UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 2003
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 0-27022
OPTICAL CABLE CORPORATION
(Exact name of registrant as specified in its charter)
| Virginia |
54-1237042 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
5290 Concourse Drive
Roanoke, Virginia 24019
(Address of principal executive offices, including zip code)
(540) 265-0690
(Registrant’s 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.
(1) Yes X No (2) Yes X No
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes No X
As of March 12, 2003, 5,452,785 shares of the registrant’s Common Stock, no par value, were outstanding.
Form 10-Q Index
Three Months Ended January 31, 2003
| Page | ||||||
| PART I. |
FINANCIAL INFORMATION |
|||||
| Item 1. |
Financial Statements |
|||||
| Condensed Balance Sheets – January 31, 2003 and October 31, 2002 |
||||||
| Condensed Statements of Operations – Three Months Ended January 31, 2003 and 2002 |
||||||
| Condensed Statement of Changes in Shareholders’ Equity – Three Months Ended January 31, 2003 |
||||||
| Condensed Statements of Cash Flows – Three Months Ended January 31, 2003 and 2002 |
||||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
|||||
| Item 3. |
||||||
| Item 4. |
||||||
| PART II. |
OTHER INFORMATION |
|||||
| Item 1. |
||||||
| Item 2. |
||||||
| Item 6. |
||||||
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets
| (Unaudited) |
||||||
| Assets |
January 31, 2003 |
October 31, 2002 | ||||
| Current assets: |
||||||
| Cash |
$ |
— |
$ |
746,771 | ||
| Trade accounts receivable, net of allowance for doubtful accounts of $590,355 at January 31, 2003 and $476,124 at October 31, 2002 |
|
8,015,553 |
|
7,795,058 | ||
| Income taxes refundable |
|
908,728 |
|
840,013 | ||
| Other receivables |
|
305,639 |
|
285,639 | ||
| Due from employees, net of allowance for uncollectible advances of $59,078 |
|
29,892 |
|
31,467 | ||
| Inventories |
|
8,924,913 |
|
9,412,130 | ||
| Prepaid expenses |
|
414,222 |
|
492,201 | ||
| Deferred income taxes |
|
177,684 |
|
180,144 | ||
| Total current assets |
|
18,776,631 |
|
19,783,423 | ||
| Other assets, net |
|
276,151 |
|
261,344 | ||
| Property and equipment, net |
|
11,601,559 |
|
11,907,567 | ||
| Deferred income taxes |
|
723,590 |
|
721,755 | ||
| Total assets |
$ |
31,377,931 |
$ |
32,674,089 | ||
| Liabilities and Shareholders’ Equity |
||||||
| Current liabilities: |
||||||
| Accounts payable and accrued expenses |
$ |
3,160,054 |
$ |
2,912,177 | ||
| Accrued compensation and payroll taxes |
|
505,250 |
|
859,899 | ||
| Accrued shareholder litigation settlement expense |
|
610,427 |
|
531,643 | ||
| Total current liabilities |
|
4,275,731 |
|
4,303,719 | ||
| Note payable to bank |
|
2,076,831 |
|
— | ||
| Other liabilities |
|
— |
|
166,383 | ||
| Total liabilities |
|
6,352,562 |
|
4,470,102 | ||
| Shareholders’ equity: |
||||||
| Preferred stock, no par value, authorized 1,000,000 shares; none issued and outstanding |
|
— |
|
— | ||
| Common stock, no par value, authorized 50,000,000 shares; issued and outstanding 5,452,785 shares at January 31, 2003 and 6,928,652 at October 31, 2002 |
|
— |
|
55,313 | ||
| Retained earnings |
|
25,025,369 |
|
28,148,674 | ||
| Total shareholders’ equity |
|
25,025,369 |
|
28,203,987 | ||
| Commitments and contingencies |
||||||
| Total liabilities and shareholders’ equity |
$ |
31,377,931 |
$ |
32,674,089 | ||
See accompanying condensed notes to condensed financial statements.
2
Condensed Statements of Operations
(Unaudited)
| Three Months Ended January 31, |
||||||||
| 2003 |
2002 |
|||||||
| Net sales |
$ |
9,746,015 |
|
$ |
11,391,421 |
| ||
| Cost of goods sold |
|
6,248,180 |
|
|
6,895,184 |
| ||
| Gross profit |
|
3,497,835 |
|
|
4,496,237 |
| ||
| Selling, general and administrative expenses |
|
3,293,106 |
|
|
3,506,417 |
| ||
| Shareholder litigation settlement expense |
|
291,400 |
|
|
— |
| ||
| Loss on impairment of machinery and equipment |
|
117,337 |
|
|
— |
| ||
| Income (loss) from operations |
|
(204,008 |
) |
|
989,820 |
| ||
| Other income (expense): |
||||||||
| Interest income |
|
4,710 |
|
|
7,152 |
| ||
| Interest expense |
|
(34,850 |
) |
|
(64,704 |
) | ||
| Other, net |
|
13,827 |
|
|
184 |
| ||
| Other expense, net |
|
(16,313 |
) |
|
(57,368 |
) | ||
| Income (loss) before income tax expense |
|
(220,321 |
) |
|
932,452 |
| ||
| Income tax expense (benefit) |
|
(68,299 |
) |
|
328,000 |
| ||
| Net income (loss) |
$ |
(152,022 |
) |
$ |
604,452 |
| ||
| Net income (loss) per share: |
||||||||
| Basic and diluted |
$ |
(0.02 |
) |
$ |
0.09 |
| ||
See accompanying condensed notes to condensed financial statements.
3
Condensed Statement of Changes in Shareholders’ Equity
(Unaudited)
| Three Months Ended January 31, 2003 |
|||||||||||||||
| Common Stock |
Retained Earnings |
Total Shareholders’ Equity |
|||||||||||||
| Shares |
Amount |
||||||||||||||
| Balances at October 31, 2002 |
6,928,652 |
|
$ |
55,313 |
|
$ |
28,148,674 |
|
$ |
28,203,987 |
| ||||
| Stock-based compensation |
— |
|
|
6,311 |
|
|
— |
|
|
6,311 |
| ||||
| Repurchase of common stock (at cost) |
(1,475,867 |
) |
|
(61,624 |
) |
|
(2,971,283 |
) |
|
(3,032,907 |
) | ||||
| Net loss |
— |
|
|
— |
|
|
(152,022 |
) |
|
(152,022 |
) | ||||
| Balances at January 31, 2003 |
5,452,785 |
|
$ |
— |
|
$ |
25,025,369 |
|
$ |
25,025,369 |
| ||||
See accompanying condensed notes to condensed financial statements.
4
Condensed Statements of Cash Flows
(Unaudited)
| Three Months Ended |
||||||||
| 2003 |
2002 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income (loss) |
$ |
(152,022 |
) |
$ |
604,452 |
| ||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
||||||||
| Depreciation, amortization and accretion |
|
288,833 |
|
|
293,718 |
| ||
| Bad debt expense |
|
113,437 |
|
|
270,659 |
| ||
| Deferred income tax expense |
|
625 |
|
|
21,507 |
| ||
| Stock-based compensation expense |
|
6,311 |
|
|
— |
| ||
| Shareholder litigation settlement expense |
|
290,083 |
|
|
— |
| ||
| Loss on impairment of machinery and equipment |
|
117,337 |
|
|
— |
| ||
| (Increase) decrease in: |
||||||||
| Trade accounts receivable |
|
(333,932 |
) |
|
999,621 |
| ||
| Income taxes refundable |
|
(68,715 |
) |
|
301,303 |
| ||
| Other receivables |
|
(20,000 |
) |
|
(125,400 |
) | ||
| Due from employees |
|
1,575 |
|
|
225 |
| ||
| Inventories |
|
487,217 |
|
|
223,559 |
| ||
| Prepaid expenses |
|
77,979 |
|
|
(75,093 |
) | ||
| Other assets |
|
(6,844 |
) |
|
— |
| ||
| Increase (decrease) in: |
||||||||
| Accounts payable and accrued expenses and other liabilities |
|
(139,437 |
) |
|
(346,585 |
) | ||
| Accrued compensation and payroll taxes |
|
(354,649 |
) |
|
(250,488 |
) | ||