<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 30, 1997
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 0-17297
BTU INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 04-2781248
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
23 Esquire Road, North Billerica, Massachusetts 01862-2596
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (508) 667-4111
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 ( )
Indicate the number of shares outstanding of the Registrant's Common Stock,
par value $.01 per share, as of the latest practicable date: As of May 7, 1997:
7,280,096 shares.
<PAGE> 2
<TABLE>
<CAPTION>
BTU INTERNATIONAL, INC.
TABLE OF CONTENTS
<S> <C>
PART I. FINANCIAL INFORMATION
Condensed Consolidated Balance Sheets 1-2
Condensed Consolidated Statements of Operations 3
Condensed Consolidated Statement of Stockholders' Investment 4
Condensed Consolidated Statements of Cash Flows 5
Notes to Condensed Consolidated Financial Statements 6-7
Management's Discussion and Analysis of Financial Condition
and Results of Operations 8-9
PART II. OTHER INFORMATION
Signatures 10
Exhibits and Reports on Form 8-K 11
Calculation of Net Income per Common and Common
Equivalent Share 12
</TABLE>
<PAGE> 3
BTU INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
ASSETS
<TABLE>
<CAPTION>
(Unaudited)
March 30, December 31,
1997 1996
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets
Cash and cash equivalents $ 9,416 $10,218
Accounts receivable, less reserves of
$160 in 1997 and $160 in 1996 11,129 10,630
Inventories (Note 2) 10,034 9,760
Other current assets 1,512 1,661
- ---------------------------------------------------------------------------------------------
Total current assets 32,091 32,269
- ---------------------------------------------------------------------------------------------
Property, plant and equipment, at cost
Land 210 210
Buildings and improvements 5,592 5,591
Machinery and equipment 5,159 5,021
Furniture and fixtures 731 731
- ---------------------------------------------------------------------------------------------
11,692 11,553
Less-Accumulated depreciation 7,503 7,288
- ---------------------------------------------------------------------------------------------
Net property, plant and equipment 4,189 4,265
Other assets, net of accumulated amortization of $424
in 1997 and $421 in 1996 226 229
- ---------------------------------------------------------------------------------------------
$36,506 $36,763
=============================================================================================
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
1
<PAGE> 4
BTU INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
LIABILITIES AND STOCKHOLDERS' INVESTMENT
<TABLE>
<CAPTION>
(Unaudited)
March 30, December 31,
1997 1996
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Current liabilities
Current maturities of long-term debt and
capital lease obligations (Note 3) $ 363 $ 363
Accounts payable 4,096 4,124
Other current liabilities 2,672 2,514
- ----------------------------------------------------------------------------------------------------
Total current liabilities 7,131 7,001
- ----------------------------------------------------------------------------------------------------
Long-term debt and capital lease obligations, less
current maturities (Note 3) 5,264 5,352
Deferred income taxes 2,203 2,203
- ----------------------------------------------------------------------------------------------------
14,598 14,556
- ----------------------------------------------------------------------------------------------------
Stockholders' investment (Note 4)
Series preferred stock, $1 par value-
Authorized - 5,000,000 shares
Issued and outstanding - none - -
Common stock, $.01 par value-
Authorized - 25,000,000 shares;
Issued - 7,635,377 and 7,635,167 shares
at 1997 and 1996 respectively 76 76
Additional paid-in capital 20,116 20,115
Accumulated earnings 2,535 2,811
Treasury stock - 355,281 shares at cost,
at March 30, 1997 and December 31, 1996 (1,183) (1,183)
- ----------------------------------------------------------------------------------------------------
21,544 21,819
Cumulative foreign currency translation adjustment 364 388
- ----------------------------------------------------------------------------------------------------
Total stockholders' investment 21,908 22,207
- ----------------------------------------------------------------------------------------------------
$36,506 $36,763
====================================================================================================
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
2
<PAGE> 5
BTU INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 30, 1997 AND MARCH 31, 1996
(Dollars in thousands, except share and per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended.
-----------------------
March 30, March 31,
1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Net sales $11,026 $11,748
Cost of goods sold 6,235 6,500
- --------------------------------------------------------------------------------
Gross profit 4,791 5,248
Operating expenses:
Selling, general and administrative 3,637 3,704
Research, development and engineering 1,029 1,037
Restructuring Charge 530 --
- --------------------------------------------------------------------------------
Income from operations (405) 507
- --------------------------------------------------------------------------------
Interest income 105 55
Interest expense (127) (139)
Other income, net 9 29
- --------------------------------------------------------------------------------
Income before provision for income taxes (418) 452
Income tax provision (142) 95
- --------------------------------------------------------------------------------
Net (loss) income $ (276) $ 357
================================================================================
Net (loss) income per share $ (0.04) $ 0.05
================================================================================
Weighted average number of shares and share
equivalents outstanding 7,279,924 7,356,898
================================================================================
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
<PAGE> 6
BTU INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' INVESTMENT
FOR THE THREE MONTHS ENDED MARCH 30, 1997
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
ADDITIONAL CUMULATIVE TOTAL
COMMON PAID-IN ACCUMULATED TREASURY TRANSLATION STOCKHOLDERS'
STOCK CAPITAL EARNINGS STOCK ADJUSTMENT INVESTMENT
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance,
beginning of
the period $76 $20,115 $2,811 $(1,183) $388 $22,207
Net income (loss) -- -- (276) -- -- (276)
Sale of Common
Stock -- 1 -- -- -- 1
Translation
Adjustment -- -- -- -- (24) (24)
- ---------------------------------------------------------------------------------------------
Balance,
end of
the period $76 $20,116 $2,535 $(1,183) $364 $21,908
=============================================================================================
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
<PAGE> 7
BTU INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 30, 1997 AND MARCH 31, 1996
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
MARCH 30, MARCH 31,
1997 1996
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (276) $ 357
Adjustments to reconcile net income to net cash
provided by(used in) operating activities -
Depreciation and amortization 215 203
Net changes in operating assets and liabilities-
Accounts receivable (499) 721
Inventories (274) (1,308)
Other current assets 149 156
Accounts payable (28) (174)
Other current liabilities 158 (406)
Other assets 3 --
- ----------------------------------------------------------------------------------------------
Net cash used in operating activities (552) (451)
- ----------------------------------------------------------------------------------------------
Cash flows from investing activities:
Purchases of property, plant and equipment, net (139) (237)
- ----------------------------------------------------------------------------------------------
Net cash used in investing activities (139) (237)
- ----------------------------------------------------------------------------------------------
Cash flows from financing activities:
Principal payments under long-term debt and capital lease
obligations (88) (83)
Proceeds from issuance of common stock 1 --
Purchase of treasury stock -- (55)
- ----------------------------------------------------------------------------------------------
Net cash used in financing activities (87) (138)
- ----------------------------------------------------------------------------------------------
Effect of exchange rates on cash (24) (2)
- ----------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (802) (828)
Cash and cash equivalents, at beginning of the period 10,218 6,145
- ----------------------------------------------------------------------------------------------
Cash and cash equivalents, at end of the period $ 9,416 $ 5,317
==============================================================================================
Supplemental disclosures of cash flow information
Cash paid (received/refunded) during the periods for -
Interest $ 127 $ 139
Income taxes 5 218
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
5
<PAGE> 8
BTU INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) Basis for presentation
The condensed consolidated balance sheet as of March 30, 1997, the
condensed consolidated statement of stockholders' investment for the three
months ended March 30, 1997, the condensed consolidated statement of cash flows
for the three months ended March 30, 1997 and March 31, 1996, and the related
condensed consolidated statements of operations for the quarters ended March 30,
1997 and March 31, 1996 are unaudited. In the opinion of management, all
adjustments necessary for the fair presentation of such financial statements
have been included. Such adjustments consisted only of normal recurring items.
Interim results are not necessarily indicative of results for the full year.
These financial statements do not include all disclosures associated with annual
financial statements, and accordingly, should be read in conjunction with the
footnotes contained in the Company's consolidated financial statements for the
period ended December 31, 1996, together with the auditors' report, included in
the Company's "1996 Annual Report," and filed in conjunction with Form 10K.
(2) Inventories
Inventories at March 30, 1997 and December 31, 1996 consisted of:
<TABLE>
<CAPTION>
($000)
-------------------------
March 31, December 31,
1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Raw materials and manufactured components $ 4,714 $5,660
Work-in-process 3,444 2,527
Finished goods 1,876 1,573
- --------------------------------------------------------------------------------
$10,034 $9,760
================================================================================
</TABLE>
(3) Debt
Debt at March 30, 1997 and December 31,1996 consisted of:
<TABLE>
<CAPTION>
($000)
--------------------------
March 30, December 31,
1997 1996
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
9.0% Mortgage note payable $5,585 $5,664
Capital lease obligations, interest rates ranging from 5.9% to 15.6%,
net of interest of $5,000 and $ 6,000 in 1997 and 1996, respectively 42 51
- ---------------------------------------------------------------------------------------------------
5,627 5,715
Less-current maturities 363 363
- ---------------------------------------------------------------------------------------------------
$5,264 $5,352
===================================================================================================
</TABLE>
6
<PAGE> 9
BTU INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
The mortgage note payable is secured by the Company's land and building and
required monthly payments of $68,500, including interest at 9.0%, with a balloon
payment due and payable on April 1, 1997.
The Company refinanced the mortgage note payable with the same institution,
extending the maturity date to April 1, 2004. The new agreement requires monthly
payments of $ 53,922, including interest at 8.125%. A final balloon payment of $
3,797,000 is due at maturity.
(4) Earnings Per Share
On March 3, 1997, the FASB issued SFAS No. 128, "Earnings Per Share." This
Statement supersedes APB Opinion No. 15 regarding the presentation of earnings
per share ("EPS") on the face of the income statement. SFAS No. 128 replaces the
presentation of Primary EPS with a Basic EPS calculation that excludes the
dilutive effect of common stock equivalents. The statement requires a dual
presentation of Basic and Diluted EPS, which is computed similarly to Fully
Diluted EPS pursuant to APB Opinion No. 15, for all entities with complex
capital structures. This Statement is effective for fiscal years ending after
December 15, 1997 and requires restatement of all prior-period EPS data
presented. This Statement is not expected to have a material impact on the
Company's earnings per share presentation.
7
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net Sales - In the first quarter of 1997, net sales decreased by $722,000,
a decrease of 6% when compared to the first quarter of 1996. The decrease in
sales between the two periods reflected a continuation of the slowdown
experienced in 1996 for capital expenditures, in the electronics industry.
During the first quarter of 1997, as compared to the first quarter of 1996,
sales to the Far East and Europe, increased as a percentage of total sales, with
the offset coming from a decline in sales to North America customers.
Gross Profit - Gross profit decreased by $457,000, or 9%, in the first
quarter of 1997, compared to the first quarter of 1996. Gross profit as a
percent of sales decreased 1.2 %, from 44.7% to 43.5%, for the first quarter of
1997 versus the same quarter in 1996. The decrease in gross profit was due
primarily to the overall decrease in revenues versus the first quarter of 1996,
as well as a change in the product mix.
Selling, General and Administrative - In the first quarter of 1997,
selling, general and administrative expense decreased by $67,000, or 1.8%, to
$3,637,000, as compared to the same period in 1996. The significant decrease was
in commissions expense paid during the first quarter 1997, directly related to
the sales volume.
Research, Development and Engineering - Expenses in this area for the first
quarter of 1997 decreased by $ 8,000, or 0.8%, as compared to the first quarter
of 1996. The Company continues to fund ongoing investment in the development of
new products for many of its product lines, at a similar level as the first
quarter of 1996.
Restructuring Charge - During the first quarter of 1997, the Company
incurred a restructuring charge of $ 530,000, representing a one time cost,
incurred as the result of a reduction in overhead personnel, as well as a
restructuring of our US and Far East organizations. These actions are in
response to a shift in the amount of out-sourced materials and a change in our
approach to sales and service support in certain Far East territories.
Interest Income - In the first quarter of 1997 interest income increased by
$50,000, or 90%, as compared to the first quarter of 1996. The increase in
interest income is due to the higher average investment balance in 1997 versus
1996.
Interest Expense - Interest expense decreased by $12,000, or 8.6%, for the
first quarter of 1997, as compared to the first quarter of 1996. The slight
decrease in expense is due to the lower level of interest due on the mortgage as
its principal balance decreases.
Income Taxes - In the first quarter of 1997 the Company recorded a tax
benefit of $142,000 versus a tax provision of $ 95,000 for the first quarter of
1996. The effective tax rate for the first quarter of 1997 was 34%, as compared
to an effective tax rate for the first quarter of 1996 of 21%. This compares to
the statutory rate of 34%. During the first quarter of 1997 the Company recorded
a tax benefit due to the pre-tax loss of $418,000. The Company recorded this tax
benefit based on the expectation that it will be profitable in 1997. During the
first quarter of 1996, the Company recorded the use of net operating losses
carryforwards (NOL) , resulting in the lower effective tax rate.
8
<PAGE> 11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
LIQUIDITY AND CAPITAL RESOURCES
The Company has an unsecured revolving line of credit with a bank, which
allows for aggregate borrowings and/or letters of credit of up to $5,000,000.
Borrowings are available to the Company at either the Bank's base rate or a
Eurodollar rate, as elected by the Company. This loan agreement is available to
the Company until July 1, 1998, subject to certain financial covenants. In
addition, the Company established a secured equipment loan facility with the
same bank, with the ability to borrow up to $1,000,000 for purchases of
equipment. The proceeds of these equipment loans can fund up to 75% of the cost
of qualifying equipment purchases, collateralized by a first security interest
on the purchased equipment. These equipment loans are subject to interest at
either the Bank's base rate or a Eurodollar rate, and must be repaid in monthly
principal and interest payments over a period not to exceed seven years. No
amounts were outstanding under either of these loan agreements as of March 30,
1997.
The current mortgage had an outstanding balance of $5,585 ,000 at March 30,
1997. This mortgage has an annual interest rate of 9% with a balloon payment of
$5,585,000 due at maturity on April 1, 1997.
The Company refinanced the mortgage note payable with the same institution,
extending the maturity date to April 1, 2004. The new agreement requires monthly
payments of $ 53,922, including interest at 8.125%. A final balloon payment of $
3,797,000 is due at maturity.
The Company expects its current cash position, ability to borrow necessary
funds, as well as cash flows from operations will be sufficient to meet its
corporate, operating and capital requirements through into 1998.
FORWARD LOOKING STATEMENTS
This report contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements are based on
the Company's current plans and expectations and involve risks and uncertainties
that could cause actual future activities and results of operations to be
materially different from those set forth in the forward-looking statements.
Important factors that could cause actual results to differ include, among
others, general market conditions governing supply and demand, the timely
availability and acceptance of new products, and the impact of competitive
products and pricing and other risks detailed in the Company's SEC reports.
9
<PAGE> 12
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.
BTU INTERNATIONAL, INC.
DATE: May 12, 1997 BY: /s/ Paul J. van der Wansem
--------------------------
Paul J. van der Wansem
President, Chief Executive Officer
(principal executive officer) and Director
DATE: May 12, 1997 BY: /s/ Thomas P. Kealy
-------------------
Thomas P. Kealy
Vice President, Corporate Controller and
Chief Accounting Officer (principal
financial and accounting officer)
10
<PAGE> 13
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
- ----------------------------------------
(a) Exhibits
Exhibit 11.0 - Calculation of net income per common and
common equivalent share.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the
period covered by this report.
11
<PAGE> 1
Exhibit 11.0
BTU INTERNATIONAL , INC.
CALCULATION OF NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE
(Dollars in thousands, except share and per share data)
<TABLE>
<CAPTION>
For the Three Months Ended
--------------------------
March 30, March 31,
1997 1996
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Net income $ (276) $ 357
- ---------------------------------------------------------------------------------------------------
Net income applicable to common stockholders $ (276) $1,112
===================================================================================================
Weighted average shares and share equivalents outstanding:
Common stock 7,279,924 7,288,835
Stock options - 68,063
- ---------------------------------------------------------------------------------------------------
Weighted average shares and share equivalents outstanding 7,279,924 7,356,898
===================================================================================================
Net income per common and common equivalent share $ (0.04) $0.05
===================================================================================================
</TABLE>
12
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-30-1997
<EXCHANGE-RATE> 1
<CASH> 9,416
<SECURITIES> 0
<RECEIVABLES> 11,289
<ALLOWANCES> 160
<INVENTORY> 10,034
<CURRENT-ASSETS> 32,091
<PP&E> 11,692
<DEPRECIATION> 7,503
<TOTAL-ASSETS> 36,506
<CURRENT-LIABILITIES> 7,131
<BONDS> 5,264
0
0
<COMMON> 76
<OTHER-SE> 21,832
<TOTAL-LIABILITY-AND-EQUITY> 36,506
<SALES> 11,026
<TOTAL-REVENUES> 11,026
<CGS> 6,235
<TOTAL-COSTS> 6,235
<OTHER-EXPENSES> 1,029
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 127
<INCOME-PRETAX> (418)
<INCOME-TAX> (142)
<INCOME-CONTINUING> (276)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (276)
<EPS-PRIMARY> (0.04)
<EPS-DILUTED> (0.04)
</TABLE>
