SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 quarterly period ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 FOR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to ______.
Commission File Number: 0-22046
Bogen Communications International, Inc.
(Exact name of registrant as specified in its charter)
Delaware 38-3114641
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
50 Spring Street, Ramsey, New Jersey 07446
(Address of principal executive offices) (Zip Code)
(201) 934-8500
(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 ___
As of October 31, 1996, 5,758,850 shares of the registrant's common stock, par
value $.001 per share, were outstanding.
<PAGE>
BOGEN COMMUNICATIONS INTERNATIONAL, INC.
AND SUBSIDIARIES
INDEX
PAGE
Facing Sheet 1
Index 2
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of September 30, 1996
and December 31, 1995 (Unaudited) 3
Condensed Consolidated Statements of Operations for the three and
nine months ended September 30, 1996 and 1995 (Unaudited) 5
Condensed Consolidated Statement of Changes in Stockholders' Equity
for the nine months ended September 30, 1996 (Unaudited) 6
Condensed Consolidated Statements of Cash Flows for the nine months
ended September 30, 1996 and 1995 (Unaudited) 7
Notes to Condensed Consolidated Financial Statements (Unaudited) 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 10
PART II. OTHER INFORMATION:
Item 6. Exhibits
Signatures 15
2
<PAGE>
BOGEN COMMUNICATIONS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars)
(UNAUDITED)
ASSETS September 30, December 31,
1996 1995
------------- ------------
CURRENT ASSETS:
Cash and cash equivalents $ 661 $ 1,276
Accounts receivable (less allowance for doubtful
accounts of $642 and $424 at September 30,
1996 and December 31, 1995, respectively) 6,529 4,992
Inventories 6,261 6,922
Prepaid expenses and other current assets 1,156 1,042
------- -------
TOTAL CURRENT ASSETS 14,607 14,232
Property and equipment, net 2,126 2,191
Goodwill and intangible assets, net 14,360 14,706
Other assets 300 175
------- -------
TOTAL ASSETS $31,393 $31,304
The accompanying notes are an integral part of these
condensed consolidated statements.
3
<PAGE>
BOGEN COMMUNICATIONS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars, Except Share Amounts)
(UNAUDITED)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------ ------------
<S> <C> <C>
LIABILITIES
CURRENT LIABILITIES
Amounts outstanding under revolving credit agreements $ 4,572 $ 4,944
Accounts payable 3,620 2,861
Accrued expenses 3,230 3,610
Income taxes payable 680 1,353
Advances and notes payable to related parties 755 537
Notes payable to non-related parties -- 221
------------ ------------
TOTAL CURRENT LIABILITIES 12,857 13,526
Advances and notes payable to related parties 247 3,411
Other long term liabilities 571 674
Minority interest 778 550
------------ ------------
TOTAL LIABILITIES 14,453 18,161
------------ ------------
Commitments and contingencies
STOCKHOLDERS' EQUITY
Common stock - .001 par value; 50,000,000 shares authorized;
5,758,850 and 5,759,350 shares issued and outstanding at
September 30, 1996 and December 31, 1995, respectively 6 6
Additional paid-in capital 21,774 19,175
Accumulated deficit (4,835) (6,185)
Cumulative currency translation adjustments (5) 147
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 16,940 13,143
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 31,393 $ 31,304
============ ============
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated statements.
4
<PAGE>
BOGEN COMMUNICATIONS INTERNATIONAL, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands of Dollars, Except Share Amounts)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Sales $ 12,388 $ 11,689 $ 34,078 $ 34,150
Cost of goods sold 6,530 7,150 18,628 19,899
----------- ----------- ----------- -----------
Gross profit 5,858 4,539 15,450 14,251
Operating expenses:
Research and development 808 561 2,150 1,593
Selling, general and administrative 3,794 3,808 10,278 10,748
Amortization of goodwill and intangibles 110 126 330 331
----------- ----------- ----------- -----------
Income From Operations 1,146 44 2,692 1,579
Other Expenses:
Interest expense, net 167 152 476 553
Interest expense to related parties 21 34 49 349
Minority interest 125 82 228 268
Transaction costs -- 1,493 -- 1,493
----------- ----------- ----------- -----------
Net income (loss) before income taxes 833 (1,717) 1,939 (1,084)
Provision for income taxes 84 434 589 1,178
----------- ----------- ----------- -----------
Net income (loss) $ 749 $ (2,151) $ 1,350 $ (2,262)
=========== =========== =========== ===========
NET INCOME (LOSS) PER COMMON SHARE $ .13 $ (.60) $ .23 $ (.91)
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 5,758,850 3,592,000 5,759,151 2,487,000
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated statements.
5
<PAGE>
BOGEN COMMUNICATIONS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(In Thousands of Dollars, Except Share Amounts)
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK
------------------------
CUMULATIVE
FOREIGN
NUMBER ADDITIONAL CURRENCY
OF PAID-IN ACCUMULATED TRANSLATION
SHARES AMOUNT CAPITAL DEFICIT ADJUSTMENT
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1995 5,759,350 $ 6 $ 19,175 $ (6,185) $ 147
Restructure of $3,000 related party note with related
interest of $102 2,602
Translation adjustments (152)
Repurchased and canceled common stock (500) (3)
Net income for the period 1,350
---------- ---------- ---------- ---------- ----------
Balance at September 30, 1996 5,758,850 $ 6 $ 21,774 $ (4,835) $ (5)
========== ========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated statements.
6
<PAGE>
BOGEN COMMUNICATIONS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of Dollars)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995
------------ ------------
<S> <C> <C>
NET CASH FLOW PROVIDED BY OPERATING ACTIVITIES $ 982 $ 2,160
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment and leasehold improvements (668) (777)
Purchase of intangible assets (39) --
Cash acquired from combination of Bogen and Speech Design -- 928
Collection of notes receivable 15 27
------------ ------------
NET CASH FLOW PROVIDED BY (USED IN) INVESTING ACTIVITIES (692) 178
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments to reacquire common stock (3) --
Amounts (paid) borrowed under notes payable (216) (890)
Amounts (paid) borrowed under revolving credit agreements (275) (807)
Advances and notes payable - related parties (352) 210
Cash overdraft -- 146
------------ ------------
NET CASH USED IN FINANCING ACTIVITIES (846) (1,341)
------------ ------------
(DECREASE) INCREASE IN CASH (556) 997
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,276 147
Effects of Exchange Rate on Cash (59) 94
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 661 $ 1,238
============ ============
SUPPLEMENTAL CASH FLOW INFORMATION:
NON CASH FINANCING ACTIVITIES:
Restructuring of $3,000 related party note
and related interest $ 2,602 --
Restructuring of Bogen debt by Geotek treated as
an equity contribution -- 7,155
Adjustments to combine companies -- 2,120
Notes payable to Geotek in consideration for
acquiring Bogen & Speech Design -- 3,000
Common stock issued to Geotek in consideration
for acquiring Bogen and Speech Design -- 4
Common stock and warrants issued as consideration
for certain services provided to the Company in
connection with the acquisition of Bogen and
Speech Design -- 740
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated statements.
7
<PAGE>
BOGEN COMMUNICATIONS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands of Dollars, Except Per Share Amounts)
(UNAUDITED)
1. Basis of Presentation
The condensed consolidated balance sheet of Bogen Communications
International, Inc. and Subsidiaries (the "Company") as of December 31,
1995 has been derived from the audited consolidated balance sheet contained
in the Company's Form 10-K and is presented for comparative purposes. In
the opinion of management, all significant adjustments including normal
recurring adjustments necessary to present fairly the financial position,
results of operations and cash flows for all periods presented have been
made. The results of operations for interim periods are not necessarily
indicative of the operating results for the full year. Certain 1995 amounts
have been reclassified to conform with the 1996 presentation.
Footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been omitted
in accordance with the published rules and regulations of the Securities
and Exchange Commission. These condensed consolidated financial statements
should be read in conjunction with the financial statements and notes
thereto included in the Company's Form 10-K for the most recent fiscal
year.
2. The Company
On August 21, 1995, the Company acquired a 99% interest in Bogen
Corporation ("Bogen") and a 67% interest in Speech Design GmbH ("Speech
Design") from Geotek Communications, Inc. ("Geotek"). The Company paid
Geotek $7,000 in cash, a convertible promissory note in the aggregate
principal amount of $3,000, (see note 5 "Amendment to Shareholder
Agreement") 3,700,000 shares of the Company's common stock and warrants to
acquire 200,000 shares of common stock of the Company. As a result, Geotek
acquired approximately 64% of the stock of the Company, thereby giving it a
controlling interest in the Company. Geotek, in addition, contributed
approximately $7,155 of intercompany indebtedness from Bogen to equity as
part of the transaction. Further, as contingent consideration, the Company
could be liable to pay Geotek an amount up to $11,000, based upon a
calculation of operating results of Bogen and Speech Design during the two
years after the acquisition. Based on managements review of the earnout
calculation, which takes into account Speech Design and Bogen's operating
results for the last two quarters of 1995, all of 1996 and the first two
quarters of 1997, the anticipated contingent consideration payment, if any,
will not have a material adverse effect on the Company's financial position
and operating results.
For accounting purposes, the acquisition is being treated as a joint
acquisition of the Company by Bogen and Speech Design, companies under the
common control of Geotek. The transaction is considered a reverse
acquisition with Geotek as the acquiror for accounting purposes. The
historical financial statements reflect the combination of Bogen and Speech
Design in a manner similar to a pooling of interests. Accordingly, the
historical financial statements reflect the combined operations of Bogen
and Speech Design prior to the transaction.
3. Summary of Significant Accounting Policies.
A. Principles of Consolidation
The consolidated financial statements include the accounts of Bogen
Communications International, Inc., Bogen and Speech Design. All
significant intercompany balances and transactions have been
eliminated in consolidation.
8
<PAGE>
BOGEN COMMUNICATIONS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands of Dollars)
(UNAUDITED)
B. Inventory, at lower of cost (first in, first out) or market, as of
September 30, 1996 and December 31, 1995, is as follows:
1996 1995
------ ------
Raw materials and supplies $1,884 $1,864
Work in progress 1,029 1,155
Finished goods $3,348 3,903
------ ------
Total $6,261 $6,922
====== ======
C. Recently Issued Accounting Pronouncements
In March 1995, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 121 "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of" which is effective
for fiscal years beginning after December 31, 1995. The Company will
adopt this standard later in 1996 and is presently analyzing the
impact of this new standard.
4. Income Tax
Domestic and foreign earnings before taxes on income from operations
includes income derived from operations in the respective U.S. and foreign
geographic areas, whereas provisions for taxes on income include all income
taxes payable to U.S., foreign and other governments as applicable,
regardless of the sites in which the taxable income is generated. Income
tax expense for 1996 and 1995 differs from the amount computed by applying
the U.S. federal statutory rates due to higher tax rates in Europe for
which no U.S. tax benefit has been provided and the utilization of U.S.
preacquisition loss carryforwards for which the benefit has been charged to
goodwill (1996), and, net operating losses for which the benefit could not
be recognized (1995).
5. Amendment to Stock Purchase Agreement
In May 1996, the Company and Geotek entered into an agreement in principle
to amend, effective January 1, 1996, the Stock Purchase Agreement dated as
of April 6, 1995. Pursuant to such agreement in principle, (i) the $3,000
convertible promissory note payable by the Company to Geotek, due February
1997, will be reduced and restructured to a $500 non-convertible promissory
note due July 1997, (ii) Geotek's contingent obligation to pay up to $2,500
in cash (or, at its option, make a ten year, 4% loan in the principal
amount of up to $5,000) to the Company if Speech Design and Bogen, in the
aggregate, achieve certain earning goals during the period from July 1,
1995 to June 30, 1997 will be proportionally reduced, and (iii) during the
period commencing on February 21, 1997 and ending one year thereafter,
Geotek will be granted an option to purchase from the Company $3,000 worth
of the Common Stock of the Company at the discount rates provided in the
$3,000 convertible promissory note.
9
<PAGE>
CAUTIONARY STATEMENT FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
This report contains "forward-looking" statements. The Company desires to
take advantage of the new "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995 and is including this statement for the express
purpose of availing itself of the protections of such safe harbor with respect
to all of such forward-looking statements. Examples of forward-looking
statements include, but are not limited to (a) projections of revenues, income
or loss, earnings or loss per share, capital expenditures, dividends, capital
structure and other financial items, (b) statements of plans and objectives of
the Company or its management or Board of Directors, including the introduction
of new products, or estimates or predictions of actions by customers, suppliers,
competitors or regulating authorities, (c) statements of future economic
performance and (d) statements of assumptions underlying other statements and
statements about the Company or its business.
The Company's ability to predict projected results or to predict the effect
of any legislation or other pending events on the Company's operating results is
inherently uncertain. Therefore, the Company wishes to caution each reader of
this report to carefully consider specific factors, including price competition,
the decisions of customers, the actions of competitors, the effects of
government regulations, possible delays in the introduction of new products,
customer acceptance of products and services and other factors discussed herein,
because such factors in some cases have affected, and in the future (together
with other factors) could affect, the ability of the Company to achieve its
projected results and may cause actual results to differ materially from those
expressed herein.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(All Amounts In Thousands of Dollars)
General
The financial statements and the following discussion include the accounts of
Bogen Corporation ("Bogen"), the Company's 99% owned subsidiary, and Speech
Design GmbH ("Speech Design"), its 67% owned subsidiary. All significant
intercompany accounts and transactions have been eliminated in consolidation.
Results of Operations
Three Months Ended September 30, 1996 Compared to the Three Months Ended
September 30, 1995
Net Sales.
Net sales of $12,388 for the third quarter of 1996 represent an increase of
$699, or 6% from net sales of $11,689 in the third quarter of 1995. The increase
in net sales is principally due to an aggregate increase of $1,224 in net sales
of the Company's core products, which include Commercial Sound, Engineered
Systems and Telco Product Lines. This increase was partially offset by a
decrease in net sales of the Company's Office Automated Systems ("OAS") products
of $525. See "Phase-Out of OAS Product Line" below.
Net sales for Commercial Sound products increased to $3,058 for the quarter
ended September 30, 1996, or 27%, from net sales of $2,407 for the quarter ended
September 30, 1995. Net sales of the Engineered System line of products
increased to $1,971 for the quarter ended September 30, 1996, or 2%, from net
sales of $1,926 for the quarter ended September 30, 1995. Net sales for the
Company's Telco product line increased to $7,203, or 8%, in the third quarter of
1996 from net sales of $6,675 for the comparable period in 1995.
Net sales for the OAS product line for the third quarter of 1996 were $156, a
decrease of $525, or 77%, from sales of $681 for the comparable period of 1995.
See "Phase-Out of OAS Product Line", below.
10
<PAGE>
Gross Profit.
Gross profit as a percentage of total net sales for the quarter ended September
30, 1996 was 47% compared to 39% for the comparable period in 1995. The increase
in gross profit margin is attributable to a change in product mix resulting from
the phase-out of the OAS product line, which had a significantly lower gross
profit margin in 1995 compared to that of 1996 due to a $720 provision to reduce
OAS inventory to its market value. OAS net sales comprised 1% of net sales
during the quarter ended September 30, 1996, compared to 6% of net sales for the
comparable period in 1995.
Selling, General and Administrative Expenses.
Selling, General and Administrative expenses ("SG&A") were $3,794, or 31%, of
net sales for the third quarter of 1996 as compared to $3,808 or 33% of net
sales for the third quarter of 1995. The decrease of $14 is primarily
attributable to the reduction in marketing and selling expenses related to the
OAS product line.
Research and Development.
The Company's Research and Development ("R&D") programs are designed to
efficiently introduce innovative products in a timely manner. R&D was $808, or
7%, of net sales for the third quarter of 1996, compared to $561, or 5% of net
sales for the third quarter of 1995. The $247, or 44%, increase from 1995, is
attributable to higher staff levels directly related to increased levels of
activity in connection with the development of new products.
Interest Expense
Interest expense in the third quarter of 1996 was $188, or 2%, of net sales
compared to $186, or 2%, of net sales in 1995.
Taxes on Income.
Income tax expense for the quarter ended September 30, 1996 was $84 compared to
$434 in the comparable period of 1995. The $350 decrease is due to a decrease in
foreign tax expense in the amount of $360, offset by an increase of $10 in U.S.
tax expense.
Foreign taxes decreased due to a $215 credit resulting from a refund of 1995
taxes and a decrease in Speech Design's pre-tax income.
Transaction Costs
During the third quarter of 1995 the Company recorded $1,493 in non-recurring
transaction costs for legal and other professional services received in
connection with the acquisition of Bogen and Speech Design. A portion of such
costs, amounting to $740, are non-cash, related to the issuance of common stock
and warrants to purchase common stock of the Company. The Company had no such
expense in the third quarter of 1996.
Phase-Out of OAS Product Line.
In December 1995, the Company's management determined to phase-out the OAS
product line. This determination was based on the intense competition that the
Company faced from local telephone companies and answering service companies,
both of which offer central voice mail services. The Company's OAS product line
competed with products that were frequently offered at a lower retail price than
the Company's products. In addition, competitors' products benefitted from
better brand recognition in the marketplace, which is dominated by AT&T,
Panasonic and PhoneMate. The Company anticipates the phase-out will be completed
during the fourth quarter of 1996. However, there can be no assurance that the
phase-out will not require additional time to complete.
Nine Months Ended September 30, 1996 Compared to Nine Months
Ended September 30, 1995
(All Amounts In Thousands of Dollars)
Net Sales
Net sales in the first nine months of 1996 remained relatively constant at
approximately $34.1 million compared to the same period of 1995. Sales of the
Company's OAS product line decreased approximately $2,200, or 62% precipitated
by the Company's decision to phase-out this product line. However, this decrease
was offset by strong growth in net sales of the Company's core product line
resulting in an increase of approximately $2,200, or 7%, over net sales of such
products during the comparable period of 1995.
11
<PAGE>
Gross Profit
Gross profit in the first nine months of 1996 increased by $1,199 to 45% of
sales, compared to 42% of sales for the comparable period in 1995. The increase
in gross profit margin is attributable to a change in product mix resulting from
the phase-out of the OAS product line, which had a significantly lower gross
profit margin in 1995 due to an inventory provision. OAS net sales comprised 4%
of total net sales for the nine months ended September 30, 1996, compared to 11%
of net sales in the comparable period in 1995. The Company's core product lines
contributed a 1% increase to Gross Profit.
Selling, General and Administrative Expenses
SG&A of $10,278 in the first nine months of 1996 decreased $470, or 4% from SG&A
of $10,748 in the comparable period of 1995. The decrease is primarily
attributable to a reduction in selling and marketing expense related to the OAS
product line, partially offset by higher administrative expenses associated with
the Company's expansion into the European market.
Research and Development
R&D expense of $2,150 in the first nine months of 1996 increased $557, or 35%
over R&D expense of $1,593 in the comparable period of 1995, due to higher staff
levels directly related to increased levels of activity in connection with the
development of new products. The Company intends to continue to strengthen its
core product line by continuing to introduce innovative products designed to
better meet the needs of its customer base. There can be no assurance that the
Company will develop such products in a cost-effective manner, on a timely
basis, or at all.
Interest Expense
Interest expense in the first nine months of 1996 was $525 compared to $902, for
the nine months ended September 30, 1995. The decrease of $377, or 42% is
primarily attributable to a reduction in notes payable to Geotek which were
contributed to equity in August 1995 in connection with the Company's
acquisition of Bogen.
Taxes on Income
Income tax expense in the first nine months of 1996 was $589 compared to $1,178
for the comparable period in 1995. The decrease of $589 is due to a $599
decrease in foreign tax expense, offset by a $10 increase in U.S. tax expense.
Foreign taxes decreased due to a reduction in Speech Design's pre-tax income and
a refund of 1995 taxes in the amount of $215.
Transaction Costs
During the third quarter of 1995 the Company recorded $1,493 in non-recurring
transaction costs for legal and other professional services received in
connection with the acquisition of Bogen and Speech Design. A portion of these
costs, amounting to $740 are non-cash, related to the issuance of common stock
and warrants to purchase common stock of the Company. The Company had no such
expense in the comparable nine months of 1996.
Liquidity and Capital Resources
The following discussion of liquidity and capital resources, among other things,
compares the Company's financial and cash position as of September 30, 1996 to
the Company's financial and cash position as of December 31, 1995.
During the nine months ended September 30, 1996, the Company focused its efforts
on long-term growth by strengthening profitable product lines while continuing
the phase-out of the OAS product line. Cash utilization focused on current
working capital requirements, the paydown of related party debt and subordinated
notes, and the purchase of equipment and leasehold improvements.
The Company's operating activities provided $982 of operating capital. The
Company's net income of $1,350 includes net non-cash charges of $88, which
principally consisted of (i) depreciation and amortization of $992, (ii) a
reduction of inventory reserves of $1,360 (of which $1,424 relates to the OAS
product line, offset by an increase to the core product line of $64), (iii)
minority interest of consolidated subsidiaries of $228, and (iv) a $218 increase
in reserves for bad debt. Further, net changes in operational assets and
liabilities used $456 of cash.
12
<PAGE>
Net cash flows used in investing activities of $692 was used principally for the
purchase of equipment and leasehold improvements.
Net cash flows used in financing activities include cash used to repay (i)
related parties advances and notes of $352, (ii) notes payable of $216, (iii)
net borrowings under revolving credit agreements of $275, and (iv) other items
amounting to $3, for a net usage of $846.
As of September 30, 1996, the Company's total liabilities were $14,453, of which
$12,857 was classified as current. Such indebtedness included loans from third
parties and loans and advances from Geotek.
In August 1995, Bogen extended its $10 million senior credit agreement for a two
year term, through August 1997. The line is secured by substantially all assets
of Bogen and is guaranteed by Geotek. Advances to Bogen are made based on a
percentage of accounts receivable and inventory. As of September 30, 1996, Bogen
had borrowings of $2,342 and the unutilized credit line availability was $1,383.
Also in August 1995, Bogen established a two year working capital line of credit
with Geotek, in the aggregate amount of $2 million. At September 30, 1996 Bogen
had no borrowings outstanding under the working capital line.
As of September 30, 1996, Speech Design had short term lines of credit and
overdraft facilities of $4,534. Short term borrowings under such facilities
amounted to $2,229. Speech Design's unutilized credit line availability at
September 30, 1996, was $2,305.
In May 1996, the Company and Geotek entered into an agreement in principle to
amend, effective as of January 1, 1996, the Stock Purchase Agreement dated as of
April 6, 1995. As part of such agreement in principle, the initial $3,000
convertible note from the Company to Geotek will be restructured to a $500 note
bearing interest as stated in the original note. The agreement in principle is
more fully described in Footnote 5 to the accompanying financial statements.
The Company believes that it has adequate liquidity to finance its ongoing
activities.
13
<PAGE>
EXHIBITS
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are included herein:
27.1 Financial Data Schedule.
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the
quarter ended September 30, 1996.
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.
BOGEN COMMUNICATIONS INTERNATIONAL, INC.
(Registrant)
Date: November 14, 1996 By: /s/ Zvi Peled
-------------------
Name: Zvi Peled
Title: President/CEO
Date: November 14, 1996 By: /s/ Yoav M. Cohen
------------------------
Name: Yoav M. Cohen
Title: Chief Financial Officer
15
<PAGE>
EXHIBIT INDEX
Exhibit No.
27.1 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-mos 9-mos
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-START> JUL-01-1996 JAN-01-1996
<PERIOD-END> SEP-30-1996 SEP-30-1996
<CASH> 661 661
<SECURITIES> 0 0
<RECEIVABLES> 7,171 7,171
<ALLOWANCES> 642 642
<INVENTORY> 6,261 6,261
<CURRENT-ASSETS> 14,607 14,607
<PP&E> 2,126 2,126
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 31,393 31,393
<CURRENT-LIABILITIES> 12,857 12,857
<BONDS> 0 0
0 0
0 0
<COMMON> 6 6
<OTHER-SE> 16,940 16,940
<TOTAL-LIABILITY-AND-EQUITY> 31,393 31,393
<SALES> 12,388 34,078
<TOTAL-REVENUES> 12,388 34,078
<CGS> 6,530 18,628
<TOTAL-COSTS> 4,712 12,758
<OTHER-EXPENSES> 125 228
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 188 525
<INCOME-PRETAX> 833 1,939
<INCOME-TAX> 84 589
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 749 1,350
<EPS-PRIMARY> 0.13 0.23
<EPS-DILUTED> 0 0
</TABLE>
