U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-QSB
(Mark one)
[ X ] Quarterly report pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934
For the quarterly period ended March 31, 1996
[ ] 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 0-24564
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FIBERSTARS, INC.
(Exact name of registrant as specified in its charter)
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California 94-3021850
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2883 Bayview Drive, Fremont, CA 94538
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code): (510) 490-0719
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
----- -----
Number of shares of Common Stock outstanding as of March 31, 1996: 3,391,329
Index to Exhibits is at page 11
Page 1 of 12 pages
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FIBERSTARS, INC.
TABLE OF CONTENTS
Page
Part I - FINANCIAL INFORMATION
Item 1 Financial Statements:
a. Balance Sheets
March 31, 1996 and December 31, 1995....................... 3
b. Statements of Operations
Three months ended March 31, 1996 and 1995................. 4
c. Statements of Cash Flows
Three months ended March 31, 1996 and 1995................. 5
d. Notes to Financial Statements.............................. 6
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations.............................7-9
Part II - OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K................................ 10
Signatures...................................................... 10
EXHIBITS
Index to Exhibits............................................... 11
Exhibit 11 Statement Regarding Computation of Net Income (Loss) Per Share.. 12
Page 2
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FIBERSTARS, INC.
BALANCE SHEETS
(amounts in thousands)
March 31, December 31,
1996 1995
----------- ------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 1,118 $ 1,756
Short-term investments 1,743 2,446
Accounts receivable, net 4,132 2,614
Inventories 1,804 1,904
Prepaid expenses and other assets 242 176
Deferred income taxes 616 668
------- -------
Total current assets 9,655 9,564
Fixed assets, net 792 754
Investment in joint ventures 37 342
Other assets 203 21
Deferred income taxes 813 813
------- -------
Total assets $11,500 $11,494
======= =======
LIABILITIES
Current liabilities:
Accounts payable $ 936 $ 1,098
Accrued expenses 1,073 977
Current portion of long-term debt 13 13
------- -------
Total current liabilities 2,022 2,088
Long-term debt, less current portion 37 40
------- -------
Total liabilities 2,059 2,128
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SHAREHOLDERS' EQUITY
Common stock 0 0
Additional paid-in capital 11,856 11,848
Notes receivable from shareholder (75) (75)
Accumulated deficit (2,340) (2,407)
------- -------
Total shareholders' equity 9,441 9,366
------- -------
Total liabilities and shareholders' equity $11,500 $11,494
======= =======
The accompanying notes are an integral part
of these financial statements
Page 3
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FIBERSTARS, INC.
STATEMENTS OF OPERATIONS
(amounts in thousands)
(unaudited)
Three months ended March 31,
1996 1995
------ ------
Net sales $3,746 $2,689
Cost of sales 2,192 1,523
------ ------
Gross profit 1,554 1,166
------ ------
Operating expenses:
Research and development 228 195
Sales and marketing 941 827
General and administrative 308 334
------ ------
Total operating expenses 1,477 1,356
------ ------
Income (loss) from operations 77 (190)
Other income (expense):
Equity in joint ventures' income (loss) (7) 28
Interest income, net 49 41
------ ------
Income (loss) before income tax 119 (121)
Benefit from (provision for) income taxes (51) 61
------ ------
Net income (loss) $ 68 $ (60)
====== ======
Net income (loss) per share $ 0.02 $(0.02)
====== ======
Shares used in computing net income (loss) 3,506 3,253
====== ======
The accompanying notes are an integral part
of these financial statements
Page 4
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FIBERSTARS INC.
STATEMENTS OF CASH FLOWS
(amounts in thousands)
(unaudited)
Three months ended March 31,
1996 1995
------- -------
Cash flows from operating activities:
Net income (loss) $ 68 ($ 60)
------- -------
Adjustments to reconcile net income to net cash
(used in) operating activities:
Depreciation 65 93
Provision for doubtful accounts receivable 6 13
Equity in joint ventures' income 7 (28)
Changes in assets & liabilities:
Increase in accounts receivable (1,525) (736)
Decreases (increase) in inventories 100 (545)
Decrease (increase) in prepaid expenses and
other current assets (66) 16
Decrease in deferred income taxes 52 0
Decrease in other assets 57 0
Increase (decrease) in accounts payable (162) 157
Increase (decrease) in accrued expenses 96 (146)
------- -------
Total adjustments (1,370) (1,176)
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Net cash used in operating activities (1,302) (1,236)
------- -------
Cash flows from investing activities:
Sale of short term investments 703 0
Sale of equity in joint venture 59 0
Acquisition of fixed assets (103) (71)
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Net cash used in investing activities 659 (71)
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Cash flows from financing activities:
Cash proceeds from sale of common stock 8 794
Proceeds from short term borrowing 0
Repayment of long term debt (3) (23)
------- -------
Net cash provided by financing activities 5 771
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Net increase in cash and cash equivalents (638) (536)
Cash and cash equivalents, beginning of period 1,756 3,489
------- -------
Cash and cash equivalents, end of period $ 1,118 $ 2,953
======= =======
Supplemental schedule of non-cash investing
and financing activities:
Note receivable from sale of investment
in joint venture $ 239 $ 0
======= =======
The accompanying notes are an integral part
of these financial statements
Page 5
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FIBERSTARS, INC.
NOTES TO FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Interim Financial Statements (unaudited)
Although unaudited, the interim financial statements in this report reflect all
adjustments, consisting of normal recurring accruals, which are, in the opinion
of management, necessary for a fair statement of financial position, results of
operations and cash flows for the interim periods covered and of the financial
condition of the Company at the interim balance sheet dates. The results of
operations for the interim periods presented are not necessarily indicative of
the results expected for the entire year.
The year-end balance sheet information was derived from audited financial
statements, but does not include all disclosures required by generally accepted
accounting principles. These financial statements should be read in conjunction
with the Company's audited financial statements and notes thereto for the year
ended December 31, 1995, contained in the Company's 1995 Annual Report to
Shareholders.
Net Income (Loss) Per Share
Net income (loss) per share is computed by dividing net income (loss) by the
weighted average number of common and common equivalent (when dilutive) shares
of common stock outstanding during each period.
2. Inventories
Inventories are stated at the lower of cost (first-in, first-out) or market and
consist of the following (in thousands):
March 31, December 31,
1996 1995
---- ----
(unaudited)
Raw materials $ 1,087 $ 1,111
Finished Goods 717 793
-------- --------
$ 1,804 $ 1,904
======== ========
3. Sale of Investment in Joint Venture
On February 21, 1996, the Company entered into an agreement to sell its equity
interest in Fiberoptic Medical Products (FMP) for the net book value of
approximately $300,000. Under the terms of the agreement, the Company received a
cash payment equal to 20% of the total and a note for the remaining 80%, payable
in four annual installments together with simple interest at 7%. FMP will
continue to purchase certain product(s) exclusively from the Company.
Page 6
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Page 9
FIBERSTARS, INC.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The following discussion should be read in conjunction with the attached
financial statements and notes thereto. Except for the historical information
contained herein, the matters discussed in this document are forward-looking
statements that involve certain risks and uncertainties, including, among
others, the risks and uncertainties discussed below.
Net Sales
Q1'96 Q1'95 change
Net Sales ($000) $3,746 $2,689 39%
Net sales in the first quarter were 39% above the first quarter of 1995, with
the greatest factor being higher unit sales in the swimming pool market.
Gross Profit
Q1'96 Q1'95 change
Gross Profit ($000) $1,554 $1,166 33%
Percentage of net sales 41% 43%
The Company's gross margin percentage declined to 41.5% in the quarter ended
March 31, 1996, primarily due to changes in product mix and to certain costs
incurred in expanding the Company's manufacturing operations.
Research and Development
Q1'96 Q1'95 change
Research & Development ($000) $228 $195 17%
Percentage of net sales 6% 7%
Research and Development expenses increased in absolute dollars, primarily due
to increases in personnel and consulting expenses. Because of increased revenue,
the expenses as a percentage of sales decreased. The Company expects to continue
investing significantly in research and product development; however, dollars
and percentages may vary from period to period.
Selling and Marketing
Q1'96 Q1'95 change
Selling & Marketing ($000) $941 $827 14%
Percentage of net sales 25% 31%
Page 7
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Selling and marketing expenses increased by 14% compared to the first quarter of
1995. The increase is primarily attributable to higher commissions (associated
with higher sales), combined with increases in marketing literature and certain
promotional expenses.
The expenses decreased as a percentage of sales, due to the higher sales volume.
General and Administrative
Q1'96 Q1'95 change
General & Administrative ($000) $308 $334 -8%
Percentage of net sales 8% 12%
General and administrative expenses for the quarter decreased by 8% compared to
the first quarter of 1995, largely due to a reduction in annual report
production and legal expenses, partly offset by increased personnel costs.
Other Income (Expense)
Q1'96 Q1'95 change
Other Income (Expense) ($000) $42 $69 -39%
Percentage of net sales 1% 3%
Other income includes interest, as well as the Company's share of income or loss
from joint ventures. Net interest income was $49,000 for the quarter, compared
to $41,000 in the first quarter of 1995. Interest income varies from quarter to
quarter based on fluctuations in interest rates and in the Company's cash
balances. During the quarter ended March 31, 1996, the Company sold its interest
in one joint venture (see Note 3 to Financial Statements). The Company's
interest in the remaining joint venture yielded a $7,000 loss for the quarter,
compared to income of $28,000 from both joint ventures in the first quarter of
1995. The Company expects its interest in joint venture income or loss to remain
immaterial for the foreseeable future.
Net Income
Q1'96 Q1'95 change
Net Income (Loss) ($000) $68 ($60) ++
Percentage of net sales 2% (2%)
The improvement in net income for the quarter is attributable primarily to the
increase in net sales, partly offset by the increases in cost of goods sold and
operating expenses.
Seasonality; Risk Factors
The Company's operating results are subject to significant seasonal variations,
especially in the pool and spa market. In general, the Company's sales tend to
be strongest in the second and fourth quarters of the year. However, the
variable impact of weather conditions and other factors makes revenue and profit
levels difficult to predict.
Page 8
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In addition, a wide variety of factors influence the Company's quarterly and
annual operating results, any of which could materially affect revenues and
profitability. These include, among others, business factors such as increases
in competition and related pricing pressure, shortages or increases in prices of
materials, manufacturing constraints, changes in distribution channels,
variations in product mix, and potential problems and delays in new product
development and introduction; as well as national economic and other factors,
such as construction trends and interest rates.
Competition is increasing in a number of the Company's markets, including, for
example, fiber optic swimming pool lighting products introduced by competitors
in late 1995. The Company anticipates that any future growth in the fiber optic
lighting market will be accompanied by increasing competition, which could
adversely affect the Company's operating results.
Liquidity and Capital Resources
For the three months ended March 31, 1996, cash used in operating activities
totaled $1.3 million, consisting primarily of seasonal increases in accounts
receivable.
The Company has a $1 million unsecured line of credit for working capital
purposes and a $500,000 term loan commitment to finance equipment purchases.
Both lines expire on June 28, 1996, and the Company expects them to be renewed
at that time. At March 31, 1996, the Company had no borrowings outstanding
against either of these lines of credit.
The Company believes that existing cash balances, together with the Company's
bank lines of credit and funds that may be generated from operations, will be
sufficient to finance the Company's currently anticipated working capital
requirements and capital expenditure requirements for at least the next twelve
months.
Page 9
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PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits have been filed with this Report:
Exhibit 11 - Statement Regarding Computation of Net Earnings Per
Share (p. 12)
(b) No reports on Form 8-K were filed by the Company during the period
covered by this report.
Items 1, 2, 3, 4, and 5 are not applicable and have been omitted.
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.
FIBERSTARS, INC.
Date: May 3, 1996
By: /s/ William C. Lapworth
-----------------------------------------
William C. Lapworth, Vice President
and Chief Financial Officer
(Principal Financial and Accounting Officer)
Page 10
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INDEX TO EXHIBITS
Exhibit Page
Number Number
11 Statement Regarding Computation of Net Income (Loss) per Share 12
27 Financial Data Schedule
Page 11
Exhibit 11
FIBERSTARS INC.
COMPUTATION OF NET INCOME (LOSS) PER SHARE
(in thousands, except per share amounts)
(Unaudited)
Three Months Ended
3/31/96 3/31/95
-------------------
Primary and Fully Diluted:
Weighted average common shares outstanding for the period 3,385 3,253
Weighted average shares from assumed conversion of
preferred stock -- --
Common equivalent shares pursuant to Staff Accounting
Bulletin No. 83 -- --
Common equivalent shares assuming conversion of stock
options and warrants under the treasury stock method 121 --
------ ------
Shares used in per share calculations 3,506 3,253
====== ======
Net income (loss) $68 ($60)
Net income (loss) per share: $ 0.02 ($ 0.02)
Calculated in accordance with the guidelines of item 601 of Regulation S-B.
Primary and fully diluted calculations are substantially the same.
Page 12
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<CIK> 0000924168
<NAME> Fiberstars, Inc.
<S> <C>
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<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,118
<SECURITIES> 1,743
<RECEIVABLES> 4,328
<ALLOWANCES> 196
<INVENTORY> 1,804
<CURRENT-ASSETS> 1,911
<PP&E> 1,746
<DEPRECIATION> 954
<TOTAL-ASSETS> 11,500
<CURRENT-LIABILITIES> 2,059
<BONDS> 0
<COMMON> 9,441
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 11,500
<SALES> 3,746
<TOTAL-REVENUES> 3,788
<CGS> 2,192
<TOTAL-COSTS> 2,192
<OTHER-EXPENSES> 1,477
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<INCOME-TAX> 51
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