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 March 31, 2005.
| ¨ | 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 0-10843
CSP Inc.
(Exact name of Registrant as specified in its Charter)
| Massachusetts | 04-2441294 | |
| (State of incorporation) | (I.R.S. Employer Identification No.) |
43 Manning Road
Billerica, Massachusetts 01821-3901
(978) 663-7598
(Address and telephone number of principal executive offices)
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 Act). Yes ¨ No x.
As of May 13, 2005, the registrant had 3,658,399 shares of common stock issued and outstanding.
| Page | ||||
| PART I. | FINANCIAL INFORMATION | |||
| Item 1. | Financial Statements | |||
| Unaudited Consolidated Balance Sheets as of March 31, 2005 and September 30, 2004 | 3 | |||
| Unaudited Consolidated Statements of Operations for the three and six months ended March 31, 2005 and 2004 | 4 | |||
| Unaudited Consolidated Statements of Cash Flows for the six months ended March 31, 2005 and 2004 | 5 | |||
| Notes to Unaudited Consolidated Financial Statements | 6-12 | |||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 13-27 | ||
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 27 | ||
| Item 4. | Controls and Procedures | 27 | ||
| PART II. | OTHER INFORMATION | |||
| Item 4. | Submission of Matters to a vote of Security Holders | 28 | ||
| Item 5. | Other | 28 | ||
| Item 6. | Exhibits | 28 | ||
| Exhibit 31.1 | ||||
| Exhibit 31.2 | ||||
| Exhibit 32.1 | ||||
2
UNAUDITED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except par value)
| March 31, 2005 |
September 30, 2004 |
|||||||
| ASSETS | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 8,532 | $ | 2,880 | ||||
| Short-term investments |
6,598 | 10,015 | ||||||
| Accounts receivable, net of allowances of $143 and $195 as of March 31, 2005 and September 30, 2004 |
5,654 | 7,292 | ||||||
| Inventories |
4,048 | 3,611 | ||||||
| Refundable income taxes |
25 | 12 | ||||||
| Other current assets |
1,306 | 866 | ||||||
| Total current assets |
26,163 | 24,676 | ||||||
| Property, equipment and improvements, net |
1,157 | 1,213 | ||||||
| Other assets: |
||||||||
| Long-term investments |
695 | 174 | ||||||
| Goodwill |
2,996 | 2,996 | ||||||
| Deferred income taxes |
170 | 264 | ||||||
| Cash surrender value life insurance |
1,774 | 1,704 | ||||||
| Other assets |
139 | 86 | ||||||
| Total other assets |
5,774 | 5,224 | ||||||
| Total assets |
$ | 33,094 | $ | 31,113 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable and accrued expenses |
$ | 8,092 | $ | 8,185 | ||||
| Pension and retirement plans |
389 | 368 | ||||||
| Income taxes payable |
991 | 700 | ||||||
| Total current liabilities |
9,472 | 9,253 | ||||||
| Pension and retirement plans |
8,224 | 7,717 | ||||||
| Deferred income taxes |
129 | 99 | ||||||
| Other long-term liabilities |
— | 20 | ||||||
| Total Liabilities |
17,825 | 17,089 | ||||||
| Commitments and contingencies |
||||||||
| Shareholders’ equity: |
||||||||
| Common stock, $.01 par; authorized, 7,500 shares; issued 4,160 and 4,140 shares as of March 31, 2005 and September 30, 2004 |
42 | 41 | ||||||
| Additional paid-in capital |
11,509 | 11,405 | ||||||
| Retained earnings |
10,852 | 9,865 | ||||||
| Accumulated other comprehensive loss |
(4,275 | ) | (4,428 | ) | ||||
| 18,128 | 16,883 | |||||||
| Less treasury stock, at cost, 570 shares |
(2,859 | ) | (2,859 | ) | ||||
| Total shareholders’ equity |
15,269 | 14,024 | ||||||
| Total liabilities and shareholders’ equity |
$ | 33,094 | $ | 31,113 | ||||
See accompanying notes to unaudited consolidated financial statements.
3
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except for per share data)
| For the three months ended |
For the six months ended |
||||||||||||||
| March 31, 2005 |
March 31, 2004 |
March 31, 2005 |
March 31, 2004 |
||||||||||||
| Sales: |
|||||||||||||||
| Product |
$ | 15,622 | $ | 9,123 | $ | 26,834 | $ | 17,908 | |||||||
| Services |
3,339 | 3,043 | 6,501 | 6,058 | |||||||||||
| Total sales |
18,961 | 12,166 | 33,335 | 23,966 | |||||||||||
| Cost of sales: |
|||||||||||||||
| Product |
11,657 | 6,470 | 20,024 | 13,593 | |||||||||||
| Services |
2,371 | 2,130 | 4,462 | 3,986 | |||||||||||
| Total cost of sales |
14,028 | 8,600 | 24,486 | 17,579 | |||||||||||
| Gross profit |
4,933 | 3,566 | 8,849 | 6,387 | |||||||||||
| Operating expenses: |
|||||||||||||||
| Engineering and development |
789 | 661 | 1,653 | 1,351 | |||||||||||
| Selling, general and administrative |
3,228 | 2,455 | 5,836 | 4,802 | |||||||||||
| Total operating expenses |
4,017 | 3,116 | 7,489 | 6,153 | |||||||||||
| Operating income | 916 | 450 | 1,360 | 234 | |||||||||||
| Other income |
|||||||||||||||
| Foreign exchange gain (loss) |
15 | (12 | ) | (28 | ) | (14 | ) | ||||||||
| Other income net |
75 | 49 | 109 | 121 | |||||||||||
| Total other income, net |
90 | 37 | 81 | 107 | |||||||||||
| Income before income taxes |
1,006 | 487 | 1,441 | 341 | |||||||||||
| Provision for income taxes |
256 | 9 | 454 | 91 | |||||||||||
| Net income | $ | 750 | $ | 478 | $ | 987 | $ | 250 | |||||||
| Net income per share – basic |
$ | 0.21 | $ | 0.13 | $ | 0.28 | $ | 0.07 | |||||||
| Weighted average shares outstanding-basic |
3,591 | 3,558 | 3,584 | 3,556 | |||||||||||
| Net income per share-diluted |
$ | 0.20 | $ | 0.13 | $ | 0.26 | $ | 0.07 | |||||||
| Weighted average shares outstanding-diluted |
3,814 | 3,673 | 3,811 | 3,667 | |||||||||||
See accompanying notes to unaudited consolidated financial statements
4
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
| For the six months ended |
||||||||
| March 31, 2005 |
March 31, 2004 |
|||||||
| Cash flows from operating activities: | ||||||||
| Net income |
$ | 987 | $ | 250 | ||||
| Adjustments to reconcile net income to net cash provided by (used for) operations: |
||||||||
| Depreciation and amortization |
302 | 264 | ||||||
| Loss on disposal of property, net |
7 | 2 | ||||||
| Loss on foreign currency transactions |
28 | 14 | ||||||
| Non-cash changes in accounts receivable |
(49 | ) | (14 | ) | ||||
| Deferred income taxes |
135 | (247 | ) | |||||
| Changes in operating assets and liabilities |
||||||||
| (Increase) decrease in accounts receivable |
1,852 | (1,353 | ) | |||||
| Increase in inventories |
(414 | ) | (563 | ) | ||||
| (Increase) decrease in refundable income taxes |
(13 | ) | 781 | |||||
| (Increase) decrease in other current assets |
(417 | ) | 288 | |||||
| Increase in cash surrender value life insurance |
(70 | ) | (58 | ) | ||||
| (Increase) decrease in other assets |
(53 | ) | 29 | |||||
| Increase (decrease) in accounts payable and accrued expenses |
(254 | ) | 385 | |||||
| Increase (decrease) in pension and retirement plans |
288 | (34 | ) | |||||
| Increase (decrease) in income taxes payable |
285 | (129 | ) | |||||
| Decrease in other liabilities |
(20 | ) | — | |||||
| Net cash provided by (used for) operating activities |
2,594 | (385 | ) | |||||
| Cash flows from investing activities: | ||||||||
| Purchases of available-for-sale securities |
(45 | ) | (125 | ) | ||||
| Purchases of held-to-maturity securities |
(3,439 | ) | (1,174 | ) | ||||
| Sales of available-for-sale securities |
45 | 49 | ||||||
| Maturities of held-to-maturity securities |
6,638 | |||||||