SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 December 31, 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 (IRS 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 January 31, 1997.
BKC SEMICONDUCTORS INCORPORATED
QUARTERLY REPORT FORM 10-Q
December 31, 1996
Page
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements (Unaudited)
Balance Sheet - December 31, 1996 and September 30, 1996 3
Statement of Income (Loss) - for the three months ended
December 31, 1996, and December 31, 1995 4
Statement of Cash Flows - for the three months ended
December 31, 1996 and December 31, 1995 5
Notes to Financial Statements - December 31, 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 8
ITEM 2. Changes in Securities 8
ITEM 3. Defaults Upon Senior Securities 8
ITEM 4. Submission of Matters to a Vote of Security Holders 8
ITEM 5. Other Information 8
ITEM 6. Exhibits and Reports on Form 8-K 8
Signature Page 9
2
BKC SEMICONDUCTORS INCORPORATED
BALANCE SHEET
December 31, 1996 September 30, 1996
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 8,644 $ 5,921
----------- -----------
Accounts Receivable, Net 1,455,299 1,274,927
Inventories 3,082,734 3,119,741
----------- -----------
Deferred Income Taxes 508,149 460,000
----------- -----------
Other Current Assets 82,222 33,577
----------- -----------
Total current assets 5,137,048 4,894,166
----------- -----------
PROPERTY AND EQUIPMENT - NET 1,371,309 1,426,439
----------- -----------
----------- -----------
OTHER ASSETS 94,423 107,908
----------- -----------
----------- -----------
TOTAL $6,602,780 $6,428,513
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $1,479,992 $1,430,839
----------- -----------
Accounts payable 793,795 1,019,836
----------- -----------
Accrued liabilities 303,501 54,481
----------- -----------
Current maturities of long-term debt 353,424 374,070
----------- -----------
Total current liabilities 2,930,712 2,879,226
----------- -----------
LONG-TERM DEBT - Net of current maturities 776,473 580,610
----------- -----------
DEFERRED INCOME TAXES 0 0
----------- -----------
STOCKHOLDERS' EQUITY:
Convertible preferred stock series A - 6% cumulative,
authorized, 5,000 shares of no par value; issued and
outstanding, 2,940 shares 242,078 242,078
----------- -----------
Common Stock-authorized, 2,000,000 shares of no par value;
issued 1,295,311 shares on 12/31/96, 1,295,311 on
9/30/96 3,916,721 3,916,721
----------- -----------
Retained earnings (Deficit) (907,585) (834,503)
----------- -----------
Total 3,251,214 3,324,296
----------- -----------
Less cost of shares held in treasury:
Convertible preferred stock, 2,940 235,200 235,200
----------- -----------
----------- -----------
Common stock, 18,900 shares 120,419 120,419
----------- -----------
----------- -----------
Stockholders' equity-net 2,895,595 2,968,677
----------- -----------
TOTAL $6,602,780 $6,428,513
=========== ===========
See notes to financial statements.
3
BKC SEMICONDUCTORS INCORPORATED
UNAUDITED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED DECEMBER 31, 1996 AND 1995
1996 1995
---- ----
REVENUE $2,367,542 $2,900,986
----------- -----------
COST OF REVENUE 1,935,538 2,228,648
----------- -----------
GROSS PROFIT 432,004 672,338
----------- -----------
OPERATING EXPENSES:
Selling 261,639 245,702
General and administrative 189,635 202,510
Research and development 43,947 46,840
----------- ----------
Total operating expenses 495,221 495,052
----------- ----------
INCOME (LOSS) FROM OPERATIONS (63,217) 177,286
INTEREST EXPENSE 58,016 88,856
----------- ----------
INCOME (LOSS) BEFORE CREDIT FOR INCOME TAXES
(121,233) 88,430
----------- ----------
CREDIT FOR INCOME TAXES (48,149) 0
----------- ----------
NET INCOME (LOSS) $(73,084) $88,430
=========== ==========
NET INCOME (LOSS) PER SHARE ($0.06) $0.07
=========== ==========
See notes to financial statements.
4
BKC SEMICONDUCTORS INCORPORATED
UNAUDITED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1996 AND 195
1996 1995
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net Earnings $(73,084) $88,430
Depreciation 127,420 126,932
Deferred income taxes (48,149) 0
Reserve for inventory obsolescence 0 (190,588)
Changes in assets/liabilities:
Accounts receivable (180,372) 17,225
Inventories 37,007 69,070
Other assets (35,160) (96,864)
Accounts payable (226,041) (71,946)
Accrues liabilities 249,020 53,895
Net cash (used) in operating activities (149,359) (3,846)
----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (72,288) (45,640)
Sale of assets 0 104,362
----------- ------------
Net cash provided/(used) in investing activities (72,288) 58,722
----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings (payments) under line-of-credit 49,153 86,680
Proceeds from issuance of long-term debt 235,442 0
Principal payments on long-term debt (60,225) (117,831)
----------- -----------
Net cash provided/(used) by financing activities 224,370 (31,151)
----------- -----------
Net inc./(dec.) in cash and cash equivalents 2,723 23,725
Cash and cash equivalents at beginning of period 5,921 28,340
----------- -----------
Cash and cash equivalents at end of period $ 8,644 $ 52,065
=========== ===========
See notes to financial statements.
5
BKC SEMICONDUCTORS INCORPORATED
Notes to Financial Statements (Unaudited)
December 31, 1996
Note A - Basis of Presentation
The accompanying unaudited 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
the 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:
Dec. 31, Sept. 30
1996 1996
---- ----
Raw Material $ 607,351 $ 558,008
Work in Process 1,552,183 1,519,481
Finished Goods 923,200 1,042,252
=========== ============
$3,082,734 $ 3,119,741
=========== ============
Note C - Forward-Looking Statement
Except for historical information contained herein, the matters set forth are
forward-looking statements as defined under the Federal Securities Laws. Actual
results could differ materially from the information set forth herein and there
is no assurance than any anticipated future results will be achieved. Risks
include uncertainties with regard to product demand, manufacturing, and the
effectiveness of the Company's plans to realize and expand revenues. The Company
undertakes no obligation to publicly release the result of any revisions to
forward-looking statements.
6
Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Quarter Ended December 31, 1996 Compared to Quarter Ended December 31, 1995
Revenues for the first fiscal quarter of 1997 were $2,367,542
compared to $2,900,986 for the same quarter of fiscal 1996, a decrease of 18%.
The changes in the quarterly revenue levels are related to a decrease in
revenues of BKC's resale products to the computer peripherals market, which was
down by $470,000 in revenue for the first quarter FY97 compared to the first
quarter of FY96.
Gross profit for the fiscal year 1997 quarter was $432,004 or
18% of revenue versus $672,338 or 23% of revenue for the same quarter fiscal of
1996. The lower gross profit was mainly due to lower revenues, reduction of BKC
inventories resulting in lower manufacturing overhead absorption and costs
related to a new product line startup and market launch.
Operating expenses for the fiscal year 1997 quarter were
$495,221, compared to prior year quarter expenses of $495,052.
The net income for first quarter FY97 was a net loss of
($73,084) or ($.06) per share versus net income of $88,430 or $.07 per share for
the same quarter last year. The first quarter results (gross margins and
operating expenses) were negatively impacted by approximately $100,000 of
pre-tax costs relating to a new product line start-up and market launch for
high-reliability and space/satellite communications products. These new products
were successfully introduced and initial shipments occurred at the end of the
first quarter FY97.
Liquidity and Capital Resources
As of December 31, 1996, the Company had working capital of
$2,206,000 as compared to $2,015,000 for the period ending September 30, 1996.
The increase was primarily due to a $180,000 increase in trade receivables.
During the quarter the Company used its increased working
capital to purchase $72,288 in property and equipment as compared to $45,640 for
the same quarter in 1995.
As of December 31, 1996, the Company has a revolving credit
line with Eastern Bank for $2,500,000 collateralized by accounts receivable and
inventories. The balance used on the line is $1,479,992. The line of credit
agreement contains certain restrictive covenants which the Company has complied
with or the bank has waived.
7
PART II. Other Information
BKC Semiconductors Incorporated
December 31, 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
None
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
None
8
Pursuant to the requirements of Section 13 or 15(d) 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.
BKC Semiconductors Incorporated
Date: February 10, 1997 /s/ James R. Shiring
---------------------------------------
By: James R. Shiring, President and
Chief Executive Officer, Director
Date: February 10, 1997 /s/ Bryan A. Schmidt
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Bryan A. Schmidt, Controller, Treasurer
9