<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 QUARTERLY PERIOD ENDED DECEMBER 26, 1998
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. 33-9875
-----------------
BOSTON ACOUSTICS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MASSACHUSETTS 04-2662473
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR IDENTIFICATION NO.)
ORGANIZATION)
300 JUBILEE DRIVE
PEABODY, MASSACHUSETTS 01960
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(978) 538-5000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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 []
There were 5,011,381 shares of Common Stock issued and outstanding as of
February 5, 1999.
- --------------------------------------------------------------------------
<PAGE>
Boston Acoustics, Inc.
Index
-----
<TABLE>
<CAPTION>
Page
----
<S> <C>
Part I: Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets (Unaudited)-
March 28, 1998 and December 26, 1998 4
Consolidated Statements of Income (Unaudited)-
Three months and Nine Months ended December 27, 1997
and December 26, 1998 6
Consolidated Statements of Cash Flows (Unaudited)-
Nine Months ended December 27, 1997 and
December 26, 1998 7
Notes to Unaudited Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 10
Part II: Other Information
Items 1 through 6 14
Signatures 15
</TABLE>
2
<PAGE>
PART I: FINANCIAL INFORMATION
Item 1: Financial Statements
3
<PAGE>
Boston Acoustics, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
Assets
<TABLE>
<CAPTION>
March 28, 1998 December 26, 1998
-------------- -----------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 3,870,569 $ 1,163,469
Accounts receivable, net of reserves of
approximately $402,000
and $516,000, respectively 11,439,178 19,194,033
Inventories 12,617,077 28,032,852
Deferred income taxes 1,092,000 1,092,000
Prepaid expenses and other current assets 395,087 215,940
----------- -----------
Total current assets 29,413,911 49,698,294
----------- -----------
Property and Equipment, at cost:
Land 1,433,365 1,433,365
Building and improvements 7,061,479 7,146,284
Machinery and equipment 8,667,671 10,734,232
Office equipment and furniture 1,847,326 3,553,929
Motor vehicles 288,948 361,090
----------- -----------
19,298,789 23,228,900
Less-accumulated depreciation
and amortization 8,005,621 9,928,116
----------- -----------
----------- -----------
11,293,168 13,300,784
----------- -----------
Other Assets:
Other assets, net 1,792,125 1,394,848
----------- -----------
$42,499,204 $64,393,926
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
Boston Acoustics, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
March 28, 1998 December 26, 1998
-------------- -----------------
<S> <C> <C>
Current Liabilities:
Accounts payable $ 3,224,208 $ 14,290,926
Accrued payroll and payroll-
related expenses 1,392,171 1,723,357
Dividends payable 414,287 424,140
Other accrued expenses 922,216 1,387,011
Accrued income taxes 142,075 104,274
Current maturity of line of credit 3,000,000 3,000,000
----------- -----------
Total current liabilities 9,094,957 20,929,708
----------- -----------
Line of credit, net of current portion 9,500,000 12,078,353
Commitments
Shareholders' Equity:
Common stock, $.01 par value
Authorized -- 8,000,000 shares
Issued - 6,936,327 and 4,990,380
shares at March 28, 1998 and
December 26, 1998, respectively 69,363 49,904
Additional paid-in capital 5,831,724 484,000
Retained earnings 46,245,277 30,851,961
----------- -----------
52,146,364 31,385,865
Less-Treasury stock, 1,964,881 shares at
March 28, 1998, at cost. 28,242,117 ---
----------- -----------
Total shareholders' equity 23,904,247 31,385,865
----------- -----------
$42,499,204 $64,393,926
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
Boston Acoustics, Inc. and Subsidiaries
Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------ -----------------
December 27, December 26, December 27, December 26,
1997 1998 1997 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 27,187,429 $ 37,305,613 $ 57,738,674 $ 85,155,939
Cost of goods sold 16,727,826 25,070,440 34,611,336 56,523,377
------------ ------------ ------------ ------------
Gross profit 10,459,603 12,235,173 23,127,338 28,632,562
------------ ------------ ------------ ------------
Selling and
marketing expenses 2,267,937 2,975,878 6,016,009 7,372,786
General and
administrative expenses 1,023,254 1,460,654 3,104,196 3,561,538
Engineering and
development expenses 927,535 1,374,400 2,490,884 3,677,003
Total expenses 4,218,726 5,810,932 11,611,089 14,611,327
------------ ------------ ------------ ------------
Income from operations 6,240,877 6,424,241 11,516,249 14,021,235
Interest income 26,159 17,815 168,772 71,217
Interest expense (347,676) (219,618) (789,080) (542,081)
------------ ------------ ------------ ------------
Income before provision
for income taxes 5,919,360 6,222,438 10,895,941 13,550,371
Provision for income taxes 2,307,000 2,269,000 4,173,000 5,015,000
------------ ------------ ------------ ------------
Net income $ 3,612,360 $ 3,953,438 $ 6,722,941 $ 8,535,371
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Basic earnings per share $ .73 $ .79 $ 1.26 $ 1.71
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Diluted earnings per share $ .70 $ .75 $ 1.23 $ 1.62
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Weighted average common shares outstanding
Basic 4,964,022 4,989,609 5,320,415 4,982,424
Diluted 5,137,211 5,270,648 5,463,671 5,278,824
Dividends per share $ .083 $ .085 $ .250 $ .253
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
6
<PAGE>
Boston Acoustics, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
-----------------
December 27, 1997 December 26, 1998
----------------- -----------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 6,722,941 $ 8,535,371
Adjustments to reconcile net income to net cash
provided by (used in) operating activities-
Depreciation and amortization 1,274,934 2,368,964
Provision for doubtful accounts 69,800 133,100
Compensation expense related to restricted
stock and warrants 434,227 ---
Changes in assets and liabilities --
Accounts receivable (6,230,433) (7,887,955)
Inventories (2,725,103) (15,415,775)
Prepaid expenses and other current assets 573,335 179,147
Accounts payable 1,695,336 11,066,718
Accrued payroll and other accrued expenses 870,065 795,981
Accrued income taxes 195,639 (37,801)
----------------- -----------------
Net cash provided by (used in) operating activities 2,880,741 (262,250)
----------------- -----------------
Cash flows from investing activities:
Purchase of property and equipment, net (657,904) (3,930,111)
Proceeds from sale of held-to-maturity investments 3,361,422 ---
Increase in other assets (31,892) (1,306)
----------------- -----------------
Net cash provided by (used in) investing activities 2,671,626 (3,931,417)
----------------- -----------------
Cash flows from financing activities:
Dividends paid (1,348,162) (1,253,168)
Stock dividend fractional share payment --- (480)
Purchase of treasury stock (23,912,402) ---
Proceeds from line of credit 21,125,000 9,600,000
Payments on line of credit (5,125,000) (7,100,000)
Proceeds from exercise of stock options 333,795 240,215
----------------- -----------------
Net cash used in financing activities (8,926,769) 1,486,567
----------------- -----------------
Decrease in cash and cash equivalents (3,374,402) (2,707,100)
Cash and cash equivalents, beginning of period 4,937,232 3,870,569
----------------- -----------------
Cash and cash equivalents, end of period $ 1,562,830 $ 1,163,469
----------------- -----------------
----------------- -----------------
Supplemental Disclosure of NonCash Financing Activities:
Dividends payable $ 413,871 $ 424,140
Retirement of treasury stock $ --- $ 28,242,117
----------------- -----------------
Supplemental Disclosure of Cash Flow Information:
Cash paid for income taxes $ 4,003,599 $ 5,052,800
----------------- -----------------
----------------- -----------------
Cash paid for interest $ 789,080 $ 557,672
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
7
<PAGE>
Boston Acoustics, Inc. and Subsidiaries
Notes to Unaudited Consolidated Financial Statements
(1) Basis of Presentation
The unaudited consolidated financial statements included herein have
been prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission and include, in the
opinion of management, all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of interim period results.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations. The
Company believes, however, that its disclosures are adequate to make the
information presented not misleading. The results for the three and nine-month
periods ended December 26, 1998 are not necessarily indicative of results to be
expected for the full fiscal year. These financial statements should be read in
conjunction with the Company's Annual Report included in its Form 10-K for
fiscal year ended March 28, 1998.
(2) Inventories
Inventories are stated at the lower of cost (first-in, first-out) or
market and consist of the following:
<TABLE>
<CAPTION>
March 28, 1998 December 26, 1998
--------------- -----------------
<S> <C> <C>
Raw materials and work-in process $ 7,473,368 $11,232,701
Finished goods 5,143,709 16,800,151
$ 12,617,077 $28,032,852
--------------- -----------------
--------------- -----------------
</TABLE>
Work-in-process and finished goods inventories consist of materials,
labor and manufacturing overhead.
(3) Stockholders Equity
On July 13, 1998, the Company's Board of Directors authorized an
increase in the authorized shares of common stock to 8.0 million shares and a
three-for-two stock split effected in the form of a stock dividend. All share
and per share amounts in the accompanying financial statements and footnotes
have been retroactively restated to reflect the stock split. Accordingly,
approximately $23,000 was transferred from additional paid-in capital to
common stock.
In October 1998, the Company retired 1,964,881 shares of treasury
stock that had a cost of approximately $28,242,000. As a result of the
retirement of these shares, the Company charged approximately $22,635,000 to
retained earnings.
(4) Net Income Per Common Share
In February 1997, the Financial Accounting Standards Board issued SFAS
No. 128, Earnings per Share. SFAS No. 128 establishes standards for computing
and presenting earnings per share (EPS) and applies to entities with publicly
held common stock or potential common stock. The Company has restated earnings
per share for the comparative periods for fiscal 1998 as required by SFAS No.
128. Basic EPS is computed by dividing net income by the weighted average number
of common shares outstanding for the period. Diluted EPS reflects the potential
dilution from common stock equivalents (stock options and
8
<PAGE>
warrants). For the periods ended December 27, 1997 and December 26, 1998, there
were no antidilutive shares for purposes of earnings per share.
A reconciliation of basic and diluted shares outstanding, as required
by SFAS No. 128, is as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------ -----------------
December 27, December 26, December 27, December 26,
1997 1998 1997 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Basic weighted
average common
shares outstanding 4,964,022 4,989,609 5,320,415 4,982,424
Dilutive effect of
assumed exercise of
stock options and warrant 173,189 281,039 143,256 296,400
----------- ----------- ----------- -----------
Weighted average
common shares
outstanding assuming
dilution 5,137,211 5,270,648 5,463,671 5,278,824
----------- ----------- ----------- -----------
</TABLE>
(5) Stock Options
The following is a summary of stock option activity:
<TABLE>
<CAPTION>
Weighted
Number of Price Average
Options Range Price
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Outstanding at March 28, 1998 501,854 $11.33 - $19.89 $14.86
Options granted 63,750 $20.25 $20.25
Options exercised (18,953) $11.33 - $13.00 $12.67
- ------------------------------------------------------------------------------------------------------
Outstanding at December 26, 1998 546,561 $11.67 - $20.25 $15.56
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
Exercisable at December 26, 1998 162,240 $11.67 - $14.67 $13.69
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
The following table sets forth the results of operations for the three-month and
six-month periods ended December 27, 1997 and December 26, 1998 expressed as
percentages of net sales.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------ -----------------
December 27, December 26, December 27, December 26,
1997 1998 1997 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales 100.0 % 100.0 % 100.0 % 100.0 %
Cost of goods sold 61.5 67.2 59.9 66.4
----------- ----------- ----------- -----------
Gross profit 38.5 32.8 40.1 33.6
----------- ----------- ----------- -----------
Selling and marketing
expenses 8.3 8.0 10.4 8.6
General & administrative
expenses 3.8 3.9 5.4 4.2
Engineering & development
expenses 3.4 3.7 4.3 4.3
----------- ----------- ----------- -----------
15.5 15.6 20.1 17.1
----------- ----------- ----------- -----------
Income from operations 23.0 17.2 20.0 16.5
Interest income (expense), net (1.2) (0.5) (1.1) (0.6)
----------- ----------- ----------- -----------
Income before provision for
income taxes 21.8 16.7 18.9 15.9
Provision for income taxes 8.5 6.1 7.3 5.9
----------- ----------- ----------- -----------
Net income 13.3 % 10.6 % 11.6 % 10.0 %
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
Net sales increased 37%, from approximately $27,187,000 during the third quarter
of fiscal 1998 to approximately $37,306,000 during the third quarter of fiscal
1999. For the nine months ended December 26, 1998 net sales increased
approximately 48% from approximately $57,739,000 to approximately $85,156,000.
The overall sales increase for both the three-month and nine-month periods ended
December 26, 1998 was primarily due to the OEM sales of multimedia speaker
systems to Gateway, Inc. ("Gateway"), a leading global direct marketer of PC
products. These products included the BA635
10
<PAGE>
three-piece system, the Digital MediaTheater(TM) three-piece system, and the
DigitalTheater(TM) 6000, a complete Dolby(R) Digital 5.1 Channel Home Theater
System. During the three-month and nine-month periods ended December 26, 1998,
growth in the Company's core business was primarily the result of the continued
success of the ProSeries automotive component speaker systems and the
subwoofer/satellite home theater speaker systems.
The Company's gross margin for the three-month and nine-month periods ended
December 26, 1998 increased in absolute dollars but decreased as a percentage of
net sales due primarily to a shift in the sales mix to loudspeaker models with
slightly lower margins, particularly the Company's OEM multimedia speaker
systems.
Total operating expenses increased in absolute dollars for both the
three-month and nine-month periods ended December 26, 1998, while remaining
relatively stable as a percentage of net sales during the three-month period
ended December 26, 1998 and decreasing as a percentage of net sales for the
nine-month period ended December 26, 1998 compared to the corresponding
periods a year ago. Selling and marketing expenses for the three-month and
nine-month periods ended December 26, 1998 have increased in absolute dollars
primarily due to increased salaries and benefits relating to additional
personnel and increased marketing expenses associated with the
direct-to-consumer program for the Company's Personal Desktop Audio(TM)
products. General and administrative expenses have increased in absolute
dollars primarily due to increased depreciation expenses relating to updated
computerized systems. As a percentage of net sales, general and administrative
expenses remained relatively stable during the three-month period ended
December 26, 1998 and decreased as a percentage of net sales for the
nine-month period ended December 26, 1998 compared to the corresponding
periods a year ago. Engineering and development expenses for the three-month
and nine-month periods ended December 26, 1998 have increased in absolute
dollars due primarily to increased salaries and benefits relating to
additional personnel and increased expenses associated with new product
development. As a result of these increases, engineering and development
expenses increased as a percentage of net sales for the three-month period
ended December 26, 1998 while remaining stable during the nine-month period,
as compared to the same periods a year ago.
Net interest expense has decreased during the three-month and nine-month periods
ended December 26, 1998 compared to the corresponding periods a year ago. The
decrease is primarily due to lower interest expense as a result of the Company's
repayments on the Company's line of credit borrowing during the first six months
of fiscal 1999 which was partially offset by additional borrowings during the
three-month period ended December 26, 1998.
The Company's effective income tax rate decreased slightly for the three-month
period ended December 26, 1998 from 39% to 36.5% as compared to the same period
a year ago, primarily due to lower state income taxes. For the nine-month period
of fiscal 1999 the effective tax rate decreased from approximately 38.3% to 37%.
Net income for the third quarter increased 9%, from approximately $3,612,000 in
fiscal 1998 to approximately $3,953,000 in fiscal 1999 while diluted earnings
per share increased from $.70 to $.75 per share. Net income for the nine-month
period ended December 26, 1998 increased 27%, from approximately $6,723,000 in
fiscal 1998 to approximately $8,535,000 in fiscal 1999, while diluted earnings
per share for the nine-month period increased from $1.23 to $1.62 per share. The
increase in net income for the three and nine-month periods ended December 26,
1998 was primarily the result of the increased sales growth, which was offset
slightly by the operating loss of the Snell subsidiary included in the
consolidated results of operations.
Liquidity and Capital Resources
During the first nine months of fiscal 1999, the Company financed its growth
principally with net proceeds of $2,500,000 from the Company's revolving line
of credit. As of December 26, 1998 the Company's working capital was
approximately $28,769,000, an increase of approximately $8,450,000 from
March 28, 1998. The increase in working capital was primarily due to increased
inventory and accounts receivable which were partially offset by increased
accounts payable balances and the borrowings on the Company's line of credit
during the first nine
11
<PAGE>
months of fiscal 1999. The Company's cash and cash equivalents were
approximately $1,163,000 at December 26, 1998. The Company's cash and cash
equivalents at December 26, 1998 decreased by approximately $2,707,000 from
March 28, 1998 primarily due to increased inventory levels, increased accounts
receivable balances and purchases of property and equipment relating to
production tooling and computerized equipment. The Company's increased
inventory levels, both in absolute dollars and as a percentage of net sales,
was principally the result of an increase of OEM products relating to the
timing of Gateway orders placed during the last three months. In addition,
inventory levels of certain core products contributed to the overall
inventory increase. The increase in the Company's accounts receivable balance
is principally the result of the 48% increase in net sales for the nine-month
period ended December 26, 1998 and the timing of payments by certain larger
customers which were subsequently received after December 26, 1998. Current
liabilities increased by approximately $11,835,000 primarily as a result of
increases in accounts payable related to inventory purchases and other accrued
expenses. Long-term debt increased by approximately $2,600,000 as a result of
borrowings under the Company's line of credit. The Company has two lines of
credit with two banking institutions totaling $26,500,000. At December 26, 1998
the Company had borrowings totaling $15,000,000 under its $25 million revolving
credit agreement. The Company believes that its existing resources are adequate
to meet its requirements for working capital and capital expenditures through
the next twelve months.
Significant Customers
The Company's financial results for the three-month and nine-month periods
ending December 26, 1998 include significant OEM sales of multimedia speaker
systems to Gateway. These sales are pursuant to various contracts that currently
run through June 1999. Since these contracts do not contain schedules with which
Gateway must comply in placing orders, orders by Gateway may fluctuate
significantly from quarter to quarter over the terms of the contracts. Assuming
Gateway places orders in the quantities required under the terms of the
contracts by June 1999, a substantial portion of the Company's revenues for the
fourth quarter of fiscal 1999 is expected to be derived from its contracts with
Gateway. As a result of recent discussions with Gateway, the Company
anticipates a decline in the quantity of products sold to Gateway during the
last quarter of fiscal 1999 and in subsequent quarters, although the Company
expects Gateway to continue as a significant customer. The loss of Gateway as a
customer or any significant portion of orders from Gateway could have a material
adverse affect on the Company's business, results of operations and financial
condition. In addition, the Company also could be materially adversely affected
by any substantial work stoppage or interruption of production at Gateway or if
Gateway were to reduce or cease conducting operations.
Year 2000 Compliance
The Company has undertaken an internal assessment of its operations,
including its information and financial systems and its manufacturing
equipment in order to determine the extent to which the Company may be
adversely affected by Year 2000 issues. The Company is currently in the
process of updating its computer systems and applications to improve the
scalability and functionality of the Company's overall manufacturing,
planning and inventory related systems and to ensure that they are Year 2000
compliant. The Company believes that the Company's updated computer system
will be Year 2000 compliant. The financial impact to the Company of its Year
2000 compliance programs has not been and is not anticipated to be material
to its financial position or results of operations in any given year. The
Company has also commenced a survey of its suppliers' Year 2000 compliance
status and is anticipating responses from theses suppliers before the end of
the current fiscal year. While the Company does not believe it will suffer
any major effects from the Year 2000 issue, it is possible that such effects
could materially impact future financial results, or cause reported financial
information not to be necessarily indicative of future operating results or
future financial condition. In addition, if any of the Company's significant
customers or suppliers do not successfully and in a timely manner achieve
Year 2000 compliance, the Company's business could be materially affected. At
present, the Company has not developed contingency plans, but intends to
determine whether to develop any such plans by the end of fiscal 1999.
Possible Adverse Effect of Euro Conversion
On January 1, 1999, 11 of the 15 member countries of the European Union
established fixed conversion rates between their existing currencies and a
new common currency called the "euro." This represented an initial step in a
process expected to culminate in the replacement of the existing currencies
with the euro. The conversion to the euro will have operational and legal
implications for some of our international business activities. We have begun
evaluating these implications, but we have yet to estimate the potential
impact on our business, operating results and financial condition. Our
preliminary judgment, however, is that the nature of our business and
customers makes a material impact unlikely.
Cautionary Statements
The Private Securities Litigation Reform Act of 1995 contains certain safe
harbors regarding forward-looking statements. From time to time, information
provided by the Company or statements made by its directors, officers, or
employees may contain "forward-looking" information which involve risk and
uncertainties. Any statements in this report that are not statements of
historical fact are forward-looking statements (including, but not limited to,
statements concerning the characteristics and growth of the Company's market and
customers, the Company's objectives and plans for future operations, the
Company's expected liquidity and capital resources and the Company's ability and
the Company's
12
<PAGE>
suppliers' and customers' ability to replace, modify or upgrade computer
programs in ways to adequately address the Year 2000 issue). Such
forward-looking statements are based on a number of assumptions and involve a
number of risks and uncertainties, and accordingly, actual results could differ
materially. Factors that may cause such differences include, but are not limited
to: the continued and future acceptance of the Company's products, the rate of
growth in the audio industry; the presence of competitors with greater technical
marketing and financial resources; the Company's ability to promptly and
effectively respond to technological change to meet evolving consumer demands;
capacity and supply constraints or difficulties; and the Company's ability to
successfully integrate new operations. The words "believe,' "expect,"
"anticipate," "intend" and "plan" and similar expressions identify
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date the statement
was made. For a further discussion of these and other significant factors to
consider in connection with forward-looking statements concerning the Company,
reference is made to Exhibit 99 of the Company's Form 8-K filed on July 18,
1996.
13
<PAGE>
PART II: OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None
Item 2. CHANGES IN SECURITIES
None
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
Item 5. OTHER INFORMATION
None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
Exhibit 27 -- Financial Data Schedule
b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
December 26, 1998.
14
<PAGE>
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 Acoustics, Inc.
----------------------
Registrant
Date: February 5, 1999 By: s/Andrew G. Kotsatos
---------------------
Andrew G. Kotsatos
Director, Chief Executive Officer
and Treasurer
Date: February 5, 1999 By: s/Fred E. Faulkner, Jr.
-----------------------
Fred E. Faulkner, Jr.
President and Chief
Operating Officer
Date: February 5, 1999 By: s/Debra A. Ricker-Rosato
------------------------
Debra A. Ricker-Rosato
Vice President and
Chief Accounting Officer
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FINANCIAL STATEMENTS IN ITS QUARTERLY REPORT ON FORM 10Q FOR THE
QUARTERLY PERIOD ENDED DECEMBER 26, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000805268
<NAME> BOSTON ACOUSTICS, INC.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-27-1999
<PERIOD-END> DEC-26-1998
<CASH> 1163469
<SECURITIES> 0
<RECEIVABLES> 19194033
<ALLOWANCES> 516000
<INVENTORY> 28032852
<CURRENT-ASSETS> 49698294
<PP&E> 23228900
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