<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------------------------------------------
FORM 10-Q
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Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Quarter Ended September 30, 1997
Commission File Number 0-21626
ELECTROGLAS, INC.
(exact name of registrant as specified in its charter)
DELAWARE 77-0336101
(state or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification Number)
2901 Coronado Drive
Santa Clara, CA 95054
Telephone: (408) 727-6500
(address of principal executive
offices and telephone number)
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
requirement for the past 90 days.
Yes X No
--- ---
As of November 1, 1997, 19,443,041 shares of the Registrant's common stock,
$0.01 par value, were issued and outstanding.
<PAGE> 2
INDEX
ELECTROGLAS, INC.
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Condensed Financial Statements
Consolidated condensed statements of operations -- Three months and
nine months ended September 30, 1997 and
September 30, 1996 ..................................................... 3
Consolidated condensed balance sheets -- September 30, 1997
and December 31, 1996 .................................................. 4
Consolidated condensed statements of cash flows -- Nine months
ended September 30, 1997 and September 30, 1996 ........................ 5
Notes to consolidated condensed financial statements --
September 30, 1997 ..................................................... 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations .......................... 9
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security-Holders .................... 14
Item 6. Exhibits and Reports on Form 8-K ....................................... 14
SIGNATURES 15
</TABLE>
-2-
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Condensed Financial Statements
ELECTROGLAS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
--------------------- ----------------------
1997 1996 1997 1996
------- ------- -------- --------
<S> <C> <C> <C> <C>
Net sales $44,263 $31,467 $105,889 $132,171
Cost of sales 24,556 17,014 60,434 64,762
------- ------- -------- --------
Gross profit 19,707 14,453 45,455 67,409
------- ------- -------- --------
Operating expenses:
Engineering, research and development 5,678 4,819 15,473 14,312
Selling, general and administrative 8,758 6,566 22,683 21,335
In-process research and development -- -- 23,500 --
------- ------- -------- --------
Total operating expenses 14,436 11,385 61,656 35,647
------- ------- -------- --------
Operating income (loss) 5,271 3,068 (16,201) 31,762
Interest income 1,463 1,199 3,931 3,510
Other income (expense), net (32) 54 (332) 90
------- ------- -------- --------
Income (loss) before income taxes 6,702 4,321 (12,602) 35,362
Provision for income taxes 1,015 98 2,400 10,962
------- ------- -------- --------
Net income (loss) $ 5,687 $ 4,223 $(15,002) $ 24,400
======= ======= ======== ========
Net income (loss) per share $ 0.29 $ 0.24 $ (0.82) $ 1.35
======= ======= ======== ========
Shares used in per share calculations 19,918 17,878 18,385 18,044
======= ======= ======= =======
</TABLE>
See accompanying notes to consolidated condensed financial statements
-3-
<PAGE> 4
ELECTROGLAS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
--------- ---------
(Unaudited) (1)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $26,642 $11,141
Short-term investments 101,804 117,961
Accounts receivable, net 34,562 16,663
Inventories 26,173 22,578
Prepaid expenses and other current assets 3,170 8,231
Deferred income taxes 7,352 7,017
--------- ---------
Total current assets 199,703 183,591
Deferred income taxes 541 2,669
Equipment and leasehold improvements, net 14,315 10,184
Other assets 10,372 1,422
--------- ---------
Total assets $224,931 $197,866
========= =========
Liabilities and stockholders' equity
Current liabilities:
Short-term borrowings $3,365 $1,790
Accounts payable 10,014 4,754
Accrued liabilities 14,639 17,061
Income taxes payable 2,668 610
--------- ---------
Total current liabilities 30,686 24,215
Stockholders' equity:
Preferred stock, $0.01 par value;
authorized 1,000,000; none outstanding -- --
Common stock, $0.01 par value;
authorized 40,000,000; issued and outstanding
20,143,000 at September 30, 1997 and 18,203,000 at
December 31, 1996 201 182
Additional paid in capital 125,653 89,825
Deferred stock compensation (1,056) (1,278)
Retained earnings 79,671 94,673
--------- ---------
204,469 183,402
Less cost of common stock in treasury;
700,000 at September 30, 1997 and 674,000 at
December 31, 1996 10,224 9,751
--------- ---------
Total stockholders' equity 194,245 173,651
--------- ---------
Total liabilities and stockholders' equity $224,931 $197,866
========= =========
</TABLE>
(1) The information in this column was derived from the Company's audited
consolidated financial statements for the year ended December 31, 1996.
See accompanying notes to consolidated condensed financial statements
-4-
<PAGE> 5
ELECTROGLAS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended
September 30,
-----------------------
1997 1996
--------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $(15,002) $24,400
Changes to income not affecting cash 29,073 2,769
Changes in current assets and current liabilities
net of effects from acquisition (13,796) (4,363)
--------- --------
Cash provided by operating activities 275 22,806
Cash flow from investing activities:
Capital expenditures (7,055) (5,993)
Purchases of investments (157,529) (185,837)
Sales and maturities of investments 172,917 176,482
Other assets (225) (856)
Cash acquired in acquisition 973 --
--------- --------
Cash provided by (used in) investing activities 9,081 (16,204)
Cash flow from financing activities:
Proceeds from short-term borrowings 1,575 1,902
Payments of short-term borrowings (1,250) --
Sales of common stock, net of issuance costs 6,288 978
Purchases of treasury stock (473) (6,105)
--------- --------
Cash provided by (used in) financing activities 6,140 (3,225)
Effect of exchange rate changes 5 (28)
--------- --------
Net increase in cash and cash equivalents 15,501 3,349
Cash and cash equivalents at beginning of period 11,141 6,796
--------- --------
Cash and cash equivalents at end of period $ 26,642 $ 10,145
========= =========
</TABLE>
See accompanying notes to consolidated condensed financial statements
-5-
<PAGE> 6
ELECTROGLAS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE: 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial statements have been
prepared by the Company in accordance with generally accepted accounting
principles for interim financial information and with 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 consolidated
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring adjustments) considered necessary for fair presentation have
been included. These consolidated condensed financial statements should be read
in conjunction with the audited consolidated financial statements for the year
ended December 31, 1996, included in the Company's Annual Report on Form 10-K.
Operating results for the nine month period ended September 30, 1997 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1997.
The Company's fiscal year end is December 31. The Company's fiscal quarters end
on the Saturday nearest the end of the calendar quarter. For convenience, the
Company has indicated that its quarters end on March 31, June 30 and September
30.
USE OF ESTIMATES - The preparation of the accompanying unaudited consolidated
condensed financial statements requires management to make estimates and
assumptions that affect the amounts reported in the financial statements. Actual
results could differ from those estimates.
NOTE: 2 - INVENTORIES
Inventories comprised the following:
<TABLE>
<CAPTION>
September 30, December 31,
(in thousands) 1997 1996
- -----------------------------------------------------------------------------
<S> <C> <C>
Raw materials $ 11,962 $ 7,671
Work in process 8,929 8,766
Finished goods 5,282 6,141
- -----------------------------------------------------------------------------
$ 26,173 $ 22,578
- -----------------------------------------------------------------------------
</TABLE>
NOTE: 3 - NET INCOME (LOSS) PER SHARE
Net income per share is computed using the weighted average number of common
shares and dilutive common equivalent shares attributable to stock options using
the treasury stock method. However, since the Company incurred a loss in its
most recent nine month period, common share equivalents have been excluded from
the computation for such period as they were antidilutive.
-6-
<PAGE> 7
In February 1997, the Financial Accounting Standards Board issued Statement No.
128, "Earnings Per Share," which is required to be adopted on December 31, 1997.
At that time, the Company will be required to change the method currently used
to compute net income per share and to restate all prior periods. Under the new
requirements for calculating basic net income per share, the dilutive effect of
stock options will be excluded. There will be no impact to income per share for
the three months and nine months ended September 30, 1997 and 1996. The impact
of Statement 128 on the calculation of diluted net income per share for these
periods is not material.
NOTE: 4 - LEASE AGREEMENT
In March 1997, the Company entered into a five-year operating lease for
approximately 21.5 acres of undeveloped land in San Jose, California. The
monthly payments are based on the London Interbank Offering Rate (LIBOR). At
current interest rates, the annual lease payments represent approximately
$710,000. At the end of the lease, the Company has the option to acquire the
property at its original cost of approximately $12,000,000 and any current rent
due and payable.
The guaranteed residual payment on the lease is approximately $12,000,000. The
lease contains certain restrictive covenants. The Company was in compliance with
these covenants at September 30, 1997. The lease also contains a collateral
option, which would allow the Company to reduce rent expense. The Company has
exercised the collateral option and at September 30, 1997, the Company had
pledged cash of approximately $12,000,000 which is included in cash and cash
equivalents, since the Company can withdraw the cash with ten days notice.
NOTE: 5 - ACQUISITION OF KNIGHTS TECHNOLOGY
On May 19, 1997, the Company acquired Knights Technology, Inc. (Knights), a
developer of yield management software for the semiconductor industry, for the
following amounts (in thousands):
<TABLE>
<S> <C>
Common stock issued, 1,352,205 shares $27,720
Assumption of Knights stock options 2,295
Acquisition costs 1,785
-------
$31,800
=======
</TABLE>
The acquisition was recorded under the purchase method of accounting, and
accordingly, the accompanying financial statements include the operations of
Knights subsequent to the acquisition date. The purchase price was allocated,
based on an independent appraisal obtained by the Company, to the tangible and
intangible assets acquired and liabilities assumed based on their respective
fair values on the date of acquisition as follows (in thousands):
<TABLE>
<S> <C>
Cash $ 973
Other current assets 1,220
Non-current assets 712
Intangibles 7,720
Liabilities (2,325)
In-process research and development 23,500
-------
$31,800
=======
</TABLE>
-7-
<PAGE> 8
To determine the value of in-process research and development, the Company
considered, among other factors, the stage of development of each project,
expected income, target markets, and associated risks. Associated risks included
inherent difficulties and uncertainties in completing the project and, thereby,
achieving technical feasibility and risks related to the viability of and
potential changes in future target markets. This analysis resulted in a
valuation of $23,500,000 for in-process research and development that had not
reached technical feasibility and did not have alternative future uses.
Therefore, in accordance with generally accepted accounting principles, the
$23,500,000 was expensed.
Intangible assets relate primarily to developed technology and goodwill. To
determine the value of developed technology, the expected future cash flows of
each software product was discounted, taking into account risks related to the
characteristics and applications of each product, existing and future markets,
and assessments of the life cycle stage of each product. This analysis resulted
in a valuation for completed software which had reached technological
feasibility and, therefore, was capitalizable. Intangible assets will be
amortized on a straight-line basis over estimated useful lives ranging from
three to five years.
As part of the Agreement and Plan of Reorganization, 10% of the common stock
included in the consideration was deposited into an escrow account. The escrow
shares are to be distributed to Knights stockholders on May 19, 1998 and are for
the full satisfaction of losses to the Company resulting from misrepresentations
or omissions in the agreement.
NOTE: 6 - INCOME TAXES
The Company's estimated effective tax rate for the nine months ended September
30, 1997 was 22% as applied to income before income taxes exclusive of the
nondeductible in-process research and development expense. The effective tax
rate is less than the statutory federal rate of 35% primarily as a result of the
research and development tax credit and tax exempt investment income.
-8-
<PAGE> 9
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The statements contained in this Form 10-Q that are not purely historical are
forward-looking statements, including statements regarding the Company's
expectations, hopes or intentions regarding the future. Forward-looking
statements include, but are not limited to, statements about gross profits,
current levels of taxable income, liquidity, anticipated cash needs and
availability. All forward-looking statements included in this document are made
as of the date hereof, based on information available to the Company as of the
date hereof, and Electroglas assumes no obligation to update any forward-looking
statement. It is important to note that the Company's actual results could
differ materially from those in such forward-looking statements. You should
consult the risk factors listed from time to time in the Company's Annual Report
on Form 10-K, as well as those disclosed in this discussion and analysis
included under the sections titled "Factors That May Affect Results and
Financial Condition" and "Volatility of Stock Price."
The components of the Company's statements of operations, expressed as a
percentage of net sales, are as follows:
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
----------------- ------------------
1997 1996 1997 1996
----- ----- ----- ----
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 55.5 54.1 57.1 49.0
----- ----- ----- ----
Gross profit 44.5 45.9 42.9 51.0
----- ----- ----- ----
Operating expenses:
Engineering, research and development 12.8 15.3 14.6 10.8
Selling, general and administrative 19.8 20.9 21.4 16.2
In-process research and development -- -- 22.2 --
----- ----- ----- ----
Total operating expenses 32.6 36.2 58.2 27.0
----- ----- ----- ----
Operating income (loss) 11.9 9.7 (15.3) 24.0
Interest income 3.3 3.8 3.7 2.7
Other income (expense), net (0.1) 0.2 (0.3) 0.1
----- ----- ----- ----
Income (loss) before income taxes 15.1 13.7 (11.9) 26.8
Provision for income taxes 2.3 0.3 2.3 8.3
----- ----- ----- ----
Net income (loss) 12.8% 13.4% (14.2)% 18.5%
===== ===== ===== ====
</TABLE>
RESULTS OF OPERATIONS
Net Sales
Net sales for the quarter ended September 30, 1997 were $44,263,000, a 40.7%
increase from net sales of $31,467,000 in the comparable period last year. The
increase was due primarily to higher system unit sales, particularly the sales
of the Horizon 4090, as the Company recovered from a general downturn in the
semiconductor equipment industry which it experienced in the latter half of
1996.
-9-
<PAGE> 10
Net sales for the first nine months of 1997 were $105,889,000, a 19.9% decrease
from net sales of $132,171,000 for the same period last year. The decrease in
net sales for the nine month period compared to the same period last year was
principally due to the effect of the slowdown in the semiconductor industry
which began to impact the Company's sales in the third quarter of 1996.
For the quarters ended September 30, 1997 and 1996, net sales comprised of the
Horizon 4000 series (72.4% and 52.5%, respectively), the 2000 series (9.7% and
28.4%, respectively) and aftermarket sales, consisting primarily of service,
spare parts and upgrades (14.5% and 19.1%, respectively). Knights software sales
added 3.4% for the current quarter.
For the nine months ended September 30, 1997 and 1996, net sales comprised of
the Horizon 4000 series (69.1% and 58.3%, respectively), the 2000 series (11.3%
and 28.1%, respectively) and aftermarket sales (17.0% and 13.6%, respectively).
Knights software sales added 2.6% since the acquisition in May 1997.
For the quarter ended September 30, 1997, international sales accounted for
41.6% of net sales as compared to 44.7% for the same period last year. The
decrease was due primarily to lower Japanese and European sales, as a percentage
of total sales, in the third quarter of 1997 from 1996. In absolute dollars,
except for a decrease in Japanese sales, the Company experienced sales increases
across the major geographic regions, most notably in North America and Asia
Pacific.
For the first nine months of 1997, international sales accounted for 41.2% of
net sales as compared to 43.9% for the same period last year. The decrease in
the percentage of international sales was due principally to lower European and
Japanese sales in the first nine months of 1997 from 1996. Except for Asian
Pacific sales which remained relatively flat, the Company experienced sales
declines, in absolute dollars, across the major geographic regions.
The semiconductor industry has been experiencing volatility in product demand
and pricing which have caused semiconductor manufacturers to exercise caution in
making capital equipment decisions. As a result of the uncertainties in this
market environment, any rescheduling or cancellations of planned capital
purchases by semiconductor manufacturers will cause the Company's sales to
fluctuate on a quarterly basis.
Gross Profit
Gross profit, as a percentage of sales, was 44.5% for the third quarter of 1997,
compared to 45.9% for the third quarter of 1996. The decrease in gross profit,
as a percentage of sales, was primarily attributable to a sales shift from
higher margin, mature products to the Horizon 4090, which has lower margins due
to product pricing pressures and higher material costs. These more than offset
gains from manufacturing volume and, to a lesser extent, new higher margin
software sales.
For the first nine months of 1997, gross profit was 42.9% compared to 51.0% for
the first nine months of 1996. The decrease in gross profit, as a percentage of
sales, was primarily attributable to a sales shift from higher margin, mature
products to the Horizon 4090, which has lower margins due to product pricing
pressures and higher material costs. In addition, gross profit was negatively
impacted by underutilization of manufacturing capacity from lower sales and
production volume in the first nine months of 1997.
The Company believes that its gross profit will continue to be affected by a
number of factors, including competitive pressures, changes in demand for
semiconductors, changes in product mix, level of software sales, and excess
manufacturing capacity costs.
-10-
<PAGE> 11
Engineering, Research and Development
Engineering, research and development expenses were $5,678,000 for the third
quarter of 1997, up 17.8% from $4,819,000 in the comparable quarter of a year
ago. For the first nine months of 1997, these expenses were $15,473,000, up 8.1%
from $14,312,000 for the same period last year. The increases for the three and
nine months periods were due primarily to the addition of Knights operations and
the amortization of intangibles related to the Knights acquisition.
Engineering, research and development expenses consist primarily of salaries,
project materials, amortization of intangibles related to the Knights
acquisition, and other costs associated with the Company's ongoing efforts in
hardware and software product development and enhancement to meet changing
industry needs.
Selling, General and Administrative
Selling, general and administrative expenses were $8,758,000 for the third
quarter of 1997, up 33.4% from $6,566,000 in the comparable quarter last year.
This was mainly attributable to the added costs from Knights operations,
including the amortization of goodwill, and to a lesser extent, operating costs
related to the new land lease and increased employee incentive compensation.
For the first nine months of 1997, these expenses were $22,683,000, up 6.3% from
$21,335,000 in the comparable period of a year ago. This was primarily a result
of increased marketing support and higher worldwide customer operations
expenses, coupled with the addition of Knights operating costs and goodwill
amortization related to the Knights acquisition. These were offset by a
reduction in the amount of employee incentive compensation recorded in a less
profitable first nine months in 1997 as compared to the same period last year.
In-Process Research and Development
The charge for in-process research and development of $23,500,000 in the second
quarter of 1997 was attributable to the Company's acquisition of Knights. See
note 5 under "Notes to Consolidated Condensed Financial Statements."
Income Taxes
The Company's estimated effective tax rate for the three months ended September
30, 1997 was 15.1% compared to 2.3% for the third quarter of 1996. The effective
tax rates for both of these quarters included the net impact of reinstating the
federal research and development credit. The lower rate in 1996 was also due to
the impact of higher tax exempt interest income relative to total estimated
pretax income, and the decrease in state taxes.
The Company's estimated effective tax rate for the nine months ended September
30, 1997 was 22.0%, applied to income before taxes exclusive of the deduction
for acquired in-process research and development, compared to 31.0% for the
first nine months of 1996. The decrease in the effective tax rate for the
current nine month period was primarily attributable to the impact of new
federal tax legislation extending the research and development tax credit and
the greater percentage impact of tax-exempt investment income. The charge for
the in-process research and development will be a non-deductible expense for tax
purposes.
-11-
<PAGE> 12
FACTORS THAT MAY AFFECT RESULTS AND FINANCIAL CONDITION
The Company's future operating results may be affected by inherent uncertainties
that exist in the worldwide semiconductor equipment industry. Such uncertainties
include, but are not limited to, timely availability and acceptance of new
hardware and software products, capital expenditures of semiconductor
manufacturers, changes in demand for semiconductor products, competitive pricing
pressures, product volume and mix, development of new products, enhancement of
existing products, global economic conditions, availability of needed
components, availability of skilled employees, timing of orders received,
fluctuations in foreign exchange rates, introduction of competitor products
having technological and/or pricing advantages, and the continued integration of
the business of Knights into the Company. In addition, the Company has
experienced, and may in the future experience, significant fluctuations in its
quarterly financial results. Accordingly, recent historical operating results
should only be one source of information when evaluating the future financial
performance of the Company.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash, cash equivalents and short-term investments were
$128,446,000 at September 30, 1997, a decrease of $656,000 from December 31,
1996.
For the nine months ended September 30, 1997, operating activities generated
cash of $275,000. This resulted from noncash charges to income of $29,073,000,
which included the in-process research and development write-off of $23,500,000
related to the Knights acquisition, offset by a net loss of $15,002,000 and a
net increase in current assets and liabilities of $13,796,000. Accounts
receivable increased by $17,156,000 due to a higher level of shipments during
the current quarter compared to the fourth quarter of 1996, while inventories
increased by $3,557,000 to support the Horizon 4090 production ramp up. Other
current assets decreased due primarily to an income tax refund of $4,900,000
received in the first quarter. Accrued liabilities decreased by $5,203,000,
while accounts payable increased by $4,897,000. The changes in accounts
receivable, inventories, other current assets, accrued liabilities, and accounts
payable exclude the impact of the acquisition of Knights.
Cash provided by investing activities was $9,081,000 due primarily to sales and
maturities of investments of $15,388,000, offset partially by capital
expenditures of $7,055,000 for engineering design and test equipment,
manufacturing leasehold improvements, and enhancement of the Company's
information technology infrastructure. In addition, the Company acquired cash of
$973,000 from the Knights acquisition.
Cash provided by financing activities was $6,140,000. This was attributed to the
sale of common stock of $6,288,000 under employee stock plans and additional
short-term borrowings of $1,575,000 by the Company's Japanese subsidiary. These
were partially offset by the repayment of $1,250,000 for a bank loan assumed by
the Company from the Knights acquisition, and the repurchase of an additional
26,000 shares of the Company's common stock at a cost of $473,000 in the first
quarter.
At September 30, 1997, the Company's Japanese subsidiary had lines of credit
with Japanese banks with a total borrowing capacity of approximately $5,000,000
(denominated in Yen). Amounts outstanding under these facilities at September
30, 1997 were $3,365,000. These facilities enable the Company's Japanese
subsidiary to finance its working capital requirements locally.
-12-
<PAGE> 13
In March 1997, the Company entered into an agreement to lease land for a
five-year term with an investment value of $12,000,000, which will result in an
increase in future operating lease commitments. Based on current interest rates,
the annual lease payments will be approximately $710,000.
Historically, the Company has generated cash in an amount sufficient to fund its
operations. The Company anticipates that its existing capital resources and cash
flow generated from future operations will enable it to maintain its current
level of operations and its planned operations including capital expenditures
for the foreseeable future.
VOLATILITY OF STOCK PRICE
The Company believes that any of the following factors can cause the price of
the Company's Common Stock to fluctuate, perhaps substantially: announcements of
developments related to the Company's business, fluctuations in the Company's
operating results, sales of substantial amounts of securities of the Company in
the marketplace, general conditions in the semiconductor industry or worldwide
economy, a shortfall in revenue or earnings from or changes in analysts'
expectations, announcements of technological innovations or new products or
enhancements by the Company or its competitors, developments in patents or other
intellectual property rights, and changes in the Company's relationships with
certain customers and suppliers. In addition, in recent years, the stock market
in general, and the market for the shares of small capitalization stocks in
particular, including the Company's, have experienced extreme price fluctuations
which have often been unrelated to the operating performance of affected
companies. There can be no assurance that the market price of the Company's
Common Stock will not continue to experience significant fluctuations in the
future, including fluctuations that are unrelated to the Company's performance.
-13-
<PAGE> 14
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security-Holders
At the Company's Special Meeting of Stockholders held on August
27, 1997, the stockholders approved the Electroglas, Inc. 1997
Stock Incentive Plan with 11,990,216 affirmative votes, 4,283,862
negative votes and 453,283 abstentions.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
27 Financial Data Schedule
(b) Reports on Form 8-K:
None
-14-
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ELECTROGLAS, INC.
DATE: November 12, 1997 BY: /s/ Armand J. Stegall
--------------------------- ---------------------
Armand J. Stegall
Chief Financial Officer
-15-
<PAGE> 16
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENTS OF OPERATIONS, THE CONSOLIDATED BALANCE SHEETS, AND THE
ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 26,642
<SECURITIES> 101,804
<RECEIVABLES> 35,031
<ALLOWANCES> 469
<INVENTORY> 26,173
<CURRENT-ASSETS> 199,703
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0
0
<COMMON> 201
<OTHER-SE> 194,044
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<SALES> 105,889
<TOTAL-REVENUES> 105,889
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<INCOME-TAX> 2,400
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<EPS-PRIMARY> (0.82)
<EPS-DILUTED> (0.82)
</TABLE>
