UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 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 1-11057
__________________________________________________________________
COLONIAL DATA TECHNOLOGIES CORP.
--------------------------------
(Exact name of registrant as specified in its charter)
Delaware 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)
(860) 210-3000
----------------
(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 [ ]
The number of shares outstanding of the issuer's common stock, as of
October 31, 1995 was 15,407,484.
<PAGE>
COLONIAL DATA TECHNOLOGIES CORP.
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets,
September 30, 1995 and December 31, 1994 ............... 3
Consolidated Condensed Statements of Earnings for
the three and nine months ended September 30, 1995
and 1994 ............................................... 4
Consolidated Condensed Statement of Stockholders'
Equity for the nine months ended September 30, 1995 .... 5
Consolidated Condensed Statements of Cash Flows for
the nine months ended September 30, 1995 and 1994 ...... 6
Notes to Consolidated Condensed Financial Statements ... 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations ......... 10
PART II. OTHER INFORMATION
Item 5. Other Information .................................... 14
Item 6. Exhibits and Reports on Form 8-K ...................... 14
SIGNATURES ....................................................... 15
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
COLONIAL DATA TECHNOLOGIES CORP.
CONSOLIDATED CONDENSED BALANCE SHEETS
SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
(In thousands, except share and per share amounts)
1995 1994
ASSETS --------- -------
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents $20,032 $14,013
Short-term investments 14,906
Accounts receivable (net of allowances
of $307 in 1995 and $56 in 1994) 15,001 5,102
Inventories 19,997 6,473
Deferred income taxes 171 131
Other current assets 711 991
------- -------
Total current assets 70,818 26,710
PROPERTY AND EQUIPMENT, NET:
Leased product 4,379 5,001
Other 2,995 754
------- -------
Total property and equipment, net 7,374 5,755
DEFERRED INCOME TAXES 477 668
INVESTMENTS 3,646
------- -------
TOTAL ASSETS $82,315 $33,133
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 2,728 $ 1,497
Accrued liabilities 2,209 1,020
Income taxes payable 413 263
------- -------
Total current liabilities 5,350 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 15,422,484 shares in 1995
and 13,299,241 shares in 1994 154 133
Additional paid-in capital 61,993 22,142
Retained earnings 14,771 6,078
Cumulative translation adjustment 47
------- -------
Total stockholders' equity 76,965 28,353
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $82,315 $33,133
======= =======
See notes to consolidated condensed financial statements.
3
<PAGE>
COLONIAL DATA TECHNOLOGIES CORP.
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(In thousands, except per share amounts; unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
------------------ ------------------
1995 1994 1995 1994
------- ------- ------- -------
REVENUES:
Products $13,828 $ 5,898 $36,008 $14,060
Leases 5,362 3,452 15,550 7,100
Services 436 607 1,582 2,230
------- ------- ------- -------
Total revenues 19,626 9,957 53,140 23,390
COST OF SALES:
Products 9,203 4,269 24,258 10,230
Leases 2,016 1,828 6,090 3,933
Services 226 413 1,002 1,514
------- ------- ------- -------
Total cost of sales 11,445 6,510 31,350 15,677
------- ------- ------- -------
GROSS PROFIT 8,181 3,447 21,790 7,713
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 2,598 1,654 7,204 3,818
RESEARCH AND DEVELOPMENT 448 91 1,093 286
------- ------- ------- -------
INCOME FROM OPERATIONS 5,135 1,702 13,493 3,609
OTHER INCOME (EXPENSE):
Investment income 527 6 919 17
Interest expense (14) (110) (31) (187)
------- ------- ------- -------
Total other income (expense) 513 (104) 888 (170)
INCOME BEFORE INCOME TAXES 5,648 1,598 14,381 3,439
INCOME TAXES 2,194 617 5,688 1,395
------- ------- ------- -------
NET INCOME $ 3,454 $ 981 $ 8,693 $ 2,044
======= ======= ======= =======
WEIGHTED AVERAGE SHARES:
Primary 15,335 11,188 14,305 11,220
======= ======= ======= =======
Fully diluted 15,335 11,211 14,306 11,245
======= ======= ======= =======
PRIMARY AND FULLY DILUTED NET
INCOME PER SHARE $ .23 $ .09 $ .61 $ .18
======= ======= ======= =======
See notes to consolidated condensed financial statements.
4
<PAGE>
COLONIAL DATA TECHNOLOGIES CORP.
CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
(In thousands; unaudited)
COMMON STOCK
-------------- ADDITIONAL CUMULATIVE
PAR PAID-IN RETAINED TRANSLATION
SHARES VALUE CAPITAL EARNINGS ADJUSTMENT TOTAL
------ ----- ---------- -------- ----------- ---------
BALANCE,
DECEMBER 31,
1994 13,299 $ 133 $ 22,142 $ 6,078 $ 28,353
ISSUANCE OF
COMMON STOCK
DUE TO
EXERCISE OF
STOCK OPTIONS
AND WARRANTS
AND RELATED
INCOME TAX
BENEFIT 307 3 1,675 1,678
ISSUANCE OF
SHARES TO
US ORDER 171 2 3,391 3,393
ISSUANCE OF
COMMON STOCK,
NET OF RELATED
COSTS 1,645 16 34,785 34,801
NET INCOME 8,693 8,693
CUMULATIVE
TRANSLATION
ADJUSTMENT $ 47 47
______ _____ __________ ________ ___________ ________
BALANCE
SEPTEMBER 30,
1995 15,422 $ 154 $ 61,993 $ 14,771 $ 47 $ 76,965
====== ===== ========== ======== =========== ========
See notes to consolidated condensed financial statements.
5
<PAGE>
COLONIAL DATA TECHNOLOGIES CORP.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(In thousands; unaudited)
1995 1994
-------- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 8,693 $ 2,044
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Depreciation 2,718 2,769
Gain on sale of security (132)
Provision for uncollectible accounts 123 63
Decrease in reserve for inventory (22)
Deferred income taxes 151 (400)
Changes in assets and liabilities:
Accounts receivable (10,198) (1,526)
Merchandise sold under contract 527
Inventories (12,432) (1,598)
Prepaid expenses (283) (147)
Accounts payable 1,226 (63)
Income taxes receivable and payable 2,666 (148)
Accrued liabilities 1,132 289
-------- -------
Net cash provided by (used in)
operating activities (6,358) 1,810
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, net of dispositions (3,685) (5,232)
Proceeds from sale of investments 6,077
Purchase of investments (20,851)
Other investments (1,956)
-------- -------
Net cash used in investing activities (20,415) (5,232)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net
of related costs and related tax benefit 34,785 108
Proceeds from (payments on) borrowings (2,000) 3,310
-------- -------
Net cash provided by financing activities 32,785 3,418
EFFECT OF EXCHANGE RATE CHANGES 7
-------- -------
NET INCREASE (DECREASE) IN CASH 6,019 (4)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 14,013 11
-------- -------
CASH AND EQUIVALENTS AT END OF PERIOD $ 20,032 $ 7
======== =======
See notes to consolidated condensed financial statements.
6
<PAGE>
COLONIAL DATA TECHNOLOGIES CORP.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (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 its 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 nine-month period ended
September 30, 1995 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1995.
2. Certain Transactions and Events
US Order, Inc. Exchange Agreement
In April 1995, the Company entered into a stock exchange agreement with US
Order, Inc. ("US Order") a strategic alliance partner for analog display
services interface protocol capable "smart telephones." Under the terms of
the agreement, on June 9, 1995, the Company exchanged 170,743 shares of
restricted common stock for 230,000 shares of US Order restricted common
stock. The value of this exchange was based on US Order's value at their
initial public offering price and an equal value of the Company's common
stock based on the average closing price for a specified period of time, as
defined in the agreement, preceding the date of the exchange. On June 2,
1995, US Order's initial public offering was effective at a price per share
of $14.75.
The agreement provides for the Company and US Order to exchange on April 15,
1996 $3 million of the Company's restricted common stock for $3 million of US
Order's restricted common stock, subject to certain conditions and not
exceeding a maximum of 200,000 shares. Each company's stock will be valued
at the average closing price of their respective common stock for a specified
period of time, as defined in the agreement, preceding the date of the
exchange. Both companies will have certain "piggyback" registration rights
and rights of first refusal with respect to each others' stock.
CDT Canada Corp.
In May 1995, the Company purchased the Canadian Caller ID business of
TIE/communications, Inc. through an acquisition of certain assets. The
acquisition costs and operations purchased were not significant to the
Company. CDT Canada Corp., a newly formed subsidiary, manages the Company's
Canadian operations, which includes a manufacturing, engineering and sales
facility in Brampton, Ontario, Canada.
7
<PAGE>
Worldwide Telecom Partners, Inc.
In May 1995, the Company acquired a 50% interest in a joint venture,
Worldwide Telecom Partners, Inc. The venture is 50% owned by Barry Blau &
Partners, Inc. The venture provides marketing services to the
telecommunications industry. The cost of this investment and related equity
income were not significant.
Stockholders' Equity
In May 1995, the stockholders approved the Company's reincorporation into
Delaware from Massachusetts. As a result of this reincorporation, the
Company's authorized class of preferred stock, of which no shares were issued
and outstanding, was eliminated.
Stock Offering
On July 13, 1995, the Company sold 2,645,000 shares of the Company's common
stock, of which 1,645,000 shares were issued by the Company and 1,000,000
shares were sold by certain selling stockholders. The net proceeds to the
Company from the sale of the 1,645,000 shares of common stock were
approximately $35 million, after deducting the applicable issuance costs and
expenses. The net proceeds will be used for general corporate purposes,
including working capital, new product introductions, expansion of the
Company's research and development activities, and expansion of the Company's
customer service, sales and marketing operations.
3. Accounting Policies
Cash and Cash Equivalents
Cash and cash equivalents consist of cash and short-term investments with
original maturities of three months or less.
Short-term Investments
The Company reports its short-term investments in marketable securities in
accordance with Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities", which
requires investment securities to be classified as trading, held-to-maturity,
or available-for-sale. The Company has categorized its marketable securities
as available-for-sale. Realized gains or losses are determined on the first-
in, first-out method and are reflected in income. Short-term investments are
reported at cost which approximates fair value.
Investments
The Company carries its investment in restricted US Order common stock at its
original cost. The Company's investment in Worldwide Telecom Partners, Inc.
is recorded using the equity basis of accounting.
4. 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.
8
<PAGE>
5. Subsequent Events
Stock Repurchase Program
In October 1995, the Board of Directors approved a stock repurchase program
whereby the Company will repurchase up to 500,000 shares of its common stock
up to $10 million from time to time on the open market.
Southwestern Bell Telecommunications, Inc. ("SBT") Agreement
On November 8, 1995, the Company, through one of its subsidiaries, entered
into an agreement with SBT for exclusive worldwide distribution rights to
SBT's Landmark[R] small business telephone systems and acquired certain
Landmark[R] inventory. In addition, the subsidiary received worldwide
distribution rights to certain other small business-oriented products to
telephone companies and other non-retail outlets.
9
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations - Three Months Ended September 30, 1995
Compared to Three Months Ended September 30, 1994
Revenues
Revenues for the third quarter of 1995 were $19,626,000 compared to
$9,957,000 for the same period in the prior year. Caller ID revenues were
$19,190,000 for the third quarter of 1995 compared to $9,350,000 for the
third quarter of 1994, with approximately 81% of the increase being generated
by product sales and 19% from leasing. The growth in Caller ID revenues was
primarily a result of higher sales volume of Caller ID units and growth of
the US West Communications ("US West") leasing program over 1994. This
growth resulted from the addition of new customers, increased availability
and acceptance of Caller ID service, and marketing and promotional campaigns
conducted by telephone operating companies ("telcos") and the Company. Also
contributing to the increase were sales to the Company's direct marketing
joint venture, Worldwide Telecom Partners, Inc. Service revenues decreased
28% to $436,000 for the third quarter of 1995 from $607,000 for the third
quarter of 1994 primarily due to the completion of certain repair contracts.
Cost of Sales
Cost of sales increased from $6,510,000 for the third quarter of 1994 to
$11,445,000 for the third quarter of 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 product sales of Caller ID products increased from 28% for the third
quarter of 1994 to 33% for the third quarter of 1995, primarily as a result
of changes in product mix in connection with promotional activities
undertaken by certain telco customers and the impact of certain direct
fulfillment sales at higher margins. Gross profit margin derived from Caller
ID leasing increased from 47% for the third quarter of 1994 to 62% for the
third quarter of 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
increased to 48% for the third quarter of 1995 from 32% for the third quarter
of 1994. The combined result of these factors was the improvement in the
overall gross margin from 35% for the third quarter of 1994 to 42% for the
third quarter of 1995. The Company anticipates that gross profit margins may
fluctuate due to changes in product mix, the introduction of new products and
maturation of the leasing program.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased 57% from $1,654,000
for the third quarter of 1994 to $2,598,000 for the same period in 1995, but
decreased from 17% to 13% of total revenues for the respective periods. One
significant component of the expense increase was salaries and employee
related expenses resulting from an increase in personnel to support higher
business volume. Also contributing to the increase were commission and
royalty expenses associated with higher Caller ID revenues.
10
<PAGE>
Research and Development Expenses
Research and development expenses increased 392% from $91,000 in the third
quarter of 1994 to $448,000 in the third quarter of 1995 primarily due to
services performed by the Company's principal manufacturer on a contract
basis, the hiring of additional personnel to support higher levels of new
product development activity and research and development activities related
to the introduction of certain new products and development of future
products.
Other Income (Expense)
Net other income, consisting primarily of investment income, including a gain
from the sale of a security, was $513,000 for the third quarter of 1995
compared to net other expense of $104,000 for the third quarter of 1994.
Income Taxes
Income taxes were $2,194,000 for the third quarter of 1995 compared to
$617,000 for the third quarter of 1994. The effective income tax rate
remained constant at 39% for the third quarter of 1995 compared to the same
period in the prior year.
Weighted Average Shares
The fully diluted weighted average shares increased to 15,335,000 for the
third quarter of 1995 compared to 11,211,000 for the third quarter of 1994.
The increase resulted from shares issued in connection with secondary common
stock offerings in October 1994 for 2,400,000 shares and in July 1995 for
1,645,000 shares.
Results of Operations - Nine Months Ended September 30, 1995
Compared to Nine Months Ended September 30, 1994
Revenues
Revenues for the nine months ended September 30, 1995 were $53,140,000
compared to $23,390,000 for the same period in the prior year. Caller ID
revenues were $51,558,000 for the nine months ended September 30, 1995
compared to $21,160,000 for the nine months ended September 30, 1994 with
approximately 72% of the increase being generated by product sales and 28%
from leasing. Service revenues decreased 29% to $1,582,000 for the nine
months ended September 30, 1995 from $2,230,000 for the nine months ended
September 30, 1994.
Cost of Sales
Cost of sales for the nine months ended September 30, 1995 were $31,350,000
compared to $15,677,000 for the same period in the prior year. Gross profit
increased to $21,790,000 for the nine months ended September 30, 1995 from
$7,713,000 for the nine months ended September 30, 1994 due to a combination
of higher revenues and improved margins. Gross profit margins increased to
41% for the nine months ended September 30, 1995 from 33% for the nine months
ended September 30, 1994 due to the effect on lease margins of fully
depreciated units, and changes in product mix, including additional higher
margin direct fulfillment sales.
11
<PAGE>
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased 89% to $7,204,000 for
the nine months ended September 30, 1995 from $3,818,000 for the same period
in 1994, but decreased to 14% from 16% of total revenues for the respective
periods. The increased expenses are attributed primarily to higher salaries
and employee related expenses resulting from an increase in personnel to
support higher business volume and commission and royalty expenses associated
with higher Caller ID revenues.
Research and Development Expenses
Research and development expenses for the nine months ended September 30,
1995 increased 282% to $1,093,000 compared to $286,000 for the same period in
the prior year as the Company focused additional resources on recent and
future product introductions.
Other Income (Expense)
Net other income was $888,000 for the nine months ended September 30, 1995
compared to net other expense of $170,000 for the nine months ended September
30, 1994. In 1995, interest income was earned on the invested proceeds of the
Company's October 1994 and July 1995 common stock offerings. 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 Before Income Taxes and Net Income
The above factors resulted in income before income taxes and net income of
$14,381,000 and $8,693,000, respectively, for the nine months ended September
30, 1995 compared to income before income taxes and net income of $3,439,000
and $2,044,000, respectively, for the nine months ended September 30, 1994.
Income Taxes
Income taxes were $5,688,000 for the nine months ended September 30, 1995
compared to $1,395,000 for the nine months ended September 30, 1994. The
effective income tax rate decreased to 40% for the nine months ended
September 30, 1995 compared to 41% for the same period in the prior year.
The decrease in the effective income tax rate is primarily attributed to a
change in the mix of taxable income by state.
Weighted Average Shares
The fully diluted weighted average shares increased to 14,306,000 for the
nine months ended September 30, 1995 compared to 11,245,000 for the same
period last year. The increase resulted from shares issued in connection
with secondary common stock offerings in October 1994 for 2,400,000 shares
and in July 1995 for 1,645,000 shares.
12
<PAGE>
Liquidity and Capital Resources
The Company's working capital increased from $23,930,000 at December 31, 1994
to $65,468,000 at September 30, 1995. To improve the yield on its cash and
equivalent holdings, in August 1995, the Company invested $35,000,000 in
financial instruments that are diversified among high credit quality
securities. These investments are reported at cost, which approximates market
value, as short-term investments and cash equivalents, and, if necessary,
will be liquidated to meet future cash requirements.
The Company's principal needs for cash are for investments in property and
equipment and to fund working capital, primarily related to inventory and
accounts receivable. To support the Company's growth, capital expenditures,
net of dispositions for the nine months ended September 30, 1995 aggregated
$3,685,000. In addition, during the nine months ended September 30, 1995,
the Company acquired the Canadian Caller ID business of TIE/communications,
Inc. and funded its portion of a joint venture arrangement entered into with
Barry Blau & Partners, Inc. for a total investment of $1,956,000.
The Company funded an inventory increase of $12,432,000 for the nine months
ended September 30, 1995 to ensure that units were available for timely
fulfillment of lease and sales orders, including the purchase of certain
longer lead-time parts. In addition, accounts receivable increased by
$10,198,000 for the nine months ended September 30, 1995 as a result of
higher sales, installment receipts for certain promotions and the timing of
certain collections.
The Company's cash requirements were financed primarily by the net proceeds
from the sale of investments and approximately $35 million from a common
stock offering completed in July 1995. In addition, the Company maintains a
$4 million line of credit under a revolving loan agreement with a bank to
meet short term cash requirements and to fund letters of credit in connection
with commercial transactions. The Company elected to reduce the credit line
from $8 million to $4 million in the first quarter of 1995. At September 30,
1995, $2.75 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.
Stockholders' equity increased to $76,965,000 at September 30, 1995 from
$28,353,000 at December 31, 1994. This increase primarily resulted from the
$34,785,000 net proceeds of a public offering, completed in July 1995, of
2,645,000 shares, (inclusive of 345,000 shares issued in connection with the
underwriters' overallotment option) of the Company's common stock, of which
1,645,000 shares were issued by the Company and 1,000,000 shares were sold by
selling stockholders. Also contributing to the increase were retained
earnings of $8,693,000 for the nine months ended September 30, 1995 and the
$3,393,000 value of stock exchanged with US Order.
In order to meet the Company's anticipated needs for cash during the
foreseeable future, including cash required to fund inventory purchases,
accounts receivable, research and development activities, new product
introductions, expansion of customer service, sales and marketing operations,
the acquisition of leased Caller ID units and stock repurchases, the Company
will utilize existing cash and cash equivalents and short-term investments,
line of credit availability and cash provided by operations.
13
<PAGE>
PART II. OTHER INFORMATION
Item 5. Other Information
Stock Offering
On July 13, 1995, the Company sold 2,645,000 shares of the Company's common
stock, of which 1,645,000 shares were issued by the Company and 1,000,000
shares were sold by certain selling stockholders. The net proceeds to the
Company from the sale of the 1,645,000 shares of common stock were
approximately $35 million, after deducting the applicable issuance costs and
expenses. The net proceeds will be used for general corporate purposes,
including working capital, new product introductions, expansion of the
Company's research and development activities, and expansion of the Company's
customer service, sales and marketing operations.
Stock Repurchase Program
In October 1995, the Board of Directors approved a stock repurchase program
whereby the Company is authorized to repurchase up to 500,000 shares of its
common stock up to $10 million from time to time on the open market. The
authorization of 500,000 shares represents approximately 3% of the 15,422,484
common shares outstanding.
Southwestern Bell Telecommunications, Inc. ("SBT") Agreement
On November 8, 1995, the Company, through one of its subsidiaries, entered
into an agreement with SBT for exclusive worldwide distribution rights to
SBT's Landmark[R] small business telephone systems and acquired certain
Landmark[R] inventory. In addition, the subsidiary received worldwide
distribution rights to certain other small business-oriented products to
telephone companies and other non-retail outlets.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(i) Letter evidencing amendment to credit facility dated
October 26, 1995 from People's Bank to Colonial Data
Technologies Corp.
(ii) Financial Data Schedule
(b) The Company was not required to file a report on Form 8-K
during the quarter ended September 30, 1995.
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.
COLONIAL DATA TECHNOLOGIES CORP.
Date: November 14, 1995 By: /s/ John N. Giamalis
----------------------------------
JOHN N. GIAMALIS
Vice President, Finance,
Treasurer, Chief Financial Officer
and Secretary
(Principal Accounting Officer)
(Duly Authorized Officer)
15
Northwest Commercial Lending
- ------------------------------------------------------------------------
People's Bank
255 Bank Street
Waterbury, Connecticut 06702-2219
203-591-2620 Fax: 203-591-2624
[PEOPLE'S BANK LOGO]
October 26, 1995
Mr. John N. Giamalis
Vice President and Chief Financial Officer
Colonial Data Technologies Corp.
80 Pickett District Road
New Milford, CT 06776
RE: Loan and Security Agreement Covenant Waiver
Dear Mr. Giamalis:
This letter is to inform you that People's Bank has approved your
request to amend Paragraph 7(c) of the above referenced Loan and
Security Agreement until March 31, 1996, with limitations as follows:
Debtor shall not............
(c) Declare or pay any dividends or make any other distributions
on any shares of its capital stock (other than dividends payable solely
in such shares), or purchase, redeem, retire or otherwise acquire,
directly or indirectly, any such shares;
Shall be amended to:
(c) Declare or pay any dividends or make any other distributions
on any shares of its capital stock (other than dividends payable solely
in such shares), or purchase, redeem, retire or otherwise acquire,
directly or indirectly, more than 500,000 shares of its common stock for
a price not greater than $10,000,000.
The agreements set forth herein are limited as written and shall not be
deemed to be a waiver of, or consent to, the modification of or
deviation from any other term or condition of the Loan and Security
Agreement or any other Loan Document. This agreement shall not be
deemed to be a waiver of any of the rights and remedies of People's Bank
in connection with the Loan and Security Agreement or other Loan
Documents.
Very truly yours,
PEOPLE'S BANK
by: /s/ Richard M. Harmonay, Jr.
-----------------------------
Richard M. Harmonay, Jr.
Assistant Vice President
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000811243
<NAME> COLONIAL DATA TECHNOLOGIES CORP.
<MULTIPLIER> 1,000
<CURRENCY> U.S.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<EXCHANGE-RATE> 1
<CASH> 20,032
<SECURITIES> 14,906
<RECEIVABLES> 15,001
<ALLOWANCES> 307
<INVENTORY> 19,997
<CURRENT-ASSETS> 70,818
<PP&E> 16,182
<DEPRECIATION> 8,808
<TOTAL-ASSETS> 82,315
<CURRENT-LIABILITIES> 5,350
<BONDS> 0
<COMMON> 154
0
0
<OTHER-SE> 76,811
<TOTAL-LIABILITY-AND-EQUITY> 82,315
<SALES> 51,558
<TOTAL-REVENUES> 53,140
<CGS> 30,348
<TOTAL-COSTS> 31,350
<OTHER-EXPENSES> 8,297
<LOSS-PROVISION> 123
<INTEREST-EXPENSE> 31
<INCOME-PRETAX> 14,381
<INCOME-TAX> 5,688
<INCOME-CONTINUING> 8,693
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,693
<EPS-PRIMARY> .61
<EPS-DILUTED> .61
</TABLE>
