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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark one)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
- -----
SECURITIES EXCHANGE ACT OF 1934
For the three months ended June 30, 1998
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
000-23657
ASTROPOWER, INC.
(Exact name of registrant as specified in its charter)
Delaware 51-0315869
(STATE OR OTHER JURISDICTION (IRS EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION
NUMBER)
SOLAR PARK
NEWARK, DELAWARE 19716-2000
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
302-366-0400
(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 such shorter period that the Registrant was required
to file such report(s), and (2) has been subject to such filing requirements for
the past 90 days.
YES X NO _____
------
(Registrant became subject to filing requirements on February 12, 1998)
The number of shares outstanding of the Registrant's common stock, $0.01 par
value, as of August 7, 1998, was 8,523,923.
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AstroPower, Inc.
FORM 10-Q FOR THE THREE MONTHS ENDED June 30, 1998
TABLE OF CONTENTS
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PAGE NO.
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PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BALANCE SHEETS - JUNE 30, 1998 (UNAUDITED) AND DECEMBER 31, 1997............... 1,2
STATEMENTS OF INCOME (UNAUDITED) -
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997 ...................... 3
STATEMENTS OF CASH FLOWS (UNAUDITED) -
SIX MONTHS ENDED JUNE 30, 1998 AND 1997 ....................................... 4
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) ..................................... 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS ........................................... 6-12
PART II: OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............................ 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K .............................................. 14
SIGNATURES..................................................................... 15
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This report on Form 10-Q contains forward-looking statements that are made
pursuant to the Safe Harbor provisions of the Private Securities Litigation
Reform Act of 1995. Forward looking statements involve risks and uncertainties,
as described in the Company's Registration Statement, Annual Report on Form 10-K
for the year ended December 31, 1997, and other periodic reports filed with the
Securities and Exchange Commission. All statements, other than statements of
historical facts, which address the Company's expectations of sources of capital
or which express the Company's expectation for the future with respect to
financial performance or operating strategies can be identified as forward
looking statements. As a result, there can be no assurance that the Company's
future results will not be materially different from those described herein as
believed, anticipated, estimated or expected, which reflect the current views of
the Company with respect to future events. The Company hereby expressly
disclaims any obligation or undertaking to release publicly any updates or
revisions to any such statements to reflect any change in the Company's
expectations or any change in events, conditions or circumstances on which such
statement is based.
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June 30, December 31,
ASSETS 1998 1997
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CURRENT ASSETS: (unaudited)
Cash and cash equivalents (including restricted cash of $1,860,931 in 1998) $ 13,794,756 $ 4,908,177
Accounts receivable:
Trade, net.......................................................... 4,955,409 3,326,200
Other............................................................... 4,590 35,872
Inventories............................................................ 3,009,813 1,602,321
Prepaid expenses....................................................... 442,576 350,471
-------------- --------------
Total current assets 22,207,144 10,223,041
PROPERTY AND EQUIPMENT: 11,447,834 7,750,316
Less accumulated depreciation and amortization......................... (3,186,439) (2,858,195)
-------------- --------------
8,261,395 4,892,121
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Total assets................................................. $ 30,468,539 $ 15,115,162
============== ==============
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June 30, December, 31
1998 1997
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) (unaudited)
CURRENT LIABILITIES:
Accounts payable ..................................................... $ 2,054,926 $ 2,314,495
Notes payable ........................................................ 0 261,357
Current maturities of long-term debt ................................. 0 55,000
Accrued payroll and payroll taxes .................................... 1,101,434 978,256
Accrued expenses ..................................................... 394,727 394,564
Advance from customer ................................................ 321,756 610,891
------------- -------------
Total current liabilities .............................. 3,872,843 4,614,563
OTHER LIABILITIES:
Long-term debt, excluding current maturities ......................... 5,000,000 6,277,174
Deferred compensation and other ...................................... 374,986 463,900
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5,374,986 6,741,074
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Total liabilities ...................................... 9,247,829 11,355,637
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REDEEMABLE CONVERTIBLE PREFERRED STOCK:
Series A Convertible Preferred Stock ................................. 0 5,798,725
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT):
Series B Convertible Preferred Stock ................................. 0 3,364
Common Stock ......................................................... 85,243 37,698
Additional paid-in capital ........................................... 25,935,215 3,288,017
Note receivable ...................................................... (79,125) (79,125)
Unearned compensation ................................................ (294,731) (343,743)
Accumulated deficit .................................................. (4,425,892) (4,945,411)
-------------
Total stockholders' equity (deficit) ..................... 21,220,710 (2,039,200)
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Total liabilities and stockholders' equity(deficit)... $ 30,468,539 $ 15,115,162
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<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
---------------------------------- ----------------------------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
REVENUES: 1998 1997 1998 1997
------------ ------------ ------------ -----------
Product sales........................... $ 4,670,677 $ 3,280,987 $ 8,894,825 $ 5,761,744
Research contracts...................... 716,134 928,658 1,421,102 1,933,695
------------ ------------ ------------ -----------
Total revenues................. 5,386,811 4,209,645 10,315,927 7,695,439
COST OF REVENUES:
Product sales........................... 3,478,329 2,400,147 6,530,910 4,220,763
Research contracts...................... 582,155 659,114 1,137,925 1,347,555
------------ ------------ ------------ -----------
Total cost of revenues......... 4,060,484 3,059,261 7,668,835 5,568,318
------------ ------------ ------------ -----------
Gross profit................... 1,326,327 1,150,384 2,647,092 2,127,121
OPERATING EXPENSES:
Product development expenses............ 298,771 246,236 608,543 493,318
General and administrative expenses..... 664,136 493,107 1,183,655 920,684
Selling expenses........................ 265,037 231,971 451,173 406,088
------------ ------------ ------------ -----------
Income from operations......... 98,383 179,070 403,721 307,031
OTHER EXPENSE (INCOME):
Interest expense........................ 82,958 67,006 197,589 124,008
Interest income......................... (203,047) (8,470) (338,387) (8,470)
Other expense (income).................. 0 (7,165) 0 (9,823)
------------ ------------ ------------ -----------
Total other expense (income)... (120,089) 51,371 (140,799) 105,715
NET INCOME BEFORE INCOME
TAXES........................................ 218,472 127,699 544,519 201,316
INCOME TAXES.................................... 10,000 4,000 25,000 4,000
------------ ------------ ------------ -----------
NET INCOME...................................... $ 208,472 $ 123,699 $ 519,519 $ 197,316
============ ============ ============ ===========
NET INCOME DATA:
Net income per share - basic............ $ 0.02 0.03 0.07 0.05
============ ============ ============ ===========
Net income per share - diluted.......... $ 0.02 0.02 0.07 0.03
============ ============ ============ ===========
Weighted average shares
outstanding - basic................. 8,523,820 3,715,168 7,336,169 3,710,347
============ ============ ============ ===========
Weighted average shares
outstanding - diluted............... 8,523,820 5,903,254 7,336,169 5,797,628
============ ============ ============ ===========
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<CAPTION>
Six Months Ended June 30
------------------------------------
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES: 1998 1997
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Net income ................................................... $ 519,519 $ 197,316
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization.......................... 328,244 259,064
Stock options issued................................... 93,022 0
Changes in working capital items:
Accounts receivable............................... (1,629,210) (795,591)
Inventories....................................... (1,407,492) 187,697
Prepaid expenses.................................. 47,744 (39,645)
Accounts payable and accrued expenses............. (266,066) 28,784
Accrued payroll and payroll taxes................. (61,608) 48,496
Deferred revenue.................................. 0 (107,808)
Advance from customer............................. (289,135) 832,807
Other............................................. 64,001 (5,420)
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Net cash provided by (used in) operating activities........... (2,600,981) 605,700
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures.................................... (3,646,848) (203,843)
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Net cash used in investing activities......................... (3,646,848) (203,843)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt............................ 0 470,177
Net repayments from line of credit...................... (203,357) 0
Repayment of long-term debt............................. (1,393,174) (718,158)
Proceeds from issuance of common stock.................. 16,730,939 2,100
Proceeds from issuance of preferred stock............... 0 60,000
Net cash provided by (used in) financing activities........... 15,134,408 (185,881)
------------ -------------
NET INCREASE IN CASH AND
CASH EQUIVALENTS.......................................... 8,886,579 215,976
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD....................................... 4,908,177 29,017
------------ -------------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD.................................................... $ 13,794,756 $ 244,993
============ =============
OTHER NONCASH FINANCING ACTIVITIES:
On February 19, 1998, the Company converted all shares of its Series A
and Series B Convertible Preferred Stock into 2,194,709 shares of common
stock on a one-for-one basis.
During the six months ended June 30, 1998, the Company issued stock
options for 119,000 shares of common stock to Corning.
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4
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AstroPower, Inc.
Notes to Financial Statements
JUNE 30, 1998
(UNAUDITED)
(1) GENERAL
-------
The accompanying financial statements for the three month and six month periods
ended June 30, 1998 and 1997 have been prepared by AstroPower, Inc. (Company)
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission . The information furnished herein reflects all
adjustments (consisting only of normal recurring accruals) which are, in the
opinion of management, necessary to present fairly the financial position and
operating results of the Company as of and for the respective periods. Certain
information and footnote disclosures normally included in annual financial
statements prepared in accordance with generally accepted accounting principles
have been omitted pursuant to such rules and regulations. However, management
of the Company believes that the disclosures herein are adequate to make the
information presented not misleading. The accompanying financial statements
should be read in conjunction with the financial statements contained in the
Company's Annual Report Form 10-K for the year ended December 31, 1997.
5
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The Company develops, manufacturers, markets, and sells PV solar cells,
modules and panels for generating solar electric power. Solar cells are
semiconductor devices which convert sunlight directly into electricity. Solar
electric power is used off the electric utility grid for many applications in
the communications and transportation industries and in remote villages and
homes. Solar electric power is also used in on-grid applications by existing
electric utility customers to provide a clean, renewable source of alternative
or supplementary electric power.
The Company was incorporated in 1989 as a successor to a business that was
organized in 1983 to develop thin crystalline silicon photovoltaic and related
optoelectronic technology. Initial revenue came from contract research
performed primarily for agencies of the United States government. The company
commenced commercial solar cell manufacturing operations in 1988 with silicon
wafers purchased from third parties. Since then the commercial portion of the
business has grown steadily with product sales representing 86.7% of total
revenues for the quarter ended June 30, 1998.
The Company has received significant assistance in its transition from
primarily a contract research organization to a commercial manufacturer of solar
cells and modules. Such assistance originated from the U.S. Department of
Energy in the form of cost-sharing designed to assist the Company in expanding
its manufacturing capabilities and in reducing its manufacturing costs.
The Company currently generates product revenues from the sale of solar
cells, modules, and panels. Although the Company is continuing a significant
expansion of its Silicon-FilmTM manufacturing capacity in 1998, the predominant
source of its product revenues to date has been single crystal products. Product
sales are recognized upon shipment. Solar cell prices and manufacturing costs
vary depending upon supply and demand in the market for solar cells and modules,
order size, yields, the costs of raw materials, particularly reclaimed silicon
wafers recycled from the semiconductor industry, and other factors. In addition,
the Company also earns revenue from contracts with various federal government
agencies to conduct research on advanced Silicon-FilmTM products and
optoelectronic devices. Generally, these contracts last from 6 months to three
years. The Company recognizes research contract revenue at the time costs
benefiting the contracts are incurred, which approximates the percentage of
completion method.
Solar cells manufactured by the Company are sold to original equipment
manufacturers that assemble the solar cells into modules. Modules are sold to
distributors and value-added resellers. The sale of a module results in
substantially more revenue to the Company than the sale of solar cells due to
the value of the additional materials,
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labor and overhead added during the module assembly process. Accordingly, the
Company's product sales are affected not just by changes in total solar cells
produced, but by changes in the mix between solar cells and modules sold. In
1994, the Company commenced manufacturing modules in substantial quantities as a
means of expanding its customer base. Currently, the gross margin percentages
for modules are less than that of solar cells.
The Company has developed a proprietary process called Silicon-FilmTM for
the manufacture of sheets of polycrystalline silicon. Wafers made from these
sheets are used in the Company's solar cell manufacturing process. Silicon-
FilmTM technology has been under development since the Company's inception in
1983 and, after several successful field tests, Silicon-FilmTM products are
currently being shipped to selected customers. The Company leased space in
January 1998 for a new plant for production of Silicon-FilmTM solar cells,
modules and panels. The facility came on line and began making its first
commercial shipments in the second quarter of 1998. When operating at full
capacity, this 60,000 square foot facility is expected to produce approximately
9MW of product per year. This facility was partially funded by a $5.0 million
convertible promissory note (the "Promissory Note") issued in August 1997.
For the six months ended June 30, 1998, 88.0% of the Company's product
revenues was generated by sales to customers located outside the United States.
The Company believes that international sales will continue to account for a
significant portion of its product sales for the foreseeable future. Current
sales are denominated in U.S. dollars and foreign exchange rate fluctuations
have not had an impact on the Company's results of operations.
Substantially, all of the Company's revenues from government contracts are
subject to audit under various federal statues. The Company has received final
approval of its overhead rate through 1993. Audits of 1994 and 1995 rates began
in December 1997. It is management's opinion that adjustments to such revenue,
if any, will not have a material adverse effect on the Company's business,
results of operations, and financial condition.
As described in Note 13 to Financial Statements, included in the Company's
1997 Annual Report on Form 10-K, the Company has entered into an agreement with
Corning that provides for the issuance of stock options to Corning in return for
services performed. Such services are accounted for based on the fair value for
the services provided or the fair value of the options issued, whichever is more
reliably measurable, as required by the provisions of paragraph 8 of SFAS No.
123. The value of such options is included in operating expenses. The Company's
annual and quarterly operating results may fluctuate as a result of the issuance
of the options.
7
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RESULTS OF OPERATIONS
Three Months Ended June 30, 1998 and 1997
Revenues. Total revenues for the three-month period ended June 30, 1998 were
- ---------
$5.4 million, an increase of $1.2 million or 28.0% from $4.2 million for the
three-month period ended June 30, 1997. Product sales for the three-month
period ended June 30, 1998 were $4.7 million, an increase of $1.4 million or
42.4% from $3.3 million for the comparable 1997 period. The increase in product
sales was attributable to increased levels of production as a result of
improvements in manufacturing technology and productivity, allowing the Company
to satisfy a greater percentage of customer orders. Research contract revenue
for the three month period ended June 30, 1998 was $716,000, a decline of
$213,000 or 22.9% from $929,000 for the three months ended June 30, 1997. The
decline in contract research revenue, which was expected, was primarily
attributable to a reduction of the Company's contract overhead rates as a result
of its ongoing transformation from a government contractor to a manufacturing
company.
GROSS PROFIT. Gross profit for the three months ended June 30, 1998 was $1.3
- -------------
million, an increase of $176,000 or 15.3% from $1.2 million for the three month
period ended June 30, 1997. Gross profit on product sales for the three months
ended June 30, 1998 was $1.2 million, an increase of 35.3% from $881,000 in the
comparable period in 1997. The product gross margin was 25.5% for the three
months ended June 30, 1998, as compared with 26.9% in the comparable 1997
period. Improvements in manufacturing productivity and manufacturing volumes,
which reduced manufacturing costs, were offset by costs associated with the
scale-up of the Company's new Silicon-Film(TM) manufacturing facility. These
costs are expected to affect the third quarter product gross margin as well.
Research contract gross profit for the three months ended June 30, 1998 was
$135,000, as compared with $270,000 in the comparable 1997 period. The decline
in contract gross profit, which had been expected, was due to reduced amounts of
overhead expenses that were previously allocated and billed to government
contracts, which have declined by 23% as the result of the ongoing transition to
a manufacturing company.
PRODUCT DEVELOPMENT COSTS. Product development costs for the three months
- --------------------------
ended June 30, 1998 were $299,000, an increase of $53,000 or 21.3% from $246,000
for the three months ended June 30, 1997. The increase is a result of a higher
level of development activity.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses for
- ------------------------------------
the three months ended June 30, 1998 were $664,000, an increase of $171,000 or
34.7% from $493,000 in the comparable 1997 period. The increase is a result of
a higher level of professional services, as well as higher salaries and benefits
costs.
SELLING EXPENSES. Selling expenses for the three months ended June 30, 1998
- -----------------
were $265,000, an increase of $33,000 or 14.2% from the comparable period in
1997. Higher
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levels of salaries, benefits, and travel in 1998, were generally offset by
reductions in sales commissions paid to third parties. There were no such
commissions in the 1998 period.
INTEREST EXPENSE. Interest expense for the three months ended June 30, 1998 was
- -----------------
$83,000, an increase of $16,000 or 23.9% from $67,000 in the 1997 period. The
increase is a result of higher debt levels outstanding in the current quarter,
principally as a result of The Promissory Note.
INTEREST INCOME. Interest income was $203,000 for the three months ended June
- ----------------
30, 1998, as compared with $8,000 for the similar period in 1997. The increase
in interest income is a result of the investment of the proceeds from the
Company's initial public offering in February 1998, as well as the unexpended
proceeds from the Promissory Note.
INCOME TAXES. Income taxes for the three months ended June 30, 1998 were
- -------------
$10,000, as compared with $4,000 for the comparable period in 1997. The
provision represents the Company's estimated AMT liability. The Company's
effective tax rate is affected by its Net Operating Loss ("NOL") carry forward.
SIX MONTHS ENDED JUNE 30, 1998 AND 1997
Revenues. Total revenues for the six month period ended June 30, 1998 were
- ---------
$10.3 million, an increase of $2.6 million or 34.0% from $7.7 million for the
six month period ended June 30, 1997. Product sales for the six month period
ended June 30, 1998 were $8.9 million, an increase of $3.1 million or 54.4% from
$5.8 million for the comparable 1997 period. The increase in product sales was
attributable to increased levels of production as a result of improvements in
manufacturing technology and productivity, allowing the Company to satisfy a
greater percentage of customer orders. Research contract revenue for the six
month period ended June 30, 1998 was $1.4 million, a decline of $500,000 or
26.5% from $1.9 million for the six months ended June 30, 1997. The decline in
contract research revenue, which was expected, was primarily attributable to a
reduction of the Company's contract overhead rates as a result of its ongoing
transformation from a government contractor to a manufacturing company.
GROSS PROFIT. Gross profit for the six months ended June 30, 1998 was $2.6
- -------------
million, an increase of $500,000 or 24.4% from $2.1 million for the six month
period ended June 30, 1997. Gross profit on product sales for the six months
ended June 30, 1998 was $2.4 million, an increase of 60.0% from $1.5 million in
the comparable period in 1997. The product gross margin was 26.6% for the six
months ended June 30, 1998, as compared with 26.9% in the comparable 1997
period. Improvements in manufacturing productivity and manufacturing volumes,
which reduced manufacturing costs, were offset by costs associated with the
scale-up of the Company's new Silicon-Film(TM) manufacturing facility. These
costs are expected to affect the third quarter gross margin as well. The
increase in product gross profit was due to higher product sales, as well as
reduced manufacturing costs. Research contract gross profit for the six months
ended June 30, 1998 was
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$283,000, as compared with $586,000 in the comparable 1997 period. The decline
in contract gross profit, which had been expected, was due to reduced amounts of
billable overhead expenses that were previously allocated to government
contracts, which have declined by 26.5% as the result of the ongoing transition
to a manufacturing company.
PRODUCT DEVELOPMENT COSTS. Product development costs for the six months ended
- --------------------------
June 30, 1998 were $609,000, an increase of $116,000 or 23.5% from the six
months ended June 30, 1997. The increase is a result of a higher level of
development activity, as well as the cost of common stock options issued to
Corning for services performed in the six months ended June 30, 1998 under the
terms of an agreement with Corning.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses for
- ------------------------------------
the six months ended June 30, 1998 were $1.2 million, an increase of $262,000 or
28.4% from $921,000 in the comparable 1997 period. The increase is a result of
a higher level of professional services, as well as higher salaries and benefits
costs.
SELLING EXPENSES. Selling expenses for the six months ended June 30, 1998 were
- -----------------
$451,000, an increase of $45,000 or 11.1% from the comparable period in 1997.
Higher levels of salaries, benefits, and travel in 1998 were generally offset by
reductions in sales commissions paid to third parties. There were no such
commissions in the 1998 period.
INTEREST EXPENSE. Interest expense for the six months ended June 30, 1998 was
- -----------------
$197,000, an increase of $73,000 or 58.9% from $124,000 in the 1997 period. The
increase is a result of higher debt levels outstanding in the current quarter,
principally as a result of The Promissory Note issued in August 1997.
INTEREST INCOME. Interest income was $338,000 for the six months ended June 30,
- ----------------
1998, as compared to $8,000 for the similar period in 1997. The increase in
interest income is a result of the investment of the proceeds from the Company's
initial public offering in February 1998, as well as the unexpended proceeds
from The Promissory Note.
INCOME TAXES. Income taxes for the six months ended June 30, 1998 were
- -------------
$25,000, as compared to $4,000 for the six months ended June 30, 1997. The
provision represents the Company's estimated Alternative Minimum Tax liability.
The Company's effective tax rate is affected by its NOL carry forward.
LIQUIDITY AND CAPITAL RESOURCES
On February 13, 1998, the Company completed an initial public offering
of its common stock, raising net proceeds of $16.7 million.
At June 30, 1998, the Company had cash of $13.8 million, as compared
with $4.9 million at December 31, 1997. At June 30, 1998, approximately $1.9
million of this
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balance was restricted for use in connection with the Company's Silicon-Film(TM)
manufacturing facility in accordance with the terms of the Promissory Note.
Principal uses of cash for the six-months ended June 30, 1998 were additions to
plant and equipment (as part of the scale-up of the Silicon-Film(TM)
manufacturing plant), working capital, and debt reduction.
The Company expects that the available cash balance, together with
projected cash generated from operations, will be sufficient to fund its
activities for the next 24 months.
INCOME TAXES
NOL carry forwards totaling approximately $4.5 million are available
to reduce future federal and state taxable income as of June 30, 1998. The NOL
carry forwards expire through 2012. The Tax Reform Act of 1986 and other income
tax regulations contain provisions which may limit the NOL carry forwards
available to be used in any given year, if certain events occur, including
changes in ownership interests. The Company has established a valuation
allowance for the entire amount of the net deferred tax assets at June 30, 1998.
ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards No. 131, "Disclosures
about Segments of an Enterprise and Related Information" ("SFAS 131"), was
issued in June 1997. This statement establishes standards for the way public
business enterprises report information about operating segments. It also
establishes standards for related disclosure about products and services,
geographical areas, and major customers. The Company will adopt the disclosure
prescribed by SFAS 131 in its 1998 Annual Report as required.
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income", was issued in June 1997. The statement establishes
standards for reporting and display of comprehensive income in financial
statements. This statement was adopted effective January 1, 1998 and such
adoption did not have a material effect on the Company's financial statements.
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EFFECTS OF INFLATION AND EXCHANGE RATES
The Company has not been materially affected by inflation or changes
in foreign exchange rates. However, there can be no assurance that the
Company's business will not be affected by inflation or foreign exchange rates
in the future.
YEAR 2000
The Company's current data processing systems are not year 2000
compliant. The Company has developed and is implementing a comprehensive plan
to make its computer systems Year 2000 ready. The Company believes that, within
the next 15 months, it will have replaced its current systems with new systems
that are year 2000 compliant. The cost of such systems is currently estimated
at approximately $500,000.
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AstroPower, Inc.
FORM 10-Q FOR THE THREE MONTHS ENDED June 30, 1998
PART II: OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
THE COMPANY'S ANNUAL MEETING OF SHAREHOLDERS WAS HELD ON JUNE 18, 1998
FOR THE PURPOSE OF THE FOLLOWING:
1. TO ELECT SIX DIRECTORS.
2. TO AMEND THE COMPANY'S 1989 STOCK OPTION PLAN SO AS TO
INCREASE THE NUMBER OF SHARES AVAILABLE.
3. TO APPROVE THE PROPOSED 1998 ASTROPOWER, INC. NON-EMPLOYEE
DIRECTORS' STOCK OPTION PLAN.
4. TO RATIFY THE APPOINTMENT OF INDEPENDENT ACCOUNTANTS.
Shareholders votes on these proposals follow:
Election of Directors:
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<CAPTION>
<S> <C> <C> <C>
Name For Against Broker Non-Votes
Clare E. Nordquist 7,586,001 84,494 --
Charles R. Schaller 7,667,250 3,245 --
Dr. George W. Roland 7,667,250 3,245 --
Dr. George S. Reichenbach 7,667,250 3,245 --
Dr. Allen M. Barnett 7,667,250 3,245 --
</TABLE>
<TABLE>
<CAPTION>
For Against Abstain Broker Non-Votes
--- ------- ------- ----------------
<S> <C> <C> <C> <C>
Proposal to amend 1989 Stock
Option Plan 5,932,577 86,400 21,255 1,658,293
Proposal to approve 1998
AstroPower, Inc. Non-Employee
Directors' Stock Option Plan 5,671,964 359,982 8,256 1,658,293
Proposal to ratify appointment of
independent accountants 7,666,982 900 2,613 --
</TABLE>
13
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS
Exhibit No. DESCRIPTION
----------- -----------
27 FINANCIAL DATA SCHEDULE
REPORTS ON FORM 8-K
THERE WERE NO REPORTS FILED ON FORM 8-K DURING THE QUARTER ENDED JUNE
30, 1998.
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.
ASTROPOWER, INC.
DATE: AUGUST 11, 1998 BY: /S/ ALLEN M. BARNETT
---------------------
Allen M. Barnett
PRESIDENT AND CHIEF
EXECUTIVE OFFICER
DATE: AUGUST 11, 1998 BY: /S/ THOMAS J. STINER
---------------------
Thomas J. Stiner
VICE PRESIDENT AND CHIEF FINANCIAL
OFFICER
(PRINCIPAL FINANCIAL OFFICER)
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 13,794,756
<SECURITIES> 0
<RECEIVABLES> 5,019,223
<ALLOWANCES> 59,224
<INVENTORY> 3,009,813
<CURRENT-ASSETS> 22,207,144
<PP&E> 11,447,834
<DEPRECIATION> 3,186,439
<TOTAL-ASSETS> 30,468,539
<CURRENT-LIABILITIES> 3,872,843
<BONDS> 0
0
0
<COMMON> 85,243
<OTHER-SE> 21,135,467
<TOTAL-LIABILITY-AND-EQUITY> 30,468,539
<SALES> 8,894,825
<TOTAL-REVENUES> 10,315,927
<CGS> 6,530,910
<TOTAL-COSTS> 7,668,835
<OTHER-EXPENSES> 2,228,371
<LOSS-PROVISION> 15,000
<INTEREST-EXPENSE> 197,589
<INCOME-PRETAX> 544,519
<INCOME-TAX> 25,000
<INCOME-CONTINUING> 519,519
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 519,519
<EPS-PRIMARY> 0.02
<EPS-DILUTED> 0.02
</TABLE>
