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 April 30, 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. 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 June 9, 2003, 5,452,785 shares of the registrant’s Common Stock, no par value, were outstanding.
OPTICAL CABLE CORPORATION
Six Months Ended April 30, 2003
OPTICAL CABLE CORPORATION
| (Unaudited) |
||||||
| April 30, 2003 |
October 31, 2002 | |||||
| Assets |
||||||
| Current assets: |
||||||
| Cash |
$ | — | $ | 746,771 | ||
| Trade accounts receivable, net of allowance for doubtful accounts of $599,812 at April 30, 2003 and $476,124 at October 31, 2002 |
8,275,822 | 7,795,058 | ||||
| Income taxes refundable |
704,352 | 840,013 | ||||
| Other receivables |
315,639 | 285,639 | ||||
| Due from employees, net of allowance for uncollectible advances of $59,078 |
28,317 | 31,467 | ||||
| Inventories |
8,807,680 | 9,412,130 | ||||
| Prepaid expenses |
326,470 | 492,201 | ||||
| Deferred income taxes |
193,922 | 180,144 | ||||
| Total current assets |
18,652,202 | 19,783,423 | ||||
| Other assets, net |
297,693 | 261,344 | ||||
| Property and equipment, net |
11,464,885 | 11,907,567 | ||||
| Deferred income taxes |
810,812 | 721,755 | ||||
| Total assets |
$ | 31,225,592 | $ | 32,674,089 | ||
| Liabilities and Shareholders’ Equity |
||||||
| Current liabilities: |
||||||
| Accounts payable and accrued expenses |
$ | 3,299,097 | $ | 2,912,177 | ||
| Accrued compensation and payroll taxes |
747,611 | 859,899 | ||||
| Accrued shareholder litigation settlement expense |
930,543 | 531,643 | ||||
| Total current liabilities |
4,977,251 | 4,303,719 | ||||
| Note payable to bank |
1,081,819 | — | ||||
| Other liabilities |
— | 166,383 | ||||
| Total liabilities |
6,059,070 | 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 April 30, 2003 and 6,928,652 at October 31, 2002 |
8,394 | 55,313 | ||||
| Retained earnings |
25,158,128 | 28,148,674 | ||||
| Total shareholders’ equity |
25,166,522 | 28,203,987 | ||||
| Commitments and contingencies |
||||||
| Total liabilities and shareholders’ equity |
$ | 31,225,592 | $ | 32,674,089 | ||
See accompanying condensed notes to condensed financial statements.
2
OPTICAL CABLE CORPORATION
Condensed Statements of Operations
(Unaudited)
| Three months ended April 30, |
Six months ended April 30, |
|||||||||||||||
| 2003 |
2002 |
2003 |
2002 |
|||||||||||||
| Net sales |
$ | 9,758,672 | $ | 10,915,618 | $ | 19,504,687 | $ | 22,307,039 | ||||||||
| Cost of goods sold |
5,904,408 | 7,307,796 | 12,152,588 | 14,202,980 | ||||||||||||
| Gross profit |
3,854,264 | 3,607,822 | 7,352,099 | 8,104,059 | ||||||||||||
| Selling, general and administrative expenses |
3,352,371 | 3,248,774 | 6,645,477 | 6,755,191 | ||||||||||||
| Shareholder litigation settlement expense |
283,190 | 144,704 | 574,590 | 144,704 | ||||||||||||
| Loss on impairment of machinery and equipment |
— | — | 117,337 | — | ||||||||||||
| Income from operations |
218,703 | 214,344 | 14,695 | 1,204,164 | ||||||||||||
| Other income (expense): |
||||||||||||||||
| Interest income |
3,911 | 13,494 | 8,621 | 20,646 | ||||||||||||
| Interest expense |
(48,086 | ) | (62,139 | ) | (82,936 | ) | (126,843 | ) | ||||||||
| Other, net |
17,877 | 983 | 31,704 | 1,167 | ||||||||||||
| Other expense, net |
(26,298 | ) | (47,662 | ) | (42,611 | ) | (105,030 | ) | ||||||||
| Income (loss) before income tax expense (benefit) |
192,405 | 166,682 | (27,916 | ) | 1,099,134 | |||||||||||
| Income tax expense (benefit) |
59,646 | 58,505 | (8,653 | ) | 386,505 | |||||||||||
| Net income (loss) |
$ | 132,759 | $ | 108,177 | $ | (19,263 | ) | $ | 712,629 | |||||||
| Net income (loss) per share: |
||||||||||||||||
| Basic and diluted |
$ | 0.02 | $ | 0.02 | $ | — | $ | 0.10 | ||||||||
See accompanying condensed notes to condensed financial statements.
3
OPTICAL CABLE CORPORATION
Condensed Statement of Shareholders’ Equity
(Unaudited)
| Six months ended April 30, 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 |
— | 14,705 | — | 14,705 | |||||||||||
| Repurchase of common stock (at cost) |
(1,475,867 | ) | (61,624 | ) | (2,971,283 | ) | (3,032,907 | ) | |||||||
| Net loss |
— | — | (19,263 | ) | (19,263 | ) | |||||||||
| Balances at April 30, 2003 |
5,452,785 | $ | 8,394 | $ | 25,158,128 | $ | 25,166,522 | ||||||||
See accompanying condensed notes to condensed financial statements.
4
OPTICAL CABLE CORPORATION
Condensed Statements of Cash Flows
(Unaudited)
| Six months ended April 30, |
||||||||
| 2003 |
2002 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income (loss) |
$ | (19,263 | ) | $ | 712,629 | |||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
||||||||
| Depreciation, amortization and accretion |
582,639 | 597,057 | ||||||
| Bad debt expense |
169,295 | 133,263 | ||||||
| Deferred income tax expense (benefit) |
(102,835 | ) | 72,157 | |||||
| Stock-based compensation expense |
14,705 | 5,474 | ||||||
| Shareholder litigation settlement expense |
566,291 | — | ||||||
| Loss on impairment of machinery and equipment |
117,337 | — | ||||||
| (Increase) decrease in: |
||||||||
| Trade accounts receivable |
(650,059 | ) | 2,565,748 | |||||
| Income taxes refundable |
135,661 | 129,172 | ||||||
| Other receivables |
(30,000 | ) | (68,844 | ) | ||||
| Due from employees |
3,150 | 475 | ||||||
| Inventories |
604,450 | 2,163,824 | ||||||
| Prepaid expenses |
165,731 | (48,610 | ) | |||||
| Other assets |
(57,166 | ) | — | |||||
| Increase (decrease) in: |
||||||||
| Accounts payable and accrued expenses and other liabilities |
45,816 | (2,644,513 | ) | |||||
| Accrued compensation and payroll taxes |
(112,288 | ) | (212,716 | ) | ||||
| Net cash provided by operating activities |
1,433,464 | 3,405,116 | ||||||
| Cash flows from investing activities: |
||||||||
| Purchase of property and equipment |
(193,993 | ) | (152,563 | ) | ||||
| Receipt of cash surrender value of life insurance |
— | 367,469 | ||||||
| Net cash provided by (used in) investing activities |
(193,993 | ) | 214,906 | |||||
| Cash flows from financing activities: |
||||||||
| Proceeds from (repayment of) notes payable to bank, net |
1,081,819 | (5,300,764 | ) | |||||
| Payments for financing costs |
(35,154 | ) | (273,711 | ) | ||||
| Repurchase of common stock |
(3,032,907 | ) | — | |||||
| Net cash used in financing activities |
(1,986,242 | ) | (5,574,475 | ) | ||||
| Net decrease in cash |
(746,771 | ) | (1,954,453 | ) | ||||
| Cash at beginning of period |
746,771 | 2,087,608 | ||||||
| Cash at end of period |
$ | — | ||||||