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 DECEMBER 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
------------------------------------------------------------ ----------------------
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
17 Stepar Place, Huntington Station, NY 11746
---------------------------------------- ------
(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 February 4, 2002, the Registrant had outstanding 8,057,818 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 per share data)
DEC. 31, 2001 JUNE 30, 2001
------------------ ------------------
ASSETS (unaudited)
Current Assets
Cash (including cash equivalents of $447 and
$552, respectively) $ 4,123 $ 1,659
Investments 3,000 3,520
Accounts receivable, net 5,658 11,530
Inventories 23,651 24,568
Deferred income taxes, net 1,722 1,722
Other current assets 1,180 1,289
------------------ ------------------
TOTAL CURRENT ASSETS 39,334 44,288
------------------ ------------------
Property, plant and equipment, net of accumulated depreciation
and amortization of $30,026 and $27,639, respectively 31,367 32,089
Other assets, net 182 199
------------------ ------------------
TOTAL ASSETS $70,883 $76,576
================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt $ 978 $ 877
Accounts payable 1,064 1,755
Accrued expenses 3,290 6,235
Income taxes payable, net 350 1,759
------------------ ------------------
TOTAL CURRENT LIABILITIES 5,682 10,626
Long-term debt, net of current portion 6,808 7,211
Deferred income taxes 2,894 2,910
------------------ ------------------
TOTAL LIABILITIES 15,384 20,747
------------------ ------------------
Commitments and Contingencies
Stockholders' Equity
Common Stock -- $.01 par value; authorized 20,000
shares; issued 8,482 and 8,451 shares, respectively 85 85
Capital in excess of par value 11,530 11,260
Retained earnings 45,674 46,414
Accumulated other comprehensive income (loss):
Unrealized gain on investments available-for-sale, net 26 56
Cumulative foreign currency translation adjustment (227) (294)
------------------ ------------------
(201) (238)
------------------ ------------------
Less: Treasury stock, at cost (427 and 444 shares, respectively) 1,418 1,447
Deferred compensation 171 245
------------------ ------------------
TOTAL STOCKHOLDERS' EQUITY 55,499 55,829
------------------ ------------------
$ 70,883 $ 76,576
================== ==================
See accompanying notes to unaudited consolidated financial statements.
AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
For the Quarter Ended Dec. 31, For the Six Months Ended Dec. 31,
2001 2000 2001 2000
---- ---- ---- ----
Net sales $ 11,582 $ 21,326 $ 25,487 $ 42,223
Cost of sales 9,246 12,468 18,790 24,226
----------------- ----------------- --------------- --------------
Gross profit 2,336 8,858 6,697 17,997
----------------- ----------------- --------------- --------------
Selling, general and administrative expenses 3,135 3,982 6,155 8,072
Research and development expenses 833 1,089 1,685 2,130
----------------- ----------------- --------------- --------------
Operating expenses 3,968 5,071 7,840 10,202
----------------- ----------------- --------------- --------------
----------------- ----------------- --------------- --------------
(Loss)/ Income from operations (1,632) 3,787 (1,143) 7,795
----------------- ----------------- --------------- --------------
Other (income) expense:
Interest expense 130 143 273 260
Interest income (76) (90) (136) (190)
Other (113) (28) (159) (29)
----------------- ----------------- --------------- --------------
(59) 25 (22) 41
----------------- ----------------- --------------- --------------
(Loss)/ Income before provision for income taxes (1,573) 3,762 (1,121) 7,754
Provision for income taxes (535) 1,317 (381) 2,714
----------------- ----------------- --------------- --------------
Net (loss)/ income $ (1,038) $ 2,445 $ (740) $ 5,040
================= ================= =============== ==============
Basic net (loss)/ income per common share $ (0.13) $ 0.31 $ (0.09) $ 0.63
================= ================= =============== ==============
Diluted net (loss)/ income per common share $ (0.13) $ 0.30 $ (0.09) $ 0.61
================= ================= =============== ==============
Basic weighted average common
shares outstanding 8,047 7,952 8,038 7,939
================= ================= =============== ==============
Diluted weighted average common
shares outstanding 8,047 8,292 8,038 8,325
================= ================= =============== ==============
See accompanying notes to unaudited consolidated financial statements.
- 3 -
AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended Dec. 31,
2001 2000
--------------------- --------------------
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES: (unaudited)
Net (Loss)/ income $ (740) $ 5,040
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 2,614 2,063
Loss on disposal of fixed assets 19 ---
Stock award compensation expense 192 340
Realized gain on sale of investments (109) ---
Changes in operating assets and liabilities:
Accounts receivable 5,872 931
Inventories 917 (4,109)
Other assets 126 (59)
Accounts payable and accrued expenses (3,636) (417)
Income taxes payable (1,361) 1,069
--------------------- --------------------
Net cash provided by operating activities 3,894 4,858
--------------------- --------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,925) (7,131)
Purchase of investments (1,053) (102)
Proceeds from sale of investments 1,635 ---
Proceeds from sale of fixed assets 26 9
--------------------- --------------------
Net cash used in investing activities (1,317) (7,224)
--------------------- --------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt (302) (168)
Proceeds from the exercise of stock options 132 239
Proceeds from issuance of debt --- 1,771
--------------------- --------------------
Net cash (used in) provided by financing activities (170) 1,842
--------------------- --------------------
Effect of exchange rate changes on cash 57 54
--------------------- --------------------
Net increase/ (decrease) in cash and cash equivalents 2,464 (470)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 1,659 2,277
--------------------- --------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 4,123 $ 1,807
===================== ====================
Supplemental cash flow information:
Interest paid $ 294 $ 260
Taxes paid $ 994 $ 1,642
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 December 31, 2001 and the results of its operations for
the three and six month periods ended December 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, 2001. Results for the three and six month periods
ended December 31, 2001 are not necessarily indicative of results which could be
expected for the entire year.
(2) IMPACT OF NEW ACCOUNTING STANDARDS:
In July 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 143, "Accounting for Asset Retirement
Obligations" ("SFAS No. 143"). SFAS No. 143 addresses financial accounting
requirements for retirement obligations associated with retirement of tangible
long-lived assets and for the associated asset retirement costs. SFAS No. 143
requires a company to record the fair value of an asset retirement obligation in
the period in which it incurred a legal obligation associated with the
retirement of tangible long-lived assets that results from the acquisition,
construction development and/or normal use of the asset. The company is also to
record a corresponding increase to the carrying amount of the related asset and
to depreciate that cost over the life of the asset. The amount of the liability
is changed at the end of each period to reflect the passage of time and changes
in estimated future cash flows. SFAS No. 143 is effective for fiscal years
beginning after June 15, 2002. The Registrant has not yet determined the impact
of its planned adoption of SFAS No. 143 (anticipated for July 1, 2002).
In August 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" ("SFAS No. 144"), which addresses
financial accounting and reporting for the impairment or disposal of long-lived
assets. SFAS No. 144 establishes accounting guidelines for the impairment of
long-lived assets to be held and used; to be disposed of other than by sale; and
to be disposed of by sale. SFAS No. 144 is effective for fiscal years beginning
after December 15, 2001 and interim periods within those fiscal years. The
Registrant has not yet determined the impact of its planned adoption of SFAS No.
144 (anticipated for July 1, 2002).
- 5 -
AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
(3) SUPPLEMENTAL CASH FLOW INFORMATION:
During the six months ended December 31, 2001, the Registrant (i)
granted $119 in deferred compensation stock awards, (ii) recognized a $48
reduction of income taxes payable related to stock options exercised, and (iii)
issued treasury stock in connection with stock awards with a cost basis of $29.
(4) INVENTORIES:
Inventories included in the accompanying consolidated financial
statements consist of the following:
Dec. 31, June 30,
2001 2001
----------------- ----------------
(unaudited)
Raw materials $ 14,465 $ 13,388
Work-in-process 4,012 4,717
Finished goods 5,174 6,463
----------------- ----------------
$ 23,651 $ 24,568
================= ================
- 6 -
AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
(5) EARNINGS PER SHARE:
The following represents a reconciliation of the numerators and
denominators of the basic and diluted earnings per share computation.
For the Quarter Ended December 31,
2001 2000
---- ----
(Loss) / Income Shares Per-Share Income Shares Per-Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
--------------- ------------- ----------- ------------- ------------- -----------
Basic EPS $ (1,038) 8,047 $ (.13) $ 2,445 7,952 $ .31
============ ===========
Effect of Dilutive Securities:
Stock options --- 317
Deferred compensation
stock awards --- 23
--------------- ------------- ----------- ------------- ------------- -----------
Diluted EPS $ (1,038) 8,047 $ (.13) $ 2,445 8,292 $ .30
=============== ============= =========== ============= ============= ===========
For the Six Months Ended December 31,
2001 2000
---- ----
(Loss) / Income Shares Per-Share Income Shares Per-Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
--------------- ------------- ----------- ------------- ------------- -----------
Basic EPS $ (740) 8,038 $ (.09) $ 5,040 7,939 $ .63
============ ===========
Effect of Dilutive Securities:
Stock options --- 363
Deferred compensation
stock awards --- 23
--------------- ------------- ----------- ------------- ------------- -----------
Diluted EPS $ (740) 8,038 $ (.09) $ 5,040 8,325 $ .61
=============== ============= =========== ============= ============= ===========
Options covering 1,300 shares have been omitted from the calculation of
dilutive EPS for the three and six months ended December 31, 2001 because their
inclusion would have been antidilutive.
- 7 -
AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
(6) COMPREHENSIVE INCOME:
The Registrant's total comprehensive income is as follows:
For The Three Months Ended December 31,
2001 2000
---- ----
Net (Loss)/income $ (1,038) $ 2,445
------------------ ------------------
Other comprehensive income, net of tax:
Foreign currency translation adjustments (4) 96
Unrealized (loss)/ gains on investments (138) 87
------------------ ------------------
Other comprehensive (loss)/ income (142) 183
------------------ ------------------
Comprehensive (loss)/ income $ (1,180) $ 2,628
================== ==================
For The Six Months Ended December 31,
2001 2000
---- ----
Net (loss)/ income $ (740) $ 5,040
------------------ ------------------
Other comprehensive income, net of tax:
Foreign currency translation adjustments 67 54
Unrealized (loss)/ gains on investments (30) 120
------------------ ------------------
Other comprehensive income 37 174
------------------ ------------------
Comprehensive (loss)/ income $ (703) $ 5,214
================== ==================
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(In thousands, except per 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 cancellations and other risks detailed from time to time in the
Registrant'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 it was 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 December 31, 2001 Compared with Three Months Ended
December 31, 2000
---------------------------------------------------------------------
Net sales for the three months ended December 31, 2001 decreased 46% to
$11,582, compared to $21,326 in the comparable period in the prior fiscal year.
The decrease in net sales was primarily the result of decreased sales volume
across all major product lines. The decline in sales is due to the economic
downturn affecting the entire electronic component industry. Sales were down in
all market sectors except the medical equipment sector. Sales to a major medical
equipment OEM accounted for 15% of the Registrant's net sales in the three
months ended December 31, 2001.
Gross margin for the three months ended December 31, 2001 was 20.2% of
net sales, compared to 41.5% for the comparable period in the prior fiscal year.
The decrease in gross margin was principally due to lower sales volume. Cost of
sales for the three months ended December 31, 2001 was also negatively impacted
by a charge of $830 for inventory that the Registrant believes may be scrapped
in the future as a result of excess quantities, customer requirements and other
causes. Similar charges may be necessary in future periods depending upon
various factors, including demand for the Registrant's products and the
efficiency of its production process. Cost reduction measures put in place
during the fourth quarter of fiscal year 2001 and the first quarter of fiscal
year 2002 have partially offset the impact of lower sales on gross margins.
These measures included reduced headcount, reduced capital spending and general
cost controls on discretionary spending.
- 9 -
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
(In thousands, except per share data)
Selling, general and administrative expenses for the three months ended
December 31, 2001 decreased 21% to $3,135, compared to $3,982 in the comparable
period in the prior fiscal year. The decrease was due to decreased commission
expense as a result of the decrease in net sales, lower bonus accruals due to
decreased profitability and decreased payroll related expenses due to cost
reduction measures instituted in the fourth quarter of fiscal year 2001 and the
first quarter of fiscal year 2002, offset partially by severance and
professional fees incurred in connection with closing the Registrant's sales
office in England.
Research and development expenses for the three months ended December
31, 2001 decreased 24% to $833, compared to $1,089 in the comparable period in
the prior fiscal year. A reduction in research and development spending was
among the cost reduction measures referred to above.
Bookings for the three months ended December 31, 2001 were $9,452,
compared to $24,101 for the three months ended December 31, 2000. Cancellations
have returned to historical levels, but bookings remain low, particularly in the
fiber optic, wireless infrastructure and semiconductor manufacturing equipment
sectors. Bookings for the second quarter of fiscal year 2002 have declined from
the levels attained in the first quarter of fiscal year 2002. The decline was
due to continued weakness in the fiber optic market and a temporary slowdown in
the medical market due to inventory buildups. The Registrant expects the second
quarter to be the weakest for the fiscal year and anticipates modest improvement
over the next few quarters. Delivery times and price are key factors in
obtaining orders. The Registrant believes its current levels of inventories
should enable it to deliver orders in the short time frames currently required
by many of its customers.
The backlog of unfilled orders was $10,644 at December 31, 2001
compared to $29,458 at December 31, 2000 and $16,153 at June 30, 2001. The
decrease in backlog compared to December 31, 2000 was primarily the result of
bookings cancellations incurred during the latter half of fiscal year 2001
caused by the economic weakness in the electronic component industry. The
decrease in backlog compared to June 30, 2001 was primarily due to shipments in
excess of order bookings as the Registrant continued to ship orders out of
backlog scheduled for delivery during the second quarter.
The Registrant expects the current level of backlog to be sustainable
as order bookings begin to improve over the next several quarters. Customer
order patterns are anticipated to improve as they deplete their current
inventory and economic conditions improve. The Registrant anticipates that
customers will place orders with short delivery requirements for the foreseeable
future resulting in a slow growth in sales and bookings over the next few
quarters.
As a result of the foregoing, net loss for the three months ended
December 31, 2001 was $1,038 or ($.13) per common share (($.13) per common share
assuming dilution), compared to net income of $2,445, or $.31 per common share
($.30 per common share assuming dilution), for the comparable period in the
prior fiscal year.
- 10 -
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
(In thousands, except per share data)
Six Months Ended December 31, 2001 Compared with Six Months Ended
December 31, 2000
-----------------------------------------------------------------
Net sales for the six months ended December 31, 2001 decreased 40% to
$25,487, compared to $42,223 in the comparable period in the prior fiscal year.
The decrease in net sales was primarily the result of decreased sales volume
across all major product lines. The decline in sales is due to the economic
downturn affecting the entire electronic component industry. Sales were down in
all market sectors except the medical equipment sector.
Gross margin for the six months ended December 31, 2001 was 26.3% of
net sales, compared to 42.6% for the comparable period in the prior fiscal year.
The decrease in gross margin was principally due to lower sales volume. Cost of
sales for the six months ended December 31, 2001 was also negatively impacted by
charges of $1,427 for inventory that the Registrant believes may be scrapped in
the future as a result of excess quantities, customer requirements and other
causes. Similar charges may be necessary in future periods depending upon
various factors, including demand for the Registrant's products and the
efficiency of its production process. Cost reduction measures put in place
during the fourth quarter of fiscal year 2001 and in the first quarter of fiscal
year 2002 have partially offset the impact of the lower sales. These measures
included reduced headcount, reduced capital spending and general cost controls
on discretionary spending.
Selling, general and administrative expenses for the six months ended
December 31, 2001 decreased 24% to $6,155, compared to $8,072 in the comparable
period in the prior fiscal year. The decrease was due to decreased commission
expense as a result of the decrease in net sales, lower bonus accruals due to
decreased profitability and decreased payroll related expenses due to cost
reduction measures instituted in the fourth quarter of fiscal year 2001 and the
first quarter of fiscal year 2002, partially offset by severance costs of $203
incurred in connection with headcount reduction in the United States and
England, and professional fees incurred in connection with closing the
Registrant's sales office in England.
Research and development expenses for the six months ended December 31,
2001 decreased 21% to $1,685, compared to $2,130 in the comparable period in the
prior fiscal year. Research and development spending was among the cost
reduction measures referred to above.
The Registrant experienced a net loss for the six months ended December
31, 2001 primarily due to the low sales level in relation to fixed costs,
particularly in the second quarter, and the inventory charges discussed above.
The cost reduction measures employed by the Registrant did not fully compensate
for the decline in revenue.
- 11 -
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
(In thousands, except per share data)
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
The Registrant's financial position at December 31, 2001 remains strong
as evidenced by working capital of $33,652 and stockholders' equity of $55,499.
The Registrant's current ratio at December 31, 2001 was 6.9, compared to a
current ratio of 4.2 at June 30, 2001. The Registrant's quick ratio (current
assets minus inventory divided by current liabilities) at December 31, 2001 was
2.8 as compared to 1.9 at June 30, 2001. The improvements in the Registrant's
current ratio and quick ratio were primarily due to a reduction in current
liabilities as a result of lower raw material purchases, lower bonus and
commission accruals due to the lower sales and profitability and reduced capital
spending, partially offset by a reduction in accounts receivable.
Cash, cash equivalents and investments increased by $1,944 to $7,123 at
December 31, 2001 from $5,179 at June 30, 2001, primarily as a result of
collection of accounts receivable, reduced purchasing of raw material and
reduced discretionary spending, partially offset by payment of year end bonus
and commission accruals and investment in property, plant and equipment.
Accounts receivable decreased by $5,872 to $5,658 at December 31, 2001 from
$11,530 at June 30, 2001, primarily due to lower sales volumes and collection of
balances due at June 30, 2001. Inventories decreased by $917 to $23,651 at
December 31, 2001 from $24,568 at June 30, 2001. Accounts payable and accrued
expenses decreased by $3,636 to $4,354 at December 31, 2001 from $7,990 at June
30, 2001, primarily due to payment of fiscal year end bonus accruals, lower
capital spending due to cost reduction measures and lower purchasing levels of
raw materials due to the lower production volumes commensurate with lower sales
volumes.
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 ("LIBOR") 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.
The Registrant did not incur any borrowings under the revolving line of
credit or the equipment line during the three and six months ended December 31,
2001. Through December 31, 2001, the Registrant's borrowings aggregated $4,768
under the equipment line.
The Registrant has available credit facilities with Citibank N.A. (as
successor to European American Bank, N.A.); a $5,000 line for equipment
purchases and a $2,000 unsecured term loan line. The lines bear interest at
either the Citibank prime rate or 1.5% above the Reserve Adjusted LIBOR rate (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. The Registrant has not incurred any borrowings
under either of these facilities. These facilities were scheduled to expire in
January 2002. The Registrant is negotiating a new credit facility with the bank.
While there can be no assurance that an agreement will be reached, Citibank N.A.
has agreed to extend these lines on a month-to-month basis while discussions are
in progress.
- 12 -
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
(In thousands, except per share data)
Capital expenditures for the six months ended December 31, 2001 totaled
$1,925, including amounts for machinery and equipment and planned leasehold
improvements. 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 $2,000 for the remainder of
fiscal year 2002.
Aggregate contractual obligations as of December 31, 2001 mature as follows:
Payments Due by Period
------------------------------------------ ---------------------------------------------------------------------------------
Less
than 1 1- 3 4- 5 After 5
Contractual Obligations Total year years years years
------------------------------------------ ------------- --------------- ------------- -------------- -----------
------------------------------------------ ------------- ------------- -------------- -----------
Long-Term Debt $ 5,083 $ 761 $ 2,282 $ 1,464 $ 576
Capital Lease Obligations 2,703 217 764 623 1,099
Operating Leases 262 149 113 --- ---
------------- --------------- ------------- -------------- -----------
Total Contractual Obligations $ 8,048 $ 1,127 $ 3,159 $ 2,087 $ 1,675
------------------------------------------ ============= =============== ============= ============== ===========
Aggregate other commitments as of December 31, 2001 mature as follows:
Other Commercial Total Amounts Amount of Commitment Expiration Per Period
Commitments Committed Less than 1 year
----------------------------------- ----------------------------- --------------------------------------------
Lines of Credit $ 19,500 $ 19,500
In the normal course of business, the Company routinely enters into binding and
non-binding purchase obligations primarily covering anticipated purchases of
inventory and equipment. The terms of these commitments generally do not extend
beyond six months. None of these obligations are individually significant. The
Company does not expect that these commitments will materially adversely affect
its liquidity in the foreseeable future.
ITEM 3. 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, 2001.
- 13 -
PART II - OTHER INFORMATION
ITEMS 1. THROUGH 3. Not Applicable
--------------
ITEM 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
At the Registrant's Annual Meeting of Stockholders held on November 15,
2001 (the "Annual Meeting"), the stockholders elected the individuals named
below as directors for one-year terms. Votes were cast as follows:
For Withheld
--------------------------- -------------------------
Victor Insetta 7,971,464 89,646
Dov S. Bacharach 7,983,589 77,521
Chester E. Spence 7,970,564 90,546
O. Julian Garrard III 7,982,089 79,021
Stuart P. Litt 8,015,564 45,546
Thomas J. Volpe 7,981,989 79,121
The stockholders also ratified the appointment of KPMG LLP as the
independent public accountants to audit the Registrant's consolidated financial
statements for the fiscal year ending June 30, 2002. The holders of 8,025,223
shares of Common Stock voted to ratify the appointment, 10,687 voted against
ratification and the holders of 25,200 shares of Common Stock abstained from
voting on the issue.
ITEM 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) (the
"Registration Statement") 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.
- 14 -
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) - Form of 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)
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) - Managers Profit Bonus Plan, dated December 7, 1999, and
effective January 1, 2000. (12)
10(h) - Employment Agreement, dated September 1, 2000, between the
Registrant and Richard Monsorno. (14)
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)(i) - Loan Agreement, dated November 25, 1998, between the
Registrant and NationsBank, N.A. (10)
- 15 -
10(o)(ii) - Amendment to Loan Agreement, dated February 4, 1999, between
the Registrant and NationsBank, N.A. (12)
10(o)(iii) - Second 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)(iv) - Third Amendment to Loan Agreement, dated October 26, 2000,
between the Registrant and Bank of America, N.A., as successor
to NationsBank, N.A. (15)
10(o)(v) - Fourth 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)
10(s) - Loan Agreement, dated May 8, 2001, between the Registrant and
European American Bank, N.A. (16)
21 - Subsidiaries of the Registrant. (2)
--------------------
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.
- 16 -
7. Incorporated by reference to the Registrant's Annual Report on Form 10-K for
the fiscal year 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.Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
for the quarterly period ended March 31, 2001.
16.Incorporated by reference to the Registrant's Annual Report on Form 10-K for
the fiscal year ended June 30, 2001.
(b) REPORTS ON FORM 8-K
-------------------
The Registrant did not file any reports on Form 8-K during the quarter
ended December 31, 2001.
- 17 -
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant in
the capacities and on the dates indicated:
AMERICAN TECHNICAL CERAMICS CORP.
(Registrant)
DATE: February 13, 2002 BY: /s/ VICTOR INSETTA
------------------
Victor Insetta
President and Director
(Principal Executive Officer)
DATE: February 13, 2002 BY: /s/ ANDREW R. PERZ
------------------
Andrew R. Perz
Vice President, Controller
(Principal Accounting Officer)
- 18 -