x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Massachusetts
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04-2441294
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(State of incorporation)
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(I.R.S. Employer Identification No.)
|
Large accelerated filer
|
¨
|
Accelerated filer
|
¨
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Non-accelerated filer
|
¨ (Do not check if a smaller reporting company)
|
Smaller reporting company
|
x
|
Page
|
||||
PART I. FINANCIAL INFORMATION
|
||||
Item 1.
|
Financial Statements
|
|||
Consolidated Balance Sheets as of June 30, 2011 (unaudited) and September 30, 2010
|
3
|
|||
Consolidated Statements of Operations (unaudited) for the three and nine months ended June 30, 2011 and 2010
|
4
|
|||
Consolidated Statement of Shareholders’ Equity (unaudited) for the nine months ended June 30, 2011
|
5
|
|||
Consolidated Statements of Cash Flows (unaudited) for the nine months ended June 30, 2011 and 2010
|
6
|
|||
Notes to Consolidated Financial Statements (unaudited)
|
7-12
|
|||
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
12-23
|
||
Item 4.
|
Controls and Procedures
|
24
|
||
PART II. OTHER INFORMATION
|
||||
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
25
|
||
Item 6.
|
Exhibits
|
26
|
June 30,
2011
|
September 30,
2010
|
|||||||
(Unaudited)
|
||||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 17,482 | $ | 15,531 | ||||
Accounts receivable, net of allowances of $277 and $288
|
10,318 | 12,190 | ||||||
Inventories
|
5,586 | 5,862 | ||||||
Refundable income taxes
|
334 | 721 | ||||||
Deferred income taxes
|
126 | 124 | ||||||
Other current assets
|
2,054 | 1,523 | ||||||
Total current assets
|
35,900 | 35,951 | ||||||
Property, equipment and improvements, net
|
873 | 873 | ||||||
Other assets:
|
||||||||
Intangibles, net
|
602 | 687 | ||||||
Deferred income taxes
|
918 | 880 | ||||||
Cash surrender value of life insurance
|
2,888 | 2,689 | ||||||
Other assets
|
249 | 299 | ||||||
Total other assets
|
4,657 | 4,555 | ||||||
Total assets
|
$ | 41,430 | $ | 41,379 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable and accrued expenses
|
$ | 8,978 | $ | 10,049 | ||||
Deferred revenue
|
3,348 | 3,078 | ||||||
Pension and retirement plans
|
708 | 441 | ||||||
Income taxes payable
|
239 | 380 | ||||||
Total current liabilities
|
13,273 | 13,948 | ||||||
Pension and retirement plans
|
9,010 | 8,928 | ||||||
Capital lease obligation
|
25 | 24 | ||||||
Other long term liabilities
|
271 | - | ||||||
Total liabilities
|
22,579 | 22,900 | ||||||
Commitments and contingencies
|
||||||||
Shareholders’ equity:
|
||||||||
Common stock, $.01 par; authorized, 7,500 shares; issued and outstanding 3,473 and 3,520 shares, respectively
|
35 | 35 | ||||||
Additional paid-in capital
|
11,035 | 11,280 | ||||||
Retained earnings
|
12,977 | 12,516 | ||||||
Accumulated other comprehensive loss
|
(5,196 | ) | (5,352 | ) | ||||
Total shareholders’ equity
|
18,851 | 18,479 | ||||||
Total liabilities and shareholders’ equity
|
$ | 41,430 | $ | 41,379 |
For the three months ended
|
For the nine months ended
|
|||||||||||||||
June 30,
2011
|
June 30,
2010
|
June 30,
2011
|
June 30,
2010
|
|||||||||||||
Sales:
|
||||||||||||||||
Product
|
$ | 16,416 | $ | 23,753 | $ | 49,566 | $ | 59,549 | ||||||||
Services
|
3,265 | 4,815 | 11,434 | 11,601 | ||||||||||||
Total sales
|
19,681 | 28,568 | 61,000 | 71,150 | ||||||||||||
Cost of sales:
|
||||||||||||||||
Product
|
13,690 | 21,153 | 41,440 | 50,729 | ||||||||||||
Services
|
2,370 | 2,519 | 7,162 | 7,731 | ||||||||||||
Total cost of sales
|
16,060 | 23,672 | 48,602 | 58,460 | ||||||||||||
Gross profit
|
3,621 | 4,896 | 12,398 | 12,690 | ||||||||||||
Operating expenses:
|
||||||||||||||||
Engineering and development
|
442 | 498 | 1,460 | 1,401 | ||||||||||||
Selling, general and administrative
|
3,450 | 3,740 | 10,135 | 10,207 | ||||||||||||
Total operating expenses
|
3,892 | 4,238 | 11,595 | 11,608 | ||||||||||||
Operating income (loss)
|
(271 | ) | 658 | 803 | 1,082 | |||||||||||
Other income (expense):
|
||||||||||||||||
Foreign exchange gain (loss)
|
(9 | ) | (6 | ) | - | (16 | ) | |||||||||
Other income (expense), net
|
(24 | ) | (4 | ) | (55 | ) | (30 | ) | ||||||||
Net other income (expense)
|
(33 | ) | (10 | ) | (55 | ) | (46 | ) | ||||||||
Income (loss) before income taxes
|
(304 | ) | 648 | 748 | 1,036 | |||||||||||
Income tax expense (benefit)
|
(90 | ) | 27 | 287 | 168 | |||||||||||
Net income (loss)
|
$ | (214 | ) | $ | 621 | $ | 461 | $ | 868 | |||||||
Net income (loss) attributable to common shareholders
|
$ | (211 | ) | $ | 614 | $ | 455 | $ | 860 | |||||||
Net income (loss) per share – basic
|
$ | (0.06 | ) | $ | 0.17 | $ | 0.13 | $ | 0.24 | |||||||
Weighted average shares outstanding – basic
|
3,428 | 3,548 | 3,446 | 3,545 | ||||||||||||
Net income (loss) per share – diluted
|
$ | (0.06 | ) | $ | 0.17 | $ | 0.13 | $ | 0.24 | |||||||
Weighted average shares outstanding – diluted
|
3,428 | 3,574 | 3,485 | 3,574 |
Shares
|
Amount
|
Additional
Paid-in
Capital
|
Retained
Earnings
|
Accumulated
other
comprehensive
loss
|
Total
Shareholders’
Equity
|
Comprehensive
Income
|
||||||||||||||||||||||
Balance as of September 30, 2010
|
3,520 | $ | 35 | $ | 11,280 | $ | 12,516 | $ | (5,352 | ) | $ | 18,479 | ||||||||||||||||
Comprehensive income (loss):
|
||||||||||||||||||||||||||||
Net income
|
— | — | — | 461 | — | 461 | $ | 461 | ||||||||||||||||||||
Other comprehensive income:
|
||||||||||||||||||||||||||||
Effect of foreign currency translation
|
— | — | — | — | 156 | 156 | 156 | |||||||||||||||||||||
Total comprehensive income
|
$ | 617 | ||||||||||||||||||||||||||
Stock-based compensation
|
— | — | 54 | — | — | 54 | ||||||||||||||||||||||
Issuance of shares under employee stock purchase plan
|
25 | — | 74 | — | — | 74 | ||||||||||||||||||||||
Restricted stock shares issued
|
37 | 1 | 74 | — | — | 75 | ||||||||||||||||||||||
Purchase of common stock
|
(109 | ) | (1 | ) | (447 | ) | — | — | (448 | ) | ||||||||||||||||||
Balance as of June 30, 2011
|
3,473 | $ | 35 | $ | 11,035 | $ | 12,977 | $ | (5,196 | ) | $ | 18,851 |
For the nine months ended
|
||||||||
June 30,
2011
|
June 30,
2010
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$ | 461 | $ | 868 | ||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
277 | 295 | ||||||
Amortization of intangibles
|
85 | 85 | ||||||
Loss on disposal of fixed assets, net
|
3 | 1 | ||||||
Foreign exchange loss (gain)
|
― | 16 | ||||||
Non-cash changes in accounts receivable
|
(12 | ) | 8 | |||||
Stock-based compensation expense on stock options and restricted stock awards
|
129 | 166 | ||||||
Deferred income taxes
|
― | (153 | ) | |||||
Increase in cash surrender value of life insurance
|
(59 | ) | (60 | ) | ||||
Changes in operating assets and liabilities:
|
||||||||
(Increase) decrease in accounts receivable
|
2,212 | (4,819 | ) | |||||
(Increase) decrease in inventories
|
295 | (1,281 | ) | |||||
(Increase) decrease in refundable income taxes
|
410 | (46 | ) | |||||
(Increase) decrease in other current assets
|
(449 | ) | 132 | |||||
Decrease in other assets
|
54 | 10 | ||||||
Increase (decrease) in accounts payable and accrued expenses
|
(1,322 | ) | 4,959 | |||||
Increase in deferred revenue
|
149 | 180 | ||||||
Increase in pension and retirement plans liability
|
58 | 159 | ||||||
Increase (decrease) in income taxes payable
|
(143 | ) | 252 | |||||
Increase (decrease) in other long term liabilities
|
271 | (309 | ) | |||||
Net cash provided by operating activities
|
2,419 | 463 | ||||||
Cash flows from investing activities:
|
||||||||
Purchase of investments
|
- | (1,100 | ) | |||||
Life insurance premiums paid
|
(140 | ) | (121 | ) | ||||
Purchases of property, equipment and improvements
|
(249 | ) | (288 | ) | ||||
Net cash used in investing activities
|
(389 | ) | (1,509 | ) | ||||
Cash flows from financing activities:
|
||||||||
Proceeds from issuance of shares under employee stock purchase plan
|
74 | 113 | ||||||
Purchase of common stock
|
(448 | ) | (122 | ) | ||||
Net cash used in financing activities
|
(374 | ) | (9 | ) | ||||
Effects of exchange rate on cash
|
295 | (1,143 | ) | |||||
Net increase (decrease) in cash and cash equivalents
|
1,951 | (2,198 | ) | |||||
Cash and cash equivalents, beginning of period
|
15,531 | 18,904 | ||||||
Cash and cash equivalents, end of period
|
$ | 17,482 | $ | 16,706 | ||||
Supplementary cash flow information:
|
||||||||
Cash paid for income taxes
|
$ | 267 | $ | 404 | ||||
Cash paid for interest
|
$ | 85 | $ | 89 |
1.
|
Basis of Presentation
|
2.
|
Use of Estimates
|
3.
|
Earnings Per Share of Common Stock
|
For the Three Months Ended
|
For the Nine Months Ended
|
|||||||||||||||
June 30,
2011
|
June 30,
2010
|
June 30,
2011
|
June 30,
2010
|
|||||||||||||
(Amounts in thousands, except per share data)
|
||||||||||||||||
Net income (loss)
|
$ | (214 | ) | $ | 621 | $ | 461 | $ | 868 | |||||||
Less: Net income (loss) attributable to nonvested common stock
|
(3 | ) | 7 | 6 | 8 | |||||||||||
Net income (loss) attributable to common stockholders
|
(211 | ) | 614 | 455 | 860 | |||||||||||
Weighted average total shares outstanding – basic
|
3,484 | 3,588 | 3,497 | 3,578 | ||||||||||||
Less: weighted average non-vested shares outstanding
|
(56 | ) | (40 | ) | (51 | ) | (33 | ) | ||||||||
Weighted average number of common shares outstanding – basic
|
3,428 | 3,548 | 3,446 | 3,545 | ||||||||||||
Potential common shares from non-vested stock awards and the assumed exercise of stock options
|
― | 26 | 39 | 29 | ||||||||||||
Weighted average common shares outstanding – diluted
|
3,428 | 3,574 | 3,485 | 3,574 | ||||||||||||
Net income (loss) per share – basic
|
$ | (0.06 | ) | $ | 0.17 | $ | 0.13 | $ | 0.24 | |||||||
Net income (loss) per share – diluted
|
$ | (0.06 | ) | $ | 0.17 | $ | 0.13 | $ | 0.24 |
June 30,
2011
|
September 30,
2010
|
|||||||
(Amounts in thousands)
|
||||||||
Raw materials
|
$ | 966 | $ | 1,029 | ||||
Work-in-process
|
948 | 439 | ||||||
Finished goods
|
3,672 | 4,394 | ||||||
Total
|
$ | 5,586 | $ | 5,862 |
5.
|
Accumulated Other Comprehensive Loss
|
For the Three Months Ended
|
For the Nine Months Ended
|
|||||||||||||||
June 30,
2011
|
June 30,
2010
|
June 30,
2011
|
June 30,
2010
|
|||||||||||||
(Amounts in thousands)
|
||||||||||||||||
Net income (loss)
|
$ | (214 | ) | $ | 621 | $ | 461 | $ | 868 | |||||||
Effect of foreign currency translation
|
115 | (297 | ) | 156 | (653 | ) | ||||||||||
Comprehensive income (loss)
|
$ | (99 | ) | $ | 324 | $ | 617 | $ | 215 |
June 30,
2011
|
September 30,
2010
|
|||||||
(Amounts in thousands)
|
||||||||
Cumulative effect of foreign currency translation
|
$ | (1,977 | ) | $ | (2,133 | ) | ||
Additional minimum pension liability
|
(3,219 | ) | (3,219 | ) | ||||
Accumulated Other Comprehensive Loss
|
$ | (5,196 | ) | $ | (5,352 | ) |
For the Three Months Ended June 30
|
||||||||||||||||||||||||
2011
|
2010
|
|||||||||||||||||||||||
Foreign
|
U.S.
|
Total
|
Foreign
|
U.S.
|
Total
|
|||||||||||||||||||
(Amounts in thousands)
|
||||||||||||||||||||||||
Pension:
|
||||||||||||||||||||||||
Service cost
|
$ | 18 | $ | 3 | $ | 21 | $ | 14 | $ | 2 | $ | 16 | ||||||||||||
Interest cost
|
176 | 25 | 201 | 159 | 29 | 188 | ||||||||||||||||||
Expected return on plan assets
|
(128 | ) | — | (128 | ) | (106 | ) | — | (106 | ) | ||||||||||||||
Amortization of:
|
||||||||||||||||||||||||
Prior service gain
|
— | — | — | — | — | — | ||||||||||||||||||
Amortization of net gain
|
18 | 7 | 25 | 10 | 8 | 18 | ||||||||||||||||||
Net periodic benefit cost
|
$ | 84 | $ | 35 | $ | 119 | $ | 77 | $ | 39 | $ | 116 | ||||||||||||
Post Retirement:
|
||||||||||||||||||||||||
Service cost
|
$ | — | $ | 5 | $ | 5 | $ | — | $ | 5 | $ | 5 | ||||||||||||
Interest cost
|
— | 17 | 17 | — | 17 | 17 | ||||||||||||||||||
Amortization of net gain
|
— | 12 | 12 | — | 16 | 16 | ||||||||||||||||||
Net periodic benefit cost
|
$ | — | $ | 34 | $ | 34 | $ | — | $ | 38 | $ | 38 |
For the Nine Months Ended June 30
|
||||||||||||||||||||||||
2011
|
2010
|
|||||||||||||||||||||||
Foreign
|
U.S.
|
Total
|
Foreign
|
U.S.
|
Total
|
|||||||||||||||||||
(Amounts in thousands)
|
||||||||||||||||||||||||
Pension:
|
||||||||||||||||||||||||
Service cost
|
$ | 54 | $ | 8 | $ | 62 | $ | 44 | $ | 7 | $ | 51 | ||||||||||||
Interest cost
|
518 | 74 | 592 | 504 | 87 | 591 | ||||||||||||||||||
Expected return on plan assets
|
(379 | ) | — | (379 | ) | (333 | ) | — | (333 | ) | ||||||||||||||
Amortization of:
|
||||||||||||||||||||||||
Prior service gain
|
— | — | — | — | — | — | ||||||||||||||||||
Amortization of net gain
|
52 | 23 | 75 | 33 | 22 | 55 | ||||||||||||||||||
Net periodic benefit cost
|
$ | 245 | $ | 105 | $ | 350 | $ | 248 | $ | 116 | $ | 364 | ||||||||||||
Post Retirement:
|
||||||||||||||||||||||||
Service cost
|
$ | — | $ | 15 | $ | 15 | $ | — | $ | 14 | $ | 14 | ||||||||||||
Interest cost
|
— | 51 | 51 | — | 52 | 52 | ||||||||||||||||||
Amortization of net gain
|
— | 35 | 35 | — | 48 | 48 | ||||||||||||||||||
Net periodic benefit cost
|
$ | — | $ | 101 | $ | 101 | $ | — | $ | 114 | $ | 114 |
7.
|
Segment Information
|
Service and System Integration Segment
|
||||||||||||||||||||||||
Three Months Ended June 30,
|
Systems
Segment
|
Germany
|
United
Kingdom
|
U.S.
|
Total
|
Consolidated
Total
|
||||||||||||||||||
(Amounts in thousands)
|
||||||||||||||||||||||||
2011
|
||||||||||||||||||||||||
Sales:
|
||||||||||||||||||||||||
Product
|
$ | 1,323 | $ | 3,996 | $ | 68 | $ | 11,029 | $ | 15,093 | $ | 16,416 | ||||||||||||
Service
|
152 | 2,151 | 347 | 615 | 3,113 | 3,265 | ||||||||||||||||||
Total sales
|
1,475 | 6,147 | 415 | 11,644 | 18,206 | 19,681 | ||||||||||||||||||
Profit (loss) from operations
|
(810 | ) | 63 | 15 | 461 | 539 | (271 | ) | ||||||||||||||||
Assets
|
12,508 | 13,699 | 3,890 | 11,333 | 28,922 | 41,430 | ||||||||||||||||||
Capital expenditures
|
10 | 12 | 9 | 7 | 28 | 38 | ||||||||||||||||||
Depreciation and amortization
|
24 | 46 | 7 | 46 | 99 | 123 | ||||||||||||||||||
2010
|
||||||||||||||||||||||||
Sales:
|
||||||||||||||||||||||||
Product
|
$ | 313 | $ | 2,801 | $ | - | $ | 20,639 | $ | 23,440 | $ | 23,753 | ||||||||||||
Service
|
1,741 | 1,787 | 356 | 931 | 3,074 | 4,815 | ||||||||||||||||||
Total sales
|
2,054 | 4,588 | 356 | 21,570 | 26,514 | 28,568 | ||||||||||||||||||
Profit (loss) from operations
|
55 | (159 | ) | (35 | ) | 797 | 603 | 658 | ||||||||||||||||
Assets
|
14,111 | 9,114 | 3,704 | 17,626 | 30,444 | 44,555 | ||||||||||||||||||
Capital expenditures
|
10 | 58 | 15 | 33 | 106 | 116 | ||||||||||||||||||
Depreciation and amortization
|
27 | 37 | 7 | 52 | 96 | 123 |
Service and System Integration Segment
|
||||||||||||||||||||||||
Nine Months Ended June 30,
|
Systems
Segment
|
Germany
|
United
Kingdom
|
U.S.
|
Total
|
Consolidated
Total
|
||||||||||||||||||
(Amounts in thousands)
|
||||||||||||||||||||||||
2011
|
||||||||||||||||||||||||
Sales:
|
||||||||||||||||||||||||
Product
|
$ | 3,563 | $ | 12,556 | $ | 140 | $ | 33,307 | $ | 46,003 | $ | 49,566 | ||||||||||||
Service
|
2,036 | 6,506 | 1,043 | 1,849 | 9,398 | 11,434 | ||||||||||||||||||
Total sales
|
5,599 | 19,062 | 1,183 | 35,156 | 55,401 | 61,000 | ||||||||||||||||||
Profit (loss) from operations
|
(624 | ) | 213 | - | 1,214 | 1,427 | 803 | |||||||||||||||||
Assets
|
12,508 | 13,699 | 3,890 | 11,333 | 28,922 | 41,430 | ||||||||||||||||||
Capital expenditures
|
142 | 59 | 12 | 36 | 107 | 249 | ||||||||||||||||||
Depreciation and amortization
|
66 | 138 | 21 | 137 | 296 | 362 | ||||||||||||||||||
2010
|
||||||||||||||||||||||||
Sales:
|
||||||||||||||||||||||||
Product
|
$ | 4,842 | $ | 10,500 | $ | 49 | $ | 44,158 | $ | 54,707 | $ | 59,549 | ||||||||||||
Service
|
2,234 | 6,282 | 1,201 | 1,884 | 9,367 | 11,601 | ||||||||||||||||||
Total sales
|
7,076 | 16,782 | 1,250 | 46,042 | 64,074 | 71,150 | ||||||||||||||||||
Profit from operations
|
191 | (111 | ) | (21 | ) | 1,023 | 891 | 1,082 | ||||||||||||||||
Assets
|
14,111 | 9,114 | 3,704 | 17,626 | 30,444 | 44,555 | ||||||||||||||||||
Capital expenditures
|
25 | 193 | 24 | 46 | 263 | 288 | ||||||||||||||||||
Depreciation and amortization
|
90 | 116 | 20 | 154 | 290 | 380 |
For the Three Months Ended
|
For the Nine Months Ended
|
|||||||||||||||||||||||||||||||
June 30,
2011
|
June 30,
2010
|
June 30,
2011
|
June 30,
2010
|
|||||||||||||||||||||||||||||
Amount
|
% of
Revenues
|
Amount
|
% of
Revenues
|
Amount
|
% of
Revenues
|
Amount
|
% of
Revenues
|
|||||||||||||||||||||||||
(Dollar amounts in millions)
|
||||||||||||||||||||||||||||||||
Vodafone
|
$ | 1.5 | 8 | % | $ | 1.1 | 4 | % | $ | 6.6 | 11 | % | $ | 6.0 | 8 | % | ||||||||||||||||
Verio
|
$ | 4.7 | 24 | % | $ | 9.8 | 34 | % | $ | 9.5 | 16 | % | $ | 17.6 | 25 | % | ||||||||||||||||
Atos
|
$ | 2.2 | 11 | % | $ | 0.5 | 2 | % | $ | 4.5 | 7 | % | $ | 2.3 | 3 | % |
8.
|
Fair Value Measures
|
Fair Value Measurements Using
|
||||||||||||||||||||
Quoted Prices in
Active
Markets for Identical
Instruments
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
Total
Balance
|
Gain
or
(loss)
|
||||||||||||||||
As of June 30, 2011
|
||||||||||||||||||||
(Amounts in thousands)
|
||||||||||||||||||||
Assets:
|
||||||||||||||||||||
Money Market funds
|
$ | 3,491 | $ | — | $ | — | $ | 3,491 | $ | — | ||||||||||
Total assets measured at fair value
|
$ | 3,491 | $ | — | $ | — | $ | 3,491 | $ | — | ||||||||||
As of September 30, 2010
|
||||||||||||||||||||
(Amounts in thousands)
|
||||||||||||||||||||
Assets:
|
||||||||||||||||||||
Money Market funds
|
$ | 3,482 | $ | — | $ | — | $ | 3,482 | $ | — | ||||||||||
10.
|
Income Taxes
|
Three months ended
June 30, 2011
|
Three months ended
June 30, 2010
|
|||||||
(Amounts in thousands)
|
||||||||
Beginning balance
|
$ | — | $ | 326 | ||||
Increases in tax positions in the current year
|
271 | — | ||||||
Settlements
|
— | — | ||||||
Lapse in statute of limitations
|
— | (302 | ) | |||||
Accrued penalties and interest
|
— | 8 | ||||||
Balance, end of period
|
$ | 271 | $ | 32 |
Nine months ended
June 30, 2011
|
Nine months ended
June 30, 2010
|
|||||||
(Amounts in thousands)
|
||||||||
Balance, beginning of year
|
$ | — | $ | 326 | ||||
Increases in tax positions in the current year
|
271 | — | ||||||
Settlements
|
— | — | ||||||
Lapse in statute of limitations
|
— | (302 | ) | |||||
Accrued penalties and interest
|
— | 8 | ||||||
Balance, end of period
|
$ | 271 | $ | 32 |
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
•
|
Revenue decreased by approximately $10.2 million, or 14%, to $61.0 million for the nine months ended June 30, 2011 versus $71.2 million for the nine months ended June 30, 2010.
|
|
•
|
For the nine months ended June 30, 2011, operating income was approximately $0.8 million versus operating income of approximately $1.1 million for the nine months ended June 30, 2010.
|
|
•
|
For the nine months ended June 30, 2011, net income was approximately $0.5 million versus net income of approximately $0.9 million for the nine months ended June 30, 2010.
|
June 30,
2011
|
%
of sales
|
June 30,
2010
|
%
of sales
|
|||||||||||||
(Dollar amounts in thousands)
|
||||||||||||||||
Sales
|
$ | 61,000 | 100 | % | $ | 71,150 | 100 | % | ||||||||
Costs and expenses:
|
||||||||||||||||
Cost of sales
|
48,602 | 80 | % | 58,460 | 82 | % | ||||||||||
Engineering and development
|
1,460 | 2 | % | 1,401 | 2 | % | ||||||||||
Selling, general and administrative
|
10,135 | 17 | % | 10,207 | 14 | % | ||||||||||
Total costs and expenses
|
60,197 | 99 | % | 70,068 | 98 | % | ||||||||||
Operating income
|
803 | 1 | % | 1,082 | 2 | % | ||||||||||
Other expense
|
(55 | ) | — | % | (46 | ) | — | % | ||||||||
Income before income taxes
|
748 | 1 | % | 1,036 | 2 | % | ||||||||||
Income tax expense
|
287 | — | % | 168 | — | % | ||||||||||
Net income
|
$ | 461 | 1 | % | $ | 868 | 1 | % |
Systems
|
Service and
System
Integration
|
Total
|
% of
Total
|
|||||||||||||
(Dollar amounts in thousands)
|
||||||||||||||||
For the nine months ended June 30, 2011:
|
||||||||||||||||
Product
|
$ | 3,563 | $ | 46,003 | $ | 49,566 | 81 | % | ||||||||
Services
|
2,036 | 9,398 | 11,434 | 19 | % | |||||||||||
Total
|
$ | 5,599 | $ | 55,401 | $ | 61,000 | 100 | % | ||||||||
% of Total
|
9 | % | 91 | % | 100 | % |
Systems
|
Service and
System
Integration
|
Total
|
% of
Total
|
|||||||||||||
For the nine months ended June 30, 2010:
|
||||||||||||||||
Product
|
$ | 4,842 | $ | 54,707 | $ | 59,549 | 84 | % | ||||||||
Services
|
2,234 | 9,367 | 11,601 | 16 | % | |||||||||||
Total
|
$ | 7,076 | $ | 64,074 | $ | 71,150 | 100 | % | ||||||||
% of Total
|
10 | % | 90 | % | 100 | % | ||||||||||
Systems
|
Service and
System
Integration
|
Total
|
%
decrease
|
|||||||||||||
Increase (Decrease)
|
||||||||||||||||
Product
|
$ | (1,279 | ) | $ | (8,704 | ) | $ | (9,983 | ) | (17 | )% | |||||
Services
|
(198 | ) | 31 | (167 | ) | (1 | )% | |||||||||
Total
|
$ | (1,477 | ) | $ | (8,673 | ) | $ | (10,150 | ) | (14 | )% | |||||
% decrease
|
(21 | )% | (14 | )% | (14 | )% |
For the Nine Months Ended
|
||||||||||||||||||||||||
June 30,
2011
|
%
|
June 30,
2010
|
%
|
$ Increase
(Decrease)
|
% Increase
(Decrease)
|
|||||||||||||||||||
(Dollar amounts in thousands)
|
||||||||||||||||||||||||
Americas
|
$ | 38,373 | 63 | % | $ | 51,582 | 73 | % | $ | (13,209 | ) | (26 | )% | |||||||||||
Europe
|
20,215 | 33 | % | 18,548 | 26 | % | 1,667 | 9 | % | |||||||||||||||
Asia
|
2,412 | 4 | % | 1,020 | 1 | % | 1,392 | 137 | % | |||||||||||||||
Totals
|
$ | 61,000 | 100 | % | $ | 71,150 | 100 | % | $ | (10,150 | ) | (14 | )% |
Systems
|
Service and
System
Integration
|
Total
|
% of
Total
|
|||||||||||||
(Dollar amounts in thousands)
|
||||||||||||||||
For the nine months ended June 30, 2011:
|
||||||||||||||||
Product
|
$ | 1,614 | $ | 39,826 | $ | 41,440 | 85 | % | ||||||||
Services
|
239 | 6,923 | 7,162 | 15 | % | |||||||||||
Total
|
$ | 1,853 | $ | 46,749 | $ | 48,602 | 100 | % | ||||||||
% of Total
|
4 | % | 96 | % | 100 | % | ||||||||||
% of Sales
|
33 | % | 84 | % | 80 | % | ||||||||||
Gross Margins:
|
||||||||||||||||
Product
|
55 | % | 13 | % | 16 | % | ||||||||||
Services
|
88 | % | 26 | % | 37 | % | ||||||||||
Total
|
67 | % | 16 | % | 20 | % | ||||||||||
Systems
|
Service and
System
Integration
|
Total
|
% of
Total
|
|||||||||||||
For the nine months ended June 30, 2010:
|
||||||||||||||||
Product
|
$ | 2,216 | $ | 48,513 | $ | 50,729 | 87 | % | ||||||||
Services
|
267 | 7,464 | 7,731 | 13 | % | |||||||||||
Total
|
$ | 2,483 | $ | 55,977 | $ | 58,460 | 100 | % | ||||||||
% of Total
|
4 | % | 96 | % | 100 | % | ||||||||||
% of Sales
|
35 | % | 87 | % | 82 | % | ||||||||||
Gross Margins:
|
||||||||||||||||
Product
|
54 | % | 11 | % | 15 | % | ||||||||||
Services
|
88 | % | 20 | % | 33 | % | ||||||||||
Total
|
65 | % | 13 | % | 18 | % | ||||||||||
Decrease
|
||||||||||||||||
Product
|
$ | (602 | ) | $ | (8,687 | ) | $ | (9,289 | ) | (18 | )% | |||||
Services
|
(28 | ) | (541 | ) | (569 | ) | (7 | )% | ||||||||
Total
|
$ | (630 | ) | $ | (9,228 | ) | $ | (9,858 | ) | (17 | )% | |||||
% Decrease
|
(25 | )% | (16 | )% | (17 | )% | ||||||||||
% of Sales
|
(2 | )% | (3 | )% | (2 | )% | ||||||||||
Gross Margins:
|
||||||||||||||||
Product
|
1 | % | 2 | % | 1 | % | ||||||||||
Services
|
- | % | 6 | % | 4 | % | ||||||||||
Total
|
2 | % | 3 | % | 2 | % |
For the Nine Months Ended
|
||||||||||||||||||||||||
June 30,
2011
|
% of
Total
|
June 30,
2010
|
% of
Total
|
$ Increase
|
% Increase
|
|||||||||||||||||||
(Dollar amounts in thousands)
|
||||||||||||||||||||||||
By Operating Segment:
|
||||||||||||||||||||||||
Systems
|
$ | 1,460 | 100 | % | $ | 1,401 | 100 | % | $ | 59 | 4 | % | ||||||||||||
Service and System Integration
|
— | — | % | — | — | % | — | — | % | |||||||||||||||
Total
|
$ | 1,460 | 100 | % | $ | 1,401 | 100 | % | $ | 59 | 4 | % |
For the Nine Months Ended
|
||||||||||||||||||||||||
June 30,
2011
|
% of
Total
|
June 30,
2010
|
% of
Total
|
$ Decrease
|
% Decrease
|
|||||||||||||||||||
(Dollar amounts in thousands)
|
||||||||||||||||||||||||
By Operating Segment:
|
||||||||||||||||||||||||
Systems
|
$ | 2,910 | 29 | % | $ | 2,976 | 29 | % | $ | (66 | ) | (2 | )% | |||||||||||
Service and System Integration
|
7,225 | 71 | % | 7,231 | 71 | % | (6 | ) | - | % | ||||||||||||||
Total
|
$ | 10,135 | 100 | % | $ | 10,207 | 100 | % | $ | (72 | ) | (1 | )% |
For the Nine Months Ended
|
||||||||||||
June 30,
2011
|
June 30,
2010
|
Increase
(Decrease)
|
||||||||||
(Amounts in thousands)
|
||||||||||||
Interest expense
|
$ | (64 | ) | $ | (68 | ) | $ | 4 | ||||
Interest income
|
27 | 38 | (11 | ) | ||||||||
Foreign exchange loss
|
- | (16 | ) | 16 | ||||||||
Other expense, net
|
(18 | ) | - | (18 | ) | |||||||
Total other expense, net
|
$ | (55 | ) | $ | (46 | ) | $ | (9 | ) |
|
•
|
Revenue decreased by approximately $8.9 million, or 31%, to $19.7 million for the three months ended June 30, 2011 versus $28.6 million for the three months ended June 30, 2010.
|
|
•
|
For the three months ended June 30, 2011, we had an operating loss of approximately $0.3 million versus operating income of approximately $0.7 million for the three months ended June 30, 2010, for a decrease of approximately $1.0 million, or 141% in our operating result.
|
|
•
|
For the three months ended June 30, 2011, we had a net loss of approximately $0.2 million versus net income of approximately $0.6 million for the three months ended June 30, 2010, for a decrease of approximately $0.8 million, or 134%.
|
June 30,
2011
|
%
of sales
|
June 30,
2010
|
%
of sales
|
|||||||||||||
(Dollar amounts in thousands)
|
||||||||||||||||
Sales
|
$ | 19,681 | 100 | % | $ | 28,568 | 100 | % | ||||||||
Costs and expenses:
|
||||||||||||||||
Cost of sales
|
16,060 | 82 | % | 23,672 | 83 | % | ||||||||||
Engineering and development
|
442 | 2 | % | 498 | 2 | % | ||||||||||
Selling, general and administrative
|
3,450 | 17 | % | 3,740 | 13 | % | ||||||||||
Total costs and expenses
|
19,952 | 101 | % | 27,910 | 98 | % | ||||||||||
Operating income
|
(271 | ) | (1 | )% | 658 | 2 | % | |||||||||
Other expense
|
(33 | ) | — | % | (10 | ) | — | % | ||||||||
Income (loss) before income taxes
|
(304 | ) | (1 | )% | 648 | 2 | % | |||||||||
Income tax expense (benefit)
|
(90 | ) | — | % | 27 | — | % | |||||||||
Net income (loss)
|
$ | (214 | ) | (1 | )% | $ | 621 | 2 | % |
Systems
|
Service and
System
Integration
|
Total
|
% of
Total
|
|||||||||||||
(Dollar amounts in thousands)
|
||||||||||||||||
For the three months ended June 30, 2011:
|
||||||||||||||||
Product
|
$ | 1,323 | $ | 15,093 | $ | 16,416 | 83 | % | ||||||||
Services
|
152 | 3,113 | 3,265 | 17 | % | |||||||||||
Total
|
$ | 1,475 | $ | 18,206 | $ | 19,681 | 100 | % | ||||||||
% of Total
|
7 | % | 93 | % | 100 | % | ||||||||||
Systems
|
Service and
System
Integration
|
Total
|
% of
Total
|
|||||||||||||
For the three months ended June 30, 2010:
|
||||||||||||||||
Product
|
$ | 313 | $ | 23,440 | $ | 23,753 | 83 | % | ||||||||
Services
|
1,741 | 3,074 | 4,815 | 17 | % | |||||||||||
Total
|
$ | 2,054 | $ | 26,514 | $ | 28,568 | 100 | % | ||||||||
% of Total
|
7 | % | 93 | % | 100 | % | ||||||||||
Systems
|
Service and
System
Integration
|
Total
|
%
decrease
|
|||||||||||||
Increase (Decrease)
|
||||||||||||||||
Product
|
$ | 1,010 | $ | (8,347 | ) | $ | (7,337 | ) | (31 | )% | ||||||
Services
|
(1,589 | ) | 39 | (1,550 | ) | (32 | )% | |||||||||
Total
|
$ | (579 | ) | $ | (8,308 | ) | $ | (8,887 | ) | (31 | )% | |||||
% decrease
|
(28 | )% | (31 | )% | (31 | )% |
For the three Months Ended
|
||||||||||||||||||||||||
June 30,
2011
|
%
|
June 30,
2010
|
%
|
$ Increase
(Decrease)
|
% Increase
(Decrease)
|
|||||||||||||||||||
(Dollar amounts in thousands)
|
||||||||||||||||||||||||
Americas
|
$ | 12,836 | 65 | % | $ | 23,388 | 82 | % | $ | (10,552 | ) | (45 | )% | |||||||||||
Europe
|
6,568 | 33 | % | 5,122 | 18 | % | 1,446 | 28 | % | |||||||||||||||
Asia
|
277 | 2 | % | 58 | - | % | 219 | 378 | % | |||||||||||||||
Totals
|
$ | 19,681 | 100 | % | $ | 28,568 | 100 | % | $ | (8,887 | ) | (31 | )% |
Systems
|
Service and
System
Integration
|
Total
|
% of
Total
|
|||||||||||||
(Dollar amounts in thousands)
|
||||||||||||||||
For the three months ended June 30, 2011:
|
||||||||||||||||
Product
|
$ | 619 | $ | 13,071 | $ | 13,690 | 85 | % | ||||||||
Services
|
102 | 2,268 | 2,370 | 15 | % | |||||||||||
Total
|
$ | 721 | $ | 15,339 | $ | 16,060 | 100 | % | ||||||||
% of Total
|
4 | % | 96 | % | 100 | % | ||||||||||
% of Sales
|
49 | % | 84 | % | 82 | % | ||||||||||
Gross Margins:
|
||||||||||||||||
Product
|
53 | % | 13 | % | 17 | % | ||||||||||
Services
|
33 | % | 27 | % | 27 | % | ||||||||||
Total
|
51 | % | 16 | % | 18 | % | ||||||||||
Systems
|
Service and
System
Integration
|
Total
|
% of
Total
|
|||||||||||||
For the three months ended June 30, 2010:
|
||||||||||||||||
Product
|
$ | 288 | $ | 20,865 | $ | 21,153 | 89 | % | ||||||||
Services
|
117 | 2,402 | 2,519 | 11 | % | |||||||||||
Total
|
$ | 405 | $ | 23,267 | $ | 23,672 | 100 | % | ||||||||
% of Total
|
2 | % | 98 | % | 100 | % | ||||||||||
% of Sales
|
20 | % | 88 | % | 83 | % | ||||||||||
Gross Margins:
|
||||||||||||||||
Product
|
8 | % | 11 | % | 11 | % | ||||||||||
Services
|
93 | % | 22 | % | 48 | % | ||||||||||
Total
|
80 | % | 12 | % | 17 | % | ||||||||||
Increase (decrease)
|
||||||||||||||||
Product
|
$ | 331 | $ | (7,794 | ) | $ | (7,463 | ) | (35 | )% | ||||||
Services
|
(15 | ) | (134 | ) | (149 | ) | (6 | )% | ||||||||
Total
|
$ | 316 | $ | (7,928 | ) | $ | (7,612 | ) | (32 | )% | ||||||
% Increase (decrease)
|
78 | % | (34 | )% | (32 | )% | ||||||||||
% of Sales
|
29 | % | (4 | )% | (1 | )% | ||||||||||
Gross Margins:
|
||||||||||||||||
Product
|
45 | % | 2 | % | 6 | % | ||||||||||
Services
|
(60 | )% | 5 | % | (21 | )% | ||||||||||
Total
|
(29 | )% | 4 | % | 1 | % |
For the Three Months Ended
|
||||||||||||||||||||||||
June 30,
2011
|
% of
Total
|
June 30,
2010
|
% of
Total
|
$ Decrease
|
% Decrease
|
|||||||||||||||||||
(Dollar amounts in thousands)
|
||||||||||||||||||||||||
By Operating Segment:
|
||||||||||||||||||||||||
Systems
|
$ | 442 | 100 | % | $ | 498 | 100 | % | $ | (56 | ) | (11 | )% | |||||||||||
Service and System Integration
|
— | — | % | — | — | % | — | — | % | |||||||||||||||
Total
|
$ | 442 | 100 | % | $ | 498 | 100 | % | $ | (56 | ) | (11 | )% |
For the Three Months Ended
|
||||||||||||||||||||||||
June 30,
2011
|
% of
Total
|
June 30,
2010
|
% of
Total
|
$ Increase (Decrease)
|
% Increase (Decrease)
|
|||||||||||||||||||
(Dollar amounts in thousands)
|
||||||||||||||||||||||||
By Operating Segment:
|
||||||||||||||||||||||||
Systems
|
$ | 1,122 | 33 | % | $ | 1,073 | 29 | % | $ | 49 | 5 | % | ||||||||||||
Service and System Integration
|
2,328 | 67 | % | 2,667 | 71 | % | (339 | ) | (13 | )% | ||||||||||||||
Total
|
$ | 3,450 | 100 | % | $ | 3,740 | 100 | % | $ | (290 | ) | (8 | )% |
For the Three Months Ended
|
||||||||||||
June 30,
2011
|
June 30,
2010
|
Increase
(Decrease)
|
||||||||||
(Amounts in thousands)
|
||||||||||||
Interest expense
|
$ | (21 | ) | $ | (22 | ) | $ | 1 | ||||
Interest income
|
11 | 20 | (9 | ) | ||||||||
Foreign exchange gain (loss)
|
(9 | ) | (6 | ) | (3 | ) | ||||||
Other income (expense), net
|
(14 | ) | (2 | ) | (12 | ) | ||||||
Total other expense, net
|
$ | (33 | ) | $ | (10 | ) | $ | (23 | ) |
Item 4.
|
Controls and Procedures
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Issuer Purchases of Equity Securities
|
|||||||||||||
Period
|
Total Number of
Shares Purchased
|
Average Price
Paid per Share
|
Total Number of Shares
Purchased as
Part of Publicly
Announced Plans (1)
|
Maximum Number of
Shares that May
Yet Be
Purchased Under
the Plans
|
|||||||||
October 1-31, 2010
|
7,940 | $ | 4.53 | 7,940 | |||||||||
November 1-30, 2010
|
9,500 | $ | 4.52 | 9,500 | |||||||||
December 1-31, 2010
|
28,221 | $ | 3.98 | 28,221 | |||||||||
January 1-31, 2011
|
44,393 | $ | 3.98 | 44,393 | |||||||||
February 1-28, 2011
|
3,543 | $ | 4.01 | 3,543 | |||||||||
March 1-31, 2011
|
3,000 | $ | 4.20 | 3,000 | |||||||||
April 1-30, 2011
|
- | $ | - | - | |||||||||
May 1-31, 2011
|
4,145 | $ | 4.47 | 4,145 | |||||||||
June 1-30, 2011
|
8,692 | $ | 4.36 | 8,692 | |||||||||
Total
|
109,434 | $ | 4.12 | 109,434 |
285,122
|
(1)
|
All shares were purchased under publicly announced plans. For additional information about these publicly announced plans, please refer to Note 12 of our audited financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2010. On February 8, 2011, the Board of Directors authorized the Company to purchase up to 250 thousand additional shares of the Company’s outstanding common stock at market price.
|
Item 6.
|
Exhibits
|
Number
|
Description
|
|
3.1
|
Articles of Organization and amendments thereto (incorporated by reference to Exhibit 3.1 to our Form 10-K for the year ended September 30, 2007)
|
|
3.2
|
By-Laws, as amended (incorporated by reference to Exhibit 3.2 to our Form 10-K for the year ended September 30, 2007)
|
|
31.1*
|
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
31.2*
|
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
32.1*
|
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
101*
|
Interactive Data Files regarding (a) our Consolidated Balance Sheets as of June 30, 2011 and September 30, 2010, (b) our Consolidated Statements of Operations for the Three and Nine Months Ended June 30, 2011 and 2010, (c) our Consolidated Statement of Shareholders’ Equity for the Nine Months Ended June 30, 2011, (d) our Consolidated Statements of Cash Flows for the Nine Months Ended June 30, 2011 and 2010 and (e) the Notes to such Consolidated Financial Statements.
|
CSP INC.
|
|||
Date: August 9, 2011
|
By:
|
/s/Alexander R. Lupinetti
|
|
Alexander R. Lupinetti
|
|||
Chief Executive Officer,
|
|||
President and Chairman
|
|||
Date: August 9, 2011
|
By:
|
/s/Gary W. Levine
|
|
Gary W. Levine
|
|||
Chief Financial Officer
|
Number
|
Description
|
|
3.1
|
Articles of Organization and amendments thereto (incorporated by reference to Exhibit 3.1 to our Form 10-K for the year ended September 30, 2007)
|
|
3.2
|
By-Laws, as amended (incorporated by reference to Exhibit 3.2 to our Form 10-K for the year ended September 30, 2007)
|
|
31.1*
|
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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31.2*
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Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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32.1*
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Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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101*
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Interactive Data Files regarding (a) our Consolidated Balance Sheets as of June 30, 2011 and September 30, 2010, (b) our Consolidated Statements of Operations for the Three and Nine Months Ended June 30, 2011 and 2010, (c) our Consolidated Statement of Shareholders’ Equity for the Nine Months Ended June 30, 2011, (d) our Consolidated Statements of Cash Flows for the Nine Months Ended June 30, 2011 and 2010 and (e) the Notes to such Consolidated Financial Statements.
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