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 June 30, 1996 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 0-20506
BKC SEMICONDUCTORS INCORPORATED
(Exact name of registrant as specified in its charter)
Massachusetts 04-2883532
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6 Lake Street, Lawrence, Massachusetts 01841
(Address of principal executive offices) (Zip Code)
(508) 681-0392
(Registrant's telephone number, including area code)
____________________________________________________________________
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark 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), and (2) has been subject to
such filing requirements for the past 90 days. Yes__X__ No_____
There were 1,276,411 shares of common stock outstanding at June 30, 1996
BKC SEMICONDUCTORS INCORPORATED
QUARTERLY REPORT FORM 10-Q
June 30, 1996
PART I. FINANCIAL INFORMATION Page
ITEM 1. Financial Statements (Unaudited)
Consolidated Balance Sheet - June 30, 1996 and September 30, 1995 3
Statement of Consolidated Income (Loss) -
for the three and nine months ended June 30, 1996 and July 1, 1995 4
Statement of Consolidated Cash Flows - for the nine months
ended June 30, 1996 and July 1, 1995 5
Notes to Consolidated Financial Statements - June 30, 1996 6
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings 9
ITEM 2. Changes in Securities 9
ITEM 3. Defaults Upon Senior Securities 9
ITEM 4. Submission of Matters to a Vote of Security Holders 9
ITEM 5. Other Information 9
ITEM 6. Exhibits and Reports on Form 8-K 9
Signature Page 10
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
BKC SEMICONDUCTORS INCORPORATED
CONSOLIDATED BALANCE SHEET
June 30, 1996 Sept. 30, 1995
ASSETS
CURRENT ASSETS:
Cash and Cash Equivalents $11,747 $28,340
Accounts and Notes Receivable 1,552,146 1,899,748
Refundable Income Taxes 11,252 215,255
Inventories 3,018,243 3,038,082
Deferred Income Taxes 383,724 491,400
Other Current Assets 113,161 54,357
--------------- -------------
Total Current Assets 5,090,273 5,727,182
PROPERTY AND EQUIPMENT - NET 1,505,602 1,996,220
OTHER ASSETS 129,251 100,939
--------------- -------------
TOTAL $6,725,126 $7,824,341
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes Payable $1,331,190 $2,279,647
Payroll Payable 22,757 28,351
Accounts Payable 901,555 894,853
Accrued Liabilities 79,581 92,647
Current Maturities of Long-term Debt 671,864 687,671
------------- -------------
Total current liabilities 3,006,947 3,983,169
------------- -------------
LONG-TERM DEBT - Net of Current Maturities 459,813 915,251
------------- -------------
DEFERRED INCOME TAXES 73,900 73,900
------------- -------------
STOCKHOLDERS' EQUITY:
Convertible preferred
stock series A-6%, authorized,
5000 shares of no par value;
issued 2940 shares 242,078 242,078
Common Stock-authorized 2,000,000
shares of no par value;
issued, 1996, 1,295,321
shares; 1995, 1,262,311 shares 3,916,721 3,834,221
Retained earnings (deficit) (618,714) (868,659)
------------- -------------
Total 3,540,085 3,207,640
Less cost of shares held in treasury:
Convertible preferred stock,
2,940 shares 235,200 235,200
Common stock, 18,900 shares 120,419 120,419
------------- -------------
Stockholders' equity - net 3,184,466 2,852,021
------------- -------------
TOTAL $6,725,126 $7,824,341
============= =============
See notes to consolidated financial statements.
BKC SEMICONDUCTORS INCORPORATED
UNAUDITED STATEMENT OF CONSOLIDATED INCOME (LOSS)
Three Months Ended Nine Months Ended
June 30, 1996 July 1, 1995 June 30, 1996 July 1, 1995
REVENUE $2,406,746 $3,064,384 $7,914,722 $8,327,183
COST OF REVENUE 1,910,487 2,568,713 6,171,334 7,113,584
----------- ------------ ------------ ------------
GROSS PROFIT 496,259 495,671 1,743,388 1,213,599
----------- ------------ ------------ ------------
OPERATING EXPENSES:
Selling 191,528 336,176 657,471 1,000,665
General and administrative 158,643 157,524 554,163 582,011
Research and development 56,231 26,548 155,436 115,023
Write-down of photo detectors 574,873 574,873
----------- ------------ ------------ ------------
Total operating expenses 406,402 1,095,121 1,367,070 2,272,572
----------- ------------ ------------ ------------
INCOME (LOSS) FROM
OPERATIONS 89,857 (599,450) 376,318 (1,058,973)
INTEREST INCOME (EXPENSE) (64,296) (81,309) (235,773) (228,926)
GAIN ON SALE OF REAL ESTATE 0 0 217,075 0
----------- ------------ ------------ ------------
INCOME (LOSS) BEFORE
PROVISION (CREDIT)
FOR INCOME TAXES 25,561 (680,759) 357,620 (1,287,899)
PROVISION (CREDIT) FOR
INCOME TAXES 10,224 (284,423) 107,675 (525,593)
----------- ------------ ------------ ------------
NET INCOME (LOSS) $15,337 ($396,336) $249,945 ($762,306)
============ ============ ============ =============
NET INCOME (LOSS) $0.01 ($0.32) $0.20 ($0.61)
PER SHARE
============ ============= ============ =============
WEIGHTED AVERAGE
NUMBER OF COMMON
SHARES OUTSTANDING 1,276,411 1,243,411 1,271,593 1,244,078
============ ============= ============ =============
See notes to consolidated financial statements.
BKC SEMICONDUCTORS INCORPORATED
UNAUDITED STATEMENT OF CONSOLIDATED CASH FLOWS
For Nine Months Ended
June 30, 1996 July 1, 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $249,945 ($762,306)
Depreciation 372,610 416,962
Gain on sale of real estate (217,075)
Write down of assets of Photo Detector Division 574,873
Deferred income taxes 107,676 (339,525)
Changes in assets/liabilities:
Accounts receivable 347,602 (35,068)
Refundable income taxes 204,003 217,799
Inventories 19,839 (104,575)
Other assets (87,116) (69,649)
Accounts payable 6,702 453,518
Accrued liabilities 63,840 87,060
--------------- ---------------
Net cash provided/(used)
in operating activities 1,068,026 439,089
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (85,870) (402,976)
Proceeds from sale of property and equipment 420,953 0
--------------- ---------------
Net cash provided/(used) in investing activities 335,083 (402,976)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (payments) under
line-of-credit (948,457) 227,674
Proceeds from issuance of long-term debt 0 76,864
Principal payments on long-term debt (471,245) (314,570)
Purchase of common stock for the treasury 0 (2,304)
--------------- --------------
Net cash provided/(used)
by financing activities (1,419,702) (12,336)
--------------- ---------------
Net inc./(dec.) in cash and cash equivalents (16,593) 23,777
Cash and cash equivalents at beg. of period 28,340 52,096
--------------- ---------------
Cash and cash equivalents at end of period $11,747 $75,873
============= ==============
See notes to consolidated financial statements.
BKC SEMICONDUCTORS INCORPORATED
Notes to Consolidated Financial Statements (Unaudited)
June 30, 1996
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation of financial position and results of
operations have been included. Operating results for interim periods are not
necessarily indicative of the results that may be expected for the full year.
For further information, refer to the consolidated financial statement and
footnotes thereto included in the Company's annual report on Form 10-K.
Note B - Inventories
Inventories consisted of the following:
June 30, 1996 Sept. 30, 1995
Raw Material $ 557,432 $ 360,694
Work in Process 1,461,730 1,823,009
Finished Goods 999,081 854,379
------------ -----------
$ 3,018,243 $ 3,038,082
Item 2 Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Quarter Ended June 30, 1996 Compared to Quarter Ended July 1, 1995
Revenues for the third quarter of fiscal 1996 were $2,406,746, compared to
$3,064,384 for the same quarter last year. The revenue difference was primarily
due to softness in the personal computer and related disk drive businesses
caused by that market segment's overproduction, which severely impacted
component shipments to these manufacturers.
Gross Profit for the third quarter of fiscal 1996 was $496,259, or 21% of
revenues, compared to $495,671, or 16% of revenues, for the third quarter
of fiscal 1995. The major improvement related to the gross profit came
from increased product pricing and manufacturing expense reductions.
Operating Expenses for the current quarter were $406,402, compared to
$1,095,121, for the third quarter of fiscal 1995, a reduction of $688,719,
or 63%. The third quarter of FY95 included the write down of $574,873 for
the photo detector business exit, while the balance of the third quarter
FY96 improvement was the result of overhead expense reduction.
Net income for the current quarter was $15,337, or $0.01 per share, compared
to a loss of ($396,336), or ($0.32) loss per share for the same quarter last
year. The net income improvement is the resultant sum of the above noted
actions.
Nine Months Ended June 30, 1996 compared to nine months ended July 1, 1995
Revenues for the first nine months of fiscal 1996 were $7,914,722, compared
to $8,327,183 for the same period in 1995, a decrease of $412,461, or 5%.
The softness in the computer industry was the major reason for the lower
revenue level during the nine month period of FY96 compared to FY95.
Gross Profit for nine months of fiscal 1996 was $1,743,388, or 22% of
revenue, compared to $1,213,599, or 15% of revenue, the same period of
fiscal 1995. The improvements in Gross Profit for FY96 resulted from
improved product prices and elimination of some uncompetitive products.
Operating Expenses for nine months of fiscal 1996 were $1,367,070, compared
to $2,272,572 for nine months of fiscal 1995. This reduction of $905,502,
or 40%, has been pivotal in improving the Company's break-even operating
point. In addition to closing the Company's Photo Detector operations and
reductions in the related selling and administrative overhead costs, a
general streamlining of the Company's organization was accomplished which
resulted in further cost savings.
Net Income for the nine month period was $249,945, or $0.20 per share.
The same period last year resulted in a loss of ($762,306), or ($0.61) per
share. The significant improvement in net income for nine months FY96
compared to FY95 is the result of both the operational and overhead cost
improvements noted above and the gain on the sale of real estate during FY96
Qtr. 2.
Liquidity and Capital Resources
Cash provided from Operations rose to $1,068,026 for the fiscal 1996 nine
month period compared to $439,089 for the fiscal 1995 period. The primary
reason for the improvement is the turn around of the Company from a ($762,306)
loss in fiscal 1995 versus a profit of $249,945 in fiscal 1996.
The Company has reduced year-to-date capital spending versus plan in fiscal
1996 to $86,000 versus $403,000 in fiscal 1995 through nine months.
The Company plans to spend $125,000 in capital equipment during fiscal 1996,
but the exact expenditures will be determined after refinancing is complete.
During the fourth quarter of FY96, as a result of improved financial
performance and being awarded a $450,000 loan guarantee from the City of
Lawrence/HUD for a 40 month period, the Company's relationship with Eastern
Bank has been normalized and is positive. The existing term loan is in the
process of being rewritten with more favorable conditions and the line of
credit is under review for an increased level and extension to January 1997,
which is the annual renewal cycle for Eastern Bank. The Company views
these developments as a favorable and stabilizing event going forward.
PART II. Other Information
BKC Semiconductors Incorporated
Quarter Ended June 30, 1996
ITEM 1. Legal Proceedings
None
ITEM 2. Changes in the Rights of the Company's Security Holders
None
ITEM 3. Defaults upon Senior Securities
None
ITEM 4. Submission of Matters to a Vote of Security Holders
None
ITEM 5. Other Information
Gerald T. Billadeau, V.P. Finance/CFO and Treasurer, resigned
to pursue other interests on May 24, 1996. He will remain a
member of the Board of Directors.
ITEM 6. Exhibits and Reports on Form 8-K
None
Pursuant to the requirement of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
BKC SEMICONDUCTORS INCORPORATED
Date: 08/13/96 s/James R. Shiring
____________________________________
James R. Shiring, President/CEO
and interim Chief Financial Officer