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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED MARCH 25, 2000
OR
[ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________ TO __________
COMMISSION FILE NO. 33-9875
-----------------
BOSTON ACOUSTICS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MASSACHUSETTS 04-2662473
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR IDENTIFICATION NO.)
ORGANIZATION)
300 JUBILEE DRIVE
PEABODY, MASSACHUSETTS 01960
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(978) 538-5000
(REGISTRANT'S TELEPHONE NUMBER,INCLUDING AREA CODE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
None.
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
8,000,000 shares of Common Stock ($.01 Par Value)
(Title of Class)
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 if the disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the voting stock held by nonaffiliates of the
registrant was $35,907,359 as of June 22, 2000.
There were 4,908,245 shares of Common Stock issued and outstanding as of June
22, 2000.
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DOCUMENTS INCORPORATED BY REFERENCE
(1) Registrant's Annual Report to Stockholders for the fiscal year ended March
25, 2000 (Part II, Items 5, 6, 7, 8 and Part III, 14 (a)(1))
(2) Proxy Statement for Registrant's Annual Meeting of Stockholders to be held
on August 8, 2000 (Part IV, Items 10, 11, 12 and 13)
BOSTON ACOUSTICS, INC.
Securities and Exchange Commission
Item Number and Description Page
- - - - - - - - - - ---------------------------------- ----
PART I
ITEM 1. Business 1
ITEM 2. Properties 8
ITEM 3. Legal Proceedings 8
ITEM 4. Submission of Matters to a Vote of Security Holders 8
PART II
ITEM 5. Market for Registrant's Common Equity
and Related Stockholder Matters 9
ITEM 6. Selected Financial Data 9
ITEM 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
ITEM 8. Financial Statements and Supplementary Data 9
ITEM 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 9
PART III
ITEM 10. Directors and Executive Officers of the Registrant 10
ITEM 11. Executive Compensation 10
ITEM 12. Security Ownership of Certain Beneficial
Owners and Management 10
ITEM 13. Certain Relationships and Related Transactions 10
PART IV
ITEM 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K 11
SIGNATURES 14
INDEX TO FINANCIAL STATEMENT SCHEDULES F-1
Inasmuch as the calculation of shares of the registrant's voting stock held by
non-affiliates requires a calculation of the number of shares held by
affiliates, such figure, as shown on the cover page hereof, represents the
Registrant's best good faith estimate for purposes of this Annual Report on Form
10-K, and the Registrant disclaims that such figure is binding for any other
purpose. The aggregate market value of Common Stock indicated is based upon
$11.0625, the price at which the Common Stock was last sold on June 22, 2000 as
reported by The Nasdaq Stock Market. All outstanding shares beneficially owned
by executive officers and directors of the registrant or by any shareholder
beneficially owning more than 10% of registrant's Common Stock, as disclosed
herein, were considered for purposes of this disclosure to be held by
affiliates.
-i-
PART I
ITEM 1. BUSINESS
Boston Acoustics, Inc. (the "Company") engineers, manufactures and markets
moderately-priced, high-quality audio systems for use in home audio and video
entertainment systems, in after-market automotive audio systems and in
multimedia computer environments. The Company believes that its products deliver
better sound quality than other comparably priced audio systems. Most of the
Company's products are assembled by the Company from purchased components,
although certain automotive speakers are manufactured by others according to
Company specifications. All of the Company's products and subassemblies,
including those supplied by outside sources, have been designed by the Company's
engineering department. Boston Acoustics' speakers are marketed nationwide
through selected audio and audio-video specialty dealers and through
distributors in many foreign countries. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- International
Operations" which is included in the Company's 2000 Annual Report which is filed
as Exhibit 13 hereto.
The Company was organized as a Massachusetts corporation in 1979 by Andrew G.
Kotsatos and former Chief Executive Officer, Francis L. Reed, who passed away in
November 1996. Its principal executive offices and manufacturing facilities are
located at 300 Jubilee Drive, Peabody, Massachusetts.
PRODUCTS
The Company has determined it has two reportable business industry segments:
Core and original equipment manufacturer (OEM) and Multimedia. Prior to fiscal
1998, the Company operated as a single segment. The Company's reportable
segments are strategic business units that sell the Company's products to
distinct distribution channels. Both segments derive their revenues from the
sale of audio systems. They are managed separately because each segment requires
distinct selling and marketing strategies, as the class of customers within each
segment is different. Each business segment has distinct product lines as
discussed below.
The Home Loudspeaker line consists of six bookshelf models currently ranging in
price from $100 to $420 per pair, four floor-standing systems currently priced
from $500 to $1,600 per pair, two home theater subwoofer/satellite systems
currently priced at $700 and $1,000 per system, and four powered subwoofers
priced at $300, $450, $700, and $1,200. Additional products for the home theater
market include five different center-channel speakers currently ranging in price
from $130 to $600 each and three diffuse-field surround speakers ranging in
price from $200 to $500 per pair. The Company also produces magnetically
shielded versions of most of its models and produces four indoor/outdoor speaker
systems (Voyager-Registered Trademark- 3, Voyager 2, Voyager Pro, and Grand
Voyager) priced from $220 to $700 per pair. The Company also produces the
DigitalTheater-TM- 6000 and DigitalTheater7000, complete digital home theater
sound systems priced at $600 and $1,000 respectively.
1
The Designer Series line is a collection of speaker systems engineered for flush
mounting in the walls or ceilings of homes, businesses and recreational
vehicles. There are eleven models in the Designer Series line with prices
currently ranging from $130 to $500 per pair.
The Automotive Series consists of 39 models of automotive speakers with prices
currently ranging from $60 to $700 per pair. The automotive line includes
high-quality full-range replacement speakers, sophisticated component systems,
and subwoofers. The component systems permit flexible speaker placement and
provide sound rivaling that of fine home speakers. The automotive line includes
the CX Series, the 700 Series of plate speakers, the Boston Rally-Registered
Trademark- RC Series of component speakers, the Boston Rally RX Coaxial Series,
the Competitor Series subwoofer and enclosure systems, the Generator Series
subwoofers, the Boston Rally RM Series, and the premium performance ProSeries
Speaker Systems.
The Multimedia category of products sold through the Company's retailers,
through business arrangements with two distributors and two leading computer
retailers, and via a direct Internet-based sales channel currently consists of
four high performance powered subwoofer/satellite speaker systems for computing
environments priced from $70 to $250 per system. The OEM sales of Multimedia
speaker systems sold to Gateway, Inc. ("Gateway"), a leading global direct
marketer of PC products, include the Digital BA735 subwoofer/satellite system,
the Digital MediaTheater-TM- three-piece system, the DigitalTheater 6000 and the
BA7500 thin panel audio system designed for desktop theater applications such as
DVDs and PC games. These products are available either as a component of certain
pre-configured computer systems offered by Gateway, or as an upgrade option on
those configurations that do not include Boston Acoustics' products as standard.
NEW PRODUCTS
In Fiscal 2000, as in previous years, Boston met the challenges of the changing
marketplace with new systems for all of our target markets. These new products,
described below, are intended to supplement or replace those products which have
matured, to increase penetration into current markets, and to gain footholds in
new markets.
Fiscal 2000 saw the Company's introduction of the DigitalTheater 7000. This
system is the second complete home theater sound system with 5.1 channel
Dolby-Registered Trademark- Digital processing that Boston has introduced and
follows last year's successful introduction of the smaller DT6000 system. It
includes five sonically matched satellite speakers and a powered subwoofer, all
driven by its own powerful six-channel 350 watt Boston designed amplifier. With
a suggested retail price of only $1,000, it offers outstanding performance in a
space-saving, easy-to-connect format. The DT7000 received an "Innovations 2000"
award for new product design and engineering excellence at the International
Winter Consumer Electronics Show in Las Vegas.
The Company added two important new models to its highly-regarded Lynnfield VR
line. The new VR-M50 and VR-M60 Lynnfield `Monitor' style speakers feature
elegant real wood veneer cabinets and Boston's most advanced drive units for
excellent sound from compact enclosures. The suggested retail price of the
VR-M50 is $700 per pair and the VR-M60 is $1,000 per pair.
The Company expanded its line of complete home theater speaker systems with the
introduction of the System 10K, a set of five high performance satellite
speakers in rugged cast aluminum housings. The result, when partnered with one
of the new Boston PowerVent-Registered Trademark- subwoofers, gives the customer
a complete home theater speaker system that delivers the same level of
performance as a much larger system. The system 10K is priced at $1,500.
2
Boston's popular Home Audio/Home Theater `powered tower' speaker line also
received attention this year with two new models, the VR975 and VR965. Both
models are designed to give customers the performance of a floor standing
speaker with the bass impact of a powered subwoofer, in one space saving design.
Both the $1,600 per pair VR975 and the $1,000 per pair VR965 feature much of
Boston's proprietary driver and electronics design experience and technology.
The VR965 was one of five Boston products that won a CES "Innovations 2000"
award this year.
This fiscal year also saw the launch of a line of four all-new
PowerVent-Registered Trademark- powered home subwoofers. Starting at $300, these
subwoofers are capable of producing deep bass and high output from surprisingly
compact enclosures. The PV400 is priced at $300, the PV600 at $450, the PV800 at
$700. The top-of-the-line award winning compact PV1000 features a 1000-watt
amplifier and a real wood veneer cabinet at $1,200 The PV1000 was also an
"Innovations 2000" award-winning product at the CES awards this year.
Boston's successful Multimedia line also grew this year with the introduction of
three innovative new models. The Digital BA735 (launched in May) is the world's
first multimedia subwoofer-satellite stereo system featuring an S/PDIF
(Sony/Philips Digital Interface Format) input. Using this digital input enables
the user to enjoy a much cleaner sound than with conventional speakers because
the digital to analog conversion is actually done within the BA735 speaker
system.
The Company's latest new Digital Multimedia desktop home theater system, the
BA7500 also made its debut in Fiscal 2000. The BA7500 is Boston's first product
that uses Boston's patented SST-TM- (Slimline Speaker Technology-TM-) drivers.
This system is a fully digitAL, self-powered sound system for the PC. It uses
Dolby-Registered Trademark- Digital Decoding and Virtual Dolby to create a full
5.1 channel Dolby Digital sound experience for games, movies, music and other PC
multimedia audio sources. It also features 4 channel gaming ability. The system
includes four satellites and a hideaway subwoofer for $300 MSRP. The BA7500 also
won an "Innovations 2000" Award at the CES show.
In addition, the Company introduced the BA4800, a 5-piece multimedia sound
system especially for PC `gamers' using the 4-channel gaming system. With four
diminutive desktop satellites and a powerful hideaway subwoofer, the BA4800 is
priced at $200.
The Company's new Voyager outdoor series was also launched this year. These
rugged outdoor models provide true hi-fi quality performance for outdoor
listening and are fully weather resistant - even in the harshest environments.
Available in both white and black finishes, the Voyager line contains four
models (Voyager 2, Voyager 3, Voyager Pro and Grand Voyager) ranging from $220
to $700 per pair.
Boston also launched two families of automotive subwoofers this year, the
Competitor Series and the Generator Series. Both feature versions of Boston's
proprietary driver cooling technology to enable the drivers to provide tight,
deep bass even at high volume levels. Competitor subwoofers are also available
as systems mounted in carpeted enclosures. The Competitor enclosures feature a
tuned radiator to give higher power and volume from very small enclosures. Both
series are available in 2 ohm or 4 ohm configurations. The four Competitor
drivers range in price from $200 to $280. The two innovative Competitor
enclosure models the--C110 (another CES Innovations award winning product from
Boston Acoustics) and the C210--sell for $400 and $650, respectively. The
Generator series is priced at $120 to $180. The Generator 15" Subwoofer won a
coveted AUTOSOUND Grand Prix Award.
3
ENGINEERING AND DEVELOPMENT
The Company's engineering and development department is actively engaged in the
development of new products and manufacturing processes, the improvement of
existing products and the research of new materials for use in the Company's
products. The Company designs all of its products and subassemblies, including
those supplied by outside sources.
The Company's engineering and development staff includes 60 full-time employees
and three outside consultants. During fiscal years 1998, 1999 and 2000 the
Company spent approximately $3,513,000, $5,106,000, and $5,936,000 respectively,
for engineering and development.
MARKETING
The Company employs 27 salespersons and retains 17 manufacturer's
representatives who service the Company's dealer network. In addition, the
Company retains the services of two freelance public relations consultants (one
in the United States, one in Europe) to assist in the professional promotion of
the Company and its products. Boston Acoustics' home audio, Designer Series (in
wall/in ceiling models) and outdoor speaker products are distributed in the
United States and Canada through approximately 567 selected audio or audio
specialist retailers, some of whom have multiple outlets. The Company's car
audio products are sold through approximately 389 similarly specialized
retailers, some of whom also sell the Company's home audio products. The
Company's dealers usually stock and sell a broad range of audio products
including, in most cases, the Company's competitor's products. The Company seeks
dealers who emphasize quality products and who are knowledgeable about the
products they sell. The Company's Multimedia products are sold through an OEM
agreement with Gateway, through the Company's retailers, through business
arrangements with two distributors and two leading computer retailers, and via a
direct Internet-based sales channel (www.bostonacoustics.com). During the fiscal
year ended March 25, 2000 one customer accounted for 44% of net sales.
Boston Acoustics' products are also exported to dealers in Canada and sold
through exclusive distributors in over 50 foreign countries, primarily in
Europe, Asia/Pacific and South/Central America. Export sales accounted for
approximately 19% of net sales in Fiscal 1998, 14% in Fiscal 1999, and 17% in
Fiscal 2000. See also Note 6 to Consolidated Financial Statements incorporated
herein by reference, pursuant to Part II, Item 8.
The Company emphasizes the high performance-to-price ratio of its products in
its advertising and promotion. Boston Acoustics believes that specialty
retailers can be effective in introducing retail customers to the high dollar
value of the Company's products. The Company directly supports its domestic
dealers and international distributors via a cooperative advertising program,
prepared advertisements, detailed product literature and point of purchase
materials. The Company also regularly advertises in national specialist
magazines including SOUND AND VISION, CAR AUDIO AND ELECTRONICS, CAR STEREO
REVIEW, MAX POWER, AUDIO VIDEO INTERIORS, DIGITAL HOME ENTERTAINMENT, HOME
THEATER and AUDIO VIDEO INTERNATIONAL. During Fiscal 2000 the Company spent
approximately $2,754,000 (2.6% of net sales) for advertising.
4
COMPETITION
The Company competes primarily on the basis of product performance, price and
the strength of its dealer organization.
The market for branded loudspeaker systems is served by many manufacturers, both
foreign and domestic. Many products are available over a broad price range, and
the market is highly fragmented and competitive. The Company distributes its
products primarily through specialty retailers where it competes directly for
space with other branded speaker manufacturers. Audio systems produced by many
of the Company's competitors can be purchased by consumers through mass
merchandisers, department stores, mail-order merchants, and catalogue showrooms.
The Company believes it is more advantageous to distribute through specialty
retailers who provide sales support and service to consumers.
Boston Acoustics competes with a substantial number of branded speaker
manufacturers, including Bose Corporation, Infinity and JBL (divisions of Harman
International Industries), Advent (division of Recoton Corp.), Polk Audio, Inc.,
and Klipsch and Associates, Inc. Some of these competitors have greater
technical and financial resources than the Company and may have broader brand
recognition than Boston Acoustics.
In addition to competition from branded loudspeaker manufacturers, the Company's
products compete indirectly with single name "rack systems". Rack systems
contain all the various components needed to form an audio system, and are sold
by Sony, Pioneer, Technics, Yamaha and many others. Rack systems are generally
sold through mass merchandisers and department stores, although many of the
Company's dealers also sell rack systems.
MANUFACTURING AND SUPPLIERS
Most of the Company's products are assembled by the Company from components
specially fabricated for the Company, although certain automotive speakers and
multimedia audio systems are manufactured by others in certain foreign countries
according to Company specifications.
The Company purchases materials and component parts from approximately 222
suppliers located in the United States, Canada, Europe and the Far East.
Although Boston Acoustics relies on single suppliers for certain parts, the
Company could, if necessary, develop multiple sources of supply for these parts.
The Company does not have long-term or exclusive purchase commitments. The
Company does have a written agreement with one of its inventory suppliers, which
accounted for more than 10% of the Company's purchases during fiscal year 2000.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- International Operations" which is included in the Company's 2000
Annual Report which is filed as Exhibit 13 hereto.
SEASONALITY AND CONSUMER DISCRETION
The home and automotive audio markets are both somewhat seasonal, with a
majority of home speaker retail sales normally occurring in the period October
through March and a majority of automotive speaker retail sales normally
occurring in the period April through October.
The Company's sales and earnings can also be affected by changes in the general
economy since purchases of home entertainment and automotive audio products,
including loudspeakers, are discretionary for consumers.
5
PATENTS AND TRADEMARKS
Boston Acoustics holds eight United States patents and numerous international
patents, which relate to certain speaker technologies, assemblies and cabinet
design. The Company also currently has several registered trademarks including
Boston-Registered Trademark-, Boston Acoustics-Registered Trademark-,
PowerVent-Registered Trademark-, Tempo-Registered Trademark-, Voyager-Registered
Trademark-, Runabout-Registered Trademark-, SoundBar-Registered Trademark-, and
Boston Rally-Registered Trademark-. Trademarks used by the SnelL subsidiary
include Snell Acoustics, Snell Multimedia, Snell Music & Cinema and Room
Ready-Registered Trademark-. The Company believes that its growth, competitive
position and success in the marketplace are more dependent on its technical and
marketing skills and expertise than upon the ownership of patent and trademark
rights. There can be no assurance that any patent or trademark would ultimately
be proven valid if challenged.
SIGNIFICANT CUSTOMERS
The Company's financial results for the fiscal year ended March 25, 2000 include
significant OEM sales of multimedia speaker systems to Gateway, Inc.
("Gateway"). The terms of these sales are governed by the Master Supply
Agreement between Gateway and the Company. On July 19, 1999, the Company entered
into a new three year Master Supply Agreement with Gateway. Since this Master
Supply Agreement with Gateway does not contain minimum or scheduled purchase
requirements, purchase orders by Gateway may fluctuate significantly from
quarter to quarter over the terms of the agreement. Based on information
currently available from our OEM customer, the Company anticipates that our OEM
sales should reflect a slight increase in sales during the fiscal year ending
March 31, 2001. The loss of Gateway as a customer or any significant portion of
orders from Gateway could have a material adverse affect on the Company's
business, results of operations and financial condition. In addition, the
Company also could be materially adversely affected by any substantial work
stoppage or interruption of production at Gateway or if Gateway were to reduce
or cease conducting operations.
BACKLOG
The Company currently has no significant backlog. The Company's policy is to
maintain sufficient inventories of finished goods to fill all orders within two
business days of receipt.
WARRANTIES
Boston Acoustics warrants its home speakers to be free from defects in materials
and workmanship for a period of five years, its Designer Series speakers and its
automotive speakers for one year and its multimedia audio speaker systems for a
period of three years. During the years ended March 25, 2000, March 27, 1999 and
March 28, 1998, warranty costs recorded by the Company were approximately
$221,000, $241,000 and $193,000, respectively.
EMPLOYEES
As of June 10, 2000, the Company had 366 full-time employees who were engaged as
follows: 221 in production and materials management; 60 in engineering and
development; 54 in marketing and sales support; and 31 in administration.
None of the Company's employees are represented by a collective bargaining
agreement and the Company believes that its relations with its employees are
satisfactory.
6
EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning Andrew G. Kotsatos, who is Chairman of the Board, Chief
Executive Officer and Treasurer of the Company, and Moses A. Gabbay who is Chief
Operating Officer of the Company, is incorporated herein by reference from the
Company's definitive Proxy Statement for its Annual Meeting of Stockholders to
be held on August 8, 2000, under the headings "Proposal No. 1 -- Election of
Directors" and "Board of Directors." Information concerning the Company's other
executive officers as of June 22, 2000 is set forth below.
Name Age Title
- - - - - - - - - - ---- --- -----
Michael B. Chass 30 Vice President - Multimedia Products Group
Martin J. Harding 40 Vice President - Marketing
Paul F. Reed 36 Vice President - Administrative Services
Debra A. Ricker-Rosato 44 Vice President - Finance
Michael J. Rudd 55 Vice President - New Technology
Robert L. Spaner 40 Vice President - Sales
Michael B. Chass was named Vice President - Multimedia Products Group in August
1999. He joined the Company in 1994 as an account manager. In 1996 he became a
Sales Manager and in 1998 became a Director of Sales. Mr. Chass was formerly
employed by C.P.S. Marketing as an Assistant Director of Sales and Marketing. He
holds a BSBA in Marketing from the University of Missouri.
Martin J. Harding was named Vice President - Marketing in November 1998. He
joined the Company in 1996 as International sales manager. In 1997 he became
Director of International Sales and Marketing. Mr. Harding previously held
positions specializing in International sales and marketing with Casio,
Celestion and NAD Electronics.
Paul F. Reed was named Vice President - Administrative Services in May 1993. He
has been with the Company since its inception in 1979. From production and
shipping, Mr. Reed moved to sales in 1986 and, in 1989, became a Regional Sales
Manager. He was named Director of Administrative Services in 1990.
Debra A. Ricker-Rosato was named Vice President - Finance in May 1993. Prior to
joining the Company in October 1986 as Controller, Ms. Ricker-Rosato was
employed by Babco-Textron from 1975, a manufacturer of small aircraft engine
components. Her last position with Babco-Textron was that of Assistant
Controller. She holds an MSF degree from Bentley College.
Michael J. Rudd was named Vice President - New Technology in January 2000. He
joined the Company in 1995 as a product manager. In 1997 he became Manager of
New Technology - Engineering. Prior to joining the Company, Mr. Rudd worked as a
consultant specializing in acoustic arrays. Mr. Rudd previously held positions
with Atlantic Applied Research, Bolt Beranek and Newman and New York University.
Mr. Rudd holds a PhD in Physics from the University Cambridge, England.
Robert L. Spaner was named Vice President - Sales in May 1993. He joined the
Company in 1987 as a regional sales manager. In 1990 he became National Sales
Manager. Mr. Spaner was formerly employed by Kloss Video as Western Regional
Manager and worked six years in retail sales at Tweeter, Etc.
7
Each executive officer is elected for a term scheduled to expire at the meeting
of Directors following the Annual Meeting of Stockholders or until a successor
is duly chosen and qualified. There are no arrangements or understandings
pursuant to which any executive officer was or is to be selected for election or
reelection. There are no family relationships among any Directors or executive
officers, except that Paul F. Reed, an executive officer, and Lisa M. Mooney, a
director, are brother and sister.
ITEM 2. PROPERTIES
The Company owns its principal executive offices and manufacturing facilities
which sits on 15 acres of land at 300 Jubilee Drive, Peabody, Massachusetts.
Snell Acoustics ("Snell"), a subsidiary of the Company, leases all of the
properties used in its business. Snell maintains its principal executive offices
and manufacturing facilities at 143 Essex Street, Haverhill, Massachusetts. A
total of 65,090 square feet of space is leased from an unrelated party under an
operating lease which expires in September 2000.
ITEM 3. LEGAL PROCEEDINGS
There are no material legal proceedings affecting the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of shareholders during the fourth
quarter of Fiscal 2000.
8
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The information required by this item is incorporated by reference to the
section entitled "Stock Market Activity" on page 21 in the Registrant's 2000
Annual Report to Stockholders, which is filed herewith as Exhibit 13.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this item is incorporated by reference to the
section entitled "Selected Financial Data" on page 20 in the Registrant's 2000
Annual Report to Stockholders, which is filed herewith as Exhibit 13.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The information required by this item is incorporated by reference to the
section entitled "Management's Discussion and Analysis of Financial Condition
and Results of Operations" on pages 6 through 10 in the Registrant's 2000 Annual
Report to Stockholders, which is filed herewith as Exhibit 13.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this item is incorporated by reference to the
section entitled "Quantitative and Qualitative Disclosures about Market Risk" on
page 9 in the Registrant's 2000 Annual Report to Stockholders, which is filed
herewith as Exhibit 13.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is incorporated by reference to the
Consolidated Financial Statements at March 25, 2000 and notes thereto on pages
11 through 19 in the Registrant's 2000 Annual Report to Stockholders, which is
filed herewith as Exhibit 13.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
9
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Pursuant to General Instruction G (3) of Form 10-K and Instruction 3 to Item
401(b), the information required by this item concerning executive officers,
including certain information incorporated herein by reference to the
information appearing in the Company's definitive Proxy Statement for its
Annual Meeting of Stockholders to be held on August 8, 2000 concerning Andrew
G. Kotsatos, who is the Chairman of the Board, Chief Executive Officer and
Treasurer of the Company, and Moses A. Gabbay, Chief Operating Officer of the
Company, is set forth in Part I, Item 1, hereof, under the heading "Executive
Officers of the Registrant". Information concerning Directors, including
Messrs. Kotsatos and Gabbay, is incorporated by reference to the sections
entitled "Proposal No. 1 -- Election of Directors", "Board of Directors" and
"Compensation Interlocks and Insider Participation" in the Registrant's
definitive Proxy Statement for its Annual Meeting of Stockholders to be held
August 8, 2000.
There is incorporated herein by reference to the discussion under "Compliance
with Section 16(a) of the Securities Exchange Act of 1934" in the Company's
definitive Proxy Statement for its Annual Meeting of Stockholders to be held
August 8, 2000 the information with respect to delinquent filings of reports
pursuant to Section 16(a) of the Securities Exchange Act of 1934.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated by reference to the
sections entitled "Executive Compensation" in the Registrant's definitive Proxy
Statement for its Annual Meeting of Stockholders to be held August 8, 2000.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information required by this item is incorporated by reference to the
section entitled "Principal and Management Stockholders" in the Registrant's
definitive Proxy Statement for its Annual Meeting of Stockholders to be held
August 8, 2000.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated by reference to the
section entitled "Certain Relationships and Transactions" in the Registrant's
definitive Proxy Statement for its Annual Meeting of Stockholders to be held
August 8, 2000.
10
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K.
(a) The following documents are included as part of this report:
(1) FINANCIAL STATEMENTS
The following consolidated financial statements are incorporated by
reference to the Registrant's 2000 Annual Report to Stockholders:
Report of Independent Public Accountants.
Consolidated Balance Sheets as of March 27, 1999 and March 25, 2000.
Consolidated Statements of Income for the three years ended March 25,
2000.
Consolidated Statements of Shareholders' Equity for the three years
ended March 25, 2000.
Consolidated Statements of Cash Flows for the three years ended March
25, 2000.
Notes to Consolidated Financial Statements.
(2) FINANCIAL STATEMENT SCHEDULES
The following financial statement schedules are filed as part of this
report and should be read in conjunction with the consolidated
financial statements:
Report of Independent Public Accountants.
Schedule I -- Valuation and Qualifying Account.
Other financial schedules have been omitted because they are not
required or because the required information is included in the
Consolidated Financial Statements or notes thereto.
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(3) LISTING OF EXHIBITS
Exhibits
--------
3.1. - Articles of Organization (1)
3.2. - Amendment to Articles of Organization (1)
3.3. - Second Amendment to Articles of Organization (1)
3.4. - Bylaws (1)
4.1. - Specimen Share Certificate (1)
10.1.+ - 1996 Stock Plan adopted by Boston Acoustics, Inc.
on February 20, 1996, as amended (3)
10.2.+ - 1986 Incentive Stock Option Plan adopted by Boston
Acoustics, Inc. on October 15, 1986, as amended (2)
10.3.+ - 1997 Stock Plan adopted by Boston Acoustics, Inc. on May 28, 1997. (9)
10.4.# - Purchase Agreement dated March 27, 1997 by and between
Gateway 2000, Inc. and Boston Acoustics, Inc. (3)
10.5.# - Letter of Agreement dated January 14, 1997 by and between
Gateway 2000, Inc. and Boston Acoustics, Inc. (3)
10.6.# - Master Supply Agreement dated July 19, 1999 by and between
Gateway, Inc. and Boston Acoustics, Inc. (4)
10.7. - Loan Agreement dated as of June 13, 1997 between Boston Acoustics, Inc. and
State Street Bank and Trust Company. (5)
10.8. - Revolving Credit Note dated as of June 13, 1997 in the amount of $25,000,000
made by Boston Acoustics, Inc. payable to the order of State Street Bank and
Trust Company. (6)
10.9.# - Letter of Agreement dated December 22, 1997 by and between Gateway 2000,
Inc. and Boston Acoustics, Inc. (7)
10.10.# - Letter of Agreement dated May 14, 1998 by and between Gateway 2000, Inc.
and Boston Acoustics, Inc. (10)
13. * - 2000 Annual Report to Shareholders
21. - Subsidiaries of the Registrant (3)
23. * - Consent of Independent Public Accountants
27. * - Financial Data Schedule
99. - "Safe Harbor" Statement under Private Securities Litigation
Reform Act of 1995 (8)
* Indicates an exhibit which is filed herewith.
+ Indicates an exhibit which constitutes an executive compensation plan.
# Indicates that portions of the exhibit have been omitted pursuant to an order
granting a request for confidential treatment.
- - - - - - - - - - -------------------
(1) Incorporated by reference to the similarly numbered exhibits in Part II of
File No. 33-9875.
(2) Incorporated by reference to the similarly numbered exhibit in Item 14 of
the Company's Annual Report on Form 10-K for the year ended March 27, 1993.
(3) Incorporated by reference to the similarly numbered exhibit in Item 14 of
the Company's Annual Report on Form 10-K for the fiscal year ended March 29,
1997.
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(4) Incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report
on Form 10-Q for fiscal quarter ended September 25, 1999.
(5) Incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report
on Form 10-Q for the fiscal quarter ended June 28, 1997.
(6) Incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report
on Form 10-Q for the fiscal quarter ended June 28, 1997.
(7) Incorporated by reference to Exhibit 10.A. to the Company's Quarterly Report
on Form 10-Q for the fiscal quarter ended December 27, 1997.
(8) Incorporated by reference to the similarly numbered exhibit in Item 14 of
the Company's Annual Report on Form 10-K for the fiscal year ended March 30,
1996.
(9)Incorporated by reference to Exhibit 10.C. to the Company's Annual Report
on Form 10-K for the fiscal year ended March 28, 1998.
(10)Incorporated by reference to Exhibit 10.L. to the Company's Annual Report
on Form 10-K for the fiscal year ended March 28, 1998.
(b) REPORTS ON FORM 8-K:
No reports on Form 8-K were filed by the Registrant during the last quarter
covered by this report, and no other such reports were filed subsequent to March
25, 2000 through the date of this report.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Peabody,
Commonwealth of Massachusetts, on the 22nd day of June 2000.
BOSTON ACOUSTICS, INC.
(Registrant)
BY: /s/ Andrew G. Kotsatos
----------------------------
Andrew G. Kotsatos
Chief Executive Officer
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 and
in the capacities and on the dates indicated.
Signatures Capacities Date
/s/ Andrew G. Kotsatos 6/22/00
- - - - - - - - - - ---------------------- Director, Chief Executive ------------
Andrew G. Kotsatos Officer and Treasurer
/s/ Moses A. Gabbay 6/22/00
- - - - - - - - - - ---------------------- Director, and ------------
Moses A. Gabbay Chief Operating Officer
/s/ Debra A. Ricker-Rosato 6/22/00
- - - - - - - - - - ---------------------- Vice President and ------------
Debra A. Ricker-Rosato Chief Accounting Officer
/s/ George J. Markos 6/22/00
- - - - - - - - - - ---------------------- Director ------------
George J. Markos
/s/ Lisa M. Mooney 6/22/00
- - - - - - - - - - ---------------------- Director ------------
Lisa M. Mooney
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BOSTON ACOUSTICS, INC. AND SUBSIDIARIES
Schedule I
Valuation and Qualifying Accounts
----------------ALLOWANCE FOR DOUBTFUL ACCOUNTS----------------
BALANCE, CHARGED TO
BEGINNING OF COSTS AND BALANCE, END
YEAR EXPENSES DEDUCTIONS(1) OF YEAR
For the fiscal year ended--
March 25, 2000 $ 463,000 $ 7,000 $ (125,000) $ 345,000
=========== ============ ============== ============
March 27, 1999 $ 402,000 $ 163,000 $ (102,000) $ 463,000
=========== ============ ============== ============
March 28, 1998 $ 411,000 $ 36,000 $ (45,000) $ 402,000
=========== ============ ============== ============
(1) Amounts deemed uncollectible net of recoveries of previously reserved
amounts.
---------------RESERVE FOR OFF-INVOICE ALLOWANCES---------------
BALANCE, CHARGED TO
BEGINNING OF COSTS AND BALANCE, END
YEAR EXPENSES DEDUCTIONS OF YEAR
For the fiscal year ended--
March 25, 2000 $ 2,102,000 $ 11,715,000 $ (11,254,000) $ 2,563,000
=========== ============ ============== ============
March 27, 1999 $ 1,660,000 $ 10,411,000 $ (9,969,000) $ 2,102,000
=========== ============ ============== ============
March 28, 1998 $ 1,336,000 $ 8,524,000 $ (8,200,000) $ 1,660,000
=========== ============ ============== ============
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