<PAGE>
BOSTON TECHNOLOGY, INC.
100 Quannapowitt Parkway
Wakefield, MA 01880
June 14, 1995 VIA EDGAR
Securities and Exchange Commission
Division of Corporation Finance
450 5th Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Re: Boston Technology, Inc.
Commission File No. 0-17384
Form 10-Q
Dear Sir/Madam:
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), enclosed for filing in EDGAR electronic format
is a copy of the Form 10-Q and required Exhibits for the three months ended
April 30, 1995.
If you have any questions or comments regarding the enclosed material, please
contact the undersigned.
Very truly yours,
/s/ Carol B. Langer
________________________________
Carol B. Langer, Secretary
<PAGE>
==========================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
_______________
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended April 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 No. 0-17384
Boston Technology, Inc.
(Exact name of registrant as specified in its charter)
Delaware 04-3073385
(State or other jurisdiction of (I.R.S Employer
incorporation or organization) Identification Number)
100 Quannapowitt Parkway
Wakefield, Massachusetts 01880
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (617) 246-9000
___________________________
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 at least the past 90 days.
Yes X No .
___ ___
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Shares Outstanding
Class of Securities (as of June 8, 1995)
___________________ ____________________
Common Stock, $.001 par value per share 25,037,832
Total Number of Pages: 12
The Exhibit Index is located on page: 10
==========================================================================
<PAGE>
INDEX
BOSTON TECHNOLOGY, INC.
PART I. FINANCIAL INFORMATION Page No.
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets:
As of April 30, 1995 (Unaudited) and January 31, 1995........... 3
Unaudited Consolidated Statements of Income:
For the three months ended
April 30, 1995 and 1994......................................... 4
Unaudited Consolidated Statements of Cash Flows:
For the three months ended
April 30, 1995 and 1994......................................... 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 1. Legal Proceedings........................................ 8
Item 2. Changes in Securities.................................... 8
Item 3. Defaults upon Senior Securities.......................... 8
Item 4. Submission of Matters to a Vote of Security Holders...... 8
Item 5. Other Information........................................ 8
Item 6. Exhibits and Reports on Form 8-K......................... 8
Signatures....................................................... 9
Exhibit Index................................................... 10
Page 2
<PAGE>
<TABLE>
PART I
BOSTON TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
<CAPTION>
April 30, 1995 January 31, 1995
______________ ________________
ASSETS (UNAUDITED)
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 16,511,000 $ 19,715,000
Short-term investments 4,530,000 6,057,000
Accounts receivable, less allowances of $1,094,000 and $799,000 43,929,000 30,476,000
Net investment in sales type leases 1,504,000 1,234,000
Inventories 7,157,000 8,298,000
Prepaid expenses and other current assets 1,477,000 1,047,000
__________ __________
Total current assets 75,108,000 66,827,000
Net investment in sales type leases 2,314,000 3,118,000
Property and equipment, net 8,137,000 7,474,000
Other assets 2,914,000 2,870,000
__________ __________
TOTAL ASSETS $ 88,473,000 $ 80,289,000
========== ==========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Current portion of long-term debt 22,000 542,000
Accounts payable 6,191,000 4,880,000
Accrued expenses 11,460,000 10,229,000
Income taxes payable 2,196,000 669,000
Deferred customer funding 4,546,000 4,267,000
Deferred revenues 1,981,000 1,741,000
__________ __________
Total current liabilities 26,396,000 22,328,000
Long-term debt and other long-term liabilities 1,184,000 1,169,000
Stockholders' equity:
Common stock, $.001 par value, 35,000,000 shares authorized;
24,896,483 and 24,759,302 shares issued and outstanding 25,000 25,000
Additional paid-in capital 35,944,000 35,094,000
Retained earnings 24,967,000 21,689,000
Cumulative translation adjustment (43,000) (16,000)
__________ __________
Total stockholders' equity 60,893,000 56,792,000
__________ __________
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 88,473,000 $ 80,289,000
========== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
Page 3
<PAGE>
<TABLE>
BOSTON TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
For the three months ended April 30,
___________________________________
1995 1994
___________ ___________
<S> <C> <C>
Revenues $ 26,021,000 $ 18,286,000
Cost and expenses:
Cost of revenues 9,474,000 6,180,000
Research and development 3,941,000 2,871,000
Marketing, general and adminstrative 8,037,000 6,160,000
__________ __________
21,452,000 15,211,000
Income from operations 4,569,000 3,075,000
Interest income 517,000 232,000
Interest expense (42,000) (70,000)
_________ _________
Income before provision for
income taxes 5,044,000 3,237,000
Provision for income taxes 1,766,000 971,000
_________ _________
Net income $ 3,278,000 $ 2,266,000
========= =========
Net income per share $ .13 $ .09
========= =========
Weighted average number of common and
common equivalent shares outstanding 26,178,000 25,778,000
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
Page 4
<PAGE>
<TABLE>
BOSTON TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
For the three months ended April 30,
___________________________________
1995 1994
___________ ___________
<S> <C> <C>
Cash flows from (used by) operating activities:
Net Income $ 3,278,000 $ 2,266,000
Reconciliation to cash flows from (used by)
operating activities:
Depreciation and amortization 1,031,000 870,000
Rent expense (49,000) (49,000)
Other - 71,000
Changes in operating assets and liabilities:
Accounts receivable (13,453,000) (8,544,000)
Net investment in sales type leases 534,000 69,000
Inventories 1,141,000 (115,000)
Prepaid expenses and other current assets (430,000) (85,000)
Accounts payable 1,311,000 549,000
Accrued expenses 1,231,000 557,000
Deferred revenues 240,000 238,000
Customer funding 279,000 (516,000)
Other long-term liabilities 64,000 -
Income taxes 1,676,000 (1,243,000)
__________ __________
Cash flows from (used by) operating activities: (3,147,000) (5,932,000)
<CAPTION>
Cash flows from (used by) investing activities:
<S> <C> <C>
Purchase of investments (2,283,000) (3,384,000)
Redemption of investments 3,810,000 2,213,000
Purchase of property and equipment, net (1,594,000) (1,338,000)
Purchase of license agreements and other assets (144,000) -
__________ __________
Cash flows (used by) investing activities (211,000) (2,509,000)
Cash flows from (used by) financing activities:
Principal payments under financing obligations (520,000) (48,000)
Proceeds from exercise of common stock options 405,000 391,000
Proceeds from employee stock purchase plan 296,000 183,000
__________ __________
Cash flows from financing activities 181,000 526,000
Effect of exchange rate changes on cash (27,000) -
__________ __________
Net decrease in cash and cash equivalents (3,204,000) (7,915,000)
Cash and cash equivalents at beginning of period 19,715,000 28,043,000
__________ __________
Cash and cash equivalents at end of period $ 16,511,000 $ 20,128,000
========== ==========
Supplemental disclosure of cash flow information:
Tax benefit of disqualifying dispositions of
incentive stock options $ 149,000 $ 135,000
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
Page 5
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Boston Technology, Inc.
Notes to Consolidated Financial Statements
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Boston Tech-
nology, Inc. (the "Company") have been prepared in accordance with generally
accepted accounting principles for interim financial information and pursuant
to the instructions to Form 10-Q and Article 10 of Regulation S-X. Accord-
ingly, these consolidated financial statements do not include all of the in-
formation and footnote disclosures required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) necessary for a fair
presentation of the unaudited consolidated statements of income for the three
months ended April 30, 1995 and 1994, the unaudited consolidated statements of
cash flows for the three months ended April 30, 1995 and 1994, and the
unaudited consolidated balance sheet at April 30, 1995 have been made.
It is suggested that the financial statements contained herein be read in con-
junction with the consolidated financial statements and notes thereto included
in the Company's audited Annual Report on Form 10-K for the year ended January
31, 1995. The results for interim periods are not necessarily indicative of
the results for the full fiscal year.
2. CASH AND SHORT-TERM INVESTMENTS
In accordance with the terms of a patent license agreement, as of April 30, 1995
the Company has restricted cash of $500,000 which is included in short-term
investments.
3. INVENTORIES
Inventories consist of:
April 30, 1995 January 31, 1995
______________ ________________
(Unaudited)
Materials and purchased parts $ 2,775,000 $ 3,285,000
Work in process 4,225,000 4,349,000
Finished goods 157,000 664,000
_________ _________
Total $ 7,157,000 $ 8,298,000
========= =========
4. COMMITMENTS AND CONTINGENCIES
During fiscal 1995, the Company received $1,741,000 from the sale of sales type
lease receivables, and at April 30, 1995, was contingently liable for
$1,506,000.
Page 6
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ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
1. Material Changes in Financial Condition
Aggregate cash, cash equivalents and short-term investments decreased by
$4,731,000 to $21,041,000 at April 30, 1995 as compared to $25,772,000 at
January 31, 1995. The decrease in cash, cash equivalents and short-term
investments is due primarily to a $13,453,000 increase in accounts receivable
to $43,929,000 at April 30, 1995. The increase in accounts receivable has
four major components. The first component is approximately $6,347,000 of
first quarter sales to a North American customer on extended payment terms.
The second component is amounts due from international contracts for custom
modifications and enhancement activities, which increased $777,000 over year
end to $8,566,000 as of April 30, 1995. The Company expects payment to occur
within the next two quarters. The third component is international receivables
from first quarter sales of $14,711,000 offset by the collection of
$5,561,000 on amounts outstanding from international customers as of January 31,
1995. Sixty percent of the first quarter of fiscal 1996's international sales
have been collected in the second quarter to date. The fourth component is
$2,821,000 of collections from North American customers in excess of current
quarter billings.
Net investments in sales type leases decreased $534,000 from $4,352,000 at Jan-
uary 31, 1995 to $3,818,000 at April 30, 1995. The decrease is primarily due to
$350,000 of scheduled customer payments during the quarter.
Inventories decreased $1,141,000 to $7,157,000 at April 30, 1995. The decrease
is primarily a result of several end-of-quarter shipments where the material
content of the items shipped was higher than in the previous quarter, result-
ing in a larger reduction to inventory.
Prepaid expenses and other current assets increased by $430,000 to $1,477,000 at
April 30, 1995 due primarily to an increase in prepaid insurances.
Accounts payable and accrued expenses increased $2,542,000 to $17,651,000 at
April 30, 1995 due primarily to increases in accrued distributor commissions
and accounts payable, offset by a reduction in compensation-related accruals
that were paid during this first quarter.
The Company anticipates that its cash, cash equivalents and investments, along
with cash generated from operations and existing credit facilities, will be
sufficient to meet the Company's cash requirements, including the potential
repurchase of up to one million shares of its common stock authorized by the
Board of Directors in June 1994, through June 1995. As of April 30, 1995,
none of the Company's common stock had been repurchased.
2. Material Changes in the Results of Operations
During the three months ended April 30, 1995, revenues were $26,021,000 compared
to $18,286,000 for the first quarter of the prior fiscal year, an increase of
$7,735,000, or 42%. For the three months ended April 30, 1995, North American
revenues generated by sales to Regional Bell Operating Companies, a Competitive
Access Provider and Independent Telephone Companies were approximately
$11,310,000, a $124,000 reduction from the same period last fiscal year. Inter-
national revenues for the quarter increased $7,859,000 to $14,711,000, or 115%,
versus the first quarter of the prior fiscal year. The increase in internation-
al sales reflects the Company's continued emphasis on worldwide expansion, par-
ticularly in Japan and Southeast Asia. For the three months ended April 30,
1995, international sales comprised 57% of total revenues.
The Company's gross margin as a percentage of revenues was approximately 64% for
the quarter ended April 30, 1995 as compared to approximately 66% for the cor-
responding quarter in the prior fiscal year. The change in the gross margins
was primarily due to a negative margin generated on a custom modification con-
tract. Due to competitive pricing pressures, the Company expects gross margin
as a percentage of revenues to continue to decline in future quarters.
Page 7
<PAGE>
Research and development expenses were $3,941,000 for the three months ended
April 30, 1995 compared to $2,871,000 for the first quarter of the prior fiscal
year. Excluding the effect of customer funding, absolute research and develop-
ment spending in the first quarter of fiscal 1996 increased $685,000 over the
first quarter of fiscal 1995 primarily due to an increase in headcount to sup-
port ongoing development efforts. As a percentage of revenues, net research and
development expenses decreased to 15% for the three months ended April 30,
1995, versus 16% for the first quarter of the prior fiscal year, due to incre-
mental sales. The Company is involved in several research and development
programs that are funded in whole or in part by its customers. Customer funding
is recognized as a reduction to research and development expense as development
activities occur. Customer funding for the three months ended April 30, 1995
and 1994 amounted to $1,494,000 and $1,879,000, respectively.
During the three months ended April 30, 1995, marketing, general and adminis-
trative expenses were $8,037,000 as compared to $6,160,000 for the first quarter
of the prior fiscal year. As a percentage of revenues, these expenses decreased
from 34% at April 30, 1994 to 31% at April 30, 1995. Absolute spending in-
creased due primarily to additional staffing in the worldwide customer service
and sales organizations to support the Company's growth.
Interest income for the three months ended April 30, 1995 increased $285,000 to
$517,000 versus the first quarter of the prior fiscal year due to higher invest-
ment yields.
The effective tax rate for the three months ended April 30, 1995 and 1994, was
35% and 30%, respectively. This 5% increase is principally due to reductions
for the utilization of tax credits and to additional state income taxes.
3. Future Operating Results
The Company's future operating results may vary from period to period. The
Company has operated historically with minimal backlog; as a result, revenues
in any quarter are dependent on orders booked, built, and shipped in that
quarter. In addition, the Company has experienced a pattern of recording the
majority of its quarterly revenues in the third month of the quarter. Mean-
while, the Company's operating expenses are incurred ratably throughout each
quarter and are relatively fixed in the short term. As a result, if projected
revenues are not realized in the expected period, the Company's operating
results for that period could be adversely affected.
PART II.
ITEM 1. Legal Proceedings
Not Applicable.
ITEM 2. Changes in Securities
Not applicable.
ITEM 3. Defaults upon Senior Securities
Not applicable.
ITEM 4. Submission of Matters to a Vote of Security Holders
Not applicable.
ITEM 5. Other Information
None.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The exhibits listed in the Exhibit Index filed as part of this report
are filed as part of or included in this report.
(b) Reports on Form 8-K
None.
Page 8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Regis-
trant has duly caused this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
BOSTON TECHNOLOGY, INC.
Date: June 13, 1995 /s/ John C. W. Taylor
By: _________________________________________
John C.W. Taylor, Ph.D.
President and Chief Executive Officer
(principal executive officer)
/s/ Carol B. Langer
By: _________________________________________
Carol B. Langer
Vice President of Finance, Chief
Financial Officer, Treasurer and
Secretary (principal financial officer)
Page 9
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BOSTON TECHNOLOGY. INC.
EXHIBIT INDEX
Exhibit Page
Number Title of Document Number
_______ ___________________________________________________ ______
11 Statement re: Weighted Shares used in Computation 11
of Earnings per Share
27 Financial Data Schedule 12
Page 10
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<TABLE>
EXHIBIT 11
BOSTON TECHNOLOGY, INC.
Weighted Shares used in Computation of Earnings Per Share
<CAPTION>
Three months ended April 30,
1995 1994
__________ __________
<S> <C> <C>
Common stock outstanding, beginning of year 24,759,000 24,217,000
Weighted average common stock issued during
the three months ended April 30, 47,000 83,000
Weighted average common stock equivalents 2,800,000 2,484,000
Weighted average treasury shares acquired using
the treasury stock method (1,428,000) (1,006,000)
__________ __________
Weighted average shares of common stock outstanding 26,178,000 25,778,000
========== ==========
</TABLE>
Page 11
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1995
<PERIOD-END> APR-30-1995
<CASH> 16,511
<SECURITIES> 4,530
<RECEIVABLES> 45,023
<ALLOWANCES> (1,094)
<INVENTORY> 7,157
<CURRENT-ASSETS> 75,108
<PP&E> 20,969
<DEPRECIATION> (12,832)
<TOTAL-ASSETS> 88,473
<CURRENT-LIABILITIES> 26,396
<BONDS> 0
<COMMON> 25
0
0
<OTHER-SE> 60,868
<TOTAL-LIABILITY-AND-EQUITY> 88,473
<SALES> 26,021
<TOTAL-REVENUES> 26,021
<CGS> 9,474
<TOTAL-COSTS> 9,474
<OTHER-EXPENSES> 11,940
<LOSS-PROVISION> 38
<INTEREST-EXPENSE> 42
<INCOME-PRETAX> 5,044
<INCOME-TAX> 1,766
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,278
<EPS-PRIMARY> .13
<EPS-DILUTED> .13
</TABLE>
