<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 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 0-15562
_______________________
COLONIAL DATA TECHNOLOGIES CORP.
________________________________
(Exact name of registrant as specified in its charter)
Massachusetts 04-2763229
_____________ __________
(State or other (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or
organization)
80 Pickett District Road
New Milford, Connecticut 06776
_______________________________
(Address of principal executive offices)
(Zip Code)
(203) 355-3178
______________
(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.
X Yes No
______ _____
The number of shares outstanding of the issuer's common stock,
as of March 31, 1995 was 13,390,253.
<PAGE>
COLONIAL DATA TECHNOLOGIES CORP.
I N D E X
Page
PART I. Financial Information
Item 1. Financial Statements
Consolidated Condensed Balance Sheets,
March 31, 1995 and December 31, 1994 . . . . . . . . . 4
Consolidated Condensed Statements of Earnings for
the three months ended March 31, 1995 and 1994 . . . . 5
Consolidated Condensed Statements of Cash Flows for
the three months ended March 31, 1995 and 1994 . . . . 6
Consolidated Condensed Statement of Stockholders'
Equity for the three months ended March 31, 1995 . . . 7
Notes to Consolidated Condensed Financial Statements . 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . 9
PART II. Other Information
Item 5. Other Information . . . . . . . . . . . . . . . . . 13
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . 13
Signatures . . . . . . . . . . . . . . . . . . . . . 14
<PAGE>
PART I.
Item 1. Financial Statements
<PAGE>
COLONIAL DATA TECHNOLOGIES CORP.
CONSOLIDATED CONDENSED BALANCE SHEETS
MARCH 31, 1995 AND DECEMBER 31, 1994
(In Thousands, Except Share and Per Share Amounts)
ASSETS 1995 1994
(Unaudited)
CURRENT ASSETS:
Cash and equivalents $7,639 $14,013
Accounts receivable (net of allowance
of $80 in 1995 and $56 in 1994) 8,370 5,102
Income taxes receivable 118 863
Inventories 6,804 6,473
Prepaid expenses 346 128
Deferred income taxes 146 131
______ _______
Total current assets 23,423 26,710
PROPERTY, PLANT and EQUIPMENT, NET:
Leased product 4,838 5,001
Other property, plant & equipment 1,929 754
______ _______
Total property, plant and equipment 6,767 5,755
DEFERRED INCOME TAXES 803 668
U.S. TREASURY NOTE HELD FOR SALE 5,994
______ ______
TOTAL ASSETS $36,987 $33,133
________ ________
________ ________
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $2,773 $1,497
Accrued liabilities 1,119 1,020
Income taxes payable 2,013 263
______ ________
Total current liabilities 5,905 2,780
LONG TERM DEBT 2,000
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, par value $.01 per share,
authorized 20,000,000 shares, issued and
outstanding 13,390,253 shares in 1995
and 13,299,241 shares in 1994 171 133
Additional paid-in-capital 22,370 22,142
Retained earnings 8,492 6,078
Unrealized appreciation of
security held for sale 49
______ ________
Total stockholders' equity 31,082 28,353
______ ________
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $36,987 $33,133
_________ ________
_________ ________
See notes to consolidated condensed financial statements.
<PAGE>
COLONIAL DATA TECHNOLOGIES CORP.
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(In Thousands, Except Share and Per Share Amounts)
1995 1994
(Unaudited)
REVENUES:
Products $9,702 $3,492
Leases 4,793 1,704
Services 711 847
_______ _______
Total revenues 15,206 6,043
COST OF SALES:
Products 6,699 2,569
Leases 1,921 986
Services 481 562
_______ _______
Total cost of sales 9,101 4,117
_______ _______
GROSS PROFIT 6,105 1,926
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 2,267 1,037
_______ _______
INCOME FROM OPERATIONS 3,838 889
OTHER INCOME (EXPENSES):
Interest expense (4) (26)
Interest income 190
_______ _______
Total other income (expense) 186 (26)
_______ _______
INCOME BEFORE INCOME TAXES 4,024 863
INCOME TAXES 1,610 368
________ ________
NET INCOME $2,414 $495
________ ________
________ ________
WEIGHTED AVERAGE SHARES:
Primary 13,764,213 11,285,252
__________ __________
__________ __________
Fully diluted 13,764,296 11,291,771
__________ __________
__________ __________
PRIMARY AND FULLY DILUTED NET
INCOME PER SHARE $ 0.18 $ 0.04
__________ __________
__________ __________
See notes to consolidated condensed financial statements.
<PAGE>
COLONIAL DATA TECHNOLOGIES CORP.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(In Thousands)
1995 1994
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $2,414 $495
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 972 735
Provision for bad debts 24
Increase in reserve for inventory 144
Deferred income taxes (150) (200)
Changes in assets and liabilities:
Accounts receivable (3,292) 699
Merchandise sold under contract 145
Inventories (475) (467)
Prepaid expenses (218) (238)
Accounts payable 1,276 (196)
Income taxes receivable and payable 2,495 (42)
Accrued liabilities 99 82
________ _______
Net cash provided by
operating activities 3,289 1,013
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,984) (355)
Purchase of US Treasury
Note Held-For-Sale (5,945)
______ _______
Net cash used in investing activities (7,929) (355)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from issuance of common stock, net
of related costs and related tax benefit 266 58
Payments on borrowings (2,000) (720)
________ _______
Net cash used in
financing activities (1,734) (662)
________ ________
NET DECREASE IN CASH (6,374) (4)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 14,013 11
________ ________
CASH AND EQUIVALENTS AT END OF PERIOD $ 7,639 $ 7
________ ________
________ ________
See notes to consolidated condensed financial statements.
<PAGE>
COLONIAL DATA TECHNOLOGIES CORP.
CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1995 (UNAUDITED)
(In Thousands, Except Share Date)
UNREALIZED
COMMON STOCK APPRECIATION
ADDITIONAL OF HELD
PAR PAID-IN RETAINED FOR SALE
SHARES VALUE CAPITAL EARNINGS SECURITY TOTAL
BALANCE,
DECEMBER 31,
1994 13,299,241 $133 $22,142 $6,078 $ $28,353
OPTIONS/
WARRANTS
EXERCISED 91,012 38 228 266
NET INCOME 2,414 2,414
UNREALIZED
APPRECIATION
OF SECURITY
HELD FOR SALE 49 49
__________ _____ _______ ______ ___ _______
BALANCE
MARCH 31,
1995 13,390,253 $171 $22,370 $8,492 $49 $31,082
__________ ____ _______ ______ ___ _______
__________ ____ _______ ______ ___ _______
See notes to consolidated condensed financial statements
<PAGE>
COLONIAL DATA TECHNOLOGIES CORP.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994 (UNAUDITED)
1. Basis of Presentation
The accompanying unaudited consolidated condensed financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with
the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
They do not include all information and footnotes required by
generally accepted accounting principles for complete financial
statements. However, except as disclosed herein, there has been no
material change in the information disclosed in the notes to
consolidated financial statements included in the Annual Report on
Form 10-K of Colonial Data Technologies Corp. and subsidiaries (the
"Company") for the year ended December 31, 1994. In the opinion of
management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
included. Operating results for the three-month period ended March
31, 1995 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1995.
2. Accounting Policy - US Treasury Note Held For Sale
The Company reports its investment holdings in conformance
with Financial Accounting Standards Board Statement No. 115,
"Accounting for Certain Investments in Debt and Equity Securities."
Accordingly, a US Treasury Note with a February, 1997 maturity,
which the Company will use to fund working capital, is classified
as a noncurrent asset held for sale and carried at market value.
Changes in the market value of securities held for sale are
included in stockholders' equity, net of applicable taxes.
3. Borrowings
On February 22, 1995, the Company elected to amend its loan
agreement and reduce its credit line from $8 million to $4 million.
The loan agreement is subject to renewal on April 30, 1996.
4. Subsequent Event
On May 1, 1995, the Company purchased the Canadian Caller ID
business of TIE/communications, Inc. through an acquisition of
certain assets.
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Three Months Ended March 31, 1995
Compared to Three Months Ended March 31, 1994
Revenues
Revenues for the first quarter of 1995 were $15,206,000 compared to
$6,043,000 in the prior year period. Caller ID revenues were
$14,430,000 in 1995 compared to $5,087,000 in 1994, with
approximately 67% of the increase being generated by product sales
and 33% from leasing. The growth in Caller ID revenues was
primarily a result of higher sales volume of Caller ID units and
continued expansion of the US West Communications ("US West")
leasing program. This growth was stimulated by increased
availability and acceptance of Caller ID service resulting from
additional state regulatory approvals and marketing and promotional
campaigns conducted by telephone operating companies ("telcos") and
the Company. Service revenues declined from $847,000 in 1994 to
$711,000 in 1995 due to the winding down of one repair contract
and the timing of certain non-recurring projects. Sales of
miscellaneous telephone products declined from $109,000 in 1994
to $65,000 in 1995 as the Company continued to focus its marketing
and new product development activities on Caller ID.
Cost of Sales
Cost of sales increased from $4,117,000 in 1994 to $9,101,000 in
1995 due to costs associated with the increases in both product
sales and leasing of Caller ID units offset in part by decreased
service and support activity. Gross profit margin derived from
sales of Caller ID products increased from 26% in 1994 to 31% in
1995, primarily as a result of changes in product mix in connection
with promotional activities undertaken by certain telco customers.
Gross profit margin derived from Caller ID leasing increased from
42% in 1994 to 60% in 1995 as a result of an increase in the base
of fully depreciated units under lease, increased leasing of higher
margin units and generally lower relative production costs. Gross
profit margins for services were down slightly to 32% in 1995 from
34% in 1994. The combined result of these factors was the
improvement in the overall gross margin from 32% in 1994 to 40%
in 1995. The Company anticipates that gross profit margins may
fluctuate due to changes in product mix, the introduction of new
products and the maturation and expansion of leasing programs.
<PAGE>
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased 119% from
$1,037,000 for the first quarter of 1994 to $2,267,000 for the same
period in 1995, but decreased from 17% to 15% of total revenues for
the respective periods. The most significant component of the
expense increase was salaries and employee related expenses
resulting from an increase in personnel to support higher business
volume. The Company anticipates that personnel additions will
continue as revenue levels increase during 1995. Other major
components of the increase were commission and royalty expenses
associated with higher Caller ID revenues and increased research
and development activity. The Company reported an operating profit
of $3,838,000 for the first quarter of 1995 compared to $889,000 in
the prior year period, an increase of 332%.
Other Income (Expense)
Net other income, consisting primarily of interest income in 1995,
was $186,000 compared to net expense of $26,000 in 1994. In 1995,
interest income was earned on the invested proceeds of the
Company's October 1994 common stock offering. In 1994, interest
expense resulted from borrowings under the Company's revolving line
of credit, which was utilized to fund expansion of the lease base
and working capital.
Income Taxes
Income taxes were $1,610,000 in 1995 compared to $368,000 in 1994.
The effective income tax rates decreased from 43% in 1994 to 40% in
1995 because of a change in the mix of taxable income by state.
Net Income
As a result of the foregoing factors, net income increased 388%
from $495,000 in 1994 to $2,414,000 in 1995.
Liquidity and Capital Resources
The strengthening of the Company's financial condition continued
into 1995. Retained first quarter earnings primarily resulted in
an increase in stockholders' equity to $31,082,000 from $28,353,000
at December 31, 1994. The Company's first quarter working capital
decreased from $23,930,000 at December 31, 1994 to $17,518,000. To
improve the yield on its cash and equivalent holdings, in February,
1995, the Company acquired a US Treasury Note with a February 1997
maturity. This highly liquid holding is reported at market value
as a noncurrent asset held for sale, and, if necessary, will be
liquidated to meet future cash requirements. Working capital
adjusted to include the value of the US Treasury Note was
$23,512,000 at March 31, 1995.
<PAGE>
The Company's primary needs for cash are for lease and other
equipment purchases and to fund working capital, primarily related
to inventory and accounts receivable. Additions to leased
equipment from the Company's US West lease program totaled
$1,056,000 for 1995. Other machinery and equipment purchases of
$928,000 were made to support the Company's growth. The $331,000
increase in inventory during 1995 was planned to ensure that units
were available for timely fulfillment of lease and sales orders.
Accounts receivable increased by $2,268,000 as a result of higher
sales and the timing of certain collections.
These cash requirements were financed primarily by first quarter
1995 cash provided by operations of $3,289,000 and the net proceeds
of $16.1 million from a common stock offering completed in October
1994. In addition, the Company maintains a $4 million line of
credit under a revolving loan agreement to meet short term cash
requirements. The Company elected to reduce the credit line from
$8 million to $4 million in the first quarter. At March 31, 1995,
approximately $3.3 million of the line of credit was available to
fund draw downs and letters of credit. The loan agreement is
subject to renewal on April 30, 1996.
In order to meet the Company's needs for cash during the next
twelve months, including cash required to fund inventory purchases,
accounts receivable, product development activities and the
acquisition of leased Caller ID units, the Company will utilize the
proceeds from its common stock offering, line of credit
availability and cash provided by operations.
<PAGE>
PART II
Item 5. Other Information
On May 1, 1995, the Company purchased the Canadian Caller ID
business of TIE/communications, Inc. through an acquisition of
certain assets. In connection with the acquisition, a newly-formed
subsidiary, CDT Canada Corp., will manage the Company's Canadian
operations, which will include a manufacturing, engineering and
sales facility in Brampton, Ontario, a suburb of Toronto.
Item 6. Exhibits and Reports on Form 8-K
(a) Letter evidencing amendment to credit facility dated
March 24, 1995 from People's Bank to Colonial Data Technologies Corp.
(b) The Company was not required to file a report on
Form 8-K during the quarter ended March 31, 1995.
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.
COLONIAL DATA TECHNOLOGIES CORP.
Date: May 11, 1995 By /s/ John N. Giamalis
________________________________
JOHN N. GIAMALIS
Vice President
and Chief Financial Officer
Northwest Commercial Loan Office
_________________________________________________________________
[PEOPLE'S BANK LOGO] People's Bank
255 Bank Street
Waterbury, Connecticut 06702-2219
203-591-2620 Fax: 203-591-2624
March 24, 1995
Mr. Robert F. Wasco, VP Finance
Colonial Data Technologies Corp.
80 Pickett District Road
New Milford, CT 06776
Dear Bob:
This letter will confirm that pursuant to your request, People's
Bank has reduced the maximum amount of CDT's credit facility to
$4,000,000 effective February 22, 1995.
In addition, the Bank is pleased to advise you that we have
approved your request to reduce the commitment fee on the unused
portion of the facility from one-half percent to one-quarter
percent.
Thank you for your continuing support of People's Bank.
Sincerely,
/s/ Richard M. Harmonay, Jr.
Richard M. Harmonay, Jr.
Assistant Vice President
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<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<EXCHANGE-RATE> 1
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0
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