<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
__________
FORM 10-Q
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period Ended March 31, 1997
or
( ) Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Transition Period From __________ To __________
Commission File Number: 0-25560
ACT Manufacturing, Inc.
-----------------------
(Exact name of registrant as specified in its charter)
Massachusetts 04-2777507
------------- ----------
(State or other jurisdiction of (IRS Employer ID NO.)
incorporation or organization)
108 Forest Avenue 01749
Hudson, Massachusetts ----------
---------------------- (Zip Code)
(Address of principal
executive offices)
Registrant's telephone number, including area code: (508) 562-1200
--------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 of 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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock 8,827,200 Shares
- - -------------- ----------------
(Class) (Outstanding on May 9, 1997)
<PAGE>
ACT Manufacturing, Inc.
INDEX TO FORM 10-Q
PART I. FINANCIAL INFORMATION
ITEM 1 - Financial Statements:
- - ------------------------------
Condensed Statements of Income for the three months ended March 31, 1997
and March 31, 1996.
Condensed Balance Sheets as of March 31, 1997 and December 31, 1996.
Condensed Statements of Cash Flows for the three months ended March 31, 1997
and March 31, 1996.
Notes to Financial Statements.
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
- - -------------------------------------------------------------------------
Results of Operations
- - ---------------------
PART II. OTHER INFORMATION
ITEM 6 - Exhibits and Reports on Form 8-K
- - -----------------------------------------
Signatures
Exhibit Index
Exhibit 10
Exhibit 11
Exhibit 27
<PAGE>
ACT MANUFACTURING, INC.
CONDENSED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
<S> <C> <C>
1997 1996
---------- ----------
Net Sales $ 70,250 $ 40,516
Cost of goods sold 61,208 35,748
---------- ----------
Gross profit 9,042 4,768
Selling, general and administrative 2,892 2,070
expenses ---------- ----------
Operating income 6,150 2,698
---------- ----------
Interest and other (income) expense, net 548 (5)
---------- ----------
Income before provision for income taxes 5,602 2,703
Provision for income taxes 2,241 1,081
---------- ----------
Net income $ 3,361 $ 1,622
========== ==========
Net income per common share $.37 $.18
========== ==========
Weighted average shares outstanding 9,127,426 8,965,695
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
ACT MANUFACTURING, INC.
CONDENSED BALANCE SHEETS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
-------------- -----------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 5,251 $ 5,054
Accounts receivable trade, net 48,866 41,475
Inventory 50,605 53,994
Deferred taxes 1,487 1,487
Prepaid expenses and other assets 324 489
-------- --------
Total current assets 106,533 102,499
-------- --------
PROPERTY AND EQUIPMENT- Net 4,745 4,635
OTHER ASSETS 432 461
-------- --------
TOTAL $111,710 $107,595
======== ========
LIABILITIES AND
STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt $ 38 $ 38
Accounts payable 27,878 26,154
Accrued expenses 3,914 5,216
-------- --------
Total current liabilities 31,830 31,408
-------- --------
LONG-TERM DEBT - Less current portion 29,378 29,055
-------- --------
STOCKHOLDERS' EQUITY
Common stock 88 88
Additional paid-in capital 33,209 33,201
Retained earnings 17,205 13,843
-------- --------
Total stockholders' equity 50,502 47,132
-------- --------
TOTAL $111,710 $107,595
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
ACT MANUFACTURING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended March 31,
----------------------------
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income........................... $ 3,361 $ 1,622
Adjustments to reconcile net income -------- --------
to net cash provided by (used for)
operating activities:
Deferred taxes................. - -
Depreciation and amortization.. 332 225
Increase (decrease) in cash
from:
Accounts receivable -
trade................... (7,391) (8,643)
Inventory................ 3,389 (12,237)
Prepaid expenses and
other assets............ 165 61
Accounts payable......... 1,724 9,982
Accrued expenses......... (1,302) (206)
-------- --------
Total adjustments......................... (3,083) (10,818)
-------- --------
Net cash provided by (used for)
operating activities..................... 278 (9,196)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and
equipment........................... (425) (716)
(Increase) decrease in other
assets.............................. 12 (87)
-------- --------
Net cash used for investing activities.... (413) (803)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under line-of credit
agreements.......................... 50,532 17,666
Repayments under line-of-credit
agreements.......................... (50,192) (10,485)
Repayments of long-term debt......... (17) (25)
Net proceeds from sale of stock...... 9 -
-------- --------
Net cash provided by financing
activities............................... 332 7,156
-------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 197 (2,843)
CASH AND CASH EQUIVALENTS BEGINNING OF
YEAR..................................... 5,054 7,097
-------- --------
CASH AND CASH EQUIVALENTS END OF PERIOD... $ 5,251 $ 4,254
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE>
ACT MANUFACTURING, INC.
NOTES TO FINANCIAL STATEMENTS
1. The unaudited interim condensed financial statements furnished herein
reflect all adjustments, which in the opinion of management are of a normal
recurring nature, necessary to fairly state the Company's financial position,
cash flows and the results of operations for the periods presented and have been
prepared on a basis substantially consistent with the audited financial
statements.
The results of operations for the interim periods are not necessarily indicative
of the results of operations to be expected for the fiscal year. These
condensed interim financial statements should be read in conjunction with the
Company's Annual Report on Form 10-K for the period ending December 31, 1996
filed with the Securities and Exchange Commission.
2. Inventory consisted of the following at:
<TABLE>
<CAPTION>
(in thousands)
March 31, 1997 December 31, 1996
-------------- -----------------
<S> <C> <C>
Raw material $35,778 $37,698
Work in process 14,168 15,853
Finished goods 659 443
------- -------
TOTAL $50,605 $53,994
======= =======
</TABLE>
3. Net income per common share is based on the weighted average number of common
and dilutive common equivalent shares (common stock options) outstanding during
the period, using the provisions of Accounting Principles Board Opinion No. 15
"Earnings per share." Dilutive common equivalent shares represent shares
issuable upon exercise of stock options, calculated using the treasury stock
method. Common equivalent shares are not included in the per share calculations
where the effect of their inclusion would be antidilutive, except in accordance
with Securities and Exchange Commission Staff Accounting Bulletin No. 83.
In March 1997, the Financial Accounting Standards Board released Statement of
Financial Accounting Standards (SFAS) No. 128 "Earnings per share," which the
company will adopt in the fourth quarter of 1997. Had SFAS No. 128 been
effective for the quarters ended March 31, 1997 and 1996, reported earnings per
share on a pro forma basis would have been as follows:
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1997 1996
------------- -------------
<S> <C> <C>
Basic $ .38 $ .19
Diluted .37 .18
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Management's Discussion and Analysis of Financial Condition and Results of
Operations should be read in conjunction with the accompanying financial
statements for the periods specified and the associated notes. Further
reference should be made to the Company's Annual Report on Form 10-K for the
period ending December 31, 1996.
Overview
- - --------
The Company provides value-added, turnkey contract manufacturing services for
emerging and major Original Equipment Manufacturers ("OEM's") in the commercial
electronics industry. The Company's manufacturing services include complex
Printed Circuit Board ("PCB") assemblies, mechanical and molded cable and
harness assemblies, electromechanical sub-assemblies and total system assemblies
and integration. As an integral part of its service to OEM customers, the
Company provides advanced manufacturing and test engineering and materials
management across the full range of the Company's assembly services.
The Company's principal manufacturing facilities are located in four leased
facilities in Massachusetts containing an aggregate of 204,000 square feet.
As of March 31, 1997, the Company had 777 employees, including 711 in
manufacturing and related activities and 66 in sales, marketing and
administrative services.
Three Months Ended March 31, 1997 and 1996
- - ------------------------------------------
Net sales increased 73% to $70.3 million for the three months ended March 31,
1997 from $40.5 million for the same period in 1996. This increase was
attributed principally to increased volume in PCB assembly sales to existing
customers in the first quarter of 1997.
Gross profit increased 90% to $9.0 million for the three months ended March 31,
1997 compared to $4.8 million for the same period in 1996. Gross margin
increased to 12.9% for the three months ended March 31, 1997 from 11.8% for the
same period in 1996 due primarily to increased absorption of manufacturing
overhead associated with the Company's PCB assembly operation.
Selling, general and administrative expenses increased 40% to $2.9 million, or
4.1% of net sales, for the three months ended March 31, 1997 compared to $2.1
million, or 5.1% of net sales, for the three months ended March 31, 1996. This
decrease as a percentage of net sales reflects the results of the continued
growth in the Company's business which allowed for higher utilization of fixed
costs and a greater proportion of net sales being made directly by the Company.
Operating income increased 128% to $6.2 million, or 8.8% of net sales, for the
three months ended March 31, 1997 compared to $2.7 million, or 6.7% of net sales
for the three months ended March 31, 1996 as a result of the above factors.
Interest and other expense was $548,000 for the three months end March 31, 1997
compared to interest income net of other expense of $5,000 for the three months
ended March 31, 1996. Interest and other expenses consisted principally of fees
and interest expense to the Company's bank lenders. Interest income consisted
of the proceeds from the investment of the Company's cash and cash equivalents
and
<PAGE>
marketable securities. The change resulted principally from additional
borrowings on the Company's line of credit for working capital requirements.
Liquidity and Capital Resources
- - -------------------------------
Traditionally, the Company has financed its growth and operations through
earnings and borrowings. The Company has experienced a significant increase in
working capital as the business has grown. At March 31, 1997, the Company had
working capital of $74.7 million compared to $71.1 million at December 31, 1996.
The net increase was due to the growth in accounts receivable associated with an
increase in sales partially offset by a reduction of inventory and growth in
accounts payable.
The Company had a secured revolving credit facility of $50.0 million at March
31, 1997. As of March 31, 1997 there was $29.0 million outstanding under the
available credit facility. The Company anticipates that its cash requirements
for at least the next twelve months will be satisfied by cash flow from
operations and the use of the Company's existing bank credit and equipment lease
facilities.
In March 1997, the Financial Accounting Standards Board released Statement of
Financial Accounting Standards (SFAS) No. 128 "Earnings per share," which will
be effective during the fourth quarter of 1997. SFAS No. 128 will require the
company to restate all previously reported earnings per share information to
conform with the new pronouncement's requirements.
Cautionary Statements
- - ---------------------
The Private Securities Litigation Reform Act of 1995 (the "Act") contains
certain safe harbors regarding forward-looking statements. From time to time,
information provided by the Company or statements made by its employees may
contain "forward-looking" information which involve risk and uncertainties. Any
statements in this report that are not statements of historical fact are
forward-looking statements (including, but not limited to, statements concerning
the characteristics and growth of the Company's market and customers, the
Company's objectives and plans for future operations, and the Company's expected
liquidity and capital resources). The following cautionary statements should be
considered carefully in evaluating the Company and its business. The factors
discussed in these cautionary statements, among other factors, could cause
actual results to differ materially from those contained in the forward-looking
statements made in this Quarterly Report and presented elsewhere by management
from time to time. These cautionary statements are being made pursuant to the
provisions of the act and with the intention of obtaining the benefits of the
safe harbor provisions of the Act.
Customer and Industry Concentration
-----------------------------------
For fiscal 1996, the Company's four largest customers accounted for
approximately 63% of net sales. Sales to Cascade Communications, 3Com, Bay
Networks and Motorola were approximately 20%, 17%, 13% and 13%, respectively, of
the Company's net sales for fiscal 1996. The Company's results will depend to a
significant extent on the success achieved by its OEM customers in marketing
their products and the Company's ability to diversify its customer base in order
to reduce its reliance on its major customers. There can be no assurance that
the Company's principal customers will continue to purchase products and
services from the Company at current levels. The loss of one or more major
customers, a significant reduction in purchases from such customers, or
developments adverse to the Company's customers or their products could have a
material adverse effect on the Company's results of operations. In addition,
while the Company has not experienced any difficulty in being paid by its major
customers in recent years, the Company could be adversely affected if a major
customer were unable or unwilling to pay for products and services.
<PAGE>
The Company's customer base has historically been concentrated in a limited
number of industries, most of which are subject to high competition, rapid
technological changes and consequent product obsolescence. Developments adverse
to such industries could have a negative effect on the Company. The industries
served by the Company are also subject to economic cycles and have in the past
experienced, and are likely in the future to experience, recessionary periods.
A recessionary period affecting one or more of the industry segments served by
the Company could have a material adverse effect on the Company. In addition,
the Company's results of operations could be adversely affected due to a slowing
of the manufacturing outsourcing trend.
Variability of Customer Requirements; Nature and Extent of Customer
-------------------------------------------------------------------
Commitments on Orders
----------------------
The level and timing of orders placed by the Company's OEM customers vary due
to customer attempts to manage inventory, changes in the OEM's manufacturing
strategy and variation in demand for customer products due to, among other
things, introduction of new products, product life cycles, competitive
conditions or general economic conditions. The Company generally does not obtain
long-term purchase orders or commitments but instead works with its customers to
anticipate the future volume of orders. Based on such anticipated future
volumes, the Company makes other significant commitments regarding the levels of
business that it will seek and accept, the timing of production schedules and
the levels and utilization of personnel and other resources. From time to time,
the Company will purchase components without a customer commitment to pay for
them. A variety of conditions, both specific to the individual customer and
generally affecting the customer's industry, may cause customers to cancel,
reduce or delay orders that were either previously made or anticipated.
Generally, customers may cancel, reduce or delay purchase orders and commitments
without penalty. Significant cancellations, reductions or delays in orders by a
customer or group of customers could adversely affect the Company's results of
operations.
Fluctuations in Operating Results
---------------------------------
The variability of the level and timing of orders from, and shipments to,
major customers may result in significant periodic and quarterly fluctuations in
the Company's results of operations. In addition to the variability resulting
from the short-term nature of its customers' commitments, other factors have
contributed, and may in the future contribute, to such fluctuations. These
factors include, among other things, customers' announcement and introduction of
new products or new generations of products, evolutions in the life cycles of
customers' products, timing of expenditures in anticipation of future orders,
effectiveness in managing manufacturing processes, changes in cost and
availability of labor and components, a shift in the Company's product and
service mix which results in fluctuating margins, and changes or anticipated
changes in economic conditions. Because the Company's operating expenses are
based on anticipated revenue levels and a high percentage of the Company's
operating expenses are relatively fixed, any unanticipated shortfall in revenue
in a quarter may have an adverse impact on the Company's results of operations
for that quarter. Results of operations in any period should not be considered
indicative of the results to be expected for any future period.
Availability of Key Components
-------------------------------
The Company and many of its customers rely on a single or limited number of
third-party suppliers for many components used in the assembly process.
Shortages of certain electronic components, including certain memory modules and
logic devices, have occurred from time to time. In addition, due to the
Company's utilization of just-in-time inventory techniques, the timely
availability of many components to the Company is dependent on the Company's
ability to continuously develop accurate forecasts of customer volume
requirements. Component shortages could result in manufacturing and shipping
delays or increased component prices which could have a material adverse effect
on the
<PAGE>
Company's results of operations. Because the Company purchases a significant
number of components manufactured in foreign countries, it is subject to
numerous risks, including economic disruptions, transportation delays and
interruptions, foreign exchange rate fluctuations, imposition of tariffs and
import and export controls and changes in governmental policies, any of which
could have a material adverse effect on the Company's business and results of
operations. The Company has historically been able to enter into advantageous
arrangements from time to time for the supply of certain limited availability
components. To the extent that the Company is unable to source key components
for the reasons cited above or otherwise, the Company's results of operations
could be materially adversely affected.
Technological Change and Process Development
---------------------------------------------
The market for the Company's manufacturing services is characterized by
rapidly changing technology and continuing process development. The continued
success of the Company's business will depend in large part upon its ability to
maintain and enhance its technological capabilities, develop and market
manufacturing services which meet changing customer needs and successfully
anticipate or respond to technological changes in manufacturing processes on a
cost-effective and timely basis. Although management believes that the Company's
operations utilize the assembly and testing technologies and equipment currently
required by the Company's customers, there can be no assurance that the
Company's process development efforts will be successful or that the emergence
of new technologies, industry standards or customer requirements will not render
the Company's technology, equipment or processes obsolete or uncompetitive. In
addition, to the extent that the Company determines that new assembly and
testing technologies and equipment are required to remain competitive, the
acquisition and implementation of such technologies and equipment are likely to
require significant capital investment by the Company.
Competition
------------
The commercial electronics contract manufacturing industry is a highly
competitive industry. The Company competes against numerous domestic and foreign
contract manufacturers. The Company's major competitors in the PCB assembly
business include Solectron Corporation, SCI Systems, Inc., Jabil Circuit, Inc.,
Lockheed Martin Commercial Electronics, the DII Group, Group Technologies
Corporation, Benchmark Electronics, Inc. and Sanmina Corporation. The Company
faces competition in the cable and harness assembly market primarily from Volex
Interconnect Systems, Inc., Berg Electronics, Inc., AMP, Inc. and Molex, Inc.
The Company also faces competition from a number of local and regional contract
manufacturers. In addition, current and prospective customers continually
evaluate the merits of manufacturing products internally and certain large OEMs
will from time to time offer contract manufacturing services in order to utilize
excess capacity. Certain of the Company's competitors have substantially greater
manufacturing, financial and marketing resources than the Company. The Company
may be operating at a cost disadvantage compared to manufacturers who have
greater direct buying power from component suppliers or who have lower cost
structures, particularly those with significant offshore operations. The Company
believes that the principal competitive factors in the segments of the contract
manufacturing industry in which it operates are technology, service,
manufacturing capability, quality, regional access, price, reliability,
timeliness and flexibility. There can be no assurance that competition from
existing or potential competitors will not have a material adverse effect on the
Company's results of operations.
Management of Growth
---------------------
The Company has grown rapidly in recent years. A continuing period of rapid
growth could place a significant strain on the Company's management, operations
and other resources. The Company's
<PAGE>
ability to manage its growth will require it to continue to invest in its
operational, financial and management information systems, and to retain,
motivate and effectively manage its employees. If the Company's management is
unable to manage growth effectively, the quality of the Company's services and
products, its ability to retain key personnel and its results of operations
could be materially and adversely affected.
Dependence Upon Key Personnel
------------------------------
The Company's continued success been largely dependent upon the skills and
efforts of John A. Pino, its President and Chief Executive Officer, and other
key employees. None of the senior management or other key employees of the
Company is subject to any employment contract. The loss of services of any of
its officers or other key personnel could have an adverse effect on the
operations of the Company. In addition, continued growth and development of the
Company will require that, despite significant competition, it attract, motivate
and retain additional skilled and experienced personnel. There can be no
assurance that the Company will be able to attract, motivate and retain
personnel with the skills and experience needed to successfully manage the
Company's business and operations.
Concentration of Printed Circuit Board Business in Northeastern United States
------------------------------------------------------------------------------
The Company's PCB assemblies and related services are primarily marketed and
sold to customers operating in the Northeastern United States. The Company
attempts to mitigate any unique exposure to the Northeastern United States
economy by marketing to OEMs which deliver products to national and
international markets, but there can be no assurance that an economic downturn
or recession in the Northeastern United States would not have an adverse effect
on the Company.
Future Acquisitions and Geographical Expansion
-----------------------------------------------
The Company may expand into other geographical areas within the United States
and internationally by acquiring contract manufacturing businesses or by
establishing new manufacturing operations in such areas. The Company may compete
for acquisition and expansion opportunities with entities having significantly
greater resources than the Company. Any such transactions may result in
potentially dilutive issuance of equity securities, the incurrence of debt and
amortization expenses related to goodwill and other intangible assets, and other
costs and expenses, all of which could materially adversely affect the company's
financial results following such a transaction. Such transactions also involve
numerous business risk, including difficulties in the assimilation of the
operations, technologies and products of the acquired companies, the diversion
of management's attention from other business concerns and the potential loss of
key employees from the combined company. In the event that any such transaction
does occur, there can be no assurance as to the beneficial effect on the
Company's business and financial results.
Environmental Compliance
-------------------------
The Company is subject to a variety of environmental regulations relating to
the use, storage, discharge and disposal of hazardous chemicals used during its
manufacturing process. A failure by the Company to comply with present and
future regulations could subject it to future liabilities or the suspension of
production. Such regulations could also restrict the Company's ability to expand
its facilities or could require the Company to acquire costly equipment or to
incur other significant expenses to comply with environmental regulations.
<PAGE>
Possible Volatility of Stock Price
----------------------------------
There has been significant volatility in the market price of securities of
high technology companies. Factors such as announcements of technological
innovations by the Company, its competitors and other third parties, as well as
quarterly variations in the Company's results of operations and market
conditions in the industry, may cause the market price of the Company's Common
Stock to fluctuate significantly. In addition, the public stock markets have
historically experienced extreme price and trading volume volatility. This
volatility has significantly affected the market prices of securities of many
technology companies for reasons frequently unrelated to the operating
performance of the specific companies. These broad market fluctuations may
adversely affect the market price of the Company's Common Stock.
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
10. Seventh Amendment dated February 28, 1997 to the Amended and
Restated Loan and Security Agreement by and among The First
National Bank of Boston, State Street Bank & Trust Company,
Citizen's Bank of Massachusetts and ACT Manufacturing, Inc.
11. Weighted Shares Used in Computation of Earnings per Share
27. Financial Data Schedule
(b) Report on Form 8-K.
The registrant did not file any reports on Form 8-K during the
quarter ended March 31, 1997.
<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.
ACT MANUFACTURING, INC.
May 9, 1997 /s/ John A. Pino
------------------------------------
John A. Pino
President and Chief Executive Officer
(Principal Executive Officer)
/s/ Douglass C. Greenlaw
------------------------------------
May 9, 1997 Douglass C. Greenlaw
Vice President of Finance and
Administration and Chief Financial Officer
(Principal Financial and Accounting Officer)
<PAGE>
EXHIBIT INDEX
Exhibit No.
- - -----------
10. Seventh Amendment dated February 28, 1997 to the Amended and Restated Loan
and Security Agreement by and among The First National Bank of Boston, State
Street Bank & Trust Company, Citizen's Bank of Massachusetts and ACT
Manufacturing, Inc.
11. Weighted Shares Used in Computation of Earnings per Share
27. Financial Data Schedule
<PAGE>
EXHIBIT 10
- - --------------------------------------------------------------------------------
SEVENTH AMENDMENT TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
- - --------------------------------------------------------------------------------
February 28, 1997
Effective: February 28, 1997
THIS SEVENTH AMENDMENT IS made to the Amended and Restated Loan and
Security Agreement (the "LOAN AGREEMENT"), which Amended and Restated Loan and
Security Agreement took effect on April 6, 1995 as an amendment and restatement
of the December 16, 1994 Loan and Security Agreement made between
The First National Bank of Boston, a national banking association with
offices at 100 Federal Street, Boston, Massachusetts, as agent for the ratable
benefit of the "LENDERS" being:
The First National Bank of Boston;
and
State Street Bank and Trust Company, a Massachusetts trust
company with offices at 225 Franklin Street, Boston, Massachusetts 02110;
and
Citizens Bank of Massachusetts, a Massachusetts savings
bank with offices at 55 Summer Street, Boston, Massachusetts 02110
and
ACT Manufacturing, Inc., a Massachusetts corporation with
its principal executive offices at 108 Forest Avenue, Hudson, Massachusetts
01749
in consideration of the mutual covenants contained herein and benefits to be
derived herefrom,
WITNESSETH:
1 . AGREEMENT TO AMEND
------------------
Provided each of those "Conditions to Amendment" set forth in Section
2, below, is satisfied on or before February 28, 1997, the Loan Agreement shall
be amended, as set forth below, such amendment to take effect as of February 28,
1997.
<PAGE>
SECTION 1-1(D) of the Loan Agreement (Definition of "Loan Cap") is
amended to read as follows:
"LOAN CAP": The following amount between the dates indicated,
Minus, in each instance, the then aggregate Stated Amount of all L/C's:
- - --------------------------------------------------------------
From To Loan Cap
- - --------------------------------------------------------------
September 4, 1996 October 18, 1996 $32,000,000.00
- - --------------------------------------------------------------
October 19, 1996 November 3, 1996 $28,000,000.00
- - --------------------------------------------------------------
November 4, 1996 April 30, 1997 $33,000,000.00
- - --------------------------------------------------------------
May 1, 1997 Termination $28,000,000.00
- - --------------------------------------------------------------
ARTICLE 3 (Definitions of "Commitment" and "Commitment Percentage")
are amended to read as follows:
"COMMITMENT and COMMITMENT PERCENTAGE": the following amounts and
Percentages:
REVOLVING CREDIT:
COMMITMENTS AND PERCENTAGE COMMITMENTS
================================================================================
LENDER
- - --------------------------------------------------------------------------------
DOLLAR COMMITMENT TO REVOLVING COMMITMENT
CREDIT LOANS ($ MILLIONS) PERCENTAGE
OF
REVOLVING
CREDIT LOANS
----------------------------------------------------------
Through April 30, 1997 May 1, 1997 to
Termination Date
================================================================================
THE FIRST NATIONAL 19.8 16.8 60%
BANK OF
BOSTON
- - --------------------------------------------------------------------------------
STATE STREET 6.6 5.6 20%
- - --------------------------------------------------------------------------------
CITIZENS 6.6 5.6 20%
- - --------------------------------------------------------------------------------
TOTALS...... $33.0 $28.0 100 %
================================================================================
<PAGE>
1 . CONDITIONS TO EFFECTIVENESS OF AMENDMENT
----------------------------------------
The within Amendment shall be effective if each of the following conditions
is satisfied on or before February 28, 1997 and on the date on which such
amendment is to take effect, no Suspension Event (as defined in the Loan
Agreement) is extant:
A Receipt by the Agent of a Certificate setting forth the text of
the resolutions adopted by the Directors of the Borrower authorizing the
Borrower's execution of the within Amendment, and attesting to the authority of
the persons who executed the within Amendment on behalf of the Borrower.
B Receipt by the Agent of a Certificate, executed by the Borrower's
President and its Chief Financial Officer, respectively confirming that no
Suspension Event is then extant.
C Receipt by the Agent of an opinion of counsel to the Borrower as
to the due execution and effectiveness of the within Amendment (which opinion
is subject only to the same qualifications as had been included in the opinion
delivered by that counsel at the initial execution of the Loan Agreement).
The Borrower hereby represents that, at the execution of the within
Agreement, no Suspension Event has occurred.
Except as amended hereby, or by the First, Second, Third, Fourth, Fifth,
and Sixth Amendments to the Loan Agreement, all terms and conditions of the Loan
Agreement shall remain in full force and effect.
ACT MANUFACTURING, INC.
(The "BORROWER")
By: /s/ Douglass C. Greenlaw
Its: Chief Financial Officer
THE FIRST NATIONAL BANK OF BOSTON
("AGENT")
By: /s/ George M. Mandt
Its: Director
<PAGE>
The "LENDERS"
THE FIRST NATIONAL BANK STATE STREET BANK
OF BOSTON AND TRUST COMPANY
By: /s/ George M. Mandt By: /s/ F. Andrew Beise
Its: Director Its: Vice President
CITIZENS BANK OF MASSACHUSETTS
By: /s/ Anne Forbes Van Nest
Its: Vice President
<PAGE>
EXHIBIT 11
ACT MANUFACTURING, INC.
Weighted Shares Used in Computation of Earnings per Share
Shares used in the net income per common share computation are the weighted
average number of common shares outstanding plus common share equivalents.
<TABLE>
<CAPTION>
Quarter ended March 31,
1997 1996
----- -----
(in thousands)
<S> <C> <C>
Weighted average number of
common shares outstanding 8,817 8,713
Common share equivalents 310 253
----- -----
TOTAL 9,127 8,966
===== =====
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 5,251
<SECURITIES> 0
<RECEIVABLES> 48,866
<ALLOWANCES> 225
<INVENTORY> 50,605
<CURRENT-ASSETS> 106,533
<PP&E> 9,152
<DEPRECIATION> 4,407
<TOTAL-ASSETS> 111,710
<CURRENT-LIABILITIES> 31,830
<BONDS> 29,378
0
0
<COMMON> 88
<OTHER-SE> 50,414
<TOTAL-LIABILITY-AND-EQUITY> 111,710
<SALES> 70,250
<TOTAL-REVENUES> 70,250
<CGS> 61,208
<TOTAL-COSTS> 64,100
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 548
<INCOME-PRETAX> 5,602
<INCOME-TAX> 2,241
<INCOME-CONTINUING> 3,361
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,361
<EPS-PRIMARY> .37
<EPS-DILUTED> .37
</TABLE>
