<PAGE>
BOSTON TECHNOLOGY, INC.
100 Quannapowitt Parkway
Wakefield, MA 01880
June 14, 1996 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, 1996.
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>
<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, 1996
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 7, 1996)
____________________ ___________________
Common Stock, $.001 par value per share 24,966,674
Total Number of Pages: 13
The Exhibit Index is located on page: 11
=============================================================================
<PAGE>
<PAGE>
INDEX
BOSTON TECHNOLOGY, INC.
PART I. FINANCIAL INFORMATION Page No.
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets:
As of April 30, 1996 (Unaudited) and January 31, 1996........... 3
Unaudited Consolidated Statements of Income:
For the three months ended
April 30, 1996 and 1995......................................... 4
Unaudited Consolidated Statements of Cash Flows:
For the three months ended
April 30, 1996 and 1995......................................... 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............................................... 9
Item 2. Changes in Securities.......................................... 10
Item 3. Defaults upon Senior Securities................................ 10
Item 4. Submission of Matters to a Vote of Security Holders............ 10
Item 5. Other Information.............................................. 10
Item 6. Exhibits and Reports on Form 8-K............................... 10
Signatures............................................................. 10
Exhibit Index.......................................................... 11
Page 2<PAGE>
<PAGE>
<TABLE> PART I
BOSTON TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
<CAPTION>
April 30, 1996 January 31, 1996
______________ ________________
ASSETS (UNAUDITED)
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 5,655,000 $ 13,929,000
Accounts receivable, less allowances of $1,557,000 and $1,554,000 45,121,000 28,892,000
Net investment in sales type leases 2,441,000 2,771,000
Inventories 19,080,000 16,951,000
Income taxes receivable 1,849,000 3,886,000
Prepaid expenses and other current assets 2,174,000 2,130,000
__________ __________
Total current assets 76,320,000 68,559,000
Net investment in sales type leases 239,000 357,000
Property and equipment, net 13,316,000 10,597,000
Deferred taxes 2,080,000 2,080,000
Other assets 3,154,000 3,068,000
__________ __________
TOTAL ASSETS $ 95,109,000 $ 84,661,000
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ -- $ 275,000
Accounts payable 11,643,000 11,253,000
Accrued expenses 13,471,000 9,981,000
AT&T contract accrual 978,000 2,060,000
Deferred customer funding 1,036,000 2,825,000
Deferred revenues 4,320,000 3,536,000
__________ __________
Total current liabilities 31,448,000 29,930,000
Long-term debt and other long-term liabilities 6,004,000 417,000
Stockholders' equity:
Common stock, $.001 par value, 60,000,000 shares
authorized; 25,344,814 and 25,344,814 shares issued 25,000 25,000
Additional paid-in capital 57,234,000 57,048,000
Retained earnings 5,922,000 5,557,000
Cumulative translation adjustment 277,000 283,000
Treasury Stock, at cost, 427,503 and 613,119 shares (5,801,000) (8,599,000)
__________ __________
Total stockholders' equity 57,657,000 54,314,000
__________ __________
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 95,109,000 $ 84,661,000
========== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
Page 3<PAGE>
<PAGE>
<TABLE>
BOSTON TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
For the three months ended April 30,
___________________________________
1996 1995
___________ ___________
<S> <C> <C>
Revenues $ 35,751,000 $ 26,021,000
Cost and expenses:
Cost of revenues 16,289,000 9,474,000
Research and development 7,093,000 3,941,000
Marketing, general and adminstrative 9,565,000 8,430,000
__________ __________
32,947,000 21,845,000
Income from operations 2,804,000 4,176,000
Interest income 275,000 517,000
Interest expense (210,000) (42,000)
Other income (expense) (53,000) 393,000
_________ _________
Income before provision for
income taxes 2,816,000 5,044,000
Provision for income taxes 986,000 1,766,000
_________ _________
Net income $ 1,830,000 $ 3,278,000
========= =========
Net income per share $ .07 $ .13
========= =========
Weighted average number of common and
common equivalent shares outstanding 27,729,000 26,178,000
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
Page 4<PAGE>
<PAGE>
<TABLE> BOSTON TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
For the three months ended April 30,
___________________________________
1996 1995
___________ ___________
<S> <C> <C>
Cash flows used by operating activities:
Net Income $ 1,830,000 $ 3,278,000
Reconciliation to cash flows used by
operating activities:
Depreciation and amortization 1,531,000 1,031,000
Rent expense in excess of payments (48,000) (49,000)
Changes in operating assets and liabilities:
Accounts receivable (16,229,000) (13,453,000)
Net investment in sales type leases 448,000 534,000
Inventories (2,129,000) 1,141,000
Prepaid expenses and other current assets (44,000) (430,000)
Accounts payable 390,000 1,311,000
Accrued expenses 3,490,000 1,231,000
AT&T contract accrual (1,082,000) --
Deferred revenues 784,000 240,000
Customer funding (1,789,000) 279,000
Other long-term liabilities 34,000 64,000
Income taxes 2,222,000 1,676,000
__________ __________
Cash flows used by operating activities: (10,592,000) (3,147,000)
Cash flows used by investing activities:
Purchase of property & equipment (4,112,000) (1,594,000)
Purchase of investments -- (2,283,000)
Redemption of investments -- 3,810,000
Purchase of license agreements and other assets (224,000) (144,000)
__________ __________
Cash flows used by investing activities (4,336,000) (211,000)
Cash flows from financing activities:
Principal payments under financing obligations (275,000) (520,000)
Borrowings under revolving credit agreements 10,600,000 --
Repayments under revolving credit agreements (5,000,000) --
Proceeds from exercise of common stock options 960,000 405,000
Proceeds from employee stock purchase plan 374,000 296,000
__________ __________
Cash flows from financing activities 6,659,000 181,000
Effect of exchange rate changes on cash (5,000) (27,000)
__________ __________
Net decrease in cash and cash equivalents (8,274,000) (3,204,000)
Cash and cash equivalents at beginning of period 13,929,000 19,715,000
__________ __________
Cash and cash equivalents at end of period $ 5,655,000 $ 16,511,000
========== ==========
</TABLE>
Supplemental disclosure of cash flow information:
Tax benefit of disqualifying dispositions of
incentive stock options $ 185,000 $ 149,000
The accompanying notes are an integral part of the consolidated financial
statements.
Page 5<PAGE>
<PAGE>
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, 1996 and 1995, the unaudited consolidated statements of
cash flows for the three months ended April 30, 1996 and 1995, and the
unaudited consolidated balance sheet at April 30, 1996 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, 1996. The results for interim periods are not necessarily indicative of
the results for the full fiscal year.
Certain amounts in the fiscal 1996 financial statements have been reclassified
to conform to the fiscal 1997 presentation.
2. CASH AND CASH EQUIVALENTS
In accordance with the terms of a patent license agreement, as of January 31,
1996 the Company had restricted cash of $275,000 which is included in cash and
cash equivalents. The Company has no restricted cash as of April 30, 1996.
3. INVENTORIES
Inventories consist of:
April 30, 1996 January 31, 1996
______________ ________________
(Unaudited)
Materials and purchased parts $10,126,000 $ 8,179,000
Work in process 8,300,000 6,858,000
Finished goods 654,000 1,914,000
__________ __________
Total $19,080,000 $16,951,000
========== ==========
4. COMMITMENTS AND CONTINGENCIES
During fiscal 1996, the Company received $1,741,000 from the sale of certain
sales type lease receivables, and at April 30, 1996, was contingently liable
for $1,199,000.
Page 6<PAGE>
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ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
1. Material Changes in Financial Condition
Cash and cash equivalents decreased by $8,274,000 to $5,655,000 at April 30,
1996 versus $13,929,000 at January 31, 1996. The decrease in cash and cash
equivalents is due primarily to a $16,229,000 increase in accounts receivable,
asset purchases of $4,112,000 and a $2,129,000 increase in inventories,
partially offset by net borrowings under a revolving credit facility of
$5,600,000, increases in accounts payable and accrued expenses of $3,880,000,
a $2,222,000 reduction in income taxes receivable and net income of
$1,830,000.
The increase of $16,229,000 in accounts receivable from $28,892,000 at January
31, 1996 to $45,121,000 at April 30, 1996 was due primarily to higher sales
volume in the first quarter of fiscal 1997 versus the fourth quarter of fiscal
1996 from one international customer, and also to additional sales volume from
shipments made late in the first quarter of fiscal 1997 to two new North
American customers.
The $4,112,000 increase in property and equipment (at cost) was concentrated
in the area of research and development and was due primarily to the purchase
of computer workstations to support increased headcount and test equipment
resulting from the release of the Access NP Network Services Platform.
Inventories increased $2,129,000 from $16,951,000 at January 31,1996 to
$19,080,000 at April 30, 1996. The increase in inventory levels is due to the
ongoing product transition from the CO Access platform to Access NP Network
Services Platform, as additional inventories are necessary to support Access
NP orders, while also maintaining adequate support for the CO Access customer
base. Inventories are also higher due to expected higher sales levels in
fiscal 1997 versus the fourth quarter of fiscal 1996.
The Company had borrowings under its revolving credit facilities of $5,600,000
outstanding at April 30, 1996, which are included on the Balance Sheet under
Long-term debt and other long-term liabilities. The Company anticipates that
its cash and cash equivalents, along with cash generated from operations and
existing credit facilities will be sufficient to meet the Company's cash
requirements at least through January 31, 1997.
Accounts payable and accrued expenses increased $3,880,000 to $25,114,000 at
April 30, 1996 due primarily to an increase in accrued distributor commissions
and to a higher product warranty reserve. Accrued distributor commissions
increased from January 31, 1996 levels due to the timing of certain inter-
national sales and the timing of the payment of these commissions. Product
warranty reserves increased due primarily to the growth in the installed
product base.
The $2,222,000 decrease in income taxes receivable was due primarily to
refunds received during the first quarter of fiscal 1997, as well as to the
first quarter provision for amounts due for fiscal 1997 taxes.
Page 7<PAGE>
<PAGE>
2. Material Changes in the Results of Operations
During the three months ended April 30, 1996, revenues were $35,751,000
comparedto $26,021,000 for the first quarter of the prior fiscal year, an
increase of $9,730,000, or 37%. For the three months ended April 30, 1996,
North American revenues, generated by sales to Regional Bell Operating
Companies, a competitiveaccess provider, a long distance carrier and other net-
work operators, were approximately $16,925,000, a $5,615,000, or 50%, increase
versus the first quarter of the prior fiscal year. International revenues
for the quarter increased $4,115,000 to $18,826,000, or 28%, versus the first
quarter of the prior fiscal year. North American revenues increased due
primarily to higher volume from the addition of two new customers, offset by
lower first quarter volume from an existing major customer, and by product mix.
International revenues increased versus the first quarter of the prior fiscal
year due to higher volume from two of the Company's Pacific Rim customers.
For the three months ended April 30, 1996, international shipments comprised
53% of total revenues.
The Company's gross margin as a percentage of revenues was approximately 54%
forthe quarter ended April 30, 1996 versus approximately 64% for the first
quarter of the prior fiscal year. The change in the gross margin percent was
primarily due to the continuing shipment of a large number of smaller systems,
which traditionally have lower margins. The Company expects to continue to
ship smaller systems during the first half of fiscal 1997, with gross margin
as a percentage of revenues to approximate present levels.
Research and development expenses were $7,093,000 for the three months ended
April 30, 1996 versus $3,941,000 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 1997 increased $3,118,000, or 57%,
over the first quarter of fiscal 1996 primarily due to an increase in headcount
to support ongoing development projects. As a percentage of revenues, net
research and development expenses increased to 20% for the three months ended
April 30, 1996, versus 15% for the first quarter of the prior fiscal year. The
Company expects to continue to make a significant investment in research and
development as necessary under certain recent customer contracts. The Company
is also involved in 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 offsets against expense for the three months ended April 30, 1996 and
1995 amounted to $1,460,000 and $1,494,000, respectively.
During the three months ended April 30, 1996, marketing, general and adminis-
trative expenses were $9,565,000 versus $8,430,000 for the first quarter
of the prior fiscal year. As a percentage of revenues, these expenses decreased
from 32% at April 30, 1995 to 27% at April 30, 1996 due to higher incremental
revenue. Absolute spending increased due primarily to additional staffing in
the worldwide customer service and sales organizations, to support the
Company's growth and worldwide expansion.
Net interest income for the three months ended April 30, 1996 decreased from
$475,000 at April 30, 1995 to $65,000 at April 30, 1996 due primarily to lower
average cash and investment balances and interest expense incurred as a result
of borrowings against the line of credit. Other income/expense decreased from
Page 8<PAGE>
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income of $393,000 at April 30, 1995 to expense of $53,000 at April 30, 1996
due primarily to an exchange gain on foreign currency recognized during the
first quarter of fiscal 1996.
The effective tax rate for the three months ended April 30, 1996 and 1995, was
35%. The Company expects the rate to remain at approximately 35% throughout
the remainder of fiscal 1997.
3. Future Operating Results
The reader should consider the following important factors, among others, which
in some cases have affected, or could affect, the Company's actual results in
future quarters and fiscal years to differ materially from those expressed in
forward-looking statements made by, or on behalf of, the Company.
The Company has operated historically with minimal backlog; as a result,
revenues earned in any quarter will continue to be largely 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. Meanwhile, 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.
For a further explanation of risk factors, please refer to the Company's
Annual Report on Form 10-K for the fiscal year ended January 31, 1996.
PART II.
ITEM 1. Legal Proceedings
In May 1996, the Company entered into a License Agreement with Audio-
Fax, Inc. ("AudioFax") for a fully paid up license to three U.S.
patents and one Canadian patent held by AudioFax. In conjunction with
the execution of this License Agreement, the Company and AudioFax
entered into a Settlement Agreement under which each company released
and fully discharged any and all claims and causes of action which
existed or may have existed prior to the execution of the Settlement
Agreement. The Company and AudioFax also entered into a Judgement and
Order under which AudioFax's complaint for patent infringement against
the Company was discontinued.
Reference is made to the Company's Annual Report on Form 10-K for the
fiscal year ended January 31, 1996 for a description of certain legal
proceedings (Civil Action Nos. 95-CV-7236, 95-CV-7295 and 95-CV-7317)
commenced in the United States District Court for the Eastern District
of Pennsylvania against the Company and certain of its current and
former officers and directors alleging violations of Section 10(b) of
the Securities Exchange Act of 1934, as amended, and Rule 10b-5 there-
under. Boston Technology and the defendants continue to deny the
allegations and intend to contest these cases vigorously.
Page 9<PAGE>
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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.
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 14, 1996 /s/ Carol B. Langer
By: ____________________________________
Carol B. Langer
Senior Vice President of Finance and
Administration, Chief Financial Officer,
Treasurer and Secretary
(principal financial officer)
Page 10<PAGE>
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BOSTON TECHNOLOGY. INC.
EXHIBIT INDEX
Exhibit Page
Number Title of Document Number
_______ ___________________________________________________ ______
11 Statement re: Weighted Shares used in Computation 12
of Earnings per Share
27 Financial Data Schedule 13
Page 11<PAGE>
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<TABLE>
EXHIBIT 11
BOSTON TECHNOLOGY, INC.
Weighted Shares used in Computation of Earnings Per Share
(in thousands)
<CAPTION>
Three months ended April 30,
1996 1995
_______ _______
<S> <C> <C>
Common stock outstanding, beginning of year 24,732 24,759
Weighted average common stock issued during
the three months ended April 30, 68 47
Weighted average common stock equivalents 7,927 2,800
Weighted average treasury shares acquired using
the treasury stock method (4,998) (1,428)
______ ______
Weighted average shares of common stock outstanding 27,729 26,178
====== ======
</TABLE>
Page 12<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
BOSTON TECHNOLOGY, INC.
FINANCIAL DATA SCHEDULE
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-END> APR-30-1996
<CASH> 5655
<SECURITIES> 0
<RECEIVABLES> 45121
<ALLOWANCES> 1557
<INVENTORY> 19080
<CURRENT-ASSETS> 76320
<PP&E> 31133
<DEPRECIATION> 17817
<TOTAL-ASSETS> 95109
<CURRENT-LIABILITIES> 31448
<BONDS> 0
0
0
<COMMON> 25
<OTHER-SE> 57632
<TOTAL-LIABILITY-AND-EQUITY> 95109
<SALES> 35751
<TOTAL-REVENUES> 35751
<CGS> 16289
<TOTAL-COSTS> 16289
<OTHER-EXPENSES> 16658
<LOSS-PROVISION> 10
<INTEREST-EXPENSE> 210
<INCOME-PRETAX> 2816
<INCOME-TAX> 986
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1830
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
