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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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 27, 1999
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
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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 $60,226,559 as of June 24, 1999.
There were 5,021,700 shares of Common Stock issued and outstanding as of
June 24, 1999.
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DOCUMENTS INCORPORATED BY REFERENCE
(1) Registrant's Annual Report to Stockholders for the fiscal year ended
March 27, 1999 (Part II, Items 5, 6, 7, 8 and Part IV, 14 (a)(1))
(2) Proxy Statement for Registrant's Annual Meeting of Stockholders to be held
on August 10, 1999 (Part III, 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
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
$17.875, the price at which the Common Stock was last sold on June 24, 1999 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 1999 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 $1600 per pair, two home theater subwoofer/satellite
systems currently priced at $700 and $1000 per system, and three powered
subwoofers priced at $400, $600 and $1200. 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
three indoor/outdoor speaker systems (Voyager-Registered Trademark-,
Runabout-Registered Trademark- I, and Runabout II) currently priced from $200
to $400 per pair. The Company also produces a complete THX-Registered
Trademark- Home Theater speaker system priced at $3,600 and the
DigitalTheater-TM- 6000, a complete digital home theater sound system priced
at $599.95.
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-TM- RC Series of component speakers, the Boston Rally RX Coaxial
Series, the Boston Rally RS Subwoofers and Band-Pass enclosure systems, the
Boston Rally RM Series, and the premium performance ProSeries Speaker Systems.
The Multimedia category of products sold through the Company's retailers and
via a direct Internet-based sales channel currently consists of three high
performance powered subwoofer/satellite speaker systems for computing
environments priced from $99.95 to $249.95 per system. The OEM sales of
Multimedia speaker systems sold to Gateway, Inc. ("Gateway"), a leading
global direct marketer of PC products, include the BA635 three-piece system,
the Digital MediaTheater-TM- three-piece system, and the DigitalTheater-TM-
6000, a complete Dolby-Registered Trademark- Digital 5.1 Channel Home Theater
System.
NEW PRODUCTS
In fiscal 1999, as in previous years, the Company introduced new systems for
all of our markets. These new products, described below, supplemented or
replaced certain products which in the Company's opinion had matured. The
Company believes that its new product offerings will increase penetration in
current markets, and help gain footholds in new markets.
A highlight of fiscal 1999 was the Company's introduction of the
DigitalTheater 6000. The DigitalTheater 6000 system is the first complete
home theater sound system with 5.1 channel Dolby-Registered Trademark-
Digital processing (the step beyond Dolby analog processing). It includes
five sonically matched satellite speakers and a powered subwoofer, driven by
a powerful six-channel amplifier. It is designed to utilize minimal space
while producing superior sound quality. It has a suggested retail price of
$599.95.
In fiscal 1999, the Company added an important new model to its
highly-regarded Lynnfield VR Series of floorstanding speakers. The new
Lynnfield VR940, priced at $500 per pair, utilizes an innovative new bass
driver designed and built by the Company that delivers exceptional
performance from a sleek enclosure. The VR940 received an "Innovations '99"
award for new product design and engineering excellence at the International
Consumer Electronics Show in Las Vegas.
The Company expanded its home theater speaker offerings with the introduction
of the System8000. This system is a complete six-speaker package with front
and rear satellites, a center channel speaker, and a 65-watt powered
subwoofer. It features the Company's MagnaGuard-Registered Trademark-
magnetic shielding and a DCD-TM- long excursion bass driver. The suggested
retail price is $700 per system.
The Company added two new models to its line of Compact Reference Series
bookshelf speakers. The CR4 and CR5 are both smaller than a typical hardcover
book, but offer smooth, wide-range sound. These new models are suited for use
in small, high-quality music systems, as extension speakers or as an upgrade
for speakers that are packaged with "shelf" audio systems. The CR4 and CR5
have suggested retail prices of $100 per pair and $150 per pair, respectively.
2
The Company's new Digital MediaTheater-TM- desktop home theater system also
debuted in fiscal 1999. Digital MediaTheater is a fully digital, self powered
sound system for the personal computing environment. It uses Dolby 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.
The basic system includes two satellites and a hideaway subwoofer and has a
suggested retail price of $299.95. Optional surround sound speakers are
available for $50.00 a pair.
In addition, the Company introduced the BA635 three-piece multimedia sound
system. The system includes two diminutive desktop satellite speakers and a
miniature hideaway subwoofer. It has quickly become one of the Company's best
selling models. The suggested retail price is $99.95 per system.
Introduced in fiscal 1999, the Company's new Designer Series DX Pro in-wall
diffuse-field surround speaker is designed to be mounted flush with the wall
surface. The DX Pro is designed to duplicate the performance of surround
speakers in a movie theater, projecting sound along walls, ceilings, floors
and other surfaces to provide a realistic three-dimensional sound field while
remaining virtually invisible. DX Pro grilles and frames can be painted to
match their surroundings. The suggested retail price is $500 per pair.
In addition to the DX Pro, the Company added three additional new speakers to
our popular Designer Series in fiscal 1999. Two of the new speakers are
flush-mounted wall speakers--the Model 261, a 6 1/2-inch two way with a
suggested retail price of $250per pair, and the Model 251, a 5 1/4-inch two
way with a suggested retail price of $200 per pair. The third speaker, the
Model 315, is a ceiling mounted speaker priced at $150 per pair and can be
used to bring audio into hallways and small rooms, or to provide rear-channel
surround in home theater systems.
The Company also introduced in fiscal 1999, a completely new generation of
its flagship ProSeries products for car audio enthusiasts. The ProSeries
family is designed to handle high power without distortion and with accurate
frequency response to produce detailed, clean sound. ProSeries components
include woofers and distinctly small tweeters that can be mounted in a
variety of places. These components can be installed in most stock factory
locations without modifying car interiors, or in custom arrangements
virtually anywhere in the vehicle. They have suggested retail prices ranging
from $400 to $750 for the system.
In addition to the ProSeries .5 component speakers, the Company also
introduced completely redesigned 8-inch, 10-inch and 12-inch ProSeries .5
subwoofers for loud, undistorted bass sound in automotive environments and
are priced from $220 to $300 each.
In June 1996, the Company acquired the business of Snell-Registered
Trademark- Acoustics ("Snell"), a manufacturer of high-quality speaker
systems for traditional audio and home theater use. Snell specializes in
creating furniture-quality speakers for discriminating customers. Snell's
line of speakers includes products in four ranges - - compact speaker
systems, floorstanding systems, in-wall speaker systems and THX home theater
systems. Products range from $450 per pair for small bookshelf speakers, to
$45,000 per system for a complete 7-speaker THX theater system with
state-of-the-art digital room correction.
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 59 full-time
employees and three outside consultants. During fiscal years 1997, 1998 and
1999 the Company spent approximately, $3,187,000, $3,513,000 and $5,106,000,
respectively, for engineering and development.
MARKETING
The Company employs 29 salespersons and retains 13 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 551
selected audio or audio specialist retailers, some of whom have multiple
outlets. The Company's car audio products are sold through approximately 332
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 and via a direct Internet-based sales channel
(www.bostondirect.com). During the fiscal year ended March 27, 1999 one
customer accounted for 49% 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 21% of net sales in fiscal 1997, 19% in fiscal 1998, and 14% in
fiscal 1999. See also Note 7 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, AUDIO, CAR AUDIO AND ELECTRONICS, CAR
STEREO REVIEW, VIDEO, HOME THEATER and AUDIO VIDEO INTERNATIONAL. During
fiscal 1999 the Company spent approximately $2,704,000 (2.3% of net sales)
for advertising.
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
4
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 274
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 1999. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--International Operations"
which is included in the Company's 1999 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.
PATENTS AND TRADEMARKS
Boston Acoustics holds seven 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-, and Runabout-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
5
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
A significant portion of the Company's sales currently are to Gateway, Inc.
("Gateway") pursuant to a purchase agreement that extends through July 2,
1999. Since this purchase 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.
Although the Company expects Gateway to continue as a significant customer,
the Company anticipates a decline in the quantity of products to be sold to
Gateway in fiscal 2000. 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 operation 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 27,
1999, March 28, 1998 and March 29, 1997, warranty costs recorded by the
Company were approximately $241,000, $193,000 and $232,000, respectively.
EMPLOYEES
As of June 24, 1999, the Company had 353 full-time employees who were engaged
as follows: 219 in production and materials management; 59 in engineering and
development; 49 in marketing and sales support; and 26 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 Fred E. Faulkner,
Jr., who is President and 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 10,
1999, under the headings "Proposal No. 1 -- Election of Directors" and "Board
of Directors." Information concerning the Company's other executive officers
as of June 24, 1999 is set forth below.
Name Age Title
- ---- --- -----
Moses A. Gabbay 54 Vice President - Engineering
Paul F. Reed 35 Vice President - Administrative Services
Debra A. Ricker-Rosato 43 Vice President - Finance
Robert L. Spaner 38 Vice President - Sales
Martin J. Harding 39 Vice President - Marketing
Moses A. Gabbay has been Vice President - Engineering since joining the Company
in 1981. Mr. Gabbay was previously Director of Engineering at Avid Corporation
and an acoustic engineer for Teledyne Acoustic Research.
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.
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.
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.
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.
7
ITEM 2. PROPERTIES
The Company owns its principal executive offices and manufacturing facilities
which sits on 11 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 1999.
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 1999.
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 1999
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 1999
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 1999 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 1999 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 27, 1999 and notes thereto on pages
11 through 19 in the Registrant's 1999 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 10, 1999 concerning Andrew G.
Kotsatos, who is the Chairman of the Board, Chief Executive Officer and
Treasurer of the Company, and Fred E. Faulkner, Jr., who is President and 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 Faulkner, 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 10, 1999.
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 10, 1999 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 10, 1999.
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 10, 1999.
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 10, 1999.
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 1999 Annual Report to Stockholders:
Report of Independent Public Accountants.
Consolidated Balance Sheets as of March 28, 1998 and March 27, 1999.
Consolidated Statements of Income for the three years ended March 27,
1999.
Consolidated Statements of Shareholders' Equity for the three years
ended March 27, 1999.
Consolidated Statements of Cash Flows for the three years ended
March 27, 1999.
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 II -- 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.
11
(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.
10.4.# - Purchase Agreement dated March 27, 1997 by and between
Gateway 2000, Inc. and Boston Acoustics, Inc. (3)
10.5. - Boston Acoustics, Inc. Warrant naming Gateway 2000, Inc.
as registered holder. (3)
10.6.# - Letter of Agreement (3) dated January 14, 1997 by and between
Gateway 2000, Inc. and Boston Acoustics, Inc. (3)
10.7. - Loan Agreement dated as of June 13, 1997 between Boston Acoustics, Inc. and
State Street Bank and Trust Company. (4)
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. (5)
10.9. - Stock Redemption Agreement dated as of June 13, 1997 by and among Boston
Acoustics, Inc. and Valerie R. Cohen, Lisa M. Mooney and Paul F. Reed
as Executors of the Estate of Francis L. Reed and the Estate of Dorothea T. Reed (6)
10.10.^ - Letter of Agreement dated December 22, 1997 by and between Gateway 2000,
Inc. and Boston Acoustics, Inc. (7)
10.11.^ - Letter of Agreement dated May 14, 1998 by and between Gateway 2000, Inc.
and Boston Acoustics, Inc.
13. * - 1999 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.
^ Indicates that portions of the exhibit have been omitted pursuant to 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.
12
(4) Incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report
on Form 10-Q for fiscal quarter ended June 28, 1997.
(5) 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.
(6) Incorporated by reference to Exhibit 10.3 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.
(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
27, 1999 through the date of this report.
13
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 29th day of June 1999.
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 6/29/99
- ---------------------- Director, Chief Executive ------------
Andrew G. Kotsatos Officer and Treasurer
s/Fred E. Faulkner, Jr. 6/29/99
- ---------------------- Director, President and ------------
Fred E. Faulkner, Jr. Chief Operating Officer
s/Debra A. Ricker-Rosato 6/29/99
- ---------------------- Vice President and ------------
Debra A. Ricker-Rosato Chief Accounting Officer
s/George J. Markos 6/29/99
- ---------------------- Director ------------
George J. Markos
s/Lisa M. Mooney 6/29/99
- ---------------------- Director ------------
Lisa M. Mooney
s/Gerald Walle 6/29/99
- ---------------------- Director ------------
Gerald Walle
14