<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 28, 2000
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)
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
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 3, 2000 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 28, October 29,
2000 1999
----------- -----------
(Unaudited)
(Dollars in thousands)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 12,866 $ 13,421
Accounts receivable less allowance for doubtful
accounts of $1,436 (2000) and $1,501 (1999) 14,184 12,478
Inventories-See Note C 11,460 11,037
Deferred income tax benefit-See Note D 4,558 4,380
Prepaid expenses and other assets 1,386 1,460
--------- ---------
Total current assets 44,454 42,776
PROPERTY AND EQUIPMENT, at cost net of
accumulated depreciation and amortization
of $7,718 (2000) and $7,150 (1999) 5,064 5,389
DEFERRED INCOME TAX BENEFIT-See Note D 3,768 3,768
EXCESS OF PURCHASE PRICE OVER NET ASSETS
ACQUIRED, net of amortization of $2,203 (2000)
and $2,065 (1999)-See Note B 550 688
OTHER ASSETS 56 60
--------- ---------
$ 53,892 $ 52,681
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 3,112 $ 4,242
Payable to Volt-See Notes E and F 152 84
Accrued payroll and related liabilities 2,963 3,291
Accrued expenses 2,251 2,148
Customer advances 7,715 5,194
Income taxes payable 557 598
--------- ---------
Total current liabilities 16,750 15,557
STOCKHOLDERS' EQUITY-See Notes B and G
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 1999 and 1998 58 58
Paid-in capital 112,620 112,620
Accumulated deficit (75,536) (75,554)
--------- ---------
37,142 37,124
--------- ---------
$ 53,892 $ 52,681
========= =========
</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 28, January 29,
2000 1999
----------- -----------
(In thousands, except per share amounts)
<S> <C> <C>
REVENUES
Systems and equipment $ 11,535 $ 12,746
Customer service and support 6,113 6,050
-------- --------
17,648 18,796
-------- --------
OPERATING COSTS AND EXPENSES
Cost of systems and equipment 6,606 6,912
Cost of customer service and support 4,120 4,517
-------- --------
Gross margin 6,922 7,367
Operating expenses 6,774 7,179
Charges from Volt-See Notes E and F
Rent 194 194
General and administrative 9 9
-------- --------
OPERATING LOSS (55) (15)
-------- --------
OTHER INCOME (EXPENSE)
Interest income 147 127
Foreign exchange loss (70) (49)
Other, net 10 (12)
-------- --------
87 66
-------- --------
INCOME FROM OPERATIONS
BEFORE INCOME TAXES 32 51
INCOME TAX PROVISION-See Note D 14 21
-------- --------
NET INCOME $ 18 $ 30
======== ========
BASIC AND DILUTED EARNINGS
PER SHARE -See Note G $ 0.00 $ 0.01
======== ========
Average number of shares outstanding-Basic 5,788 5,788
======== ========
Average number of shares outstanding-Diluted 5,788 5,788
======== ========
</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 Accumulated
Shares Amount Capital Deficit
--------- --------- --------- -----------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Balance at October 29, 1999 5,787,970 $ 58 $ 112,620 $ (75,554)
Net income for the three months -- -- -- 18
--------- --------- --------- ---------
Balance at January 28, 2000 5,787,970 $ 58 $ 112,620 $ (75,536)
========= ========= ========= =========
</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 28, January 29,
2000 1999
----------- -----------
(Dollars in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 18 $ 30
Adjustments to reconcile net income to net
cash applied to operating activities:
Depreciation 578 569
Amortization 138 138
Provision for doubtful accounts 35 201
Gains on foreign currency translation (185) (139)
Loss (gain) on dispositions of property and equipment 138 (14)
Deferred income taxes (168) (17)
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (2,015) 852
Increase in inventories (423) (962)
Decrease (increase) in prepaid expenses and other assets 78 (919)
Decrease in accounts payable (998) (399)
Decrease in accrued expenses (227) (913)
Increase in customer advances 2,625 372
(Decrease) increase in income taxes payable (51) 9
Increase (decrease) in payable to Volt 68 (11)
-------- --------
NET CASH APPLIED TO OPERATING ACTIVITIES (389) (1,203)
-------- --------
CASH FLOWS APPLIED TO INVESTING ACTIVITIES
Purchases of property and equipment (391) (423)
-------- --------
Effect of exchange rate changes on cash 225 252
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS (555) (1,374)
Cash and cash equivalents, beginning of period 13,421 11,871
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 12,866 $ 10,497
======== ========
SUPPLEMENTAL CASH TRANSACTIONS
Cash paid during the period:
Interest expense $ 1 $ --
Income tax $ 231 $ 136
</TABLE>
See accompanying notes
5
<PAGE> 6
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 28, 2000 and results of operations
and cash flows for the three months ended January 28, 2000 and January 29, 1999.
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 29, 1999. 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 and its fiscal
quarters end on the Friday nearest the last day of January, April and July. The
2000 fiscal year will contain 53 weeks compared with 52 weeks in fiscal year
1999.
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. The $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 28, October 29,
2000 1999
----------- -----------
(Dollars in thousands)
<S> <C> <C>
Service parts $ 1,104 $ 1,170
Materials 7,201 6,205
Work-in-process 1,606 1,910
Finished goods 1,549 1,752
-------- --------
$ 11,460 $ 11,037
======== ========
</TABLE>
6
<PAGE> 7
AUTOLOGIC INFORMATION INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-Continued
(Unaudited)
NOTE D--INCOME TAXES
Income taxes are provided using the liability method. Significant components of
the income tax provision attributable to operations are as follows:
<TABLE>
<CAPTION>
For the Three Months Ended
--------------------------
January 28, January 29,
2000 1999
----------- -----------
(Dollars in thousands)
<S> <C> <C>
Current Taxes:
Federal $ 236 $ 57
State and local 36 34
Foreign (90) (53)
------ ------
Total current 182 38
------ ------
Deferred Taxes:
Federal (150) (11)
State and local (18) (6)
Foreign -- --
------ ------
Total deferred (168) (17)
------ ------
Total income tax provision $ 14 $ 21
====== ======
</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 mergers 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 for which the Company
reimburses Volt and, accordingly, such costs are reflected in the Company's
results of operations. In addition, during the three months ended January 28,
2000 and January 29, 1999, 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. At January 28, 2000, the Company had a
$152,000 payable to Volt as a result of costs paid by Volt on behalf of the
Company including amounts owed under the retainer arrangement.
7
<PAGE> 8
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. 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. The lease also provides for the
Company to pay all real estate taxes, insurance, utilities and repairs related
to the facility. The Company and the Landlord have continued to operate under
the terms of the lease since its expiration in January 1999. During the three
months ended January 28, 2000 and January 29, 1999, the Company paid rent to
Volt of $194,000.
NOTE G--PER SHARE DATA
The Company calculates per share data in accordance with Statement of Financial
Accounting Standards No. 128, "Earnings per Share" (SFAS No. 128). Under SFAS
No. 128 earnings per share data is calculated for basic and diluted earnings per
share. Basic earnings per share excludes dilutive securities including stock
options, and is calculated using the weighted average common shares outstanding
for the period. Diluted earnings per share reflects the dilution to earnings
that would occur if stock options and other dilutive securities resulted in the
issuance of common stock. Substantially all common stock equivalent shares from
stock options (330,500 and 345,000 in 2000 and 1999, respectively) have been
excluded from the computation of diluted earnings per share because the effect
would be antidilutive since the option prices were greater than the average
market prices of the Company's common stock during the quarters.
NOTE H--REVENUE RECOGNITION
Revenues are recognized when products are shipped and services are rendered,
less estimated returns and warranty costs for which provisions are made at the
time of sale. The Company also generates revenues from support and maintenance
contracts, which generally provide for the Company to provide technical support
and maintenance to its customers on its products. Support and maintenance
revenues are recognized ratably over the contract periods.
NOTE I--CONTINGENCIES
The Company is currently involved in various claims and legal actions arising in
the ordinary course of business. In the opinion of management, the ultimate
resolution of such claims and actions will not have a materially adverse effect
on the Company's financial position or results of operations.
NOTE J--SUBSEQUENT EVENT
On February 18, 2000, the Company announced that it had terminated all sales and
engineering activities on its Laser Cinema Recorder. The Laser Cinema Recorder
had been used in the production of many major motion pictures over the past
three years. However, sales of the product had never reached business plan
expectations. The Company will continue to provide field service, technical
support, spare parts, and other support, to existing users. The Company has
previously provided for all associated manufacturing inventory write-offs.
8
<PAGE> 9
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) contains 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. Although the Company believes that its expectations are based on reasonable
assumptions, these 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 that could cause or
contribute to such differences include, but are not limited to:
- - general economic and business conditions in the United States and in the
overseas markets where the Company distributes products, including the
impact of the major economic problems currently occurring in Asia and Latin
America;
- - the impact of the strengthening dollars in international prices;
- - the Company's ability to successfully expand its market base beyond its
traditional newspaper market;
- - potential changes in customer spending and purchasing policies and
practices;
- - the continuing availability of components, sub-assemblies, parts and end
items, and dependence on third parties for some components;
- - risks inherent in new product introductions, such as start-up delays,
uncertainty of customer acceptance;
- - the success of the Company's new Computer-to-Plate imager;
- - the Company's ability to maintain superior technological capability;
- - 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 and achieve customer acceptance in markets
characterized by rapidly changing technology and frequent new product
introductions;
- - the Company's ability to meet competition in its highly competitive markets
with minimal impact on prices and margins;
- - 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;
- - the Company's ability to generate cash flows and obtain financing to support
its operations and growth; and,
- - the impact of the introduction of the Euro currency.
Results of Operations
Three months ended January 28, 2000 compared to three months ended January 29,
1999
In the three month period ended January 28, 2000, revenues decreased by
$1,148,000, or 6.1%, due to a decrease of $1,211,000, or 9.5%, in sales of
systems and equipment, partially offset by an increase of $63,000, or 1.0% in
customer service sales. The decrease in systems and equipment sales both
domestically and internationally was primarily due to the Y2K millennium
boundary, as users who had finished testing and qualifying their systems
deferred making purchases. The continuing adverse business conditions in Latin
America and the Far East also contributed to lower sales during the three-month
period. In addition, lower sales in Europe were the result of shipments of the
Company's new Computer-to-Plate (CTP) imager at a slower pace than shipments of
the 3850 film imager last year. CTP products were designed as an enhancement
upon the 3850 film imager. While the price of CTP plates has begun to decline as
more are used, presently the price of CTP plates used in conjunction with our
technology is relatively high, delaying many potential users from investing in
CTP technology. It is expected that the price of CTP plates will continue to
decline, and sales of CTP equipment will increase on a worldwide basis,
including the U.S. The increase in customer service and support sales was due
primarily to new service contracts in Europe associated with the sales of CTPs.
Gross margins remained constant at 39.2%, with higher service and support
margins, which increased 7.3 percentage points (from 25.3% to 32.6%) over the
same period in 1999, being offset by lower margins on systems and equipment,
which decreased 3.1 percentage points (from 45.8% to 42.7%) from the same period
in 1999. The increase in service and support margins were due to higher margins
domestically due to lower spare costs during the period, and internationally,
due to new service contracts in Europe,
9
<PAGE> 10
associated with sales of CTPs without a corresponding increase in costs. The
decrease in systems and equipment margins was due primarily to discounting in
response to competition and slightly higher manufacturing costs during the
period. The higher manufacturing costs resulted from higher material costs for
3850 film imagers due to lower production volumes and less price breaks provided
by vendors and manufacturing variances associated with the initial roll-out of
the Company's new wide versions of the CTP film imagers.
Operating expenses decreased by $405,000 from $7,179,000 in the first three
months of fiscal 1999 to $6,774,000 in the first three months of fiscal 2000 due
primarily to cost cutting measures implemented by the Company beginning in
October 1999. Operating expenses as a percentage of sales increased by .2
percentage points (from 38.2% to 38.4%) due primarily to the lower level of
sales. As part of its ongoing cost-cutting initiatives, the Company implemented
a 6% worldwide reduction in staffing in February 2000. Total personnel was
reduced by 25, with the majority of the layoffs occurring in the Company's
Thousand Oaks facility. The Company estimates that annual savings of
approximately $1.8 million will result from this action. In addition, in
connection with the termination of sales and engineering activities on its Laser
Cinema Recorder, the Company estimates approximately $400,000 in annual savings.
The $20,000 increase in interest income was due to a higher average (over the
three-month period) cash balance in the fiscal 2000 period than in the
comparable period in the prior year.
A foreign exchange loss of $70,000 was realized in the three-month period ended
January 28, 2000 compared to $49,000 in the same period in 1999. The loss in
both periods was due to unfavorable currency movements in the European currency
markets. To reduce the potential impact from foreign currency changes on the
Company's foreign currency receivables and firm commitments, foreign currency
options are purchased.
The Company's effective tax rate was 43.8% for the three months ended January
28, 2000 compared to 41.2% for the comparable prior year period due primarily to
higher foreign taxes.
Liquidity and Capital Resources
As of January 28, 2000, the Company had cash and cash equivalents of $12,866,000
and working capital of $27,704,000. During the three months ended January 28,
2000, the Company's operating activities used cash of $389,000, primarily for
increases in accounts receivable and inventories and a decrease in accounts
payable. These uses of cash in operating activities were offset by increases in
customer deposits and non-cash charges, which are primarily from depreciation
and amortization. Accounts receivable increased due to increases in sales of the
Company's new CTP product, primarily in Europe, while accounts payable decreased
primarily due to the timing of payments for material inventory purchases.
Customer advances increased significantly due to orders placed for the Company's
CTP product.
Investing activities used cash of $391,000 for the purchase of property and
equipment. There are no major capital expenditures forecast during the balance
of the fiscal year.
The Company believes that its cash on hand resources will be sufficient to meet
the Company's liquidity and capital needs in the normal course of business.
Impact of Year 2000
In prior years, the Company discussed the nature and progress of its plans to
become Year 2000 ready. In late 1999, the Company completed its remediation and
testing of systems. The Company experienced no significant disruptions in
mission critical information technology and non-information technology systems
and believes those systems successfully responded to the Year 2000 date change.
During the past three years, the Company expensed approximately $380,000 in
connection with remediating its systems. The Company is not aware of any
material problems resulting from Year 2000 issues, either with its products, its
internal systems, or the products and services of third parties. The Company
will continue to monitor its mission critical computer applications and those of
its suppliers and vendors throughout the year 2000 to ensure that any latent
Year 2000 matters that may arise are addressed promptly.
10
<PAGE> 11
Impact of the Euro
Several European countries have adopted as of January 1, 1999, and others are
expected to adopt, a Single European Currency (the "Euro") with a transition
period continuing through January 1, 2002. The Company believes, based on its
experience to date, that its internal systems are, and will continue to be, Euro
compatible without material modification cost. Further, the Company has not
experienced to date, and does not expect, the introduction of the Euro currency
to have a material adverse impact on the Company's financial position or results
of operations.
ITEM 3--QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risk related to changes in interest rates,
foreign currency exchange rates and derivative financial instruments. To reduce
the potential impact from foreign currency changes on the Company's foreign
currency receivables and firm commitments, foreign currency options are
purchased.
The Company maintains a portfolio of highly liquid cash equivalents maturing in
three months or less from the date of purchase. Given the short-term nature of
these investments, and that the Company has no borrowings outstanding, the
Company is not subject to significant principal risk. However, the Company's
yield return on future short-term investments could be affected at the time of
reinvestment as a result of intervening events. The Company presently has no
borrowings and, accordingly, does not purchase interest rate swaps or other
instruments to hedge against interest rate fluctuations.
A significant portion of the Company's operations consists of sales activities
in foreign locations, as the Company sells its products worldwide. The Company's
financial results, therefore, could be significantly impacted by factors such as
changes in foreign currency exchange rates or weak economic conditions in
foreign markets. Since all of the Company's sales are denominated in U.S.
dollars, the Company's foreign operations are net payers in currencies other
than the U.S. dollar. As such, the Company's operating results may be adversely
affected by the impacts of weaker foreign currencies relative to the U.S.
dollar. To mitigate the short-term effect of changes in currency exchange rates
on its foreign currency based expenses and receivables, the Company purchases
foreign currency option contracts to hedge the adverse impact of currency
fluctuations on its foreign currency receivables and firm commitments.
Management believes that due to its currency option positions that changes in
currency rates would not have a significant impact on the Company's results of
operations.
PART II - OTHER INFORMATION
ITEM 6--EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
<TABLE>
<S> <C>
15 Independent Accountants' Report on Review of Interim Financial
Information from Ernst & Young LLP
27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K:
No Reports on Form 8-K were filed during the quarter ended January 28,
2000.
11
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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 10, 2000
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
EXHIBIT 15
INDEPENDENT ACCOUNTANTS' 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 28,
2000, and the related condensed consolidated statements of operations for the
three-month periods ended January 28, 2000 and January 29, 1999, the condensed
consolidated statement of stockholders' equity for the three-month period ended
January 28, 2000, and the condensed consolidated statements of cash flows for
the three-month periods ended January 28, 2000 and January 29, 1999. 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 auditing standards generally accepted in the United States,
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 accounting principles generally
accepted in the United States.
We have previously audited, in accordance with auditing standards generally
accepted in the United States, the consolidated balance sheet of Autologic
Information International, Inc. and subsidiaries as of October 29, 1999, 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, 1999, we expressed an unqualified opinion on those consolidated
financial statements. In our opinion, the information set forth in the
accompanying condensed consolidated balance sheet as of October 29, 1999, is
fairly stated, in all material respects, in relation to the consolidated balance
sheet from which it has been derived.
February 29, 2000
Woodland Hills, California
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