BRLC 10-Q...Highlights......
Results of Operations
Three months ended December 31, 2006 compared with three months ended December 31, 2005
Net Sales. Net sales increased 303% to $242.5 million in the second quarter of fiscal 2007
from $60.2 million in the second quarter of fiscal 2006. Net sales consisted of LCD television
sales of $227.2 million, LCoS product sales of $1.9 million, and Digital Camera sales of
$13.4 million. LCD television revenue of $227.2 million represents an increase of 280% from
$59.9 million in the comparable quarter of the previous year. The increase in LCD television
revenue was a result of increased unit shipments. During the quarter ended December 31, 2006,
we shipped approximately 352,000 units compared with approximately 94,000 units in the quarter
ended December 31, 2005. LCoS revenue for the second quarter of fiscal 2007 was $1.9 million
compared with $294,000 for the second quarter of fiscal 2006, which only included LCoS revenue
for the month of December. Digital Camera revenue for the second quarter of fiscal 2007 was
$13.4 million. The acquisition of Vivitar was completed on November 21, 2006, therefore only
sales activity from November 21, 2006 through December 31, 2006 was included in results.
Net sales in North America totaled $101.4 million, or 42% of total net sales, in the second
quarter of fiscal 2007 compared with $52.7 million, or 88% of total net sales, in the second
quarter of fiscal 2006. Net sales in Asia totaled $134.2 million, or 55% of total net sales,
in the second quarter of fiscal 2007 compared with $7.5 million, or 12% of total net sales,
in the second quarter of fiscal 2006. Net sales in Europe totaled $6.9 million, or 3% of
total net sales, in the second quarter of fiscal 2007, compared with $36,000, or less than
1% of total net sales, in the second quarter of fiscal 2006.
At December 31, 2006, all convertible and secured debentures had been retired.
The original discount and beneficial conversion feature to the redeemable convertible
preferred stock was $11.6 million, of which $3.5 million remained unaccreted at December 31, 2006.
LCD television revenue of $312.9 million represents an increase of 359% from $87.2 million
in the comparable six months of the previous year. The increase in LCD television revenue
was a result of increased unit shipments. During the six months ended December 31, 2006,
we shipped approximately 496,000 units compared with approximately 128,000 units in the
six months ended December 31, 2005.
Digital Camera revenue for the first half of fiscal 2007 was $13.4 million. The acquisition
of Vivitar was completed on November 20, 2006; therefore only sales activity from November 21,
2006 through December 31, 2006 was included in results. Net sales in North America totaled
$140.3 million, or 43% of total net sales, in the first half of fiscal 2007 compared with
$76.4 million, or 87% of total net sales, in the first half of fiscal 2006. Net sales in
Asia totaled $182.3 million, or 55% of total net sales, in the first half of fiscal 2007
compared with $11.1 million, or 13% of total net sales, in the first half of fiscal 2006.
Net sales in Europe totaled $7.0 million, or 2% of total net sales, in the first half of
fiscal 2007 compared with $36,000, or less than 1% of total net sales in the first half
of fiscal 2006.
We believe that the cash from operations and the increased credit facilities will be
sufficient to sustain operations at the current level for the next 12 months.
However, if we continue to experience rapid revenue growth, additional capacity
under accounts receivable lines of credit or other sources of financing, such as
long-term debt or equity financing, will be necessary. We are currently negotiating
with multiple banks for lines of credit with significantly increased borrowing capacity.
Although there can be no assurance that the desired financing will be available on favorable
terms, or at all, we believe that we will be able to obtain the desired financing to continue
to fund our business, including the anticipated growth, for at least the next 12 months.
3 PRICE PROTECTION
3.1. The Manufacturer agrees to offer the price protection to Syntax against
50% of the mark down allowance offered by Syntax to the Channels. Prior approval of the
Manufacturer shall be obtained if any price protection claimed by Syntax to the Manufacturer
higher than 50% as agreed.
4.2. The Manufacturer agrees to reimburse all expenses and loss incurred in the
event of catastrophic failure of the Products upon receipt of a written statement from
Syntax to claim such reimbursement.
VOLUME INCENTIVE PROGRAM
3.1 The Manufacturer agrees that in the event that (i) the monthly shipment
of any one of the models of the Products from the Manufacturer to Syntax exceeds 3,000 units,
the Manufacturer shall provide a 1.5% per invoice discount by the end of that quarter;
(ii) the monthly shipment of any one of the models of the Products from the Manufacturer
to Syntax exceeds 6,000 units, the Manufacturer shall provide a 2% per invoice discount by
the end of that quarter; or (iii) the monthly shipment of any one of the models of the
Products from the Manufacturer to Syntax exceeds 10,000 units, the Manufacturer shall
provide a 2.75% per invoice discount by the end of that quarter.
3.1. The Manufacturer agrees to pay the Allowance to Syntax, the calculation
of which shall be 3% of each monthly shipment of the Products. |
