-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MCRiSDTrrSLedaoGQR2Jf8ryWzkNim/nmidIzFhMQX8UdKPQ5wdNMIKtDid5L7qD XHLMJiQeMg2yJjfyFVcbLw== 0000950135-96-004898.txt : 19961115 0000950135-96-004898.hdr.sgml : 19961115 ACCESSION NUMBER: 0000950135-96-004898 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960929 FILED AS OF DATE: 19961113 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONCEPTRONIC INC / DE CENTRAL INDEX KEY: 0000879986 STANDARD INDUSTRIAL CLASSIFICATION: SPECIAL INDUSTRY MACHINERY, NEC [3559] IRS NUMBER: 020413153 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-19589 FILM NUMBER: 96662476 BUSINESS ADDRESS: STREET 1: 6 POST ROAD STREET 2: EXETER CORPORATE PARK CITY: PORTSMOUTH STATE: NH ZIP: 03801 BUSINESS PHONE: 6034316262 MAIL ADDRESS: STREET 1: 6 POST RD CITY: PORTSMOUTH STATE: NH ZIP: 03801 10QSB 1 CONCEPTRONIC, INC. FORM 10-QSB 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-QSB Quarterly Report under Section 13 or 15 (d) of the Securities Exchange Act of 1934 For Quarter ended: September 29, 1996 Commission File Number: 0-19589 CONCEPTRONIC, INC. ----------------------------------------------- (Exact name of Registrant as specified in its Charter) Delaware 02-0413153 -------- ---------- (State of other jurisdiction of (I.R.S. Employer incorporation of organization) Identification Number) 6 Post Road, Portsmouth, New Hampshire 03801 -------------------------------------- ----- (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, including Area Code: 603-431-6262 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15 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: --- --- As of September 29, 1996, there were 1,700,000 shares of Common Stock of the Registrant outstanding. 2 CONCEPTRONIC, INC. INDEX Part I - Financial Statements: Item 1 - Financial Statements Condensed Balance Sheets - September 29, 1996 (Unaudited) and December 31, 1995 3 Condensed Statements of Operations (Unaudited) - Three Months and Nine Months Ended September 29, 1996 and October 1, 1995 4 Condensed Statements of Cash Flows (Unaudited)- Nine Months Ended September 29, 1996 and October 1, 1995 5 Notes to Condensed Financial Statements (unaudited) 6 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 7 Part II - Other Information Items 1 through 6 9 Signatures 10
3 CONCEPTRONIC, INC. Condensed Balance Sheets
Sept. 29, 1996 Dec.31,1995* -------------- ------------ Assets (Unaudited) Current assets: Cash $ 11,703 $ 10,101 Accounts receivable, net 3,057,218 2,830,146 Inventories 3,683,927 3,240,066 Other assets, current 125,648 135,950 ----------- ----------- Total current assets 6,878,496 6,216,263 Property, plant and equipment, net 1,388,189 1,521,915 Purchased software costs and other assets 14,035 76,611 ----------- ----------- $ 8,280,720 $ 7,814,789 =========== =========== Liabilities and Stockholders' Equity Current liabilities: Current portion long-term debt $ 45,000 $ 43,000 Short-term borrowings 1,234,302 844,605 Accounts payable 1,383,767 1,167,875 Accrued expenses and other liabilities 925,187 906,569 ----------- ----------- Total current liabilities 3,588,256 2,962,049 ----------- ----------- Long-term debt, excluding current portion 1,052,317 1,086,850 ----------- ----------- Stockholders' equity: Common stock $.01 par value 17,000 17,000 Additional paid-in capital 5,199,747 5,199,747 Accumulated deficit (1,576,600) (1,450,857) ----------- ----------- Total stockholders' equity 3,640,147 3,765,890 ----------- ----------- $ 8,280,720 $ 7,814,789 =========== =========== * Condensed from audited financial statements
The accompanying notes are an integral part of these condensed financial statements. 4 CONCEPTRONIC, INC. Condensed Statements of Operations (Unaudited)
Three Months Ended Nine Months Ended -------------------------- ---------------------------- September 29, October 1, September 29, October 1, 1996 1995 1996 1995 ------------ --------- ------------ --------- Net sales $4,072,237 $3,895,469 $11,632,499 $10,889,885 Cost of goods sold 2,940,339 2,642,265 8,544,706 7,469,627 ---------- ---------- ----------- ----------- Gross profit 1,131,898 1,253,204 3,087,793 3,420,258 Selling, general and administrative expenses 870,532 762,517 2,692,061 2,356,078 Research and development expense 69,932 89,360 294,577 246,666 ---------- ---------- ----------- ----------- Income from operations 191,434 401,327 101,155 817,514 Other expense: Legal costs 9,227 296,916 89,666 516,762 Interest expense, net 46,211 36,154 137,232 92,762 ---------- ---------- ----------- ----------- Income (loss) before income tax expense 135,996 68,257 (125,743) 207,990 Income tax expense - - - - ---------- ---------- ----------- ----------- Net income (loss) $ 135,996 $ 68,257 $ (125,743) $ 207,990 ========== ========== =========== =========== Net income (loss) per share $ .08 $ .04 $ (.07) $ .12 ========== ========== =========== =========== Weighted average number of shares outstanding 1,700,000 1,700,000 1,700,000 1,700,000 ========== ========== =========== ===========
The accompanying notes are an integral part of these condensed financial statements. 5 CONCEPTRONIC, INC. Condensed Statements of Cash Flows (Unaudited)
Nine Months Ended September 29, 1996 October 1, 1995 ------------------ --------- Cash flows from operating activities: Net income (loss) $(125,743) $207,990 Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: Depreciation and amortization 254,468 265,550 Changes in assets and liabilities: Accounts receivable (227,072) 355,580 Inventories (443,861) (970,702) Refundable income taxes and other assets 10,302 10,687 Accounts payable 215,892 (677,245) Accrued expenses and other liabilities 18,618 (62,983) --------- --------- Net cash used for operating activities (297,396) (871,123) --------- --------- Cash flows used for investing activities: Additions to property, plant and equipment (58,166) (6,544) --------- --------- Cash flows used for financing activities: Proceeds from line of credit, net 389,697 846,094 Net repayments of current note payable (32,533) (23,413) --------- --------- Net cash provided by financing activities 357,164 822,681 Net increase (decrease) in cash 1,602 (54,986) Cash at beginning of period 10,101 73,062 --------- --------- Cash at end of period $ 11,703 $ 18,076 ========= =========
The accompanying notes are an integral part of these condensed financial statements. 6 CONCEPTRONIC, INC. Notes to Condensed Financial Statements (Unaudited) A) Name of Business ---------------- Conceptronic, Inc. (the "Company") manufactures and sells equipment used in the assembly and repair of printed circuit boards. B) Basis for Presentation ---------------------- As permitted by the rules of the Securities and Exchange Commission (the "Commission") applicable to quarterly reports on Form 10-QSB, these notes are condensed and do not contain all disclosures required by generally accepted accounting principles. Reference should be made to the financial statements and related notes included in the Company's Annual Report on Form 10-KSB for the year ended December 31, 1995, filed with the Commission on March 29, 1996. At December 31, 1995, operating loss carry forwards of approximately $719,000 were available to offset future taxable income for income tax purposes. In the opinion of management of Conceptronic, Inc. (the "Company"), the accompanying unaudited condensed financial statements contain all adjustments considered necessary to present fairly the financial position of the Company as of September 29, 1996 and the results of its operations and cash flows for the periods presented. The Company prepares its interim financial information using the same accounting principles as it does for its annual financial statements. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year. C) Earnings per Share ------------------ Earnings per share is computed based on the weighted average number of common shares outstanding adjusted, when dilutive, for the number of shares issuable upon assumed exercise of stock options after the assumed repurchase of shares with the related proceeds. D) Litigation ---------- On December 13, 1991, the Company was served with a complaint from Vitronics Corporation ("Vitronics"), one of the Company's competitors, alleging patent infringement involving its reflow soldering ovens. Vitronics stated that it sought an injunction, together with unspecified damages and costs. The claim was filed in the United States Federal District Court, District of New Hampshire. In August 1995, the presiding U.S. District Court judge issued a directed verdict of non-infringement in Conceptronic's favor regarding method patent #4,654,502. Additionally, a favorable decision was reached on the apparatus patent #4,833,301 by a jury which found non-infringement on all past and current Conceptronic ovens. Vitronics' has appealed the non-infringement finding of patent #4,654,502. The United States Court of Appeals has subsequently reversed the trial court's judgment of non-infringement of claim 1 of patent #4,654,502 and remanded the case for further proceedings. In a related action, in July 1996, the United States Patent Office granted Conceptronic's request for a reexamination of Vitronics' patent #4,654,502 claim 1 and 2. In the opinion of counsel, the ultimate outcome of this litigation cannot presently be determined; however, management of the Company believes the claim is without merit and that the Company will prevail. Accordingly, no provision has been made in the accompanying financial statements for any potential liability that might result. 7 CONCEPTRONIC, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 29, 1996 COMPARED TO THREE MONTHS ENDED OCTOBER 1, 1995. The Company had a profit of approximately $136,000 for the three months ended September 29, 1996 compared to a profit of $68,000 for the three months ended October 1, 1995. Higher third quarter 1996 profits was due to lower legal costs and increased sales volume offset by lower gross profit margins compared to the third quarter for 1995. Net sales in the third quarter of 1996 were approximately $4,072,000 compared to approximately $3,895,000 for the third quarter of 1995, an increase of approximately 5%. A 15% increase in third quarter bookings compared to the same period in 1995 resulted in higher third quarter sales. Bookings in the third quarter of 1996 were approximately $3,787,000, compared to approximately $3,295,000 in the third quarter of 1995, an increase of approximately 15%. Increased bookings for the Company's Freedom HGR 2000 rework station, accounts for the third quarter increase. Gross profit margin was 28% of sales in the third quarter of 1996 compared to 32% for the third quarter of 1995. The Company is experiencing increasing competitive pressures brought on by over-capacity in the industry and the higher manufacturing costs required to meet customer expectations in product performance and reliability. However, the Company has initiated a price increase, which management expects will improve margins. Selling, general and administrative expenses for the third quarter of 1996 were $871,000 compared to $763,000 for the third quarter of 1995. The increase was largely due to product promotion expenditures and the expansion of the Company's sales and service organization. Research and development expenditures for the third quarter of 1996 were $70,000 compared to $89,000 in the third quarter of 1995. The Company continues to spend the majority of its development dollars on its reflow solder oven line and Freedom series rework stations. Legal costs for the third quarter of 1996 were $9,000 compared to $297,000 for the same period in 1995. These costs were incurred in the Company's defense of the patent infringement suit with Vitronics. Net interest expense for the third quarter of 1996 was $46,000 compared to $36,000 for the third quarter of 1995. The interest expense represents the mortgage interest on the Company's manufacturing and office facility and the Company's credit line. The increase in expense for the third quarter 1996 compared to 1995 is attributed to increased amounts outstanding under the credit line due to the need to fund working capital requirements. NINE MONTHS ENDED SEPTEMBER 29, 1996 COMPARED TO NINE MONTHS ENDED OCTOBER 1, 1995. The Company had a net loss of approximately $126,000 for the first nine months of 1996 compared to a net profit of $208,000 for the same period in 1995. Lower margins and higher operating expenses contributed to the 1996 loss offset by lower legal costs. Net sales for the first nine months of 1996 were approximately $11,632,000 compared to $10,890,000 for the same period in 1995, an increase of 7%. The increase is primarily due to sales of the Company's Freedom HGR 2000 series rework station. 8 Bookings for the period ending September 29, 1996 were approximately $11,587,000 compared to $10,457,000 for the same period in 1995, an 11% increase. A large portion of the increase is due to the increasing demand for the Company's Freedom HGR 2000 rework station. Backlog as of September 29, 1996 was approximately $1,328,000 compared to approximately $1,815,000 as of October 1, 1995. Gross profit margin was 27% for the nine months ended September 29, 1996 compared to 31% for the same period in 1995. The Company is experiencing a decline in 1996 margins due to increasing competitive pressures brought on by over-capacity in the industry and the higher manufacturing costs required to meet customer expectations in product performance and reliability. However, the Company has initiated a price increase, which management expects will improve margins. Selling, general and administrative expenses for the nine months ended September 29, 1996 were $2,692,000 compared to $2,356,000 for the same period in 1995. The increase is largely due to product promotion expenditures and the expansion of the Company's sales and service organization. Research and development expenditures for the first nine months of 1996 were $295,000 compared to $247,000 in the same period in 1995. The Company continues to spend the majority of its development dollars on its reflow solder oven line and Freedom series rework stations. Legal costs for the first nine months of of 1996 were $90,000 compared to $517,000 for the same period in 1995. These costs were incurred in the Company's defense of the patent infringement suit with Vitronics. Net interest expense for the first nine months of 1996 was $137,000 compared to $93,000 for the same period in 1995. The interest expense represents the mortgage interest on the Company's manufacturing and office facility and the Company's credit line. The increase in expense for 1996 compared to 1995 is attributed to increased amounts outstanding under the credit line to fund working capital requirements. LIQUIDITY AND CAPITAL RESOURCES Net cash used for operations for the period ending September 29, 1996 was $297,000 compared to $871,000 for the period ending October 1, 1995. The change in cash from operations is due to the year-to-date 1996 loss of $126,000, an increase in inventories to support on-time reflow oven deliveries and an increasing bookings rate for the Freedom HGR 2000 rework station and an increase in receivables reflecting the higher third quarter 1996 shipping rate. This use of cash flows was offset by higher vendor trade payables. Net cash used for investing activities for the nine months ended September 29, 1996 was $58,000 compared to $7,000 for the same period in 1995, 1996 additions include $30,000 for electrical service upgrades. Net cash flows provided by financing activities was $357,000 for the nine months ended September 29, 1996 compared to net cash flows provided by financing activities of $823,000 for the same period in 1995. The decrease reflects changes in proceeds from the Company's working capital credit line. The Company has a $1,500,000 demand line of credit with the First National Bank of Boston of which $1,234,000 was drawn down as of September 29, 1996. The Company believes it has sufficient cash flows from operations, cash on hand, and its credit line to finance its business for the balance of the fiscal year. This release contains forward-looking statements based on current expectations that involve a number of risks and uncertainties. The factors that could cause actual results to differ materially include the following: general economic conditions and growth rates in the SMT circuit manufacturing industry and related industries, including but not limited to the printed circuit board industry; competitive factors and pricing pressures; changes in product mix; changes in the seasonality of demand patterns; the timely development and acceptance of new products; inventory risks due to shifts in market demand; component constraints and shortages; risks of nonpayment of accounts receivable; ramp up and expansion of manufacturing capacity; and the risks described from time to time in the Company's SEC reports. 9 CONCEPTRONIC, INC. PART II Other Information Item 1: Legal Proceedings. The Company is involved in the following action: 1. VITRONICS CORPORATION V. CONCEPTRONIC, INC. On December 13, 1991, the Company was served with a complaint from Vitronics Corporation ("Vitronics"), one of the Company's competitors, alleging patent infringement involving its reflow soldering ovens. Vitronics stated that it sought an injunction, together with unspecified damages and costs. The claim was filed in the United States Federal District Court, District of New Hampshire. In August 1995, the presiding U.S. District Court judge issued a directed verdict of non-infringement in Conceptronic's favor regarding method patent #4,654,502. Additionally, a favorable decision was reached on the apparatus patent #4,833,301 by a jury which found non-infringement on all past and current Conceptronic ovens. Vitronics' has appealed the non-infringement finding of patent #4,654,502. The United States Court of Appeals has subsequently reversed the trial court's judgment of non-infringement of claim 1 of patent #4,654,502 and remanded the case for further proceedings. In a related action, in July 1996, the United States Patent Office granted Conceptronic's request for a reexamination of Vitronics' patent #4,654,502 claim 1 and 2. In the opinion of counsel, the ultimate outcome of this litigation cannot presently be determined; however, management of the Company believes the claim is without merit and that the Company will prevail. Accordingly, no provision has been made in the accompanying financial statements for any potential liability that might result. Items 2 and 3: Not Applicable Item 4: Not Applicable. Item 5: Not Applicable Item 6: Exhibits and Reports on form 8-K (a) 11a Statement Regarding Computation of Per Share Earnings (b) Financial Data Schedule #27 (c) Reports on Form 8-K none 10 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. Conceptronic, Inc. November 12, 1996 By: /s/ Reiner H. Bosselmann -------------------------------------- Reiner H. Bosselmann Chief Executive Officer November 12, 1996 By: /s/ William D. Gray -------------------------------------- William D. Gray Chief Financial Officer EX-11.A 2 COMPUTATION OF PER SHARE EARNINGS 1 EXHIBIT 11 a CONCEPTRONIC, INC. STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
Three Months Ended Nine Months Ended September 29, 1996 October 1, 1995 September 29, 1996 October 1, 1995 NET INCOME (LOSS) $ 135,996 $ 68,257 $ (125,743) $ 207,990 ---------- ---------- ---------- ---------- PRIMARY EARNINGS PER SHARE WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 1,700,000 1,700,000 1,700,000 1,700,000 STOCK OPTIONS -- -- -- -- OTHER -- -- -- -- ---------- ---------- ---------- ---------- 1,700,000 1,700,000 1,700,000 1,700,000 NET INCOME (LOSS) PER SHARE $ .08 $ .04 $ (.07) $ .12 ---------- ---------- ---------- ---------- FULLY DILUTED EARNINGS PER SHARE: WEIGHTED AVERAGED COMMON SHARES OUTSTANDING 1,700,000 1,700,000 1,700,000 1,700,000 STOCK OPTIONS -- -- -- -- OTHER -- -- -- -- ---------- ---------- ---------- ---------- 1,700,000 1,700,000 1,700,000 1,700,000 NET INCOME (LOSS) PER SHARE $ .08 $ .04 $ (.07) $ .12 ---------- ---------- ---------- ----------
EX-27 3 FINANCIAL DATA SCHEDULE
5 0000879986 CONCEPTRONIC, INC. 1 U.S. DOLLARS 9-MOS DEC-31-1996 JAN-01-1996 SEP-29-1996 1 11,703 0 3,057,218 0 3,683,927 6,878,496 1,388,189 0 8,280,720 3,588,256 0 17,000 0 0 0 8,280,720 11,632,499 11,632,499 8,544,706 8,544,706 89,666 0 137,232 (125,743) 0 0 0 0 0 (125,743) (.07) (.07)
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