U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________________________________________________________________
FORM 10-QSB/A
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
Commission file number 0-5460
_____________________________________________
Stocker & Yale, Inc.
(Name of small business issuer in its charter)
Massachusetts 04-2114473
(State or 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 August 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>
JUNE 30, 1997 DECEMBER 31, 1996
<S> (unaudited) (unaudited)
Current Assets: <C> <C>
Cash $ 186,363 $ 1,244,418
Accounts Receivable 1,873,673 1,410,774
Prepaid Taxes 233,588 353,668
Inventory 4,608,390 3,701,019
Prepaid Expenses 385,017 131,478
_________ _________
Total current assets 7,287,031 6,841,357
Property, Plant and Equipment, Net 3,335,007 3,134,717
--------- ---------
Note Receivable 1,000,000 1,000,000
--------- ---------
Goodwill, Net of Accumulated Amortization 8,587,400 8,721,800
--------- ---------
Other Assets 52,166 0
--------- ---------
Debt Issuance Costs, Net of Accumulated
Amortization 118,054 138,490
--------- ---------
$ 20,379,658 $ 19,836,364
LIABILITIES AND STOCKHOLDER'S INVESTMENT
<S>
Current Liabilities: <C> <C>
Current Portion of long-term debt $ 273,869 $ 357,569
Accounts Payable 1,413,796 1,373,121
Accrued Expenses 481,594 547,654
_________ _________
Total current liabilities 2,169,259 2,278,344
--------- ---------
Long Term Debt 4,772,319 4,021,570
--------- ---------
Other Long Term Liabilities 564,688 564,688
--------- ---------
Deferred Income Taxes 912,685 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 1,135,434 1,133,804
---------- ----------
Total stockholder's investment 11,960,707 11,959,077
---------- ----------
$ 20,379,658 $ 19,836,364
</TABLE>
<PAGE>
PART I FINANCIAL STATEMENTS
Item 1.2 CONSOLIDATED STATEMENT OF OPERATIONS
STOCKER & YALE, INC.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
(unaudited) (unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
Net Sales $ 2,804,280 $ 2,566,098 $ 5,537,942 $ 5,576,224
Cost of Sales 1,614,438 1,634,293 3,256,883 3,579,452
__________ _________ _________ _________
Gross Profit 1,189,842 931,805 2,281,059 1,996,772
Selling Expenses 410,447 409,756 839,357 831,127
General and 467,458 444,562 852,243 955,567
Administrative Expenses
Research and 157,241 73,357 331,525 144,762
Development _________ ________ _________ _________
Operating Income 154,696 4,130 257,934 65,316
Interest Expense (86,871) (147,975) (164,304) (300,140)
________ _________ _________ _________
Income/(Loss) before 67,825 (143,841) 93,630 (234,824)
income taxes
Income Tax Expense/ 54,500 (29,300) 92,000 (36,100)
(Benefit)
Net Income/(Loss) $ 13,325 (114,541) $ 1,630 (198,724)
________ __________ ________ ________
________ __________ -------- --------
Income/(Loss) $ 0.01 (0.07) $ 0.00 (0.11)
Per Share -------- ---------- -------- --------
Weighted-Average
Common Shares and 2,567,894 1,712,914 2,567,894 1,712,914
Equivalents
</TABLE>
<PAGE>
PART I FINANCIAL STATEMENTS
Item 1.3 CONSOLIDATED STATEMENTS OF CASH FLOWS
STOCKER & YALE, INC.
<TABLE>
<CAPTION>
Six Months Ended
June 30
1997 1996
(unaudited) (unaudited)
<S>
Cash Flows from Operating Activities: <C> <C>
Net Income/(Loss) $ 1,630 $ (198,724)
Adjustments to reconcile net loss to
net cash used in/provided by operating
activities
Depreciation and Amortization 278,151 486,784
Deferred income taxes (100,000) (80,000)
Other changes in assets and liabilities
Accounts receivable, net (462,899) 204,729
Inventories (907,371) (162,458)
Prepaid expenses (133,459) 44,127
Accounts payable 40,675 225,340
Accrued expenses (66,060) (48,810)
Other assets (52,166) 0
Accrued and refundable taxes 0 (184,188)
--------- ---------
Net cash used in/provided by operating (1,401,499) 286,800
activities --------- ---------
Cash Flows from Investing Activities:
Purchases of property, plant and equipment (323,602) (110,073)
--------- --------
Net cash used in investing activities (323,602) (110,073)
Cash Flows from Financing Activities:
Proceeds of equipment line of credit 153,985 0
Payments/Advances of bank debt 513,061 (1,445,715)
Payments on capital lease 0 (37,974)
Proceeds from Subordinated Notes Payable 0 1,350,000
Deferred Financing Costs 0 (39,000)
-------- --------
Net cash used in financing activities 667,046 (172,689)
-------- --------
Net Decrease in Cash and Cash Equivalents (1,058,055) 4,038
Cash and Cash Equivalents, Beginning of Period 1,244,418 22,033
--------- --------
Cash and Cash Equivalents, End of Period $ 186,363 $ 26,071
---------- ---------
---------- ---------
</TABLE>
<PAGE>
PART 1. FINANCIAL STATEMENTS
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 month and six
month periods ended June 30, 1997 and June 30, 1996 (b) the financial position
at June 30, 1997 and (c) the cash flows for the six month periods ended
June 30, 1997 and June 30, 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.
Three-month periods ending June 30, 1997 and 1996
Revenues increased 9% from $2,566,098 for the three months ended June 30,1996,
to $2,804,280 for the three months ended June 30, 1997, as the Company
experienced significant revenue increases in sales of lighting products and
sales of military products (military-style watches and compasses) to civilian
markets. Sales of lighting products increased approximately 56% from $642,321
in the second quarter of 1996 to $1,001,871 in the second quarter of 1997.
This growth resulted in part from the introduction in May 1997 of the
Steadylite Plus, a new fluorescent lighting product which generated $48,765
in net revenues in the quarter, as well as sales of the Company's new fiber
opitc lighting products which totaled $81,762 for the second quarter of 1997
as compared to $0 in the second quarter of 1996. Sales of military products
to civilians increased approximately 41%, from $232,366 for the quarter ended
June 30, 1996 to $326,986 for the quarter ended June 30, 1997. These
reported military sales include the sales by the Company's Hong Kong subsidiary,
which primarily sells these products to civilians in southeast Asia.
Sales to the U.S. Government increased 67% from $80,250 in the three months
ending June 30, 1996 to $133,936 in the equivalent period in 1997, as a result
of a new contract for galvanometers and increased contract shipments of watches
in the 1997 period. Electronic ballast, which were discontinued as a product
offering in 1996, decreased from $122,331 for the quarter ended June 30, 1996
to $1,976 for the quarter ended June 30, 1997. Sales of the Company's MFE
products decreased 30% from $487,845 for the second quarter of 1996 to $339,318
for the second quarter of 1997, in large part because of a decrease in OEM
contracts. Second quarter comparative sales of machine tool components through
the Company's Stilson division remained relatively flat at $1,001,196 for the
quarter ended June 30, 1997 and $1,000,885 for the quarter ended June 30, 1996.
Management attributes the increase in lighting and military product sales to
management's efforts to implement its strategic shift away from sales of the
Company's commodity price driven products in favor of developing and
marketing the Company's higher margin products. Lighting and military products,
as well as machine tool components, generate higher gross margins than the
Company's other product lines.
Gross profit margin increased, to 42% for the quarter ended June 30, 1997 as
compared to 36% for the quarter ended June 30, 1996, primarily as a result
of the more favorable product mix. Selling expenses and General and
Administrative expenses remained unchanged between the two periods. Research
and development expenditures increased by $83,884 as a result of the Company's
increased development efforts relating to its new fiber optic product line.
The Company recorded pretax income of $67,825 for the quarter ended
June 30, 1997 as compared with the reported pretax loss of $(143,841) for the
quarter ended June 30, 1996. The increase is primarily attributable to the
above improved gross margin and to reduced interest expense, which decreased
by $61,100 as a result of reductions in the Company's outstanding debt.
Six month periods ending June 30, 1997 and 1996
Revenues decreased modestly from $5,576,224 for the six months ended
June 30, 1996, to $5,537,942 for the six months ended June 30, 1997. Although
the second quarter of 1997, reflected various positive elements, circumstances
in the first quarter of 1997 served to burden cumulative totals as of June 30,
1997. In particular, sales to the U.S. Government for the first six months
of 1997 were $156,497 as compared to $354,842 for the first six months of 1996,
in spite of favorable comparisons between the second quarter of 1997 and the
second quarter of 1996. Similarly, although Stilson division sales were flat
in the June 30 three month period comparisons above, the division's six months
sales lagged 7% behind the prior year at $1,996,717 for the six months ended
June 30, 1997 versus $2,148,113 for the comparable 1996 period.
Sales of lighting and military products increased significantly. Lighting
sales increased 43% from $1,362,257 in the six month period ended
June 30, 1996 to $1,949,862 in the equivalent period of 1997. Included in
these lighting segment revenues are sales of the Company's fiber optic
lighting products which were $129,995 as of June 30, 1997 compared to $0 in
the comparable period of 1996. For the six months ended June 30, 1997, sales
of military products to civilian markets increased 52% to $667,066 from
$445,653 for the first six months of 1996. Electronic ballast decreased from
$260,073 for the six months ended June 30, 1997 to $16,209 for the comparable
1997 period. MFE product sales declined from $1,005,286 for the six month
period ended June 30, 1996 to $742,591 for the six month period ended
June 30, 1997.
In the six month period ended June 30, 1997, the Company recorded pretax
income of $93,630 which was an increase from the reported pretax loss of
$(234,824) for the comparable period ended June 30, 1996. An increase in
gross profit margin from 36% for the six months ended June 30, 1996 to 41%
for the six months ended June 30, 1997 contributed toward this positive
pretax income. Interest expense also decreased by $135,836 as a result of
reductions in the Company's outstanding debt. Selling expenses remained
generally unchanged between the two periods. General and Administrative
expenses decreased by $103,324 primarily due to a reduction in professional
fees such as legal. Lastly, research and development costs increased by
$186,763 as a result of the Company's research efforts 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
$(1,401,499) for the six months ended June 30, 1997 and $286,800 for the six
months ended June 30, 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 Revolving Line of Credit Loan (the "Revolving Loan") due
March 31, 1998 and a a Long Term Loan due March 1, 2001. The
Revolving Loan and the Long Term Loan bear interest at the Bank's base rate
plus 1/2%. At June 30, 1997 there was a total of $1,844,591 borrowed under
the Credit Agreement and availability to borrow of $2,440,936 under 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 6/30/97, the Company is in compliance with all of the covenants.
The Company has issued and outstanding Subordinated Notes
in an original principal amount of $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 $323,602 in the first six
months of 1997 as compared to $110,073 in the same period of 1996. The
majority of the 1997 expenditures related to the Company's new fiber optic
product line.
On May 20, 1997 the Company entered into a line of credit agreement with
Primary Bank to finance capital equipment related to new product development.
The facility provides that equipment purchases will be converted quarterly
into a series of five year notes, not to exceed $500,000 in the aggregate,
bearing interest at the prime rate plus .75%. As of June 30, 1997, the
Company had borrowed $153,985 against the line of credit.
The Company believes that its available financial resources are adequate to
meet its foreseeable working capital, debt service and capital expenditure
requirements.
<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.
- --------------------
August 11, 1997 /s/ Mark W. Blodgett
- -------------- ----------------------
Mark W. Blodgett, Chairman and Chief Executive Officer
August 11, 1997 /s/ Susan A. H. Sundell
- -------------- -------------------------
Susan A.H. Sundell, Senior Vice-President-Finance and Treasurer
