U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________________________________________________________________
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
Commission file number 0-5460
_____________________________________________
Stocker & Yale, Inc.
(Name of small business issuer in its charter)
Massachusetts 04-2114473
(State of other jurisdiction of incorporation (I.R.S. employer
or organization) identification no.)
32 Hampshire Road
Salem, New Hampshire 03079
(Address of principal executive offices (Zip Code)
(603) 893-8778
(Issuer's telephone number)
___________________________
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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. ___X__Yes _____No
As of May 1, 1997 there were 2,567,894.60 shares of the issuer's common stock
outstanding.
Transitional Small Business Disclosure Format: _______Yes ____X__No
<PAGE>
PART 1 FINANCIAL STATEMENTS
Item 1.1 CONSOLIDATED BALANCE SHEETS
STOCKER & YALE, INC.
ASSETS
<TABLE>
<CAPTION>
MARCH 31, 1997 DECEMBER 31, 1996
<S> (unaudited) (unaudited)
Current Assets: <C> <C>
Cash $ 621,994 $ 1,244,418
Accounts Receivable 1,624,993 1,410,774
Prepaid Taxes 353,668 353,668
Inventory 4,000,852 3,701,019
Prepaid Expenses 294,619 131,478
_________ _________
Total current assets 6,896,126 6,841,357
Property, Plant and Equipment, Net 3,149,210 3,134,717
--------- ---------
Note Receivable 1,000,000 1,000,000
--------- ---------
Goodwill, Net of Accumulated Amortization 8,654,600 8,721,800
--------- ---------
Other Assets 52,166 0
--------- ---------
Debt Issuance Costs, Net of Accumulated
Amortization 128,272 138,490
--------- ---------
$ 19,880,374 $ 19,836,364
LIABILITIES AND STOCKHOLDER'S INVESTMENT
<S>
Current Liabilities: <C> <C>
Current Portion of long-term debt $ 277,767 $ 357,569
Accounts Payable 1,559,178 1,373,121
Accrued Expenses 503,159 547,654
Accrued Taxes 29,337 0
_________ _________
Total current liabilities 2,369,441 2,278,344
--------- ---------
Long Term Debt 4,016,178 4,021,570
--------- ---------
Other Long Term Liabilities 564,688 564,688
--------- ---------
Deferred Income Taxes 982,685 1,012,685
Stockholder's Investment: Common stock, par value $0.001
Authorized -- 10,000,000
Issued and outstanding -- 2,567,894 2,568 2,568
Paid-in capital 10,822,705 10,822,705
Retained earnings 1,122,109 1,133,804
---------- ----------
Total stockholder's investment 11,947,382 11,959,077
---------- ----------
$ 19,880,374 $ 19,836,364
</TABLE>
<PAGE>
PART I FINANCIAL STATEMENTS
Item 1.2 CONSOLIDATED STATEMENT OF OPERATIONS
STOCKER & YALE, INC.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1997 1996
(unaudited) (unaudited)
<S> <C> <C>
Net Sales $ 2,733,662 $ 3,010,126
Cost of Sales 1,642,445 1,945,159
_________ _________
Gross Profit 1,091,217 1,064,967
Selling Expenses 428,910 421,371
General and Administrative Expenses 384,785 511,005
Research and Development 174,284 71,405
_________ _________
Operating Income 103,238 61,186
Interest Expense (77,433) (152,169)
_________ _________
Income/(Loss) before income taxes 25,805 (90,983)
Income Tax Expense/(Benefit) 37,500 (6,800)
Net Loss $ (11,695) $ (84,183)
________ ________
-------- --------
Loss Per Share $(0.00) $(0.05)
------- -------
Weighted-Average Common Shares
and Equivalents 2,567,895 1,712,914
</TABLE>
<PAGE>
PART I FINANCIAL STATEMENTS
Item 1.3 CONSOLIDATED STATEMENTS OF CASH FLOWS
STOCKER & YALE, INC.
<TABLE>
<CAPTION>
Three Months Ended
March 31
1997 1996
(unaudited) (unaudited)
<S>
Cash Flows from Operating Activities: <C> <C>
Net Loss $ (11,695) $ (84,183)
Adjustments to reconcile net loss to
net cash used in/provided by operating
activities
Depreciation and Amortization 140,222 250,685
Other changes in assets and liabilities
Accounts receivable, net (214,219) (305,787)
Inventories (299,833) (102,799)
Prepaid expenses (163,141) 28,902
Accounts payable 186,057 482,287
Accrued expenses (15,158) 26,237
Other assets (52,166) 0
Accrued and refundable taxes (30,000) (193,415)
--------- ---------
Net cash used in/provided by operating (459,933) 101,927
activities --------- ---------
Cash Flows from Investing Activities:
Purchases of property, plant and equipment (77,296) (62,427)
--------- --------
Net cash used in investing activities (77,296) (62,427)
Cash Flows from Financing Activities:
Payments of bank debt (85,195) (29,520)
Payments on capital lease - (18,744)
-------- --------
Net cash used in financing activities (85,195) (48,264)
-------- --------
Net Decrease in Cash and Cash Equivalents (622,424) (8,764)
Cash and Cash Equivalents, Beginning of Period 1,244,418 22,033
--------- --------
Cash and Cash Equivalents, End of Period $ 621,994 $ 13,269
---------- ---------
---------- ---------
</TABLE>
<PAGE>
PART 1. FINANCIAL STATEMENTS
Item 1.4 Notes to Financial Statements
The interim consolidated financial statements presented have been prepared by
Stocker & Yale, Inc. (the "Company") without audit and, in the opinion of the
management, reflect all adjustments of a normal recurring nature necessary for
a fair statement of (a) the results of operations for the three months ended
March 31, 1997 and March 31, 1996, (b) the financial position at March 31, 1997
and (c) the cash flows for the three month periods ended March 31, 1997 and
March 31, 1996. Interim results are not necessarily indicative of results for
a full year.
The consolidated balance sheet presented as of December 31, 1996 has been
derived from the consolidated financial statements that have been audited by
the Company's independent public accountants. The consolidated financial
statements and notes are condensed as permitted by Form 10-QSB and do not
contain certain information included in the annual financial statements and
notes of the Company. The consolidated financial statements and notes
included herein should be read in conjunction with the financial statements
and notes included in the Company's Annual Report on Form 10-KSB.
In March 1997, the Financial Accounting Standards Board issued SFAS No. 128
Earnings Per Share. SFAS No. 128 establishes standards for computing and
presenting earnings per share and applies to entities with publicly held common
stock. This statement is effective for fiscal years ending December 15, 1997
and early adoption is not permitted. When adopted, the statement will require
restatement of prior years' earnings per share. The Company will adopt this
statement for its fiscal year ending December 31, 1997 and does not believe that
the effect of this adoption of this standard would be materially different from
the amounts presented in the accompanying statements of income.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND OPERATING RESULTS
This Quarterly Report on Form 10-QSB contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. The Company's actual results could differ
materially from those set forth in the forward-looking statements.
Results of Operations
The following discussion should be read in conjunction with the attached
consolidated financial statements and notes thereto and with the Company's
audited financial statements and notes thereto for the fiscal year ended
December 31, 1996.
Fiscal Quarters Ended March 31, 1997 and 1996
Revenues decreased from $3,010,126 in the three months ending March 31, 1996
to $2,733,662 in the period ending March 31, 1997. Approximately 37% of the
decrease was due to reduced sales to the U.S. Government, which declined from
$274,592 to $22,561 in the equivalent period in the current year, reflecting
the fact that 1996 sales benefited from a one-time contract. As a result of
the Company's continued withdrawal from the electronic ballast market, sales
of electronic ballasts decreased from $137,642 to $14,233 which represents
18% of the Company's aggregate decline in revenue. The departure away from
the commodity price driven ballast market has allowed the Company to focus on
the development of higher margin products. Sales of two product lines, Power
Clamping and DieDraulic, by the Company's Stilson Division encompassed 26% of
the decrease dropping from $554,939 in the three months ended March 31, 1996
to $378,511 in the first three months of 1997. Sales of the Company's
lighting products increased 24% from $646,327 for first quarter 1996 to
$804,245 for first quarter 1997. Sales of millitary products (watches and
compasses) increased 62% from $163,940 to $265,810 as a direct result of the
the Company's marketing of such products through a mail order marketing
company. Sales of millitary watches in the Company's Hong Kong subsidiary
increased 69% from $49,347 to $83,270. The Company had sales of $48,233 from
its new fiber optic product line in the first quarter of 1997.
The Company recorded pretax income of $25,805 for the period ending March 31,
1997 which was an increase from the reported net loss $(90,983) for the
period ending March 31, 1996. Contributing factors to the Company's increased
income included a reduction in interest expense of approximately $75,000 as
a result of reductions in the Company's outstanding debt and a decrease in
General and Administrative expenses by approximately $125,000 due primarily
to a reduction in professional fees such as legal. Selling expenses remained
generally unchanged between the two periods. Research and development costs
increased by approximately $100,000 in response to the Company's research
efforts relating to its new fiber optic product line.
<PAGE>
Liquidity and Capital Resources
The Company finances its operations primarily through third party credit
facilities and cash from operations. Net cash provided by operations was
$(459,933) for the quarter ended March 31, 1997 and $101,927 for the quarter
ended March 31, 1996.
The Company's primary third party financing relationship is with Fleet National
Bank of Massachusetts, N.A. (the "Bank"). The initial Credit Agreement between
the Company and the Bank, dated March 6, 1995 (the "Credit Agreement"),
provided for a Short Term Loan due August 1, 1995, a Revolving Line of Credit
Loan (the "Revolving Loan") due March 31, 1998 and a a Long Term Loan due
March 1, 2001. The Short Term Loan was paid as agreed in August 1995. The
Revolving Loan and the Long Term Loan bear interest at the Bank's base rate
plus 1/2%. At March 31, 1997 there was a total of $1,296,725 outstanding under
the Credit Agreement, all of which constituted long term debt. There was
$2,681,693 available to borrow under the Revolving Loan. At March 31, 1996
there was $4,099,922 borrowed under the Credit Agreement of which $2,606,451
pertained to the Revolving Loan.
Under the terms of the Credit Agreement, the Company is required to comply with
a number of financial covenants including minimum equity, debt service coverage
ratios, debt to equity ratios and minimum net income tests. For the period
ending 3/31/97, the Company is in compliance with all of the covenants.
The Company holds Subordinated Notes outstanding totaling $1,350,000. These
notes mature on May 1, 2001. They bear interest at 7.25% and are convertible
into shares of the Company's common stock at a price of $7.375 per share.
Company expenditures for capital equipment were $77,296 in the first quarter of
1997 as compared to $62,427 in the same period of 1996. The majority of the
1997 expenditures related to the Company's new fiber optic product line.
The Company believes that its available financial resources are adequate to meet
its foreseeable working capital, debt service and capital expenditure
requirements.
<PAGE>
PART II
ITEM. 5 OTHER INFORMATION
Alex W. Blodgett has resigned from his position as President of the Company's
Stilson Division to pursue other interests in Vancouver, British Columbia. His
resignation will be effective June 1, 1997. Mr. Blodgett will continue to
actively serve on the Company's Board of Directors.
ITEM. 6 EXHIBITS, LISTS AND REPORTS ON FORM 8-K
(a) The following is a complete list of Exhibits filed as part of this Form
10-QSB:
Exhibit
Number Description
------- -----------
27.1 Financial Data Schedule
(b) There were no reports filed on Form 8-K
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereto duly
authorized.
Stocker & Yale, Inc.
- --------------------
April 29, 1997 /s/ Mark W. Blodgett
- -------------- ----------------------
Mark W. Blodgett, Chairman and Chief Executive Officer
April 29, 1997 /s/ Susan A. H. Sundell
- -------------- -------------------------
Susan A.H. Sundell, Senior Vice-President-Finance and Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S UNAUDITED FINANCIAL STATEMENTS FOR THE THREE MONTH PERIOD ENDED
MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 621,994
<SECURITIES> 0
<RECEIVABLES> 1,624,993
<ALLOWANCES> 0
<INVENTORY> 4,000,852
<CURRENT-ASSETS> 6,896,126
<PP&E> 3,149,210
<DEPRECIATION> 0
<TOTAL-ASSETS> 19,880,374
<CURRENT-LIABILITIES> 2,369,441
<BONDS> 0
0
0
<COMMON> 2,568
<OTHER-SE> 11,944,814
<TOTAL-LIABILITY-AND-EQUITY> 19,880,374
<SALES> 2,733,662
<TOTAL-REVENUES> 2,733,662
<CGS> 1,642,445
<TOTAL-COSTS> 987,979
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 77,433
<INCOME-PRETAX> 25,805
<INCOME-TAX> 37,500
<INCOME-CONTINUING> (11,695)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (11,695)
<EPS-PRIMARY> (0.00)
<EPS-DILUTED> (0.00)
</TABLE>
