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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q/A
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED APRIL 4, 1998 COMMISSION FILE NUMBER 0-13230
ALTRON INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MASSACHUSETTS 04-2464301
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
ONE JEWEL DRIVE, WILMINGTON, 01887
MASSACHUSETTS (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(978) 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
April 4, 1998 was 15,548,879 shares.
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Explanatory Note: This amendment amends the Form 10-Q filed with the
Securities and Exchange Commission on May 15, 1998. Items 1 and 2 have been
changed.
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ALTRON INCORPORATED AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE
NUMBER
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<C> <S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Consolidated Balance Sheets -- April 4, 1998 and January 3,
1998....................................................... 3
Consolidated Income Statements -- Three Months Ended April
4, 1998 and March 29, 1997................................. 4
Consolidated Statements of Cash Flows -- Three Months Ended
April 4, 1998 and March 29, 1997........................... 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>
APRIL 4, JANUARY 3,
1998 1998
----------- ----------
(IN THOUSANDS, EXCEPT SHARE DATA) (UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................ $ 13,215 $ 11,926
Short-term investments................................... 9,105 15,556
Accounts receivable, net................................. 30,735 25,781
Inventories.............................................. 35,378 28,626
Other current assets..................................... 3,381 3,337
-------- --------
Total current assets................................... 91,814 85,226
Property, plant and equipment, net......................... 67,259 65,311
Costs in excess of net assets of acquired company.......... 3,115 3,184
Long-term investments...................................... 2,381 1,882
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$164,569 $155,603
======== ========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current liabilities:
Accounts payable......................................... $ 18,986 $ 16,455
Accrued payroll and other employee benefits.............. 3,846 3,367
Other accrued expenses................................... 2,841 2,269
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Total current liabilities.............................. 25,673 22,091
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Long-term debt............................................. 7,600 7,600
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Deferred income taxes...................................... 10,190 8,785
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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 -- 15,784,460 and 15,726,769 shares.............. 789 786
Paid-in capital.......................................... 40,517 40,113
Retained earnings........................................ 80,077 76,505
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121,383 117,404
Less treasury stock, at cost (235,581 shares)............ 277 277
-------- --------
Total stockholders' investment......................... 121,106 117,127
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$164,569 $155,603
======== ========
</TABLE>
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
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APRIL MARCH 29,
4, 1998 1997
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(IN THOUSANDS, EXCEPT PER SHARE DATA, UNAUDITED)
<S> <C> <C>
Net sales..................................................... $50,568 $43,168
Cost of sales................................................. 40,654 32,938
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Gross profit.................................................. 9,914 10,230
Selling, general and administrative expenses.................. 4,333 3,363
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Income from operations........................................ 5,581 6,867
Other income.................................................. 280 435
Interest expense.............................................. 5 8
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Income before provision for income taxes...................... 5,856 7,294
Provision for income taxes.................................... 2,284 2,954
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Net income.................................................... $ 3,572 $ 4,340
======= =======
Basic earnings per share...................................... $ 0.23 $ 0.28
======= =======
Basic weighted average shares outstanding..................... 15,530 15,253
======= =======
Diluted earnings per share.................................... $ 0.22 $ 0.27
======= =======
Diluted weighted average shares outstanding................... 16,062 16,213
======= =======
</TABLE>
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
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APRIL 4, MARCH 29,
1998 1997
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(IN THOUSANDS, UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income................................................. $ 3,572 $ 4,340
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Depreciation and amortization............................ 2,130 1,660
Deferred income taxes.................................... 1,405 2,223
Changes in current assets and liabilities:
Accounts receivable.................................... (4,954) (4,889)
Inventories............................................ (6,752) (969)
Other current assets................................... (44) (590)
Accounts payable....................................... 2,531 1,055
Accrued payroll and other employee benefits............ 479 369
Other accrued expenses................................. 572 (219)
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Net cash (used in) provided by operating activities........ (1,061) 2,980
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Cash flows from investing activities:
Sales of investments, net.................................. 5,952 1,830
Capital expenditures....................................... (4,009) (6,734)
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Net cash provided by (used in) investing activities........ 1,943 (4,904)
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Cash flows from financing activities:
Proceeds from issuance of common stock..................... 407 71
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Net cash provided by financing activities.................. 407 71
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Net change in cash and cash equivalents...................... 1,289 (1,853)
Cash and cash equivalents, beginning of period............... 11,926 14,949
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Cash and cash equivalents, end of period..................... $13,215 $13,096
======= =======
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest................................................. $ 133 $ 133
Income taxes............................................. 528 783
</TABLE>
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
(1) BUSINESS
Altron Incorporated (the "Company") is a leading contract manufacturer of
interconnect products used in advanced electronic equipment. The Company
provides total design and manufacturing capability for complete electronic
systems, including multilayer boards, backplanes and surface mount assemblies.
Altron is an ISO 9000 registered company serving the telecommunication, data
communication, computer, industrial and medical industries located in the
United States and Europe. The Company has four plants located in Massachusetts
and Northern California.
(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 April 4,
1998 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 contract manufacturing sales to customers. 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 January 3, 1998 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) NEW ACCOUNTING PRONOUNCEMENTS
Effective January 4, 1998, the Company adopted the provisions of SFAS No.
130, Reporting Comprehensive Income. The Company's total comprehensive income
for the three months ended April 4, 1998 was the same as reported net income.
On March 4, 1998, Statement of Position (SOP) 98-1, Accounting for the Costs
of Computer Software Developed or Obtained for Internal Use was issued and on
April 9, 1998, SOP 98-5, Reporting on the Costs of Start-Up Activities was
issued. Both SOPs will be adopted by the Company at the beginning of fiscal
year 1999 and are not anticipated to have a material impact on the Company's
financial position or results of operations.
(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
consisted of $14.7 million of raw materials and $20.7 million of work-in-
process as of April 4, 1998 and $15.3 million of raw materials and $13.3
million of work-in-process as of January 3, 1998.
(5) EARNINGS PER SHARE
Calculations of basic and diluted earnings per share information are as
follows:
<TABLE>
<CAPTION>
1998 1997
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(IN THOUSANDS,
EXCEPT PER
SHARE DATA)
<S> <C> <C>
Net income............................................... $ 3,572 $ 4,340
Basic weighted average shares outstanding................ 15,530 15,253
Common stock equivalents................................. 532 960
Diluted weighted average shares outstanding.............. 16,062 16,213
Basic earnings per share................................. $ 0.23 $ 0.28
Diluted earnings per share............................... $ 0.22 $ 0.27
</TABLE>
(6) SIGNIFICANT CUSTOMERS
One customer accounted for 16% and 10% of net sales for the three month
periods ended April 4, 1998 and March 29, 1997, 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 1998 were $50.6 million, as compared to
net sales of $43.2 million for the same quarter of 1997. The higher shipment
level resulted principally from increased shipments to the Company's larger
customers in the computer segment of the electronics industry.
Value added sales for the first quarter of 1998 were $39.6 million or
approximately 78% of net sales, compared to $31.0 million or 72% of net sales
in the first quarter of 1997. Printed circuit board sales for the first
quarter of 1998 were $11.0 million, approximately 22% of net sales compared to
$12.2 million or 28% of net sales in the first quarter of 1997.
Gross margin as a percentage of net sales for the first quarter of 1998 was
19.6%, as compared to 23.7% in 1997. Primarily the decrease resulted from a
shift in shipment mix to a higher level of value added printed circuit
assembly and systems build products which have lower gross margins coupled
with continued increased pricing pressures. Secondarily, higher depreciation
costs and related facility costs resulted from the Company's new backplane and
systems facility and the continued investment in equipment and facilities for
the printed circuit operation to further increase capacity and capabilities.
Startup costs associated with major new customer programs impacted gross
margins but to a lesser extent.
Selling, general and administrative expenses as a percentage of net sales
were 8.6% in the first quarter of 1998 and 7.8% for the same quarter of 1997.
The increase resulted primarily from payroll and related expenses associated
with the continued hiring of program management and sales personnel and also
due to higher sales costs on increased commissionable sales made by
independent sales representatives.
The decrease of $155,000 in other income in 1998, as compared to 1997, was
principally due to lower cash balances available for investment. Interest
expense for the first quarter of 1998 was approximately the same as the
respective 1997 period.
The Company's effective tax rate for the first quarter of 1998 was 39%, as
compared to 40.5% for the first quarter of 1997, principally due to increased
tax credits.
LIQUIDITY AND CAPITAL RESOURCES
At April 4, 1998, the Company had working capital of $66.1 million and a
current ratio of 3.6 compared to working capital of $63.1 million and a
current ratio of 3.9 at January 3, 1998. Cash and cash equivalents and short-
term investments were $22.3 million at April 4, 1998 and $27.5 million at
January 3, 1998. Long-term investments at April 4, 1998 were $2.4 million
compared to $1.9 million at January 3, 1998. Capital expenditures during the
first quarter of 1998 were $4.0 million compared to $6.7 million for the same
quarter in 1997.
At April 4, 1998, the Company had a $5.0 million unsecured line of credit
with its bank, all of which was available.
The Company believes that its existing bank credit and working capital,
together with funds generated from operations, will be sufficient to satisfy
anticipated sales growth and investment in manufacturing facilities and
equipment. The Company had commitments for approximately $3.0 million of
capital expenditures as of April 4, 1998.
YEAR 2000 COMPLIANCE
During the first quarter, the Company continued its year 2000 date
conversion project. The costs of the project are not expected to have a
significant impact on the Company's results of operations and project
completion is planned for the middle of 1999. There can be no assurance,
however, that systems of other companies on which the Company's systems rely
will be converted on a timely basis or that any such conversion failure by
another company would not have an adverse effect on the Company's systems.
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
The Company filed a Form 8-K with the Securities and Exchange Commission
on February 5, 1998 which related to a change in the duration of the term
of its Board of Directors.
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
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<S> <C> <C>
/s/ Samuel Altschuler Chairman of the Board of Directors June 8, 1998
____________________________________ and President
SAMUEL ALTSCHULER (principal executive officer)
/s/ Burton Doo Executive Vice President and June 8, 1998
____________________________________ Director, President, Altron Systems
BURTON DOO Corporation
/s/ Peter D. Brennan Vice President, Chief Financial June 8, 1998
____________________________________ Officer
PETER D. BRENNAN and Treasurer
(principal financial and accounting
officer)
</TABLE>
9
