<PAGE> BOSTON TECHNOLOGY, INC.
100 Quannapowitt Parkway
Wakefield, MA 01880
September 13, 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 six months ended
July 31, 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 July 31, 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 September 6, 1996)
____________________ ___________________
Common Stock, $.001 par value per share 25,113,562
Total Number of Pages: 17
The Exhibit Index is located on page: 15
=============================================================================
<PAGE>
<PAGE>
INDEX
BOSTON TECHNOLOGY, INC.
PART I. FINANCIAL INFORMATION Page No.
________
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets:
As of July 31, 1996 (Unaudited) and January 31, 1996............ 3
Unaudited Consolidated Statements of Income:
For the three and six months ended
July 31, 1996 and 1995.......................................... 4
Unaudited Consolidated Statements of Cash Flows:
For the six months ended
July 31, 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...............................................13
Item 2. Changes in Securities...........................................13
Item 3. Defaults upon Senior Securities.................................13
Item 4. Submission of Matters to a Vote of Security Holders.............13
Item 5. Other Information...............................................14
Item 6. Exhibits and Reports on Form 8-K................................14
Signatures..............................................................14
Exhibit Index...........................................................15
Page 2<PAGE>
<PAGE>
PART I
BOSTON TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
July 31, 1996 January 31, 1996
______________ ________________
ASSETS (UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 6,339,000 $ 13,929,000
Accounts receivable, less allowances of
$1,538,000 and $1,554,000 51,908,000 28,892,000
Net investment in sales type leases 2,513,000 2,771,000
Inventories 21,404,000 16,951,000
Prepaid Taxes 487,000 3,886,000
Prepaid expenses and other current assets 2,351,000 2,130,000
___________ __________
Total current assets 85,002,000 68,559,000
Net investment in sales type leases 1,857,000 357,000
Property and equipment, net 17,103,000 10,597,000
Deferred Taxes 2,080,000 2,080,000
Other assets 5,233,000 3,068,000
___________ __________
TOTAL ASSETS $ 111,275,000 $ 84,661,000
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt 500,000 275,000
Accounts payable 11,826,000 11,253,000
Accrued expenses 16,368,000 9,981,000
AT & T Contract Accrual 0 2,060,000
Deferred customer funding 744,000 2,825,000
Deferred revenues 5,120,000 3,536,000
___________ __________
Total current liabilities 34,558,000 29,930,000
Long-term debt and other long-term liabilities 15,439,000 417,000
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 57,338,000 57,048,000
Retained earnings 7,701,000 5,557,000
Cumulative translation adjustment 277,000 283,000
Treasury Stock, at cost, 312,193 and 613,119 shares (4,063,000) (8,599,000)
___________ __________
Total stockholders' equity 61,278,000 54,314,000
___________ __________
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 111,275,000 $ 84,661,000
=========== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
Page 3<PAGE>
<PAGE>
BOSTON TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended July 31, Six months ended July 31,
___________________________ _________________________
1996 1995 1996 1995
___________ ___________ ___________ ___________
<S> <C> <C> <C> <C>
Revenues $ 41,455,000 $ 26,127,000 $ 77,206,000 $ 52,148,000
Cost and expenses:
Cost of revenues 17,120,000 8,147,000 33,409,000 17,621,000
Research and development 8,185,000 5,384,000 15,278,000 9,325,000
Marketing, general and adminstrative 11,220,000 8,494,000 20,785,000 16,534,000
__________ __________ __________ __________
36,525,000 22,025,000 69,472,000 43,480,000
Income from operations 4,930,000 4,102,000 7,734,000 8,668,000
Interest income 76,000 285,000 351,000 802,000
Interest expense (243,000) (27,000) (453,000) (69,000)
Other income (expense), net (470,000) (198,000) (523,000) (195,000)
_________ _________ _________ _________
Income before provision for
income taxes 4,293,000 4,162,000 7,109,000 9,206,000
Provision for income taxes 1,502,000 1,202,000 2,488,000 2,968,000
_________ _________ _________ _________
Net income $ 2,791,000 $ 2,960,000 $ 4,621,000 $ 6,238,000
========= ========= ========= =========
Net income per share $ .10 $ .11 $ .17 $ .24
========= ========= ========= =========
Weighted average number of common and
common equivalent shares outstanding 28,005,000 26,445,000 27,835,000 26,270,000
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
Page 4<PAGE>
<PAGE>
BOSTON TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six months ended July 31,
__________________________
1996 1995
___________ ___________
<S> <C> <C>
Cash flows from (used by) operating activities:
Net Income $ 4,621,000 $ 6,238,000
Reconciliation to cash flows from (used by)
operating activities:
Depreciation and amortization 3,464,000 2,137,000
Rent expense in excess of payments (96,000) (98,000)
Changes in operating assets and liabilities:
Accounts receivable (23,016,000) 156,000
Net investment in sales type leases (1,242,000) 706,000
Inventories (4,453,000) (2,183,000)
Prepaid expenses and other current assets (221,000) (405,000)
Accounts payable 573,000 626,000
Accrued expenses 4,327,000 1,993,000
Deferred revenues 1,584,000 1,059,000
Deferred Customer funding (2,081,000) (1,103,000)
Other long-term liabilities 17,000 72,000
Income taxes 3,689,000 (1,694,000)
__________ __________
Cash flows from (used by) operating activities: (12,834,000) 7,504,000
Cash flows from (used by) investing activities:
Purchase of investments 0 (3,429,000)
Redemption of investments 0 6,597,000
Purchase of property and equipment, net (9,575,000) (3,000,000)
Purchase of license agreements and other assets (560,000) (152,000)
__________ __________
Cash flows from (used by) investing activities (10,135,000) 16,000
Cash flows from financing activities:
Principal payments under financing obligations (275,000) (531,000)
Borrowings under revolving credit agreements 18,600,000 0
Repayments under revolving credit agreements (5,000,000) 0
Proceeds from exercise of common stock options 1,685,000 1,867,000
Proceeds from employee stock purchase plan 374,000 296,000
__________ __________
Cash flows from financing activities 15,384,000 1,632,000
Effect of exchange rate changes on cash (5,000) 4,000
__________ __________
Net increase (decrease) in cash and cash equivalents (7,590,000) 9,156,000
Cash and cash equivalents at beginning of period 13,929,000 19,715,000
__________ __________
Cash and cash equivalents at end of period $ 6,339,000 $ 28,871,000
========== ==========
Supplemental disclosure of cash flow information:
Tax benefit of disqualifying dispositions of
incentive stock options $ 290,000 $ 888,000
Income taxes paid 10,000 4,604,000
Interest paid 344,000 70,000
Non cash investing activities:
Purchase of license agreements 2,530,000 80,000
</TABLE>
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 infor-
mation 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 and six months ended July 31, 1996 and 1995, the unaudited consolidated
statements of cash flows for the six months ended July 31, 1996 and 1995, and
the unaudited consolidated balance sheet at July 31, 1996 have been made.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. Significant estimates
included in these financial statements include the reserve for bad debts,
reserve for warranty, inventory valuation reserve and certain accrued
liabilities.
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 certain patent license agreements, the
Company had restricted cash of $2,000,000 and $275,000 as of July 31, 1996
and January 31, 1996, respectively, which is included in cash and cash
equivalents.
3. INVENTORIES
Inventories consist of: July 31, 1996 January 31, 1996
______________ ________________
(Unaudited)
Materials and purchased parts $ 12,056,000 $ 8,179,000
Work in process 6,602,000 6,858,000
Finished goods 2,746,000 1,914,000
__________ __________
Total $ 21,404,000 $16,951,000
========== ==========
Page 6<PAGE>
<PAGE>
4. COMMITMENTS AND CONTINGENCIES
During fiscal 1995, the Company received $1,741,000 from the sale of sales
type lease receivables, and at July 31, 1996 was contingently liable for
$1,174,000. In September 1996, the Company received notification from the
purchaser of the lease that the lessee is in default, and requiring the
Company to repurchase the contract.
5. FINANCING ARRANGEMENTS
The Company maintains a $25,000,000 revolving credit facility with two banks.
Borrowings are collateralized by the Company's accounts receivable and
inventories and bear interest at the prime rate. The credit facility is
scheduled to expire on October 6, 1997. As of July 31, 1996, the Company had
$13,600,000 outstanding under this revolving credit facility.
6. RELATED PARTIES
On July 31, 1996, Orient Star Holdings ("Orient Star") filed a Statement on
Schedule 13D with the Securities and Exchange Commission regarding their
acquisition of 6.33% of the Company's outstanding common stock. On August 31,
1996, Orient Star amended their Schedule 13D filing for an increase in their
ownership of the Company's outstanding common stock from 6.33% to 7.36%.
Orient Star is wholly-owned by Carso Global Telecom, S.A. de C.V. ("Carso").
The Chairman of the Board of Directors of Carso is a member of the Board of
Directors of SBC Communications and Telmex, both of which are customers of
the Company. Another member of the Board of Directors of Carso is the CEO of
Telmex, a customer of the Company.
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
1. Results of Operations
Three Months Ended July 31, 1996 versus the Three Months Ended July 31, 1995
Net Sales.
Revenues for the second quarter were $41,455,000 versus $26,127,000 for the
prior year period, an increase of $15,328,000, or 59%. North American
revenues, generated by sales to Regional Bell Operating Companies, a competi-
tive access provider, a long distance carrier and other network operators,
were approximately $28,786,000, an increase of $21,819,000, or 313%, versus
the prior year period and an increase of $11,861,000 or 70%, versus the first
quarter of fiscal 1997. North American revenues increased to 69% of total
revenues versus 27% in the prior year period due primarily to higher volume
from an existing customer as well as incremental volume from two new
customers. International revenues for the second quarter were $12,669,000,
a decrease of $6,491,000, or 34%, versus the prior year period and a decrease
of $6,157,000, or 33%, versus the first quarter of fiscal 1997. International
revenues decreased versus both periods due to lower volume from two of the
Company's existing Pacific Rim customers, partially offset by incremental
revenue from a new International customer. International shipments comprised
31% of total second quarter 1997 revenues versus 73% in the prior year period.
Page 7<PAGE>
<PAGE>
Gross Profit.
As a percentage of revenues, gross profit was approximately 59% for the second
quarter versus approximately 69% the prior year period. The decrease versus
the prior year period was due primarily to an increase in the number of
smaller systems shipped, which traditionally have lower margins. Second
quarter gross profit improved five percentage points from the first quarter of
fiscal 1997 due to the shipment of a number of system upgrades, which carry a
higher profit margin. Although margin improved versus the first quarter of
fiscal 1997, the Company expects to continue to ship a larger percentage of
smaller systems during the remainder of fiscal 1997, with gross profit as a
percentage of revenues to continue to run below fiscal 1996 levels.
Research and Development Expenses.
Net research and development expenses were $8,185,000 for the second quarter
versus $5,384,000 for the prior year period. As a percentage of revenues, net
research and development expenses decreased to 20% for the second quarter
versus 21% for the prior year period due to higher incremental revenue.
Excluding the effect of customer funding and certain reclassifications, gross
research and development spending in the second quarter of fiscal 1997 in-
creased $3,607,000, or 54%, over the prior year period primarily due to an
increase in headcount to support ongoing development projects. The Company
expects to continue to make a significant investment in research and develop-
ment 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 second quarter of fiscal 1997 and
1996 were $621,000 and $1,200,000, respectively. In addition to customer
funding offsets, the Company periodically capitalizes expenses incurred under
long-term custom modification contracts. These expenses are classified as
work in process and are recognized in cost of sales as product is delivered.
Reclassifications against expense for these long-term custom modification
contracts for the second quarter of fiscal 1997 and 1996 amounted to
$1,510,000 and $125,000, respectively.
Marketing, General and Administrative Expenses.
Marketing, general and administrative expenses for the second quarter were
$11,220,000 versus $8,494,000 for the prior year period. As a percentage of
revenues, these expenses decreased from 33% at July 31, 1995 to 27% at July
31, 1996 due to higher incremental revenue. Absolute spending increased
$2,726,000 due primarily to the expansion of the worldwide customer service
and sales organizations, particularly in Mexico and the Far East, as well as
increased staffing to support the overall growth of the Company's business.
Interest.
Interest income for the second quarter decreased by $209,000 to $76,000
at July 31, 1996 due primarily to lower average cash and investment balances.
Interest expense for the second quarter increased by $216,000 to $243,000 as a
result of borrowings against the Company's available line of credit.
Other Expense.
Other expense increased $272,000 to $470,000 at July 31, 1996 due primarily
to the Company's share of a loss incurred by the joint venture recently
established in Brazil.
Page 8<PAGE>
<PAGE>
Provision for Income Taxes.
The effective tax rate for the second quarter was 35% versus 29% for the prior
year period. The effective rate of 29% in fiscal 1996 was due to a $250,000
refund received in the second quarter of fiscal 1996. The Company expects
the effective rate to remain at approximately 35% throughout the remainder of
fiscal 1997.
Six Months Ended July 31, 1996 versus the Six Months Ended July 31, 1995
Net Sales.
Revenues for the six months ended were $77,206,000 versus $52,148,000 for the
prior year period, an increase of $25,058,000, or 48%. North American revenues,
generated by sales to Regional Bell Operating Companies, a competitive access
provider, a long distance carrier and other network operators, were
approximately $45,711,000, an increase of $27,434,000, or 150%, versus the
prior year period. North American revenues increased due primarily to
slightly higher volume from several existing customers as well as to
incremental revenue from two new customers. International revenues for the
six months ended July 31, 1996 were $31,495,000, a decrease of $2,376,000, or
7%, versus the prior year period. International revenues decreased due
primarily to lower volume from one of the Company's existing Pacific Rim
customers, partially offset by incremental revenue from one new International
customer. International shipments comprised 41% of total revenues for the
first six months of fiscal 1997.
Gross Profit.
As a percentage of revenues, gross profit was approximately 57% for the six
months ended July 31, 1996 versus approximately 66% the prior year period.
The decrease was primarily due to an increase in the number of smaller systems
shipped, which traditionally have lower margins. The Company expects to
continue to ship a larger percentage of smaller systems during the balance of
fiscal 1997, with gross profit as a percentage of revenues to continue to run
below fiscal 1996 levels.
Research and Development Expenses.
Net research and development expenses were $15,278,000 for the six months ended
July 31, 1996 versus $9,325,000 for the prior year period. As a percentage of
revenues, net research and development expenses increased to 20% for the first
half of fiscal 1997 versus 18% for the prior year period. Excluding the
effect of customer funding and certain reclassifications, gross research and
development spending in the first half of fiscal 1997 increased $6,076,000,
or 45%, over the prior year period primarily due to an increase in headcount
to support ongoing development projects. Customer funding offsets against
expense for the first six months of fiscal 1997 and 1996 amounted to
$2,081,000 and $2,694,000, respectively. Reclassifications against expense
for long-term custom modification contracts for the first six months of fiscal
1997 and 1996 amounted to $2,098,000 and $1,362,000, respectively.
Marketing, General and Administrative Expenses.
Marketing, general and administrative expenses for the six months ended
July 31, 1996 were $20,785,000 versus $16,534,000 for the prior year period.
As a percentage of revenues, these expenses decreased from 32% at
July 31, 1995 to 27% at July 31, 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.
Page 9<PAGE>
<PAGE>
Interest.
Interest income for the six months ended July 31,1996 decreased by $451,000
to $351,000 due primarily to lower average cash and investment balances.
Interest expense for the six months ended July 31,1996 increased by $384,000
to $453,000 as a result of borrowings against the Company's available line
of credit.
Other Expense.
Other expense increased by $328,000 to $523,000 at July 31, 1996 due primarily
to the Company's share of a loss incurred by a joint venture recently
established in Brazil.
Provision for Income Taxes.
The effective tax rate for the six months ended July 31, 1996 and 1995, was
35% and 32%, respectively. The effective rate of 32% in fiscal 1996 was due
to a $250,000 refund received in the second quarter of fiscal 1996. The
Company expects the effective rate to remain at approximately 35% throughout
the remainder of fiscal 1997.
2. Liquidity and Capital Resources
Cash and cash equivalents decreased by $7,590,000 to $6,339,000 at July 31,
1996 versus $13,929,000 at January 31, 1996. The decrease in cash and cash
equivalents is due primarily to a $23,016,000 increase in accounts receivable,
asset purchases of $9,575,000 and a $4,453,000 increase in inventories,
partially offset by net borrowings under a revolving credit facility of
$13,600,000, increases in accounts payable and accrued expenses of $4,900,000,
a $3,689,000 reduction in net taxes receivable, proceeds from the exercise of
stock options and employee stock purchases of $2,059,000 and net income of
$4,621,000.
The increase of $23,016,000 in accounts receivable from $28,892,000 at
January 31, 1996 to $51,908,000 at July 31, 1996 was due primarily to higher
sales volume during the second quarter of fiscal 1997 versus the fourth
quarter of fiscal 1996 from three existing North American customers and from
sales made late in the quarter to one new International customer and one new
North American customer.
The $9,575,000 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, test equipment to
support increased manufacturing and research and development volume and an
enterprise-wide systems upgrade.
Inventories increased $4,453,000 from $16,951,000 at January 31, 1996 to
$21,404,000 at July 31, 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 higher expected sales levels for the
balance of fiscal 1997 and also to a large system shipment that was not
consummated as of the July 31, 1996 balance sheet date.
Page 10<PAGE>
<PAGE>
The Company had net borrowings under its revolving credit facilities of
$13,600,000 outstanding at July 31, 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 $4,900,000 to $28,194,000 at
July 31, 1996 due primarily to an increase in accrued distributor commissions,
an increase in accrued royalties and to a higher product warranty reserve.
Accrued distributor commissions increased from January 31, 1996 levels due to
the timing of certain international sales and the timing of the payment of
these commissions. Accrued royalties increased due primarily to a higher
number of product licensing agreements with certain key vendors for
components incorporated into the Access NP. Product warranty reserves
increased due primarily to incremental sales volume.
The $3,689,000 decrease in net taxes receivable was due primarily to refunds
received during the first quarter of fiscal 1997, as well as to the first
and second quarter provisions for amounts due for fiscal 1997 taxes.
The Company entered into a technology license agreement during the second
quarter of fiscal 1997. Under the terms of the agreement the Company will
pay $2,000,000 in equal installments of $500,000 every six months commencing
on February 1, 1997 through August 1, 1998. These amounts are included on
the Balance Sheet under Current portion of long-term debt and Long-term debt
and other long-term liabilities.
During fiscal 1995, the Company received $1,741,000 from the sale of sales
type lease receivables, and at July 31, 1996 was contingently liable for
$1,174,000. In September 1996, the Company received notification from the
purchaser of the lease that the lessee is in default, and requiring the
Company to repurchase the contract. The Company believes that its current
reserves will be adequate to cover any losses which may be incurred.
3. Future Operating Results
The reader should consider the following important factors, among others,
which in some cases have affected, and in the future 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, rev-
enues earned in any quarter will continue to be largely dependent on orders
booked, built, and shipped in that quarter. The Company has experienced a
pattern of recording the majority of its quarterly revenues in the third
month of the quarter.
Historically, the Company's revenues have been attributed to a limited number
of customers, with a high average system revenue per transaction. Therefore,
the loss of any one customer, or a significant decline in their volume, could
have a material adverse effect on the Company's business and it's results of
Page 11<PAGE>
<PAGE>
operations. The Company's ability to increase future revenues may depend on
its ability to generate sufficient revenues to substitute for reduced pur-
chases by one or more major customers. In addition, 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.
The Company's revenue stream depends on its ability to enhance its existing
software products and to introduce new products on a timely and cost-effective
basis. This includes any customer-required custom software enhancements
required in the normal course of product delivery. If the Company were to
delay the introduction of new products, or to delay the delivery of specific
custom software enhancements, the Company's operating results could be
adversely affected.
The International portion of the Company's business, which represented 41% of
revenues for the first half of fiscal 1997, is subject to a number of inherent
risks, including difficulties in building and managing international opera-
tions and international reseller networks, international service and support
of the Company's products, difficulties or delays in translating products into
foreign languages, fluctuations in the value of foreign currencies, import/
export duties and quotas, and unexpected regulatory, economic or political
changes in international markets. Due to the competitive environment in the
international marketplace, certain international customers may require longer
payment terms; as a result, days sales outstanding may periodically extend
beyond ninety days on amounts due from these customers.
Due to the level of International business, the Company's revenue may increas-
ingly be denominated in foreign currencies. To date, foreign currency fluc-
tuations have not had a material adverse effect on the Company's operating
results. While the Company has periodically engaged in hedging transactions
to cover its currency translation exposure, the increase in International
business may require the Company to engage in these types of transactions more
frequently to mitigate the effect of foreign currency fluctuations.
The Company sells substantially all of its product to companies in the tele-
communication industry. This industry is undergoing significant change as a
result of the passage of the telecommunications bill, reducing restrictions
on competition within the industry. The enhanced services systems industry
is already highly competitive and the Company expects competition to in-
tensify. Competition for the sale of enhanced services systems to network
operators is based principally on capacity, high reliability and ability to
provide multiple-applications platforms integrated with telecommunications
networks. The Company believes that it will continue to encounter substantial
competition from its existing competitors, and that other companies, many
with considerably greater financial, technical, marketing and sales resources
than Boston Technology, may enter the enhanced services systems markets. Also,
unforseen changes in the regulatory environment may have an impact on the
Company's revenues and/or costs in any given part of the world.
Certain components of the Company's products are currently purchased from a
single source and, although the Company believes that alternate sources are
available, any interruption in the supply of such components could adversely
effect the Company's operating results.
Page 12<PAGE>
<PAGE>
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.
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
At the Annual Meeting of Stockholders on June 25, 1996, the Company's
stockholders adopted the following proposals by the votes specified
below:
1. To fix the number of directors at seven and to elect the seven
nominees listed below.
<TABLE>
<CAPTION> Against or Broker
Proposal For Withheld Abstain Non-votes
________ ___ __________ _______ _________
<C> <C> <C> <C> <C>
1. Election of Directors:
Greg C. Carr 18,569,050 119,711 -- --
Richard J. Connaughton 18,569,050 119,711 -- --
Francis E. Girard 18,569,050 119,711 -- --
Herman B. Leonard 18,569,050 119,711 -- --
Joseph E. Norberg 18,569,050 119,711 -- --
Robert J. Slezak 18,568,911 119,850 -- --
Richard K. Snelling 18,569,050 119,711 -- --
2. To ratify and approve the 1996 Stock Incentive Plan as described
in the Proxy Statement
17,433,863 1,202,580 52,318 1,061
</TABLE>
Page 13<PAGE>
<PAGE>
ITEM 5. Other Information
Not applicable.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The exhibits listed in the Exhibit Index 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
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BOSTON TECHNOLOGY, INC.
Date: September 13, 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 14<PAGE>
<PAGE>
BOSTON TECHNOLOGY. INC.
EXHIBIT INDEX
Exhibit Page
Number Title of Document Number
_______ ___________________________________________________ ______
10.20 1996 Stock Incentive Plan (1)
11 Statement re: Weighted Shares used in Computation 15
of Earnings per Share
27 Financial Data Schedule 16
_______________
(1) Incorporated by reference to the Definitive Proxy Materials for the
Registrant's Annual Meeting of Stockholders held June 25, 1996.
Page 15<PAGE>
<PAGE>
<TABLE> EXHIBIT 11
EXHIBIT 11
BOSTON TECHNOLOGY, INC.
Weighted Shares used in Computation of Earnings Per Share
(in thousands)
<CAPTION>
Three months ended July 31, Six months ended July 31,
1996 1995 1996 1995
_______ _______ ______ ______
<S> <C> <C> <C> <C>
Common stock outstanding, beginning of period 24,917 24,896 24,732 24,759
Weighted average common stock issued during
the three and six months ended July 31, 59 226 158 193
Weighted average common stock equivalents 8,019 2,830 7,912 2,856
Weighted average treasury shares acquired using
the treasury stock method (4,990) (1,507) (4,967) (1,538)
______ ______ ______ ______
Weighted average shares of common stock outstanding 28,005 26,445 27,835 26,270
====== ====== ====== ======
</TABLE>
Page 16<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-END> JUL-31-1996
<CASH> 6339
<SECURITIES> 0
<RECEIVABLES> 51908
<ALLOWANCES> 1538
<INVENTORY> 21404
<CURRENT-ASSETS> 85002
<PP&E> 36595
<DEPRECIATION> 19492
<TOTAL-ASSETS> 111275
<CURRENT-LIABILITIES> 34558
<BONDS> 0
0
0
<COMMON> 25
<OTHER-SE> 61253
<TOTAL-LIABILITY-AND-EQUITY> 111275
<SALES> 41455
<TOTAL-REVENUES> 41455
<CGS> 17120
<TOTAL-COSTS> 17120
<OTHER-EXPENSES> 19405
<LOSS-PROVISION> 60
<INTEREST-EXPENSE> 243
<INCOME-PRETAX> 4293
<INCOME-TAX> 1502
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2791
<EPS-PRIMARY> .10
<EPS-DILUTED> .10
</TABLE>
