SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
(Mark One) Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
(X) For the Quarterly Period Ended September 30, 1995
or
Transition Report Pursuant to Section 13 or 15(d)
( ) of the Securities Exchange Act of 1934
For the transition period from ________ to _________
Commission File Number 1-9125
AMERICAN TECHNICAL CERAMICS CORP.
(Exact name of small business issuer as specified in its charter)
Delaware 11-2113382
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization
17 Stepar Place, Huntington Station, NY 11746
(Address of principal executive officer) (Zip Code)
Issuer's telephone number: 516-547-5700
N/A
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the Issuer (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 Issuer was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
----- -----
As of November 2, 1995, the Issuer had outstanding 3,873,683 shares of Common
Stock, par value $.01 per share.
Transition Small Business Disclosure Format
(Check One): Yes No X
----- -----
AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
Table of Contents
Consolidated Balance
Sheets....................................................... 1
Consolidated Statements of
Earnings..................................................... 2
Consolidated Statements of Cash
Flows........................................................ 3
Notes to Consolidated Financial
Statements................................................... 4
Management's Discussion and Analysis of Financial Condition and
Results of Operations........................................ 6
Other Information.............................................. 9
Signatures..................................................... 10
<TABLE>
AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
SEPTEMBER 30, 1995 June 30, 1995
--------------- ---------------
ASSETS (unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash (including cash equivalents of approximately
$1,558,000 and $1,054,000, respectively) $2,085,000 $1,813,000
Investments 1,109,000 3,408,000
Accounts receivable, net 4,328,000 3,897,000
Inventories 8,338,000 7,705,000
Deferred income taxes 738,000 738,000
Other current assets 423,000 399,000
--------------- ---------------
Total current assets 17,021,000 17,960,000
--------------- ---------------
Property, plant and equipment, net of
depreciation and amortization of $14,086,000
and $13,642,000, respectively 14,004,000 13,379,000
Other assets, net 337,000 285,000
-------------- ---------------
31,362,000 31,624,000
============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt 824,000 815,000
Accounts payable 1,328,000 1,547,000
Accrued expenses 1,821,000 2,172,000
Income taxes payable 547,000 447,000
--------------- ---------------
Total current liabilities 4,520,000 4,981,000
--------------- ---------------
LONG-TERM DEBT 4,282,000 4,497,000
DEFERRED INCOME TAXES 1,052,000 1,080,000
STOCKHOLDERS' EQUITY:
Common stock- par value $.01;authorized 20,000,000 shares;
issued 4,067,201 and 4,065,211 shares, respectively 41,000 41,000
Capital in excess of par value 6,345,000 6,345,000
Retained earnings 15,694,000 15,188,000
--------------- -------------
22,080,000 21,574,000
Unrealized gain on investments available-for-sale 72,000 134,000
Less: Treasury stock (193,518 shares) 590,000 590,000
Deferred compensation 17,000 26,000
Foreign currency translation adjustment 37,000 26,000
--------------- ---------------
Total stockholders' equity 21,508,000 21,066,000
--------------- ---------------
$31,362,000 $31,624,000
============== ===============
</TABLE>
- ---------------
See accompanying notes to consolidated financial statements.
-1-
<PAGE>
AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED
SEPTEMBER 30,
--------------------------
(UNAUDITED)
1995 1994
------------ ------------
<S> <C> <C>
Net sales $7,855,000 $6,487,000
Cost of goods sold 5,218,000 4,329,000
------------ ------------
Gross profit 2,637,000 2,158,000
------------ ------------
Selling, General and administrative expenses 1,637,000 1,463,000
Research and development expenses 362,000 281,000
------------ ------------
Total expenses 1,999,000 1,744,000
------------ ------------
Income from operations 638,000 414,000
------------ ------------
Other (income) expense:
Interest expense 117,000 91,000
Interest income (78,000) (41,000)
Other (141,000) 6,000
------------ ------------
(102,000) 56,000
------------ ------------
Income before provision for income taxes and cumulative
effect of change in accounting method 740,000 358,000
Provision for income taxes 234,000 115,000
------------ ------------
Income before cumulative effect of change in accounting
method $ 506,000 $ 243,000
Cumulative effect of change in method of accounting for
investments, net of income taxes -- 152,000
------------ ------------
Net income $ 506,000 $ 395,000
============ ============
Income per common and common equivalent share, before
cumulative effect of change in accounting method $ 0.13 $ 0.06
Cumulative effect of change in accounting method per common
and common equivalent share -- $ 0.04
------------ ------------
Net income per common and common equivalent share $ 0.13 $ 0.10
============ ============
Weighted average common and common equivalent shares
outstanding 3,874,000 3,883,000
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
SEPTEMBER 30,
----------------------------
(UNAUDITED)
1995 1994
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 506,000 $ 395,000
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Unrealized gain on marketable securities -- (224,000)
Depreciation and amortization 445,000 390,000
Stock award compensation expense 9,000 50,000
Gain on sale of investments (149,000) --
Changes in operating assets and liabilities:
Accounts receivable, net (434,000) 134,000
Inventories (636,000) (128,000)
Other assets (75,000) 247,000
Accounts payable, and accrued expenses (569,000) 35,000
Income taxes payable 101,000 (244,000)
------------- -------------
Net cash (used in) provided by operating activities (802,000) 655,000
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,073,000) (1,017,000)
Purchase of investments -- (271,000)
Proceeds from sale of investments 2,358,000 --
------------- -------------
Net cash provided by (used in) investing activities 1,285,000 (1,288,000)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt (206,000) (1,602,000)
Proceeds from issuance of debt -- 1,900,000
Payments to acquire treasury stock -- (80,000)
------------- -------------
Net cash (used in) provided by financing activities (206,000) 218,000
------------- -------------
Effect of exchange rate changes on cash (5,000) 12,000
------------- -------------
Net increase (decrease) in cash and cash
equivalents 272,000 (403,000)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,813,000 1,865,000
------------- -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 2,085,000 $ 1,462,000
============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
3
AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) PRINCIPLES OF CONSOLIDATION:
The accompanying unaudited interim financial statements furnished
reflect all adjustments (consisting of normal recurring accruals) which are, in
the opinion of management, necessary for a fair presentation of the financial
position and results of operations as of and for the three months ended
September 30, 1995 and 1994. These financial statements should be read in
conjunction with the summary of significant accounting policies and notes to
consolidated financial statements included in the Registrant's annual report to
stockholders for the year ended June 30, 1995. Results for the three months
ended September 30, 1995 are not necessarily indicative of results which could
be expected for the entire year.
(2) MARKETABLE SECURITIES:
Investments at September 30, 1995 and 1994 consist of U.S. Treasury
obligations, mutual funds and corporate debt and equity securities. The
Registrant adopted the provisions of Statement of Financial Accounting
Standards No. 115, Accounting for Certain Investments in Debt and Equity
Securities ("SFAS No. 115") effective July 1, 1994. Under SFAS No. 115, the
Registrant classifies its debt and marketable equity securities as available-
for-sale securities that are principally held for an unspecified period of
time. As such, the Registrant may consider selling them to meet liquidity
needs or as part of the Registrant's risk management program.
Available-for-sale securities are recorded at fair value. Unrealized
holding gains and losses, net of the related tax effect, are excluded from
earnings and are reported as a separate component of stockholders' equity until
realized. Dividend and interest income are recognized when earned. Realized
gains and losses are included in earnings and are derived using the specific
identification method for determining the cost of securities sold.
4
AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(3) INVENTORIES:
Inventories included in the accompanying consolidated financial
statements consist of the following:
<TABLE>
<CAPTION>
Sept. 30, June 30,
1995 1995
------------ -------------
<S> <C> <C>
Raw materials $1,688,000 $1,296,000
Work-in-process 3,479,000 3,316,000
Finished goods 3,171,000 3,093,000
-------------- --------------
$8,338,000 $7,705,000
============== ==============
</TABLE>
Interim inventories were determined by the gross profit method (which is
intended to approximate a first-in, first-out method) pursuant to which
estimated gross profit percentages are applied to net sales.
4) NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE:
Net income per common and common equivalent share has been computed
based upon the weighted average number of shares outstanding. Recognition has
been given to the assumed exercise, as of the beginning of each period or date
of issuance if later, of outstanding options except when their effect would be
antidilutive or immaterial.
5
AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Three Months Ended September 30, 1995
Compared with September 30, 1994
Net sales for the three months ended September 30, 1995 increased 21%
to $7,855,000 as compared to net sales of $6,487,000 for the comparable period
in the prior fiscal year. This increase was primarily the result of
significantly higher shipments of commercial (non-military) application
capacitors. Commercial product sales increased 32%, or $1,026,000, to
$4,214,000 from $3,188,000 in the three months ended September 30, 1994.
Stronger demand for capacitors from industries as diverse as wireless
communications, satellite broadcasting, and medical electronics contributed to
the revenue growth. The backlog of unfilled orders was $7,890,000 at September
30, 1995 as compared to $4,647,000 at September 30, 1994 and $8,189,000 at June
30, 1995.
Gross margin for the three months ended September 30, 1995 was 33.6% of
net sales as compared to 33.3% for the comparable period in the prior fiscal
year. The comparability of these gross margin percentages are the result of
certain offsetting factors. Increased production levels and greater
manufacturing efficiencies experienced during the three months ended September
30, 1995 were offset by start-up costs associated with a new chip fabrication
facility which was placed into service during the period, and lower average
unit selling prices during the period as compared to the three month period
ended September 30, 1994.
Total operating expenses for the three months ended September 30, 1995
increased 15% to $1,999,000 as compared to $1,744,000 in the comparable period
in the prior fiscal year. The increase in operating expenses resulted
primarily from increased variable selling costs due to higher net sales and
higher salaries for general and administrative and research and development
purposes.
The Registrant recorded net interest expense of $39,000 in the current
period as compared to net interest expense of $50,000 in the comparable period
in the prior fiscal year. The decrease in net interest expense was primarily
attributable to increases in interest income from higher average balances of
investments and higher yielding securities, net of increased interest expense
related to higher levels of indebtedness.
6
AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS, continued
Effective July 1, 1994, the Registrant adopted the provisions of
Statement of Financial Accounting Standards No. 115, Accounting for Certain
Investments in Debt and Equity Securities ("SFAS No. 115"), which requires that
debt and certain equity securities that have readily determinable fair values
be carried at fair value, unless classified as held to maturity. The adoption
of SFAS No. 115 resulted in the reversal of $152,000, net of tax effect, in the
statement of earnings for the three months ended September 30, 1994 as the
cumulative effect of a change in accounting method.
As a result of the foregoing, the Registrant recorded net income of
$506,000, or $.13 per common and common equivalent share for the three months
ended September 30, 1995 compared to net income of $395,000, or $.10 per common
and common equivalent share for the comparable period in the prior fiscal
year.
LIQUIDITY AND CAPITAL RESOURCES
The Registrant's financial position at September 30, 1995 is sound as
evidenced by working capital of $12,501,000 and stockholders' equity of
$21,508,000. The Registrant's current ratio at September 30, 1995 was 3.8:1 as
compared to a current ratio of 3.6:1 at June 30, 1995. The Registrant's quick
ratio at September 30, 1995 was 1.7:1 as compared to a quick ratio of 2.1:1 at
June 30, 1995.
Cash and marketable securities decreased by $2,027,000 to $3,194,000 at
September 30, 1995 from $5,221,000 at June 30, 1995. The Registrant utilized
cash on hand and proceeds from the sale of investments to purchase capital
equipment, and to pay employee and key personnel profit sharing bonuses related
to fiscal year 1995 profits, during the three months ended September 30, 1995.
Accounts receivable increased by $431,000 to $4,328,000 at September 30, 1995
from $3,897,000 at June 30, 1995. Inventories increased by $633,000 to
$8,338,000 at September 30, 1995 from $7,705,000 at June 30, 1995. The
increases in accounts receivable and inventory are primarily related to higher
sales and efforts by the Registrant to reduce backlog with higher inventory
levels. Accounts payable and accrued expenses decreased by $570,000 to
$3,149,000 at September 30, 1995 from $3,719,000 at June 30, 1995, primarily as
a result of the payment of an employee profit bonus based on pre tax earnings
for the fiscal year ended June 30, 1995, and the payment of certain accounts
payable related to the acquisition of capital equipment. Income taxes paid in
the three month period ended September 30, 1995 were $134,000.
7
AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES, continued
Capital expenditures for the three months ended September 30, 1995
totaled $1,073,000 of which $883,000 was for machinery and equipment. On
September 27, 1994, the Registrant entered into a loan agreement with Barnett
Bank of Jacksonville, N.A. ("Barnett") pursuant to which the Registrant
borrowed $1.9 million. The loan is unsecured, is subject to certain financial
covenants and is payable over five years in equal monthly installments of
principal plus accrued interest at Barnett's prime rate. The Registrant used
the majority of the proceeds of this note to prepay the outstanding balance
under a preexisting mortgage note and the balance of the proceeds of
approximately $350,000 to finance capital equipment expenditures. The
Registrant intends to use cash on hand as well as funds generated from
operations to finance budgeted capital expenditures of approximately $2.0
million in fiscal year 1996.
The Registrant announced a stock purchase program in June 1990 pursuant
to which it is authorized to purchase up to $1,000,000 of its Common Stock. As
of September 30, 1995, the Registrant has expended approximately $741,000 to
purchase an aggregate of 297,700 shares under this program.
8
AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
OTHER INFORMATION
Items 1. through 5. Not Applicable
Items 6. Exhibits and Reports on Form 8-KSB
(a) EXHIBITS - None
(b) REPORTS ON FORM 8-KSB - No reports on Form 8-KSB were filed by
the Registrant during the quarter ended
September 30, 1995.
9
AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMERICAN TECHNICAL CERAMICS CORP.
(Registrant)
DATE: November 3, 1995 By /s/ VICTOR INSETTA
-----------------------------
Victor Insetta
President
(Chief Executive Officer)
DATE: November 3, 1995 By /s/ JAMES CONDON
----------------------------
James Condon
Controller
(Principal Financial Officer)
10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> SEP-30-1995
<CASH> 2,085
<SECURITIES> 1,109
<RECEIVABLES> 4,328<F1>
<ALLOWANCES> 0
<INVENTORY> 8,338
<CURRENT-ASSETS> 17,021
<PP&E> 28,090
<DEPRECIATION> 14,086
<TOTAL-ASSETS> 31,362
<CURRENT-LIABILITIES> 4,520
<BONDS> 4,282
<COMMON> 41
0
0
<OTHER-SE> 21,467
<TOTAL-LIABILITY-AND-EQUITY> 31,362
<SALES> 7,855
<TOTAL-REVENUES> 7,855
<CGS> 5,218
<TOTAL-COSTS> 7,217
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 117
<INCOME-PRETAX> 740
<INCOME-TAX> 234
<INCOME-CONTINUING> 506
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 506
<EPS-PRIMARY> 0.13
<EPS-DILUTED> 0.13
<FN>
<F1>note: receivables shown net of allowance of 290
</FN>
</TABLE>
