SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
......................
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
......................
EXCEL TECHNOLOGY, INC.
(Exact name of Registrant as specified in its Charter)
For the quarter ended March 31, 2000 Commission File Number 0-19306
Delaware 11-2780242
(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
41 Research Way (631) 784-6100
E. Setauket NY 11733 (Registrant's Telephone Number)
(Address of Principal Executive Offices)
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 of the Registrant's common stock outstanding as of
May 10, 2000 was: 11,490,252.
CONTENTS
PART I. FINANCIAL INFORMATION
Page
Item 1. Consolidated Financial Statements:
.................................
Balance Sheets as of March 31, 2000 and December 31, 1999 3
Statements of Earnings for the Three Months Ended
March 31, 2000 and 1999 4
Statements of Cash Flows for the Three Months Ended
March 31, 2000 and 1999 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
.................................................
Condition and Results of Operations 7
...................................
Item 3. Quantitative and Qualitative Disclosures about Market Risk 9
..........................................................
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 9
.................
Item 2. Changes in Securities and Use of Proceeds 9
.........................................
Item 3. Defaults upon Senior Securities 9
...............................
Item 4. Submission of Matters to a Vote of Security-Holders 9
...................................................
Item 5. Other Information 9
.................
Item 6. Exhibits and Reports on Form 8-K 9
................................
(a) Exhibits - (11) Computation of net earnings per share 11
(27) Financial Data Schedule
(b) Reports on Form 8-K - None
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements:
.................................
CONSOLIDATED BALANCE SHEETS
March 31, 2000 Dec. 31, 1999
.............. .............
(Unaudited)
Assets
......
Current assets:
Cash and cash equivalents $ 17,281,666 $ 13,481,251
Accounts receivable, less allowance for
doubtful accounts of $485,000 and
$464,000 in 2000 and 1999, respectively 19,604,549 16,107,179
Inventories 14,525,647 14,383,943
Deferred income taxes, net 1,363,300 1,363,300
Other current assets 492,795 512,389
............. .............
Total current assets 53,267,957 45,848,062
............. .............
Property, plant and equipment, net 10,894,108 10,986,243
Other assets 336,382 341,416
Deferred income taxes, net 1,162,800 1,162,800
Excess of cost over fair value of net
assets of businesses acquired, net of
accumulated amortization of $4,098,271
and $3,791,559 in 2000 and 1999,
respectively 21,005,318 21,312,030
............. .............
Total assets $ 86,666,565 $ 79,650,551
............. .............
............. .............
Liabilities and Stockholders' Equity
....................................
Current liabilities:
Notes payable $ 28,241 $ 35,937
Accounts payable 3,715,973 2,974,832
Accrued expenses and other
current liabilities 9,717,591 7,638,569
............. .............
Total current liabilities 13,461,805 10,649,338
............. .............
Stockholders' equity:
Preferred stock, par value $.001 per
share: 2,000,000 shares authorized,
none issued 0 0
Common stock, par value $.001 per share:
20,000,000 shares authorized,
11,365,483 and 11,300,941 shares issued
in 2000 and 1999, respectively 11,365 11,301
Additional paid-in capital 43,805,351 43,438,702
Retained earnings 29,953,218 26,193,600
Accumulated other comprehensive loss (565,174) (642,390)
............. .............
Total stockholders' equity 73,204,760 69,001,213
............. .............
Total liabilities and
stockholders' equity $ 86,666,565 $ 79,650,551
............. .............
............. .............
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
Three Months Ended
March 31,
............................
2000 1999
............. .............
Net sales and services $ 26,500,655 $ 20,018,174
Cost of sales and services 13,072,675 9,892,194
............. .............
Gross profit 13,427,980 10,125,980
Operating expenses:
Selling and marketing 3,269,266 2,794,219
General and administrative 1,967,642 1,652,761
Research and development 2,356,379 1,678,349
Amortization of excess cost over
fair value of net assets of businesses
acquired 306,712 304,070
............. .............
Earnings from operations 5,527,981 3,696,581
Non-operating expenses (income):
Interest expense 1,252 30,041
Interest income (183,641) (57,050)
Other expense, net 13,979 27,186
............. .............
Earnings before provision for income taxes 5,696,391 3,696,404
Provision for income taxes 1,936,773 1,219,813
............. .............
Net earnings $ 3,759,618 $ 2,476,591
............. .............
............. .............
Earnings per share:
Basic earnings per common share $0.33 $0.22
..... .....
..... .....
Weighted average common
shares outstanding 11,332,667 11,067,212
............. .............
............. .............
Diluted earnings per common share $0.32 $0.22
..... .....
..... .....
Weighted average common shares and
common share equivalents 11,914,328 11,475,015
............. .............
............. .............
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
............................
2000 1999
............. .............
Cash flows from operating activities:
Net earnings $ 3,759,618 $ 2,476,591
Adjustments to reconcile net earnings to
net cash provided by operating
activities:
Depreciation and amortization 820,649 788,235
Provision for bad debts 10,674 8,275
Changes in operating assets and
liabilities:
(Increase) in accounts receivable (3,508,044) (2,183,621)
(Increase) decrease in inventories (141,704) 308,341
Decrease (increase) in other
current assets 19,594 (169,195)
Decrease (increase) in other
assets 5,034 (4,367)
Increase (decrease) in accounts
payable 741,141 (201,204)
Increase in accrued expenses and
other current liabilities 2,079,022 871,530
............. .............
Net cash provided by
operating activities 3,785,984 1,894,585
............. .............
Cash flows from investing activities:
Purchases of property, plant and equipment (421,802) (581,236)
............. .............
Net cash used in
investing activities (421,802) (581,236)
............. .............
Cash flows from financing activities:
Proceeds from exercise of common stock
options and warrants 366,713 158,880
Payments of notes payable (7,696) (35,790)
Payments of long-term debt
(revolving credit line) 0 (3,500,000)
............. .............
Net cash provided by
(used in) financing
activities 359,017 (3,376,910)
............. .............
Effect of exchange rate changes on assets
and liabilities including cash and
cash equivalents 77,216 (295,011)
............. .............
Net increase (decrease) in cash and
cash equivalents 3,800,415 (2,358,572)
Cash and cash equivalents,
beginning of period 13,481,251 5,839,339
............. .............
Cash and cash equivalents, end of period $ 17,281,666 $ 3,480,767
............. .............
............. .............
Supplemental disclosure of cash flow information:
.................................................
Cash paid for:
Interest $ 1,252 $ 30,041
Income taxes $ 1,114,821 $ 521,260
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
A. CONSOLIDATED FINANCIAL STATEMENTS:
..................................
The consolidated balance sheet as of March 31, 2000, and the
consolidated statements of earnings and cash flows for the three month
periods ended March 31, 2000 and March 31, 1999 have been prepared by the
Company and are unaudited. In the opinion of management, all adjustments
(which included only normal recurring adjustments) have been made which
are necessary to present fairly the financial position, results of
operations and cash flows at March 31, 2000 and for all periods
presented.
For information concerning the Company's significant accounting
policies, reference is made to the Company's Annual Report on Form 10-K
for the year ended December 31, 1999. While the Company believes that the
disclosures presented are adequate to make the information contained
herein not misleading, it is suggested that these statements be read in
conjunction with the consolidated financial statements and notes included
in the Form 10-K. Results of operations for the period ended March 31,
2000 are not necessarily indicative of the operating results to be
expected for the full year.
B. INVENTORIES
...........
Inventories are recorded at the lower of average cost or market.
Average cost approximates actual cost on a first-in first-out basis.
Inventories consist of the following:
March 31, 2000 December 31, 1999
.............. .................
Raw Materials $ 8,385,867 $ 6,547,811
Work in Process 4,146,902 5,509,431
Finished Goods 1,581,369 1,862,941
Consigned Inventory 411,509 463,760
............. ............
$ 14,525,647 $ 14,383,943
............. ............
............. ............
C. LONG-TERM DEBT
...............
On July 23, 1998, the Company entered into a credit facility with The
Bank of New York (the "Bank") that provides the Company with a $15 million
revolving line of credit for acquisitions or working capital requirements.
The term of this agreement is for five years, maturing on July 22, 2003.
This credit facility allows for interest to be calculated utilizing an
Alternative Base Rate ("ABR") or a LIBOR rate plus a premium ranging from
0.50% to 2.25%. The ABR is the higher rate of either the prime rate or the
Federal Funds Rate plus 0.50%. This credit facility contains certain
financial covenants, including the prohibition of the payment of dividends,
and requires payment of interest on a quarterly basis. As of March 31,
2000, the Company had no borrowings and had all of its $15 million
available on its line of credit.
D. COMPREHENSIVE INCOME
....................
Comprehensive income is comprised of net income and foreign currency
translation adjustments, amounting in the aggregate to $3,836,834 and
$2,181,580 for the three months ended March 31, 2000 and 1999,
respectively.
Item 2. Management's Discussion and Analysis of Financial Condition and
...............................................................
Results of Operations
.....................
Results of Operations
.....................
Net sales and services for the quarter ended March 31, 2000
increased $6.5 million or 32.5% to $26.5 million from $20.0 million for
the comparable period in the prior year. The increase is attributable to
increases in sales and services across all of the Company's product
lines.
Gross margins as a percentage of sales increased to 50.7% for the
period ended March 31, 2000 from 50.6% in the same period ended March
31,1999. The decrease in cost as a percentage of sales of 0.1% in the
quarter ended March 31, 2000 is primarily due to the product mix.
Selling and marketing expenses increased to $3.3 million in the
quarter ended March 31, 2000 from $2.8 million in the quarter ended March
31, 1999. The increase of $475 thousand or 17.0% is primarily
attributable to the increased variable costs associated with the
increased sales volume. Selling and marketing expenses as a percentage
of sales decreased to 12.3% for the quarter ended March 31, 2000 from
14.0% for the comparable period in the prior year. The decrease is
essentially attributable to fixed costs being absorbed by the higher
sales volume.
General and administrative expenses increased $315 thousand or 19.1%
from $1.65 million in the quarter ended March 31, 1999 to $1.97 million
in the current period. The increase is primarily attributable to higher
bonus expenses due to increased profitability.
Research and development costs for the quarter ended March 31, 2000
increased $678 thousand or 40.5% to $2.36 million from $1.68 million in
the quarter ended March 31, 1999. The increase is primarily attributable
to increased research and development activities for all product groups.
Interest expense was $1.3 thousand versus $30.0 thousand for the
quarters ended March 31, 2000 and 1999, respectively. The decrease is
due to the paydown of the loan associated with the acquisition of Synrad
in the quarter ended March 31, 1999.
The increase in interest income to $184 thousand in the quarter
ended March 31, 2000 from $57 thousand in the same period of 1999, an
increase of $127 thousand, is primarily due to increased average
investable cash balances.
Other expense resulted in a net expense of $14.0 thousand for the
quarter ended March 31, 2000 as compared to a net expense of $27 thousand
for the quarter ended March 31, 1999. This decrease is primarily due to
lower foreign exchange losses realized by the Company's German
subsidiary.
Liquidity and Capital Resources
...............................
Working capital at March 31, 2000 was $39.8 million compared to
$35.2 million at December 31, 1999. The increase is primarily derived
from the net cash provided by operating activities and the proceeds from
the exercise of stock options and warrants, partially offset by capital
expenditures.
The Company anticipates spending approximately $9.0 million for
capital expenditures in 2000, which includes a building for Synrad and
the expansion of Quantronix' facilities. Approximately $422 thousand was
spent during the quarter ended March 31, 2000. The Company had capital
expenditures of approximately $2.1 million for the year ended December
31, 1999.
The Company had no outstanding long-term debt and $15 million
available on its line of credit as of March 31, 2000, as described in
note C to the financial statements.
The Company estimates that its current resources and anticipated
cash flow from operations will be sufficient to meet the Company's cash
requirements for at least the next 12 months.
Inflation
.........
In the opinion of management, inflation has not had a material
effect on the operations of the Company.
Forward-Looking Statements
..........................
The information set forth in this Report (and other reports issued by
the Company and its officers from time to time) contain certain statements
concerning the Company's future results, future performance, intentions,
objectives, plans and expectations that are or may be deemed to be
"forward-looking statements". Such statements are made in reliance upon
safe harbor provisions of the Private Securities Litigation Reform Act of
1995. These forward-looking statements are based on current expectations
that involve numerous risks and uncertainties, including those risks and
uncertainties discussed in this Form 10-Q and in the Company's Annual
Report on Form 10K for the year ended December 31, 1999. Assumptions
relating to the foregoing involve judgments with respect to, among other
things, future economic, competitive, and market conditions and future
business decisions, all of which are difficult or impossible to predict
accurately and many of which are beyond the Company's control. Although
the Company believes that its assumptions underlying the forward-looking
statements are reasonable, any of the assumptions could prove inaccurate
and, therefore, the Company cannot assure you that the results discussed or
implied in such forward-looking statements will prove to be accurate. In
light of the significant uncertainties inherent in such forward-looking
statements, the inclusion of such statements should not be regarded as a
representation by the Company or any other person that the Company's
objectives and plans will be achieved. Words such as "believes,"
"anticipates," "expects," "intends," "may," and similar expressions are
intended to identify forward-looking statements, but are not the exclusive
means of identifying such statements. The Company undertakes no obligation
to revise any of these forward-looking statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
..........................................................
Not applicable.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
.................
For information concerning Legal Proceedings, reference is made to
Item 3, Legal Proceedings, in the Company's Annual Report on Form 10-K
for the year ended December 31, 1999.
Item 2. Changes in Securities and Use of Proceeds
.........................................
None.
Item 3. Defaults upon Senior Securities
...............................
None.
Item 4. Submission of Matters to a Vote of Security-Holders
...................................................
None.
Item 5. Other Information
.................
None.
Item 6. Exhibits and Reports on Form 8-K
.................................
(a) Exhibits - (11) Computation of net earnings per share
(27) Financial Data Schedule
(b) Reports on Form 8-K - None
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.
DATED: May 12, 2000
EXCEL TECHNOLOGY, INC.
By: /s/ J. Donald Hill
......................................
J. Donald Hill, Chairman of the Board,
Chief Executive Officer
By: /s/ Antoine Dominic
.....................................
Antoine Dominic, President,
Chief Operating Officer
and Principal Accounting Officer
EXHIBIT 11 (Unaudited)
......................
COMPUTATION OF NET EARNINGS PER SHARE
BASIC DILUTED
Three Months Ended Three Months Ended
March 31, March 31,
..................... .....................
2000 1999 2000 1999
.......... .......... .......... ..........
Net Earnings $3,759,618 $2,476,591 $3,759,618 $2,476,591
.......... .......... .......... ..........
.......... .......... .......... ..........
Weighted average common
shares outstanding 11,332,667 11,067,212 11,332,667 11,067,212
Weighted average common
common share equivalents:
Options and Warrants 0 0 581,661 407,803
.......... .......... .......... ..........
Weighted average common
shares and common shares
equivalent outstanding 11,332,667 11,067,212 11,914,328 11,475,015
.......... .......... .......... ..........
.......... .......... .......... ..........
Net Earnings per share $ 0 .33 $ 0.22 $ 0.32 $ 0.22
.......... .......... .......... ..........
.......... .......... .......... ..........
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS YEAR
<FISCAL-YEAR-END> MAR-31-2000 DEC-31-2000
<PERIOD-END> MAR-31-2000 MAR-31-2000
<CASH> 17,281,666 17,281,666
<SECURITIES> 0 0
<RECEIVABLES> 19,604,549 19,604,549
<ALLOWANCES> 485,000 485,000
<INVENTORY> 14,525,647 14,525,647
<CURRENT-ASSETS> 53,267,957 53,267,957
<PP&E> 10,894,108 10,894,108
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 86,666,565 86,666,565
<CURRENT-LIABILITIES> 13,461,805 13,461,805
<BONDS> 0 0
0 0
0 0
<COMMON> 11,365 11,365
<OTHER-SE> 43,805,351 43,805,351
<TOTAL-LIABILITY-AND-EQUITY> 86,666,565 86,666,565
<SALES> 26,500,655 26,500,655
<TOTAL-REVENUES> 26,500,655 26,500,655
<CGS> 13,072,675 13,072,675
<TOTAL-COSTS> 13,072,675 13,072,675
<OTHER-EXPENSES> 7,899,999 7,899,999
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 1,252 1,252
<INCOME-PRETAX> 5,696,391 5,696,391
<INCOME-TAX> 1,936,773 1,936,773
<INCOME-CONTINUING> 3,759,618 3,759,618
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 3,759,618 3,759,618
<EPS-BASIC> 0.33 0.33
<EPS-DILUTED> 0.32 0.32
</TABLE>
