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 MARCH 31, 2001
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 NUMBER 1-9125
AMERICAN TECHNICAL CERAMICS CORP.
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
DELAWARE 11-2113382
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
17 STEPAR PLACE, HUNTINGTON STATION, NY 11746
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(Address of principal executive offices) (Zip Code)
(631) 622-4700
--------------------------------------
(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 [ ]
As of May 7, 2001, the Registrant had outstanding 7,995,793 shares of Common
Stock, par value $.01 per share.
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
March 31, 2001 June 30, 2000
-------------- -------------
ASSET (unaudited)
Current Assets:
Cash (including cash equivalents of approximately $638 and $448,
respectively) $ 1,153 $ 2,277
Investments 3,592 3,246
Accounts receivable, net 13,169 12,686
Inventories 22,682 16,133
Deferred income taxes, net 693 693
Other current assets 1,577 1,661
-------- --------
TOTAL CURRENT ASSETS 42,866 36,696
-------- --------
Property, plant and equipment, net of accumulated depreciation
and amortization of $26,742 and $23,957, respectively 31,182 22,902
Other assets, net 292 189
-------- --------
TOTAL ASSETS $ 74,340 $ 59,787
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 3,109 $ 488
Accounts payable 2,717 2,229
Accrued expenses 6,272 6,672
Income taxes payable, net 1,388 220
-------- --------
TOTAL CURRENT LIABILITIES 13,486 9,609
-------- --------
Long-term debt, net of current portion 5,128 3,486
Deferred income taxes 2,457 2,371
-------- --------
TOTAL LIABILITIES 21,071 15,466
-------- --------
Commitments and Contingencies
STOCKHOLDERS' EQUITY:
Common stock ---$.01 par value; authorized 20,000 shares;
Issued 8,431 and 8,370 shares, respectively 84 84
Capital in excess of par value 11,239 10,366
Retained earnings 44,081 36,082
Accumulated other comprehensive income (loss):
Unrealized gain (loss) on investments available-for-sale, net 103 (56)
Cumulative foreign currency translation adjustment (353) (112)
-------- --------
(250) (168)
-------- --------
Less: Treasury stock, at cost (448 and 485 shares, respectively) 1,453 1,515
Deferred compensation 432 528
-------- --------
TOTAL STOCKHOLDERS' EQUITY 53,269 44,321
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 74,340 $ 59,787
======== ========
See accompanying notes to unaudited consolidated financial statements.
-2-
AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands, except per share data)
For the Quarter Ended March 31, For the Nine Months Ended March 31,
------------------------------- -----------------------------------
2001 2000 2001 2000
-------- -------- -------- --------
Net sales $ 23,359 $ 18,471 $ 65,582 $ 45,308
Cost of sales 13,385 9,117 37,611 25,687
-------- -------- -------- --------
Gross profit 9,974 9,354 27,971 19,621
-------- -------- -------- --------
Selling, general and administrative expenses 4,207 3,636 12,279 8,806
Research and development expenses 1,167 722 3,297 1,970
-------- -------- -------- --------
Operating expenses 5,374 4,358 15,576 10,776
-------- -------- -------- --------
Income from operations 4,600 4,996 12,395 8,845
-------- -------- -------- --------
Other expense (income):
Interest expense 149 97 409 285
Interest income (72) (109) (262) (261)
Other (29) 82 (58) 66
-------- -------- -------- --------
48 70 89 90
-------- -------- -------- --------
Income before provision for income taxes 4,552 4,926 12,306 8,755
Provision for income taxes 1,593 1,724 4,307 3,064
-------- -------- -------- --------
Net income $ 2,959 $ 3,202 $ 7,999 $ 5,691
======== ======== ======== ========
Basic net income per common share $ 0.37 $ 0.42 $ 1.01 $ 0.74
======== ======== ======== ========
Diluted net income per common share $ 0.35 $ 0.39 $ 0.96 $ 0.71
======== ======== ======== ========
Basic weighted average common
shares outstanding 7,973 7,688 7,950 7,664
======== ======== ======== ========
Diluted weighted average common
shares outstanding 8,355 8,174 8,336 8,000
======== ======== ======== ========
See accompanying notes to unaudited consolidated financial statements.
-3-
AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
For the Nine Months Ended March 31,
2001 2000
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 7,999 $ 5,691
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 2,921 2,339
(Gain) loss on disposal of fixed assets (11) 69
Stock award compensation expense 527 --
Realized gain on sale of investments -- (8)
Changes in operating assets and liabilities:
Accounts receivable, net (483) (4,388)
Inventories (6,549) (1,845)
Other assets, net (19) (827)
Accounts payable and accrued expenses 88 3,400
Income taxes payable 1,317 1,178
-------- --------
Net cash provided by operating activities 5,790 5,609
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (10,443) (4,161)
Purchase of investments (102) (1,809)
Proceeds from sale of investments -- 1,611
Proceeds from sale of fixed assets 48 20
-------- --------
Net cash used in investing activities (10,497) (4,339)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt (316) (403)
Proceeds from exercise of stock options 356 387
Proceeds from issuance of debt 3,784 --
-------- --------
Net cash provided by (used in) financing activities 3,824 (16)
-------- --------
-------- --------
Effect of exchange rate changes on cash (241) 33
-------- --------
Net (decrease) increase in cash and cash equivalents (1,124) 1,287
CASH AND CASH EQUIVALENTS, beginning of year 2,277 2,898
-------- --------
CASH AND CASH EQUIVALENTS, end of period $ 1,153 $ 4,185
======== ========
Supplemental cash flow information:
Interest paid $ 409 $ 285
Taxes paid $ 3,248 $ 1,886
See accompanying notes to unaudited consolidated financial statements.
-4-
AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
(1) BASIS OF PRESENTATION:
The accompanying unaudited interim consolidated financial statements of
American Technical Ceramics Corp. and subsidiaries (the "Registrant") reflect
all adjustments (consisting of normal recurring accruals) which are, in the
opinion of management, necessary for a fair presentation of its consolidated
financial position as of March 31, 2001 and the results of its operations for
the three and nine month periods ended March 31, 2001 and 2000. These
consolidated financial statements should be read in conjunction with the summary
of significant accounting policies and notes to consolidated financial
statements included in the Registrant's Annual Report to Stockholders for the
fiscal year ended June 30, 2000. Results for the three and nine month periods
ended March 31, 2001 are not necessarily indicative of results which could be
expected for the entire year.
Prior year share data has been revised to reflect the 2-for-1 stock
split of the Registrant's Common Stock effected in the form of a 100% stock
dividend effective April 24, 2000.
Certain reclassifications have been made to prior year amounts to
conform to the current year presentation.
(2) SUPPLEMENTAL CASH FLOW INFORMATION:
During the nine months ended March 31, 2001, the Registrant (i) granted
$484 in deferred compensation stock awards, (ii) recognized a $149 reduction of
income taxes payable related to stock options exercised, (iii) issued treasury
stock in connection with stock awards with a cost basis of $62, and (iv)
partially financed the acquisition of a building with a $795 mortgage.
(3) INVENTORIES:
Inventories included in the accompanying consolidated financial
statements consist of the following:
March 31, June 30,
2001 2000
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(unaudited)
Raw materials $12,151 $ 7,892
Work-in-process 4,905 4,103
Finished goods 5,626 4,138
------- -------
$22,682 $16,133
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-5-
AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
(4) EARNINGS PER SHARE:
The following represents a reconciliation of the numerators and
denominators of the basic and diluted EPS computation.
For the Quarter Ended March 31,
2001 2000
--------------------------------------------- -----------------------------------------
(in thousands, except per share data)
Income Share Per-Share Income Share Per-Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
---------- ------------ --------- ----------- ------------ ---------
Basic EPS $2,959 7,973 $.37 $ 3,202 7,688 $.42
==== ====
Effect of dilutive securities:
Stock options 359 486
Deferred compensation
stock awards 23
------ ----- ---- ------- ----- ----
Diluted EPS $2,959 8,355 $.35 $ 3,202 8,174 $.39
====== ===== ==== ======= ===== ====
For the Nine Months Ended March 31,
2001 2000
------------------------------------------- ------------------------------------------
(in thousands, except per share data)
Income Share Per-Share Income Share Per-Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
---------- ------------ --------- ----------- ------------ ---------
Basic EPS $7,999 7,950 $1.01 $ 5,691 7,664 $.74
===== ====
Effect of dilutive securities:
Stock options 363 336
Deferred compensation
stock awards 23
------ ----- ---- ------- ----- ----
Diluted EPS $7,999 8,336 $.96 $ 5,691 8,000 $.71
====== ===== ==== ======= ===== ====
Options covering 761 shares have been omitted from the calculation of
dilutive EPS for the three and nine months ended March 31, 2001, because their
inclusion would have been antidilutive.
-6-
AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
(5) COMPREHENSIVE INCOME:
The Registrant's comprehensive income is as follows:
For The Three Months Ended March 31,
-------------------------------------------------
2001 2000
-------------------------- ------------------
Net income $2,959 $3,202
------ ------
Other comprehensive loss, net of tax:
Foreign currency translation adjustments (295) (35)
Unrealized gains on investments:
Gains on investments arising during period 39 30
Less: reclassification adjustment for realized
gains included in net income -- 39 -- 30
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Other comprehensive loss (256) (5)
------- ------
Comprehensive income $2,703 $3,197
======= ======
For The Nine Months Ended March 31,
-------------------------------------------------
2001 2000
-------------------------- ------------------
Net income $7,999 $5,691
------ ------
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments (241) 33
Unrealized gains (losses) on investments:
Gains (losses) on investments arising
during period 159 (59)
Less: reclassification adjustment for realized
gains included in net income -- 159 5 (64)
------- ------- ------ ------
Other comprehensive loss (82) (31)
------- ------
Comprehensive income $7,917 $5,660
======= ======
-7-
AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
(6) LONG-TERM DEBT:
Long-term debt consists of the following:
March 31, 2001 June 30, 2000
-------------- -------------
Note payable to banks $5,385 $ 984
Obligations under capital leases 2,852 2,990
------ ------
8,237 3,974
Less: Current portion 3,109 488
------ ------
Long-term debt $5,128 $3,486
====== ======
In August 2000, in connection with the purchase of a facility in
Huntington Station, New York, the Registrant secured a mortgage loan in the
principal amount of $795 with European American Bank, N.A. (EAB). The term of
the loan is 10 years. Principal is payable in 120 equal installments together
with interest on the unpaid principal balance at 1.5% above the six month rate
for the U.S. Dollar deposits on the London Interbank Market. The mortgage is
subject to certain financial covenants, including maintenance of asset and
liability percentage ratios.
In October 2000, the Registrant amended its loan agreement with Bank of
America, N.A., increasing its line of credit for capital equipment purchases to
$8,500 from $3,500. The line continues to bear interest at 1.5% above the one
month rate for U.S. Dollar deposits on the London Interbank Market and is
subject to certain financial covenants, including maintenance of asset and
liability percentage ratios. The outstanding principal rolls over periodically
into a self-amortizing term note of not less than four nor more than seven
years. Borrowings under the equipment line are secured by the related equipment
purchases. During the nine months ended March 31, 2001, the Registrant borrowed
an additional $3,784 under the equipment line of credit and rolled over $1,466
into term notes. As of March 31, 2001, the Registrant has borrowed an aggregate
of $4,630 under the equipment line.
In April 2001, the Registrant entered into a credit facility with EAB,
which makes available a $5,000 line for equipment purchases and an additional
$2,000 under an unsecured term loan line. The lines bear interest at either the
EAB prime rate or 1.5% above the Reserve Adjusted LIBOR (as defined) and are
subject to certain financial covenants. Borrowings under the equipment line will
be secured by the related equipment purchases. The outstanding balance six
months after the term loan line is made available and at expiration of the line
(January 2002) will roll into fully amortizing term loans with a maturity of
five years.
(7) STOCK BASED COMPENSATION:
In April 2000, the Board of Directors approved the American Technical
Ceramics Corp. 2000 Incentive Stock Plan (the "2000 Plan"). The 2000 Plan was
approved by the stockholders on November 15, 2000. See Note 6 to the
consolidated financial statements included in the Registrant's Form 10-K for the
fiscal year ended June 30, 2000.
-8-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(In thousands except share data)
The following discussion and analysis should be read in conjunction
with the consolidated financial statements, related notes and other information
included in this Quarterly Report on Form 10-Q.
Statements in this Quarterly Report on Form 10-Q that are not
historical fact may constitute "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. All such
forward-looking statements are subject to risks and uncertainties, including,
but not limited to, market and economic conditions, the impact of competitive
products, product demand and market acceptance risks, changes in product mix,
costs and availability of raw materials, fluctuations in operating results,
delays in development of highly-complex products, risks associated with
international sales and sales to the U.S. military, risk of customer contract or
sales order cancellation and other risks detailed from time to time in American
Technical Ceramics Corp.'s filings with the Securities and Exchange Commission,
including, without limitation, those contained under the caption "Item 1.
BUSINESS - CAUTIONARY STATEMENTS REGARDING FORWARD - LOOKING STATEMENTS" in the
Registrant's Annual Report on Form 10-K. These risks could cause the
Registrant's actual results for future periods to differ materially from those
expressed in any forward looking statements made by, or on behalf of, the
Registrant. Any forward-looking statement represents the Registrant's
expectations or forecasts only as of the date they were made and should not be
relied upon as representing its expectations or forecasts as of any subsequent
date. The Registrant undertakes no obligation to correct or update any
forward-looking statement, whether as a result of new information, future events
or otherwise, even if its expectations or forecasts change.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2001 COMPARED WITH THREE MONTHS ENDED
MARCH 31, 2000
Net sales for the three months ended March 31, 2001 increased 26% to
$23,359 from $18,471 in the comparable quarter in the prior fiscal year. The
increase in net sales was attributable to increases across most of the
Registrant's product lines, including thin film and newer capacitor products
such as the 600 series and single layer capacitors.
The backlog of unfilled orders was $29,241 at March 31, 2001, compared
to $18,965 at March 31, 2000 and $30,485 at December 31, 2000. The increase in
backlog compared to the prior year was primarily due to the overall strong
demand for the Registrant's core capacitor and thin film products through the
first half of the fiscal year. Backlog decreased from the end of the immediately
preceding quarter due to decreases in the backlog for the Registrant's core
capacitor products as a result of order cancellations, mainly offset by
increases in thin film product backlog. Backlog for core capacitors declined
approximately $6,000 while backlog for thin film products increased
approximately $5,000.
Gross margin for the three months ended March 31, 2001 was 42.7% of net
sales as compared to 50.6% for the comparable period in the prior fiscal year.
The decrease in gross margin was principally due to the costs associated with
initial production activity for several new product initiatives, higher
palladium costs and charges to adjust certain inventory to estimated net
realizable value, partially offset by higher sales volume and the resulting
production efficiencies.
-9-
AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
(In thousands except share data)
Due to market price increases in palladium the Registrant's carrying
cost of palladium at March 31, 2001 is considerably higher than at March 31,
2000. The Registrant has offset the increased costs of this material in part by
increasing the prices of certain of its products that utilize large amounts of
this material relative to their sales prices. The Registrant's newer products
are being designed to minimize or eliminate the usage of palladium. At its
current usage rate, the Registrant expects that, to the extent that it is not
able to reflect increases in the market price of palladium in the prices of its
products, these higher material prices will continue to negatively impact gross
margins for the remainder of fiscal year 2001.
Order bookings for the third quarter were $22,079 representing an 8%
decrease from the preceding quarter and a 2% decrease from the comparable
quarter in fiscal year 2000. Bookings were impacted by cancellations during the
latter part of the third quarter. These cancellations were heavily weighted
toward orders for core capacitor products placed by customers in the wireless
and semiconductor markets. Bookings were down from the preceding quarter for
almost all product lines, excluding thin film products. Subsequent to the end of
the quarter, the Registrant started to experience significant bookings declines
and cancellations from customers in the fiber optics marketplace similar to
those experienced in other markets during the third quarter. As a result of the
decrease in demand for the Registrant's products, a charge to adjust certain
inventory to estimated net realizable value was taken in the third quarter of
the current fiscal year.
Selling, general and administrative expenses for the three months ended
March 31, 2001 increased 16% to $4,207 as compared to $3,636 in the comparable
period in the prior fiscal year. The increase was due to increased commission
expense as a result of the increase in net sales, and increased payroll related
expenses due to additional employees to cover expanded European operations,
growth in newer product lines and development of new information technology
systems. As a percentage of sales, selling, general and administrative expenses
decreased to 18.0% from 19.7% in the comparable quarter in the prior fiscal
year.
Research and development expenses for the three months ended March 31,
2001 increased 62% to $1,167 as compared to $722 in the comparable period in the
prior fiscal year. This increase was primarily the result of increased personnel
costs to support accelerated future product development and to further increase
the breadth of the Registrant's research and development activities.
Interest expense for the three months ended March 31, 2001 was $149
compared to $97 for the comparable period in fiscal year 2000. The increase in
interest expense related primarily to additional borrowings for the purchase of
capital equipment. Interest income was $72 for the three months ended March 31,
2001 compared to $109 for the comparable period in fiscal year 2000. The
decrease in interest income was attributable to a decrease in cash available for
investment during the quarter. The Registrant had other income for the quarter
of $29 as compared to other expense of $82 for the comparable quarter in fiscal
year 2000. The increase in other income was primarily due to the Registrant's
participation in a state funded program. Other expenses in the prior fiscal year
consisted mainly of losses incurred upon disposal of fixed assets.
-10-
AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
(In thousands except share data)
Primarily as a result of the foregoing, net income for the three months
ended March 31, 2001 was $2,959, or $.37 per common share ($.35 per common share
assuming dilution), compared to net income of $3,202, or $.42 per common share
($.39 per common share assuming dilution), for the comparable period in the
prior fiscal year.
In light of the decline in bookings for the Registrant's products which
began in the later part of the third quarter, the Registrant expects declines in
sales and net income for the fourth quarter. In response to these declines, the
Registrant has reduced its workforce, scaled back some of its research and
development programs and has implemented several other cost cutting measures.
NINE MONTHS ENDED MARCH 31, 2001 COMPARED WITH NINE MONTHS ENDED MARCH 31, 2000
Net sales for the nine months ended March 31, 2001 increased 45% to
$65,582 as compared to net sales of $45,308 for the comparable period in the
prior fiscal year. The increase in net sales for the nine months was
attributable to increases across most of the Registrant's product lines,
including thin film and newer capacitor products such as the 600 series and
single layer capacitors.
Gross margin for the nine months ended March 31, 2001 was 42.7% of net
sales as compared to 43.3% for the comparable period in the prior fiscal year.
The decrease in gross margin for the nine months ended March 31, 2001 versus the
comparable period of the prior fiscal year was primarily due to increased costs
of palladium, a charge to adjust certain inventory to estimated net realizable
value, and the commencement of several new product initiatives, offset somewhat
by the higher sales volume and the resulting increase in production
efficiencies. The cost of palladium has increased significantly over the past
nine months, which has negatively impacted current results and will continue to
impact results for the balance of the fiscal year.
Selling, general and administrative expenses for the nine months ended
March 31, 2001 increased 39% to $12,279 as compared to $8,806 in the comparable
period in the prior fiscal year. The increase was due to increased commission
expense as a result of the increase in net sales, higher bonus accruals due to
increased profitability and increased payroll related expenses due to additional
employees to cover expanded European operations, growth in newer product lines
and development of new information technology systems. As a percentage of sales,
selling, general and administrative expenses decreased to 18.7% from 19.4% in
the comparable period in the prior fiscal year.
Research and development expenses for the nine months ended March 31,
2001 increased 67% to $3,297 as compared to $1,970 in the comparable period in
the prior fiscal year. This increase was primarily the result of increased
personnel costs to support accelerated future product development and to further
increase the breadth of the Registrant's research and development activities.
-11-
AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
(In thousands except share data)
Interest expense for the nine months ended March 31, 2001 was $409
compared to $285 for the comparable period in fiscal year 2000. The increase in
interest expense related primarily to additional borrowings for the purchase of
capital equipment. Interest income was $262 for the nine months ended March 31,
2001 compared to $261 for the comparable period in fiscal year 2000. The
Registrant had other income for the current period of $58 as compared to other
expense of $66 for the comparable period in fiscal year 2000.
As a result of the foregoing, net income amounted to $7,999, or
approximately $1.01 per common share ($.96 per common share assuming dilution),
for the nine months ended March 31, 2001 compared to net income of $5,691, or
approximately $.74 per common share ($.71 per common share assuming dilution),
for the comparable period in the prior fiscal year.
LIQUIDITY AND CAPITAL RESOURCES
The Registrant's financial position at March 31, 2001 remains strong as
evidenced by working capital of $29,380 and stockholders' equity of $53,269. The
Registrant's current ratio at March 31, 2001 was 3.2 as compared to a current
ratio of 3.8:1 at June 30, 2000. The Registrant's quick ratio at March 31, 2001
was 1.5:1 compared to the quick ratio at June 30, 2000 of 2.1:1.
Cash, cash equivalents and investments decreased by $778 to $4,745 at
March 31, 2001 from $5,523 at June 30, 2000, primarily as a result of continued
investment in property, plant and equipment, partially offset by cash provided
by operations. Accounts receivable increased by $483 to $13,169 at March 31,
2001 from $12,686 at June 30, 2000, primarily due to strong third quarter sales.
Inventories increased by $6,549 to $22,682 at March 31, 2001 from $16,133 at
June 30, 2000. The increase is primarily the result of increased palladium
costs, increased amounts of palladium and gold in inventory to support higher
production volume, an increase in finished goods inventory at our Sweden
facility and increased work in process for core capacitors due to higher
production to satisfy increased demand and to increase inventories to shorten
core product delivery times.
The Registrant has available two credit facilities with Bank of
America, N.A.; a revolving line of credit of $4,000 and an equipment line of
credit of $8,500. The outstanding principal balance under both lines bears
interest at 1.5% above the one month rate for U.S. Dollar deposits on the London
Interbank Market and is subject to certain financial covenants, including
maintenance of asset and liability percentage ratios. The outstanding principal
balance of the equipment line rolls over periodically into a self-amortizing
term note of not less than four nor more than seven years. Borrowings under the
equipment line are secured by the related equipment purchases.
During the nine months ended March 31, 2001, the Registrant borrowed an
additional $3,784 under the equipment line of credit and rolled $1,466 over into
a term loan. As of March 31, 2001, the Registrant has outstanding an aggregate
of $4,630 under the equipment line and nothing outstanding under its revolving
line of credit with Bank of America, N.A. The Registrant has $3,870 available
under the equipment line and an additional $4,000 available under the revolving
line of credit.
-12-
AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
(In thousands except share data)
In August 2000, in connection with the purchase of a facility in
Huntington Station, New York, the Registrant secured a mortgage loan in the
principal amount of $795 with European American Bank, N.A. (EAB). The term of
the loan is 10 years. Principal is payable in 120 equal installments together
with interest on the unpaid principal balance at 1.5% above the six month rate
for the U.S. Dollar deposits on the London Interbank Market. The mortgage is
subject to certain financial covenants, including maintenance of asset and
liability percentage ratios.
In April 2001, the Registrant entered into a credit facility with EAB,
which makes available a $5,000 line for equipment purchases and an additional
$2,000 under an unsecured term loan line. The lines bear interest at either the
EAB prime rate or 1.5% above the Reserve Adjusted LIBOR (as defined) and are
subject to certain financial covenants. Borrowings under the equipment line will
be secured by the related equipment purchases. The outstanding balance six
months after the term loan line is made available and at expiration of the line
(January 2002) will roll into fully amortizing term loans with a maturity of
five years.
Capital expenditures for the nine months ended March 31, 2001 totaled
$10,443 of which $6,678 was for machinery and equipment, $1,470 for building and
leasehold improvements of which $725 was for the purchase and renovation of the
new facility in Huntington Station, New York, and $1,325 for a new information
technology system. The Registrant intends to use cash on hand and available
lines of credit to finance budgeted capital expenditures, primarily for
equipment acquisition and facility expansion, of approximately $1,500 for the
remainder of fiscal year 2001.
ITEM 3. AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Registrant has identified four market risks relative to its
business: interest rate risk, foreign currency exchange rate risk, commodity
price risk and security price risk. There has been no material changes in the
way the Registrant conducts its worldwide business, foreign exchange risk
management, investments in marketable securities or raw material commodity
purchasing from the descriptions thereof in the Registrant's Form 10-K for the
fiscal year ended June 30, 2000.
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PART II - OTHER INFORMATION
ITEMS 1. THROUGH 5. Not Applicable
ITEM 6. Exhibits and Reports on Form 8-K
(a) EXHIBITS:
Unless otherwise indicated, the following exhibits were filed as part of
the Registrant's Registration Statement on Form S-18 (No. 2-96925-NY) and are
incorporated herein by reference to the same exhibit thereto:
EXHIBIT NO. DESCRIPTION
----------- -----------
3(a)(i) - Certificate of Incorporation of the Registrant.
3(a)(ii) - Amendment to Certificate of Incorporation. (4)
3(b)(i) - By-laws of the Registrant.
9(a)(i) - Restated Shareholders' Agreement, dated April 15, 1985,
among Victor Insetta, Joseph Mezey, Joseph Colandrea and
the Registrant.
10(b)(i) - Amended and Restated Lease, dated September 25, 1998, between
Victor Insetta, d/b/a Stepar Leasing Company, and the Registrant
for premises at 15 Stepar Place, Huntington Station, N.Y. (9)
10(c)(i) - 1985 Employee Stock Sale Agreement between the Registrant and
various employees.
10(c)(ii) - Form of Employee Stock Bonus Agreement, dated as of July 1, 1993,
between the Registrant and various employees. (3)
10(c)(iii)- Form of Employee Stock Bonus Agreement, dated as of April 19,
1994, between the Registrant and various employees. (3)
10(c)(iv) - Form of Employee Stock Bonus Agreement, dated as of April 20,
1995, between the Registrant and various employees. (4)
10(e)(i) - Second Amended and Restated Lease, dated as of May 16, 2000,
between, V.P.I. Properties Associates, d/b/a V.P.I. Properties
Associates, Ltd., and American Technical Ceramics (Florida),
Inc. (13)
10(f) - Purchase Agreement, dated May 31, 1989, by and among Diane LaFond
Insetta and/or Victor D. Insetta, as custodians for Danielle and
Jonathan Insetta, and American Technical Ceramics Corp., and
amendment thereto, dated July 31, 1989. (4)
10(g)(iii) - Profit Bonus Plan, dated April 19, 1995, and effective for the
fiscal years beginning July 1, 1994. (4)
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10(g)(iv) - Employment Agreement, dated April 3, 1985, between Victor Insetta
and the Registrant, and Amendments No. 1 through 4 thereto. (2)
10(g)(v) - Amendment No. 5, dated as of September 11, 1998, to Employment
Agreement between Victor Insetta and the Registrant. (8)
10(g)(vi) - Amendment No. 6, dated as of January 3, 2001, to Employment
Agreement between Victor Insetta and the Registrant. (14)
10(h) - Employment Agreement, dated September 1, 2000, between the
Registrant and Richard Monsorno (14)
10(i) - Managers Profit Bonus Plan, dated December 7, 1999, and
effective January 1, 2000. (12)
10(k) - Consulting Agreement, dated October 2000, between the Registrant
and Stuart P. Litt (14)
10(m)(i) - American Technical Ceramics Corp. 1997 Stock Option Plan (7)
10(m)(ii) - American Technical Ceramics Corp. 2000 Incentive Stock Plan (12)
10(o) - Loan Agreement, dated November 25, 1998, between the Registrant
and NationsBank, N.A. (10)
10(o)(ii) - Amendment to loan Agreement, dated April 13, 2000, between the
Registrant and Bank of America, N.A., as successor to
NationsBank, N.A. (12)
10(o)(iii) - Amendment to loan Agreement, dated October 26, 2000, between the
Registrant and Bank of America, N.A., as successor to
NationsBank, N.A. (14)
10(o)(iv) - Amendment to loan Agreement, dated March 30, 2001, between the
Registrant and Bank of America, N.A., as successor to
NationsBank, N.A. (15)
10(p) - Amended and Restated Employment Agreement, dated as of
January 1, 1998, between Judah Wolf and the Registrant. (11)
10(q) - Mortgage Note between American Technical Ceramics Corp. and
European American Bank, N.A., dated as of August 17, 2000. (13)
10(r) - Employment Agreement, dated April 10, 2001, between the
Registrant and David Ott (15)
21 - Subsidiaries of the Registrant. (2)
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1. Incorporated by reference to the Registrant's Annual Report on Form 10-K
for the fiscal year ended June 30, 1989.
2. Incorporated by reference to the Registrant's Annual Report on Form 10-K
for the fiscal year ended June 30, 1993.
3. Incorporated by reference to the Registrant's Annual Report on Form 10-KSB
for the fiscal year ended June 30, 1994.
4. Incorporated by reference to the Registrant's Annual Report on Form 10-KSB
for the fiscal year ended June 30, 1995.
5. Incorporated by reference to the Registrant's Annual Report on Form 10-KSB
for the fiscal year ended June 30, 1996.
6. Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
for the quarterly period ended March 31, 1997.
7. Incorporated by reference to the Registrant's Annual Report on Form 10-K
for the quarterly period ended June 30, 1997.
8. Incorporated by reference to the Registrant's Annual Report on Form 10-K
for the fiscal year ended June 30, 1998.
9. Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
for the quarterly period ended September 30, 1998.
10. Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
for the quarterly period ended December 31, 1998.
11. Incorporated by reference to the Registrant's Annual Report on Form 10-K
for the fiscal year ended June 30, 1999.
12. Incorporated by reference to the Registrant's Annual Report on Form 10-K
for the fiscal year ended June 30, 2000.
13. Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
for the quarterly period ended September 30, 2000.
14. Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
for the quarterly period ended December 31, 2000.
15. Filed herewith.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed by the Registrant during the quarter
ended March 31, 2001.
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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.
AMERICAN TECHNICAL CERAMICS CORP.
(Registrant)
DATE: May 14, 2001 BY: /s/ VICTOR INSETTA
-------------------
Victor Insetta
President
(Chief Executive Officer)
DATE: May 14, 2001 BY: /s/ ANDREW R. PERZ
--------------------
Andrew R. Perz
Vice President and
Controller
(Principal Financial Officer)