- -------------------------------------------------------------------------------
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 25, 1999
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 NO. 33-9875
-----------------
BOSTON ACOUSTICS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MASSACHUSETTS 04-2662473
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR IDENTIFICATION NO.)
ORGANIZATION)
300 JUBILEE DRIVE
PEABODY, MASSACHUSETTS 01960
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(978) 538-5000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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 5,079,264 shares of Common Stock issued and outstanding as of
November 5, 1999.
- -------------------------------------------------------------------------------
Boston Acoustics, Inc.
INDEX
PAGE
Part I: Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets (Unaudited)-
March 27, 1999 and September 25, 1999 4
Consolidated Statements of Income (Unaudited)-
Three months and Six Months ended September 26, 1998
and September 25, 1999 6
Consolidated Statements of Cash Flows (Unaudited)-
Six Months ended September 26, 1998 and
September 25, 1999 7
Notes to Unaudited Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 11
Part II: Other Information
Items 1 through 6 15
Signatures 16
Exhibit Index 17
2
PART I: FINANCIAL INFORMATION
Item 1: Financial Statements
3
Boston Acoustics, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
ASSETS
MARCH 27, 1999 SEPTEMBER 25, 1999
Current Assets:
Cash and cash equivalents $ 2,096,246 $ 1,857,189
Accounts receivable, net of reserves of
approximately $463,000
and $413,000, respectively 12,586,919 13,529,291
Inventories 21,651,847 19,108,870
Deferred income taxes 1,524,000 1,524,000
Prepaid expenses and other current assets 478,174 990,604
----------- -----------
Total current assets 38,337,186 37,009,954
----------- -----------
Property and Equipment, at cost:
Land 1,433,365 1,805,861
Building and improvements 7,113,384 7,117,418
Machinery and equipment 10,890,563 12,441,436
Office equipment and furniture 3,862,578 3,972,299
Motor vehicles 360,963 361,831
----------- -----------
23,660,853 25,698,845
Less-accumulated depreciation
and amortization 9,699,448 11,029,724
----------- -----------
13,961,405 14,669,121
----------- -----------
Other Assets 940,226 897,320
$53,238,817 $52,576,395
=========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
4
Boston Acoustics, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
MARCH 27, 1999 SEPTEMBER 25, 1999
Current Liabilities:
Accounts payable $ 2,465,201 $ 3,442,167
Accrued payroll and payroll-
related expenses 1,553,933 1,964,327
Dividends payable 425,967 431,736
Other accrued expenses 796,795 1,373,508
Accrued income taxes 359,689 2,097
Current maturity of line of credit 3,265,018 1,673,751
----------- -----------
Total current liabilities 8,866,603 8,887,586
----------- -----------
Line of credit, net of current portion 10,500,000 7,600,000
Commitments
Shareholders' Equity:
Commonstock, $.01 par value
Authorized -- 8,000,000 shares
Issued - 5,011,700 and 5,079,264
shares at March 27, 1999 and
September 25, 1999, respectively 50,117 50,792
Additional paid-in capital 636,581 899,049
Retained earnings 33,185,516 35,138,968
----------- -----------
Total shareholders' equity 33,872,214 36,088,809
----------- -----------
$53,238,817 $52,576,395
----------- -----------
----------- -----------
The accompanying notes are an integral part of these consolidated financial
statements.
5
Boston Acoustics, Inc. and Subsidiaries
Consolidated Statements of Income
(Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
September 26, September 25, September 26, September 25,
1998 1999 1998 1999
------------- ------------- ------------- -------------
Net sales $ 26,350,362 $ 28,679,502 $ 47,850,326 $ 50,524,834
Cost of goods sold 17,462,999 20,041,878 31,452,937 34,847,102
------------ ------------ ------------ ------------
Gross profit 8,887,363 8,637,624 16,397,389 15,677,732
------------ ------------ ------------ ------------
Selling and
marketing expenses 2,356,617 2,694,756 4,396,908 5,215,929
General and
administrative expenses 1,098,351 1,296,701 2,100,884 2,396,524
Engineering and
development expenses 1,205,100 1,764,517 2,302,603 3,164,648
------------ ------------ ------------ ------------
Total operating expenses 4,660,068 5,755,974 8,800,395 10,777,101
------------ ------------ ------------ ------------
Income from operations 4,227,295 2,881,650 7,596,994 4,900,631
Interest income 21,643 22,330 53,402 46,646
Interest expense (125,957) (177,392) (322,463) (373,246)
------------ ------------- ------------- ------------
Income before provision
for income taxes 4,122,981 2,726,588 7,327,933 4,574,031
Provision for income taxes 1,560,000 1,054,000 2,746,000 1,762,000
------------ ------------ ------------ ------------
Net income $ 2,562,981 $ 1,672,588 $ 4,581,933 $ 2,812,031
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Net income per share
Basic $ .51 $ .33 $ .92 $ .56
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Diluted $ .48 $ .31 $ .86 $ .54
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Weighted average common shares outstanding
Basic 4,983,187 5,064,715 4,978,831 5,038,702
Diluted 5,300,982 5,320,674 5,319,593 5,254,793
Dividends per share $ .085 $ .085 $ .168 $ .17
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
The accompanying notes are an integral part of these consolidated financial
statements.
6
Boston Acoustics, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
SIX MONTHS ENDED
SEPTEMBER 26, 1998 SEPTEMBER 25, 1999
------------------ ------------------
Cash flows from operating activities:
Net income $ 4,581,933 $ 2,812,031
Adjustments to reconcile net income to net cash
provided by operating activities-
Depreciation and amortization 1,405,703 1,631,016
Changes in assets and liabilities, net of acquisition --
Accounts receivable (1,702,490) (942,372)
Inventories (6,498,427) 2,542,977
Prepaid expenses and other current assets (151,820) (512,430)
Accounts payable 5,827,592 976,966
Accrued payroll and other accrued expenses 642,394 987,107
Accrued income taxes (142,075) (357,592)
------------ -------------
Net cash provided by operating activities 3,962,810 7,137,703
------------ -------------
Cash flows from investing activities:
Purchases of property and equipment, net (2,023,830) (2,037,992)
Increase in other assets (37,973) (121,358)
------------ -------------
Net cash used in investing activities (2,061,803) (2,159,350)
------------ -------------
Cash flows from financing activities:
Dividends paid (829,069) (852,810)
Stock dividend fractional share payment (480) --
Repayments of line of credit (4,500,000) (4,491,267)
Proceeds from exercise of stock options 227,189 126,667
------------ ------------
Net cash used in financing activities (5,102,360) (5,217,410)
------------ ------------
Decrease in cash and cash equivalents (3,201,353) (239,057)
Cash and cash equivalents, beginning of period 3,870,569 2,096,246
------------ ------------
Cash and cash equivalents, end of period $ 669,216 $ 1,857,189
------------ ------------
------------ ------------
Supplemental Disclosure of NonCash Financing Activities:
Dividends payable $ 424,097 $ 431,736
------------ ------------
------------ ------------
Supplemental Disclosure of Cash Flow Information:
Cash paid for income taxes $ 3,164,142 $ 2,540,147
------------ ------------
------------ ------------
Cash paid for interest $ 363,049 $ 371,020
------------ ------------
------------ ------------
The accompanying notes are an integral part of these consolidated financial
statements.
7
Boston Acoustics, Inc. and Subsidiaries
Notes to Unaudited Consolidated Financial Statements
(1) Basis of Presentation
The unaudited consolidated financial statements included herein have
been prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission and include, in the
opinion of management, all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of interim period results.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations. The
Company believes, however, that its disclosures are adequate to make the
information presented not misleading. The results for the three and six-month
periods ended September 25, 1999 are not necessarily indicative of results to be
expected for the full fiscal year. These financial statements should be read in
conjunction with the Company's Annual Report included in its Form 10-K for
fiscal year ended March 27, 1999.
(2) Inventories
Inventories are stated at the lower of cost (first-in, first-out) or
market and consist of the following:
MARCH 27, 1999 SEPTEMBER 25, 1999
Raw materials and work-in process $ 9,425,814 $ 8,661,607
Finished goods 12,226,033 10,447,263
----------- -----------
$21,651,847 $19,108,870
=========== ===========
Work-in-process and finished goods inventories consist of materials,
labor and manufacturing overhead.
(3) Net Income Per Common Share
The Company follows the provisions of SFAS No. 128, EARNINGS PER SHARE.
SFAS No. 128 establishes standards for computing and presenting earnings per
share (EPS) and applies to entities with publicly held common stock or potential
common stock. Basic EPS is computed by dividing net income by the weighted
average number of common shares outstanding for the period. Diluted EPS reflects
the potential dilution from common stock equivalents (stock options and
warrants). For the three-month period ended September 25, 1999, there were
207,877 shares, and for the six-month period there were 208,195 shares that have
been excluded from the weighted average number of common and dilutive shares
outstanding as their effect would be anti-dilutive. For the three-month and
six-month period ended September 26, 1998, no antidilutive shares have been
excluded for purposes of earnings per share.
During the three-month period ended September 25, 1999, the Company
issued 57,564 shares of common stock of Boston Acoustics, Inc. to a customer
as a result of the exercise of a warrant held by that customer. At September
25, 1999 there were no remaining warrants outstanding.
A reconciliation of the number of shares used in the calculation of basic
and diluted net income per share, is as follows:
8
THREE MONTHS ENDED SIX MONTHS ENDED
September 26, September 25, September 26, September 25,
1998 1999 1998 1999
------------ ------------- ------------- -------------
Weighted
average common
shares outstanding 4,983,187 5,064,715 4,978,831 5,038,702
Dilutive effect of
assumed exercise of
stock options and warrant 317,795 255,959 340,762 216,091
--------- --------- --------- ---------
Weighted average
common shares
outstanding assuming
dilution 5,300,982 5,320,674 5,319,593 5,254,793
--------- --------- --------- ---------
--------- --------- --------- ---------
(4)Segment Reporting
The Company adopted SFAS No. 131, DISCLOSURES ABOUT SEGMENTS OF AN
ENTERPRISE AND RELATED INFORMATION effective March 27, 1999. SFAS No. 131
requires certain financial and supplementary information to be disclosed on an
annual and interim basis for each reportable segment of an enterprise.
The Company has determined that it has two reportable segments: Core and
original equipment manufacturer (OEM) and Multimedia. Prior to fiscal 1998, the
Company operated as a single segment.
The Company's reportable segments are strategic business units that sell
the Company's products to distinct distribution channels. Both segments derive
their revenues from the sale of audio systems. They are managed separately
because each segment requires different selling and marketing strategies as the
class of customers within each segment is different. The Company's disclosure of
segment performance is based on the way that management organizes the segments
within the enterprise for making operating decisions and assessing performance.
The accounting policies of the segments are the same as those described in
the summary of significant accounting policies. The Company does not allocate
operating expenses between its two reportable segments. Accordingly, the
Company's measure of profit for each reportable segment is based on gross
profit.
THREE MONTHS ENDED SEPTEMBER 25, 1999
OEM and
FISCAL 2000 CORE MULTIMEDIA TOTAL
Net Sales $13,659,147 $15,020,355 $28,679,502
----------- ----------- -----------
----------- ----------- -----------
Gross Profit $ 4,914,756 $ 3,722,868 $ 8,637,624
----------- ----------- -----------
----------- ----------- -----------
THREE MONTHS ENDED SEPTEMBER 26, 1998
OEM and
FISCAL 1999 CORE MULTIMEDIA TOTAL
Net Sales $12,571,703 $ 13,778,659 $26,350,362
----------- ------------ -----------
----------- ------------ -----------
Gross Profit $ 5,133,919 $ 3,753,444 $ 8,887,363
----------- ------------ -----------
----------- ------------ -----------
9
SIX MONTHS ENDED ENDED SEPTEMBER 25, 1999
OEM and
FISCAL 2000 CORE MULTIMEDIA TOTAL
Net Sales $26,566,627 $23,958,207 $50,524,834
----------- ----------- -----------
----------- ----------- -----------
Gross Profit $10,099,393 $ 5,578,339 $15,677,732
----------- ----------- -----------
----------- ----------- -----------
SIX MONTHS ENDED SEPTEMBER 26, 1998
OEM and
FISCAL 1999 CORE MULTIMEDIA TOTAL
Net Sales $24,361,101 $23,489,225 $47,850,326
----------- ----------- -----------
----------- ----------- -----------
Gross Profit $ 9,690,696 $ 6,706,693 $16,397,389
----------- ----------- -----------
----------- ----------- -----------
10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Results of Operations
The following table sets forth the results of operations for the three-month and
six-month periods ended September 26, 1998 and September 25, 1999 expressed as
percentages of net sales.
THREE MONTHS ENDED SIX MONTHS ENDED
September 26, September 25, September 26, September 25,
1998 1999 1998 1999
------------- ------------- ------------- -------------
Net sales 100.0 % 100.0 % 100.0 % 100.0 %
Cost of goods sold 66.3 69.9 65.7 69.0
---- ---- ---- ----
Gross profit 33.7 30.1 34.3 31.0
---- ---- ---- ----
Selling and marketing
expenses 8.9 9.4 9.2 10.3
General & administrative
expenses 4.2 4.5 4.4 4.7
Engineering & development
expenses 4.6 6.2 4.8 6.3
---- ---- ---- ----
17.7 20.1 18.4 21.3
---- ---- ---- ----
Income from operations 16.0 10.0 15.9 9.7
Interest income (expense), net (0.4) (0.5) (0.6) (0.6)
---- ---- ---- ----
Income before provision for
income taxes 15.6 9.5 15.3 9.1
Provision for income taxes 5.9 3.7 5.7 3.5
---- ---- ---- ----
Net income 9.7 % 5.8 % 9.6 % 5.6 %
---- ---- ---- ----
---- ---- ---- ----
Net sales increased 8.8%, from approximately $26,350,000 during the second
quarter of fiscal 1999 to approximately $28,680,000 during the second quarter of
fiscal 2000. For the six months ended September 25, 1999 net sales increased
approximately 5.6% from approximately $47,850,000 to approximately $50,525,000.
The overall sales increase was due to increases in both the OEM sales of
multimedia speaker systems to Gateway, Inc. ("Gateway"), a leading global direct
marketer of PC products, and sales of the Company's core products. OEM sales to
Gateway included the Digital BA735 subwoofer/satellite system introduced during
the first quarter of fiscal 2000, the Digital MediaTheater-TM-
11
three-piece system, and the DigitalTheater-TM- 6000 Dolby-TM- DIGItal 5.1
channel Home Theater system. The current products are available either as a
component of certain pre-configured computer systems offered by Gateway, or
as an upgrade option on those configurations that do not include Boston
Acoustics' products as standard. The quantity of product sold as an upgrade
option could fluctuate significantly from quarter to quarter and have an
impact on the unit volume of OEM multimedia products. During the three-month
period ended September 25, 1999, core business sales were stimulated by new
product introductions. The VR-M50 and the VR-M60 Monitor bookshelf speaker
systems with suggested retails of $700 per pair and $1000 per pair
respectively, are real wood Monitor style speakers with die-cast baskets. The
System 10k, priced at $1,500, is a home theater speaker system consisting of
a set of five high-performance satellite speakers. The Company also
introduced three new powered subwoofer systems for use in home theater
systems. The PV800, PV600 and PV400 have suggested retails of $700, $449, and
$299 respectively.
The Company's gross margin for the three-month and six-month periods ended
September 25, 1999 decreased as a percentage of net sales due primarily to
the lower margin sales of the Company's OEM Multimedia products as compared
to the same period a year ago, and expenses associated with new product
introductions.
Total operating expenses increased in both absolute dollars and as a percentage
of net sales during both the three-month and six-month periods ended September
25, 1999. Selling and marketing expenses have increased in absolute dollars
primarily due to increased salaries and benefits relating to additional
personnel and increased cooperative advertising expenditures. General and
administrative expenses have increased slightly, both in absolute dollars, and
as a percentage of net sales for the three-month and six-month periods ended
September 25, 1999 compared to the corresponding periods a year ago. Engineering
and development expenses for the three-month and six-month periods ended
September 25, 1999 have increased in absolute dollars due primarily to increased
salaries and benefits relating to additional personnel and increased expenses
associated with new product development.
Net interest expense has increased in absolute dollars while remaining
relatively stable as a percentage of net sales during the three-month and
six-month periods ended September 25, 1999 compared to the corresponding
periods a year ago, primarily due to the utilization of working capital and
borrowings under the Company's line of credit borrowing during the fiscal
year.
The Company's effective income tax rate increased both for the three-month and
six-month periods ended September 25, 1999 compared to the same periods a year
ago. The increase is primarily due to a smaller proportion of the Company's
income being derived outside the U.S., thereby reducing the tax benefits
associated with the Company's foreign sales corporation.
Net income for the second quarter decreased from approximately $2,563,000 in
fiscal 1999 to $1,673,000 in fiscal 2000 while diluted earnings per share
decreased from $.48 to $.31 per share. Net income for the six-month period ended
September 25, 1999 decreased from approximately $4,582,000 in fiscal 1999 to
approximately $2,812,000 in fiscal 2000, while diluted earnings per share for
the six-month period decreased from $.86 to $.54 per share. The decrease in net
income for the three and six-month periods ended September 25, 1999 is primarily
the result of the sales increase, which was offset by the decrease in gross
profit and an increase in operating expenses as compared to the same period a
year ago.
Liquidity and Capital Resources
During the first six months of fiscal 2000, the Company financed its growth
principally with cash generated by operations. As of September 25, 1999 the
Company's working capital was approximately $28,122,000, a decrease of
approximately $1348,000 since the end of fiscal 1999. The decrease in working
capital was primarily due to the repayment made on the Company's line of credit
borrowings. The Company's cash and cash equivalents were approximately
$1,857,000 at September 25, 1999, a decrease of approximately $239,000 from
March 27, 1999 primarily due to the purchase of land adjacent to the Company's
corporate headquarters facility, tooling expenditures related to new products,
costs related to the Company's new state-of-the art automated woofer assembly
line, and the repayments made on the Company's line of credit borrowings. The
Company has two lines of credit with two banking institutions totaling
$26,500,000. At September 25, 1999 the Company had borrowings totaling
$9,000,000 under its $25,000,000 revolving credit agreement.
12
The Company believes that its current resources are adequate to meet its
requirements for working capital and capital expenditures through fiscal 2000.
Significant Customers
The Company's financial results for the three-month and six-month periods
ended September 25, 1999 include significant OEM sales of multimedia speaker
systems to Gateway. These sales are pursuant to the Master Supply Agreement
between Gateway and Boston Acoustics, Inc. On July 19, 1999, the Company
entered into an extension of the Master Supply Agreement with Gateway. Since
the Master Supply Agreement with Gateway does not contain minimum or
scheduled purchase requirements, purchase orders by Gateway may fluctuate
significantly from quarter to quarter over the term of the agreement. The
loss of Gateway as a customer or any significant portion of orders from
Gateway could have a material adverse affect on the Company's business,
results of operations and financial condition. In addition, the Company also
could be materially adversely affected by any substantial work stoppage or
interruption of production at Gateway or if Gateway were to reduce or cease
conducting operations.
Year 2000 Compliance
The Company has undertaken an internal assessment of its operations,
including its information and financial systems and its manufacturing
equipment in order to determine the extent to which the Company may be
adversely affected by Year 2000 issues. During February 1999, the Company
updated its computer systems and applications to improve the scalability and
functionality of the Company's overall manufacturing, planning and inventory
related systems and to ensure that they are Year 2000 compliant. The Company
believes that the Company's updated computer system will be Year 2000
compliant. The financial impact to the Company of its Year 2000 compliance
programs has not been and is not anticipated to be material to its financial
position or results of operations in any given year. The Company also
commenced a self-assessment survey of its suppliers' Year 2000 compliance
status during fiscal 1999 and has received responses from approximately 69
percent of these suppliers. While the Company does not believe it will suffer
any major effects from the Year 2000 issue, it is possible that such effects
could materially impact future financial results, or cause reported financial
information not to be necessarily indicative of future operating results or
future financial condition. In addition, if any of the Company's significant
customers or suppliers do not successfully and in a timely manner achieve
Year 2000 compliance, the Company's business could be materially affected. At
present, the Company's contingency plans include but is not limited to
temporary solutions or work-arounds as part of the Company's Disaster
Recovery Plan and continuous review of safety stock levels and shipment
schedules from all suppliers.
Possible Adverse Effect of Euro Conversion
On January 1, 1999, 11 of the 15 member countries of the European Union
established fixed conversion rates between their existing currencies and a new
common currency called the "euro." This represented an initial step in a process
expected to culminate in the replacement of the existing currencies with the
euro. The conversion to the euro will have operational and legal implications
for some of our international business activities. The Company has begun
evaluating these implications, but the Company has yet to estimate the potential
impact on our business, operating results and financial condition. The Company's
preliminary judgement, however, is that the nature of the Company's business and
customers makes a material impact unlikely.
13
Cautionary Statements
The Private Securities Litigation Reform Act of 1995 contains certain safe
harbors regarding forward-looking statements. From time to time, information
provided by the Company or statements made by its directors, officers, or
employees may contain "forward-looking" information which involve risk and
uncertainties. Any statements in this report that are not statements of
historical fact are forward-looking statements (including, but not limited to,
statements concerning the characteristics and growth of the Company's market and
customers, the Company's objectives and plans for future operations, and the
Company's expected liquidity and capital resources and the Company's ability and
the Company's suppliers' and customers' ability to replace, modify or upgrade
computer programs in ways to adequately address the Year 2000 issue). Such
forward-looking statements are based on a number of assumptions and involve a
number of risks and uncertainties, and accordingly, actual results could differ
materially. Factors that may cause such differences include, but are not limited
to: the continued and future acceptance of the Company's products, the rate of
growth in the audio industry; the presence of competitors with greater technical
marketing and financial resources; the Company's ability to promptly and
effectively respond to technological change to meet evolving consumer demands;
capacity and supply constraints or difficulties; and the Company's ability to
successfully integrate new operations. The words "believe," "expect,"
"anticipate," "intend" and "plan" and similar expressions identify
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date the statement
was made. For a further discussion of these and other significant factors to
consider in connection with forward-looking statements concerning the Company,
reference is made to Exhibit 99 of the Company's Form 8-K filed on July 18,
1996.
14
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
At the Annual Meeting of the Shareholders of the Company held on August
10, 1999, shareholders acted affirmatively to elect nominees for
directors proposed by management. Each Director is to serve until the
next Annual Meeting of Shareholders and thereafter until his/her
successor is elected and qualified.
NOMINEE VOTES "FOR" VOTES "WITHHELD"
Andrew G. Kotsatos 4,498,399 11,468
Fred E. Faulkner, Jr 4,498,085 11,782
George J. Markos 4,490,519 19,348
Lisa M. Mooney 4,491,999 17,868
Gerald Walle 4,489,919 19,948
Shareholders also voted to ratify the action of the Directors in
selecting Arthur Andersen LLP as auditors of the Company. A total of
4,475,252 votes were cast in favor of the proposal, 6,158 votes were
cast against, and there were 28,457 abstentions.
Item 5. OTHER INFORMATION
None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
Exhibit 10.l - Master Supply Agreement by and between Gateway,
Inc. and Boston Acoustics, Inc. dated July 19, 1999.
Exhibit 27 -- Financial Data Schedule
b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
September 25, 1999.
15
SIGNATURES
Pursuant to the requirements 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.
BOSTON ACOUSTICS, INC.
Registrant
Date: November 12, 1999 By: /S/ANDREW G. KOTSATOS
----------------------------
Andrew G. Kotsatos
Director, Chief Executive Officer
and Treasurer
Date: November 12, 1999 By: /S/FRED E. FAULKNER, JR.
----------------------------
Fred E. Faulkner, Jr.
President and Chief
Operating Officer
Date: November 12, 1999 By: /S/DEBRA A. RICKER-ROSATO
----------------------------
Debra A. Ricker-Rosato
Vice President and
Chief Accounting Officer
16
EXHIBIT INDEX
EXHIBIT NUMBER PAGE
Exhibit 10.l* Master Supply Agreement by and between Gateway, Inc. 20
And Boston Acoustics, Inc. dated July 19, 1999
Exhibit 27 Financial Data Schedule 70
- --------------------
* Confidential Treatment Requested
17