<PAGE>
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 March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-26634
LeCROY CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 13-2507777
(State or other jurisdiction (I.R.S. Employer
of Incorporation or organization) Identification No.)
700 CHESTNUT RIDGE ROAD, CHESTNUT RIDGE , NEW YORK 10977
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (914) 425-2000
Indicate by check mark ("X") whether the Registrant: (1) has filed all
reports to be filed by section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding twelve 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.
CLASS OUTSTANDING AT APRIL 16, 1996
Common stock, par value $.01 share 5,255,482
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LeCROY CORPORATION
INDEX
PART I FINANCIAL INFORMATION PAGE
Item 1. Financial Statements:
Condensed Consolidated Balance Sheet 3
Condensed Consolidated Statement of Income 4
Condensed Consolidated Statement of Cash Flows 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7-8
PART I OTHER INFORMATION 9
PART II OTHER INFORMATION 9
SIGNATURES 10
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<TABLE>
LeCROY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
March 31, June 30,
In thousands 1996 1995
(Unaudited)
<S> <C> <C>
ASSETS
Cash $ 3,950 $ 1,408
Accounts receivable:
Trade 19,435 17,316
Officers 150 192
Inventories:
Raw Materials 6,799 7,932
Work in process 7,328 3,616
Finished goods 6,788 8,466
Total inventories 20,915 20,014
Prepaid expenses 1,487 1,284
Total Current Assets 45,937 40,214
Property and plant 5,194 5,178
Furniture, machinery and equipment 25,252 24,583
Total property, plant and equipment 30,446 29,761
Accumulated depreciation and amortization (22,407) (22,338)
Property, plant and equipment, net 8,039 7,423
Other assets 1,339 2,199
TOTAL ASSETS $ 55,315 $49,836
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Accounts payable $ 7,750 $ 7,053
Accrued liabilities 5,335 3,154
Accrued employee compensation and benefits 3,900 2,749
Current debt 581 4,069
Income taxes payable 2,539 1,398
Total current liabilities 20,105 18,423
Long-term debt and capitalized leases 228 13,973
STOCKHOLDERS' EQUITY:
Preferred stock - -
Series B Preferred stock - 6
Series C Preferred stock - 7
Common stock 59 29
Capital in excess of par value 21,627 5,419
Foreign currency translation adjustment 2,541 3,397
Retained earnings 13,888 11,715
Treasury stock, at cost (3,133) (3,133)
Total stockholders' equity 34,982 17,440
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 55,315 $ 49,836
<FN>
See accompanying notes to condensed consolidated financial statements.
</FN>
</TABLE>
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<TABLE>
LeCROY CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
For the For the
Three Months Ended Nine Months Ended
In thousands, except March 31, March 31,
per share amounts 1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenues:
Digital oscilloscopes and related
products $22,436 $17,639 $62,381 $46,779
High energy physics products 2,972 2,758 8,028 8,517
Service and other 1,132 1,169 3,344 3,013
Total revenues 26,540 21,566 73,753 58,309
Cost of sales 11,797 9,969 33,236 26,647
Gross profit 14,743 11,597 40,517 31,662
Operating expenses:
Selling, general and administrative 9,211 7,135 25,217 20,028
Research and development 3,155 2,450 9,471 7,233
Total operating expenses 12,366 9,585 34,688 27,261
Operating income 2,377 2,012 5,829 4,401
Other expenses 47 700 486 1,654
Income before income taxes and
extraordinary charge 2,330 1,312 5,343 2,747
Provision for income taxes 815 460 1,870 963
Income before extraordinary charge 1,515 852 3,473 1,784
Extraordinary charge for early
retirement of debt - - (1,300) -
Net income $ 1,515 $ 852 $ 2,173 $ 1,784
Earnings per common share:
Primary:
Income before extraordinary charge $.24 $.18 $.60 $.38
Extraordinary charge - - (.22) -
Net income $.24 $.18 $.38 $.38
Fully diluted:
Income before extraordinary charge $.24 $.18 $.60 $.38
Extraordinary charge - - (.22) -
Net income $.24 $.18 $.38 $.38
Weighted average number of common shares:
Primary 6,439 4,679 5,752 4,686
Fully diluted 6,439 4,679 5,773 4,686
<FN>
See accompanying notes to condensed consolidated financial statements.
</FN>
</TABLE>
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<TABLE>
LeCROY CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Nine Months Ended
March 31,
In thousands 1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,173 $ 1,784
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,517 1,403
Deferred income taxes - (31)
Deferred financing costs 1,300 (255)
Loss on sale of fixed assets 13 -
Changes in operating assets and liabilities:
Accounts receivable (3,330) 2,023
Inventories (1,297) (2,408)
Prepaid expenses and other assets (748) (1,353)
Accounts payable and accrued liabilities 3,598 1,138
Accrued employee compensation and benefits 1,269 (259)
Income taxes 1,174 590
Net cash provided by operating activities 5,669 2,632
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (2,142) (1,448)
Due from officers 40 -
Proceeds from sale of fixed assets 7 -
Net cash used in investing activities (2,095) (1,448)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in short-term debt (3,354) (5,329)
Net change in long-term debt (13,742) 6,485
Technology license payments - (1,549)
Proceeds from sale of common stock 16,225 (2,697)
Repurchase of common stock - 2,924
Net cash used in financing activities (871) (166)
Effect of exchange rate changes on cash (161) (68)
Increase in cash 2,542 950
Cash at beginning of the year 1,408 211
Cash at end of the period $ 3,950 $ 1,161
<FN>
See accompanying notes to condensed consolidated financial statements.
</FN>
</TABLE>
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LeCROY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Basis of Presentation
In the opinion of management, the accompanying unaudited interim condensed
consolidated financial statements reflect all adjustments, of a normal and
recurring nature, necessary to present fairly the results for the interim
periods presented.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. The year-end balance sheet data
was derived from audited financial statements, but does not include all
disclosures required by generally accepted accounting principles. It is
suggested that these condensed statements be read in conjunction with the
Corporation's most recent Form S-1.
Results for the interim period are not necessarily indicative of the results
that may be expected for the entire year.
Conversion of Preferred Stock
During the second quarter of fiscal 1996, the Corporation completed its
initial public offering. Upon the completion of the initial public offering,
all outstanding shares of the Corporation's Series B and Series C Preferred
Stock, (782,609 and 655,774 shares, respectively), were converted to shares
of common stock at a ratio of 1:1.
Extraordinary Charge
During the second quarter of fiscal 1996, LeCroy completed its initial public
offering. Proceeds from the offering were used primarily to retire existing
debt. As a result of the early retirement of the debt, certain deferred
financing costs were written off. The Corporation incurred an extraordinary
charge of approximately $1.3 million, to fiscal 1996 second quarter earnings.
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LeCROY CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Consolidated revenues for the current quarter and nine months ended March 31,
1996 increased approximately 23% and 26%, respectively, from the comparable
prior year periods, primarily as a result of a rise in sales of digital
oscilloscopes and related products. Consolidated revenues were $26.5 million
for the third quarter, and $73.8 million year-to-date, both representing
record revenues for the Corporation.
Digital oscilloscopes and related products revenues increased 27% in the third
quarter and 33% for the nine months ended March 31, 1996 as compared to the
comparable prior year periods. Increase in both units and average selling
prices of higher end products in LeCroy's 9300 family, contributed to the
improvement in this line of products for both periods presented.
Revenues from the sale of HEP products increased 8% in the third quarter, but
decreased 6% for the nine months ended March 31, 1996 as compared to the prior
year periods. The increase in the third quarter is primarily due to a large
shipment of a new product, the 1877S series. The Corporation believes that
the results of the third quarter are not indicative of the future for the HEP
business, and management expects sales of these products will continue to
decline in relationship to future overall revenues.
Approximately $2.1 million of the increase in total revenues during the nine
months ended March 31, 1996 was attributable to the net impact of the weakening
of the United States dollar versus the Japanese yen, Swiss franc, French franc
and German deutschemark, as compared to the exchange rates prevailing in the
same period of the prior fiscal year .
Consolidated gross profit for the current quarter and nine months ended was
55.6% and 54.9% of revenues, respectively, compared to 53.8% and 54.3% for each
of the respective prior year periods. The increase in rate in the current
quarter was driven by operating efficiencies in the Chestnut Ridge, N. Y.
manufacturing facility and increased volume of certain higher margin 9300
Series of digital oscilloscopes.
Selling, general and administrative expenses as a percent of sales declined
slightly in the current fiscal nine month period to 34.2% compared with 34.3%
for the comparable prior year period. Selling, general and administrative
dollars for the third quarter and year-to-date periods increased as the
Corporation expanded management and support staff, and incurred additional
sales commissions due to higher sales volume.
Research and development expenses in the current fiscal year were $3.2 million
and $9.5 million for the third quarter and year-to-date periods, respectively,
compared to $2.5 million and $7.2 million for the comparable prior year
periods, an increase of 29% and 31%, respectively. This higher level of
expenses principally reflects an increase in prototype and development costs
of custom integrated circuits for use in digital oscilloscopes and initial
development of an analog LAN network monitor. As a percentage of total
revenues, research and development expenses increased to 11.9% and 12.8% for
the third quarter and year-to-date periods ended March 31, 1996 from 11.4% and
12.4% for the comparable periods of the prior fiscal year.
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Management's Discussion and Analysis of Financial Condition and Results of
Operations (Cont.)
Net interest and financing charges, included in other expenses, decreased to
approximately $45,000 in the three months ended March 31, 1996 from
approximately $380,000 in the same period of the prior fiscal year, due
primarily to lower debt in the second quarter resulting from funds received
in the second quarter from the initial public offering.
Foreign exchange resulted in a $183,000 gain for the nine months ended March
31, 1996, versus a $589,000 loss in the same period of the prior fiscal year.
The gain in the nine months ended March 31, 1996 is primarily the result of a
one-time foreign exchange gain resulting from the close-out of a multicurrency
swap agreement, during the first quarter, which generated $330,000 of income.
This amount was partially offset by unfavorable foreign exchange losses
realized on other transactions in the first quarter of fiscal 1996.
The Corporation's effective income tax rate for the three months and
year-to-date periods ended March 31, 1996 was 35%. This rate is less than the
statutory rate primarily as a result of lower tax rates in Switzerland as
compared to those in the United States.
In the third quarter of fiscal 1996, LeCroy achieved record quarterly income.
Income increased to $1,515,000 in the three months ended March 31, 1996 from
$852,000 for the same period of the prior fiscal year. Year-to-date income
before the extraordinary charge increased to $3,473,000 from $1,784,000 in the
prior year, a 95% increase.
CAPITAL RESOURCES AND LIQUIDITY
On October 12, 1995 LeCroy completed an initial public offering of 1,500,000
shares of Common Stock at $12.00 per share. The gross amount of proceeds of
$18.4 million were used primarily to pay down outstanding debt of $16.5
million as well as underwriting fees and other offering expenses. As a result
of the early extinguishment of this debt, an extraordinary non-cash charge
in the amount of approximately $1.3 million was taken in the second quarter.
Cash flows generated from operations for the first nine months of fiscal 1996
increased significantly in comparison to the prior year period. The increase
is primarily attributable to increased operating earnings in the current year
coupled with higher operating liabilities. As a result, working capital
increased to $25.8 million at March 31, 1996, or 2.3 to 1, compared to
$21.8 million, or 2.2 to 1, at June 30, 1995.
LeCroy is a party to a multicurrency revolving credit agreement with a total
commitment of $15 million. At March 31, 1996, no amount was outstanding under
this agreement. The Company believes it has sufficient resources to finance
its cash requirements over the next year.
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LeCROY CORPORATION
PART I. OTHER INFORMATION
Item 6.(a) Exhibits
Page
Exhibit 11 Computation of Earnings per Common Share 11
Exhibit 27 Financial Data Schedule
PART II. OTHER INFORMATION
Item 2 Changes in Securities.
The Corporation completed its initial public offering of
1,500,000 shares of Common Stock on October 12,1995. Upon the
closing of such offering, all outstanding shares of its Series
B Preferred Stock and Series C Preferred Stock were
automatically converted into an equal number of shares of
Common Stock, as described in the Corporation's Registration
Statement on Form S-1 (Registration No. 33-95620), which
description is herein incorporated by reference.
Item 6.(b) Reports on Form 8-K.
No current reports on Form 8-K were filed during the quarter
ended March 31, 1996.
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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.
LeCroy Corporation
Date: May 3, 1996 /S/ JOHN C. MAAG
John C. Maag, Vice President
Finance and Chief Financial
Officer
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EXHIBIT 11
LeCROY CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE
(Unaudited)
For the For the
Three Months Ended Nine Months Ended
In thousands, except March 31, March 31,
per share amounts 1996 1995 1996 1995
<S> <C> <C> <C> <C>
Income Before Extraordinary Item $1,515 $ 852 $ 3,473 $1,784
Extraordinary Item - - (1,300) -
Net Income Applicable to Common
Shares, Common Equivalent Shares
and Dilutive Securities $1,515 $ 852 $ 2,173 $1,784
Weighted Average Shares - Primary:
Weighted Average Number of Common
Shares Outstanding 5,256 4,449 4,685 4,456
Dilutive Common Equivalent Shares
Issuable Under Stock Option Plans 1,183 230 1,067 230
Weighted Average Number of Common and
Dilutive Common Equivalent Shares 6,439 4,679 5,752 4,686
Primary Earnings Per Common Share:
Income before extraordinary item $.24 $.18 $.60 $.38
Extraordinary item - - (.22) -
Net income $.24 $.18 $.38 $.38
Weighted Average Shares - Fully Diluted:
Weighted Average Number of Common
Shares Outstanding 5,256 4,449 4,685 4,456
Dilutive Common Equivalent Shares
Issuable Under Stock Option Plans 1,183 230 1,088 230
Weighted Average Number of Common and
Dilutive Common Equivalent Shares 6,439 4,679 5,773 4,686
Fully Diluted Earnings Per Common Share:
Income before extraordinary item $.24 $.18 $.60 $.38
Extraordinary item - - (.22) -
Net income $.24 $.18 $.38 $.38
</TABLE>
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's Form 10-Q for the fiscal quarter ended March 31, 1996.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> MAR-31-1996
<CASH> 3950
<SECURITIES> 0
<RECEIVABLES> 19585
<ALLOWANCES> 0
<INVENTORY> 20915
<CURRENT-ASSETS> 45937
<PP&E> 30446
<DEPRECIATION> 22407
<TOTAL-ASSETS> 55315
<CURRENT-LIABILITIES> 20105
<BONDS> 228
0
0
<COMMON> 59
<OTHER-SE> 34923
<TOTAL-LIABILITY-AND-EQUITY> 55315
<SALES> 73753
<TOTAL-REVENUES> 73753
<CGS> 33236
<TOTAL-COSTS> 34688
<OTHER-EXPENSES> 486
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 5343
<INCOME-TAX> 1870
<INCOME-CONTINUING> 3473
<DISCONTINUED> 0
<EXTRAORDINARY> 1300
<CHANGES> 0
<NET-INCOME> 2173
<EPS-PRIMARY> 0.38
<EPS-DILUTED> 0.38
</TABLE>
