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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 26, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1984
For the transition period from to
Commission file number 0-28062
CERION TECHNOLOGIES INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 02-0485458
(State of incorporation) (I.R.S. Employer Identification Number)
1401 Interstate Drive
Champaign, Illinois 61821-1090
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (217) 359-3700
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.
Class Outstanding as of September 26, 1997
Common Stock, par value $.01 7,028,337 shares
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PART 1 -FINANCIAL INFORMATION
ITEM 1 -FINANCIAL STATEMENTS
CERION TECHNOLOGIES INC.
BALANCE SHEETS
(dollars in thousands except share and per share data)
September 26, December 31,
1997 1996
------------- ------------
ASSETS (unaudited)
Current Assets:
Cash and cash equivalents $ 7,559 $ 9,300
Accounts receivable, net 5,561 2,928
Inventories, net 533 1,046
Prepaid expenses and other assets 422 395
Deferred income taxes 420 273
------- -------
Total current assets 14,495 13,942
Property, plant and equipment, net 9,278 9,391
Other assets 79 -
------- -------
$23,852 $23,333
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 4,053 $ 3,694
------- -------
Total current liabilities 4,053 3,694
Deferred income taxes 273 273
Stockholders' equity:
Preferred Stock, par value $.01 per share, 100,000
shares authorized, none issued - -
Common Stock, par value $.01 per share, 20,000,000
shares authorized; 7,028,337 and 7,016,184 shares
issued and outstanding, respectively 70 70
Additional paid-in capital 18,679 18,639
Retained earnings 777 657
------- -------
Total stockholders' equity 19,526 19,366
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$23,852 $23,333
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The notes are an integral part of the financial statements.
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CERION TECHNOLOGIES INC.
STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
Three Months Ended Nine Months Ended
------------------ -----------------
(unaudited) (unaudited)
September 26, September 27, September 26, September 27,
1997 1996 1997 1996
------------- ------------- ------------- -------------
Net sales $ 6,701 $ 5,522 $ 22,071 $30,736
Cost of sales 5,862 4,954 19,281 20,515
------- -------- -------- -------
Gross profit 839 568 2,790 10,221
Selling, general and administrative expenses 1,100 1,446 3,117 4,306
------- -------- -------- -------
Operating income (loss) (261) (878) (327) 5,915
Interest income 91 99 282 61
------- -------- -------- -------
Income (loss) before provision (benefit)
for income taxes (170) (779) (45) 5,976
Provision (benefit) for income taxes (215) (312) (165) 2,391
------- -------- -------- -------
Net income (loss) $ 45 $ (467) $ 120 $3,585
======= ======== ======== =======
Net income (loss) per share $ 0.01 $ (0.07) $ 0.02 $ 0.58
======= ======== ======== =======
Average common shares outstanding 7,028 7,016 7,023 6,157
The notes are an integral part of the financial statements.
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CERION TECHNOLOGIES INC.
STATEMENTS OF CASH FLOWS
(dollars in thousands)
Nine Months Ended
-----------------------------
(unaudited)
September 26, September 27,
1997 1996
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Cash flows provided by (used in) operating activities:
Net income $ 120 $ 3,585
Adjustments to reconcile net income to cash
provided by (used in) operating activities:
Depreciation and amortization 1,866 1,461
Deferred income taxes (147) 9
Changes in operating assets and liabilities:
Accounts receivable (2,633) 3,282
Inventories 513 (1,682)
Prepaid expenses and other assets (27) (525)
Accounts payable and accrued expenses 359 619
------- --------
Net cash provided by operating activities 51 6,749
------- --------
Cash flows provided by (used in) investing activities:
Additions to property, plant and equipment (1,732) (5,719)
Purchase of short-term investments (5,000) (4,496)
Proceeds from redemption of short-term
investments 5,000 994
------- --------
Cash flows used in investing activities (1,732) (9,221)
------- --------
Cash flows provided by (used in) financing activities:
Debt issuance costs (100) -
Repayment of borrowings - (11,142)
Proceeds from shares issued 40 19,545
------- --------
Cash flows provided by (used in) financing activities (60) 8,403
------- --------
Increase (decrease) in cash (1,741) 5,931
Cash at beginning of period 9,300 173
------- --------
Cash at end of period $ 7,559 $ 6,104
======= ========
Supplemental disclosure of cash flow information:
Interest paid $ - $ 74
Taxes paid $ 80 $ 192
The notes are an integral part of the financial statements.
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CERION TECHNOLOGIES INC.
NOTES TO FINANCIAL STATEMENTS
1. Earnings Per Common and Common Share Equivalents
Earnings per common and common share equivalents are computed based on the
weighted average number of common shares and, as applicable, the weighted
average number of common share equivalents outstanding during the periods
presented.
Three Months Ended Nine Months Ended
------------------ -----------------
September 26, September 27, September 26, September 27,
1997 1996 1997 1996
------------- ------------- ------------- -------------
Common shares outstanding 7,028,337 7,016,184 7,022,732 6,157,369
Common share equivalents None None None None
2. Revolving Credit Facility
On March 7, 1997, the Company entered into a three year, $7.5 million revolving
credit facility ("facility") with The CIT Group/Business Credit, Inc. The
facility is collateralized by all the Company's assets and the Company may
borrow under the facility based upon prescribed advance rates calculated as a
percentage of the Company's accounts receivable and inventories.
The facility bears interest at the prime rate (as defined) plus 1/4 percent. The
facility's terms include a fee for the unused portion of the credit facility
equal to 3/8 percent, payable monthly. The facility contains certain covenants
that include a limitation on dividends and maintaining certain financial ratios.
No amounts were outstanding under the facility as of September 26, 1997.
In connection with obtaining the facility, the Company paid a closing fee equal
to one percent of the total facility and incurred other costs totaling
approximately $100,000. These costs will be amortized over the term of the
facility.
3. Liquidity Matters
Beginning in the second half of 1996, and continuing since then, the market
appears to have been dominated by oversupply resulting in significant pricing
pressures and, consequently, the Company experienced sales volume reductions and
net losses for each of the last two quarters of 1996. In addition, during the
same period, some thin-film media manufacturers shifted towards
vertically-integrated production of disk substrates. No assurance can be given
that further backwards integration by thin-film media manufacturers or other
industry factors will not result in canceled orders or further sales volume
reductions beyond levels experienced since the second half of 1996. The Company
does not believe current market conditions will support price increases in the
foreseeable future. Unless the Company achieves substantial cost improvements,
experiences increased demand for its products and stabilizes pricing, the
Company may incur operating losses and negative cash flows from operating
activities. Without such cost improvements, increased demand and pricing
stabilization, the Company could, over an extended period of time, exhaust
substantially all of its cash resources and borrowing availability. In such
event, the Company would be required to pursue other alternatives to improve
liquidity, including initiating plans for further cost reductions, selling
assets, deferring certain capital expenditures and obtaining
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additional funding sources. No assurance can be given that the Company will be
able to successfully pursue such alternatives.
4. Other
The financial statements for the nine month periods ended September 26, 1997 and
September 27, 1996 are prepared in accordance with generally accepted accounting
principles ("GAAP") for interim financial statements and reflect all adjustments
(consisting only of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of the financial position and
operating results for the interim periods. These financial statements should be
read in conjunction with the financial statements and notes thereto, together
with management's discussion and analysis of financial condition and results of
operations, contained in the Company's Form 10-K dated March 24, 1997. The
results of operations for the nine months ended September 26, 1997 are not
necessarily indicative of the results that may be expected for the entire fiscal
year ending December 31, 1997.
Certain reclassifications have been made to the statement of cash flows for the
nine months ended September 27, 1996 to conform with the financial statement
presentation of the statement of cash flows for the nine months ended September
26, 1997.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD-LOOKING STATEMENTS -- SAFE HARBOR
This Report contains "forward-looking statements," including the statements
below regarding (i) trends affecting the Company's financial condition or
results of operations, including the effect of market conditions, (ii) the
Company's business strategies, including cost reduction, liquidity improvement
and targeted capital expenditures, (iii) the possible impact of backwards
integration within the industry towards the manufacture of aluminum disk
substrates. Moreover, from time to time in both written releases and reports and
oral statements, the Company and its senior management may express expectations
regarding future performance of the Company. The Company cautions investors not
to place undue reliance on such statements. All of these "forward-looking
statements" are inherently uncertain and are not guarantees of future
performance. Investors must recognize that actual events could cause actual
results to differ materially from Senior Management's expectations. Key risk
factors that in particular, could have a material adverse impact on current and
future performance include (i) the Company's dependence on a small number of
customers, as evidenced by the cancellation of orders in July 1996 by one of the
Company's two largest customers, (ii) a trend toward vertical integration among
thin-film disk manufacturers that may reduce demand for the Company's products,
as evidenced by a drastic curtailment by the Company's largest customer in 1996,
(iii) dependence on the intensely competitive and cyclical hard-disk drive
industry, (iv) absence of long-term purchase commitments from the Company's
customers, and (v) risk of excess industry capacity. See "Factors that Affect
Future Results" of the Company's Form 10-K filed with the Securities and
Exchange Commission on March 31, 1997 for a more detailed discussion of factors,
as updated by the foregoing and other discussion in this Report, that could
affect the Company's performance and the value of its common stock (which
section is incorporated herein by reference). Such forward-looking statements
speak only as of the date of this report and the Company disclaims any duty to
update such statements.
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THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 26, 1997 AND SEPTEMBER 27, 1996
Net Sales. Net sales increased $1.2 million, or 21%, to $6.7 million in
the three months ended September 26, 1997 from $5.5 million in the three months
ended September 27, 1996. Net sales decreased $8.7 million, or 28%, to $22.1
million in the nine months ended September 26, 1997 from $30.7 million in the
nine months ended September 27, 1996. The decrease in net sales for the nine
months resulted from the Company's largest customer in 1996 gradually decreasing
orders to zero in the second half of 1996 as it expanded its internal
manufacturing capacity for aluminum disk substrates. This customer represented
3% and 50% of the Company's revenue in the nine months ended September 26, 1997
and September 27, 1996, respectively.
The increase in net sales for the three months ended September 26, 1997 resulted
from partial recovery from a significant loss of orders from a major customer
that canceled all its outstanding purchase orders in the third quarter of 1996.
Revenues from this customer for the three months ended September 26, 1997 show
an increase in sales of 770% or $3.2 million as compared with the three months
ended September 27, 1996. This customer resumed buying substrates from Cerion in
the fourth quarter of 1996 and in 1997 but at reduced quantities, resulting in
revenue from this customer being reduced 6% for the nine months ended September
26, 1997 compared to the nine months ended September 27, 1996. Net sales for the
Company was concentrated with the same two customers that represented 54% and
46% of net sales for the three months ended September 26, 1997 and 41% and 36%
of net sales for the nine months ended September 26, 1997.
In addition, average sales prices decreased significantly between the third
quarter of 1996 and 1997, resulting in an average sales price in the third
quarter of 1997 that was approximately 22% lower than the third quarter of 1996.
Gross Profit. Gross profit increased $271,000 to $839,000 in the three
months ended September 26, 1997 from $568,000 in the three months ended
September 27, 1996. Gross profit as a percentage of net sales increased to 12.5%
in the third quarter of 1997 as compared to 10.3% in the third quarter of
1996. Gross profit decreased $7.4 million to $2.8 million in the nine months
ended September 26, 1997 from $10.2 million in the nine months ended September
27, 1996. Gross profit as a percentage of net sales decreased to 12.6% in the
first nine months of 1997 compared to 33.3% in the first nine months of 1996.
The increase in gross profit in the three months ended September 26, 1997
compared to the three months ended September 27, 1996 is attributable to the 56%
increase in unit sales offset by the 22% decrease in average sales price. The
decrease in gross profit in the first nine months of 1997 compared to the first
nine months of 1996 was attributable to the underutilization of existing
capacity which had been expanded in the first half of 1996 and the spreading of
higher fixed costs, due to a larger available production capacity, over a lower
sales volume in 1997. Gross profit also decreased as a result of lower average
selling prices of the Company's products in the first nine months of 1997 as
compared to the first nine months of 1996.
Selling, General & Administrative Expenses. Selling, general and
administrative expenses decreased $346,000, or 23.9%, to $1.1 million in the
three months ended September 26, 1997 from $1.4 million in the three months
ended September 27, 1996. Selling, general and administrative expenses decreased
$1.2 million, or 27.6%, to $3.1 million in the nine months ended September 26,
1997 from $4.3 million in the nine months ended September 27, 1996. The decrease
was due primarily to higher nonrecurring costs incurred in the first nine months
of 1996, including relocation costs for two executive officers and costs
associated with transitioning the Company from a captive supplier entity within
the
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Nashua Corporation group of affiliated companies to a stand-alone company.
Furthermore, lower spending associated with a decrease in the workforce,
including lower profit-sharing and reduced research and development spending
contributed to the reduction in costs. Selling, general and administrative
expenses as a percentage of net sales decreased to 16.4% in the third quarter of
1997 compared to 26.2% in the third quarter of 1996. The decrease in the
percentage resulted from a reduction in spending combined with the growth in net
sales.
Interest Income. Interest income consists of interest income from
short-term investments.
Provision (Benefit) for Income Taxes. Benefit for income taxes was
$215,000 for the three months ended September 26, 1997 as compared to $312,000
for the three months ended September 27, 1996. The Company's effective tax rate
was 126% in the third quarter of 1997 and 40% in the third quarter of 1996. The
increase in the Company's effective tax rate for the third quarter of 1997
resulted from the reduction to zero of a valuation reserve for the Company's
deferred tax assets.
Quarterly Results. The Company's revenues and earnings may fluctuate
significantly from quarter to quarter based on a variety of factors, including
(i) the timing and size of new and recurring orders from customers, (ii) the
introduction and marketing of new products by the Company and its competitors,
(iii) changes in demand for the Company's products, and (iv) general economic
conditions within the data storage industry, (v) timing of significant orders,
changes in pricing by the Company or its competitors, (vi) order cancellations,
modifications, quantity adjustments and shipment rescheduling, (vii) changes in
product mix, (viii) manufacturing yields and the level of utilization of the
Company's production capacity. The impact of these and other factors on the
Company's expense levels are based, in part, on its expectations as to future
sales. Because the Company's sales are generally made pursuant to purchase
orders that are subject to cancellation, modification, quantity reduction or
rescheduling generally without penalty, the Company's backlog as of any
particular date may not be indicative of sales for any future period, and
changes to purchase orders could cause the Company's net sales to fall below
expected levels. If sales levels are below expectations, operating results are
likely to be materially adversely affected. Furthermore, net income may be
disproportionately affected by a reduction in net sales because a
proportionately smaller amount of the Company's expenses varies with its sales.
As a result, the Company's operating results in any quarter may not be
indicative of its future performance and could have a material adverse effect on
the market price for the Company's Common Stock. In addition, the stock market
recently has experienced volatility which has affected the market price of
securities of many companies and which has sometimes been unrelated to the
operating performance of such companies. Factors such as announcements of new
products, alternative memory technology or strategic alliances by the Company or
its competitors, as well as the market condition in the information industry and
the movements in the prices of stocks in general may have a significant impact
on the market price of the Company's Common Stock.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal capital requirements have been to fund working capital
needs, manufacturing capacity expansion and capital expenditures related to
manufacturing process automation. During 1996, these capital requirements were
satisfied by cash flows from operations and proceeds of the Company's initial
public offering, and in 1997 they have been satisfied from the proceeds of the
Company's initial public offering.
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Net cash provided by operating activities was $51,000 and $6.7 million in the
nine months ended September 26, 1997 and September 27, 1996, respectively. The
decrease in cash provided by operating activities from the first nine months of
1996 to the first nine months of 1997 was primarily due to the decrease in net
income and the increase in accounts receivable from December 31, 1996 to
September 26, 1997 associated with growth of the Company's net sales in the
second and third quarters of 1997 compared to the three months ended December
31, 1996.
Net cash used in investing activities was $1.7 million and $9.2 million in the
first nine months of 1997 and 1996, respectively. Cash used in investing
activities in 1996 was primarily for capital expenditures related to
modifications of existing equipment, purchases of new equipment and purchase of
short-term investments. In 1997, the primary investing activity was the purchase
of new automated equipment. Newly purchased equipment in 1996 increased both
manufacturing capacities and efficiencies. The Company's short-term investments
are comprised of investment grade commercial paper.
Net cash used by financing activities was $60,000 in the first nine months of
1997 and primarily related to costs of obtaining the revolving credit facility.
In the first nine months of 1996, net cash used by financing activities was $8.4
million and related to the proceeds of the Company's initial public offering
offset by the repayment of debt.
The Company's future capital requirements will be to fund working capital needs
and equipment purchases aimed at reducing manufacturing costs through changes to
the manufacturing process. The Company has expended substantially all of the
$1.4 million it had committed to an automation project that it expects to
complete by year-end. The Company's total expected capital expenditures for 1997
may exceed $2.0 million. Future additional capital expenditures will be required
to increase automation within the Company's manufacturing processes.
OUTLOOK
Cerion does not provide forecasts of potential financial performance. The
statements contained in this Outlook are based upon the intent, belief or
current expectations of the Company or its management. These statements are
forward-looking; actual results may differ materially.
Based upon anticipated cash flows from operating activities, remaining proceeds
from the initial public offering completed in 1996 and credit availability, the
Company believes that it has the liquidity and capital resources needed to meet
its financial commitments through 1998. The Company does not believe current
market conditions will support price increases in the foreseeable future. Unless
the Company achieves substantial cost improvements, experiences increased demand
for its products and stabilizes pricing, the Company may incur operating losses
and negative cash flows from operating activities. Without such cost
improvements, increased demand and pricing stabilization, the Company could,
over an extended period of time, exhaust substantially all of its cash resources
and borrowing availability. In such event, the Company would be required to
pursue other alternatives to improve liquidity, including initiating plans for
further cost reductions, selling assets, deferring certain capital expenditures
and obtaining additional funding sources. No assurance can be given that the
Company will be able to successfully pursue such alternatives.
Adverse industry conditions during the second half of 1996, and the first nine
months of 1997, in which available market supply exceeded demand, are expected
to continue through the fourth quarter of 1997. Reduced demand combined with a
significant reduction in pricing caused the Company to incur net losses for the
last two quarters of 1996 and operate at substantially break-even for the first
nine months
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of 1997. These adverse industry conditions are expected to continue and the
Company may incur operating losses and negative cash flows from operating
activities. Such net losses have, and, if they occur in the future will impair
the Company's liquidity and available sources of liquidity and will continue to
affect the Company adversely until significant product cost improvements are
achieved and combined with increased sales volumes to return the Company to
profitability.
The Company's gross margin percentage is largely a function of product mix sold
in any period. Various other factors, including unit volumes, costs and yield
issues associated with initiating production on new processes also will continue
to affect the amount of cost of sales and the variability of the gross margin
percentage in future quarters. Additionally, increased depreciation resulting
from the significant capital spending in 1996 and 1995, and planned capital
spending in 1997 will negatively impact gross margins in future periods. The
planned 1997 capital spending is focused in the area of manufacturing process
changes to reduce product cost.
Reduction in demand from either a reduction in the overall industry market
demand, further backwards integration by thin film media manufacturers or a
sudden loss of one or more customers will significantly impact the Company's
operating performance. Volatility in demand for the Company's products will have
a substantial impact to the Company's operating performance because of the fixed
cost element of the Company's product manufacturing relative to total costs.
FINANCIAL ACCOUNTING STANDARDS NO. 128
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 128, "Earnings per Share" (SFAS 128). SFAS 128 replaces
primary earnings per share ("EPS") with basic EPS, which excludes dilution, and
requires presentation of both basic and diluted EPS on the face of the income
statement. Diluted EPS is computed similarly to the current fully diluted EPS.
SFAS 128 is effective for financial statements issued for periods ending after
December 15, 1997, and requires restatement of all prior-period EPS data
presented. The adoption of this statement is not expected to materially affect
either future or prior-period EPS.
FINANCIAL ACCOUNTING STANDARDS NO. 130
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" (SFAS 130). SFAS
130 requires the presentation of comprehensive income which represents the
change in equity of the Company from transactions and other events and
circumstances from nonowner sources. Comprehensive income includes all changes
in equity except those resulting from investments by owners and distributions to
owners. SFAS 130 is effective for financial statements issued for periods
beginning after December 15, 1997, and requires restatement of all prior-period
financial statements presented.
INFLATION
In the opinion of management, inflation has not had a material effect on the
operations of the Company.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On August 8, 1996, an individual plaintiff, Joshua Teitelbaum, initiated a
lawsuit against Cerion Technologies Inc. ("Cerion" or the "Company"), Nashua
Corporation ("Nashua"), William Blair & Co. ("Blair") and certain Cerion
directors and officers in the Circuit Court of Cook County, Illinois. On
September 4, 1996, a second individual plaintiff, Philippe Olczyk, initiated a
similar lawsuit against the Company, Nashua, Blair and certain Cerion directors
in the Circuit Court of Cook County, Illinois. Both lawsuits purport to be
brought on behalf of a class consisting of all persons (other than the
defendants) who purchased the common stock of Cerion between May 24, 1996 and
July 9, 1996.
These two cases were consolidated before the same judge. On March 24, 1997,
Teitelbaum and Olcyzk, joined by a third plaintiff, Robert K. Pickup, filed a
Consolidated Amended Class Action Complaint ("Consolidated Complaint") against
the Company, Nashua, Blair, and certain Cerion directors and officers. The
Consolidated Complaint supersedes the prior complaints and also purports to be
on behalf of a class consisting of all persons (other than the defendants) who
purchased the common stock of Cerion between May 24, 1996 and July 9, 1996. The
Consolidated Complaint alleges that, in connection with the Cerion initial
public offering, the defendants issued certain materially false and misleading
statements and omitted the disclosure of material facts regarding, in
particular, certain significant customer relationships. The Consolidated
Complaint alleges that the defendants violated sections 11, 12(a)(2), and 15 of
the 1933 Securities Act, section 13 of the Illinois Blue Sky Law, and the
Illinois Consumer Fraud and Deceptive Practices Act. The Consolidated Complaint
seeks a declaration that the case may proceed as a class action; damages;
rescission of the sale of Cerion common stock by Cerion and Nashua, to the
extent purchasers still hold Cerion shares, or rescissory damages, if they have
sold their Cerion stock; attorneys fees and costs; and other relief. The Company
believes the Consolidated Complaint to be without merit and is defending
vigorously against the consolidated case.
On October 9, 1997, the Circuit Court of Cook County, Illinois dismissed the
class action lawsuit filed against all defendants. The Plaintiffs have until
December 5, 1997 to file an amended complaint in which they may attempt to state
a claim against the Company and the other defendants.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
There has been no change in the information required by paragraphs (f)(2)
through (f)(4) of Item 701 of Regulation S-K from that previously reported by
the Company on Form S-R, except as follows with respect to the Company's use of
net offering proceeds to the Company from its initial public offering after
deducting previously reported expenses, as of September 26, 1997.
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The proceeds of $19,525,350 from the initial public offering were utilized as
follows as of September 26, 1997:
Construction of plant, building and facilities $ 1,163,208
Purchase and installation of machinery and equipment 3,982,303
Purchase of real estate 75,000
Repayment of indebtedness - First Nashua Note 1,156,429
Repayment of indebtedness - Second Nashua Note 10,184,973
Working capital, including cash and cash equivalents 2,963,437
Cash and cash equivalents included in working capital will continue to be used
for general corporate purposes.
In the Company's Prospectus, dated May 24, 1996, the Company stated that it
planned to use approximately $9.0 to $12.0 million of the proceeds of the
offering to build, purchase or lease a new facility and related equipment. As a
result of a change in market conditions during the second half of 1996, the
Company canceled its capacity expansion plans which included the new facility.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
11.1 Computation of Net Income per Common Share
B. Reports on Form 8-K
None.
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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.
CERION TECHNOLOGIES INC.
-----------------------------------
(Registrant)
Date: November 10, 1997 By: /s/ Richard A. Clark
- ------------------------ -----------------------------------
Richard A. Clark
Vice President-Finance,
Chief Financial Officer and Treasurer
(principal financial and duly authorized officer)
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