UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 February 28, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No.: 0-25592
PERIPHONICS CORPORATION
(exact name of registrant as specified in its charter)
Delaware 11-2699509
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4000 Veterans Memorial Highway, Bohemia, New York 11716
(Address of principal executive offices)
Registrant's telephone number, including area code: (516) 468-9000
Check 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(s), and (2) has been subject to such filing requirements
for the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: April 11, 1997
Class of Number of
Common Equity Shares
Common Stock, par value $.01 13,674,426
<PAGE>
PERIPHONICS CORPORATION
AND SUBSIDIARIES
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets - 3
February 28, 1997 and May 31, 1996
Consolidated Statements of Earnings 4
- Nine Months Ended February 28, 1997
and February 29, 1996
Consolidated Statements of Earnings 5
- Three Months Ended February 28, 1997
and February 29, 1996
Consolidated Statements of Cash Flows 6
- Nine Months Ended February 28, 1997
and February 29, 1996
Notes to Consolidated Financial
Statements 7
Item 2. Management's Discussion and Analysis 8-12
of Financial Condition and Results of
Operations
Part II. Other Information 13
Signatures 14
<PAGE>
PERIPHONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share and Per Share Data)
<TABLE>
<CAPTION>
February 28, 1997 May 31, 1996
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents........................................ $20,460 $18,664
Short-term investments........................................... 4,847 8,603
Accounts receivable, less allowance
for doubtful accounts of $990 and
$890, respectively............................................ 33,524 23,829
Inventories...................................................... 11,381 11,097
Deferred income taxes............................................ 1,291 1,261
Prepaid expenses and other current
assets........................................................ 1,174 935
------- -------
TOTAL CURRENT ASSETS............................................. 72,677 64,389
PROPERTY, PLANT & EQUIPMENT, NET..................................... 15,611 10,426
OTHER ASSETS......................................................... 328 288
------- -------
$88,616 $75,103
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable................................................. $ 6,257 $ 4,247
Accrued expenses and other current
liabilities................................................... 14,515 11,666
------- -------
TOTAL CURRENT LIABILITIES........................................ 20,772 15,913
DEFERRED INCOME TAXES................................................ 57 409
------- -------
20,829 16,322
------- -------
STOCKHOLDERS' EQUITY
Preferred stock, par value $.01 per
share, 1,000,000 authorized, none
issued --- ---
Common stock, par value $.01 per
share, 30,000,000 shares authorized
13,665,426 shares outstanding as of
February 28, 1997 and 13,598,164
shares outstanding as of
May 31, 1996 137 136
Additional Paid-in Capital 42,317 41,770
Retained Earnings 25,333 16,875
------- -------
67,787 58,781
------- -------
$88,616 $75,103
======= =======
</TABLE>
3
<PAGE>
PERIPHONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In Thousands, Except Share and Per Share Data)
<TABLE>
<CAPTION>
Nine Months Ended
February February
28, 1997 29, 1996
(Unaudited)
<S> <C> <C>
System sales...................................................................... $63,910 $50,164
Service revenues.................................................................. 17,678 12,324
------- -------
Total revenues................................................................ 81,588 62,488
------- -------
Cost of system sales.............................................................. 29,412 23,281
Cost of service revenues.......................................................... 10,912 7,808
------- -------
Cost of revenues.............................................................. 40,324 31,089
------- -------
Gross profit...................................................................... 41,264 31,399
------- -------
Operating expenses:
Selling, general and administrative........................................... 20,552 16,468
Research and development...................................................... 7,832 5,462
------- -------
28,384 21,930
------- -------
Earnings from operations.......................................................... 12,880 9,469
------- -------
Other income (expense):
Interest and other income..................................................... 953 544
Foreign exchange gain (loss).................................................. 32 (225)
------- ------
985 319
------- ------
Earnings before provision for income taxes........................................ 13,865 9,788
Provision for income taxes........................................................ 5,407 4,013
------- ------
Net earnings...................................................................... $8,458 $5,775
======= ======
Net earnings per common and common equivalent
share .................................................................... $ 0.61 $ 0.44
======= =======
Weighted average number of common and common
equivalent shares............................................................. 13,856 13,074
======= =======
</TABLE>
4
<PAGE>
PERIPHONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In Thousands, Except Share and Per Share Data)
<TABLE>
<CAPTION>
Three Months Ended
February February
28, 1997 29, 1996
<S> <C> <C>
System sales...................................................................... $23,461 $18,742
Service revenues.................................................................. 6,185 4,655
-------- -------
Total revenues................................................................ 29,646 23,397
-------- -------
Cost of system sales.............................................................. 10,483 8,686
Cost of service revenues.......................................................... 3,961 2,874
-------- -------
Cost of revenues.............................................................. 14,444 11,560
-------- -------
Gross profit...................................................................... 15,202 11,837
-------- -------
Operating expenses:
Selling, general and administrative........................................... 7,273 6,129
Research and development...................................................... 2,797 1,996
-------- -------
10,070 8,125
-------- -------
Earnings from operations.......................................................... 5,132 3,712
-------- -------
Other income (expense):
Interest and other income..................................................... 252 251
Foreign exchange loss ........................................................ (296) (93)
-------- --------
(44) 158
-------- --------
Earnings before provision for income taxes........................................ 5,088 3,870
Provision for income taxes........................................................ 1,984 1,587
-------- --------
Net earnings...................................................................... $ 3,104 $ 2,283
======== ========
Net earnings per common and common equivalent
share .................................................................... $ 0.22 $ 0.17
======== ========
Weighted average number of common and common
equivalent shares............................................................. 13,872 13,820
======== ========
</TABLE>
5
<PAGE>
PERIPHONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
Nine Months Ended
February February
28, 1997 29, 1996
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings.......................................................................... $ 8,458 $ 5,775
Adjustments to reconcile net earnings to net
cash and cash equivalents used in operating
activities:
Depreciation and amortization..................................................... 2,709 1,805
Deferred income taxes............................................................. (382) 52
Changes in operating assets and liabilities:
Increase in accounts receivable................................................ (9,695) (79)
Increase in inventories........................................................ (284) (5,168)
(Increase) Decrease in prepaid expenses
and other current assets.................................................... (239) 343
Increase in other assets....................................................... (40) (55)
Increase in accounts payable and accrued
expenses and other current liabilities...................................... 4,859 2,919
------- -------
Net cash and cash equivalents provided by
operating activities.................................................. 5,386 5,592
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:.....................................................
Purchases of property, plant and equipment............................................ (7,894) (3,594)
Proceeds from sales of short-term investments......................................... 10,039 4,980
Purchases of short-term investments................................................... (6,283) (9,856)
------- -------
Net cash and cash equivalents used in
investing activities..................................................... (4,138) (8,470)
------- -------
CASH FLOW FROM FINANCING ACTIVITIES:......................................................
Proceeds from stock options exercised................................................. 548 170
Proceeds from Secondary Public Offering
of Common Stock....................................................................... --- 13,991
-------- --------
Net cash and cash equivalents provided by
financing activities....................................................... 548 14,161
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS................................................. 1,796 11,283
CASH AND CASH EQUIVALENTS, beginning of period............................................ 18,664 8,753
-------- --------
CASH AND CASH EQUIVALENTS, end of period.................................................. $20,460 $20,036
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest.............................................................................. --- ---
Income Taxes.......................................................................... $ 3,723 $ 3,314
</TABLE>
6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
In the opinion of Periphonics Corporation and subsidiaries (the "Company"),
the accompanying unaudited consolidated financial statements contain all
adjustments (consisting only of normal recurring adjustments) necessary to
present fairly the financial position, the results of operations, and the cash
flows at February 28, 1997 and for all periods presented.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted. These financial statements should be read in conjunction with
the Consolidated Financial Statements and Notes included in the Company's May
31, 1996 Annual Report on Form 10-K as filed with the Securities and Exchange
Commission.
The results of operations for the three and nine months ended February 28,
1997 and February 29, 1996 are not necessarily indicative of the results to be
expected for the full year. Dollar amounts are presented in thousands except per
share amounts.
2. STOCK SPLIT AND CHANGES IN AUTHORIZED CAPITAL
On September 20, 1996, the Board of Directors approved a two-for-one split
of its common stock effected as a stock dividend on October 31, 1996 to
shareholders of record at the close of business on October 15, 1996. After
giving effect to the stock split, the shares outstanding increased from
approximately 6,812,566 to approximately 13,625,132.
All historical share and per share data appearing in the consolidated
financial statements and notes thereto have been retroactively adjusted for the
stock split.
Also, on September 20, 1996, the Board of Directors determined it advisable
to amend the Company's Certificate of Incorporation to increase the number of
authorized shares of Common Stock from 15,000,000 shares to 30,000,000 shares.
The proposed amendment to the Amended and Restated Certificate of Incorporation
was submitted for shareholder approval. Shareholder approval was announced on
November 8, 1996 at the 1996 Annual Meeting of Stockholders.
3. INVENTORIES
Inventories consist of the following:
February 28, 1997 May 31, 1996
----------------- ------------
Raw materials $ 6,231 $ 6,218
Work-in-process 5,150 4,879
------- -------
$11,381 $11,097
======= =======
4. SECONDARY PUBLIC OFFERING
On November 17, 1995, the Company consummated a secondary public offering
of 2,510,000 shares of common stock at a price of $12.75 per share. Of the
shares offered, 1,200,00 were sold by the Company and 1,310,000 were sold by
certain stockholders of the company.
Also in November 1995, the underwriters of the secondary offering exercised
their over-allotment option to purchase an additional 376,500 shares from the
selling stockholders. The Company did not receive any of the proceeds from the
exercise of the over-allotment option.
The net proceeds to the Company from the sale of the 1,200,000 shares of
Common Stock offered was approximately $14.0 million (after deducting the
underwriting discount and offering expenses payable by the Company). The net
proceeds to the Company are to be used for general corporate purposes, including
working capital, facilities expansion and possible acquisitions of business,
products or technology complementary to the Company's business.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Nine Months Ended February 28, 1997 compared to Nine Months Ended February 29,
1996
Total Revenues. Total revenues increased by 30.6% to $81.6 million in the
first nine months of fiscal 1997 from $62.5 million in the comparable period of
the prior fiscal year. System sales increased by 27.4% to $63.9 million in the
first nine months of fiscal 1997 from $50.2 million in the comparable period of
the prior fiscal year. The increase in system sales was primarily due to an
increase in unit sales volume. Service revenues increased by 43.4% to $17.7
million in the first nine months of fiscal 1997 from $12.3 million in the
comparable period of the prior fiscal year, primarily due to the addition of
more units to the service base as well as an increase in installation revenues.
Gross Profit. The Company's gross profit increased by $9.9 million, or
31.4%, to $41.3 million in the first nine months of fiscal 1997 from $31.4
million in the comparable period of the prior fiscal year. Gross profit as a
percentage of total revenues increased to 50.6% in the first nine months of
fiscal 1997 from 50.2% in the comparable period of the prior fiscal year. Gross
profit on system sales increased by $7.6 million, or 28.3%, to $34.5 million in
the first nine months of fiscal 1997 from $26.9 million in the comparable period
of the prior fiscal year. The gross margin on system sales increased to 54.0% in
the first nine months of fiscal 1997 from 53.6% in the comparable period of the
prior fiscal year. The Company attributes this increase primarily to the product
mix during the current nine month period. Gross profit on service revenues
increased by $2.3 million, or 49.8%, to $6.8 million in the first nine months of
fiscal 1997 from $4.5 million in the comparable period of the prior fiscal year.
Gross margin on service revenues increased to 38.3% in the first nine months of
fiscal 1997 from 36.6% in the comparable period of the prior fiscal year. This
increase was attributable to growth in the service base, as well as an increase
in installation revenues.
Selling, General and Administrative Expenses. Selling, General and
Administrative ("SG&A") expenses were $20.6 million and $16.5 million for the
first nine months of fiscal 1997 and 1996, respectively, or 25.2% and 26.4% of
total revenues, respectively. The increase in the dollar amount of SG&A expenses
was primarily due to both the continued expansion of the Company's sales effort
in domestic and international markets and to increases in SG&A expenses
necessary to support the increased level of sales. SG&A expenses decreased as a
percentage of total revenues due to the Company's ability to leverage certain
fixed expenses over its growing revenue base.
Research and Development Expenses. Research and Development ("R&D")
expenses were $7.8 million and $5.5 million for the first nine months of fiscal
1997 and 1996, respectively, or 9.6% and 8.7% of total revenues, respectively.
The increase in the dollar amount of R&D expenses reflects the continued
expansion of the Company's R&D staff which increased to 119 from 94 between
February 28, 1997 and February 29, 1996. R&D expenses are charged to operations
as incurred, and no software development costs have been capitalized. The
Company expects the
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
8
<PAGE>
dollar amount of R&D expenditures to continue to increase, although such
expenses as a percentage of total revenues will vary from period to period.
Other Income (Expense). Other income was $1.0 million and $0.3 million for
the nine months ended February 28, 1997 and February 29, 1996. Interest and
other income increased to $1.0 million in the nine months ended February 28,
1997 from $0.5 million in the nine months ended February 28, 1997 primarily due
to increased cash balances. The Company had a foreign exchange gain of $0.03
million in the nine months ended February 28, 1997 compared to a foreign
exchange loss of $0.2 million for the nine months ended February 29, 1996. To
the extent the Company is unable to match revenue received in foreign currencies
with expenses paid in the same currency, it is exposed to fluctuations in
international currency transactions.
Income Taxes. Variations in the customary relationship between the
provision for income taxes and the statutory income tax rate primarily result
from foreign subsidiaries' net operating losses which did not produce current
tax benefits, the utilization of research and development tax credits and state
and local income taxes. The Company's effective income tax rates were 39.0% and
41.0% for the nine months ended February 28, 1997 and February 29, 1996
respectively.
Foreign Operations. The Company's European subsidiary operated at
approximately a $0.1 million profit during the nine months ended February 28,
1997 as compared to a loss of $0.4 million during the nine months ended February
29, 1996. The improved profit position was attributed to a increase in the gross
profit margin and a decrease in the exchange loss offset by an increase in the
dollar amount of SG&A expenses to support the expansion of the sales and
marketing efforts. Transfers from the Company's North American operations to its
European subsidiary are accounted for at cost, plus a reasonable profit. The
cost of revenues for the Company's European subsidiary includes approximately
$0.3 million and $0.2 million of intercompany gross profit earned by the
Company's North American operations on system sales by the European subsidiary
to third parties during the nine months ended February 28, 1997 and February 29,
1996.
Three Months Ended February 28, 1997 compared to Three Months ended
February 29, 1996
Total Revenues. Total revenues increased by 26.7% to $29.6 million in the
three months ended February 28, 1997 from $23.4 million in the comparable period
of the prior fiscal year. System sales increased by 25.2% to $23.5 million in
the three months ended February 28, 1997 from $18.7 million in the comparable
period of the prior fiscal year. The increase in system sales was primarily due
to an increase in unit sales volume. Service revenues increased by 32.9% to $6.2
million in the three months ended February 28, 1997 from $4.7 million in the
comparable period of the prior fiscal year, primarily due to the addition of
more units to the service base as well as increased installation revenues.
Gross Profit. The Company's gross profit increased by $3.4 million, or
28.4%, to $15.2 million in the three months ended February 28, 1997 from $11.8
million in the comparable period of the prior fiscal year. Gross profit as a
percentage of total revenues increased to 51.3% in the three months ended
February 29, 1996 from 50.6% in the three months ended February 29, 1996. Gross
profit on system sales increased by $2.9 million, or 29.1%, to $13.0 million in
the three months ended February 28, 1997 from $10.1 million in the comparable
period of the prior fiscal year. The gross margin on system sales increased to
55.3% in the three months ended February 28, 1997 from 53.7% in the comparable
period of the prior fiscal year.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
9
<PAGE>
The Company attributes this increase primarily to the product mix during
the current three month period. Gross profit on service revenues increased by
$0.4 million, or 24.9% to $2.2 million in the three months ended February 28,
1997 from $1.8 million in the three months ended February 28, 1997. Gross margin
on service revenues decreased to 36.0% in the three months ended February 29,
1996 from 38.3% in the comparable period of the prior fiscal year. This decrease
was attributable to higher cost to support organizational growth partially
offset by an increase in the service base and higher installation revenues.
Selling, General and Administrative Expenses. Selling, General and
Administrative ("SG&A") expenses were $7.3 million and $6.1 million for the
three months ended February 28, 1997 and February 29, 1996, or 24.5% and 26.2%
of total revenues, respectively. The increase in the dollar amount of SG&A
expenses was primarily due to both the continued expansion of the Company's
sales effort in domestic and international markets and to increases in SG&A
expenses necessary to support the increased level of sales. SG&A expenses
decreased as a percentage of total revenues due to the Company's ability to
leverage certain fixed expenses over its growing revenue base.
Research and Development Expenses. Research and Development ("R&D")
expenses were $2.8 million and $2.0 million for the three months ended February
28, 1997 and February 29, 1996, or 9.4% and 8.5% of total revenues,
respectively. The increase in the dollar amount of R&D expenses reflects the
continued expansion of the Company's R&D staff which increased to 119 from 94
between February 28, 1997 and February 29, 1996. R&D expenses are charged to
operations as incurred, and no software development costs have been capitalized.
The Company expects the dollar amount of R&D expenditures to continue to
increase, although such expenses as a percentage of total revenues will vary
from period to period.
Other Income (Expense). Other income was $0.04 million and other expense
was ($0.2) million for three months ended February 28, 1997 and February 29,
1996. Interest and other income remained unchanged at $0.3 million the three
months ended February 28, 1997 and the comparable period of the prior fiscal
year. The Company had a foreign exchange loss of $0.3 million for the three
months ended February 28, 1997, compared to a loss of $.1 million in the
comparable period of the prior fiscal year. To the extent the Company is unable
to match revenue received in foreign currencies with expense paid in the same
currency, it is exposed to fluctuations on international currency transactions.
Income Taxes. Variations in the customary relationship between the
provision for income taxes and the statutory federal income tax rate primarily
result from foreign subsidiaries' net operating losses which did not produce
current tax benefits, the utilization of research and development tax credits
and state and local income taxes. The Company's effective income tax rates were
39.0% and 41.0% for the three months ended February 28, 1997 and February 29,
1996.
Liquidity and Capital Resources
The Company's principal cash requirement to date has been to fund working
capital and capital expenditures in order to support the growth of revenues.
Historically, the Company has primarily financed this requirement through cash
flow from operations, bank borrowings and two public offerings for the Company's
common stock in 1995, which resulted in an aggregate of $41.0 million of net
proceeds to the Company. Cash flow from operations was $5.4 million and $5.6
million for the nine months ended February 28, 1997 and February 29, 1996. At
February 28, 1997, the Company had working capital of $51.9 million, including
$25.3 million of cash and cash equivalents and short-term investments. The
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Company expects its working capital needs to increase along with future
revenue growth.
At February 28, 1997, current assets and current liabilities increased by
$8.3 million and $4.9 million, respectively, compared to May 31, 1996. Current
assets increased principally as a result of an increase in accounts receivable.
During the period ended February 28, 1997, current liabilities increased
primarily due to an increase in accounts payable due to higher operating levels
in addition to higher accrued expenses resulting from the timing of payments.
The average days sales outstanding (calculated by dividing the net accounts
receivable at the balance sheet date for each period by the average sales per
day during the quarter immediately preceding the balance sheet date) were
approximately 102 days, 104 days, 83 days and 98 days at February 28, 1997,
November 30, 1996, May 31, 1996 and 1995, respectively.
The Company's inventory as of February 28, 1997 and May 31, 1996 was $11.4
million and $11.1 million respectively.
In January 1995, the Company increased its line of credit to $8.0 million
with interest charged at the prime rate plus 0.25%. The line of credit expires
on November 30, 1997. As of February 28, 1997, the Company had no borrowings
under this line of credit.
The Company made capital expenditures totaling $7.9 million and $3.6
million during the nine months ended February 28, 1997 and February 29, 1996.
The increase in expenditures is primarily due to facilities expansion, the
purchase of land adjacent to the Company's headquarters, the addition of
customer service equipment to support the installed base, and the purchase of
computer equipment required for staff and product development efforts.
The Company believes that its existing sources of working capital and
borrowings available under its revolving line of credit will be sufficient to
fund its operations and capital expenditures for at least 12 months.
Foreign Currency Transaction
The Company does not currently engage in international currency hedging
transactions to mitigate its foreign currency exposure. Included in the foreign
exchange gain (loss) are unrealized foreign exchange gains and losses resulting
from the currency remeasurement of the financial statements of the Company's
foreign subsidiaries into U.S. dollars. To the extent the Company is unable to
match revenue received in foreign currencies with expenses paid in the same
currency, it is exposed to possible losses on international currency
transactions.
Inflation
In the opinion of management, inflation has not had a material effect on
the operations of the Company.
Recent Accounting Pronouncements
In October 1995, the Financial Accounting Standards Board ("FASB") issued
Statement No. 123, "Accounting for Stock-Based Compensation", which must be
adopted by the Company in fiscal 1997. The Company has chosen not to implement
the fair value based accounting method for employee stock options, but has
elected to disclose, commencing with its fiscal 1997 Annual Report, the pro
forma net
11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
earnings and net earnings per share as if such method had been used to
account for stock-based compensation costs as described in Statement No. 123.
In March 1997, the FASB issued Statement No. 129, "Disclosure of
Information about Capital Structure" ("SFAS No 129") and Statement No. 128
"Earnings Per Share" ("SFAS No 128"). SFAS Nos. 129 and 128 specify guidelines
as to the method of computation as well as presentation and disclosure
requirements for earnings per share ("EPS"). The objective of these statements
is to simplify the calculation and to make the U.S. standard for computing EPS
more compatible with the EPS standards of other countries and with that of the
International Accounting Standards Committee. These statements are effective for
fiscal years ending after December 15, 1997 and earlier application is not
permitted. SFAS 129 and 128 will have an impact on the Company's EPS
calculations and disclosure requirements but management cannot predict the
outcome at this time.
Certain Factors That May Affect Future Results
From time to time, information provided by the Company, statements made by
its employees or information included in its filings with the Securities and
Exchange Commission (including this Form 10-Q) may contain statements which are
so-called "forward-looking statements" and not historical facts. These forward-
looking statements are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. The Company's actual future
results may differ significantly from those stated in any forward-looking
statements. Forward-looking statements involve a number of risks and
uncertainties, including, but not limited to, product demand, pricing, market
acceptance, litigation, risks in product and technology development and other
risk factors detailed from time to time in the Company's Securities and Exchange
Commission reports including this Form 10-Q for the fiscal quarter ended
February 28, 1997 and its Form 10-K for the fiscal year ended May 31, 1996.
With particular regard to the possible variability of quarterly results,
fluctuations may occur as a result of factors including the length of the sales
cycle, the timing of orders from and shipments to customers, delays in
development and customer acceptance of custom software applications, new product
introductions or announcements by the products and the hiring and training of
additional staff as well as general economic conditions.
Historically, the size and timing of the Company's sales transactions have
varied substantially from quarter, with a substantial percentage of orders and
deliveries occurring in the final weeks of a quarter, and the Company expects
such variations to continue in future periods. Because a significant portion of
the Company's overhead is fixed in the short-term, the Company's results of
operations may be materially adversely affected if revenues fall below the
Company's expectations. Generally, the Company's inventory of computer and
telephony hardware is determined by the Company's forecast of sales during the
future periods. If management's forecasts of product sales and product mix prove
to be inaccurate, the Company may not have the necessary inventory available to
deliver systems in a timely manner which may have a material averse effect on
the Company's results of operations during such period.
Due to the foregoing factors, it is possible that securities analysts might
believe that in some future period the Company's sales or operating results will
actually be below their expectations, or that such results will be below such
expectations. In either of such events, the trading price of the Company's
Common Stock in the public markets would likely be materially adversely
affected.
12
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Other Information
None.
Item 7. Exhibits and Reports on Form 8-K
None.
13
<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.
PERIPHONICS CORPORATION
Registrant
By: /s/ Peter J. Cohen
-------------------------------
Peter J. Cohen
Chairman of the Board,
President and
Chief Executive Officer
(Principal Operating Officer)
By: /s/ Kevin J. O'Brien
-------------------------------
Kevin J. O'Brien
Chief Financial Officer,
Vice President
Finance and Administration
(Principal Accounting Officer),
Secretary and Director
Dated: April 14, 1997
14
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<NAME> Periphonics Corporation
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