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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED COMMISSION FILE NUMBER
MARCH 29, 1997 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 IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
ONE JEWEL DRIVE, WILMINGTON, 01887
MASSACHUSETTS (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(508) 658-5800
FORMER NAME, FORMER ADDRESS AND FORMER
FISCAL YEAR, IF CHANGED SINCE LAST REPORT:
NONE
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
March 29, 1997 was 15,262,008 shares.
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ALTRON INCORPORATED AND SUBSIDIARIES
INDEX
PAGE
NUMBER
------
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Consolidated Balance Sheets -- March 29, 1997 and December
28, 1996................................................... 3
Consolidated Income Statements -- Three Months Ended March
29, 1997 and March 30, 1996................................ 4
Consolidated Statements of Cash Flows -- Three Months Ended
March 29, 1997 and March 30, 1996.......................... 5
Notes to Consolidated Financial Statements.................. 6
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................. 8
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K............................ 9
Signatures.................................................. 10
2
PART I--FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ALTRON INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 29, DECEMBER 28,
1997 1996
----------- ------------
(IN THOUSANDS, EXCEPT SHARE DATA) (UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents............................... $ 13,096 $ 14,949
Short-term investments.................................. 17,467 19,481
Accounts receivable, net................................ 29,729 24,840
Inventories............................................. 19,523 18,554
Other current assets.................................... 3,525 2,935
-------- --------
Total current assets.................................. 83,340 80,759
Property, plant and equipment, net........................ 50,870 45,727
Costs in excess of net assets of acquired company......... 3,392 3,461
Long-term investments..................................... 4,798 4,614
-------- --------
$142,400 $134,561
======== ========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current liabilities:
Accounts payable........................................ $ 14,020 $ 12,965
Accrued payroll and other employee benefits............. 4,279 3,910
Other accrued expenses.................................. 2,676 2,895
-------- --------
Total current liabilities............................. 20,975 19,770
-------- --------
Long-term debt............................................ 7,600 7,600
-------- --------
Deferred income taxes..................................... 8,790 6,567
-------- --------
Stockholders' investment:
Preferred stock, $1.00 par value--
Authorized--1,000,000 shares
Issued and outstanding--none........................... -- --
Common stock, $.05 par value--
Authorized--40,000,000 shares
Issued--15,497,589 and 15,477,776 shares............... 775 774
Paid-in capital......................................... 38,359 38,289
Retained earnings....................................... 66,178 61,838
-------- --------
105,312 100,901
Less treasury stock, at cost (235,581 shares)........... 277 277
-------- --------
Total stockholders' investment........................ 105,035 100,624
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$142,400 $134,561
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
3
ALTRON INCORPORATED AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
THREE MONTHS ENDED
-------------------
MARCH 29, MARCH 30,
1997 1996
--------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA, UNAUDITED) -------
Net sales.......................................... $43,168 $44,091
Cost of sales...................................... 32,938 33,427
------- -------
Gross profit....................................... 10,230 10,664
Selling, general and administrative expenses....... 3,363 3,130
------- -------
Income from operations............................. 6,867 7,534
Other income....................................... 435 458
Interest expense................................... 8 86
------- -------
Income before provision for income taxes........... 7,294 7,906
Provision for income taxes......................... 2,954 3,241
------- -------
Net income......................................... $ 4,340 $ 4,665
======= =======
Net income per common and common equivalent share.. $ 0.27 $ 0.29
======= =======
Weighted average common and common equivalent
shares outstanding................................ 16,213 15,910
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
4
ALTRON INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED
-------------------
MARCH 29, MARCH 30,
1997 1996
--------- ---------
(IN THOUSANDS, UNAUDITED)
Cash flows from operating activities:
Net income........................................ $ 4,340 $ 4,665
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization................... 1,660 1,151
Deferred income taxes........................... 2,223 2,422
Changes in current assets and liabilities:
Accounts receivable............................ (4,889) (1,010)
Inventories.................................... (969) (3,130)
Other current assets........................... (590) 9
Accounts payable............................... 1,055 2,538
Accrued payroll and other employee benefits.... 369 387
Other accrued expenses......................... (219) 268
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Net cash provided by operating activities......... 2,980 7,300
------- -------
Cash flows from investing activities:
Sales (purchases) of investments, net............. 1,830 (3,311)
Capital expenditures.............................. (6,734) (2,776)
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Net cash used in investing activities............. (4,904) (6,087)
------- -------
Cash flows from financing activities:
Principal payments of long-term debt.............. -- (53)
Proceeds from issuance of common stock............ 71 209
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Net cash provided by financing activities......... 71 156
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Net change in cash and cash equivalents............. (1,853) 1,369
Cash and cash equivalents, beginning of period...... 14,949 13,622
------- -------
Cash and cash equivalents, end of period............ $13,096 $14,991
======= =======
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest........................................ $ 133 $ 138
Income taxes.................................... 783 1,700
The accompanying notes are an integral part of these consolidated financial
statements.
5
ALTRON INCORPORATED AND SUBSIDIARIES
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 telecommunication, data communication, computer, industrial and medical
systems segments of the electronics industry located in the United States and
Europe.
(2) INTERIM FINANCIAL STATEMENTS
In the opinion of the Company's management, these interim financial
statements contain all adjustments (consisting of normal recurring
adjustments) necessary for a fair presentation of the results for such
periods. The unaudited results of operations for the quarter ended March 29,
1997 are not necessarily an indication of the results of operations for the
full year.
The accompanying consolidated financial statements include the accounts of
the Company and its wholly- owned subsidiaries, Altron Systems Corporation and
Altron Securities Corporation. 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 contract manufacturing sales to customers. 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 28, 1996 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) NET INCOME PER COMMON AND COMMON EQUIVALENT
Net income per common and common equivalent share was computed based on the
weighted average number of common and common equivalent shares outstanding
during each year. Common equivalent shares include outstanding stock options.
Fully diluted net income per share has not been separately presented as it
would not be materially different from net income per share as presented.
In March 1997, SFAS No. 128, Earnings Per Share, was issued which
established new standards for calculating and presenting earnings per share.
The Company will adopt this new standard in its fiscal year end 1997 financial
statements, which will require the reporting of diluted earnings per share and
basic earnings per share. For the quarters ended March 29, 1997 and March 30,
1996, diluted earnings per share were $0.27 and $0.29, respectively, and basic
earnings per share were $0.28 and $0.31, respectively.
(4) 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, March 29, 1997, unaudited):
MARCH 29, DECEMBER 28,
1997 1996
--------- ------------
Raw materials....................................... $10,342 $10,040
Work-in-process..................................... 9,181 8,514
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$19,523 $18,554
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6
ALTRON INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(5) SHORT-TERM DEBT
The Company has a $5,000,000 unsecured line of credit available with its
bank at the bank's prime rate. There were no borrowings outstanding under the
line of credit and the entire line was available at March 29, 1997 and
December 28, 1996.
(6) SIGNIFICANT CUSTOMERS
One single customer accounted for 10% and 16% of net sales for the three
month periods ended March 29, 1997 and March 30, 1996, respectively.
7
ALTRON INCORPORATED AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net sales for the first quarter of 1997 were $43.2 million, as compared to
net sales of $44.1 million for the same quarter of 1996. The decrease was
primarily the result of lower shipments to the Company's larger contract
manufacturing customers in the communication, computer and industrial segments
of the electronics industry. Several of the Company's customers have been
experiencing reduced demand for their products and contract manufacturing
sales for the first quarter were affected by such reduced demand.
Contract manufacturing sales for the first quarter of 1997 were $31.0
million or approximately 72% of net sales, compared to $33.1 million or 75% of
net sales in the first quarter of 1996. Printed circuit board sales for the
first quarter of 1997 were $12.2 million, approximately 28% of net sales
compared to $11.0 million or 25% of net sales in the first quarter of 1996.
Gross margin as a percentage of net sales for the first quarter of 1997 was
23.7% as compared to 24.2% in 1996. The Company's lower gross margin was
primarily the result of increased investment in new capacity and less
absorption of fixed costs due to lower shipment levels.
Selling, general and administrative expenses as a percentage of net sales
was 7.8% in the first quarter of 1997 and 7.1% for the same quarter of 1996.
Selling, general and administrative expenses for the first quarter of 1997 was
$3.4 million compared to $3.1 million in the first quarter of 1996. The
increase in selling, general and administrative expenses was primarily due to
the expense associated with the development of a stronger customer program
management organization and establishing regional sales offices.
Other income was $435,000 in the first quarter of 1997 as compared to
$458,000 in the first quarter of 1996. Interest expense was $78,000 lower in
the first quarter of 1997 as compared to the same period in 1996 as a result
of higher interest capitalized.
LIQUIDITY AND CAPITAL RESOURCES
At March 29, 1997, the Company had working capital of $62.4 million compared
to $61.0 million at December 28, 1996. Cash and cash equivalents and short-
term investments were $30.6 million at March 29, 1997 and $34.4 million at
December 28, 1996. Long-term investments at March 29, 1997 were $4.8 million
compared to $4.6 million at December 28, 1996.
At March 29, 1997, the Company had a $5,000,000 unsecured line of credit
with its bank, all of which was available.
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 $4.0 million of
capital expenditures as of March 29, 1997.
8
ALTRON INCORPORATED AND SUBSIDIARIES
PART II -- OTHER INFORMATION
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 March 29, 1997.
9
SIGNATURES
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.
Altron Incorporated
NAME TITLE DATE
/s/ Samuel Altschuler Chairman of the Board of May 9, 1997
- ------------------------- Directors and President
SAMUEL ALTSCHULER (principal executive officer)
/s/ Burton Doo Executive Vice President and May 9, 1997
- ------------------------- Director, President, Altron
BURTON DOO Systems Corporation
/s/ Peter D. Brennan Vice President, Chief Financial May 9, 1997
- ------------------------- Officer and Treasurer (principal
PETER D. BRENNAN financial and accounting
officer)
10