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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
/X / Quarterly report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 2002
/ / Transition report pursuant to Section 13 or 15 (d) of the Securities
For the period from to
Commission File Number 0-6890
MECHANICAL TECHNOLOGY INCORPORATED
(Exact name of registrant as specified in its charter)
New York
14-1462255
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
431 New Karner Road, Albany, New York 12205
(Address of principal executive offices) (Zip Code)
(
Registrant's telephone number, including area code
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
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___
Class
Outstanding at May 10, 2002
Common stock, $1.00 Par Value
35,527,260 Shares
MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES
INDEX
Part I - Financial Information
Page No.
Consolidated Balance Sheets - March 31, 2002, December 31, 2001 and September 30, 2001
3-4
Consolidated Statements of Operations - Three months ended March 31, 2002 and 2001
5
Consolidated Statements of Shareholders' Equity - Three months ended March 31, 2002 and 2001
6
Consolidated Statements of Cash Flows - Three months ended March 31, 2002 and 2001
7
Notes to Consolidated Financial Statements
8-22
Management's Discussion and Analysis of Financial Condition and Results of Operations
23-34
Part II Other Information
Item 4 - Submission of Matters to a Vote of Security Holders
35
Item 6 - Exhibits and Reports on Form 8-K
Signatures
36
PART I FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEETS
As of March 31, 2002 and December 31, 2001 (Unaudited) and
September 30, 2001 (Derived from audited financial statements)
(Dollars in thousands)
Mar. 31, 2002
Dec. 31,
2001
Sept. 30,
Assets
Current Assets:
Cash and cash equivalents
$5,134
$4,127
$ 9,807
Restricted cash equivalents
14
78
Securities available for sale
2,250
5,734
6,704
Accounts receivable
605
902
586
Inventories
1,605
1,510
1,674
Notes receivable
-
25
250
Deferred income taxes
3,734
2,315
2,052
Prepaid expenses and other current assets
1,292
1,042
1,108
Total Current Assets
14,634
15,669
22,259
Derivative asset
27
194
220
Property, plant and equipment, net
1,498
1,548
1,581
Holdings, at equity
32,679
38,937
47,197
Total Assets
$48,838
$56,348
$71,257
The accompanying notes are an integral part of the consolidated financial statements.
(Dollars in thousands, except share data)
Mar. 31,
2002
Dec. 31, 2001
Liabilities and Shareholders' Equity
Current Liabilities:
Line of credit
$ 1,000
$ 5,000
Accounts payable
431
643
807
Accrued liabilities
1,822
1,632
1,945
Accrued liabilities - related parties
133
101
3
Income taxes payable
31
28
Contingent obligation to common stock
warrant holders
288
Net liabilities of discontinued
operations
356
358
Total Current Liabilities
3,773
3,760
8,426
Long-Term Liabilities:
Deferred income taxes and other credits
2,207
4,406
8,453
Total Liabilities
5,980
8,166
16,879
Commitments and Contingencies
453
574
331
Shareholders' Equity
Common stock, par value $1 per share,
authorized 75,000,000; issued
35,529,360 in March 2002 and 35,505,010
in December and September 2001
35,529
35,505
Paid-in-capital
67,074
67,045
65,103
Accumulated deficit
(60,169
(54,913)
(41,328
42,434
47,637
59,280
Accumulated Other Comprehensive Loss:
Unrealized loss on available for sale
securities, net of tax
(5,204)
Common stock in treasury, at cost,
20,250 shares
(29)
Total Shareholders' Equity
42,405
47,608
54,047
Total Liabilities and Shareholders'
Equity
$ 48,838
$ 56,348
$ 71,257
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Dollars in thousands, except per share data)
Three months ended
Revenue:
Product revenue
$ 590
$ 1,657
Funded research and development
172
Total revenue
762
1,657
Operating costs and expenses:
Cost of product revenue
412
749
Research and product development expenses:
Funded research and product development
expenses
345
Unfunded research and product development
1,023
1,217
Total research and product development
1,368
Selling, general and administrative
1,635
1,625
Operating loss
(2,653)
(1,934)
Interest expense
(12)
(598)
Loss on derivatives
(167)
(51)
Gain on sale of holdings
2,241
5,551
Impairment losses (Note 7)
(5,282)
Other income (expense), net
9
(633)
(Loss) income from operations before income
taxes, equity in holdings' losses and
minority interests
(5,864)
2,335
Income tax benefit (expense)
2,353
(931)
Equity in holdings' losses, net of tax
(1,866)
(4,162)
Minority interest in losses of
consolidated subsidiary
121
Net loss
$ (5,256)
$ (2,758)
Loss per Share (Basic and Diluted):
Loss per share
$ (.15)
$ (0.08)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited)
COMMON STOCK
Balance, January 1
$ 35,505
$ 35,443
Issuance of shares - options
24
33
Balance, March 31
$ 35,529
$ 35,476
PAID-IN-CAPITAL
$ 67,045
$ 55,147
(6)
(10)
Plug Power holding, net of taxes
83
(17)
SatCon holding, net of taxes
(86)
1,301
Compensatory stock options
13
Stock option exercises recognized differently for
financial reporting and tax purposes
84
$ 67,074
$ 56,518
ACCUMULATED DEFICIT
$(54,913)
$(45,478)
(5,256)
(2,758
$(60,169)
$(48,236)
ACCUMULATED OTHER COMPREHENSIVE LOSS:
UNREALIZED LOSS ON AVAILABLE FOR SALE SECURITIES, NET OF TAXES
$ -
$ 14,470
Change in unrealized loss on available for sale
securities, net of taxes
(11,021)
$ 3,449
TREASURY STOCK
$ (29)
SHAREHOLDERS' EQUITY
$ 42,405
$ 47,178
TOTAL COMPREHENSIVE LOSS:
Other comprehensive loss:
Change in unrealized loss on available for
sale securities, net of tax
Total comprehensive loss
$(13,779)
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars in thousands
Operating Activities
$(5,256)
$(2,758)
Adjustments to reconcile net loss to net cash used
by operations:
167
51
Impairment losses
5,282
Minority interest
(121)
Depreciation and amortization
129
890
(2,241)
(5,551)
Equity in losses of equity holdings (gross)
3,115
6,922
Loss on disposal of fixed assets
(3,591)
(1,835)
Stock option compensation
Changes in operating assets and liabilities:
297
(653)
(95)
(268)
(264)
(204)
(213)
(48)
Income taxes
4
32
106
190
452
Net cash used by operations
(2,548
(2,879)
Discontinued Operations:
Change in net liabilities/assets
(21)
Net cash used by discontinued operations
Net cash used by operating activities
(2,548)
(2,900
Investing Activities
Purchases of property, plant and equipment
(70)
(191)
Proceeds from sale of holdings
3,582
7,059
Change in restricted cash equivalents, net
117
Principal payments from notes receivable
169
Net cash provided by investing activities
3,537
7,154
Financing Activities
Net payments under related party debt
(2,500)
Proceeds from stock option exercises
18
23
Net cash provided (used) by financing activities
(2,477)
Increase in cash and cash equivalents
1,007
1,777
Cash and cash equivalents - beginning of period
4,127
972
Cash and cash equivalents - end of period
$ 5,134
$ 2,749
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In the opinion of management the accompanying unaudited consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission and contain all adjustments, consisting of only normal, recurring adjustments, necessary for a fair presentation of results for such periods. The results for any interim period are not necessarily indicative of results for the full year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted. These consolidated financial statements should be read in conjunction with the financial statements and notes thereto for the fiscal year ended September 30, 2001.
Change in Year-End
On February 13, 2002, the Company changed its fiscal year-end from September 30 to December 31, effective with the calendar year beginning January 1, 2002. A three-month transition period from October 1, 2001 through December 31, 2001 (the "Transition Period") precedes the start of the 2002 fiscal year. "2001" refers to fiscal periods in the year ended September 30 and the Transition Period refers to the three months ended December 31, 2001. This new fiscal year makes the Company's annual and quarterly reporting periods consistent with those used by Plug Power Inc. and permits the Company to continue to account for its holdings in Plug Power on a timely basis.
Revenue Recognition
The Company recognizes revenue from product sales in accordance with Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition." Product revenue is recognized when there is persuasive evidence of an arrangement, delivery of the product to the customer or distributor has occurred, at which time title generally is passed to the customer or distributor, and the Company has determined that collection of a fixed fee is probable, all of which occur upon shipment of the product. If the product requires installation to be performed by the Company, all revenue related to the product is deferred and recognized upon the completion of the installation. The Company provides for a warranty reserve at the time the product revenue is recognized.
The Company performs funded research and development for government agencies under cost reimbursement contracts, which generally require
the Company to absorb up to 50% of the total costs incurred. Cost reimbursement contracts provide for the reimbursement of allowable costs. Such contracts require the Company to deliver research and tangible developments in fuel cell technology, and system design and prototype fuel cell systems for test and evaluation by the government agency. Revenues are recognized in proportion to the costs incurred.
Included in accounts receivable are billed and unbilled work-in-progress on cost reimbursed government contracts. Total estimated cost to complete a contract in excess of the awarded contract amounts are charged to operations during the period such costs are estimated. While the Company's accounting for these contract costs are subject to audit by the sponsoring agency, in the opinion of management, no material adjustments are expected as a result of such audits. Cost of product revenue includes material, labor and overhead. Costs incurred in connection with funded research and development arrangements are included in funded research and product development expenses.
Derivative Accounting, Company Stock
The Company accounts for derivatives potentially settled in the Company's own stock in accordance with Emerging Issues Task Force Issue EITF 00-19, "Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company's Own Stock." The Standard requires freestanding contracts that are settled in a company's own stock, including common stock warrants, to be designated as an equity instrument, asset or a liability. Under the provisions of EITF 00-19, a contract designated as an asset or a liability must be carried at fair value, with any changes in fair value recorded in the results of operations. A contract designated as
an equity instrument must be included within equity, and no fair value adjustments are required. In accordance with EITF 00-19, the Company determined that outstanding warrants as of June 30, 2001 to purchase 300,000 shares of the Company's Common Stock issued to
SatCon Technology Corporation should be designated as a liability. Effective June 30, 2001, the fair value of all such warrants were reclassified from equity to liabilities with subsequent changes in the fair value included in the results of operations.
The classification of these warrants is reassessed periodically. As a result of the amendment to the SatCon warrant agreements on December 28, 2001, requiring the Company to settle the warrants, when
exercised, in common stock, the warrants were reclassified from liability to equity and further changes in the fair value of the warrants are no longer reported in results of operations.
Accounting for Goodwill and Other Intangible Assets
Effective January 1, 2002, the Company adopted the provisions of SFAS
No. 142, Goodwill and Other Intangible Assets. This statement affects the Company's treatment of goodwill and other intangible assets. The statement requires that goodwill existing at the date of adoption be reviewed for possible impairment and that impairment tests be periodically repeated, with impaired assets written down to fair value. Additionally, existing goodwill and intangible assets must be assessed and classified within the Statement's criteria. Intangible assets with finite useful lives will continue to be amortized over those periods. Amortization of goodwill and intangible assets with indeterminable lives will cease.
As a result of the adoption of the Statement, the Company will no longer amortize the goodwill associated with its equity holdings in SatCon. The Company will continue to regularly evaluate its holdings in SatCon to determine if any declines in value of holdings are other than temporary and record impairment losses, when appropriate (see Note 7).
The Company recorded expense related to the amortization of goodwill associated with its holdings in SatCon of $0 and $688 thousand, during the three months ended March 31, 2002 and March 31, 2001, respectively. The Company has no intangible assets.
The Pro Forma effects of the Company adopting the provisions of SFAS No. 142 would be as follows:
Three months
ended
Mar. 31, 2001
Reported net loss
Add back goodwill amortization, net of taxes
413
Adjusted net loss
$(2,345)
Basic and Diluted Loss per Share:
$( 0.15)
$( 0.08)
Goodwill amortization
0.01
$( 0.07)
Goodwill by reporting segment consists of the following:
Reporting Unit
(dollars in 000's)
Balance as of
New Energy
$463
Test and Measurement Instrumentation
Accounting for Impairment or Disposal of Long-Lived Assets
In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of", and the accounting and reporting provisions of APB No. 30. This Statement addresses financial accounting and reporting for the impairment or disposal of long-lived assets and was adopted as of January 1, 2002. This Statement specifies how impairment will be measured and how impaired
assets will be classified in the financial statements. The Company's adoption of this Statement did not have a material impact on the Company's financial statements.
Certain 2001 amounts have been reclassified to conform to the 2002 presentation.
Inventories consist of the following at:
Sept.30,
Finished goods
$ 332
$ 342
$ 272
Work in process
489
479
693
Raw materials, components and assemblies
784
689
709
$1,605
$1,510
$1,674
The principal components of the Company's holdings, at equity consist of the following:
Holding
Recorded
Book Value
($ in millions)
Quoted
Market Price
per Nasdaq
Calculated
Market Value
Ownership
Shares
March 31, 2002
Plug Power
$28.820
$10.37
$121.270
23.20%
11,694,315
SatCon Technology
Corporation
3.859
$ 3.25
7.18%
1,187,500
Total
$32.679
$125.129
December 31, 2001
Plug Power Inc.
$32.177
$ 8.74
$104.830
23.83%
11,994,315
6.760
$ 5.20
7.86%
1,300,000
$38.937
$111.590
September 30, 2001
$36.027
$ 9.62
$115.385
23.9%
SatCon Technology Corporation
11.170
$ 4.86
6.318
8.05%
$47.197
$121.703
Summarized below is financial information for Plug Power and SatCon, as derived from published financial reports. Plug Power's fiscal year ends December 31 and SatCon's fiscal year ends September 30. Our holdings in SatCon are accounted for on a one-quarter lag.
SatCon
_______________________________________
________________________________________
Balance Sheet
As of
Dec. 29,
2001(1)
2001(2)
Jun. 30,
2002(1)
Current
assets
$35,352
$42,466
$44,802
$ 90,489
$100,565
$111,212
Non-current
25,183
26,310
24,621
48,840
50,809
53,607
liabilities
12,131
12,842
9,302
8,999
10,199
7,737
1,105
1,423
1,723
6,121
6,172
6,534
Stockholders'
equity
47,299
54,511
58,398
124,209
135,003
150,548
Three Months Ended
Results of
Operations
2000(1)
Gross revenues
$ 8,340
$ 9,494
$ 2,904
$ 1,027
Gross profit (loss)
687
1,956
1,213
(944)
Net loss before cumulative
effect of changes in
accounting principles
(5,397)
(2,990)
(11,596)
(19,015)
Cumulative effect
of changes in accounting
principles
(1,022)
(4,012)
(1)
SatCon's May 13, 2002 press release on second quarter results and accomplishments for the three months ended March 30, 2002 included the following information:
(Dollars in
thousands)
Mar. 30,
Current assets
$29,608
Non-current assets
22,549
Current liabilities
11,586
Non-current liabilities
1,050
Stockholders' equity
39,521
3 Months Ended
$10,300
Gross profit
871
(4,997)
The following is a roll forward of the Company's accounting for holdings in Plug Power:
Twelve months ended
Sept.30, 2001
Holdings balance, beginning of period
$32,177
$ 36,027
$ 48,372
Share of Plug Power losses gross
(2,691)
(4,069)
(22,101)
Sale of shares
(805)
(4,708)
Equity adjustment for share of third-party
investments in Plug Power which increased equity
139
219
14,464
Holdings balance, end of period
$28,820
$ 32,177
There is no difference between the carrying value of the Company's holdings in Plug Power and its interest in the underlying equity at March 31, 2002, December 31, 2001 or September 30, 2001.
The following is a roll forward of the Company's accounting for holdings in SatCon:
$6,760
$11,170
$ 15,984
Share of SatCon losses on one-quarter lag,
gross
(424)
(727)
(1,938)
(536)
(4,296)
Amortization of embedded difference between
the Company's basis and calculated ownership of underlying equity, one-quarter lag (Note 2)
(688)
(2,755)
Impairment loss (Note 7)
(1,798)
(5,790)
Equity adjustment for other equity activity
(143
2,795
4,175
$3,859
$ 6,760
The difference between the carrying value of the Company's holdings in SatCon and its interest in the underlying equity (on a one-quarter lag basis) consists of the following:
Calculated ownership
$3,396
$ 4,285
$ 4,704
Embedded difference (goodwill) (Note 2)
463
2,475
6,466
Carrying value of investment in SatCon
Securities available for sale are classified as current assets. Accumulated net unrealized gains (losses) are charged to Other Comprehensive Income.
Securities available for sale consist of Beacon Power common stock. The book basis roll forward of Beacon Power common stock is as follows:
Mar.31, 2002
Dec.31,
Capital contributions during 2000 - cash
$ 6,050
Cash-less warrant exercise during 2001
8,500
Stock received as pro rata distribution from
SatCon during 2001
827
Impairment loss during the Transition Period
ended December 31, 2001
(9,643)
Impairment loss during 2002 (see Note 7)
(3,484
Securities book basis
15,377
Fair value adjustment
(8,673
Securities at market value
$ 2,250
$ 5,734
$ 6,704
The Company's ownership of Beacon Power common stock is as follows:
Dec.31, 2001
4,410,797
Percentage
10.3%
The Company regularly reviews its holdings and securities available for sale to determine if any declines in value of those holdings are other than temporary. The Company assesses whether declines in the value of its holdings and securities in publicly traded companies, measured by comparison of the current market price of the securities to the carrying value of the Company's holdings and securities, are considered to be other than temporary based on factors that include (1) the length of time carrying value exceeds fair market value, (2) the Company's assessment of the financial condition and the near term prospects of the companies, and (3) the Company's intent with respect to the holdings and securities.
The slowing economy has had a negative impact on the equity value of companies in the new energy sector. In light of these circumstances and based on the results of the reviews described above, the Company recorded a $5.282 million other than temporary impairment charge for the three months ended March 31, 2002 with respect to its holdings in publicly traded companies. The pre-tax impairment loss recorded for holdings, at equity, was $1.798 million for the impairment of the Company's holdings in SatCon (see Note 5). The pre-tax impairment loss recorded for securities available for sale (common stock of Beacon Power) previously recorded as Accumulated Other Comprehensive Loss was $3.484 million (see Note 6).
The Company's effective tax rates for the three months ended March 31, 2002 and 2001 were as follows:
For the three months
Mar. 31, 2002 Mar. 31, 2001
Tax rate
(40.11)%
(39.9)%
Income tax (benefit) expense consists of the following:
Operations before equity in holdings' losses
Federal
State
(11)
Deferred
(2,342)
925
(2,353)
931
Equity in holdings' losses
(1,249)
(2,761)
Total operations
$(3,602)
$(1,830)
Items charged (credited) directly to stockholders' equity:
Increase in additional paid-in capital
for equity holdings, and warrants and
options issued - Deferred
$ (2)
$ 856
Decrease (increase) in unrealized loss on
available for sale securities -
(7,347)
Expenses for employee stock options
recognized differently for financial
reporting/tax purposes - Federal
(25
(84)
$ (27
$(6,575)
The deferred tax assets and liabilities consist of the following tax effects relating to temporary differences and carryforwards:
Current deferred tax assets:
Loss provisions for discontinued
$ 142
$ 143
Bad debt reserve
277
Inventory valuation
42
Inventory capitalization
12
2,738
1,344
956
Vacation pay
94
Warranty and other sale obligations
29
Stock options
242
237
232
Contingent liability warrant holders
115
Other reserves and accruals
149
183
Valuation allowance
Net current deferred tax assets
$ 3,734
$ 2,315
$ 2,052
Net operating loss
$ 3,178
$ 3,117
$ 2,360
Property, plant and equipment
(82)
(5,243)
(7,314)
(10,618)
Derivatives
(78)
(88)
Other
201
Research and development tax credit
459
Alternative minimum tax credit
609
(889)
(3,088)
(7,159)
(1,144)
Other credits
(174
(150)
Noncurrent net deferred tax liabilities
and other credits
$(2,207)
$(4,406)
$(8,453)
The deferred tax assets are expected to be realized based on the Company's expectations that its current business strategy, of selling
appreciated equity holdings, represents a tax planning strategy that will enable the Company to generate sufficient taxable income with the appropriate character (capital). Consequently, the Company believes that it is more likely than not that future taxable income will be sufficient to fully offset these future deductions.
As of March 31, 2002, the Company had a $10 million Credit Agreement with KeyBank, N.A. dated as of August 10, 2001 ("the $10 million Credit Agreement"). As of March 31, 2002, the Company had $1 million outstanding under this line of credit.
As of March 31, 2002, the market value of Plug Power common stock was $10.37 per share which means the amount available on the line of credit was $10 million of which $1 million was outstanding, leaving $9 million available under the facility.
The amounts used in computing earnings per share ("EPS") and the effect on income and the weighted average number of shares of potentially dilutive securities are as follows:
Loss
Basic and Diluted EPS:
Common shares outstanding, beginning
of period
35,484,760
35,422,335
Weighted average common shares issued
during the period
24,350
26,222
Weighted average shares outstanding
35,509,110
35,448,557
Loss per weighted average share
$ (.08)
At March 31, 2002, options to purchase 3,175,050 shares of common stock at prices ranging from $.54 to $21.92 per share and warrants to purchase 300,000 shares of common stock at $12.56 per share were outstanding but were not included in the computation of EPS-assuming dilution because the Company incurred a loss during this period and inclusion would be anti-dilutive.
At March 31, 2001, options to purchase 3,158,075 shares of common stock at prices ranging from $.54 to $21.92 per share and warrants to purchase 300,000 shares of common stock at $12.56 per share were
outstanding but were not included in the computation of EPS-assuming dilution because the Company incurred a loss during this period and inclusion would be anti-dilutive.
The Company's holdings' losses, net of tax, accounted for under the equity method is as follows:
$(1,612)
$(3,435)
SatCon, including amortization of goodwill in 2001
(254)
(727
$(1,866)
$(4,162)
March 31,
Non-cash Investing and Financing Activities:
Additional holdings and paid-in-capital resulting from other investors' investments in Plug Power Inc.
$ 139
Change in holdings and paid-in-capital resulting from other equity activity in SatCon Technology Corporation
(143)
2,168
Additional paid-in-capital resulting from stock option exercises treated differently for financial reporting and tax purposes
The Company operates in two business segments, New Energy and Test and Measurement Instrumentation. The New Energy segment is currently focused on commercializing direct methanol micro fuel cells. The Test and Measurement Instrumentation segment develops, manufactures, markets and services sensing instruments and computer-based balancing systems for aircraft engines.
The Company evaluates performance based on profit or loss from operations before income taxes, accounting changes, unusual items and interest income and expense. Inter-segment sales are not significant.
Summarized financial information concerning the Company's reportable segments is shown in the following table. The "Other" column
includes corporate related items and items like income taxes or unusual items, which are not allocated to reportable segments. The
"Reconciling Items" column includes minority interest in consolidated subsidiary and income tax allocation to equity in holdings' losses. In addition, segments' noncash items include any depreciation and amortization in reported profit or loss. The New Energy segment figures include the Company's activities related to micro fuel cell
operations, the Company's holdings in Plug Power, SatCon and Beacon Power and the results of the Company's equity method of accounting for certain holdings. SatCon results are accounted for on a one-quarter
lag except for sale of stock which is affected as of the date of sale. The results for Plug Power and SatCon are derived from their published quarterly and annual financial statements.
Three months ended Mar. 31, 2002
Reconciling Items
Consolidated Totals
Revenues
$ 172
$ 762
Research and product
development expenses
1,102
266
Selling, general and
administrative expenses
783
501
351
(3,115)
1,249
Segment (loss) profit
(8,119)
(670)
3,412
Total assets
36,681
2,255
9,902
48,838
Capital expenditures
30
40
70
46
47
Three months ended Mar. 31, 2001
874
343
728
438
(6,922)
2,760
(3,034)
44
(2,758)
71,942
3,046
6,237
81,225
50,761
20,300
136
37
191
45
836
The following table presents the details of "Other" segment (loss) profit:
Corporate and Other Income (Expenses):
$ (47)
$ (836)
Interest income
26
21
Income tax benefit
3,602
1,830
Other expense, net
(157)
(185
Total income
$ 3,412
$ 232
During the three months ended March 31, 2002, First Albany Companies Inc. ("FAC") sold 349,530 shares of the Company's common stock in the public markets. FAC now owns approximately 32.1% of the Company's common stock.
In July 2001, MTI MicroFuel Cells Inc. ("MTI Micro"), a subsidiary of the Company, entered into a Joint Venture Agreement with E.I. DuPont de Nemours and Company ("Dupont"), a minority shareholder in MTI Micro, to undertake a research and development program funded by the Advanced Technology Program of the National Institute of Standards and Technology ("NIST"). As the program administrator, MTI Micro submits all bills from Dupont to NIST for payment.
In connection with NIST billings, as of March 31, 2002, the Company has a liability to Dupont for approximately $133 thousand. This liability is included in the financial statement line "Accrued liabilities - related parties."
Sales of Holdings
From April 1 through May 10, 2002, the Company sold Plug Power and SatCon common stock as follows:
Company
Number of
Proceeds
from Sales
261,000
$2,801
55,000
148
$2,949
NYSERDA Award
On April 25, 2002, the Company announced that its subsidiary, MTI MicroFuel Cells, Inc., received an award of $500,000 from the New York State Energy Research and Development Authority (NYSERDA). The award, matched by a similar commitment from MTI Micro, will help fund a yearlong research program to advance the development and commercialization of direct methanol micro fuel cell technology.
The NYSERDA award will also augment and support a $9.3 million research and development program that is a joint effort of MTI MicroFuel Cells and DuPont. In August 2001, the two companies received an award of $4.6 million for the program from the Advanced Technology Program (ATP) of the National Institute of Science and Technology (NIST).
In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations." SFAS No. 143 requires the fair value of a liability for an asset retirement obligation to be recognized in the period in which it is incurred if a reasonable
estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. SFAS No. 143 is effective for fiscal years beginning after June 15, 2002. The Company does not believe the adoption of this Statement will have a material impact on its financial statements.
Our equity holdings and securities available for sale may constitute investment securities under the Investment Company Act. In general, a company may be deemed to be an investment company if it owns investment securities with a value exceeding 40% of its total assets, subject to certain exclusions and exemptions. Investment companies are subject to registration under, and compliance with, the Investment Company Act unless a particular exemption or safe harbor provision applies. If we were to be deemed an investment company, we would become subject to the requirements of the Investment Company Act. As a consequence, we would be prohibited from engaging in certain businesses or issuing certain securities, certain of our contracts might be voidable, and we might be subject to civil and criminal penalties for noncompliance.
Until fiscal 2001, the Company qualified for a safe harbor exemption under the Investment Company Act based upon the level of ownership of shares of Plug Power and influence over its management or policies.
However, since we sold some of our shares of Plug Power during fiscal 2001, this safe harbor exemption is no longer available.
On December 3, 2001, we made an application to the Securities and Exchange Commission ("SEC") requesting that they either declare that we are not an investment company because we are primarily engaged in another business or exempt us from the provisions of the Investment Company Act for a period of time. This application is pending. If our application is not granted, we will have to find another safe harbor or exemption that we can qualify for or become an investment company subject to the regulations of the Investment Company Act.
If we were deemed to be an investment company and could not find another safe harbor or exemption and failed to register as an investment company, the SEC could require us to sell our interests in
Plug Power, SatCon and Beacon, until the value of our holdings is
reduced below 40% of total assets. This could result in sales of our
holdings in quantities of shares at depressed prices and we may never realize anticipated benefits from, or may incur losses on, these sales.
Further, we may be unable to sell some holdings due to contractual or legal restrictions or the inability to locate a suitable buyer. Moreover, we may incur tax liabilities when selling assets.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain significant factors, which have affected the Company's earnings during the periods included in the accompanying, consolidated statements of income.
Critical Accounting Policies and Estimates
MTI's discussion and analysis of its financial condition and results of operations are based upon MTI's consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires MTI to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of assets and liabilities. On an on-going basis, MTI evaluates its estimates, including those related to revenue recognition, inventories, bad debts, holdings, derivative instruments, income taxes, contingencies and litigation. MTI bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not re adily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
MTI believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its consolidated financial statements.
MTI recognizes revenue from product sales in accordance with Staff Accounting Bulletin No. 101, "Revenue Recognition." Product revenue is recognized when there is persuasive evidence of an arrangement, the fee is fixed or determinable, delivery of the product to the customer has occurred and we have determined that collection of the fee is probable. Title to the product generally passes upon shipment of the product as the products are shipped FOB shipping point. We provide for a warranty reserve at the time the product revenue is recognized. We perform funded research and development and product development for government agencies under cost reimbursement contracts. Cost reimbursement contracts provide for the reimbursement of allowable costs. Revenue from reimbursement contracts is recognized as services are performed. In these contracts, we receive periodic progress payments and retain the rights to the intellectual property developed in government contracts. All payments made to MTI for work performed on contracts with agencies of the U.S. government are subject to audit and adjustment by the Department of Commerce. Adjustments are recognized in the period made. Any losses incurred in performing funded research and development projects are recognized as funded research and development expenses as incurred.
Critical Accounting Policies and Estimates (Continued)
MTI writes down its inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required.
MTI holds minority interests in companies having operations or technology in areas within its strategic focus, all of which are publicly traded and have highly volatile share prices. MTI records a holding impairment charge when it believes a holding has experienced a decline in value that is other than temporary. Future adverse changes in market conditions or poor operating results of underlying holdings could result in significant losses and an inability to recover the carrying value of the holdings, thereby possibly requiring an impairment charge in the future.
MTI records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized. While MTI has considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance, in the event MTI were to determine that it would be able to realize its deferred tax assets in the future in excess of its net recorded amount, an adjustment to the deferred tax asset would increase income in the period such determination was made. Likewise, should MTI determine that it would not be able to realize all or part of its net deferred tax asset in the future, an adjustment to the deferred tax asset would be charged to income in the period such determination was made. The deferred tax assets are expected to be realized based on the Company's expectations that its current business strategy, of selling appreciated equity holdings, represents a tax p lanning strategy that will enable the Company to generate sufficient taxable income with the appropriate character (capital). Consequently, the Company believes that it is more likely than not that future taxable income will be sufficient to fully offset these future deductions.
Results of Operations
Change in Year-End. On February 13, 2002, the Company changed its fiscal year-end from September 30 to December 31, effective with the calendar year beginning January 1, 2002. A three-month transition period from October 1, 2001 through December 31, 2001 (the "Transition Period") precedes the start of the 2002 fiscal year. "2001" refers to fiscal periods in the year ended September 30 and the Transition Period refers to the three months ended December 31, 2001. This new fiscal year makes the Company's annual and quarterly
Results of Operations (Continued)
reporting periods consistent with those used by Plug Power Inc. and permits the Company to continue to account for its holdings in Plug Power on a timely basis.
Product Revenue.
Funded Research and Development Revenue. Funded research and development revenue was $.172 million for the three months ended March 31, 2002. This amount reflects billings and amounts to be billed under the Advanced Technology Program (ATP) of the National Institute of Standards and Technology (NIST) contract to research and develop a micro fuel cell for use in portable electronics.
Cost of Product Revenue.
Funded Research and Product Development Expenses.
Unfunded Research and Product Development Expenses.
Selling, General and Administrative Expenses.
Operating Loss. Operating loss increased $.719 million to an operating loss of $2.653 million for the three months ended
March 31, 2002 as compared to $1.934 million for the same period in the prior year, a 37.2% increase. This increase results primarily from decreases in gross profits at MTI Instruments.
Gain on Sale of Holdings. Results for the three months ended March 31, 2002 include a $2.241 million gain on the sale of holdings and the prior year results include a $5.551 gain.
Derivative Losses. The Company recorded net losses of $.167 million and $.051 million on derivative accounting for the three months ended March 31, 2002 and 2001, respectively. Changes in derivative fair values, calculated using the Black-Scholes pricing model, are recorded on a quarterly basis.
Impairment Losses. For the three months ended March 31, 2002, the Company recorded a $5.282 million charge for impairment losses for other than temporary decline in the value of certain available-for-sale securities ($3.484 million) and equity method investments ($1.798 million).
Interest Expense. Results during the three months ended March 31, 2002 were affected by interest expense of $.012 million compared to $.598 million for the same period in the prior year. The decrease in expense for the three month period results from decreases in the amount of debt outstanding and prime interest rate since last year.
Equity in Holdings' Losses, Net of Tax. In the three months ended March 31, 2002, the Company recorded a $1.866 million loss, net of tax, from the recognition of the Company's proportionate share of losses in equity holdings compared to $4.162 million, net of tax, for the comparable period in the prior year.
Equity in holdings' losses results from the Company's minority ownership in certain companies, which are accounted for under the equity method of accounting. Under the equity method of accounting,
the Company's proportionate share of each company's operating losses and amortization of the Company's net excess investment over its equity in each company's net assets is included in equity in
holdings' losses. As a result of adopting SFAS No. 142, "Goodwill and Other Intangible Assets," effective January 1, 2002, the Company will no longer amortize the goodwill associated with its equity holdings in SatCon. Equity in holdings' losses for the three months
Equity in Holdings' Losses, Net of Tax.
ended March 31, 2002 and 2001 includes the results from the Company's minority ownership in Plug Power and SatCon. The Company expects these companies to continue to invest in development
of their products and services, and to recognize operating losses, which will result in future charges recorded by the Company to reflect its proportionate share of such losses.
Equity in holdings' losses includes a loss, before taxes, from Plug Power of $2.691 million for the three months ended March 31, 2002 compared to $5.712 million for the three months ended March 31, 2001. The decrease is a combination of Plug Power's reduction in net losses for 2002 compared to 2001 and the result of the Company's decrease in ownership of Plug Power since 2001. Equity in holdings' losses, before taxes, for the three months ended March 31, 2002 also includes our proportionate share of losses from SatCon of $.424 million compared to $.521 million for the three months ended March 31, 2001; and embedded difference (the difference between the carrying value of the Company's holdings and its interest in the underlying equity) amortization of $0 and $.689 million for the three months ended March 31, 2002 and 2001, respectively. SatCon is accounted for on a one-quarter lag and includes results of SatCon through December 29, 2001.
Income Tax (Benefit) Expense. The tax rate for the three months ended March 31, 2002 is (40.11%) compared to the rate for the three months ended March 31, 2001 of (39.9%). These tax rates are primarily due to losses generated by operations, availability of net operating losses and changes in deferred tax liabilities associated with the accounting for holdings in and recognition of the Company's proportionate share of losses from Plug Power and SatCon and its investment in derivatives and marketable securities. Further, as a result of ownership changes in 1996, the availability of net operating loss carryforwards to offset future taxable income will be limited pursuant to the Internal Revenue Code.
Financial Condition
Inventory and accounts receivable turnover ratios and their changes for the three months ended December 31 are as follows:
Change
Inventory
0.26
0.48
(0.22)
1.53
1.71
(0.18)
Financial Condition (Continued)
The change in the inventory turnover ratio is the result of sales reduction and inventory levels for new semi-conductor products.
The change in the accounts receivable turnover ratio is the result of sales reduction.
Inventories at March 31, 2002 of $1.605 million reflect inventory levels for MTI Instruments required to support expected sales levels in fiscal 2002.
Working capital of $10.861 million at March 31, 2002 reflects a $1.048 million decrease from $11.909 million at December 31, 2001. This decrease reflects $2.548 million net cash used in operating activities and a $3.484 million decrease in the fair value for Beacon Power holdings offset by $3.582 million in proceeds from sale of holdings and a $1.419 million increase in deferred income tax asset.
At March 31, 2002, cash and cash equivalents were $5.134 million versus $4.127 million at December 31, 2001. Net cash used by operating activities for the three months ended March 31, 2002 amounted to $2.548 million, as compared to $2.879 million in the prior year. Accounts receivable decreased due to the timing and reduction of sales during the quarter. Accounts receivable totaled $.605 million as of March 31, 2002 as compared to $.902 million as of December 31, 2001, or a 32.9% decrease.
The $10 million Credit Agreement requires the Company to meet certain covenants, including maintenance of a debt service reserve account
(equal to 3 months of interest payments on outstanding debt), minimum Plug Power share price and pledge additional collateral and maintain
an additional collateral value, if required, based on the Plug Power share price falling below $10 per share. Additional collateral consisting of 500,000 shares of SatCon common stock was pledged in August 2001, when the market value of Plug Power common stock fell below $10 per share. Although the price of Plug Power stock has fluctuated since that date, the Company has not requested that the additional collateral be released. The Company was in compliance with these covenants as of March 31, 2002.
Capital spending during the first three months of fiscal 2002 was $.070 million, a decrease from the comparable period in 2001 where capital spending totaled $.191 million. Capital spending during fiscal 2002 included furniture, computers, software and laboratory equipment. Total additional capital spending during fiscal 2002 is expected to be approximately $2.332 million for computers, furniture, facilities fit-up, laboratory and manufacturing equipment.
The Company anticipates that it will be able to meet the liquidity needs of its operations for the next year from current cash resources, government contract revenues, equity financings, sale of assets and borrowings under its $10 million line of credit. However, there can be no assurance as to the future stock prices or performance of Plug Power, SatCon or Beacon, or that the Company will not require additional financing within this time frame or that any additional financing will be available to the Company on terms acceptable to the Company, if at all.
The NYSERDA award will augment and support the $9.3 million research and development program that is a joint effort of MTI MicroFuel Cells and DuPont. The Company's share of the Advanced Technology Program awarded by the National Institute of Standards and Technology (NIST) is $3.3 million. The Company began incurring costs under this program during December 2001. The award is to carry out a three-year, $9.3 million cost-shared program to research and develop a micro fuel cell for use in portable electronics.
As of March 31, 2002, the Company had a net of $9 million of available borrowing capacity under its $10 million Credit Agreement. If the market value of Plug Power common stock falls below $8 per share the facility is reduced to $5 million and if the value falls below $7 per share the facility is reduced to zero. Further, proceeds from the sale of assets are subject to fluctuations in the market value of Plug Power, SatCon and Beacon as well as securities laws and other agreements detailed below.
Shares Sold
Net Proceeds
$2.801 million
.148
$2.949
The future sale of holdings in Plug Power, SatCon and Beacon Power will generate taxable income or loss which is different from book income or loss due to the tax bases in these assets being significantly different from their book bases and the small available
net federal operating loss carryforwards available to offset income. Book and tax bases as of March 31, 2002 are as follows:
Holdings
Shares Held
Average
Book Basis
Tax Basis
$2.46
$0.96
3.25
7.06
Beacon Power
.51
2.06
As of March 31, 2002, the Company has holdings in Plug Power, SatCon and Beacon Power securities. Each of these securities is currently traded on the Nasdaq National Market and is therefore subject to market conditions. When acquired, each of these securities was unregistered.
On March 20, 2002, Beacon Power filed a Form 8-K with the SEC stating that Beacon Power had received notification from Nasdaq that, because the closing price of its common stock had been below $1.00 for 30 consecutive days, it would be delisted from the National Market System on June 11, 2002 unless it closed at $1.00 per share or more for a minimum of l0 consecutive trading days before then. Beacon further stated that if it is faced with having its stock delisted, it plans to apply to transfer its stock to the Nasdaq Small Cap Market. To qualify for this move, Beacon Power will have to meet the requirements for continued inclusion in the Small Cap Market. Beacon Power expects to satisfy all these requirements that are in its control. The minimum share price of $1.00 (which the Small Cap Market also requires) is not within the control of Beacon Power, however, but Beacon Power would have a grace period until at least September 9, 2002 in which to comply with this requirement.
In February 2000, SatCon registered the securities acquired by the Company on a Form S-3. The stock in Plug Power and Beacon Power are
considered "restricted securities" as defined in Rule 144 and may be sold in the future without registration under the Securities Act
subject to compliance with the provisions of Rule 144. Generally, restricted securities that have been owned for a period of at least one year may be sold immediately after an IPO, subject to the volume limitations of Rule 144. However, because of our ownership position and our appointment of directors to both Plug Power's and Beacon Power's Board of Directors, we are considered an "affiliate" of those
companies and therefore are subject to the volume limitation of Rule 144, even if we have held the securities for two years or more.
The Rule 144 limitations, as currently in effect, limit our sales of either Plug Power or Beacon Power stock within any three-month period
to a number of shares that does not exceed the greater of 1% of the then outstanding shares of common stock of the company, or the average weekly trading volume of the common stock during the four calendar weeks preceding the date on which notice of such sale is filed, subject to certain restrictions.
As disclosed in Plug Power's Form 10-Q filed for the period ended March 31, 2002, Plug Power's cash requirements depend on numerous factors, including completion of its product development activities, ability to commercialize its fuel cell systems, market acceptance of its systems and other factors. Plug Power expects to devote substantial capital resources to continue its development programs directed at commercializing its fuel cell systems for worldwide use, hire and train its production staff, develop and expand its manufacturing capacity and begin production activities and expand its research and development activities. Plug Power expects to pursue the expansion of its operations through internal growth and strategic acquisitions and expects that such activities will be funded from existing cash and cash equivalents, issuance of additional equity or debt securities or additional borrowings subject to market and other conditions. The failure to raise the funds necessary to finance its future cas h requirements or consummate future acquisitions could adversely affect its ability to pursue its strategy and could negatively affect its operations in future periods. Plug Power anticipates incurring substantial additional losses over at least the next several years and believes that its current cash, cash equivalents and marketable securities balances will provide sufficient capital to fund operations for at least the next twelve months.
Plug Power has financed its operations through March 31, 2002, primarily from the sale of equity, which has provided cash in the
amount of $292.2 million. As of March 31, 2002, Plug Power had unrestricted cash and cash equivalents and marketable securities totaling $84.7 million and working capital of $81.5 million. As a result of Plug Power's purchase of real estate, it has escrowed an additional $5.3 million in cash to collateralize the debt assumed on the purchase. Since inception, net cash used in operating activities has been $161.3 million and cash used in investing activities has been $63.4 million.
As disclosed in SatCon's Form 10-Q filed for the period ended December 29, 2001:
Since inception, SatCon has financed its operations and met its capital expenditure requirements primarily through the sale of private equity securities, public security offerings, borrowings on its line of credit and capital equipment leases.
SatCon anticipates that, barring unforeseen circumstances, the existing cash, cash equivalents and marketable securities available at December 29, 2001, combined with its ability to implement and achieve necessary cost reductions and operational efficiencies, will
be sufficient to fund operations through December 2002 based on current estimates and expectations. However, there can be no assurance that SatCon will not require additional financings within this time frame or that any additional financing, if needed, will be available to SatCon on terms acceptable to it, if at all.
On May 13, 2002, SatCon issued a press release on its second quarter results and accomplishments for the three months ended March 31, 2002. SatCon disclosed that it is in the process of restructuring its business, which will result in annual savings in excess of $6 million, or approximately 15% of its cost bases, excluding materials. This is in addition to cash conservation steps, which SatCon initiated last quarter and which helped reduce its cash usage rate from $8 million in the first quarter to $5 million in the second quarter.
Market Risk
Market risk represents the risk of changes in value of a financial instrument caused by fluctuations in interest rates and equity prices.
At March 31, 2002, the Company had variable rate debt totaling $1 million. Interest rate changes generally do not affect the fair market value of the debt but do impact future earnings and cash
Market Risk (Continued)
flows. The earnings and cash flow impact for the next year resulting from a one-percentage point increase in interest rates would be approximately $.010 million, holding other variables (debt level) constant.
The Company has performed a sensitivity analysis on its holdings of Plug Power, SatCon and Beacon Power common stock and its derivative financial instruments (warrants to purchase SatCon common stock). The sensitivity analysis presents the hypothetical change in fair value of our holdings held by the Company at March 31, 2002, which
are sensitive to changes in interest rates. Market risk is estimated as the potential change in fair value resulting from an immediate hypothetical one-percentage point parallel shift in the yield curve.
The fair values of the Company's holdings in marketable securities have been based on quoted market prices and its derivative financial instruments based on estimates using valuation techniques.
The Company's holdings in Plug Power and SatCon are accounted for on the equity method, holdings in Beacon Power are accounted for at fair value, and derivative financial instruments are accounted for at estimated values. The fair market and estimated values, at March
31, 2002, of the Company's holdings in these companies and
derivatives and the calculated impact of a market price decrease of ten percent, is as follows:
(Dollars
in millions)
Holdings/Derivatives
Estimated Fair
10% Market
Decrease
$12.127
.386
2.249
.225
.027
.003
New Accounting Pronouncements
In August 2001, the FASB issued Statement No. 143, "Accounting for Asset Retirement Obligations." Statement No. 143 requires the fair value of a liability for an asset retirement obligation to be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The associated
asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. Statement No. 143 is effective for fiscal years beginning after June 15, 2002. The Company does not believe this Statement will have a material impact on its financial statements.
Statement Concerning Forward Looking Statements
This Form 10-Q contains and incorporates forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. You can identify forward-looking statements through our use of the words
"expect," "anticipate," "believe," "should," "could," "may," "will," and other similar words, whether in the negative or the affirmative. Statements containing these, or similar words, are our predictions, expectations, plans and intentions of what may occur in the future.
All statements that are not historical fact should be deemed to be
forward-looking statements. We believe it is important to
communicate our future expectations to our investors; however, our
actual results may be very different from the predictions, expectations, plans and intentions we have shared with our investors. Such forward-looking statements involve known and unknown risks that may cause our actual results to differ materially from those stated and implied by our forward-looking statements. Such risks include, among others, our need to raise additional financing, difficulties in
developing new technologies, risks related to developing DMFC's, market acceptance of DMFC's, our dependence on the success of our
portfolio companies, our history of losses, the historical volatility of our stock price, the risk we may become an inadvertent investment company, conflicts of interest between us, First Albany Companies Inc. and our portfolio companies and general market conditions. These and other risks are set forth in greater detail in the "Risk Factors" section of our Annual Report on Form 10-K, which is incorporated herein by reference. We do not intend to update any information in any forward-looking statements we make.
PART II OTHER INFORMATION
Item 4.Submission of Matters to a Vote of Security Holders
At the Company's Annual Meeting of Shareholders ("Annual Meeting") held on March 7, 2002, the Company's shareholders approved the following:
ELECTION OF DIRECTORS
Term
Number of Votes For
% Cast
Against/ Withheld
Broker Non-Votes
GEORGE C. McNAMEE
3 Yr.
27,855,314
78.5%
172,797
E. DENNIS O'CONNOR
27,884,150
78.6%
143,961
The other directors, whose terms of office as directors continued after the Annual Meeting are: Dale Church, Edward Dohring, David Eisenhaure, Alan Goldberg, Dr. Walter Robb and Dr. Beno Sternlicht.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) One report on Form 8-K dated February 13, 2002 was filed during the quarter ended March 31, 2002 regarding the Company changing its year-end from September 30 to December 31, effective January 1, 2002.
SIGNATURE
Pursuant to the requirements 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.
Mechanical Technology Incorporated
05/13/02
(Date)
s/William P. Acker
s/Cynthia A. Scheuer