<PAGE> 1
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange
Act of 1934 (No Fee Required) For the quarter ended January 30, 1998
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (No Fee Required)
For the transition period from _______________________ to ______________________
Commission File No. 0-29396
AUTOLOGIC INFORMATION INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 13-3855697
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1050 Rancho Conejo Boulevard, Thousand Oaks, CA 91320
- ------------------------------------------------ ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (805) 498-9611
</TABLE>
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 reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
The number of shares of common stock outstanding as of March 6, 1998 was
5,787,970.
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1--FINANCIAL STATEMENTS
AUTOLOGIC INFORMATION INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
January 30, October 31,
1998 1997
--------- ---------
(Unaudited)
ASSETS (Dollars in thousands)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 8,256 $ 9,452
Accounts receivable less allowance for doubtful
accounts of $1,869 (1998) and $1,828 (1997) 17,885 17,529
Inventories-See Note C 9,820 8,229
Deferred income tax benefit-See Note D 3,933 4,085
Prepaid expenses and other assets 2,723 2,670
--------- ---------
Total current assets 42,617 41,965
PROPERTY AND EQUIPMENT, at cost net of
accumulated depreciation and amortization
of $5,759 (1998) and $5,462 (1997) 5,776 5,931
DEFERRED INCOME TAX BENEFIT-See Note D 3,833 3,833
EXCESS OF PURCHASE PRICE OVER NET ASSETS
ACQUIRED, net of amortization of $1,102 (1998)
and $964 (1997)-See Note B 1,651 1,789
OTHER ASSETS 85 78
--------- ---------
$ 53,962 $ 53,596
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 4,260 $ 5,372
Payable to Volt-See Note E -- 265
Accrued payroll and related liabilities 2,600 3,165
Accrued expenses 1,869 1,752
Accrued restructuring costs 1,394 1,521
Customer advances 6,408 4,103
--------- ---------
Total current liabilities 16,531 16,178
STOCKHOLDERS' EQUITY-See Notes B and H
Preferred stock, par value $0.01
Authorized-1,000,000 shares; issued - none -- --
Common stock, par value $0.01
Authorized - 12,000,000 shares; issued and
outstanding 5,787,970 shares in 1998 and 1997 58 58
Paid-in capital 112,620 112,620
Accumulated deficit (75,247) (75,260)
--------- ---------
37,431 37,418
$ 53,962 $ 53,596
========= =========
</TABLE>
See accompanying notes.
2
<PAGE> 3
AUTOLOGIC INFORMATION INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
----------- -----------
January 30, January 31,
1998 1997
---- ----
(Dollars in thousands, except per share and share amounts)
<S> <C> <C>
REVENUES
Systems and equipment $ 12,082 $ 11,245
Customer service and support 5,960 6,850
----------- -----------
18,042 18,095
----------- -----------
OPERATING COSTS AND EXPENSES
Cost of systems and equipment 5,781 6,601
Cost of customer service and support 4,591 4,840
----------- -----------
Gross margin 7,670 6,654
Operating expenses 7,094 7,076
Charges from Volt-See Note E
Rent 201 201
General and administrative 9 9
----------- -----------
OPERATING INCOME (LOSS) 366 (632)
----------- -----------
OTHER INCOME (EXPENSE)
Interest income 107 31
Foreign exchange (loss) gain (446) 261
Other, net (4) (127)
----------- -----------
(343) 165
----------- -----------
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 23 (467)
INCOME TAX PROVISION-See Note D 10 58
----------- -----------
INCOME (LOSS) FROM CONTINUING OPERATIONS 13 (525)
LOSS FROM DISCONTINUED OPERATIONS-See Note G -- (203)
----------- -----------
NET INCOME (LOSS) $ 13 $ (728)
=========== ===========
BASIC AND DILUTED EARNINGS (LOSS)
PER SHARE CONTINUING OPERATIONS $ -- $ (0.09)
BASIC AND DILUTED EARNINGS (LOSS)
PER SHARE DISCONTINUED OPERATIONS -- (0.04)
----------- -----------
BASIC AND DILUTED NET INCOME (LOSS)
PER SHARE-See Note H $ -- $ (0.13)
=========== ===========
Average number of shares outstanding-Basic 5,787,970 5,790,370
=========== ===========
Average number of shares outstanding-Diluted 5,788,791 5,790,370
=========== ===========
</TABLE>
See accompanying notes
3
<PAGE> 4
AUTOLOGIC INFORMATION INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Common Stock
$0.01 Par Value Paid-In
---------------------- Paid-In Accumulated
Shares Amount Capital Deficit
--------- --------- --------- ---------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Balance at October 31, 1997 5,787,970 $ 58 $ 112,620 $ (75,260)
Net income for the three months -- -- -- 13
--------- --------- --------- ---------
Balance at January 30, 1998 5,787,970 $ 58 $ 112,620 $ (75,247)
========= ========= ========= =========
</TABLE>
See accompanying notes
4
<PAGE> 5
AUTOLOGIC INFORMATION INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
--------------------------
January 30, January 31,
1998 1997
------- -------
(Dollars in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 13 $ (728)
Adjustments to reconcile net income (loss) to net
cash applied to operating activities:
Depreciation 536 606
Amortization 138 138
Provision for doubtful accounts 131 503
Gains on foreign currency translation (8) (198)
(Gains) loss on dispositions of property and equipment (11) 5
Deferred income tax benefit 152 --
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (857) 1,556
(Increase) decrease in inventories (1,591) 1,749
(Increase) decrease in prepaid expenses and other assets (76) 213
Decrease in accounts payable (1,015) (5,671)
Decrease in accrued expenses (574) (1,319)
Increase in customer advances 2,402 910
Decrease in income taxes payable -- (255)
Decrease in payable to Volt (265) (505)
------- -------
Net cash applied to continuing operations (1,025) (2,996)
------- -------
Loss on sale of discontinued operations -- 75
Loss from discontinued operations -- 128
------- -------
Net cash provided by discontinued operations -- 203
NET CASH APPLIED TO OPERATING ACTIVITIES (1,025) (2,793)
------- -------
</TABLE>
Continued on next page
5
<PAGE> 6
AUTOLOGIC INFORMATION INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
--------------------------
January 30, January 31,
1998 1997
------- -------
(Dollars in thousands)
<S> <C> <C>
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (370) (349)
------- -------
NET CASH APPLIED TO INVESTING ACTIVITIES (370) (349)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in notes payable -- 600
------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES -- 600
------- -------
Effect of exchange rate changes on cash 199 385
------- -------
NET DECREASE IN CASH AND CASH EQUIVALENTS (1,196) (2,157)
Cash and cash equivalents, beginning of period 9,452 6,133
------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 8,256 $ 3,976
======= =======
SUPPLEMENTAL CASH TRANSACTIONS Cash paid during the period:
Interest expense $ 3 $ 1
Income tax $ 220 $ 225
</TABLE>
SUPPLEMENTAL NON-CASH TRANSACTIONS
On January 2, 1997, the Digiflex division of the Company was disposed of in
exchange for 10,500 shares of the Company's stock (See Note G).
See accompanying notes
6
<PAGE> 7
AUTOLOGIC INFORMATION INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A--Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with the instructions for Form 10-Q and Article 10 of
Regulation S-X and, therefore, do not include all information and footnotes
required by generally accepted accounting principles for complete financial
statements. However, in the opinion of management, the accompanying unaudited
condensed consolidated financial statements contain all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation of
the Company's financial position at January 30, 1998 and results of operations
and cash flows for the three months ended January 30, 1998 and January 31, 1997.
Operating results for interim periods are not necessarily indicative of the
results that may be expected for a full fiscal year.
These statements should be read in conjunction with the financial statements and
footnotes included in the Company's Annual Report on Form 10-K for the year
ended October 31, 1997. The accounting policies used in preparing these
financial statements are the same as those described in that Report. The
Company's fiscal year ends on the Friday nearest October 31.
NOTE B--FORMATION OF THE COMPANY AND MERGER
The Company was incorporated in Delaware on September 5, 1995 as a wholly-owned
subsidiary of Volt Information Sciences, Inc. ("Volt"). On January 29, 1996,
pursuant to the terms of an Agreement and Plan of Merger dated October 5, 1995,
as subsequently amended (the "Merger Agreement"), among the Company, Volt and
Information International, Inc. ("Triple-I"), Volt contributed to the capital of
Autologic, Incorporated ("Autologic") and certain foreign subsidiaries of Volt
("Volt Subsidiaries") the amounts Autologic or such subsidiaries owed to Volt
and, subsequent thereto, caused Autologic to merge with and into the Company.
Volt also assigned to the Company all of the issued and outstanding shares of
the Volt Subsidiaries. In addition, pursuant to the Merger Agreement, on January
29, 1996, following approval by its stockholders, Triple-I merged with and into
the Company.
As the Company, Autologic and the Volt Subsidiaries were under common control,
the merger of Autologic and the transfer of the stock of the Volt Subsidiaries
to the Company has been accounted for on a pooling of interest basis. The merger
of Triple-I has been accounted for under the purchase method of accounting and,
accordingly, the purchase price, which was based on the quoted market price of
the Triple-I common stock at the time the general terms of the acquisition were
agreed to and announced, plus the value of stock options issued in exchange for
outstanding stock options of Triple-I, has been allocated to net assets based
upon their estimated fair values. A $2,753,000 excess of the purchase price over
the estimated fair value of Triple-I's identifiable assets, including the
estimated future tax benefits of Triple-I's net operating loss carryforwards and
deductible temporary differences, was recorded on the effective date of the
merger and is being amortized over a five-year period.
NOTE C--INVENTORIES
Inventories consist of:
<TABLE>
<CAPTION>
January 30, October 31,
1998 1997
----------- -----------
(Dollars in thousands)
<S> <C> <C>
Service parts $2,346 $2,318
Materials 4,082 3,653
Work-in-process 982 965
Finished goods 2,410 1,293
------ ------
$9,820 $8,229
====== ======
</TABLE>
7
<PAGE> 8
AUTOLOGIC INFORMATION INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-Continued
(Unaudited)
NOTE D--INCOME TAXES
The Company applies the liability method of accounting for deferred taxes in
accordance with Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes." Under this method, deferred tax assets and liabilities are
determined based on differences between the financial reporting and tax bases of
assets and liabilities and are measured using tax rates and tax laws that are
scheduled to be in effect when the differences are scheduled to reverse.
Significant components of the income tax provision attributable to operations
are as follows:
<TABLE>
<CAPTION>
For the Three Months Ended
January 30, January 31,
1998 1997
----- -----
(Dollars in thousands)
<S> <C> <C>
Current Taxes:
Federal $ 17 $ --
State and local 10 --
Foreign (169) 58
----- -----
Total current (142) 58
----- -----
Deferred Taxes:
Federal 140 --
State and local 12 --
Foreign -- --
----- -----
Total deferred 152 --
----- -----
Total income tax provision $ 10 $ 58
===== =====
</TABLE>
Deferred income taxes reflect the net tax effects of changes in the temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes.
As described in Note B, as of the date of the mergers, a deferred tax asset was
established representing the estimated future tax benefit anticipated to be
realized from the use of Triple-I's net operating loss carryforward and
deductible temporary differences and the Company's deductible temporary
differences existing at the date of merger to reduce anticipated taxable income
of the Company to be realized subsequent to the mergers. The Company believes
that it is more likely than not that such tax benefits will be realized based on
the combined companies' past and anticipated future results of operations and
after considering provisions of the tax law, such as the change in ownership
provisions, that restrict the future use of Triple-I's tax benefits.
NOTE E--CHARGES FROM VOLT
Volt incurs certain costs on behalf of the Company which are reflected in the
results of operations. During the quarter ended January 30, 1998 and January 31,
1997, the Company incurred $9,000 in legal fees payable to Volt under a $3,000
per month retainer arrangement that provides the Company access to Volt's
in-house legal staff. As of October 31, 1997, the Company had a $265,000 payable
to Volt as a result of costs paid by Volt on behalf of the Company.
8
<PAGE> 9
AUTOLOGIC INFORMATION INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-Continued
(Unaudited)
NOTE F--RELATED PARTY TRANSACTIONS
A three-year lease, commencing on the effective date of the mergers, was entered
into between the Company, as lessee, and a wholly-owned subsidiary of Volt, as
lessor, for space previously occupied by Autologic as its headquarters and
manufacturing facility in Thousand Oaks, California. During the period from the
date of the mergers through January 30, 1998, the Company paid rent to Volt
aggregating $1,586,000. Pursuant to the terms of the lease, as amended in
December 1996, the Company's Board of Directors established a new rental rate
based on prevailing rates in the general area, which resulted in a slight
decrease in rent. During the remaining term of the lease, the Company's Board of
Directors may again, unilaterally, but in good faith and utilizing certain
reasonableness standards, redetermine whether there should be a further increase
or decrease in the base rent and/or increase (if the space is then available) or
decrease the amount of rented space. The lease also provides for the Company to
pay all real estate taxes, insurance, utilities and repairs related to the
facility.
NOTE G--DISCONTINUED OPERATIONS
On January 2, 1997, the Company disposed of the assets of, and discontinued the
operations of, Digiflex, its advertisement delivery division, which was acquired
at the end of January 1996. Digiflex was sold in exchange for the retirement of
10,500 shares of the Company's stock, which was previously held by an
unaffiliated party. The loss from discontinued operations for the three month
period ended January 31, 1997 includes an operating loss of $128,000 on revenues
of $82,000 and a loss on disposal of $75,000; no realizable income tax benefits
are available to be allocated to the loss.
NOTE H--PER SHARE DATA
During the quarter ended January 30, 1998, the Company adopted Statement of
Financial Accounting Standards No. 128, "Earning Per Share," (SFAS 128) which
required a change in the method used to compute earnings per share. SFAS 128
replaces primary and fully diluted earnings per share with basic and diluted
earnings per share, respectively. Basic earnings per share is calculated using
the weighted average number of common shares outstanding for the period, and
excludes stock options and other dilutive securities that could result in the
issuance of common stock. Diluted earnings per share reflects the dilution to
earnings that would occur if securities, stock options and other dilutive
securities result in the issuance of common stock. As required by SFAS 128, all
prior period amounts have been restated to conform to the new presentation.
9
<PAGE> 10
ITEM 2--MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
General
In order to keep investors informed of the Company's future plans and
objectives, this Report (and other reports and statements issued by the Company
and its officers from time to time) contain certain statements concerning the
Company's future results, future performance, intentions, objectives, plans and
expectations that are or may be deemed to be "forward-looking statements". The
Company's ability to do this has been fostered by the Private Securities
Litigation Reform Act of 1995 which provides a "safe harbor" for forward-looking
statements to encourage companies to provide prospective information so long as
those statements are accompanied by meaningful cautionary statements identifying
important factors that could cause actual results to differ materially from
those discussed in the statement . The Company believes it is in the best
interests of investors to take advantage of the "safe harbor" provisions of that
Act. Such forward-looking statements are subject to a number of known and
unknown risks and uncertainties that could cause the Company's actual results,
performance, and achievements to differ materially from those described or
implied in the forward-looking statements. Factors, in addition to general
economic and business conditions (both in the United States and in the overseas
markets where the Company distributes products) that could cause or contribute
to such differences include, but are not limited to, the Company's ability to
meet competition in its highly competitive markets, intense price competition
and pressure on margins; the Company's ability to maintain superior
technological capability in markets characterized by rapidly changing technology
and frequent new product introductions; the Company's ability to foresee changes
and to identify, develop and commercialize innovative and competitive products
and systems in a timely and cost effective manner, the continuing availability
of components, sub-assemblies, parts and end items; the Company's ability to
successfully expand its market base beyond its traditional newspaper market; the
Company's ability to attract and retain certain classifications of
technologically qualified personnel, particularly in the areas of research and
development and customer service; and the Company's ability to generate cash
flows and obtain financing to support its operations and growth, as well as
other factors discussed in the Company's Annual Report on Form 10-K for the year
ended October 31, 1997, and from time to time in other Company reports
thereafter filed with the Securities and Exchange Commission, including this
Report.
Three month's ended January 30, 1998 compared to three month's ended January 31,
1997
Results of Operations
Revenues in the three months ended January 30, 1998 decreased by $53,000, or
0.3%, due to an increase of $837,000, or 7.4%, in sales of systems and equipment
offset by an $890,000, or 13%, decrease in customer service sales. The increase
in sales of systems and equipment was due primarily to increased sales in the
domestic operations offset, in part, by a decrease in systems and equipment
sales in the international operations. Most of the international decline was due
to lower sales in the Pacific Rim resulting from the Asian currency crisis. The
decrease in customer service sales is due primarily to a decline in contract
service revenues, the effects of the stronger US dollar on currency conversion
of international service contracts, and lower customer service parts sales.
Gross profit margins expressed as a percentage of sales from systems, equipment,
customer service and support revenues increased by 5.7 percentage points from
36.8% in 1997 to 42.5% in the first quarter of 1998 due to an increase of 10.9
percentage points on systems and equipment offset by a 6.4 percentage point
decline in customer service margins. The increase in systems and equipment
margins is due primarily to a favorable mix of sales of higher margin products
and lower manufacturing costs during the current year. This is a continuation of
a trend started mid fiscal year 1997 resulting from consolidation of products
and operations plus on-going cost reduction efforts. The decline in customer
service margins is due primarily to lower customer service and support revenues
without a corresponding decrease in associated costs.
Operating expenses, expressed as a percentage of sales, remained relatively
stable at 39.3% in the first quarter of fiscal year 1998 compared to 39.1% in
the prior year comparable period.
The $76,000 increase in interest income in the first quarter of fiscal 1998 is
due to higher average (over the three-month period) cash balances in the first
quarter of fiscal 1998 than in the comparable period in the prior year.
10
<PAGE> 11
ITEM 2--MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS--Continued
The Company had a foreign exchange loss in the first quarter or fiscal 1998 of
$446,000 compared to a $261,000 gain in the first three months of fiscal 1997.
The gain in 1997 was due to favorable, and the loss in 1998 was due to
unfavorable, currency movements in the European and Pacific currency markets. To
reduce the potential adverse impact from foreign currency changes on the
Company's foreign currency receivables and firm commitments, foreign currency
options and forward contracts are purchased.
Other expense, net decreased from $127,000 in fiscal 1997 to $4,000 in fiscal
1998 due primarily to the absence in the fiscal 1998 period of restructuring
expenses incurred during 1997.
The tax provision in the reported fiscal 1998 period is 45.5% of pretax income
and is higher than the statutory rate of 34% due primarily to relatively higher
foreign tax rates.
See Note G of Notes to Condensed Consolidated Financial Statements on results of
discontinued operations.
Liquidity and Capital Resources
During the first three months of fiscal 1998, operating activities used
$1,025,000 of cash. While the Company generated cash from its profit of $13,000,
supplemented by non-cash charges aggregating $938,000 (consisting principally of
depreciation of $536,000, goodwill amortization of $138,000, a provision for
doubtful accounts of $131,000 and a deferred income tax charge of $152,000) and
an increase in customer advances of $2,402,000, these were offset by uses of
cash to support growth (primarily accounts receivable and inventory increases of
$857,000 and $1,591,000, respectively) and to reduce accounts payable by
$1,015,000 and accrued expenses by $574,000.
Investing activities used net cash of $370,000 for the purchase of property and
equipment.
As a result of the foregoing, during the three months ended January 30, 1998,
cash and cash equivalents decreased by $1,196,000. The Company's working capital
as of January 30, 1998 was $26,086,000, which includes $8,256,000 in cash and
cash equivalents. These resources, along with the credit facility from Wells
Fargo Bank discussed below, are anticipated to be sufficient to meet the
Company's liquidity and capital needs for the near term in the normal course of
business.
On May 15, 1997, the Company obtained a revolving line of credit, which is
guaranteed by Volt, in the amount of $2,250,000 with Wells Fargo Bank. Under the
terms and conditions of the line of credit, the Company may borrow from time to
time, up to the full amount of the line, with interest at the higher of the
bank's prime rate or the Federal Funds Rate plus .5%. There were no borrowings
outstanding under this agreement as of January 30, 1998.
11
<PAGE> 12
PART II - OTHER INFORMATION
ITEM 6--EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
15 Independent Accountants' Report on Review of Interim
Financial Information from Ernst & Young LLP
27 Financial Data Schedule
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter ended January 30,
1998.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
AUTOLOGIC INFORMATION INTERNATIONAL, INC.
Dated: Thousand Oaks, California
March 16, 1998
BY: /s/ Anthony F. Marrelli
-------------------------------------
Anthony F. Marrelli
Vice President and Chief Financial
Officer
12
<PAGE> 13
Exhibit Index
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<S> <C>
15 Independent Accountants' Report on Review of Interim Financial
Information from Ernst & Young LLP
27 Financial Data Schedule
</TABLE>
13
<PAGE> 1
INDEPENDENT ACCOUNTANT'S REVIEW REPORT: ERNST & YOUNG LLP
The Board of Directors
Autologic Information International, Inc.
We have reviewed the accompanying condensed consolidated balance sheet of
Autologic Information International, Inc. and subsidiaries as of January 30,
1998, and the related condensed consolidated statements of operations for the
three-month periods ended January 30, 1998 and January 31, 1997, the condensed
consolidated statement of stockholders' equity for the three-month period ended
January 30, 1998, and the condensed consolidated statements of cash flows for
the three-month periods ended January 30, 1998 and January 31, 1997. These
financial statements are the responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data, and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, which will be performed
for the full year with the objective of expressing an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express such an
opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying condensed consolidated financial statements referred
to above for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Autologic Information
International, Inc. and subsidiaries as of October 31, 1997, and the related
consolidated statements of operations, stockholders' equity and cash flows for
the year then ended, not presented herein; and in our report dated December 10,
1997, we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying
condensed consolidated balance sheets as of October 31, 1997, is fairly stated,
in all material respects, in relation to the consolidated balance sheet from
which it has been derived.
March 3, 1998
Woodland Hills, California
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-30-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> JAN-30-1998
<CASH> 8,256
<SECURITIES> 0
<RECEIVABLES> 17,885
<ALLOWANCES> 0
<INVENTORY> 9,820
<CURRENT-ASSETS> 42,617
<PP&E> 5,776
<DEPRECIATION> 0
<TOTAL-ASSETS> 53,962
<CURRENT-LIABILITIES> 16,531
<BONDS> 0
0
0
<COMMON> 58
<OTHER-SE> 37,373
<TOTAL-LIABILITY-AND-EQUITY> 53,962
<SALES> 18,042
<TOTAL-REVENUES> 18,042
<CGS> 10,372
<TOTAL-COSTS> 17,676
<OTHER-EXPENSES> (343)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 23
<INCOME-TAX> 10
<INCOME-CONTINUING> 13
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
