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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 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 1-13317
BOX HILL SYSTEMS CORP.
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(Exact name of registrant as specified in its charter)
New York 13-3460176
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(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
161 Avenue of the Americas, New York, NY 10013
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(Address of principal executive offices) (Zip Code)
(212) 989-4455
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(Registrant's telephone number, including area code)
N/A
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(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
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $.01 par value, 14,131,993 shares outstanding as of November 5,
1997.
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BOX HILL SYSTEMS CORP. AND SUBSIDIARIES
INDEX
Page
----
Part I. Financial Information
Item 1. Consolidated Financial Statements
Condensed Consolidated Balance Sheets --September 30, 1997 (unaudited)
and December 31, 1996 1
Condensed Consolidated Statements of Income --Three and nine
months ended September 30, 1997 and 1996 (unaudited) 2
Condensed Consolidated Statements of Cash Flows --
Nine months ended September 30, 1997 and 1996 (unaudited) 3
Notes to Condensed Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Part II. Other Information
Item 6. Exhibits 13
Signatures 14
Item 1. Consolidated Financial Statements
BOX HILL SYSTEMS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share information)
September 30, December 31,
1997 1996
------------ ------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents ............................. $ 53,769 $ 994
Accounts receivable, net .............................. 10,993 9,238
Inventories ........................................... 8,413 6,114
Prepaid expenses and other ............................ 175 215
Deferred income taxes ................................. 598 --
------------ ------------
Total current assets ................ 73,948 16,561
Property and equipment, net .................................. 831 855
Deferred income taxes ........................................ 90 --
------------ ------------
$ 74,869 $ 17,416
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable ...................................... $ 8,788 $ 5,152
Accrued expenses ...................................... 1,677 1,111
Accrued shareholder officers' compensation ............ 3,876 --
Accrued income taxes .................................. 79 --
Customer deposits ..................................... 1,755 1,346
Deferred revenues ..................................... 1,492 883
------------ ------------
Total current liabilities ......... 17,667 8,492
------------ ------------
Deferred rent ................................................ 209 155
------------ ------------
Shareholders' equity:
Preferred stock, $.01 par value, 5,000,000 shares
authorized, none issued .......................... -- --
Common stock, $.01 par value 40,000,000 shares
authorized, 14,129,749 and 9,900,000 shares issued
and outstanding, respectively .................... 141 99
Additional paid-in capital ............................ 56,553 --
Retained earnings ..................................... 299 8,670
------------ ------------
Total shareholders' equity ........ 56,993 8,769
------------ ------------
$ 74,869 $ 17,416
============ ============
The accompanying notes are an integral part of these statements.
-1-
BOX HILL SYSTEMS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share information)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
1997 1996 1997 1996
-------- -------- -------- --------
Net revenues ............................... $ 18,096 $ 12,853 $ 50,324 $ 35,997
Cost of goods sold ......................... 11,735 8,906 32,563 24,140
-------- -------- -------- --------
Gross profit ............. 6,361 3,947 17,761 11,857
-------- -------- -------- --------
Operating expenses:
Shareholder officers' compensation .. 2,311 1,407 7,219 4,321
Engineering and product development . 672 421 1,754 1,457
Sales and marketing ................. 1,764 1,377 5,049 3,856
General and administrative .......... 859 590 2,277 1,655
-------- -------- -------- --------
5,606 3,795 16,299 11,289
-------- -------- -------- --------
Operating income ......... 755 152 1,462 568
Interest income ............................ 81 51 103 94
-------- -------- -------- --------
Income before income taxes 836 203 1,565 662
Income tax provision (benefit) ............. (610) 49 (450) 152
-------- -------- -------- --------
Net income ................................. $ 1,446 $ 154 $ 2,015 $ 510
======== ======== ======== ========
Pro forma data (Note 3):
Pro forma income before income taxes $ 2,829 $ 1,291 $ 7,828 $ 4,027
Pro forma income taxes .............. 1,089 497 3,014 1,551
-------- -------- -------- --------
Pro forma net income ................ $ 1,740 $ 794 $ 4,814 $ 2,476
======== ======== ======== ========
Pro forma net income per share ...... $ .14 $ .07 $ .40 $ .21
======== ======== ======== ========
Shares used in computing pro forma
net income per share ............. 12,219 11,746 11,895 11,733
======== ======== ======== ========
The accompanying notes are an integral part of these statements.
-2-
BOX HILL SYSTEMS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine Months Ended
September 30,
--------------------
1997 1996
-------- --------
Operating activities:
Net income ................................................................ $ 2,015 $ 510
Adjustments to reconcile net income to net cash provided
by (used in) operating activities--
Depreciation and amortization ............................... 195 199
Deferred income taxes ....................................... (688) --
Changes in assets and liabilities--
Accounts receivable ................................... (1,755) (3,130)
Inventories ........................................... (2,299) (1,689)
Prepaid expenses and other ............................ 40 (120)
Accounts payable ...................................... 3,636 (566)
Accrued expenses ...................................... 620 182
Accrued shareholder officers' compensation ............ 3,876 3,703
Accrued income taxes .................................. 79 --
Customer deposits ..................................... 409 435
Deferred revenues ..................................... 609 450
-------- --------
Net cash provided by (used in) operating
activities .......................... 6,737 (26)
-------- --------
Investing activities:
Purchases of property and equipment ....................................... (171) (295)
-------- --------
Financing activities:
Net proceeds from the issuance of common stock ............................ 56,625 --
Proceeds from exercise of stock options ................................... 84 --
Distributions to S Corporation shareholders ............................... (10,500) --
-------- --------
Net cash provided by financing activities 46,209 --
-------- --------
Net increase (decrease) in cash and cash equivalents ............................. 52,775 (321)
Cash and cash equivalents, beginning of period ................................... 994 3,478
-------- --------
Cash and cash equivalents, end of period ......................................... $ 53,769 $ 3,157
======== ========
The accompanying notes are an integral part of these statements
-3-
BOX HILL SYSTEMS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of Box
Hill Systems Corp. and subsidiaries (the "Company"), have been prepared in
accordance with generally accepted accounting principles for interim financial
reporting and the instructions to Form 10-Q and Article 10 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
adjustments) considered necessary for fair presentation have been included.
Operating results for the three and nine month periods ended September 30, 1997,
are not necessarily indicative of the results that may be expected for the year
ended December 31, 1997. For further information, refer to the financial
statements and footnotes thereto included in the Company's S-1 registration
statement filed with the Securities and Exchange Commission as part of the
Company's initial public offering on September 16, 1997.
2. Initial Public Offering of Common Stock
The Company completed an initial public offering (the "Offering"), of its Common
Stock effective September 16, 1997. The Company sold 5,500,000 shares of Common
Stock at $15.00 per share, of which 3,300,000 shares were issued and sold by the
Company and 2,200,000 shares were sold by individuals who were the only
shareholders of the Company prior to the Offering. Additionally, 825,000 shares
of Common Stock were purchased from the Company at $15.00 per share by the
underwriters upon the exercise of an over-allotment option. The net proceeds to
the Company, after deducting estimated underwriting discounts and expenses,
were approximately $56.6 million.
The Company was subject to taxation under Subchapter S of the Internal Revenue
Code from 1990 until the termination of the S Corporation status concurrent with
the Offering. The balance sheet as of September 30, 1997 reflects the estimated
net deferred tax asset of $688,000, recorded by the Company as a result of the
termination of its S Corporation status. The net deferred income tax asset
represents the tax effects of the cumulative differences between the financial
reporting and income tax bases of certain assets and liabilities as of the
termination of the S Corporation status and was recorded as a one-time, income
tax benefit in the statement of income for the three months ended September 30,
1997. Deferred taxes will be adjusted to reflect any change in the net deferred
tax asset upon filing the final
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S Corporation tax return. Additionally, in September 1997, the Company made
$10.5 million of distributions to the S Corporation shareholders, representing
the estimated taxed but undistributed S Corporation earnings as of June 30,
1997. The Company will make additional distributions to the S Corporation
shareholders for any taxed but undistributed S Corporation earnings in excess of
$10.5 million based on the S Corporation's pro rata share of the Company's 1997
taxable income.
3. Pro Forma Information
Pro Forma Income Statement Data
In connection with the Offering, the Company entered into employment agreements
with three of its officers, who were the Company's only shareholders prior to
the Offering, which provide for a combined minimum annual base compensation of
$1,275,000, in addition to provisions for benefits, termination and certain
incentive compensation based on future revenues and earnings. For informational
purposes, pro forma income before income taxes for periods prior to the Offering
are presented to reflect the elimination of historical shareholder officers'
compensation expense in excess of the base salary amounts included in the
employment agreements.
Additionally, concurrent with the Offering, the Company terminated its status as
an S Corporation and is subject to federal and state income taxes. Accordingly,
for informational purposes, the accompanying statements of income for the three
and nine months ended September 30, 1997 and 1996, include a pro forma
adjustment for the income taxes which would have been recorded if the Company
had been a C Corporation for the entire period based on the tax laws in effect
during the respective periods. The pro forma adjustment for income taxes does
not include the one-time tax benefit of $688,000 related to the recognition of
the net deferred tax asset recorded by the Company upon terminating its S
Corporation status.
Pro Forma Net Income Per Share
Pro forma net income per share was calculated by dividing pro forma net income
by the weighted average number of shares of Common Stock outstanding for the
respective periods, adjusted for the dilutive effect of stock options, using the
treasury stock method, and after giving pro forma effect to the number of shares
that were required to be sold, at the net initial public offering price, to fund
the $10.5 million of distributions to the S Corporation shareholders. Pursuant
to the requirements of the Securities and Exchange Commission, Common Stock
equivalents issued by the Company during the twelve months immediately preceding
the Offering have been included in the calculation of the shares used in
computing pro forma net income per share as if they were outstanding for all
periods presented.
4. Inventories
Inventories are stated at the lower of cost (first-in, first-out) or market and
consist principally of purchased components used as raw materials.
-5-
5. Credit Facility
On October 1, 1997, the Company entered into an agreement with a commercial bank
which provides for a $10 million revolving line of credit. Borrowings are
collateralized by a pledge of substantially all of the Company's assets and
borrowings greater than $5 million are also required to be secured by short-term
investments. Additionally, the Company will be required to comply with certain
financial covenants, as defined. The revolver expires on May 1, 1998. As of
September 30, 1997, no amounts were outstanding under the line.
6. New Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share." SFAS No.
128 is designed to improve the earnings per share information provided in
financial statements by simplifying the existing computational guidelines,
revising the disclosure requirements and increasing comparability of earnings
per share data on an international basis. This pronouncement is effective for
periods beginning after December 15, 1997; earlier adoption is not permitted.
The adoption is not expected to have a material impact on the Company's
earnings per share.
-6-
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations:
Certain statements contained in this report, including statements regarding the
anticipated development and expansion of the Company's business, the intent,
belief or current expectations of the Company, its directors or its officers,
primarily with respect to the future operating performance of the Company and
the products it expects to offer and other statements contained herein regarding
matters that are not historical facts, are "forward-looking" statements. Because
such statements include risks and uncertainties, actual results may differ
materially from those expressed or implied by such forward-looking statements.
Factors that could cause actual results to differ materially from those
expressed or implied by such forward-looking statements include, but are not
limited to, the factors set forth in "Risk Factors," "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and "Business,"
found in the Company's Prospectus dated September 16, 1997, relating to its
Common Stock, as filed with the Securities and Exchange Commission.
Overview
Box Hill designs, manufactures, markets and supports high performance data
storage systems for the Open Systems computing environment. The Company employs
a direct marketing strategy aimed at data-intensive industries which, to date,
include financial services, telecommunications, health care, government/defense
and academia. Since its inception, Box Hill has focused exclusively on providing
storage solutions for high-end customers, primarily in the UNIX environment. The
Company initially focused on the financial services industry in response to that
industry's need for high-availability, high- performance, fault-tolerant storage
systems and high levels of customer and technical support. Box Hill leveraged
its position as a company focused exclusively on storage solutions to bring new
products to market faster than its competitors. Box Hill has produced
significant profits since inception and has financed its growth primarily with
cash generated from operations.
Box Hill's manufacturing operations consist primarily of assembly and
integration of components and subassemblies into the Company's products with
certain of those subassemblies manufactured by independent contractors. The
Company's cost of goods sold consists primarily of direct material costs. The
Company generally extends to its customers the warranties provided to the
Company by its suppliers. To date, the Company's suppliers have covered the
majority of the Company's warranty costs. On a quarterly and annual basis the
Company's gross margins have been and will continue to be affected by a variety
of factors, including competition, product configuration, product mix, the
availability of new products and product enhancements, and the cost and
availability of components. The Company's long-term strategy includes
maintaining or improving existing gross margins.
The Company completed an initial public offering of its common stock on
September 16, 1997. The Company sold 5,500,000 shares of common stock at $15.00
per share, of which 3,300,000 were issued and sold by the Company and 2,200,000
shares were sold by
-7-
individuals who were the only shareholders of the Company
prior to the initial public offering. Additionally, 825,000 shares of common
stock were purchased from the Company at $15.00 per share by the underwriters
upon the exercise of an over-allotment option. The net proceeds to the Company,
after deducting estimated underwriting discounts and expenses, were
approximately $56.6 million. Additionally, in September 1997, the Company made
$10.5 million of distributions to the S Corporation shareholders, representing
the estimated taxed but undistributed S Corporation earnings as of June 30,
1997. The Company will make additional distributions to the S Corporation
shareholders for any taxed but undistributed S Corporation earnings in excess of
$10.5 million, based on the S Corporation's pro rata share of the Company's 1997
taxable income.
Prior to its initial public offering, the Company was subject to taxation under
Subchapter S of the Internal Revenue Code. Accordingly, the net income of the
Company for federal and state and local tax purposes has been reported by and
taxed directly to the Company's shareholders, rather than the Company. Pro forma
net income has been computed as if the Company had been subject to federal and
state income taxes based on the tax laws in effect during the respective
periods.
Results of Operations
The following table sets forth certain items from the Company's income
statements as a percentage of net revenues for the periods indicated:
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- ----------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
Net revenues ............................... 100.0% 100.0% 100.0% 100.0%
Cost of goods sold ......................... 64.8 69.3 64.7 67.1
------------ ------------ ------------ ------------
Gross profit ............. 35.2 30.7 35.3 32.9
------------ ------------ ------------ ------------
Operating expenses:
Shareholder officers' compensation 12.8 10.9 14.3 12.0
Engineering and product development 3.7 3.3 3.5 4.0
Sales and marketing ............... 9.7 10.7 10.0 10.7
General and administrative ........ 4.8 4.6 4.6 4.6
------------ ------------ ------------ ------------
Total operating expenses . 31.0 29.5 32.4 31.3
------------ ------------ ------------ ------------
Operating income .................. 4.2% 1.2% 2.9% 1.6%
============ ============ ============ ============
Three Months Ended September 30, 1997 Compared to Three Months Ended
September 30, 1996:
Net revenue - Net revenues increased 40.3% to $18.1 million for the three months
ended September 30, 1997, from $12.9 million for the three months ended
September 30, 1996. The increase resulted from an increase in volume, primarily
due to increased demand for the Company's products, which was partially offset
by price reductions. Net revenues from sales of the Company's RAID products,
comprehensive disk storage and backup solutions
-8-
contributed approximately equally to the increase in revenues for the three
months ended September 30, 1997 compared to the three months ended September 30,
1996.
Gross profit - Gross profit increased 64.1% to $6.4 million for the three months
ended September 30, 1997, from $3.9 million for the comparable period of 1996.
As a percentage of net revenues, gross profit increased from 30.7% to 35.2%,
principally as a result of a more favorable product mix.
Shareholder officers' compensation - Shareholder officers' compensation consists
of salaries and bonuses paid to three of the Company's officers who were the
only shareholders of the company prior to the Offering. Shareholders officers'
compensation increased 64.3% to $2.3 million for the three months ended
September 30, 1997 as compared to $1.4 million for the three months ended
September 30, 1996. The increase in shareholder officers' compensation is
attributable to higher bonuses for the three months ended September 30, 1997, as
compared to the comparable period of 1996. In connection with the Offering, the
Company entered into new employment agreements with the shareholder officers.
Engineering and product development - Engineering and product development
expenses consist primarily of employee compensation, engineering equipment and
supply expenses and fees paid for third-party design services. To date, no
engineering and development expenses have been capitalized. Engineering and
product development increased 75% to $.7 million for the three months ended
September 30, 1997 from $.4 million for the comparable period of 1997. As a
percentage of net revenues, engineering and product development increased to
3.7% for the three months ended September 30, 1997 from 3.3% for the comparable
period of 1996. The increase is due to an increase in engineering staff and
additional research and development equipment and supplies purchased during the
period.
Sales and marketing - Sales and marketing expenses consist primarily of salaries
and commissions, advertising and promotional costs and travel expenses. Sales
and marketing expenses increased 28.6% to $1.8 million for the three months
ended September 30, 1997 from $1.4 million for the three months ended September
30, 1996. The increase is primarily due to an increase in the direct sales
forces and field service staff and increased commissions based on the increase
in sales. As a percentage of net revenues, sales and marketing expenses
decreased to 9.7% for the three months ended September 30, 1997 from 10.7% for
the comparable period of 1996.
General and administrative - General and administrative expenses consist
primarily of compensation to employees performing the Company's administrative
functions and expenditures for the Company's administrative facilities. General
and administrative expenses increased 50% to $.9 million for the three months
ended September 30, 1997 from $.6 million for the three months ended September
30, 1996. The increase is due to an increase in staff to support the Company's
growth. As a percentage of net revenues, general and administrative expenses
increased slightly to 4.8% for the three months ended September 30, 1997 from
4.6% for the comparable period of 1996.
-9-
Interest income - Interest income consists primarily of income earned on the
Company's cash and cash equivalents. Interest income increased 58.8% to $81,000
for the three months ended September 30, 1997 from $51,000 for the three months
ended September 30, 1996. The increase is primarily due to the investment of the
net proceeds of the September 1997 initial public offering.
Income tax provision (benefit) - Historical income taxes for the three months
ended September 30, 1997 consist of federal and state taxes on the C
Corporation's pro rata portion of the Company's taxable income, New York City
taxes, state franchise taxes and a one-time tax benefit of $688,000 related to
the recognition of the net deferred tax asset recorded by the Company upon
terminating its S Corporation status. For the three months ended September 30,
1996, historical income taxes consist of New York City taxes and state franchise
taxes.
-10-
Nine Months Ended September 30, 1997 Compared to Nine Months Ended September 30,
1996
Net revenues - Net revenues increased 39.7% to $50.3 million for the nine months
ended September 30, 1997, from $36.0 million for the nine months ended September
30, 1996. The revenue growth for the period was the result of an increase in
volume, which was partially offset by price reductions. The increase in volume
was primarily the result of the ramp up of new RAID products, which were
introduced in November 1995. Net revenues from sales of RAID products increased
$7.1 million, or 120.3%, to $13.0 million for the nine months ended September
30, 1997, compared to $5.9 million for the nine months ended September 30, 1996.
Net revenues from sales of the Company's comprehensive disk storage and backup
solutions also increased for the nine months ended September 30, 1997 compared
to the nine months ended September 30, 1996, due to an increased demand for the
Company's products.
Gross profit - Gross profit increased 49.6% to $17.8 million for the nine months
ended September 30, 1997 from $11.9 million for the comparable period of 1996.
As a percentage of net revenues, gross profit increased from 32.9% to 35.3%,
principally as a result of a more favorable product mix in 1997.
Shareholder officers' compensation - Shareholders officers' compensation
increased 67.4% to $7.2 million for the nine months ended September 30, 1997
from $4.3 million for the nine months ended September 30, 1996. The increase in
shareholder officers' compensation is attributable to higher bonuses for the
nine months ended September 30, 1997 as compared to the comparable period of
1996. In connection with the Offering, the Company entered into new employment
agreements with the shareholder officers.
Engineering and product development - Engineering and product development
increased 20% to $1.8 million for the nine months ended September 30, 1997 from
$1.5 million for the comparable period of 1996. The increase is due to an
increase in engineering staff and additional research and development equipment
and supplies purchased during the period. As a percentage of net revenues,
engineering and product development decreased slightly to 3.5% for the nine
months ended September 30, 1997 from 4.0% for the comparable period of 1996.
Sales and marketing - Sales and marketing expenses increased 28.2% to $5.0
million for the nine months ended September 30, 1997 from $3.9 million for the
nine months ended September 30, 1996. The increase is primarily due to an
increase in the direct sales forces and field service staff and increased
commissions based on the increase in sales. As a percentage of net revenues,
sales and marketing expenses decreased slightly to 10.0% for the nine months
ended September 30, 1997 from 10.7% for the comparable period of 1996.
General and administrative - General and administrative expenses increased 35.3%
to $2.3 million for the nine months ended September 30, 1997 from $1.7 million
for the nine months ended September 30, 1996. The increase is due to an increase
in staff to support the Company's growth. As a percentage of net revenues,
general and administrative expenses remained flat at 4.6%.
-11-
Interest income - Interest income increased 28.3% to $195,000 for the nine
months ended September 30, 1997 from $152,000 for the comparable period of 1996.
The increase is primarily due to the investment of the net proceeds of the
September 1997 initial public offering.
Income tax provision (benefit) - Historical income taxes for the nine months
ended September 30, 1997 consist of federal and state taxes on the C
Corporation's pro rata portion of the Company's taxable income, New York City
taxes, state franchise taxes and a one-time tax benefit of $688,000 related to
the recognition of the net deferred tax asset recorded by the Company upon
terminating its S Corporation status. For the nine months ended September 30,
1996, historical income taxes consist of New York City taxes and state franchise
taxes.
Liquidity and Capital Resources
As of September 30, 1997, the Company had $53.8 million of cash and cash
equivalents and no bank indebtedness. As of September 30, 1997, working capital
was $56.3 million. In September 1997, the Company completed an initial public
offering of its Common Stock. Proceeds of the offering, after expenses, were
approximately $56.6 million.
For the nine months ended September 30, 1997, cash provided by operating
activities was $6.7 million compared to cash used in operating activities of
$26,000 for the same period in 1996. The increase was primarily due to increased
accounts payable and net income and less of an increase in accounts receivable
when compared to the nine months ended September 30, 1996.
Cash used in investing activities consists of purchases of property and
equipment.
Cash provided by financing activities for the nine months ended September 30,
1997 consists of proceeds from the initial public offering $56.6 million, offset
partially by $10.5 million of distributions to the S Corporation shareholders,
representing the estimated taxed but undistributed S Corporation earnings of the
Company as of June 30, 1997. The Company will make additional distributions to
the S Corporation shareholders for any taxed but undistributed S Corporation
earnings in excess of $10.5 million, based on the S Corporation's pro rata
portion of the Company's 1997 taxable income.
In October 1997, the Company obtained a $10 million revolving line of credit
facility from a commercial bank. No amounts were outstanding under this facility
at September 30, 1997.
The Company presently expects that cash and cash equivalents, cash generated
from operations and availability under its revolving line of credit, will be
sufficient to meet its foreseeable operating and capital requirements. However,
the Company may need additional capital to pursue acquisitions or significant
capital improvements, neither of which is currently contemplated.
-12-
BOX HILL SYSTEMS CORP. AND SUBSIDIARIES
Part II - Other Information
Item 1 Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11.1 Computation of Pro Forma Net Income Per Share.
27.1 Financial Data Schedule.
(b) Reports on Form 8-K
None.
-13-
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, as amended, the Registrant has duly caused this report to be signed
on behalf by the undersigned, thereunto duly authorized.
Date: November 10, 1997 BOX HILL SYSTEMS CORP.
By /s/ Philip Black
-----------------------------
Philip Black
Chief Executive Officer
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, this Report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on the dates
indicated.
Date: November 10, 1997 By /s/ Philip Black
-----------------------------
Philip Black
Chief Executive Officer
(Principal Executive Officer)
Date: November 10, 1997 By /s/ R. Robert Rebmann, Jr.
-----------------------------
R. Robert Rebmann, Jr.
Chief Financial Officer and Treasurer
(Principal Financial Officer)
-14-