OEMs in the rapidly changing electronics markets. Altron's OEM
customers include a diversified base of manufacturers in the
telecommunication, data communication, computer, industrial and medical
systems segments of the electronics industry, such as 3Com Corporation,
Cabletron Systems, Inc., Cascade Communications Corp., Cisco Systems, Inc.,
Data General Corporation, EMC Corporation, General Electric Company, Hewlett-
Packard Company, Johnson and Johnson Inc., KLA Instrument Corp., Lucent
Technologies, Motorola, Inc., Silicon Graphics, Inc. and U.S. Robotics
Corporation.
Altron's strategy is to continue to use its well established high technology
printed circuit board manufacturing and engineering capabilities to further
expand into the rapidly growing contract manufacturing business, providing
products and services including backplanes, surface mount assemblies, power
supplies and total systems. Key elements of this strategy include providing
its customers with the highest levels of quality, superior service and leading
edge technology. In fiscal 1996, approximately 74% of Altron's net sales were
attributable to value added contract manufacturing, with the remaining 26% of
net sales attributable to printed circuit board manufacturing.
ELECTRONIC INTERCONNECT INDUSTRY OVERVIEW
Multilayer, High Density Printed Circuit Boards. According to The Institute
for Interconnecting and Packaging Electronic Circuits ("IPC"), the United
States printed circuit board market was approximately $7.9 billion in 1996, of
which approximately $6 billion was attributable to independent manufacturers
like Altron. IPC's data also shows that approximately 80% of this market was
multilayer, high density printed circuit boards. IPC estimates that the
percentage of the printed circuit board market available to independent
printed circuit board manufacturers, such as Altron, has increased from 66% to
85% since 1991.
Value Added Contract Manufacturing. According to IPC, the United States
value added contract manufacturing market was approximately $14 billion in
1996 and is growing about 20% per year. Based on industry data, the Company
believes that OEMs are increasingly relying upon independent manufacturers of
complex electronic interconnect products, such as Altron, rather than on in-
house ("captive") production. OEMs which have discontinued or curtailed
domestic captive printed circuit board or backplane production since 1990
include Data General Corporation, Digital Equipment Corporation, General
Electric Company, GTE Corporation, Hewlett-Packard Company, Lucent
Technologies, Northern Telecomm Limited, Raytheon Company, Unisys Corporation,
and Xerox Corporation. Altron believes that the current trend towards
increased reliance by OEMs on independent manufacturers reflects the OEMs'
recognition that, for complex electronic interconnect products, independent
manufacturers can provide greater specialization, expertise, responsiveness
and flexibility and can offer shorter delivery cycles than can be achieved by
internal production.
Other factors which lead OEMs to utilize contract manufacturers include:
Reduced Time-to-Market. Due to intense competitive pressures in the
electronics industry, OEMs are faced with increasingly shorter product
life-cycles and therefore have a growing need to reduce the time required
to bring a product to market. OEMs can reduce their time-to-market by using
a contract manufacturer's established manufacturing expertise and
infrastructure.
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Reduced Capital Investment Requirements. As electronic products have
become more technologically advanced, the manufacturing process has become
increasingly sophisticated and automated, requiring a greater level of
investment in capital equipment. By using contract manufacturers, OEMs can
reduce their overall capital equipment requirements while maintaining
access to advanced manufacturing facilities.
Focused Resources. Because the electronics industry is experiencing
greater levels of competition and rapid technological change, many OEMs
increasingly are seeking to focus their resources on activities and
technologies in which they add the greatest value. By offering
comprehensive electronic assembly and turnkey manufacturing services,
contract manufacturers, such as Altron, allow OEMs to focus on core
technologies and activities such as product development, marketing and
distribution.
Access to Leading Manufacturing Technology. Electronic interconnect
products and electronic interconnect product manufacturing technology have
become increasingly sophisticated and complex, making it difficult for OEMs
to maintain the necessary technological expertise in process development
and control. OEMs are motivated to work with a contract manufacturer in
order to gain access to the contract manufacturer's process expertise and
manufacturing know-how.
Improved Inventory Management and Purchasing Power. Electronics industry
OEMs are faced with increasing difficulties in planning, procuring and
managing their inventories efficiently due to frequent design changes,
short product life-cycles, large investments in electronic components,
component price fluctuations and the need to achieve economies of scale in
materials procurement. OEMs can reduce production costs by using a contract
manufacturer's volume procurement capabilities. By utilizing a contract
manufacturer's expertise in inventory management, OEMs can better manage
inventory costs and increase their return on assets.
BUSINESS STRATEGY
In response to the foregoing industry trends, Altron has transitioned its
business from primarily supplying printed circuit boards to producing
sophisticated value added electronic interconnect products.
Altron's business strategy encompasses several elements:
. Focus on quality. The Altron team strives to insure the highest levels of
quality control in all phases of its operations, as quality is a critical
competitive factor in the electronic interconnect market. The Company
strives for continuous improvement of its processes and has adopted a
number of quality improvement and measurement techniques to improve its
performance. Altron's three plants are ISO 9002 registered.
. Provide service-oriented manufacturing. The Company manufactures almost
all of the printed circuit boards used in its total systems, surface
mount assemblies and custom designed backplanes in order to maintain
control over costs, quality and timely delivery of its products. This
vertical integration also allows the Company to provide a broader range
of assembly services, including prototype and high technology products.
. Maintain technology leadership. Altron seeks to deliver advanced
manufacturing and test engineering, responsive materials management, and
technologically advanced, flexible and service-oriented manufacturing
for the complex, leading-edge products of its OEM customers throughout
the full product life-cycle.
. Target high value added electronic interconnect products. Altron focuses
on leading manufacturers of advanced electronic equipment who generally
require custom-designed, more complex interconnect products and short
lead-time manufacturing services such as quick-turn multilayer printed
circuit boards, backplanes and surface mount assemblies and in-house
power supply and total systems design. By focusing on such customer
needs, Altron has been able to achieve higher margins than many other
businesses within the electronic interconnect industry.
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. Maintain a diversified customer base. Altron services a diversified
customer base spread over a variety of growing industry segments,
including more than 125 customers in the telecommunication, data
communication, computer, industrial and medical systems segments of the
electronics industry. During fiscal 1996, in aggregate, Altron's ten
largest customers accounted for approximately 63% of the Company's net
sales.
. Pursue a "partnership" approach with customers. Altron seeks to
establish "partnerships" with its customers by involving Altron
engineers and staff in the early design stages of its customers' product
development, and by providing quick-turnaround manufacturing services
and just-in-time, kanban and dock-to-stock delivery. Through this
approach, Altron seeks to forge lasting customer relationships across a
number of products and through multiple product generations.
PRODUCTS AND SERVICES
Altron produces total systems, surface mount assemblies, custom designed
backplanes and multilayer printed circuit boards that are used in the
manufacture of sophisticated electronic equipment. For fiscal 1996, Altron's
sales of value added contract manufacturing products such as total systems,
surface mount assemblies and custom designed backplanes accounted for
approximately 74% of total sales. Sales of printed circuit boards accounted
for the remaining 26% of total sales. Approximately 94% of Altron's printed
circuit board sales in fiscal 1996 were multilayer, high density printed
circuit boards.
Total systems include printed circuit board assemblies, backplanes, card
racks, and power supplies that are enclosed in housings, which are usually
fabricated from steel or aluminum. Altron has developed a highly sophisticated
mechanical design capability to provide its customers with design services.
This capability allows Altron to establish a close partnership with its
customers and gives Altron visibility for potential future customer
requirements.
Custom designed backplanes are assemblies of stamped and plated pins,
plastic housings and other components on multilayer or two-sided printed
circuit boards. Backplanes are used in electronic systems to distribute power
and ground, and to connect printed circuit boards which plug into the
backplane with other printed circuit boards, power supplies, and other circuit
elements. They also are used to transfer information into and out of the
system. As semiconductor speeds have increased and design requirements have
become more stringent, backplane complexity has increased significantly, often
requiring the use of large multilayer printed circuit boards of six or more
layers. The Company manufactures backplanes with up to 32 layers, .300 inches
thick, and 2 feet by 3 feet in size. Altron has recently added a complete
fine-pitch surface mount assembly operation to its backplane assembly
capabilities, and also uses press-fit technologies in backplane assembly.
Surface mount assembly is a largely automated advanced interconnect
technology that involves placing semiconductor components directly on the
surface of both sides of a printed circuit board. This surface mount
technology ("SMT") allows the leads on integrated circuits and other
electronic components to be soldered to the surface of the backplane assembly
or printed circuit board rather than being inserted into holes, thereby
accommodating a substantially higher number of leads than can be accommodated
with less sophisticated pin-through-hole technology. More leads permit the
printed circuit board to interconnect a greater density of components, which
permits a reduction in the size of the backplane assembly or printed circuit
board. Additionally, SMT allows components to be placed on both sides of the
printed circuit board, thereby permitting even greater density.
Multilayer printed circuit boards consist of three or more layers of a
printed circuit board laminated together and interconnected by plated-through
holes. Printed circuit boards consist of metallic interconnecting paths on a
non-conductive material, typically laminated epoxy glass. Holes drilled in the
laminate and plated through with conductive material from one surface to
another, called plated-through holes, are used to receive component leads and
to interconnect the circuit layers. Multilayer boards increase packaging
density, improve power and ground distribution, and permit the use of higher
speed circuitry. The development of electronic components with increased
speed, higher performance and smaller size has stimulated a demand for
multilayer printed circuit boards, as they provide increased reliability,
density and complexity. Since even the most sophisticated two-sided
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printed circuit board cannot meet the requirements of today's circuit
designers for packaging density, an increasing number of designs use
multilayer technology.
MANUFACTURING CAPABILITIES AND SERVICES
Altron seeks to establish "partnerships" with its customers by providing
high quality, responsive, flexible manufacturing capabilities and services
which include:
Advanced Manufacturing Equipment. Altron's concentration on more complex
electronic interconnect products has necessitated a substantial capital
investment in advanced equipment and the continued introduction of new
manufacturing processes. Altron has established an engineering capability to
select and implement the latest manufacturing technology. For example, the
fine lead spacing or "pitch" in SMT requires an exacting printed circuit board
manufacturing and assembly process, and Altron has state-of-the-art surface
mount assembly operations in all three of its plants. The Company also uses
numerically controlled pin installation and high voltage electrical test
equipment in its backplane assembly manufacturing, and has developed a design
and manufacturing capability for controlled impedance multilayer printed
circuit boards and backplane assemblies. Altron's printed circuit board
manufacturing operations also require state-of-the-art equipment and
processes, and Altron has a computerized artwork generation system,
numerically controlled drillers and routers, automatic electroless deposition,
dry film photo-imaging, automatic gold plating, computerized electrical
testing and automatic optical inspection. In addition, Altron has seven SMT
machines, as well as Hewlett-Packard and GenRad Test Equipment, new Nitrogen
blanket flow soldering equipment, and two automatic axial lead assembly lines.
All three of Altron's plants are staffed with highly experienced SMT
engineering and manufacturing teams which provide cost effective, high
quality, assembled printed circuit boards, backplanes and total systems.
Value Added Contract Manufacturing. Computer integrated manufacturing
("CIM") services provided by Altron consist of developing manufacturing
processes and tooling and test sequences for new products from product designs
received from customers. In addition, Altron's interconnect products division
provides design and engineering services in the early stages of product
development, thus assuring that both mechanical and electrical considerations
are integrated into a total system approach to achieve a producible, high
quality and cost effective product. Altron also evaluates customer designs for
manufacturability and, when appropriate, recommends design changes to reduce
manufacturing costs or lead times or to increase manufacturing yields and the
quality of finished backplane assemblies and printed circuit boards.
Quick-turnaround. Altron's quick-turnaround manufacturing capabilities allow
it to better serve the needs of its customers for quick response to their
product designs. Shorter customer product life-cycles and the need to bring
new products to market quickly have created a demand for small quantities of
complex multilayer printed circuit boards delivered in relatively short
periods of time, typically from three to ten days. Sales of printed circuit
boards produced in this manner accounted for approximately 21% of the
Company's printed circuit board sales in fiscal 1996. After engineering of an
interconnect product is completed, Altron has the capability to manufacture
prototype or preproduction versions of such product on a quick-turnaround
basis. Altron expects that the demand for engineering and quick-turnaround
prototype and preproduction manufacturing services will increase as OEMs'
products become more complex and as product life-cycles shorten. The Company's
continued success depends upon its ability to respond to the evolving needs of
customers in a timely manner.
Multilayer Printed Circuit Board Manufacturing. Altron's ability to
manufacture printed circuit boards, including large, complex multilayer
printed circuit boards with close tolerance plated-through hole diameters and
other characteristics important to backplane applications, is one of the major
factors that has enabled it to become an important supplier of complex,
technologically advanced backplane assemblies and multilayer printed circuit
boards to the electronics industry. The Company began manufacturing multilayer
boards in 1979 and in fiscal 1996 multilayer sales constituted 94% of the
Company's printed circuit board revenues. Today, Altron is capable of
efficiently producing commercial quantities of printed circuit boards with up
to 32 layers and circuit track widths as narrow as four thousandths of an
inch.
5
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The manufacture of complex multilayer interconnect products often requires
the use of sophisticated circuit interconnections between certain layers
(called "blind or buried vias") and adherence to strict electrical
characteristics to maintain consistent circuit transmission speeds (referred
to as "controlled impedance boards"). These technologies require very tight
lamination and etching tolerances and are especially critical for printed
circuit boards with ten or more layers. The Company specializes in multilayer
boards requiring controlled impedance, and has developed the ability to
manufacture large, thick multilayer backplane boards using Cyanate Ester and
GETEK base materials for ultra-high speed applications. By concentrating on
the multilayer segment of the printed circuit board market, where quality,
technology and customer service are more important than in the market for less
complex boards, the Company faces less direct competition.
The manufacture of printed circuit boards involves several steps including
dry film imaging, photoimageable soldermask processing, computer controlled
drilling and routing, automated plating and process controls and achievement
of controlled impedance. Manufacture of printed circuit boards used in
backplane assemblies requires specialized expertise and equipment because of
the size of the backplane relative to other printed circuit boards and the
closer hole diameter tolerances required for press-fit pin assembly.
Multilayer manufacturing, which involves placing multiple layers of electrical
circuitry within a single printed circuit board or backplane, expands the
number of circuits and components that can be contained on the interconnect
product and increases the operating speed of the system by reducing the
distance that electrical signals must travel. Increasing the density of the
circuitry in each layer is accomplished by reducing the width of the circuit
tracks and placing them closer together on the printed circuit board or
backplane. Interconnect products having narrow, closely spaced circuit tracks
are known as "fine line" products.
Materials Procurement and Handling. Materials procurement and handling
services provided by Altron include planning, purchasing and warehousing of
electronic components and metal housings used in interconnect products. Altron
uses a variety of materials in the manufacture of its products, including
copper clad laminates, dry film photo resists, connectors, terminals and pins.
The Company maintains more than one supply source wherever possible;
however, a component for a major OEM contract is obtained from a single
source. An interruption or loss of this component supply could have a material
adverse effect on the Company's business and results of operations.
ISO 9002 Registration. Altron's Wilmington and Woburn, Massachusetts plants
and its surface mount assembly manufacturing operations in its Fremont,
California plant are ISO 9002 registered which provides for worldwide
acceptance of Altron's quality systems. ISO 9002 registration is based on
successful implementation of quality assurance requirements, and includes
continuous examination of every aspect of the Company's business and periodic
compliance audits conducted by an independent quality assessor. Altron was one
of the first companies in the electronic interconnect industry to achieve ISO
9002 registration. This achievement has been well received by Altron
customers, as certain customers will only do business with ISO 9002 registered
companies.
COMPETITION
The electronic interconnect industry, which includes contract manufacturing,
is highly fragmented and is characterized by intense competition. Altron
competes in the technologically advanced segment of the electronic
interconnect industry, which is also highly competitive but is less fragmented
than the industry as a whole. The Company competes against numerous domestic
electronic interconnect product manufacturers. In addition, current and
prospective customers continually evaluate the merits of manufacturing
products internally and will, from time to time, offer manufacturing services
to third parties in order to utilize excess capacity. Certain of the Company's
competitors have substantially greater manufacturing, financial and marketing
resources than the Company. The Company may be operating at a cost
disadvantage compared to manufacturers who have greater direct buying power
with component suppliers or who have lower cost structures. During downturns
in the electronics industry, OEMs may become more price sensitive.
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The Company believes that the principal competitive factors in the
electronic interconnect industry are quality, service, technology,
manufacturing capability, regional access, price, reliability, timeliness and
flexibility. There can be no assurance that competition from existing or
potential competitors will not have a materially adverse effect on the
Company's results of operations.
The introduction of lower-priced competitive products or significant price
reductions by the Company's competitors could result in price reductions that
would adversely affect the Company's results of operations, as would the
introduction of new technologies which would render existing electronic
interconnect technology less competitive or obsolete.
BACKLOG
The Company's backlog at February 22, 1997 was approximately $58.0 million
compared to approximately $63.0 million at February 24, 1996, the majority of
which was scheduled to be shipped within 120 days. Variations in the size and
delivery schedules of purchase orders received by the Company, as well as
changes in customers' delivery requirements, may result in substantial
fluctuations in backlog from period to period. Accordingly, the Company
believes that backlog cannot be considered a meaningful indicator of long-term
future financial results.
EMPLOYEES
The Company had 1,085 full-time employees as of December 28, 1996. The
employees are not represented by a union, and the Company believes its
employee relations to be satisfactory. A majority of Company management,
officers and executives have over five years of service with the Company.
ENVIRONMENTAL QUALITY
Proper waste disposal is a major consideration for printed circuit board
manufacturers because metals and chemicals are used in the manufacturing
process. Water used in the printed circuit board manufacturing process must be
treated to remove metal particles and other contaminants before it can be
discharged into the municipal sanitary sewer system. Altron has an existing
waste treatment system at its Wilmington plant which enables it to comply with
governmental regulations relating to the protection of the environment and
accommodate anticipated future growth. The Company believes that continued
compliance with governmental requirements relating to protection of the
environment will not have a materially adverse effect on the Company.
Altron has been advised that contamination resulting from activities of
prior owners of an adjacent property has migrated under the Company's
manufacturing plant in Wilmington, Massachusetts. The present owner of the
adjacent property has assumed responsibility for any remediation activities
that may be required and has agreed to indemnify and hold the Company harmless
from liabilities and expenses arising from any requirement that the
contamination be remediated. Although the Company believes that the present
owner's assumption of responsibility will result in no remediation costs to
the Company from the contamination, there can be no assurance that the Company
will not be subject to some costs regarding this matter.
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EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITIONS
------------------------ --- ------------------------------------------------
<C> <C> <S>
Samuel Altschuler....... 69 Chairman of the Board of Directors and President
Burton Doo.............. 66 Executive Vice President and Director of Altron
Incorporated and President of Altron Systems
Corporation
Peter D. Brennan........ 54 Vice President, Chief Financial Officer and
Treasurer
</TABLE>
MR. ALTSCHULER, a founder of the Company, has been President, Chief
Executive Officer and a Director of the Company since 1970. In December 1983,
Mr. Altschuler was elected Chairman of the Board of Directors. Mr. Altschuler
is also a director of MASSBANK Corp.
MR. DOO, a founder of the Company, has been a Director of the Company since
1970. He was Treasurer from 1973 to 1992 and Senior Vice President from 1978
to December 1983. In December 1983, he was elected Executive Vice President.
Mr. Doo has been President of Altron Systems Corporation since its inception
in June 1994.
MR. BRENNAN has been Vice President, Chief Financial Officer and Treasurer
since June 1992. He has been Vice President of Finance and Corporate
Controller since he began his employment with the Company in 1987.
ITEM 2. PROPERTIES
Altron operates a 204,000 square foot manufacturing plant in Wilmington,
Massachusetts which is approximately 15 miles north of Boston. The plant
produces multilayer printed circuit boards and interconnect products. Altron
believes that this plant is one of the largest independent facilities of its
kind in the United States. Altron leases a 70,000 square foot facility in
Fremont, California to manufacture interconnect systems, surface mount
assemblies and backplanes for its West Coast customers. Altron also leases a
30,000 square foot plant in Woburn, Massachusetts for the design and
manufacture of interconnect systems, surface mount assemblies and power
supplies. The Company is constructing a 104,000 square foot plant in Woburn,
Massachusetts for its backplane and surface mount assembly operations. This
facility is scheduled to begin operation in April 1997 and will give the
Company over 400,000 square feet of space. The Company believes that these
facilities are adequate for its current needs. See "Environmental Quality."
ITEM 3. LEGAL PROCEEDINGS
To the Company's knowledge there are no pending legal proceedings which are
material to the Company to which it is a party or to which any of its property
is subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted during the fourth quarter of the fiscal year
covered by this report to a vote of security holders through solicitation of
proxies or otherwise.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The following table sets forth, for the periods indicated, the range of high
and low sale prices for the Company's common stock in 1996 and 1995 on The
Nasdaq Stock Market's National Market. Prices of the Company's common stock
have been retroactively restated to reflect the three-for-two splits of its
common stock distributed May 10, 1996 and February 10, 1995. The Company's
common stock has been traded under the Nasdaq symbol ALRN since its initial
public offering on August 8, 1984.
<TABLE>
<CAPTION>
1996 1995
------------- -------------
QUARTER HIGH LOW HIGH LOW
- ------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
First............................................... 21 1/2 15 5/6 11 1/4 9
Second.............................................. 25 1/2 18 5/6 16 5/6 9
Third............................................... 20 3/4 12 1/4 22 5/6 15
Fourth.............................................. 21 1/2 13 1/2 22 1/2 15 2/3
</TABLE>
The Company has not paid any cash dividends on its common stock and its
Board of Directors presently intends to continue this policy in order to
retain earnings for the development of the Company's business. As of December
28, 1996, the approximate number of record shareholders was 395 and the
Company believes that there were approximately 6,300 beneficial shareholders
of the Company's common stock based on information supplied by the Company's
transfer agent.
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ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
The income statement data for each of the years in the three-year period
ended December 28, 1996 and balance sheet data as of December 28, 1996 and
December 30, 1995 are derived from the audited Consolidated Financial
Statements included elsewhere in this Form 10-K. The income statement data for
each of the years in the two-year period ended January 1, 1994 and the balance
sheet data as of December 31, 1994, January 1, 1994 and January 2, 1993 are
derived from audited Consolidated Financial Statements included in prior Forms
10-K and are not included in this Form 10-K. The information set forth below
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations," the Consolidated Financial
Statements, related Notes and other financial information included elsewhere
in this Form 10-K.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
------------------------------------------------------------
DECEMBER 28, DECEMBER 30, DECEMBER 31, JANUARY 1, JANUARY 2,
1996 1995 1994 1994 1993
------------ ------------ ------------ ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales............. $165,248 $143,867 $104,202 $83,406 $68,158
Cost of sales......... 125,079 109,858 81,161 67,020 58,571
-------- -------- -------- ------- -------
Gross profit.......... 40,169 34,009 23,041 16,386 9,587
Selling, general and
administrative
expenses............. 11,969 10,704 8,645 7,308 7,026
-------- -------- -------- ------- -------
Income from
operations........... 28,200 23,305 14,396 9,078 2,561
Other income.......... 1,869 1,317 261 109 108
Interest expense...... 232 359 574 582 613
-------- -------- -------- ------- -------
Income before
provision for income
taxes................ 29,837 24,263 14,083 8,605 2,056
Provision for income
taxes................ 12,122 9,705 5,633 3,445 818
-------- -------- -------- ------- -------
Net income............ $ 17,715 $ 14,558 $ 8,450 $ 5,160 $ 1,238
======== ======== ======== ======= =======
Net income per common
and common equivalent
share(1)............. $ 1.11 $ 0.98 $ 0.65 $ 0.42 $ 0.11
======== ======== ======== ======= =======
Weighted average
common and common
equivalent shares
outstanding(1)....... 16,009 14,795 12,980 12,370 11,655
======== ======== ======== ======= =======
<CAPTION>
DECEMBER 28, DECEMBER 30, DECEMBER 31, JANUARY 1, JANUARY 2,
1996 1995 1994 1994 1993
------------ ------------ ------------ ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital....... $ 60,989 $ 52,277 $ 24,542 $21,522 $13,346
Total assets.......... 134,561 113,059 68,522 52,553 40,461
Long-term debt........ 7,600 4,577 8,646 9,405 7,165
Stockholders'
investment........... 100,624 80,654 40,381 29,452 21,810
</TABLE>
- --------
(1) Adjusted to reflect the three-for-two splits of the Company's common stock
effected May 10, 1996, February 10, 1995 and September 3, 1993. See Note 9
of Notes to Consolidated Financial Statements.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Selected
Consolidated Financial Data and the Consolidated Financial Statements and
Notes thereto contained elsewhere herein.
Printed circuit boards manufactured by the Company and used in its assembly
operations are included in value added contract manufacturing sales to
customers. Printed circuit board sales represent sales to third parties.
The following table sets forth for the periods indicated the percentage of
net sales represented by each line item in the Company's statements of income:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
--------------------------------------
DECEMBER 28, DECEMBER 30, DECEMBER 31,
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Net sales............................ 100.0% 100.0% 100.0%
Cost of sales........................ 75.7 76.4 77.9
----- ----- -----
Gross profit......................... 24.3 23.6 22.1
Selling, general and administrative
expenses............................ 7.2 7.4 8.3
----- ----- -----
Income from operations............... 17.1 16.2 13.8
Other income......................... 1.1 0.9 0.2
Interest expense..................... 0.1 0.2 0.5
----- ----- -----
Income before provision for income
taxes............................... 18.1 16.9 13.5
Provision for income taxes........... 7.4 6.8 5.4
----- ----- -----
Net income........................... 10.7% 10.1% 8.1%
===== ===== =====
</TABLE>
RESULTS OF OPERATIONS
Fiscal 1996 Compared to Fiscal 1995
Net sales for 1996 increased 15% to $165.2 million from net sales of $143.9
million for 1995. The increase was primarily from increased contract
manufacturing shipments to the Company's larger customers in the
communication, computer, industrial and medical systems segments of the
electronics industry, as well as shipments to new customers in these
industries. Data communication and telecommunication customers accounted for
approximately 51% of net sales in 1996 and 52% in 1995. Computer customers
were 31% of net sales in 1996 as compared to 34% of net sales in 1995.
Industrial and medical systems customers combined accounted for 18% of net
sales in 1996 and 14% in 1995. The Company's largest customer in each of 1996
and 1995 was Motorola, Inc., which accounted for approximately 15% of net
sales in 1996 and 19% in 1995.
Contract manufacturing sales for 1996 increased 17% to $122.8 million or
approximately 74% of net sales, compared to 1995 contract manufacturing sales
of $105.3 million or 73% of net sales. Printed circuit board sales for 1996
were $42.4 million or approximately 26% of net sales, compared to 1995 printed
circuit board sales of $38.6 million or 27% of net sales.
Gross margin as a percentage of net sales for 1996 increased to 24.3% as
compared to 23.6% in 1995. The improvement in the Company's gross margin was
primarily a result of better absorption of fixed costs due to higher shipment
levels and normal changes in product and customer mix. In addition, gross
margin benefited from manufacturing efficiencies gained through productivity
and product yield improvements resulting from additional automated
manufacturing systems and processes. The Company expects gross margins to
continue to fluctuate based upon product mix and customer mix. Although there
can be no assurance that the Company can maintain its current gross margin,
management expects to focus on market niches and product mix where there are
less competitive pricing pressures and to continue to improve productivity,
yields and utilization.
Selling, general and administrative expenses as a percentage of net sales
decreased to 7.2% in 1996 from 7.4% in 1995. The improvement in selling,
general and administrative expenses as a percentage of net sales was
principally the result of higher net sales combined with management's ability
to control expenses. The increase of $1.3 million to $12.0 million in 1996 was
primarily due to the development of a stronger customer program
11
<PAGE>
management organization, establishing regional sales offices and higher sales
commission costs on increased commissionable sales made by independent sales
representatives.
Other income for 1996 increased 42% to $1.9 million from other income of $1.3
million in 1995. This increase was principally due to higher cash balances
available for investment, mainly due to 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 for 1996 decreased to $232,000 from
$359,000 in 1995. This decrease was principally due to higher interest
capitalized in 1996.
The Company's effective tax rate in 1996 and 1995 reflects a provision of
40.6% and 40.0%, respectively, of pretax income.
Fiscal 1995 Compared to Fiscal 1994
Net sales for 1995 increased 38% to $143.9 million from net sales of $104.2
million for 1994. 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, as well as
shipments to new customers in these industries. Continued improvement in
general economic conditions in the electronics industry has resulted in overall
growth for the Company's major customers in these industries. Data
communication and telecommunication customers accounted for approximately 52%
of net sales in 1995 and 54% in 1994. The Company's largest customer in each of
1995 and 1994 was Motorola, Inc., which accounted for approximately 19% of net
sales in 1995 and 13% in 1994.
Value added contract manufacturing sales for 1995 increased 67% to $105.3
million or approximately 73% of net sales, compared to 1994 value added
contract manufacturing sales of $63.1 million or 61% of net sales. Altron
Systems Corporation accounted for $24.1 million or 23% and $8.1 million or 13%
of value added contract manufacturing sales in 1995 and 1994, respectively.
Printed circuit board sales for 1995 were $38.6 million or approximately 27% of
net sales, compared to 1994 printed circuit board sales of $41.1 million or 39%
of net sales. Although the printed circuit board business will continue to be
an essential part of the Company's operations, management believes that printed
circuit board sales growth will not keep pace with the sales growth anticipated
in the value added contract manufacturing business.
Gross profit for 1995 increased 48% to $34.0 million from $23.0 million in
1994. Gross margin as a percentage of net sales for 1995 increased to 23.6% as
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 higher shipment
levels, and improvements in yields and manufacturing efficiencies. Although
there can be no assurance that the Company can maintain its current gross
margin, management expects to focus on market niches and product mix where
there are less competitive pricing pressures and to continue to improve
productivity, yields and utilization.
Selling, general and administrative expenses as a percentage of net sales
decreased to 7.4% in 1995 from 8.3% in 1994. The improvement in selling,
general and administrative expenses as a percentage of net sales was
principally the result of higher net sales combined with management's ability
to control expenses. The increase of $2.1 million to $10.7 million in 1995 was
primarily due to added selling, general and administrative expenses
attributable to the first full year of operations of Altron Systems Corporation
and higher sales commission costs on increased commissionable sales made by
independent sales representatives.
Other income for 1995 increased $1,056,000 to $1,317,000 from other income of
$261,000 in 1994. This increase was principally due to higher cash balances
available for investment, mainly due to net proceeds of approximately $24.3
million from the public offering of the Company's common stock during the
second quarter. Interest expense for 1995 decreased to $359,000 from $574,000
in 1994. This decrease resulted from lower term loan borrowings and higher
interest capitalized.
The Company's effective tax rate in 1995 and 1994 reflects a provision of 40%
of pretax income.
12
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
At December 28, 1996, the Company had working capital of $61.0 million and a
current ratio of 4.1 compared to working capital of $52.3 million and a
current ratio of 3.3 at December 30, 1995. Cash and cash equivalents and
short-term investments at December 28, 1996 were $34.4 million, an increase of
$4.0 million from $30.4 million at December 30, 1995. Long-term investments at
December 28, 1996 and December 30, 1995 were $4.6 million and $5.0 million,
respectively.
At December 28, 1996, the Company had a $5.0 million unsecured line of
credit with its bank, all of which was available. During the third quarter
1996, the Company borrowed $7.6 million under an amendment to its unsecured
loan agreement with its bank and paid off the balance of $3.0 million on its
existing three-year unsecured term loan and the balance of $4.6 million on its
ten-year, first mortgage loan .
The Company believes that its existing bank credit and working capital,
together with cash generated from operations, will be sufficient to satisfy
anticipated sales growth and investment in manufacturing facilities and
equipment. The Company had commitments for approximately $4.0 million of
capital expenditures as of December 28, 1996 which includes the 104,000 square
foot contract manufacturing facility under construction near the Company's
headquarters.
13
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Altron Incorporated:
We have audited the accompanying consolidated balance sheets of Altron
Incorporated (a Massachusetts corporation) and Subsidiaries as of December 28,
1996 and December 30, 1995 and the related consolidated income statements,
statements of stockholders' investment and cash flows for the years ended
December 28, 1996, December 30, 1995, and December 31, 1994. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Altron Incorporated and
Subsidiaries as of December 28, 1996 and December 30, 1995, and the results of
their operations and their cash flows for the years ended December 28, 1996,
December 30, 1995 and December 31, 1994 in conformity with generally accepted
accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index at
item 14(a)(2) is the responsibility of the Company's management and is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. The
schedule has been subjected to the auditing procedures applied in our audits
of the basic financial statements and, in our opinion, fairly states, in all
material respects, the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
Arthur Andersen LLP
Boston, Massachusetts
March 5, 1997
14
<PAGE>
ALTRON INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 28, 1996 AND DECEMBER 30, 1995
<TABLE>
<CAPTION>
1996 1995
-------- --------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents...................................... $ 14,949 $ 13,622
Short-term investments......................................... 19,481 16,821
Accounts receivable, less allowances of $800 and $775.......... 24,840 22,687
Inventories.................................................... 18,554 18,588
Other current assets........................................... 2,935 3,009
-------- --------
Total Current Assets......................................... 80,759 74,727
Property, Plant and Equipment, net............................... 45,727 29,613
Costs in Excess of Net Assets of Acquired Company................ 3,461 3,738
Long-term Investments............................................ 4,614 4,981
-------- --------
$134,561 $113,059
======== ========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
Current portion of long-term debt.............................. $ -- $ 3,169
Accounts payable............................................... 12,965 11,711
Accrued payroll and other employee benefits.................... 3,910 3,937
Other accrued expenses......................................... 2,895 3,633
-------- --------
Total Current Liabilities.................................... 19,770 22,450
-------- --------
Long-term Debt................................................... 7,600 4,577
-------- --------
Deferred Income Taxes............................................ 6,567 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 -- 40,000,000 shares
Issued-- 15,477,776 and 15,223,036 shares..................... 774 761
Paid-in capital................................................ 38,289 36,047
Retained earnings.............................................. 61,838 44,123
-------- --------
100,901 80,931
Less treasury stock, at cost (235,581 shares).................. 277 277
-------- --------
Total Stockholders' Investment............................... 100,624 80,654
-------- --------
$134,561 $113,059
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
15
<PAGE>
ALTRON INCORPORATED AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
FOR THE YEARS ENDED DECEMBER 28, 1996, DECEMBER 30, 1995 AND DECEMBER 31, 1994
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Net Sales........................................... $165,248 $143,867 $104,202
Cost of Sales....................................... 125,079 109,858 81,161
-------- -------- --------
Gross Profit........................................ 40,169 34,009 23,041
Selling, General and Administrative Expenses........ 11,969 10,704 8,645
-------- -------- --------
Income from Operations.............................. 28,200 23,305 14,396
Other Income........................................ 1,869 1,317 261
Interest Expense.................................... 232 359 574
-------- -------- --------
Income Before Provision for Income Taxes............ 29,837 24,263 14,083
Provision for Income Taxes.......................... 12,122 9,705 5,633
-------- -------- --------
Net Income.......................................... $ 17,715 $ 14,558 $ 8,450
======== ======== ========
Net Income Per Common and Common Equivalent Share... $ 1.11 $ 0.98 $ 0.65
======== ======== ========
Weighted Average Common and Common Equivalent Shares
Outstanding........................................ 16,009 14,795 12,980
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
16
<PAGE>
ALTRON INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT
FOR THE YEARS ENDED DECEMBER 28, 1996, DECEMBER 30, 1995 AND DECEMBER 31, 1994
<TABLE>
<CAPTION>
COMMON STOCK
-------------
PAID-IN RETAINED TREASURY
SHARES AMOUNT CAPITAL EARNINGS STOCK TOTAL
------ ------ ------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1994...... 12,378 $619 $ 7,995 $21,115 $(277) $ 29,452
Exercise of stock options... 224 11 287 - - 298
Income tax benefit from
stock options.............. - - 408 - - 408
Stock issuance for net
assets of acquired company. 250 12 1,673 - - 1,685
Sale of common stock through
employee stock purchase
plan....................... 15 1 87 - - 88
Net income.................. - - - 8,450 - 8,450
------ ---- ------- ------- ----- --------
Balance, December 31, 1994.... 12,867 643 10,450 29,565 (277) 40,381
Exercise of stock options... 250 12 646 - - 658
Income tax benefit from
stock options.............. - - 600 - - 600
Stock issuance from public
offering................... 2,093 105 24,180 - - 24,285
Sale of common stock through
employee stock purchase
plan....................... 13 1 171 - - 172
Net income.................. - - - 14,558 - 14,558
------ ---- ------- ------- ----- --------
Balance, December 30, 1995.... 15,223 761 36,047 44,123 (277) 80,654
Exercise of stock options... 240 12 836 - - 848
Income tax benefit from
stock options.............. - - 1,150 - - 1,150
Sale of common stock through
employee stock purchase
plan....................... 15 1 256 - - 257
Net income.................. - - - 17,715 - 17,715
------ ---- ------- ------- ----- --------
Balance, December 28, 1996.... 15,478 $774 $38,289 $61,838 $(277) $100,624
====== ==== ======= ======= ===== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
17
<PAGE>
ALTRON INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 28, 1996, DECEMBER 30, 1995 AND DECEMBER 31, 1994
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income..................................... $ 17,715 $ 14,558 $ 8,450
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization................ 5,338 4,553 3,913
Deferred taxes and nonqualified options...... 1,189 1,034 348
Changes in current assets and liabilities,
net of assets acquired:
Accounts receivable........................ (2,153) (6,871) (2,392)
Inventories................................ 34 (7,069) (2,678)
Other current assets....................... 74 (385) (126)
Accounts payable........................... 1,254 2,436 3,144
Accrued payroll and other employee
benefits.................................. (27) 1,055 353
Other accrued expenses..................... (738) 1,144 463
-------- -------- --------
Net cash provided by operating activities...... 22,686 10,455 11,475
-------- -------- --------
Cash Flows from Investing Activities:
Purchases of investments....................... (35,705) (24,367) (4,028)
Proceeds from the sale of investments.......... 33,412 4,593 2,000
Capital expenditures........................... (21,175) (9,375) (6,896)
Proceeds from sale of equipment................ - - 46
Purchase of a company, net of cash acquired.... - - (2,994)
-------- -------- --------
Net cash used in investing activities.......... (23,468) (29,149) (11,872)
-------- -------- --------
Cash Flows from Financing Activities:
Proceeds from issuance of common stock......... 1,105 25,115 386
Income tax benefit from stock options.......... 1,150 600 408
Proceeds from long-term debt................... 7,600 - -
Principal payments of long-term debt........... (7,746) (1,705) (968)
-------- -------- --------
Net cash provided by (used in) financing activ-
ities......................................... 2,109 24,010 (174)
-------- -------- --------
Net Change in Cash and Cash Equivalents.......... 1,327 5,316 (571)
Cash and Cash Equivalents at Beginning of Year... 13,622 8,306 8,877
-------- -------- --------
Cash and Cash Equivalents at End of Year......... $ 14,949 $ 13,622 $ 8,306
======== ======== ========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for:
Interest..................................... $ 498 $ 501 $ 652
Income taxes................................. 10,944 7,070 4,808
</TABLE>
Supplemental Disclosure of Noncash Investing Activities: (See Note 3).
The accompanying notes are an integral part of these consolidated financial
statements.
18
<PAGE>
ALTRON INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 28, 1996
(1) BUSINESS SUMMARY
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
systems segments of the electronics industry located principally in the United
States and Europe.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FISCAL YEAR
The Company's fiscal year ends on the Saturday closest to December 31. In the
financial statements, "1996" refers to the year ended December 28, 1996, "1995"
refers to the year ended December 30, 1995 and "1994" refers to the year ended
December 31, 1994. Operations for all years presented include 52 weeks.
PRINCIPLES OF CONSOLIDATION
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.
MANAGEMENT ESTIMATES
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements, and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments consist mainly of cash and cash
equivalents, investments, accounts receivable, accounts payable and long-term
debt. The carrying amount of these financial instruments approximates their
fair value.
CASH EQUIVALENTS AND INVESTMENTS
The Company considers all highly liquid investment instruments with
maturities of three months or less to be cash equivalents. Short-term
investments are investments with maturities less than one year and investments
with maturities greater than one year but less than five years have been
classified as long-term. The Company carries its investments in accordance with
Statement of Financial Accounting Standards (SFAS) No. 115, Accounting for
Certain Investments in Debt and Equity Securities. Investments at December 28,
1996 and December 30, 1995 consist of securities issued by the U.S. Treasury
and other U.S. Government agencies and municipalities. The Company has deemed
these investments to be available-for-sale at both December 28, 1996 and
December 30, 1995 and they are carried at cost which approximates market value.
19
<PAGE>
ALTRON INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 28, 1996
As of December 28, 1996 and December 30, 1995 the Company had no financial
instruments requiring disclosure under SFAS No. 119, Disclosure about
Derivative Financial Instruments and Fair Value of Financial Instruments.
REVENUE RECOGNITION
The Company recognizes revenue at the time products are shipped.
NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE
Net income per common and common equivalent share was computed based on the
weighted average number of common and common equivalent shares outstanding
during each year. Common equivalent shares include outstanding stock options.
Fully diluted net income per share has not been separately presented as it
would not be materially different from net income per share as presented.
In March 1997, SFAS No. 128, Earnings Per Share, was issued which
established new standards for calculating and presenting earnings per share.
The Company will adopt this new standard in its 1997 financial statements,
which will require the reporting of diluted earnings per share and basic
earnings per share. For the years ended 1996, 1995 and 1994, diluted earnings
per share was $1.11, $0.98 and $0.65, respectively. Basic earnings per share
would have been $1.17, $1.05 and $0.68, respectively, for those same years.
(3) ACQUISITION
On June 9, 1994, Altron Systems Corporation completed the acquisition of
Astrio Corporation, a manufacturer of complex surface mount assemblies, for
$4,685,000 consisting of $3,000,000 cash and $1,685,000 in Altron's common
stock (250,662 shares). In addition, $1,565,000 in liabilities were assumed
and related acquisition costs of $64,000 were incurred. The acquisition has
been accounted for as a purchase, and the results of operations of Altron
Systems Corporation since June 9, 1994 have been included in the accompanying
consolidated income statements.
The costs in excess of net assets of acquired company are being amortized on
a straight-line basis over an estimated useful life of 15 years. Accumulated
amortization is $692,000 and $415,000 as of December 28, 1996 and December 30,
1995, respectively. The Company periodically assesses whether a change in
circumstances has occurred since the acquisition date that would indicate that
the future useful life of the asset (Costs in Excess of Net Assets of Acquired
Company) should be revised. The Company considers the future earnings
potential of the original business in assessing the recoverability of this
asset.
(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:
<TABLE>
<CAPTION>
1996 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Raw materials............................................. $10,040 $ 9,371
Work-in-process........................................... 8,514 9,217
------- -------
$18,554 $18,588
======= =======
</TABLE>
20
<PAGE>
ALTRON INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 28, 1996
(5) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are recorded at cost and consist of the
following:
<TABLE>
<CAPTION>
1996 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Land...................................................... $ 3,661 $ 465
Buildings and improvements................................ 16,046 11,806
Equipment................................................. 56,628 44,059
------- -------
76,335 56,330
Less accumulated depreciation............................. 30,608 26,717
------- -------
$45,727 $29,613
======= =======
</TABLE>
The Company provides for depreciation using the straight-line method over
the estimated useful lives of 7 to 40 years for buildings and improvements and
3 to 8 years for equipment.
The Company purchased land in Woburn, Massachusetts in September 1996 and is
constructing a 104,000 square foot plant for its backplane and surface mount
assembly operations.
(6) INCOME TAXES
The provision for income taxes shown in the accompanying statements of
income consists of the following (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------- ------ ------
<S> <C> <C> <C>
Federal:
Current........................................... $ 8,715 $6,801 $4,100
Deferred.......................................... 712 806 286
------- ------ ------
9,427 7,607 4,386
------- ------ ------
State:
Current........................................... 2,536 1,870 1,167
Deferred.......................................... 159 228 80
------- ------ ------
2,695 2,098 1,247
------- ------ ------
Provision for income taxes.......................... $12,122 $9,705 $5,633
======= ====== ======
The Company had federal and state income taxes currently payable of $117,000
and $1,269,000 at December 28, 1996 and December 30, 1995, respectively.
A reconciliation of the Company's effective income tax rate and the
statutory federal income tax rate is as follows:
<CAPTION>
1996 1995 1994
------- ------ ------
<S> <C> <C> <C>
Federal statutory tax rate.......................... 35.0% 35.0% 34.0%
State income taxes, net of federal tax benefit...... 5.7 5.6 5.8
Other, net.......................................... (.1) (.6) .2
------- ------ ------
Effective tax rate.................................. 40.6% 40.0% 40.0%
======= ====== ======
</TABLE>
21
<PAGE>
ALTRON INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 28, 1996
The tax effects of temporary differences included in other current assets as
of December 28, 1996 are $769,000 for inventory and receivables, $834,000 for
accruals and $(14,000) for other net differences. The tax effects of temporary
differences included in other current assets as of December 30, 1995 are
$740,000 for inventory and receivables, $785,000 for accruals, $60,000 for
nonqualified stock options and $(5,000) for other net differences.
Deferred income taxes as of December 28, 1996 and December 30, 1995 are
$6,567,000 and $5,378,000, respectively, and resulted principally from the
difference between book and tax depreciation methods.
For 1996, 1995 and 1994, the Company realized tax benefits of $1,150,000,
$600,000 and $408,000, respectively, for disqualifying dispositions of stock
options exercised which are deemed compensation for tax purposes. For
financial reporting purposes, the benefit is accounted for as paid-in capital.
(7) LONG AND SHORT-TERM DEBT
Long-Term Debt
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C> <C>
Ten-year real estate mortgage note............................ $ - $4,746
Unsecured term loans.......................................... 7,600 3,000
------ ------
7,600 7,746
Less current portion.......................................... - 3,169
------ ------
Long-term debt................................................ $7,600 $4,577
====== ======
</TABLE>
Maturities of long-term debt are as follows (in thousands):
<TABLE>
<CAPTION>
FISCAL YEAR
-----------
<S> <C>
1997............................................................. $ -
1998............................................................. -
1999............................................................. 3,000
2000............................................................. -
2001............................................................. 4,600
-------
$ 7,600
=======
</TABLE>
Ten-Year Real Estate Mortgage Note
On September 3, 1996, the Company repaid the balance of $4,635,000 on its
ten-year, real estate mortgage note which was secured by the Company's
Wilmington facility.
22
<PAGE>
ALTRON INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 28, 1996
Unsecured Term Loans
On August 16, 1996, the Company borrowed $7,600,000 under an amendment to its
unsecured term loan agreement with its bank. The borrowing consists of a
$3,000,000 three-year unsecured term loan with interest at 6.77%, payable
monthly, and a $4,600,000 five-year unsecured term loan with interest at 7.18%,
payable monthly. Also on August 16, 1996, the Company paid off the balance of
$3,000,000 on its existing three-year unsecured term loan. The term loan
agreement contains provisions that the Company maintain certain financial
ratios and covenants which the Company met as of December 28, 1996 and December
30, 1995. On June 13, 1995, the Company paid off the remaining balance of
$1,200,000 on its five-year, unsecured term loan.
Short-term Debt
The Company has a $5,000,000 unsecured line of credit 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 December 28, 1996 and December 30,
1995.
(8) OPERATING LEASES
The Company rents manufacturing space in Woburn, Massachusetts and Fremont,
California under lease agreements. Aggregate minimum lease payments under the
leases at December 28, 1996 are $553,000, $566,000, $582,000, $469,000 and
$430,000 for each of the years 1997 through 2001, respectively. Rental expense
under the leases was $576,000 in 1996, $486,000 in 1995 and $210,000 in 1994.
(9) STOCKHOLDERS' INVESTMENT
On April 2, 1996, the Board of Directors declared a three-for-two split of
its common stock effected as a 50% stock dividend to shareholders of record on
April 18, 1996 and distributed on May 10, 1996. On January 5, 1995, the Board
of Directors declared a three-for-two stock split of its common stock effected
as a 50% stock dividend to shareholders of record on January 20, 1995 and
distributed February 10, 1995. Share quantities and related per share amounts
have been retroactively restated to reflect the stock splits.
On May 16, 1996, the stockholders approved a resolution to increase the
authorized shares of common stock outstanding from 30,000,000 to 40,000,000
shares with a par value of $.05 per share.
On May 25, 1995, the Company completed a public offering of 2,092,500 shares
of its common stock resulting in net proceeds of approximately $24.3 million.
Preferred Stock
The stockholders approved the authorization of 1,000,000 shares of preferred
stock, $1 par value, on February 14, 1984. The preferred stock is divisible and
issuable into one or more series. The rights and preferences of the different
series may be established by the Board of Directors without further action by
the stockholders. The Board of Directors is authorized, with respect to each
series, to fix and determine, among other things: (i) the dividend rate, (ii)
the liquidation preference, (iii) whether or not such shares will be
convertible into, or exchangeable for, any other securities and (iv) whether or
not such shares will have voting rights and, if so, the conditions under which
such shares will vote as a separate class.
Stock Options
The 1981 Stock Option Plan provided for incentive stock options granted at
fair market value at the date of grant and nonqualified stock options granted
at prices determined by the Board of Directors. All options under the plan are
exercisable over a five-year period and expire 10 years from the date of grant.
In December 1991, this plan terminated and at December 28, 1996, 22,050 shares
were reserved.
23
<PAGE>
ALTRON INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 28, 1996
The 1991 Stock Option Plan provides for incentive stock options granted at
fair market value at the date of grant and nonqualified stock options granted
at prices determined by a committee of the Board of Directors. All options are
exercisable over a five-year period, commencing 12 months from the date of
grant unless accelerated and expire 10 years from the date of grant. On May
16, 1996, the stockholders approved an increase in the total number of shares
of common stock reserved for issuance under the Plan to 3,750,000. At December
28, 1996, 2,910,049 shares of common stock were reserved for issuance.
The 1989 Nonqualified Stock Option Plan for Non-Employee Directors provides
for options exercisable over five years commencing 12 months from the date of
grant and expiring 10 years from the date of grant. At December 28, 1996,
3,375 shares were reserved for issuance.
The 1992, 1993 and 1995 Stock Option Plans for Non-Employee Directors
provide for options exercisable over a two year period from the date of grant
and expiring 10 years from the date of grant. At December 28, 1996, 101,250,
112,500 and 75,000 shares were reserved for issuance under the 1992, 1993 and
1995 Plans, respectively.
On May 16, 1996, the stockholders approved the Company's 1996 Stock Option
Plan for Non-Employee Directors. Under the Plan, options are exercisable over
a three-year period commencing 12 months from the date of grant and expiring
10 years from the date of grant. At December 28, 1996, 37,500 shares were
reserved for issuance under this Plan.
In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, Accounting for Stock-Based Compensation, which is effective for fiscal
years beginning after December 15, 1995. SFAS No. 123 establishes a fair-
value-based method of accounting for stock-based compensation plans. The
Company has adopted the disclosure-only alternative under SFAS No. 123, which
requires disclosure of the pro forma effects on earnings and earnings per
share as if SFAS No. 123 had been adopted as well as certain other
information.
The Company has computed the pro forma disclosures required under SFAS No.
123 for all stock options granted in the two years ended December 28, 1996
using the Black-Scholes option pricing model prescribed by SFAS No. 123.
The assumptions used and the weighted average information for the years
ended December 28, 1996 and December 30, 1995 are as follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Risk-free interest rates............................ 5.97%-6.73% 5.51%-7.79%
Expected dividend yield............................. -- --
Expected lives...................................... 4-7.5 years 4-7.5 years
Expected volatility................................. 48% 48%
Weighted average grant-date fair value of options
granted during the period.......................... $8.48 $6.43
Weighted average exercise price of options granted
during the period.................................. $13.93 $10.18
Weighted average remaining contractual life of op-
tions outstanding.................................. 7.65 years 7.74 years
Weighted average exercise price of 694,812 and
494,500 options exercisable at December 28, 1996
and December 30,1995,respectively.................. $4.76 $3.30
The effect of applying SFAS No. 123 would be as follows:
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Pro forma net income................................ $16,693 $14,235
Pro forma net income per share...................... $1.06 $.97
</TABLE>
24
<PAGE>
ALTRON INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 28, 1996
The following table summarizes the stock option activity for the three-year
period ended December 28, 1996 and the weighted average option exercise price
information for the two-year period ended December 28, 1996 (restated for the
stock splits):
<TABLE>
<CAPTION>
INCENTIVE NONQUALIFIED
STOCK OPTIONS STOCK OPTIONS
------------------------ ----------------------
OPTION PRICE OPTION PRICE WEIGHTED AVERAGE
SHARES PER SHARE SHARES PER SHARE EXERCISE PRICE
--------- ------------- ------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
Outstanding at January
1, 1994................ 1,036,350 $ .81-$ 5.95 167,063 $ 1.11-$ 4.41
Granted............... 223,875 5.67- 8.78 67,500 4.72
Exercised............. (192,037) 1.02- 2.45 (30,713) 1.11- 4.41
Canceled.............. (42,863) 1.22- 4.72 (8,100) 4.41
--------- -------
Outstanding at December
31, 1994............... 1,025,325 .81- 8.78 195,750 1.22- 4.72 $ 3.67
Granted............... 546,000 9.17- 19.25 55,500 9.17- 10.67 10.18
Exercised............. (229,012) .81- 6.72 (20,925) 1.48- 2.45 2.64
Canceled.............. (33,525) 1.19- 9.17 -- -- 5.14
--------- -------
Outstanding at December
30, 1995............... 1,308,788 1.02- 19.25 230,325 1.22- 10.67 6.35
Granted............... 535,000 12.25- 19.63 37,500 12.25- 18.83 13.93
Exercised............. (219,326) 1.11- 9.94 (20,925) 1.48- 10.67 3.57
Canceled.............. (12,900) 9.17- 17.67 -- -- 12.13
--------- -------
Outstanding at December
28, 1996............... 1,611,562 $ 1.02-$19.63 246,900 $ 1.22-$18.83 $ 9.01
========= =======
Exercisable at December
28, 1996............... 530,262 $ 1.02-$19.25 164,550 $ 1.22-$ 9.17 $ 4.76
========= =======
</TABLE>
Options outstanding at December 28, 1996 expire between December 10, 1997
and December 16, 2006.
Employee Stock Purchase Plan
On May 25, 1995, the stockholders approved the 1995 Employee Stock Purchase
Plan. The Plan provides for two purchase periods during the Company's fiscal
year. The purchase price of shares under the Plan is 90% of the lower of the
fair market value at the beginning and the end of the period. Substantially
all employees with more than one year of service are eligible to participate
in the Plan. At December 28, 1996, 421,070 of the initial 450,000 shares of
common stock were reserved for issuance.
(10) OTHER INCOME
Other income consisted of interest income of $1,857,000, $1,304,000 and
$351,000 for the years ended 1996, 1995 and 1994, respectively, and other
income (expense), net, of $12,000, $13,000 and $(90,000) for these respective
years.
(11) INTEREST EXPENSE
Interest expense was $554,000, $497,000 and $654,000 for the years ended
1996, 1995 and 1994, respectively, of which $322,000, $138,000 and $80,000 was
capitalized to property, plant and equipment.
(12) SIGNIFICANT CUSTOMERS
One customer, Motorola Inc., accounted for approximately 15% of net sales
for 1996, 19% of net sales for 1995 and 13% of net sales for 1994.
25
<PAGE>
ALTRON INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 28, 1996
(13) EMPLOYEE BENEFIT PLAN
The Altron Savings and Investment Plan allows all full-time employees with
at least one year of service with the Company to participate. Plan
participants elect to have contributions made to the Plan under Section 401(k)
of the Internal Revenue Code. Company contributions become vested at the rate
of 20% for each year of service with the Company. Annual Company contributions
to the Plan are at the discretion of the Board of Directors and are
discretionary in amount. The Company contributed approximately $537,000,
$260,000 and $230,000 for the years ended 1996, 1995 and 1994.
(14) QUARTERLY RESULTS (UNAUDITED)
The following summarized unaudited results of operations for the fiscal
quarters in the years ended December 28, 1996 and December 30, 1995 have been
accounted for using generally accepted accounting principles for interim
reporting purposes and include adjustments (consisting of normal recurring
adjustments) which the Company considers necessary for the fair presentation
of results for these interim periods:
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
--------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
1996
Net sales............................ $ 44,091 $ 44,302 $ 38,229 $ 38,626
Gross profit......................... 10,664 10,750 9,335 9,420
Net income........................... 4,665 4,760 4,110 4,180
Net income per share................. 0.29 0.30 0.26 0.26
1995
Net sales............................ $ 32,662 $ 34,724 $ 34,753 $ 41,727
Gross profit......................... 7,406 8,090 8,473 10,040
Net income........................... 2,920 3,384 3,795 4,460
Net income per share................. 0.22 0.24 0.24 0.28
</TABLE>
26
<PAGE>
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not Applicable
PART III
The information required by Items 10, 11, 12 and 13 is hereby incorporated
by reference from the Registrant's definitive Proxy Statement for the 1997
Annual Meeting to be held on May 22, 1997.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K.
(a) The following documents are filed as part of this Report:
(1) Financial Statements included in Part II of this Report:
Report of Independent Public Accountants
Consolidated Income Statements for the fiscal years ended December
28, 1996, December 30, 1995 and December 31, 1994.
Consolidated Balance Sheets as of December 28, 1996 and December 30,
1995.
Consolidated Statements of Stockholders' Investment for the fiscal
years ended December 28, 1996, December 30, 1995 and December 31,
1994.
Consolidated Statements of Cash Flows for the fiscal years ended
December 28, 1996, December 30, 1995 and December 31, 1994.
Notes to Consolidated Financial Statements
(2) Financial Statement Schedule Included in Part IV of this Report:
Schedule II--Valuation and Qualifying Accounts
Schedules other than those listed above have been omitted since they are
either not required or the information is otherwise included.
(3) Exhibits
The following exhibits are incorporated herein by reference:
3.1 Articles of Organization of Registrant, as amended (filed as
Exhibit 3.1 to the Registration Statement Form S-1 [Registration
No. 2-89704]).
3.2 By-laws of Altron Incorporated as amended through March 12, 1990
(filed as Exhibit 3.2 to the Annual Report on Form 10-K for fiscal
year ended December 29, 1990).
10.1 Altron Incorporated Non-Qualified Stock Option Plan (filed as
Exhibit 4B to the Registration Statement on Form S-8 [Registration
No. 2-94712]).
10.2 Altron Incorporated 1981 Stock Option Plan (filed as Exhibit 4A to
the Registration Statement on Form S-8 [Registration No. 2-
94712]).
10.3 First Amendment to Altron Incorporated 1981 Stock Option Plan
(filed as Exhibit 4AA to Post-Effective Amendment No. 1 to
Registration Statement on Form S-8 [Registration No. 2-94712]).
10.4 Altron Incorporated Employee Stock Purchase Plan (filed as Exhibit
4A to the Registration Statement on Form S-8 [Registration No. 2-
94713]).
10.5 Altron Incorporated Stock Option Plan for Non-Employee Directors,
adopted by the Board of Directors on December 17, 1984 (filed as
Exhibit 10.11 to the Annual Report on Form 10-K for fiscal year
ended December 29, 1984 [Registration No. 2-89704]).
27
<PAGE>
10.6 Second Amendment to the Altron Incorporated 1981 Stock Option Plan
(filed as Exhibit 10.12 to the Annual Report on Form 10-K for
fiscal year ended January 2, 1988 [Registration No. 2-94712]).
10.7 Third Amendment to the Altron Incorporated 1981 Stock Option Plan
(filed as Exhibit 10.13 to the Annual Report on Form 10-K for
fiscal year ended January 3, 1987 [Registration No. 2-94712]).
10.8 Mortgage with Massbank for Savings dated October 1, 1987 (filed as
Exhibit 10.14 to the Annual Report on Form 10-K for fiscal year
ended January 2, 1988 [Registration No. 2-94712]).
10.9 Commercial Real Estate Promissory Note with Massbank for Savings
dated October 1, 1987 (filed as Exhibit 10.15 to the Annual Report
on Form 10-K for fiscal year ended January 2, 1988 [Registration
No. 2-94712]).
10.10 Altron Incorporated Stock Option Plan for Non-Employee Directors,
adopted by the Board of Directors on December 14, 1989 (filed as
exhibit 10.18 to the Annual Report on Form 10-K for the fiscal
year ended December 30, 1989).
10.11 Altron Savings and Investment Plan, adopted by the Board of
Directors on December 14, 1989 (filed as exhibit 10.19 to the
Annual Report on Form 10-K for the fiscal year ended December 30,
1989).
10.12 Altron Incorporated 1991 Stock Option Plan, adopted by the Board
of Directors on June 20, 1991 as amended April 19, 1995 (filed as
Exhibit 4A to the Registration Statement on Form S-8
[Registration No. 33-60759]).
10.13 Altron Incorporated Stock Option Plan for Non-Employee Directors,
adopted by the Board of Directors on September 30, 1992 (filed as
exhibit 10.13 to the Annual Report on Form 10-K for the fiscal
year ended January 2, 1993).
10.14 Altron Incorporated Stock Option Plan for Non-Employee Directors,
adopted by the Board of Directors on December 22, 1993 (filed as
Exhibit 10.14 to the Annual Report on Form 10-K for the fiscal
year ended January 1, 1994.)
10.15 First Amendment to Altron Incorporated Employee Stock Purchase
Plan, adopted by the Board of Directors on December 21, 1994
(filed as Exhibit 4A to the Registration Statement on Form S-8
[Registration No. 33-60713]).
10.16 Altron Incorporated 1995 Stock Option Plan for Non-Employee
Directors (filed as Exhibit 4A to Registration Statement on Form
S-8 [Registration No. 33-60757]).
The following exhibits are filed herewith:
21Subsidiaries of the Registrant
27Financial Data Schedule
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the fourth quarter of the fiscal
year ended December 28, 1996.
28
<PAGE>
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
/s/ Samuel Altschuler
By: _________________________________
Samuel Altschuler President
Date: March 19, 1997
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
/s/ Samuel Altschuler Chairman of the Board of March 19, 1997
- --------------------------------- Directors and President
SAMUEL ALTSCHULER (principal executive
officer)
/s/ Burton Doo Executive Vice President March 19, 1997
- --------------------------------- and Director
BURTON DOO
/s/ Peter D. Brennan Vice President, Chief March 19, 1997
- --------------------------------- Financial Officer and
PETER D. BRENNAN Treasurer (principal
financial and accounting
officer)
/s/ Anthony J. Medaglia, Jr. Director March 19, 1997
- ---------------------------------
ANTHONY J. MEDAGLIA, JR.
/s/ Daniel A. Cronin, Jr. Director March 19, 1997
- ---------------------------------
DANIEL A. CRONIN, JR.
/s/ Thomas M. Claflin, II Director March 19, 1997
- ---------------------------------
THOMAS M. CLAFLIN, II
29
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our report, included in this Form 10-K, into Altron Incorporated's previously
filed Registration Statements on Form S-8 (File Nos. 2-94712, 2-94713, 33-
39744, 33-39980, 33-45884, 33-60713, 33-60757, 33-60759, 33-82574, 33-86862
and 333-01443).
Arthur Andersen LLP
Boston, Massachusetts
March 19, 1997
30
<PAGE>
SCHEDULE II
ALTRON INCORPORATED
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
BALANCE AT CHARGES TO DEDUCTION BALANCE AT
BEGINNING OF COSTS AND FROM END OF
PERIOD EXPENSES RESERVES PERIOD
------------ ---------- --------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
RESERVE FOR DOUBTFUL ACCOUNTS:
December 28, 1996............... $775 $ 25 - $800
December 30, 1995............... 625 150 - 775
December 31, 1994............... 475 150 - 625
</TABLE>
31
<PAGE>
EXHIBIT 21
The subsidiaries of Altron Incorporated are as follows:
<TABLE>
<CAPTION>
NAMES JURISDICTION OF INCORPORATION
- ----- -----------------------------
<S> <C>
Altron Systems Corporation Massachusetts
Altron Securities
Corporation Massachusetts
</TABLE>
Such subsidiaries are wholly owned.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-START> DEC-31-1995
<PERIOD-END> DEC-28-1996
<CASH> 14,949
<SECURITIES> 19,481
<RECEIVABLES> 25,640
<ALLOWANCES> 800
<INVENTORY> 18,554
<CURRENT-ASSETS> 80,759
<PP&E> 76,335
<DEPRECIATION> 30,608
<TOTAL-ASSETS> 134,561
<CURRENT-LIABILITIES> 19,770
<BONDS> 7,600
0
0
<COMMON> 774
<OTHER-SE> 99,850
<TOTAL-LIABILITY-AND-EQUITY> 134,561
<SALES> 165,248
<TOTAL-REVENUES> 165,248
<CGS> 125,079
<TOTAL-COSTS> 137,048
<OTHER-EXPENSES> (1,869)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 232
<INCOME-PRETAX> 29,837
<INCOME-TAX> 12,122
<INCOME-CONTINUING> 17,715
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,715
<EPS-PRIMARY> 1.11
<EPS-DILUTED> 1.11
</TABLE>
