<PAGE> 1
UNITED STATES
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 period ended October 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 0-15047
CIRCUIT SYSTEMS, INC.
___________________________________________________________________________
(Exact name of registrant as specified in charter)
Illinois 36-2663010
___________________________________________________________________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2350 E. Lunt Ave., Elk Grove Village, Illinois 60007
___________________________________________________________________________
(Address of principal executive offices) (Zip Code)
(708) 439-1999
___________________________________________________________________________
(Registrant's telephone number, including area code)
___________________________________________________________________________
(Former name, former address and former fiscal year, if changed since last
report)
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 the past 90 days. Yes X No .
___ ___
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15 (d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes ___ No ___.
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the latest
practicable date: November 30, 1995 5,321,973.
<PAGE> 2
CIRCUIT SYSTEMS, INC.
AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page
Number
<S> <C> <C>
PART I. FINANCIAL INFORMATION
1. Financial Statements
Consolidated Condensed Balance Sheets 3
Consolidated Condensed Statements of Earnings 4
Consolidated Condensed Statements of Cash Flows 5
Notes to Consolidated Condensed Financial
Statements 6
2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 10
</TABLE>
- 2 -
<PAGE> 3
CIRCUIT SYSTEMS, INC.
AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS 4/30/95 10/31/95
------------- -------------
<S> <C> <C>
CURRENT ASSETS
CASH AND CASH EQUIVALENTS......................................... $ 127,865 $ 206,184
ACCOUNTS RECEIVABLE, LESS
ALLOWANCE OF $350,000 AND $410,000............................ 10,007,174 10,788,341
INVENTORIES
RAW MATERIAL.................................................. 1,424,571 3,095,972
WORK IN PROCESS............................................... 2,348,590 3,013,903
FINISHED GOODS................................................ 308,864 1,176,631
------------- -------------
4,082,025 7,286,506
DEFERRED INCOME TAXES............................................. 376,000 376,000
PREPAID EXPENSES.................................................. 253,026 169,025
------------- -------------
TOTAL CURRENT ASSETS...................................... 14,846,090 18,826,056
INVESTMENT IN AFFILIATES................................................ 2,109,225 2,296,084
PROPERTY, PLANT AND EQUIPMENT - AT COST
BUILDING AND IMPROVEMENTS......................................... 7,376,273 7,704,081
MACHINERY AND EQUIPMENT........................................... 23,288,271 25,287,001
AUTOMOTIVE EQUIPMENT.............................................. 93,272 64,789
------------- -------------
30,757,816 33,055,871
LESS ACCUMULATED DEPRECIATION................................ 12,869,112 14,544,629
------------- -------------
17,888,704 18,511,242
LAND............................................................. 2,351,703 2,351,703
------------- -------------
20,240,407 20,862,945
OTHER ASSETS
DEPOSITS AND SUNDRY............................................... 2,215,328 2,360,336
------------- -------------
2,215,328 2,360,336
------------- -------------
$ 39,411,050 $ 44,345,421
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
CURRENT MATURITIES OF L/T OBLIGATIONS............................. $ 2,230,310 $ 2,858,897
ACCOUNTS PAYABLE.................................................. 4,952,287 4,793,297
ACCRUED LIABILITIES............................................... 1,019,843 1,683,425
INCOME TAXES PAYABLE.............................................. 208,709 606,403
------------- -------------
TOTAL CURRENT LIABILITIES..................................... 8,411,149 9,942,022
LONG - TERM OBLIGATIONS................................................. 11,622,365 12,741,077
DEFERRED INCOME TAXES................................................... 1,259,000 1,494,000
SHAREHOLDERS' EQUITY
COMMON STOCK...................................................... 3,002,599 3,002,599
RETAINED EARNINGS................................................. 15,115,937 17,165,723
------------- -------------
18,118,536 20,168,322
------------- -------------
$ 39,411,050 $ 44,345,421
============= =============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
- 3 -
<PAGE> 4
CIRCUIT SYSTEMS, INC.
AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
----------------------------------- --------------------------------
10/31/94 10/31/95 10/31/94 10/31/95
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
NET SALES.............................. $ 13,720,922 $ 18,000,901 $ 28,457,792 $ 34,983,161
COST OF GOODS SOLD..................... 11,665,664 14,909,373 23,506,497 28,974,015
----------- ----------- ----------- -----------
GROSS PROFIT....................... 2,055,258 3,091,528 4,951,295 6,009,146
SALES AND MARKETING EXPENSES........... 646,598 705,520 1,337,635 1,488,233
ADMINISTRATIVE EXPENSES................ 479,542 498,520 1,092,185 1,009,946
----------- ----------- ----------- -----------
1,126,140 1,204,040 2,429,820 2,498,179
----------- ----------- ----------- -----------
OPERATING INCOME................... 929,118 1,887,488 2,521,475 3,510,967
OTHER (INCOME) DEDUCTIONS
INTEREST EXPENSE................... 226,039 353,039 445,439 708,363
GAIN ON SALE OF EQUIPMENT.......... (7,027) --- (7,027) (18,600)
EQUITY IN EARNINGS OF
UNCONSOLIDATED AFFILIATE........ (95,056) (100,823) (193,249) (186,859)
RENTAL INCOME...................... (103,500) (167,299) (207,000) (334,599)
SUNDRY............................. 17,457 (6,143) 16,827 (17,124)
----------- ----------- ----------- -----------
37,913 78,774 54,990 151,181
----------- ----------- ----------- -----------
EARNINGS BEFORE INCOME TAXES....... 891,205 1,808,714 2,466,485 3,359,786
INCOME TAXES........................... 355,000 705,000 984,000 1,310,000
----------- ----------- ----------- -----------
NET EARNINGS...................... $ 536,205 $ 1,103,714 $ 1,482,485 $ 2,049,786
=========== =========== =========== ===========
PER SHARE DATA
NET EARNINGS PER SHARE............. $0.10 $0.20 $0.28 $0.38
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING................ 5,337,945 5,331,296 5,340,999 5,328,450
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
- 4 -
<PAGE> 5
CIRCUIT SYSTEMS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
--------------------------------------------
10/31/94 10/31/95
---------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
NET EARNINGS................................................................ $ 1,482,485 $ 2,049,786
ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET
CASH PROVIDED BY OPERATING ACTIVITIES
DEPRECIATION........................................................... 1,422,000 1,704,000
GAIN ON SALE OF PROPERTY & EQUIPMENT................................... (7,027) (18,600)
DEFERRED INCOME TAXES.................................................. 205,000 235,000
EQUITY IN EARNINGS OF UNCONSOLIDATED
AFFILIATE............................................................ (193,249) (186,859)
CHANGES IN ASSETS AND LIABILITIES
ACCOUNTS RECEIVABLE.................................................... 36,826 (781,167)
INVENTORIES............................................................ (64,202) (3,204,481)
PREPAID EXPENSES....................................................... (11,825) 84,001
OTHER ASSETS........................................................... 136,509 (145,008)
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES............................... (679,695) 902,286
---------------- ----------------
TOTAL ADJUSTMENTS................................................. 844,337 (1,410,828)
---------------- ----------------
NET CASH PROVIDED BY OPERATIONS................................... 2,326,822 638,958
CASH FLOWS FROM INVESTING ACTIVITIES
CAPITAL EXPENDITURES......................................................... (2,180,962) (1,664,419)
PROCEEEDS FROM SALE OF COMMON STOCK OF AFFILIATE............................. 53,552 --
REPAYMENT OF LOAN FROM AFFILIATE............................................. 55,000 --
PROCEEDS FROM SALE OF PROPERTY & EQUIPMENT................................... 19,500 18,600
---------------- ----------------
NET CASH USED IN INVESTING ACTIVITIES............................. (2,052,910) (1,645,819)
CASH FLOWS FROM FINANCING ACTIVITIES
NET BORROWINGS UNDER LINE OF CREDIT......................................... 388,635 (848,597)
PROCEEDS FROM LONG-TERM OBLIGATIONS......................................... 980,000 3,431,744
PAYMENTS ON LONG-TERM OBLIGATIONS........................................... (1,560,791) (1,497,967)
---------------- ----------------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES......................................... (192,156) 1,085,180
INCREASE IN CASH.................................................. 81,756 78,319
CASH AT BEGINNING OF PERIOD...................................................... 33,324 127,865
---------------- ----------------
CASH AT END OF PERIOD............................................................ $ 115,080 $ 206,184
================ ================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
CASH PAID DURING THE PERIOD FOR:
INTEREST............................................................... $ 435,735 $ 697,164
INCOME TAXES........................................................... 1,010,000 677,739
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES:
ISSUANCE OF CAPITAL STOCK IN SATISFACTION OF
ACCRUED COMPENSATION AND BENEFITS.................................... $ 357,750 $ ---
CAPITAL LEASES FOR NEW EQUIPMENT........................................ --- 662,119
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
- 5 -
<PAGE> 6
CIRCUIT SYSTEMS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. These interim Consolidated Condensed Financial Statements should be
read in conjunction with the Consolidated Financial Statements and
notes included in the Company's April 30, 1995 Annual Report and Form
10-K.
2. In the opinion of the Company, the accompanying unaudited condensed
consolidated financial information reflects all adjustments
(consisting only of normal recurring accruals) necessary for a fair
presentation of the statements contained herein.
3. These consolidated statements are presented in accordance with the
requirements of Form 10-Q and consequently may not include all
disclosures normally required by generally accepted accounting
principles normally made in the Company's Annual Report and Form 10-K.
- 6 -
<PAGE> 7
CIRCUIT SYSTEMS, INC.
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The net sales for the quarter ended October 31, 1995, were $18,001,000,
increasing by 31.2% from $13,721,000 for the same quarter last year. The
increase in sales was not as a result of price increases but is primarily due
to a specific customer which accounted for approximately $3,525,000 or 19.6% of
sales for the quarter ended October 31, 1995. There was also a general
increase in business activity within the existing customer base. Net sales to
four individual unaffiliated customers accounted for approximately 45% of net
sales for the quarter ended October 31, 1995, compared to the same period last
year in which two customers accounted for approximately 20% of net sales. The
gross profit for the quarter was $3,092,000 or 17.2% of net sales, compared to
$2,055,000 or 15% of net sales for the same quarter last year. The higher
gross profit is attributed to the higher volume of sales, operating
efficiencies and decrease in overhead expenses as a percentage of sales.
The net sales for the six months ended October 31, 1995 were $34,983,000,
increasing by 22.9% from $28,458,000 for the same period last year. Net sales
to four individual unaffiliated customers accounted for approximately 41% of
net sales for the six months ended October 31, 1995, compared to the same
period last year, in which three customers accounted for approximately 24% of
net sales. The sales increase is attributed to the same factors as noted
above. The gross profit for the six months ended October 31, 1995, was
$6,009,000 or 17.2% of net sales, compared to $4,951,000 or 17.4% of net sales
for the same period in the prior year. The gross profit was affected by a
decrease in overhead expenses which was offset by increases in materials,
supplies and labor as a percentage of sales.
Sales and marketing and administrative expenses for the three and six months
ended October 31, 1995, were $1,204,000 or 6.7% of net sales and $2,498,000 or
7.1% of net sales, respectively, compared to $1,126,000 or 8.2% of net sales
and $2,430,000 or 8.5% of net sales, respectively, for the same periods last
year. The decrease in the costs as a percentage of net sales is due to
decreases in salaries and professional fees which was partially offset by an
increase in the allowance for bad debts.
The other (income) deductions-net for the three and six months ended October
31, 1995 reflected an expense of $79,000 and $151,000, respectively, compared
to $38,000 and $55,000, respectively, for the same periods in the prior year.
The item that affected the increase is interest expense of $353,000 and
- 7 -
<PAGE> 8
CIRCUIT SYSTEMS, INC.
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
$708,000, respectively in 1995, compared to $226,000 and $445,000,
respectively, for the same periods last year. The increase is due to increased
borrowings. The expense was partially offset by rental income of $167,000 and
$335,000, respectively, in 1995, compared to $104,000 and $207,000,
respectively, for the same periods last year. The increase is the result of
the leasing of the 2400 Lunt Avenue location to an unaffiliated entity. This
lease will expire in November 1995, at which time the Company will begin
construction to expand capacity.
The effective income tax rate for the six months ended October 31, 1995 is
39.0%, compared to 39.9% for the same period in the prior year.
The net earnings and earnings per share for the three and six months ended
October 31, 1995, were $1,104,000 or $.20 and $2,050,000 or $.38, respectively,
compared to $536,000 or $.10 and $1,482,000 or $.28, respectively, for the same
periods in the prior year.
LIQUIDITY AND CAPITAL RESOURCES
The Company's financial requirements were met through cash generated from
operations and increased borrowings.
For the six months ended October 31, 1995, the increase in inventories of
$3,204,000, capital expenditures of $1,664,000, payments on long-term
obligations of $1,498,000, the decrease in line of credit of $849,000 and the
increase in accounts receivable of $781,000 were funded by operating income,
proceeds from long-term obligations of $3,432,000 and the increase in accounts
payable and accrued liabilities of $902,000.
The Company has purchase commitments as of October 31, 1995 of approximately
$5,500,000 for future deliveries of machinery and equipment to increase
production capacity and additional testing equipment to enhance testing
capability. In addition, approximately $800,000 is estimated for building
improvements at the 2400 Lunt Avenue location which will commence during the
third quarter of this fiscal year. The building improvements at this location
will allow for realignment of some departments, which will improve operating
efficiency, add production capacity and provide a larger area for
administrative functions. The Company intends to finance such purchases
through collateralized borrowings, installment loans, and existing cash flow.
- 8 -
<PAGE> 9
CIRCUIT SYSTEMS, INC.
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company's backlog at October 31, 1995 is approximately $13,244,000 compared
to $10,609,000 at October 31, 1994. Backlog represents orders scheduled to be
shipped within approximately 6 months, but most of which is shipped in 4 months
or less. The reliability of backlog as an indicator of future sales varies
substantially with the make-up of customers' order and the Company's scheduled
production and delivery dates. Backlog is considered adequate for the current
sales level of the Company.
- 9 -
<PAGE> 10
CIRCUIT SYSTEMS, INC.
AND SUBSIDIARIES
PART 2 - OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits
Exhibit 11 - Calculation of Primary and Fully Diluted
Per Share Earnings
(b) Reports on Form 8-K
There were no reports on Form 8-K filed for the
quarter ended October 31, 1995.
- 10 -
<PAGE> 11
CIRCUIT SYSTEMS, INC.
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, registrant's principal financial officer, thereunto duly
authorized.
Circuit Systems, Inc.
---------------------
(registrant)
/s/ Dilip S. Vyas
------------------------------
Dilip S. Vyas
(Principal Financial Officer)
December 8, 1995
- ----------------
- 11 -
<PAGE> 1
EXHIBIT 11
CIRCUIT SYSTEMS, INC.
AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
---------------------------- -----------------------------
10/31/94 10/31/95 10/31/94 10/31/95
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
PRIMARY EPS
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING DURING THE PERIOD............................. 5,321,973 5,321,973 5,312,484 5,321,973
NET ADDITIONAL SHARES ASSUMING DILUTIVE
STOCK OPTIONS EXERCISED AND PROCEEDS
USED TO PURCHASE TREASURY SHARES AT
AVERAGE FAIR MARKET VALUE........................................ 15,972 9,323 28,515 6,477
---------- ---------- ---------- ----------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
AND COMMON EQUIVALANT SHARES OUTSTANDING......................... 5,337,945 5,331,296 5,340,999 5,328,450
========== ========== ========== ==========
NET EARNINGS..................................................... $536,205 $1,103,714 $1,482,485 $2,049,786
========== ========== ========== ==========
PRIMARY EARNINGS PER SHARE....................................... $0.10 $0.20 $0.28 $0.38
========== ========== ========== ==========
FULLY DILUTED EPS
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING DURING THE PERIOD............................. 5,321,973 5,321,973 5,321,484 5,321,973
NET ADDITIONAL SHARES ASSUMING DILUTIVE
STOCK OPTIONS EXERCISED AND PROCEEDS
USED TO PURCHASE TREASURY SHARES AT
FAIR MARKET VALUE AT END OF PERIOD............................... 15,972 24,437 28,515 24,437
---------- ---------- ---------- ----------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
AND COMMON EQUIVALANT SHARES OUTSTANDING......................... 5,337,945 5,346,410 5,340,999 5,346,410
========== ========== ========== ==========
NET EARNINGS..................................................... $536,205 $1,103,714 $1,482,485 $2,049,786
========== ========== ========== ==========
FULLY DILUTED EARNINGS PER SHARE................................. $0.10 $0.20 $0.28 $0.38
========== ========== ========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-START> MAY-01-1995
<PERIOD-END> OCT-31-1995
<CASH> 206,184
<SECURITIES> 0
<RECEIVABLES> 11,198,341
<ALLOWANCES> 410,000
<INVENTORY> 7,286,506
<CURRENT-ASSETS> 18,826,056
<PP&E> 35,407,574
<DEPRECIATION> 14,544,629
<TOTAL-ASSETS> 44,345,421
<CURRENT-LIABILITIES> 9,942,022
<BONDS> 12,741,077
<COMMON> 3,002,599
0
0
<OTHER-SE> 17,165,723
<TOTAL-LIABILITY-AND-EQUITY> 44,345,421
<SALES> 34,983,161
<TOTAL-REVENUES> 34,983,161
<CGS> 28,974,015
<TOTAL-COSTS> 28,974,015
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 60,000
<INTEREST-EXPENSE> 708,363
<INCOME-PRETAX> 3,359,786
<INCOME-TAX> 1,310,000
<INCOME-CONTINUING> 2,049,786
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,049,786
<EPS-PRIMARY> 0.38
<EPS-DILUTED> 0.38
</TABLE>
