SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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, 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 0-20506
BKC SEMICONDUCTORS INCORPORATED
-------------------------------
(Exact name of registrant as specified in its charter)
Massachusetts 04-2883532
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
6 Lake Street, Lawrence, Massachusetts 01841
(Address of principal executive offices) (Zip Code)
(508) 681-0392
(Registrant's telephone number, including area code)
- ------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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_____
There were 1,276,411 shares of common stock outstanding at May 1, 1997.
<PAGE>
BKC SEMICONDUCTORS INCORPORATED
QUARTERLY REPORT FORM 10-Q
March 31, 1997
Page
----
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements (Unaudited)
Balance Sheet - March 31, 1997 and September 30, 1996 3
Statement of Income (Loss) - for the three and six months ended
March 31, 1997, and March 30, 1996 4
Statement of Cash Flows - for the six months ended
March 31, 1997 and March 30, 1996 5
Notes to Financial Statements - March 31, 1997 6
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7, 8
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings 9
ITEM 2. Changes in Securities 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
Signature Page 10
2
<PAGE>
<TABLE>
<CAPTION>
BKC SEMICONDUCTORS INCORPORATED
BALANCE SHEET
<S> <C> <C>
March 31, 1997 September 30,
(Unaudited) 1996
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,000 $ 5,921
Accounts Receivable, Net 1,626,584 1,274,927
Inventories 3,091,818 3,119,741
Deferred Income Taxes 445,967 460,000
Other Current Assets 112,239 33,577
Total current assets 5,277,608 4,894,166
---------------- --------------
---------------- --------------
PROPERTY AND EQUIPMENT - NET 1,358,348 1,426,439
OTHER ASSETS 80,725 107,908
---------------- --------------
TOTAL $6,716,681 $6,428,513
=============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $1,887,102 $1,430,839
Accounts payable 579,965 1,019,836
Accrued liabilities 230,081 54,481
Current maturities of long-term debt 335,920 374,070
Total current liabilities 3,033,068 2,879,226
---------------- --------------
LONG-TERM DEBT - Net of current maturities 693,973 580,610
---------------- --------------
STOCKHOLDERS' EQUITY:
Convertible preferred stock series A - 6% cumulative, authorized, 5,000
shares of no par value; issued and outstanding, 2,940 shares 242,078 242,078
Common Stock-authorized, 2,000,000 shares of no par value; issued
1,295,311 shares on 12/31/96, 1,295,311 on 9/30/96 3,916,721 3,916,721
Retained earnings (Deficit) (813,540) (834,503)
---------------- --------------
Total 3,345,259 3,324,296
---------------- --------------
Less cost of shares held in treasury:
Convertible preferred stock, 2,940 shares 235,200 235,200
Common stock, 18,900 shares 120,419 120,419
---------------- --------------
Stockholders' equity-net 2,989,640 2,968,677
---------------- --------------
TOTAL $6,716,681 $6,428,513
================ ==============
</TABLE>
See notes to financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
BKC SEMICONDUCTORS INCORPORATED
UNAUDITED STATEMENT OF INCOME
<S> <C> <C> <C> <C>
Three Months Ended Six Months Ended
March 31, March 30, March 31, March 30,
1997 1996 1997 1996
---- ---- ---- ----
REVENUE $2,829,856 $2,606,990 $5,197,400 $5,507,976
COST OF REVENUE 2,012,668 2,032,199 3,948,206 4,260,847
--------------- ----------- ------------ ------------
GROSS PROFIT 817,188 574,791 1,249,194 1,247,129
-------------- ----------- ------------ ------------
OPERATING EXPENSES:
Selling 304,295 220,241 565,935 465,943
General and administrative 255,299 193,010 444,934 395,520
Research and development 26,925 52,365 70,872 99,205
--------------- -------------- ------------- --------------
Total operating expenses 586,519 465,616 1,081,741 960,668
--------------- -------------- ------------- --------------
INCOME FROM OPERATIONS 230,669 109,175 167,453 286,461
INTEREST EXPENSE (65,561) (82,621) (123,577) (171,477)
GAIN ON SALE OF REAL ESTATE 0 217,075 0 217,075
--------------- -------------- --------------- ------------
INCOME BEFORE PROVISION FOR INCOME TAXES
165,108 243,629 43,876 332,059
PROVISION FOR INCOME TAXES 71,062 97,451 22,913 97,451
-------------- ------------- -------------- --------------
NET INCOME $94,046 $146,178 $20,963 $234,608
=============== ============= ============== ==============
NET INCOME PER SHARE $0.07 $0.11 $0.02 $0.18
=============== ============= ============== ==============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 1,276,411 1,276,411 1,276,411 1,269,118
=============== ============= =============== ==============
</TABLE>
See notes to financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
BKC SEMICONDUCTORS INCORPORATED
UNAUDITED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED MARCH 31, 1997 AND MARCH 30, 1996
<S> <C> <C>
March 31, March 30,
1997 1996
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Earnings $ 20,963 $ 234,608
Depreciation 253,671 253,410
Deferred income taxes 14,033 97,451
Reserve for inventory obsolescence 0 (217,075)
Income tax refund 0 203,962
Changes in assets/liabilities:
Accounts receivable (351,657) 210,037
Inventories 27,923 (256,960)
Other assets (51,479) (144,817)
Accounts payable (439,871) 130,353
Accrued liabilities 175,600 (13,038)
-------------- --------------
Net cash provided (used) in operating activities (350,817) 497,931
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (185,580) (61,702)
Sale of assets 0 420,953
---------------- ---------------
Net cash provided/(used) in investing activities (185,580) 359,251
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings (payments) under line-of-credit 456,263 (548,464)
Proceeds from issuance of long-term debt 235,442
Principal payments on long-term debt (160,229) (303,512)
--------------- --------------
Net cash provided/(used) by financing activities 531,476 (851,976)
Net inc./(dec.) in cash and cash equivalents (4,921) 5,206
Cash and cash equivalents at beginning of period 5,921 28,340
---------------- ---------------
Cash and cash equivalents at end of period $ 1,000 $ 33,546
================ ===============
</TABLE>
See notes to financial statements.
5
<PAGE>
BKC SEMICONDUCTORS INCORPORATED
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1997
Note A - Basis of Presentation
- ------------------------------
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Rule 10-01 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation of the
financial position and results of operations have been included. Operating
results for interim periods are not necessarily indicative of the results that
may be expected for the full year. For further information, refer to the
financial statement and footnotes thereto included in the Company's annual
report on Form 10-K.
Note B - Inventories
- --------------------
Inventories consisted of the following:
<TABLE>
<S> <C> <C>
March 31, Sept. 30,
1997 1996
Raw Material $ 647,888 $ 558,008
Work in Process 1,523,052 1,519,481
Finished Goods 920,878 1,042,252
============ =============
$ 3,091,818 $ 3,119,741
============ =============
</TABLE>
<PAGE>
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
- ---------------------
Quarter Ended March 31, 1997 Compared to Quarter Ended March 30, 1996
Revenues for the second quarter of fiscal 1997 were $2,829,856
compared to $2,606,990 for the same quarter last year. The revenue increase was
a result of increased sales of BKC manufactured high reliability products. A
major part of the increase was due to the new products that were introduced in
the prior quarter.
Gross Profit for the second quarter of fiscal 1997 was $817,188, or
29% of revenues, compared to $574,791, or 22% of revenues, for the second
quarter of fiscal 1996. The increased gross profit is the result of increased
sales of higher margin, high reliability products.
Operating Expenses for the current quarter were $586,519, compared to
$465,616, for the second quarter of fiscal 1996. The increase was due to costs
associated with increasing and improving staffing in the areas of sales,
marketing, customer services and administration to support the increased growth.
Interest expense for the second quarter of fiscal 1997 was $65,561
compared to $82,621 for the same period in 1996. The $17,060 reduction was due
to a significant decrease in credit line borrowings in fiscal 1997 over fiscal
1996.
Net Income for the second quarter FY97 was $94,046, or $.07 per
share, versus net income of $146,178, or $.11 per share, in the same quarter of
last year, which included an after tax gain from the sale of certain real estate
of $130,245, or $.10 per share.
Six Months Ended March 31, 1997 compared to six months ended March 30, 1996
Revenues for the first six months of fiscal 1997 were $5,197,400,
compared to $5,507,976 for the same period in 1996. The decreased revenue was a
result of lower sales of non-BKC manufactured product, following BKC's decision
to lessen its dependence on buy-resale products, due to the volatility of the
market's served. The first six months of FY97 had sales of the non-BKC
manufactured product of $197,185 versus sales of $929,335 for the same period
last year.
Gross Profit for the first half of fiscal 1997 was $1,249,194, or 24%
of revenue, compared to $1,247,129, or 23% of revenue, the first half of fiscal
1996. The improvements in Gross Profit resulted from improved product prices,
sales of higher margin products, and elimination of some uncompetitive products.
Operating Expenses for the first half of fiscal 1997 were $1,081,741,
compared to $960,668 for the first half of fiscal 1996. The increase was due to
increased staffing in the areas of Sales, Marketing, Customer Service and
Administration.
7
<PAGE>
Interest expense for the first six months of fiscal 1997 was $123,577
compared to $171,477 for the same period in 1996. The $47,900 decrease was due
to significantly less credit line borrowings during the first six months of 1997
when compared to the same six months in fiscal 1996.
Net Income for the current six month period was $20,963, or $0.02 per
share. The same period last year resulted in net income of $234,608 or $.18 per
share including an after tax gain from the sale of real estate of $130,245, or
$0.10 per share.
Liquidity and Capital Resources
- -------------------------------
As of March 31, 1997, the Company had working capital of $2,245,000
as compared to $2,015,000 for the period ending September 30, 1996. The increase
during the six-month period was primarily due to a $352,000 increase in trade
receivables.
During the fiscal year 1997 six month period the Company used its
increased working capital to purchase $185,580 in property and equipment as
compared to $61,702 for the same six months in fiscal 1996.
As of March 31, 1997, the Company has a revolving credit line with
Eastern Bank for $2,500,000, collateralized by substantially all the assets of
the Company. The balance outstanding on the line at March 31, 1997 was
$1,887,102. The line of credit agreement contains certain restrictive covenants
which the Company has complied with or the bank has waived.
8
<PAGE>
PART II. OTHER INFORMATION
BKC SEMICONDUCTORS INCORPORATED
MARCH 31, 1997
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN THE RIGHTS OF THE COMPANY'S SECURITY HOLDERS
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Pursuant to written notice from the President, given to all
shareholders more than seven days proceeding the meeting and
in accordance with the By-laws, the annual meeting of the
shareholders of BKC Semiconductors Incorporated, (the
"Company") was held at the Marriott Hotel, 123 Old River Road,
Andover, Massachusetts, on March 25, 1997.
1. The election of six candidates to the Board of Directors
(Messrs. Shiring, Billadeau, Kady, Campbell, Magdall,
and Mitchell was approved).
2. The selection by the Board of Sullivan Bille P.C. as
the Company's independent auditors for the fiscal year
ending September 30, 1997 was approved.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
--------
27 Financial Data Schedule
(b) Reports on Form 8-K
-------------------
None
<PAGE>
Pursuant to the requirements of Section 13 or 15(d) 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.
BKC Semiconductors Incorporated
Date: May 12, 1997 /s/ James R. Shiring
------------------------------------
By: James R. Shiring, President and
Chief Executive Officer, Director
Date: May 12, 1997 /s/ Bryan A. Schmidt
------------------------------------
Bryan A. Schmidt, CFO, Treasurer
10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<MULTIPLIER> 1
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1996
<PERIOD-END> MAR-31-1997
<PERIOD-TYPE> 6-MOS
<CASH> 1,000
<SECURITIES> 0
<RECEIVABLES> 1,626,584
<ALLOWANCES> 0
<INVENTORY> 3,091,818
<CURRENT-ASSETS> 5,277,608
<PP&E> 5,850,957
<DEPRECIATION> 4,492,609
<TOTAL-ASSETS> 6,716,681
<CURRENT-LIABILITIES> 3,033,068
<BONDS> 0
0
6,878
<COMMON> 3,796,302
<OTHER-SE> (813,540)
<TOTAL-LIABILITY-AND-EQUITY> 6,716,681
<SALES> 5,197,400
<TOTAL-REVENUES> 5,197,400
<CGS> 3,948,206
<TOTAL-COSTS> 3,948,206
<OTHER-EXPENSES> 1,081,741
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (123,577)
<INCOME-PRETAX> 43,876
<INCOME-TAX> 22,913
<INCOME-CONTINUING> 20,963
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,963
<EPS-PRIMARY> $0.02
<EPS-DILUTED> $0.02
</TABLE>
