SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
(Mark One) Quarterly Report Pursuant to Section 13 or 15(d)
(X) of the Securities Exchange Act of 1934
For the Quarterly Period Ended March 31, 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 (I.R.S. Employer
of incorporation or organization) Identification No.)
17 Stepar Place, Huntington Station, NY 11746
(Address of principal executive offices) (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 April 24, 1995, the Issuer had outstanding 3,861,693 shares of
Common Stock, par value $.01 per share.
Transitional Small Business Disclosure Format
(Check One): Yes No X
<PAGE>
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 ....................................... 10
Signatures .............................................. 11
<PAGE>
AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, JUNE 30,
ASSETS 1995 1994
(unaudited)
----------- -----------
<S> <C> <C>
Current Assets:
Cash (including cash equivalents
of approximately $1,258,000 and
$1,205,000, respectively) $ 1,786,000 $ 1,865,000
Marketable securities 3,095,000 3,605,000
Accounts receivable, net 4,414,000 3,566,000
Inventories 6,664,000 6,317,000
Deferred income taxes 639,000 639,000
Other current assets 596,000 250,000
---------- ----------
Total current assets 17,194,000 16,242,000
---------- ----------
Property, plant and equipment, net of
depreciation and amortization of
$13,159,000 and $12,014,000, respectively 12,275,000 9,953,000
Other assets, net 360,000 315,000
---------- ----------
$29,829,000 $26,510,000
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 821,000 $ 385,000
Accounts payable 1,108,000 858,000
Accrued expenses 1,883,000 1,883,000
Income taxes payable 388,000 551,000
---------- ----------
Total current liabilities 4,200,000 3,677,000
---------- ----------
Long-term debt 4,709,000 3,048,000
---------- ----------
Deferred income taxes 811,000 811,000
---------- ----------
Stockholders' Equity:
Common stock---par value $.01; authorized
20,000,000 shares; issued 4,065,211
shares for both periods 41,000 41,000
Capital in excess of par value 6,315,000 6,315,000
Retained earnings 14,484,000 13,308,000
---------- ----------
20,840,000 19,664,000
Unrealized loss on marketable securities (172,000) --
Less--Treasury stock, at cost (192,318 and
164,118 shares, respectively) 557,000 458,000
Deferred compensation 8,000 158,000
Foreign currency translation adjustment 6,000 74,000
---------- ----------
Total stockholders' equity 20,109,000 18,974,000
---------- ----------
$29,829,000 $26,510,000
========== ==========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
-1-
<PAGE>
AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED FOR THE NINE MONTHS ENDED
MARCH 31, MARCH 31,
(unaudited) (unaudited)
1995 1994 1995 1994
--------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
Net sales $7,781,000 $5,709,000 $20,782,000 $16,440,000
Cost of goods sold 4,681,000 3,482,000 13,205,000 10,393,000
--------- ---------- ---------- -----------
Gross profit 3,100,000 2,227,000 7,577,000 6,047,000
Selling, general &
administrative expenses 1,762,000 1,480,000 4,922,000 4,139,000
Research & development expenses 392,000 288,000 1,033,000 910,000
--------- ---------- ---------- -----------
Total expenses 2,154,000 1,768,000 5,955,000 5,049,000
--------- ---------- ---------- -----------
Income from operations 946,000 459,000 1,622,000 998,000
--------- ---------- ---------- -----------
Other expense (income)
Interest expense 106,000 83,000 275,000 236,000
Interest income (41,000) (67,000) (136,000) (278,000)
Other 4,000 162,000 60,000 75,000
--------- ---------- ---------- -----------
69,000 178,000 199,000 33,000
--------- ---------- ---------- -----------
Income before income taxes & cumulative
effect of accounting change 877,000 281,000 1,423,000 965,000
Provision for income taxes 222,000 92,000 399,000 313,000
--------- ---------- ---------- -----------
Net income before cumulative effect
of change in accounting $ 655,000 $ 189,000 $ 1,024,000 $ 652,000
========= ========== ========== ===========
Cumulative effect of change in accounting
for certain investments in debt and
equity securities, net of tax effect $ -- $ -- $ 152,000 $ --
========= ========== ========== ===========
Net income $ 655,000 $ 189,000 $ 1,176,000 $ 652,000
========= ========== ========== ===========
Net income per common & common equivalent
shares outstanding before cumulative
effect of change in accounting $ .17 $ .05 $ .26 $ .17
========= ========== ========== ===========
Net income per common & common
equivalent shares outstanding $ .17 $ .05 $ .30 $ .17
========= ========== ========== ===========
Weighted average common & common
equivalent shares outstanding 3,876,000 3,880,000 3,879,000 3,896,000
========= ========== ========== ===========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
-2-
<PAGE>
AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
MARCH 31,
(unaudited)
--------------------------
1995 1994
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $1,176,000 $ 652,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Unrealized gain on marketable securities (224,000) --
Depreciation and amortization 1,173,000 1,038,000
Stock award compensation expense 150,000 49,000
Accounts receivable, net (856,000) (513,000)
Inventories (354,000) (88,000)
Other assets (191,000) (225,000)
Accounts payable and accrued expenses 260,000 508,000
Current and deferred income taxes (168,000) (86,000)
Gain on sale of fixed assets (5,000) --
--------- ---------
Net cash provided by operating activities 961,000 1,335,000
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (3,631,000) (1,489,000)
Purchase of marketable securities (1,224,000) (6,117,000)
Proceeds from sale of marketable securities 1,786,000 6,078,000
Purchase of Miltech Corp. -- (339,000)
--------- ---------
Net cash used in investing activities (3,069,000) (1,867,000)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt (1,818,000) (167,000)
Payments to acquire treasury stock (98,000) (207,000)
Proceeds from issuance of debt 3,914,000 9,000
--------- ---------
Net cash provided by (used in) financing activties 1,998,000 (365,000)
--------- ---------
Effect of exchange rate changes on cash 31,000 (6,000)
Net (decrease) in cash and cash equivalents (79,000) (903,000)
CASH AND CASH EQUIVALENTS, beginning of period 1,865,000 2,276,000
--------- ---------
CASH AND CASH EQUIVALENTS, end of period $1,786,000 $1,373,000
========= =========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
-3-
<PAGE>
AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) PRINCIPLES OF CONSOLIDATION:
The interim financial statements furnished reflect all
adjustments (consisting of normal recurring accruals) which are,
in the opinion of management, necessary for a fair statement of
the financial position and results of operations as of and for the
three and nine months ended March 31, 1995 and 1994. The
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, 1994.
Results for the nine months ended March 31, 1995 are not
necessarily indicative of results which could be expected for the
entire year.
(2) MARKETABLE SECURITIES:
Investments at March 31, 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") as of
July 1, 1994. Under SFAS No. 115, the Registrant classifies its
debt and marketable equity securities as available-for-sale
securities that are principally being 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-
<PAGE>
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:
Mar. 31, June 30,
1995 1994
--------- ---------
Raw materials $1,226,000 $ 893,000
Work in process 2,983,000 2,583,000
Finished goods 2,455,000 2,841,000
--------- ---------
$6,664,000 $6,317,000
========= =========
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.
-5-
<PAGE>
AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Three Months Ended March 31, 1995
Compared with March 31, 1994
Net sales for the three months ended March 31, 1995 increased 36% to
$7,781,000 as compared with net sales of $5,709,000 for the comparable quarter
in the prior fiscal year. Product demand continued strong in all of the
Registrant's primary sales categories, including commercial products, hi-rel
sales, and foreign sales (including overseas shipments by the Registrant's
United Kingdom subsidiary). Orders for the Registrant's products continued
to outpace shipments. The backlog of unfilled orders was $7,568,000 at March
31, 1995 as compared with $4,976,000 at March 31, 1994 and $4,676,000 at June
30, 1994. The Registrant anticipates that the current backlog will result in
a continuation of the recently strong sales trend in the near future.
Gross margin for the three months ended March 31, 1995 was 39.8% of net
sales as compared to 39.0% of net sales for the comparable quarter in the
prior fiscal year. Increased production and greater operational efficiencies
were almost entirely offset by lower selling prices for the Registrant's
principal products, as a result of competitive factors. The markets for the
Registrant's products are intensely competitive, particularly with respect to
commercial applications, including communications technology. The Registrant
anticipates that this trend of lower prices and higher production volume will
continue at least into the near future.
Total operating expenses increased 22% to $2,154,000 as compared to
$1,768,000 in the comparable quarter in the prior fiscal year. The increase
in operating expenses resulted primarily from increased selling costs,
particularly higher direct selling expenses which resulted from the higher
level of sales. These included higher representatives' and salesmen's
commissions and higher salaries, which were partially offset by lower
expenditures for advertising and promotional related activities in the current
three month period.
Net interest expense of $65,000 was recorded in the current quarter as
compared to net interest expense of $16,000 in the comparable quarter in the
prior fiscal year. The higher net interest expense in the current quarter was
the result of lower average cash and investment balances, investments bearing
lower rates of interest and interest expense incurred in association with
certain borrowings to finance capital equipment additions. See "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --
Liquidity and Capital Resources". Other expense was $4,000 in the current
quarter as compared to other expense of $162,000 in the comparable quarter in
the prior fiscal year, when the Registrant recorded realized and unrealized
losses on short-term investments.
-6-
<PAGE>
AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations, continued
As a result of the foregoing, the Registrant recorded net income of
$655,000 for the quarter ended March 31, 1995 compared to net income of
$189,000 for the comparable quarter in the prior fiscal year.
Nine Months Ended March 31, 1995
Compared with March 31, 1994
Net sales for the nine months ended March 31, 1995 increased 26% to
$20,782,000 as compared with net sales of $16,440,000 for the comparable
period in the prior fiscal year. The increase in net sales is attributable to
higher sales in all primary categories, including sales of commercial
products, hi-rel sales, and foreign sales.
Gross margin for the nine months ended March 31, 1995 was 36.5% of net
sales as compared to 36.8% for the comparable period in the prior fiscal year.
Increased production levels and operating efficiencies were negated by lower
average unit selling prices for commercial and hi-rel products.
Total operating expenses increased 18% to $5,955,000 as compared to
$5,049,000 in the comparable period in the prior fiscal year. The increase in
operating expenses resulted primarily from increased selling costs,
particularly higher direct selling expenses. These included higher
representatives' and salesmen's commissions and higher salaries. The
Registrant also incurred significantly higher expenditures for advertising and
promotional related activities over the nine month period, particularly during
the first six months.
Net interest expense of $139,000 was recorded in the current period as
compared to net interest income of $42,000 in the comparable period in the
prior fiscal year. The interest expense in the current period, as compared to
interest income in the comparable period of the prior year, was the result of
lower average cash and investment balances, investments bearing lower rates of
interest, and interest expense incurred in association with certain borrowings
to finance capital equipment additions. See "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- Liquidity and
Capital Resources". Other expense was $60,000 in the current period as
compared to other expense of $75,000 in the comparable period in the prior
fiscal year. Other expense in both the current and prior year periods was the
result of realized and unrealized net losses on marketable securities.
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 as the cumulative effect of a change in
accounting principle.
-7-
<PAGE>
AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations, continued
As a result of the foregoing, the Registrant recorded net income of
$1,176,000 for the nine months ended March 31, 1995 compared to net income of
$652,000 for the comparable period in the prior fiscal year.
Liquidity and Capital Resources
The Registrant's financial position at March 31, 1995 is sound as
evidenced by working capital of $12,994,000 and stockholders' equity of
$20,109,000. The Registrant's current ratio at March 31, 1995 was 4.1:1 as
compared to a current ratio of 4.4:1 at June 30, 1994. The Registrant's quick
ratio at March 31, 1995 was 2.2:1 as compared to a quick ratio of 2.5:1 at
June 30, 1994.
Cash and marketable securities decreased by $589,000 to $4,881,000 at
March 31, 1995 as compared to $5,470,000 at June 30, 1994. The Registrant
utilized cash on hand, proceeds from the sale of investments and borrowings
from financial institutions, as further described in the following paragraphs,
to purchase capital equipment during the first nine months of fiscal year
1995. Accounts receivable increased by $848,000 from June 30, 1994 to
$4,414,000 at March 31, 1995. Inventories increased by $347,000 from June 30,
1994 to $6,664,000 at March 31, 1995. Accounts payable and accrued expenses
increased by $250,000 from June 30, 1994 to $2,991,000 at March 31, 1995. The
higher levels of accounts receivable, accounts payable and inventory reflect
the higher level of business activity during the nine month period ended March
31,1995 as compared to the comparable period of the prior fiscal year. Income
taxes paid in the nine month period ended March 31, 1995 were $556,000.
Capital expenditures for the nine months ended March 31, 1995 totaled
$3,631,000 of which $2,448,000 was for machinery and equipment. By
comparison, capital expenditures for the nine months ended March 1994, which
included the acquisition of the net assets of Miltech Corp., were $1,828,000,
or $1,803,000 lower than in the nine months ended March 31, 1995.
On September 27, 1994, the Registrant entered into a term loan
agreement with Barnett Bank of Jacksonville, N.A. ("Barnett Bank") 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 Bank's prime rate.
The Registrant used the majority of the proceeds of this loan to prepay the
outstanding balance under a pre-existing mortgage note and the balance of the
proceeds of approximately $350,000 to finance capital equipment expenditures.
-8-
<PAGE>
AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources, continued
On February 17, 1995, the Registrant entered into two separate loan
agreements with European American Bank ("EAB Bank") pursuant to which the
Registrant borrowed $2.0 million. Each loan is for $1 million, is secured by
capital equipment, is subject to certain financial covenants and is payable
over a five year period. The agreement representing the first such loan with
EAB Bank provides for payment of 60 monthly installments of a fixed principal
payment amount and interest accrued at a fixed rate of 6.85% per annum of the
outstanding balance for the first two years and 8.85% per annum thereafter.
The agreement representing the second such loan with EAB Bank provides for
payment of 60 equal monthly installments of principal and interest accrued at
a fixed rate of 8.85% per annum of the outstanding balance for the term of the
loan.
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 March 31, 1995, the Registrant has expended approximately $692,000 to
purchase an aggregate of 286,500 shares under this program.
-9-
<PAGE>
AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
OTHER INFORMATION
Items 1. through 5. Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) EXHIBITS - None
(b) REPORTS ON FORM 8-K - No reports on Form 8-K were
filed by the Registrant
during the quarter ended
March 31, 1995.
-10-
<PAGE>
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: April 27, 1995 By /s/ VICTOR INSETTA
-------------------------------
Victor Insetta
President
(Chief Executive Officer)
DATE: April 27, 1995 By /s/ JAMES CONDON
-------------------------------
James Condon
Controller
(Principal Financial Officer)
-11-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> MAR-31-1995
<CASH> 1,786
<SECURITIES> 3,095
<RECEIVABLES> 4,414
<ALLOWANCES> 0
<INVENTORY> 6,664
<CURRENT-ASSETS> 17,194
<PP&E> 12,275
<DEPRECIATION> 13,159
<TOTAL-ASSETS> 29,829
<CURRENT-LIABILITIES> 4,200
<BONDS> 4,709
<COMMON> 41
0
0
<OTHER-SE> 20,068
<TOTAL-LIABILITY-AND-EQUITY> 29,829
<SALES> 20,782
<TOTAL-REVENUES> 20,782
<CGS> 13,205
<TOTAL-COSTS> 19,160
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 275
<INCOME-PRETAX> 1,423
<INCOME-TAX> 399
<INCOME-CONTINUING> 1,176
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 152
<NET-INCOME> 1,176
<EPS-PRIMARY> .30
<EPS-DILUTED> .30
</TABLE>
