================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR QUARTER ENDED APRIL 1, 1995 COMMISSION FILE NUMBER 0-13230 ALTRON INCORPORATED (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) MASSACHUSETTS 04-2464301 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 01887 ONE JEWEL DRIVE, WILMINGTON, MA (ZIP CODE) (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (508) 658-5800 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) NONE (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 [_]. The number of shares of Common Stock of the Registrant outstanding as of April 1, 1995 was 8,452,988 shares. ================================================================================ ALTRON INCORPORATED AND SUBSIDIARY INDEX PAGE NUMBER ------ PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements Consolidated Balance Sheets--April 1, 1995 and December 31, 1994........................................................ 3 Consolidated Income Statements--Three Months Ended April 1, 1995 and April 2, 1994............................................... 4 Consolidated Statements of Cash Flows--Three Months Ended April 1, 1995 and April 2, 1994............................. 5 Notes to Consolidated Financial Statements................... 6 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................................... 7 PART II. OTHER INFORMATION ITEM 4. Submission of Matters to a Vote of Security Holders.......... 8 ITEM 6. Exhibits and Reports on Form 8-K............................. 8 Signatures................................................... 9 2 PART I--FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS ALTRON INCORPORATED AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS (IN THOUSANDS) APRIL 1, DECEMBER 31, 1995 1994 ----------- ------------ ASSETS (UNAUDITED) Current Assets: Cash and cash equivalents........................... $ 9,187 $ 8,306 Short-term investments.............................. 2,059 2,028 Accounts receivable, less allowances of $650 and $625............................................... 17,868 15,816 Inventories......................................... 15,402 11,519 Other current assets................................ 2,839 2,324 ----------- ------- Total Current Assets.............................. 47,355 39,993 Property, Plant and Equipment, net.................... 25,740 24,510 Costs in Excess of Net Assets of Acquired Company..... 3,946 4,019 ----------- ------- $ 77,041 $68,522 =========== ======= LIABILITIES AND STOCKHOLDERS' INVESTMENT Current Liabilities: Current portion of long-term debt................... $ 796 $ 805 Accounts payable.................................... 11,994 9,275 Accrued payroll and other employee benefits......... 3,760 2,882 Other accrued expenses.............................. 3,130 2,489 ----------- ------- Total Current Liabilities......................... 19,680 15,451 ----------- ------- Long-term Debt........................................ 8,455 8,646 ----------- ------- Deferred Income Taxes................................. 5,541 4,044 ----------- ------- Stockholders' Investment: Preferred stock, $1.00 par value-- Authorized--1,000,000 shares Issued and outstanding--none....................... -- -- Common stock, $.05 par value-- Authorized--30,000,000 shares Issued--8,610,042 and 8,577,552 shares............. 431 429 Paid-in capital..................................... 10,726 10,664 Retained earnings................................... 32,485 29,565 ----------- ------- 43,642 40,658 Less treasury stock, at cost, 157,054 shares........ 277 277 ----------- ------- Total Stockholders' Investment.................... 43,365 40,381 ----------- ------- $ 77,041 $68,522 =========== ======= The accompanying notes are an integral part of these consolidated financial statements. 3 ALTRON INCORPORATED AND SUBSIDIARY CONSOLIDATED INCOME STATEMENTS (IN THOUSANDS, EXCEPT PER SHARE DATA, UNAUDITED) THREE MONTHS ENDED -------------------- APRIL 1, APRIL 2, 1995 1994 --------- --------- Net Sales.................................................. $ 32,662 $ 23,007 Cost of Sales.............................................. 25,256 17,907 --------- --------- Gross Profit............................................... 7,406 5,100 Selling, General and Administrative Expenses............... 2,593 1,955 --------- --------- Income from Operations..................................... 4,813 3,145 Other Income............................................... 168 56 Interest Expense........................................... 116 161 --------- --------- Income Before Provision for Income Taxes................... 4,865 3,040 Provision for Income Taxes................................. 1,945 1,215 --------- --------- Net Income................................................. $ 2,920 $ 1,825 ========= ========= Net Income Per Common and Common Equivalent Share.......... $ .33 $ .21 ========= ========= Weighted Average Common and Common Equivalent Shares Outstanding............................................... 8,922 8,565 ========= ========= The accompanying notes are an integral part of these consolidated financial statements. 4 ALTRON INCORPORATED AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS, UNAUDITED) THREE MONTHS ENDED --------------------- APRIL 1, APRIL 2, 1995 1994 --------- --------- Cash Flows From Operating Activities: Net income............................................. $ 2,920 $ 1,825 Adjustments to reconcile net income to net cash flows provided by operating activities: Depreciation and amortization........................ 1,147 1,050 Deferred income taxes................................ 1,097 1,215 Changes in current assets and liabilities: Accounts receivable................................ (2,052) (1,828) Inventories........................................ (3,883) (1,076) Other current assets............................... (115) 29 Accounts payable................................... 2,719 1,005 Accrued expenses................................... 1,519 894 --------- --------- Net cash provided by operating activities.............. 3,352 3,114 --------- --------- Cash Flows From Investing Activities: Capital expenditures................................. (2,335) (1,238) --------- --------- Net cash used in investing activities.................. (2,335) (1,238) --------- --------- Cash Flows From Financing Activities: Proceeds from issuance of common stock............... 64 50 Principal payments of long-term debt................. (200) (337) --------- --------- Net cash used in financing activities.................. (136) (287) --------- --------- Net Change In Cash And Cash Equivalents................ 881 1,589 Cash And Cash Equivalents, Beginning Of Period......... 8,306 8,877 --------- --------- Cash And Cash Equivalents, End Of Period............... $ 9,187 $ 10,466 ========= ========= Supplemental Disclosures Of Cash Flow Information: Cash paid during the period for: Interest........................................... $ 145 $ 188 Income taxes....................................... 600 355 The accompanying notes are an integral part of these consolidated financial statements. 5 ALTRON INCORPORATED AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) BUSINESS Altron Incorporated (the "Company") is a leading contract manufacturer of interconnect products used in advanced electronic equipment. The Company manufactures complex products in the mid-volume sector of the electronic interconnect industry including custom-designed backplanes, surface mount assemblies and total systems, as well as multilayer, high density printed circuit boards. Altron's customers include a diversified base of manufacturers in the telecommunications, data communications, computer, industrial and medical systems segments of the electronics industry. On June 9, 1994, Altron Systems Corporation, a wholly-owned subsidiary, completed the acquisition of Astrio Corporation, a manufacturer of complex surface mount assemblies. The acquisition has been accounted for as a purchase, and the results of operations have been included in the accompanying consolidated income statements from the date of acquisition. (2) INTERIM FINANCIAL STATEMENTS In the opinion of management, these interim financial statements contain all adjustments (consisting of normal recurring adjustments) which management considers necessary for a fair presentation of the results for such periods. The unaudited results of operations for the quarter ended April 1, 1995 are not necessarily indicative of the results of operations for the full year. The accompanying consolidated financial statements include the accounts of the Company and Altron Systems Corporation, its wholly owned subsidiary. All significant intercompany balances and transactions have been eliminated in consolidation. Printed circuit boards manufactured by the Company and used in its assembly operations are included in value added contract manufacturing sales. Printed circuit board sales represent sales to third parties. For information as to the significant accounting policies followed by the Company and other financial and operating information, see the Company's Form 10-K for the year ended December 31, 1994 as filed with the Securities and Exchange Commission (Commission File No. 0-13230). These interim financial statements should be read in conjunction with the financial statements included in the Form 10-K. (3) INVENTORIES Inventories are stated at the lower of cost (first-in, first-out method) or market. Cost includes materials, labor and manufacturing overhead. Inventories are summarized as follows (in thousands, April 1, 1995 unaudited): APRIL 1, DECEMBER 31, 1995 1994 -------- ------------ Raw materials........................................ $ 7,492 $ 5,120 Work-in-process...................................... 7,910 6,399 ------- ------- $15,402 $11,519 ======= ======= (4) SHORT-TERM DEBT The Company has an unsecured line of credit available with its bank of $5,000,000 at the bank's prime rate. There were no borrowings outstanding under the line of credit and the entire line was available at April 1, 1995 and December 31, 1994. (5) SIGNIFICANT CUSTOMERS One customer, Motorola Inc., accounted for 17% and 14% of net sales for the three month periods ended April 1, 1995 and April 2, 1994, respectively. 6 ALTRON INCORPORATED ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Net sales for the first quarter of 1995 increased 42% to $32.7 million from net sales of $23.0 million for the same quarter of 1994. The increase was primarily the result of increased shipments to the Company's major customers in the communications and computer segments of the electronics industry. The Company's largest customer in each of the first quarters of 1995 and 1994 was Motorola, Inc., which accounted for 17% and 14% of net sales, respectively. Value added contract manufacturing sales for the first quarter of 1995 increased 77% to $23.9 million or approximately 73% of net sales, compared to $13.5 million or 59% of net sales in the first quarter of 1994. Of the $10.4 million increase in value added contract manufacturing sales, $5.2 million is attributable to Altron Systems Corporation. Printed circuit board sales for the first quarter of 1995 were $8.8 million or approximately 27% of net sales, compared to $9.5 million or 41% of net sales in the first quarter of 1994. Gross profit for the first quarter of 1995 increased 45% to $7.4 million from $5.1 million in 1994. Gross margin as a percentage of net sales for 1995 increased to 22.7% as compared to 22.2% in 1994. The improvement in the Company's gross margin resulted primarily from better absorption of fixed costs due to the higher volume of shipments and was also due to increased manufacturing efficiencies resulting from productivity and product yield improvements. Selling, general and administrative expenses increased to $2.6 million in the first quarter of 1995 from $2.0 million for the same period a year ago. The increase was due primarily to the added selling, general and administrative expenses attributable to Altron Systems Corporation. Selling, general and administrative expenses as a percentage of net sales decreased to 7.9% in the first quarter of 1995 from 8.5% for the same quarter of 1994. The decline in selling, general and administrative expenses as a percentage of net sales was principally the result of higher net sales. Other income increased $112,000 in the first quarter of 1995 as compared to the first quarter of 1994. This increase was principally due to increased interest income which resulted from higher rates of return earned on investments and higher cash balances available for investment. Interest expense was $45,000 lower in the first quarter of 1995 than 1994 as a result of reduced outstanding borrowings and higher capitalized interest. LIQUIDITY AND CAPITAL RESOURCES At April 1, 1995, the Company had working capital of $27.7 million compared to $24.5 million at December 31, 1994. Cash and cash equivalents and short-term investments were $11.2 million at April 1, 1995 and $10.3 million at December 31, 1994. At April 1, 1995, the Company had a $5,000,000 line of credit arrangement with its bank, all of which was available. On March 31, 1995, the Company's stockholders approved a resolution to increase the authorized shares of the Company's common stock from 10,000,000 to 30,000,000 shares with a par value of $.05 per share. The Company believes that its existing bank credit and working capital, together with funds generated from operations, will be sufficient to satisfy anticipated sales growth and investment in manufacturing facilities and equipment. The Company had commitments for approximately $700,000 of capital expenditures as of April 1, 1995. On March 29, 1995, the Company filed a Registration Statement on Form S-3 to register shares of its common stock with the Securities and Exchange Commission. 7 ALTRON INCORPORATED PART II--OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS At a Special Meeting of Stockholders held on March 31, 1995, the Company's Stockholders approved by a vote of 6,797,596 for, 594,208 against and 16,602 abstaining, an amendment to the Company's Articles of Organization increasing the number of authorized shares of common stock, par value $.05 par share, from 10,000,000 to 30,000,000 shares. The Company solicited proxies for the Special Meeting pursuant to Regulation 14 under the Securities Exchange Act. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 27 -- Financial Data Schedule (b) Reports on Form 8-K No reports on Form 8-K were filed by the Company during the quarter ended April 1, 1995. 8 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THE REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED. ALTRON INCORPORATED NAME TITLE DATE ---- ----- ---- /s/ SAMUEL ALTSCHULER Chairman of the Board of May 11, 1995 ____________________________________ Directors and President SAMUEL ALTSCHULER (principal executive officer) /s/ BURTON DOO Executive Vice President May 11, 1995 ____________________________________ and Director, President, BURTON DOO Altron Systems Corporation /s/ PETER D. BRENNAN Vice President, Chief May 11, 1995 ____________________________________ Financial Officer and PETER D. BRENNAN Treasurer (principal financial and accounting officer) 9