<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X Quarterly Report Pursuant To Section 13 Or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 1999.
_____ 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 0-22089
BRUNSWICK TECHNOLOGIES, INC.
(Exact Name of Registrant As Specified In Its Charter)
Maine 01-0405052
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
43 Bibber Pkwy., Brunswick, ME 04011
(Address of principal executive offices) (Zip Code)
(207) 729-7792
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 registrant had 5,191,687 shares of Common Stock, $.0001 par value,
outstanding as of May 10, 1999.
<PAGE> 2
BRUNSWICK TECHNOLOGIES, INC.
INDEX
PAGE NO.
Part I. Financial information.
Item 1. Financial Statements
Report of Independent Accountants 3
Consolidated balance sheets as of March 31, 1999
and December 31, 1998. 4
Consolidated statements of income for the three months
ended March 31, 1999 and 1998. 5
Consolidated statements of cash flows for the three
months ended March 31, 1999 and 1998. 6
Consolidated statements of comprehensive income for the
three months ended March 31, 1999 and 1998. 7
Notes to consolidated financial statements. 8-10
Item 2. Management's Discussion and Analysis of Financial
Condition And Results of Operations. 11
Item 3. Quantitative and Qualitative Disclosures about Market
Risk. 13
Part II. Other Information.
Item 6. Exhibits and Reports on Form 8-K. 14
Signature 15
2
<PAGE> 3
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Brunswick Technologies, Inc.
We have reviewed the accompanying consolidated balance sheet of Brunswick
Technologies, Inc. and Subsidiaries as of March 31, 1999, and the related
consolidated statements of income, and comprehensive income for the three month
periods ended March 31, 1999 and 1998, and the consolidated statements of cash
flows for the three month period then ended. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
PricewaterhouseCoopers
April 26, 1999
3
<PAGE> 4
BRUNSWICK TECHNOLOGIES, INC,
CONSOLIDATED BALANCE SHEETS
(in thousands except share information)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
-------- --------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 1,264 $ 796
Accounts receivable, net of allowance for doubtful
accounts of $134 in 1999 and $125 in 1998 6,455 6,056
Inventories 5,180 4,807
Refundable income taxes -- 27
Deferred income taxes 274 274
Other current assets 331 531
-------- --------
Total current assets 13,504 12,491
Property, plant and equipment:
Land and building 974 974
Furniture and fixtures 566 535
Leasehold improvements 119 117
Machinery and equipment 10,944 10,284
Machine under construction 54 280
Vehicles 92 92
Management information system 468 394
-------- --------
13,217 12,676
Less accumulated depreciation and amortization (3,134) (2,877)
-------- --------
Net property, plant and equipment 10,083 9,799
Due from shareholder 112 111
Other assets, including investment in Euro-Technology (net of accumulated
amortization of $165 in 1999 and $128 in 1998) 2,142 2,182
Goodwill (net of accumulated amortization of $652 in 1999 and $581 in 1998) 4,982 5,056
-------- --------
Total assets $ 30,823 $ 29,639
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank overdraft $ -- $ 474
Note payable to bank -- 261
Current installments of long-term debt 111 111
Accounts payable shareholder 377 226
Accounts payable 2,996 1,876
Accrued expenses 809 580
Income taxes payable 161 --
-------- --------
Total current liabilities 4,454 3,528
Long-term debt, excluding current installments 136 139
Deferred income taxes 1,026 1,034
Commitments (Note 5)
Shareholders' equity:
Common stock, $0.0001 par value; 20,000,000 shares authorized,
5,187,799 outstanding in 1999 and 5,186,889 outstanding in 1998 1 1
Additional paid-in capital 24,892 24,837
Treasury stock at cost; 3,300 shares in 1999 and 1998 (5) (5)
Cumulative translation adjustment (110) 41
Retained earnings 429 64
-------- --------
Total shareholders' equity 25,207 24,938
-------- --------
Total liabilities and shareholders' equity $ 30,823 $ 29,639
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 5
BRUNSWICK TECHNOLOGIES, INC,
CONSOLIDATED STATEMENTS OF INCOME
(in thousands except share information)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
MARCH 31,
----------------------
1999 1998
-------- --------
(UNAUDITED)
<S> <C> <C>
Net sales $ 11,474 $ 9,048
Cost of goods sold (raw material purchased from a stockholder
amounted to $2,737 in 1999 and $1,958 in 1998) 8,990 6,856
-------- --------
Gross profit 2,484 2,192
Selling, general and administrative expenses 1,740 1,495
Research and development expenses 227 160
-------- --------
Operating income 517 537
-------- --------
Other income (expense):
Interest income 11 51
Interest expense (8) (3)
Miscellaneous, net 40 68
-------- --------
43 116
-------- --------
Income before income taxes 560 653
Income tax expense 195 235
-------- --------
Net income $ 365 $ 418
======== ========
Basic:
Earnings per share $ 0.07 $ 0.08
Weighted average common shares outstanding 5,188 5,150
Diluted:
Earnings per share $ 0.07 $ 0.08
Weighted average common shares outstanding 5,448 5,466
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE> 6
BRUNSWICK TECHNOLOGIES, INC,
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands except share information)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED
MARCH 31,
--------------------
1999 1998
------- -------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 365 $ 418
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation and amortization 375 254
Deferred taxes (3) --
Changes in assets and liabilities:
Increase in accounts receivable (440) (1,442)
Increase in inventories (397) (907)
Decrease in refundable income taxes 27 --
Increase (decrease) in other current assets 197 (11)
(Increase) decrease in due from shareholder (1) 19
Increase in accounts payable shareholder 151 328
Increase in accounts payable and accrued expenses 1,427 1,014
Increase in income taxes payable 161 31
------- -------
Net cash provided by (used in) operating activities 1,862 (296)
------- -------
Cash flows from investing activities:
Acquisition of Tech Textiles, net of cash acquired, including
technology -- (5,993)
Sale of marketable securities -- 6,607
Purchases of property, plant and equipment (605) (338)
(Increase) decrease in other assets (2) 22
------- -------
Net cash (used in) provided by investing activities (607) 298
------- -------
Cash flows from financing activities:
Decrease in bank overdraft (474) --
Net (repayments) proceeds under line of credit (261) 113
Issuance of common stock, net of issuance cost -- --
Repayment of long-term debt (3) --
Proceeds from exercise of common stock options and warrants 3 11
------- -------
Net cash (used in) provided by financing activities (735) 124
------- -------
Effect of currency exchange rate changes on cash (52) 5
------- -------
Net increase in cash 468 131
Cash at beginning of period 796 353
------- -------
Cash at end of period $ 1,264 $ 484
======= =======
Preliminary allocation of purchase price of acquisition of Tech Textiles
International Ltd., net of cash acquired:
Working capital, other than cash $ 1,097
Machinery and equipment 2,552
Goodwill/technology 2,524
Deferred taxes (180)
-------
Net cash used to acquire Tech Textiles Ltd. $ 5,993
=======
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE> 7
BRUNSWICK TECHNOLOGIES, INC,
CONSOLIDATED STATEMENTS COMPREHENSIVE INCOME
(in thousands except share information)
<TABLE>
<CAPTION>
FOR THE THREE
MONTHS ENDED
MARCH 31,
--------------------
1999 1998
----- -----
(UNAUDITED)
<S> <C> <C>
Net income $ 365 $ 418
Foreign currency translation adjustments (151) 69
----- -----
Comprehensive income $ 214 $ 487
===== =====
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE> 8
BRUNSWICK TECHNOLOGIES, INC,
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. CONSOLIDATED FINANCIAL STATEMENTS:
The 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. 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, although the Company believes that the disclosures are
adequate to make the information presented not misleading. In the opinion of
management, the amounts shown reflect all adjustments necessary to present
fairly the financial position and results of operations for the periods
presented. All such adjustments are of a normal recurring nature. The year-end
consolidated balance sheet was derived from audited financial statements, but
does not include all disclosures required by generally accepted accounting
principles. It is suggested that the financial statements be read in conjunction
with the financial statements and notes thereto included in the Company's latest
annual report.
Foreign Currency Translation
All assets and liabilities of foreign operations are translated into U.S.
dollars at period end exchange rates. Income and expense items are translated at
average exchange rates during the period. Foreign exchange gains and losses
arising from transactions are reflected in net income.
B. ACQUISITION OF TECH TEXTILES INTERNATIONAL LTD.:
On March 2, 1998 the Company acquired the business and assets of Tech
Textiles International Ltd. ("TTI") based in Andover, UK from T&N plc, for
approximately $5.9 million in cash. The acquisition was made by the Company and
through the Company's recently formed wholly owned subsidiary in the UK,
Brunswick Technologies Europe Ltd. ("BTI-Europe") and is being accounted for
using the purchase method of accounting. The operations of BTI-Europe have been
included in financial results of the Company since March 2, 1998 and have been
consolidated for the period ending March 31, 1999.
C. INVENTORIES:
Inventories consist of the following components:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
------ ------
(IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
Raw materials $1,400 $1,394
Work-in-process 1,058 957
Finished goods 2,722 2,456
------ ------
$5,180 $4,807
====== ======
</TABLE>
Continued
8
<PAGE> 9
BRUNSWICK TECHNOLOGIES, INC,
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
D. NEW ACCOUNTING PRONOUNCEMENTS:
In June 1998, FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which establishes accounting and reporting
standards for derivative instruments, including certain derivatives embedded in
other contracts, and for hedging activities. SFAS 133 requires that an entity
recognize all derivatives as either assets or liabilities in the statement of
financial position and measure those financial instruments at fair value. The
accounting for changes in the fair value of a derivative under SFAS 133 depends
on the intended use of the derivative and its hedging destination. SFAS 133 is
required to be adopted for the Company's year ending December 31, 2000 and the
Company has not yet determined the impact SFAS 133 will have on its results of
operations, liquidity or financial position.
In April 1998, the American Institute of Certified Public Accountants'
Accounting Standards Executive Committee issued Statement of Position ("SOP")
98-5, "Reporting on the Costs of Start-Up Activities." It requires costs of
start-up activities and organization costs to be expensed as incurred. SOP 98-5
is required to be adopted for fiscal years beginning after December 15, 1998.
The adoption of SOP 98-5 has not had a material effect on the financial
statements.
E. EARNINGS PER SHARE:
The following is a reconciliation of the numerators and denominators of
the basic and diluted earnings per share calculations:
<TABLE>
<CAPTION>
(in thousands except per share information)
1999 1998
-------------------------------- -------------------------------
(UNAUDITED)
NET PER NET PER
INCOME SHARES SHARE INCOME SHARES SHARE
--------- --------- -------- --------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS $ 365 5,188 $ 0.07 $ 418 5,150 $ 0.08
Effect of dilutive securities:
Conversion of Stock Options -- 300 -- 316
--------- --------- --------- ---------
Diluted EPS $ 365 5,488 $ 0.07 $ 418 5,466 $ 0.08
========= ========= ========= =========
</TABLE>
F. SEGMENT INFORMATION:
The Company has two reportable segments - (1) Domestic and (2)
International. Revenue and asset information is based on the country in which
the legal entities are located. Segment data includes intersegment revenues, as
well as a royalty charge pursuant to an intersegment technology licensing
agreement.
Continued
9
<PAGE> 10
BRUNSWICK TECHNOLOGIES, INC,
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F. SEGMENT INFORMATION, CONTINUED:
The international segment was acquired on March 2, 1998. Income statement
amounts reported in 1998 for the international segment are for the period from
March 2, 1998 to March 31, 1998.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1999 1998
-------- --------
(IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
DOMESTIC
Net sales $ 9,457 $ 8,395
Operating income 198 423
Intercompany income 101 --
Pretax income 340 539
Net income 218 339
INTERNATIONAL
Net sales 2,017 653
Operating income 319 114
Intercompany expense 101 --
Pretax income 220 114
Net income 147 79
EBITDA
Domestic $ 651 $ 751
International 292 159
-------- --------
Total EBITDA $ 943 $ 910
======== ========
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
-------- --------
(UNAUDITED)
<S> <C> <C>
ASSETS
Domestic $ 28,894 $ 28,060
International 3,831 3,481
Intercompany elimination (1,902) (1,902)
-------- --------
Total assets $ 30,823 $ 29,639
======== ========
</TABLE>
G. RECLASSIFICATIONS:
Certain prior year amounts have been reclassified to conform with the
presentation used in the 1999 financial statements.
10
<PAGE> 11
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Matters discussed in this news release with respect to expected financial
results and future events, including any discussion, expressed or implied, of
the Company's anticipated revenue growth, operating results and future earnings
per share are forward-looking statements (identified by the words "expect",
"estimate", "project", "plans", "believe", and similar expressions) that involve
known and unknown risks and uncertainties. For these statements the Company
claims the protection of the safe harbor of the Private Securities Litigation
Reform Act of 1995. The Company's future operating results are dependent on its
ability to achieve increased sales and to control expenses. Factors such as
lower than expected inflation, product cost fluctuations, changes in product
mix, continued or increased competitive pressures from existing competitors and
new entrants (both fiberglass and non-fiberglass), including price cutting
strategies and deterioration in general of regional economic conditions are all
factors which could adversely affect sales projections. Additionally, the
Company's operating results may be negatively affected by (i) difficulties and
uncertainties associated with the merger of three of the Company's large
distributors, (ii) fluctuations in valuation of the pound Sterling versus other
European currencies and the US Dollar, (iii) the failure to obtain necessary
capital for the expansion of facilities and acquisitions, (iv) unforeseen
results of the Y2K problem and (v) the inability to continue to improve
production capacity and scheduling. These and other risks are detailed from time
to time in the Company's SEC reports, including Form 10K for the year ended
December 31, 1998.
Results of Operations
Net sales increased 26.8% in the first quarter of 1999 over the same period last
year and 3.4% over the fourth quarter of 1998. Excluding BTI-Europe's revenues,
net sales increased 12.7% when compared to the first quarter of 1998 and 0.8%
compared to the fourth quarter. On a consolidated basis, gross profit margin was
21.6%, up from 20.9% and 21.0% in the third and fourth quarters of 1998,
respectively. The gross profit margin had been 24.2% in the first quarter last
year. Net Income was $365,000 or fully diluted earnings per share of $.07, down
slightly from $418,000 or $.08 per share in the first quarter of 1998. The
results of operations in 1999 include a full three months of Brunswick
Technologies Europe, Ltd. ("BTI-Europe", formerly known as Tech Textiles
International, Ltd.) while the results in the first quarter of 1998 included
only one month of BTI-Europe which was acquired on March 2, 1998.
Demand continued to be strong for the Company's products during the first
quarter of 1999. Domestically, there was some weakness in orders related to the
wind energy industry as manufacturers of wind blades await congressional action
to renew incentives sometime in the third quarter of the current year. Weakness
continues in the corrosion industry driven largely by soft demand from paper
manufacturers. Overall, however, these soft areas were more than offset by
demand from marine, oil and gas, and industrial composite markets.
Internationally, demand continues to be strong and outpacing existing capacity
for certain product lines. The wind energy composite industry remains vibrant
with other markets strong, as well. A new machine was brought on line by
BTI-Europe during the later half of the quarter. The machine is capable of
producing both 0/90 degree White Steel(R) heavyweight and mid-weight fabrics. No
significant revenue was generated by the new machine during the quarter but
management expects demand to build for products produced by the machine during
the subsequent quarters.
The improved consolidated gross margin was largely a factor of lower raw stock
prices, which became effective during the quarter. The improved pricing was
offset somewhat by increased overhead associated with BTI's expanded facilities
and capacity as well as labor associated with the new machine of BTI-Europe's.
SG&A expenses were up in the first quarter of 1999 compared to the fourth
quarter of 1998 reflecting increased costs associated with MIS software
maintenance and amortization, higher property taxes, and other miscellaneous
expenses. R&D expense was modestly lower during the quarter.
11
<PAGE> 12
Financial Condition
The consolidated balance sheet at March 31, 1999 reflected increased liquidity
due to strong cash flow during the quarter. Net cash from operating activities
totaled $1.862 million and the Company was paid out of its line of credit with
the bank as of March 31st. Capital expenditures during the quarter totaled
$605,000 largely reflecting the new machine in the UK . The Company's $4.0
million unsecured line of credit was recently renewed through May 28, 2000 and
the Company believes cash flow from ongoing operations and funds available under
the Company's credit facility will be adequate to meet the Company's needs
during 1999.
Year 2000 Disclosure
The year 2000 (Y2K) issue is best defined as the ability of systems to
accurately process all date related information before, during and after
midnight on 12/31/99, including other 'magic' or 'null-set' dates such as
9/9/99, 1/11/11.
The Company has undertaken an initiative (begun in the second quarter of 1998)
to assess the readiness of its internal systems in regards to compliance with
the pending millennium change. The Company has assigned direct responsibility
for the Y2K project to the corporate controller, in conjunction with the chief
financial officer.
The Company has identified three broad categories of internal Y2K risk: network
hardware and software, manufacturing systems and processes, and financial,
manufacturing and time and attendance software.
- - All network hardware has been inventoried, reviewed for compliance and
tested where necessary and appropriate. Upon completion of the testing it
was determined that some hardware was not in compliance, replacement
hardware has been purchased and installation is complete in all areas
identified as critical. There is some non-critical peripheral equipment
that is not compliant, however replacement components have been purchased
and are scheduled to be installed by June.
- - The manufacturing equipment on which the Company places primary reliance
for production of saleable goods has been inventoried for date sensitive
components. Components identified with the potential for containing date
sensitive processors were researched through the original manufacturer to
determine compliance and upgraded or replaced as necessary.
- - The Company has fully implemented the financial modules of a third party
supplied Enterprise Resource Planning (ERP) system, which is Y2K
compliant, and separately it has successfully upgraded its time and
attendance system with Y2K compliant software. The manufacturing and
customer service modules of the ERP were successfully implemented in Maine
during the month of April. The rollout of these modules in Texas began in
May and it is planned to convert Texas manufacturing and customer service
on August 2, 1999. It is important to note, however, that the
implementation of these modules is not mission critical internationally at
the UK facility.
The impetus for installing the new ERP system was the need for an enhanced,
fully integrated, management information system to support continued growth, not
specifically due to Y2K exposure. The Company continues to capitalize the costs
of the ERP consistent with GAAP under Management Information Systems, which
totaled $468,000 as of March 31,1998. The implementation of this ERP system
substantially addresses Y2K compliance issues related to our financial and
manufacturing data collection and reporting systems.
In addition to assessing internal systems, the Company is reviewing suppliers,
service providers and customers whose systems failures as a result of Y2K
non-compliance could have a significant impact on the Company's continued
business operations. The Company is principally dependent on a small number of
suppliers for the majority of its raw material. The Company has initiated
communications to directly address these suppliers' Y2K preparedness, however
the Company has limited or no control over the actions of these third party
suppliers to address and resolve their Y2K issues. Any failure of these
principal third party suppliers to resolve their Y2K issues could have a
materially adverse effect on continued uninterrupted business operations.
12
<PAGE> 13
It is the Company's goal to be Y2K system compliant and to have performed a
thorough assessment of critical third parties by the end of the second quarter
of 1999. Based on the results of the internal compliance initiative and the
assessment of third parties preparedness for the millennium change, management
will determine the extent to which contingency planning is necessary. At this
time, based on management's opinion of overall risk, no formal contingency
planning has been initiated.
It is management's opinion that the Company's overall internal, as opposed to
supplier, risks associated with the Y2K problem are low. The implementation
costs associated with the ERP project are the only material costs incurred to
date in system software that would be reviewed as part of our Y2K project. The
Company has not incurred any other material costs related to the Y2K project,
and it is anticipated that total future costs associated with ensuring
compliance will not exceed $140,000 and will be funded by cash flows generated
from ongoing business operations. However, these expectations are subject to
uncertainties. Although the Company expects that its internal systems will be
Y2K compliant by the end of 1999, there can be no assurances that system
failures will not occur, or that such failures will not have a materially
adverse effect on continued uninterrupted business operations.
The following table provides a synopsis of the status, timetable, costs and
contingency plans of the categories BTI has identified as sensitive to Y2K.
<TABLE>
<CAPTION>
System/Process Phase Status Timetable Estimated Contingency Estimated
Cost Plan/Risks Contingency
Cost
<S> <C> <C> <C> <C> <C> <C>
Financial, Implementation of $600,000 In the event $0
Manufacturing, and Integrated ERP System that the
Time & Attendance Financial Complete This cost manufacturing
Software Purchasing Complete - is not a and customer
Manufacturing ME Complete - direct service
Customer Service ME Complete - result of systems are
the Y2K not fully
Manufacturing TX In process 8/99 initiative, installed,
Customer Service TX In process 8/99 but was current
incurred to processes
Implementation of Complete - support will support
new time and continued continued
attendance system business operations.
growth
Network Hardware Inventory System Complete - $15,000 Greatest $20,000
and Software Equipment Risk is over
WAN,
Test Hardware/Software Complete - disruption
would
Upgrade/Replace In process - only necessitate
non-critical 6/99 local
hardware installation
remains to be of ERP
replaced software
Manufacturing Inventory System Complete - $0 Manufacturing $0
Equipment and Equipment process does
Systems not rely on
Test as appropriate Complete - date
sensitive
Remediate Complete - processing
equipment
</TABLE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Management feels that the Market Risk profile of the Company is low. The
Company has a wholly owned subsidiary, BTI-Europe, located in Andover, UK. The
value of the Company's interest in, and inter-Company obligations to and from,
BTI-Europe may fluctuate from time to time in response to changes in the
relative exchange rates between the US Dollar ($) and British Pound Sterling
(pound sterling). The financial statements of BTI-Europe are consolidated into
the financial statements of the Company for financial reporting purposes in
accordance with Generally Accepted Accounting Principals ("GAAP") and, as such,
are translated into US currency at the exchange
13
<PAGE> 14
rates prescribed by GAAP. The Company also sells product throughout the world
and, from time to time, may agree to sell based on the local currencies. The
Company may, from time to time, enter into foreign exchange forward contracts in
order to hedge against currency fluctuations associated with these foreign sales
or anticipated sales. Accordingly, the Company's accounts receivable may be
subject to realized and unrealized foreign exchange gains or losses and are
reported in accordance with GAAP. At March 31, 1999, the Company had no foreign
exchange forward contracts outstanding.
PART II. OTHER INFORMATION.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibit 27 - Financial Data Schedule
14
<PAGE> 15
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.
Brunswick Technologies, Inc.
By: /s/ Alan M. Chesney
------------------------------------
Alan M. Chesney
Chief Financial Officer and Treasurer
(Principal financial and accounting officer)
15
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 1,264
<SECURITIES> 0
<RECEIVABLES> 6,589
<ALLOWANCES> 134
<INVENTORY> 5,180
<CURRENT-ASSETS> 13,504
<PP&E> 13,217
<DEPRECIATION> 3,134
<TOTAL-ASSETS> 10,083
<CURRENT-LIABILITIES> 4,454
<BONDS> 0
0
0
<COMMON> 24,893
<OTHER-SE> 314
<TOTAL-LIABILITY-AND-EQUITY> 30,823
<SALES> 0
<TOTAL-REVENUES> 11,474
<CGS> 8,990
<TOTAL-COSTS> 2,194
<OTHER-EXPENSES> (51)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8
<INCOME-PRETAX> 560
<INCOME-TAX> 195
<INCOME-CONTINUING> 365
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 365
<EPS-PRIMARY> 0.07
<EPS-DILUTED> 0.07
</TABLE>
