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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
For the quarterly period ended June 30, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to _________
Commission File Number
0-27678
TRIDENT INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 06-6403301
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1114 Federal Road, Brookfield, Connecticut 06804
(Address of principal executive offices) (Zip Code)
(203) 740-9333
(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 / /
The number of shares outstanding of the registrant's Common Stock, par value
$.01 per share, as of July 30, 1996 was 6,951,288.
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TRIDENT INTERNATIONAL, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page
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<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets as of
June 30, 1996 and September 30, 1995.................... 3
Condensed Consolidated Statements of Operations
for the three months and nine months ended
June 30, 1996 and 1995.................................. 4
Condensed Consolidated Statements of Cash Flows
for the nine months ended June 30, 1996 and
1995.................................................... 5
Notes to Condensed Consolidated Financial Statements....... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.......................... 14
Signatures................................................ 14
</TABLE>
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PART 1. FINANCIAL INFORMATION
This Form 10-Q contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. The Company's actual results could differ materially from those set
forth in the forward-looking statements. Factors that might cause such a
difference are discussed in the section entitled "Business Environment and
Future Results" on page 11 of this Form 10-Q.
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
TRIDENT INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(000'S Omitted)
<TABLE>
<CAPTION>
(Unaudited)
June 30, 1996 September 30, 1995
------------- ------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and equivalents $ 14,685 $ 2,988
Accounts receivable, net 3,866 2,929
Inventories 1,234 1,049
Refundable income taxes 395 --
Deferred income taxes 484 285
Other current assets 121 95
-------- --------
Total current assets 20,785 7,346
LEASEHOLD IMPROVEMENTS AND EQUIPMENT, net 1,289 876
DEFERRED INCOME TAXES, LONG-TERM 1,074 --
INTANGIBLE ASSETS, net 12,745 14,911
-------- --------
Total assets $ 35,893 $ 23,133
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ -- $ 2,620
Accounts payable 814 584
Accrued expenses 807 795
Income taxes payable -- 115
-------- --------
Total current liabilities 1,621 4,114
-------- --------
LONG-TERM DEBT, less current portion included above -- 12,361
-------- --------
DEFERRED INCOME TAXES 90 97
-------- --------
REDEEMABLE COMMON STOCK WARRANTS -- 4,561
-------- --------
SERIES A REDEEMABLE CONVERTIBLE PARTICIPATING
PREFERRED STOCK, $.01 par value; 307,317
shares issued and outstanding at September 30, 1995 -- 3,311
-------- --------
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock, $.01 par value; 30,000,000
shares authorized; 6,951,288 shares
issued and outstanding at June 30, 1996 70 --
Class A voting common stock, $.01 par
value; 7,000,000 shares authorized;
1,560,000 shares issued and outstanding
at September 30, 1995 -- 16
Additional paid-in capital 40,014 2,786
Deferred compensation -- (443)
Retained earnings (deficit) (5,902) (3,670)
-------- --------
Total stockholders' equity (deficit) 34,182 (1,311)
-------- --------
$ 35,893 $ 23,133
======== ========
</TABLE>
See accompanying notes.
3
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TRIDENT INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(000'S Omitted, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------------- -----------------------------
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
NET SALES $ 6,681 $ 4,416 $ 18,908 $ 11,750
COST OF SALES 2,392 1,643 6,992 4,570
----------- ----------- ----------- -----------
Gross profit 4,289 2,773 11,916 7,180
----------- ----------- ----------- -----------
OPERATING EXPENSES:
Marketing and selling 409 227 1,039 641
Research and development 579 371 1,577 944
Write-off of purchased in
process research and
development -- -- 3,052 --
General and administrative 510 402 1,942 1,136
Amortization of intangibles 199 201 600 601
Amortization of deferred
compensation -- 296 443 887
----------- ----------- ----------- -----------
Total operating expenses 1,697 1,497 8,653 4,209
----------- ----------- ----------- -----------
Operating income 2,592 1,276 3,263 2,971
OTHER (INCOME) EXPENSE:
Interest (income) expense, net (179) 469 433 1,403
Redeemable warrant interest
charge -- 1,140 1,710 3,420
----------- ----------- ----------- -----------
Income (loss) before
income taxes 2,771 (333) 1,120 (1,852)
PROVISION FOR INCOME TAXES 1,183 506 1,466 1,173
----------- ----------- ----------- -----------
NET INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM 1,588 (839) (346) (3,025)
EXTRAORDINARY ITEM (net of
income tax benefit of $1,253) -- -- (1,803) --
----------- ----------- ----------- -----------
NET INCOME (LOSS) 1,588 (839) (2,149) (3,025)
INCREASE IN REDEMPTION VALUE
OF PREFERRED STOCK -- (47) (83) (141)
----------- ----------- ----------- -----------
INCOME (LOSS) APPLICABLE TO COMMON
STOCKHOLDERS $ 1,588 $ (886) $ (2,232) $ (3,166)
=========== =========== =========== ===========
INCOME (LOSS) PER COMMON SHARE
BEFORE EXTRAORDINARY ITEM $ 0.22 $ (0.55) $ (0.11) $ (1.98)
=========== =========== =========== ===========
INCOME (LOSS) PER COMMON SHARE $ 0.22 $ (0.55) $ (0.56) $ (1.98)
=========== =========== =========== ===========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 7,275,383 1,608,000 4,019,529 1,602,348
=========== =========== =========== ===========
</TABLE>
See accompanying notes.
4
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TRIDENT INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(000'S Omitted)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
------------------------
June 30, June 30,
1996 1995
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (2,149) $ (3,025)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 1,014 1,154
Amortization of deferred compensation 443 887
Write-off of unamortized original issue discount 2,158 --
Write-off of consulting agreement 438 --
Write-off of deferred financing cost 898 --
Deferred income taxes (1,280) 26
Accretion of interest on zero coupon notes 108 180
Accretion of redeemable warrant interest charge 1,710 3,420
Changes in operating assets and liabilities:
Accounts receivable, net (937) (825)
Inventories (185) 334
Other current assets (26) (49)
Accounts payable and accrued expenses 242 (8)
Current income taxes (510) (126)
-------- --------
Net cash provided by operating activities 1,924 1,968
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of leasehold improvements and equipment, net (597) (172)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issue of common stock 28,272 60
Exercise of warrants 418 --
Repayments of long-term debt (17,247) (750)
Repayment of line-of-credit -- (244)
Payments of offering costs (1,073) --
-------- --------
Net cash provided by (used in) financing
activities 10,370 (934)
-------- --------
INCREASE IN CASH 11,697 862
CASH, beginning of period 2,988 518
-------- --------
CASH, end of period $ 14,685 $ 1,380
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for -
Interest $ 3,120 $ 1,085
Income taxes $ 1,988 $ 1,273
Non-cash transactions -
Increase in redemption value of preferred stock $ 83 $ 141
</TABLE>
See accompanying notes.
5
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TRIDENT INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Business:
Trident International, Inc. (the Company) designs, manufactures and
markets impulse ink jet subsystems, including printheads, inks and other
consumables, and related components for the industrial market. The
Company markets its products worldwide principally to original equipment
manufacturers (OEMs), who integrate the products into systems which are
then sold to end-users directly or via distributors. The largest market
segment currently addressed by the Company's products is that of printing
onto shipping cartons. Other industrial market segments in which the
Company's products are currently being utilized include check coding,
addressing and imprinting business forms, postal bar coding and stamp
cancellation and plotting garment patterns.
The interim financial statements reflect all adjustments (consisting of
normal recurring adjustments) which are, in the opinion of management,
necessary to a fair statement of the results for the interim periods
presented. These interim financial statements should be read in
conjunction with the financial statements and notes included in the
Company's February 26, 1996 Form S-1 Registration Statement and included
in the Company's February 26, 1996 Prospectus related thereto.
The foregoing interim results are not necessarily indicative of the
results of operations for the full fiscal year ending September 30, 1996.
2. Inventories:
Inventories consisted of the following:
<TABLE>
<CAPTION>
June 30, September 30,
1996 1995
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<S> <C> <C>
Raw materials $ 509 $ 466
Work-in process 380 363
Finished goods 345 220
------ ------
$1,234 $1,049
====== ======
</TABLE>
3. Contingency:
In connection with the prior acquisition (Acquisition), the Company
undertook an environmental compliance audit which identified certain
environmental deficiencies on properties leased by the Company. The site
of one of the Company's leased facilities was contaminated due to prior
uses by a prior occupant and may require remedial action. Although the
Company obtained an indemnification agreement in connection with the
Acquisition with respect to such prior contamination, if the Company is
found to be liable as a result of any contamination of the site, there
6
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can be no assurance that such indemnification will be available or that,
if available, it will be sufficient. While the ultimate results of future
claims, if any, against the Company with regard to these matters cannot
be determined, management does not anticipate that these matters will
have a material adverse impact on the consolidated results of operations
or financial position of the Company.
4. Write-off of Purchased in Process Research and Development:
In March 1996, the Company acquired from Dataproducts Corporation a
non-exclusive license for patented solid ink jet printing technology in
certain licensed industrial marking fields. This agreement allows the
Company to use these patents in the development and commercialization of
its own solid ink printhead. The Company recorded a charge of $3,052,000
in the quarter ended March 31, 1996 as a write-off of purchased in
process research and development to record the cost of evaluating and
acquiring this license.
5. Initial Public Offering:
In February 1996, the Company completed the initial public offering of
its common stock which provided net proceeds, after underwriting
discounts and expenses, of $28,264,000. The Company used approximately
$10,755,000 to repay the outstanding indebtedness under its credit
facility and $4,500,000 to retire all of the $5,000,000 in principal
amount of the zero coupon notes originally issued by the Company for
$1,900,000 in connection with the Acquisition. The remaining net proceeds
will be used for working capital and general corporate purposes.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
Trident International, Inc. (the Company) designs, manufactures and markets
impulse ink jet subsystems, including printheads, inks and other consumables,
and related components for the industrial market. The Company markets its
products worldwide principally to original equipment manufacturers (OEMs), who
integrate the products into systems which are then sold to end-users directly or
via distributors. The largest market segment currently addressed by the
Company's products is that of printing onto shipping cartons. Other industrial
market segments in which the Company's products are currently being utilized
include check coding, addressing and imprinting business forms, postal bar
coding and stamp cancellation and plotting garment patterns.
In March 1996, the Company acquired from Dataproducts Corporation a
non-exclusive license for patented solid ink jet printing technology in certain
licensed industrial marking fields. This agreement allows the Company to use
these patents in the development of its own solid ink printhead. The Company
recorded a charge of $3.1 million in the quarter ended March 31, 1996 as
write-off of purchased in process research and development to record the cost of
evaluating and acquiring this license.
In February 1996, the Company completed the initial public offering of its
common stock which provided net proceeds, after underwriting discounts and
expenses, of $28.3 million. The Company used approximately $10.8 million to
repay the outstanding indebtedness under its credit facility and $4.5 million to
retire all of the $5.0 million in principal amount of the zero coupon notes
issued by the Company for $1.9 million in connection with the 1994 acquisition.
The remaining net proceeds will be used for working capital and general
corporate purposes.
RESULTS OF OPERATIONS
Net Sales. Net sales increased $2.3 million, or 52% to $6.7 million for the
three months ended June 30, 1996 from $4.4 million for the three months ended
June 30, 1995. Net sales of printheads increased by approximately $1.6 million
in the three months ended June 30, 1996 as compared to the same quarter in the
prior fiscal year due primarily to a 62% increase in printhead unit sales. Sales
of ink products increased by $621,000 or 42% in the three months ended June 30,
1996 as compared to the same quarter in the prior fiscal year due to the
expanding installed base of printheads. Net sales to international customers
increased by $854,000, or 85% for the three months ended June 30, 1996 as
compared to the three months ended June 30, 1995.
Net sales increased $7.1 million or 60%, to $18.9 million for the nine months
ended June 30, 1996 from $11.8 million for the nine months ended June 30, 1995.
Net sales of printheads increased by approximately $5.0 million in the nine
months ended June 30, 1996 as compared to the same quarter in the prior fiscal
year due to a 69% increase in printhead unit sales and a 2.6% increase in
average selling price per printhead unit. Sales of ink products increased by
$2.0 million or 52% in the nine months ended June 30, 1996 as compared to the
nine months in the prior fiscal year due to the expanding installed base of
printheads.
8
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Net sales to international customers increased by $2.4 million, or 71% for the
nine months ended June 30, 1996 as compared to the nine months ended June 30,
1995.
Because of the size of the carton coding market and the relatively small market
penetration achieved to date, the Company believes that it can continue to sell
printheads into its principal market and expand its installed base of
printheads. There can, however, be no assurance that such sales and expansion
will experience continued growth at similar rates or not be limited or otherwise
adversely affected by competition, emerging or alternative technologies, shifts
in customer demands or other factors.
Gross Profit. Gross profit increased $1.5 million, or 54% to $4.3 million for
the three months ended June 30, 1996 from $2.8 million for the three months
ended June 30, 1995. Gross profit as a percentage of net sales increased from
62.8 % for the three months ended June 30, 1995 to 64.2% for the three months
ended June 30, 1996. The increase in gross profit as a percentage of net sales
was due to lower average printhead costs.
Gross profit increased $4.7 million, or 65% to $11.9 million for the nine months
ended June 30, 1996 from $7.2 million for the nine months ended June 30, 1995.
Gross profit as a percentage of net sales increased from 61.1% for the nine
months ended June 30, 1995 to 63.0% for the nine months ended June 30, 1996. The
increase in gross profit as a percentage of net sales was due to the higher
printhead average selling prices as well as lower average printhead costs. The
increase in gross profit was offset in part by an increase in the Company's
warranty reserve which was adjusted to reflect a revised estimate of potential
product repair costs, as well as an overall increase in the installed base of
printheads.
Marketing and Selling Expenses. Marketing and selling expenses increased
$182,000, or 81% to $409,000 for the three months ended June 30, 1996 from
$227,000 for the three months ended June 30, 1995 due to the addition of sales
personnel. As a percentage of net sales, these expenses increased to 6.1% for
the three months ended June 30, 1996 from 5.1% for the three months ended June
30, 1995.
Marketing and selling expenses increased $398,000 or 62%, to $1,039,000 for the
nine months ended June 30, 1996 from $641,000 for the nine months ended June 30,
1995 due to the addition of sales personnel. As a percentage of net sales, these
expenses remained consistent at 5.5% for the nine months ended June 30, 1996.
Because of its OEM customer base, the Company can effectively manage the
marketing and selling function with a relatively small organization. Employee
compensation accounts for the majority of these expenses and sales commissions
are a relatively small part of overall compensation.
9
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Research and Development Expenses. Research and development expenses increased
$208,000, or 56% to $579,000 for the three months ended June 30, 1996 from
$371,000 for the three months ended June 30, 1995 due principally to the
addition of engineering personnel as well as increases in research project
materials and supplies. As a percentage of net sales, these expenses increased
to 8.7% for the three months ended June 30, 1996 from 8.4% for the three months
ended June 30, 1995. The Company's product research and development groups work
in teams on engineering development programs to design and develop new products
and enhancements to existing products.
Research and development expenses increased $633,000, or 67% to $1,577,000 for
the nine months ended June 30, 1996 from $944,000 for the nine months ended June
30, 1995 due principally to the addition of engineering personnel as well as
increases in research project materials and supplies. As a percentage of net
sales, these expenses increased to 8.3% for the nine months ended June 30, 1996
from 8.0% for the nine months ended June 30, 1995. The Company anticipates that
research and development expenses will increase in future periods as a result of
increased product development activity.
Write-off of Purchased in Process Research and Development. In March 1996, the
Company acquired from Dataproducts Corporation a non-exclusive license for
patented solid ink jet printing technology in certain licensed industrial
marking fields. This agreement allows the Company to use these patents in the
development and commercialization of its own solid ink printhead. The Company
recorded a charge of approximately $3.1 million in the quarter ended March 31,
1996 as write-off of purchased in process research and development to record the
cost of evaluating and acquiring this license. There were no similar expenses in
either the three month period ended June 30, 1996 or the three month or nine
month periods ended June 30, 1995.
General and Administrative Expenses. General and administrative expenses
increased $108,000, or 26.9% to $510,000 for the three months ended June 30,
1996 from $402,000 for the three months ended June 30, 1995. As a percentage of
net sales, these expenses decreased to 7.6% for the three months ended June 30,
1996 from 9.1% for the three months ended June 30, 1995 due to the increase in
net sales.
General and administrative expenses increased $800,000, or 73% to $1.9 million
for the nine months ended June 30, 1996 from $1.1 million for the nine months
ended June 30, 1995. The increase in general and administrative expenses was due
principally to the write-off of a consulting agreement in the amount of
$438,000, additions of accounting and administrative personnel and increases in
recruiting fees. As a percentage of net sales, these expenses increased to 10.3%
for the nine months ended June 30, 1996 from 9.7% for the nine months ended June
30, 1995. If the write-off of the consulting agreement had not occurred, these
expenses would have decreased to 8.0% of net sales for the nine months ended
June 30, 1996 due to the increase in net sales without a corresponding increase
in general and administrative expenses.
10
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Amortization of Intangibles and Amortization of Deferred Compensation. The
amortization amounts for intangibles of $199,000 and $201,000, respectively, did
not vary materially in amount for the three months ended June 30, 1996 as
compared to the three months ended June 30, 1995. Deferred compensation was
fully amortized effective February, 1996 and accordingly there were no further
charges for deferred compensation during the three months ended June 30, 1996.
The amortization amounts for intangibles and deferred compensation of $600,000
and $601,000, respectively, did not vary materially in amount for the nine
months ended June 30, 1996 as compared to the nine months ended June 30, 1995.
Amortization of deferred compensation decreased by $444,000 or 50% from $887,000
for the nine months ended June 30, 1996 because deferred compensation expense
was fully amortized effective February 1996.
Interest (Income) Expense, net. Interest income was $179,000 for the three
months ended June 30, 1996 as compared to interest expense of $469,000 for the
three months ended June 30, 1995. This was due the repayment of all outstanding
borrowings with the proceeds of the initial public offering and an increase in
interest income on higher cash balances.
Interest (income) expense, net decreased $967,000, or 69% to $433,000 for the
nine months ended June 30, 1996 from $1.4 million for the nine months ended June
30, 1995 due to the repayment of debt and increase in interest income.
Redeemable Warrant Interest Charge. Redeemable warrant interest charge decreased
by $1.1 million to $0 for the three months ended June 30, 1996 from $1.1 million
for the three months ended June 30, 1995 because the redeemable warrants were
fully accreted as of February 1996. Redeemable warrant interest charge decreased
by $1.7 million or 50% to $1.7 million for the nine months ended June 30, 1996
from $3.4 million for the nine months ended June 30, 1995 for this reason.
Provision for Income Taxes. The provision for income taxes for the three months
ended June 30, 1996 was $1.2 million on income before income taxes of $2.8
million. The provision for income taxes for the nine months ended June 30, 1996
was $1.5 million on income before income taxes of $1.1 million. The effective
tax rate for the nine months ended June 30, 1996 differed from the statutory
rate principally due to the non-deductibility of the redeemable warrant interest
charge, amortization of deferred compensation and amortization costs related to
excess of purchase price over fair value of net assets acquired.
Extraordinary Item. Effective with the initial public offering, the Company
expensed approximately $2,159,000 of unamortized original issue discount upon
prepayment of notes payable to TA Associates and approximately $897,000 of
unamortized deferred financing cost. The extraordinary item represents the
write-off of these items less a related income tax benefit of approximately
$1,253,000.
BUSINESS ENVIRONMENT AND FUTURE RESULTS
This Form 10-Q contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. The Company's actual results could differ materially from those set
forth in the forward-looking statements. Factors that might cause such a
difference include those discussed below.
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The markets for the Company's products are characterized by changing technology,
evolving industry standards and changing customer needs. The Company's future
success will depend in part on its ability to enhance its current products and
to develop new products on a timely and cost-effective basis in order to respond
to technological developments and changing customer needs. There can be no
assurance that the Company will be successful in developing new products or
enhancing its existing products on a timely or cost-effective basis.
New products could also have the effect of decreasing customer demand for the
Company's current products. Although the Company historically has not
experienced any material adverse impact on its business attributable to delays
in the introduction of new products, there can be no assurance that delays will
not occur in the future. The Company expects a component of its growth strategy
to be the acquisition of new technologies, whether through entering into
licensing arrangements, acquiring businesses owning desirable technology, or
otherwise. An example of this is the new solid ink jet printing technology.
There can be no assurance that the Company's investments in new technologies,
including solid ink, will lead to the successful development of new products.
The industrial printing industry is highly competitive and the Company believes
it will need to continue to develop new products and applications in order to
remain competitive. Several of the Company's competitors are larger and have
greater financial, research and development, marketing and other resources than
the Company. For example Nu-Kote Holdings, Inc. released a piezoelectric
printhead intended for use in industrial and other applications. No assurance
can be given that the Company will be able to compete successfully against
current or future competitors or that the competitive pressures faced by the
Company will not adversely affect its results of operations. The Company is
aware that manufacturers of certain ink products are claiming that their inks
could be utilized with certain of the Company's impulse ink jet printheads.
Although the use of such other inks will void the Company's warranties on its
printheads, and could, in the Company's judgment, result in inferior performance
and permanent damage to its printheads, there can be no assurance that the
introduction and sale of such other inks will not have a material adverse effect
on the Company's financial condition or results of operations or that end users
will continue to purchase their ink requirements from the Company.
The Company's net sales are dependent upon the ability of its OEM customers to
develop and sell products that incorporate the Company's impulse ink jet
products. Factors such as economic conditions, inventory positions, limited
marketing resources and other factors affecting these OEM customers could have a
substantial impact upon the Company's financial results. No assurances can be
given that the Company's OEM customers will not experience financial or other
difficulties that could adversely affect their operations and, in turn, the
results of operations of the Company.
For the nine months ended June 30, 1996, approximately 82% of the Company's net
sales were to its top ten OEM customers, while approximately 23.4%, 12.3% and
11.9% of the Company's net sales for this period were to three OEM customers,
Marsh Company, Bantec, Inc. and Foxjet, Inc., respectively. A significant
diminution in the sales to or loss of any of the Company's major customers would
have a material adverse effect on the Company's results of operations.
For the nine months ended June 30, 1996, approximately 66.5% of the Company's
net sales were derived from carton coding and the Company anticipates that
carton coding will continue to account for a substantial portion of the
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Company's total net sales. A reduction in demand for carton coding systems would
have a material adverse effect on the Company's business, results of operations
and financial condition.
The Company's annual and quarterly operating results may fluctuate due to
factors such as the timing of new product announcements and introductions by the
Company and its competitors, market acceptance of new or enhanced versions of
the Company's products, changes in product mix, changes in manufacturing costs
or other expenses, competitive pricing pressures, the gain or loss of
significant customers, increased research and development expenses and general
economic conditions.
The trading price of the Company's Common Stock could be subject to wide
fluctuations in response to quarterly variations in the Company's operating
results, shortfalls in such operating results from levels forecast by securities
analysts and other events or factors. In addition, the stock market has, from
time to time, experienced extreme price and volume fluctuations that have often
been unrelated to the operating performance of the affected companies.
In connection with the consummation of the Company's initial public offering in
February, 1996, the Company paid down all of its indebtedness and fully
amortized a number of expenses incurred in connection with the 1994 acquisition.
As a result, period to period comparisons involving periods through March 31,
1996 may not necessarily be meaningful or indicative of trends in operating
results.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity was materially improved during the first nine months of
fiscal 1996 as a result of the completion of the initial public offering of its
common stock. Partially offsetting this improvement, was a cash requirement of
approximately $3.1 million for the purchase of a nonexclusive license for
patented solid ink jet printing technology. At June 30, 1996, the Company had
working capital of $19.2 million compared to $3.2 million at September 30, 1995.
At June 30, 1996, the Company has cash and temporary cash investments of $14.7
million.
The Company's long-term capital requirements will depend on numerous factors
including the rate at which the Company identifies, evaluates and acquires new
technologies, whether through entering into licensing arrangements or acquiring
businesses, the timing of the expansion of the Company's facilities and the
purchase of additional factory automation equipment. The Company believes the
proceeds of the initial public offering, together with amounts available from
cash generated by its operating activities, will be adequate to meet the
Company's anticipated needs for working capital and capital expenditures through
at least the next 12 months.
13
<PAGE> 14
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits:
The following exhibit is filed as a part of this report:
<TABLE>
<CAPTION>
Exhibit Number Title
-------------- -----
<S> <C>
27 Financial Data Schedule.
</TABLE>
b. Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter ended June 30, 1996.
SIGNATURES
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.
Dated: August 2, 1996
Trident International, Inc.
(Registrant)
/S/ J. Leo Gagne
-----------------
J. Leo Gagne
Vice President and Chief
Financial Officer
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDED JUNE 30, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> JUN-30-1996
<CASH> $14,685
<SECURITIES> 0
<RECEIVABLES> 4,166
<ALLOWANCES> 300
<INVENTORY> 1,234
<CURRENT-ASSETS> 20,785
<PP&E> 1,711
<DEPRECIATION> 422
<TOTAL-ASSETS> 35,893
<CURRENT-LIABILITIES> 1,621
<BONDS> 0
0
0
<COMMON> 70
<OTHER-SE> 34,112
<TOTAL-LIABILITY-AND-EQUITY> 35,893
<SALES> 18,908
<TOTAL-REVENUES> 18,908
<CGS> 6,992
<TOTAL-COSTS> 8,653
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 80
<INTEREST-EXPENSE> 2,143
<INCOME-PRETAX> 1,120
<INCOME-TAX> 1,466
<INCOME-CONTINUING> (346)
<DISCONTINUED> 0
<EXTRAORDINARY> (1,803)
<CHANGES> 0
<NET-INCOME> (2,149)
<EPS-PRIMARY> (0.56)
<EPS-DILUTED> (0.56)
<FN>
Amounts inapplicable or not disclosed as a separate line on the Condensed
Consolidated Balance Sheets or Condensed Consolidated Statements of Operations
are reported as 0 herein.
</FN>
</TABLE>
