SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
------------------
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 0-3207
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BARRINGER TECHNOLOGIES INC.
------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 84-0720473
-------------------------------- -----------------------------
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION
INCORPORATION OR ORGANIZATION) NUMBER)
30 TECHNOLOGY DRIVE, WARREN, NEW JERSEY 07059
---------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)
(908) 222-9100
----------------------------------------------------
(Registrant's telephone number, including area code)
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(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
1939 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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
Common stock, $0.01 par value - outstanding as of August 3, 2000 - 6,986,502
shares
<PAGE>
BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES
INDEX
Page No.
--------
Part I Financial Information
Item 1. Financial Statements
-- Consolidated Balance Sheets as of June 30, 2000
(unaudited) and December 31, 1999............................... 3
-- Consolidated Statements of Operations (unaudited) for the
three months and six months ended June 30, 2000 and 1999........ 5
-- Consolidated Statement of Stockholders' Equity and
Comprehensive Income for the six months ended June 30,
2000............................................................ 7
-- Consolidated Statements of Cash Flows (unaudited) for the
three months and six months ended June 30, 2000 and 1999........ 8
-- Notes to Consolidated Financial Statements................... 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... 11
Item 3. Quantitative and Qualitative Disclosures About
Market Risk .............................................. 14
Part II Other Information:
Item 4. Submission of Matters to a Vote of Security Holders....... 15
Item 6. Exhibits and Reports on Form 8-K ......................... 15
Signatures........................................................... 16
Index to Exhibits.................................................... 17
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<PAGE>
Part I. Financial Information
Item 1. Financial Statements
BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS JUNE 30, December 31,
2000 1999
------------ ------------
(unaudited)
Current assets:
Cash and cash equivalents ................... $20,695,000 $26,933,000
Marketable securities ....................... 4,923,000 1,178,000
Accounts receivable, less allowances of
$413,000 and $393,000 ...................... 10,802,000 7,397,000
Inventories ................................. 6,187,000 5,543,000
Prepaid expenses and other .................. 1,415,000 1,154,000
Deferred tax asset (note 2) ................. 2,107,000 2,677,000
----------- -----------
Total current assets .................... 46,129,000 44,882,000
Property and equipment ....................... 2,588,000 2,309,000
Other assets ................................. 1,932,000 1,574,000
----------- -----------
Total assets ............................ $50,649,000 $48,765,000
=========== ===========
See notes to consolidated financial statements.
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<PAGE>
BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY JUNE 30, December 31,
2000 1999
---------- ------------
<S> <C> <C>
Current liabilities: (unaudited)
Accounts payable ......................................................... $ 1,807,000 $ 1,055,000
Accrued liabilities ...................................................... 982,000 228,000
Accrued payroll and related taxes ........................................ 1,138,000 1,122,000
Income taxes payable ..................................................... 398,000 19,000
Accrued commissions payable .............................................. 162,000 175,000
Unearned revenues ........................................................ 540,000 314,000
----------- -----------
Total current liabilities ............................................. 5,027,000 2,913,000
Non-current liabilities ................................................... 831,000 599,000
----------- -----------
Total liabilities .................................................... 5,858,000 3,512,000
----------- -----------
Stockholders' equity:
Convertible preferred stock, $1.25 par value, 1,000,000 shares
authorized, none outstanding
Preferred stock, $2.00 par value, 4,000,000 shares authorized:
270,000 shares designated class A convertible preferred
stock, 35,000 shares outstanding less discount of $28,000 ........... 42,000 42,000
730,000 shares designated class B convertible preferred
stock, 22,500 shares outstanding .................................... 45,000 45,000
Common stock, $.01 par value, 20,000,000 shares authorized,
7,865,000 shares issued; 7,055,000 and 7,773,000
outstanding, respectively ........................................... 79,000 79,000
Additional paid-in capital ............................................... 51,452,000 54,776,000
Accumulated deficit ...................................................... (734,000) (3,090,000)
Cumulative comprehensive other income (loss) .............................. (922,000) (742,000)
----------- -----------
49,962,000 51,110,000
Less: common stock in treasury at cost, 810,000 and 92,000
shares, respectively .................................................... (5,171,000) (5,857,000)
----------- -----------
Total stockholders' equity ............................................ 44,791,000 45,253,000
----------- -----------
Total liabilities and stockholders' equity ................................ $50,649,000 $48,765,000
=========== ===========
</TABLE>
See notes to consolidated financial statements.
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<PAGE>
BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- ----------------------------
2000 1999 2000 1999
-------------- ----------- -------------- -----------
<S> <C> <C> <C> <C>
Revenues ......................................... $8,713 $ 5,427 $13,496 $10,319
Cost of revenues ................................. 4,187 2,297 6,578 4,313
------ ------- ------- -------
Gross profit ............................. 4,526 3,130 6,918 6,006
------ ------- ------- -------
Operating expenses:
Selling, general and administrative ...... 1,730 1,600 3,351 3,274
Business development ..................... 102 151 213 345
Product development ...................... 316 296 607 799
------ ------- ------- -------
2,148 2,047 4,171 4,418
------ ------- ------- -------
Operating income ................... 2,378 1,083 2,747 1,588
------ ------- ------- -------
Other income (expense):
Interest income .......................... 461 419 854 906
Other, net ............................... (32) 28 (25) 43
------ ------- ------- -------
429 447 829 949
------ ------- ------- -------
Income from continuing operations
before income tax provision ........ 2,807 1,530 3,576 2,537
Income tax provision ............................. 955 600 1,215 965
------ ------- ------- -------
Income from continuing operations .. 1,852 930 2,361 1,572
Discontinued operation (note 4)
Loss from operations, net of tax
benefit of $146 and $210 ........... -- (202) -- (344)
Loss on disposition, net of tax
benefit of $555 and $555 ........... -- (909) -- (909
------ ------- ------- -------
-- (1,111) -- (1,253)
------ ------- ------- -------
Net Income (loss) .................. 1,852 (181) 2,361 319
Preferred stock dividends ........................ (2) (2) (5) (5)
------ ------- ------- -------
Net income (loss) attributable to
common stockholders ................ $1,850 $ (183) $ 2,356 $ 314
====== ======= ======= =======
</TABLE>
(Continued)
-5-
<PAGE>
BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
(continued)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------- ----------------------------
2000 1999 2000 1999
------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
Basic earnings per common share (note 3)
Continuing operations ........................... $0.25 $ 0.13 $0.33 $ 0.21
Discontinued operation -- loss from operations .. -- (0.03) -- (0.05)
Discontinued operation -- loss on disposition ... -- (0.13) -- (0.12)
----- ------- ----- ------
$0.25 $(0.03) $0.33 $ 0.04
===== ======= ===== ======
Diluted earnings per common share (note 3)
Continuing operations ........................... $0.24 $ 0.12 $0.32 $ 0.20
Discontinued operation -- loss from operations .. -- (0.03) -- (0.04)
Discontinued operation -- loss on disposition ... -- (0.12) -- (0.12)
----- ------- ----- ------
$0.24 $(0.03) $0.32 $ 0.04
===== ======= ===== ======
Weighted average common and common equivalent
shares outstanding:
Basic ........................................... 7,302 7,119 7,197 7,414
===== ===== ===== =====
Diluted ......................................... 7,578 7,673 7,404 8,038
===== ===== ===== =====
</TABLE>
See notes to consolidated financial statements.
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<PAGE>
BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
AND COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
Class A Preferred Class B Preferred
Common Stock Stock Stock
---------------------- --------------------- ---------------------
Total Equity Shares Amount Shares Amount Shares Amount
-------------- ---------- ----------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance - January 1, 2000 .......... $ 45,253 7,865 $79 35 $42 23 $45
Net income ....................... 2,361
Translation adjustment ........... (180)
Comprehensive Income ...........
Exercise of stock options and
warrants ....................... 761
Repurchase of common stock ....... (3,399)
Dividend on preferred stock ...... (5)
-------- ----- --- -- --- -- ---
Balance - June 30, 2000 ............ $ 44,791 7,865 $79 35 $42 23 $45
======== ===== === == === == ===
<CAPTION>
Cumulative
comprehen-
sive other
Paid-in income Treasury Comprehensive
Capital* Deficit (loss) Stock Income
------------ ----------- ---------- ----------- -------------
<S> <C> <C> <C> <C>
Balance - January 1, 2000 .......... $ 54,776 $(3,090) $(742) $(5,857)
Net income ....................... 2,361 $2,361
Translation adjustment (180) (126)
------
Comprehensive Income ........... $2,235
======
Exercise of stock options and
warrants ....................... (3,324) 4,085
Repurchase of common stock ....... (3,399)
Dividend on preferred stock ...... (5)
-------- ------- ----- -------
Balance - June 30, 2000 ............ $ 51,452 $ (734) $(922) $(5,171)
======== ======= ===== =======
-------------
</TABLE>
* At June 30, 2000, net of notes receivable of $1,922 from the sale of stock.
See notes to consolidated financial statements.
-7-
<PAGE>
BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS) (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ------------------------
OPERATING ACTIVITIES 2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Income (loss) .................................................. $ 1,852 $ (181) $ 2,361 $ 319
Items not affecting cash:
Depreciation and amortization ............................... 260 226 509 444
Deferred tax provision (benefit) ............................ 405 (100) 570 150
Inventory and accounts receivable reserves .................. 13 116 20 158
Loss from discontinued operation ............................ -- 1111 -- 1,253
Other ....................................................... (106) (17) (144) (52)
Decrease in non-cash working capital balances -
continuing operations .............................................. (1,923) (2,845) (2,216) (3,306)
-------- -------- -------- --------
Cash provided by (used in) operating
activities - continuing operations .......................... 501 (1,690) 1,100 (1,034)
Net cash provided by discontinued operation ................. -- 339 -- 197
-------- -------- -------- --------
Cash provided by (used in) operating
activities ............................................ 501 (1,351) 1,100 (837)
-------- -------- -------- --------
INVESTING ACTIVITIES
Purchase of equipment and other .................................... (595) (409) (950) (725)
Sale (purchase) of marketable securities ........................... (3,248) 3,477 (3,745) 1,521
-------- -------- -------- --------
Cash provided by (used in) investing
activities ............................................ (3,843) 3,068 (4,695) 796
-------- -------- -------- --------
FINANCING ACTIVITIES
Warrant and option exercises ....................................... 689 12 761 40
Payment of dividends on preferred stock ............................ (5) (5) (5) (5)
Payment of shareholder loan ........................................ -- -- -- 65
Acquisition of treasury stock ...................................... (3,257) (2,195) (3,399) (4,700)
-------- -------- -------- --------
Cash used in financing activities ..................... (2,573) (2,188) (2,643) (4,600)
-------- -------- -------- --------
Decrease in cash and cash equivalents .............................. (5,915) (471) (6,238) (4,641)
Cash and cash equivalents at beginning of period ................... 26,610 14,632 26,933 18,802
-------- -------- -------- --------
Cash and cash equivalents at end of period ......................... $ 20,695 $ 14,161 $ 20,695 $ 14,161
======== ======== ======== ========
CHANGES IN COMPONENTS OF NON-CASH WORKING
CAPITAL BALANCES RELATED TO OPERATIONS
Accounts receivable ................................................ $(3,362) $(2,038) $ (3,425) $ (1,270)
Inventories ........................................................ 392 (1,625) (644) (2,866)
Other current assets ............................................... (194) (47) (261) (324)
Accounts payable and accrued liabilities ........................... 1,241 865 2,114 1,154
-------- -------- -------- --------
Decrease in non-cash working capital
balances - continuing operations ................................ $ (1,923) $(2,845) $(2,216) $ (3,306)
======== ======== ======== ========
Cash paid during the period for income taxes ....................... $ 92 $ 25 $ 149 $ 236
======== ======== ======== ========
</TABLE>
See notes to consolidated financial statements.
-8-
<PAGE>
BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of the Company, the unaudited consolidated financial
statements contain all adjustments (consisting of only normal recurring
accruals) necessary to present fairly the consolidated financial position of the
Company as of June 30, 2000 and the results of its operations and its cash flows
for the three months and six months ended June 30, 2000 and 1999, respectively.
The accounting policies followed by the Company are set forth in the Notes to
Consolidated Financial Statements in the audited consolidated financial
statements of Barringer Technologies Inc. and Subsidiaries included in its
Annual Report on Form 10-K for the year ended December 31, 1999. This report
should be read in conjunction therewith. The results of operations for the three
and six months ended June 30, 2000 are not necessarily indicative of the results
to be expected for any other interim period or for the full year.
Certain items in the 1999 consolidated financial statements have been
reclassified to conform to the 2000 presentation.
2. At June 30, 2000, the gross deferred tax asset of $2,107,000 included
approximately $445,000 and $1,662,000 related to the Company's Canadian and U.S.
operations, respectively. The deferred tax liability of $313,000 is due to
product development costs of the Company's U.S. operations. Based on historical
results and estimated 2000 earnings, which include earnings from certain
contracts, as well as available tax planning strategies, management considers
realization of the unreserved deferred tax asset more likely than not.
3. Basic and diluted earnings per share from continuing operations for the three
months and six months ended June 30, 2000 and 1999, respectively, have been
computed as follows:
<TABLE>
<CAPTION>
For the three months ended June 30, 2000 For the six months ended June 30, 2000
--------------------------------------------- ---------------------------------------------
Per Per
Income Shares Share Income Shares Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
--------------- ----------------- ----------- --------------- ----------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Basic Earnings Per Share
Income attributable to
common stockholders
from continuing operations 1,850 7,302 $0.25 2,356 7,197 $0.33
===== =====
Effect of dilutive securities
Warrants and options 255 186
Convertible preferred
dividend requirements 2 21 5 21
------ ----- ------- -----
Diluted Earnings Per Share
Income attributable to
common stockholders and
assumed conversions from
continuing operations $1,852 7,578 $0.24 $ 2,361 7,404 $0.32
====== ===== ===== ======= ===== =====
</TABLE>
-9-
<PAGE>
<TABLE>
<CAPTION>
For the three months ended June 30, 1999 For the six months ended June 30, 1999
-------------------------------------------- ------------------------------------------
Per Per
Income Shares Share Income Shares Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
------------- ----------------- ----------- -------------- ------------- ------
<S> <C> <C> <C> <C> <C> <C>
Basic Earnings Per Share
Income attributable to
common stockholders
from continuing operations 928 7,119 $0.13 1,567 7,414 $0.21
===== =====
Effect of dilutive securities
Warrants and options 534 604
Convertible preferred
dividend requirements 2 20 5 20
---- ----- ------ -----
Diluted Earnings Per Share
Income attributable to
common stockholders and
assumed conversions from
continuing operations $ 930 7,673 $0.12 $1,572 8,038 $0.20
===== ===== ===== ====== ===== =====
</TABLE>
4. On April 30, 1998, the Company acquired all of the outstanding capital stock
of DigiVision, Inc. ("DigiVision"), a San Diego-based developer of video
enhancement products, in a business combination accounted for as a purchase.
Effective June 30, 1999, the Company determined that it would dispose of
DigiVision and, on December 15, 1999, sold all of the outstanding capital stock
of DigiVision to a group comprised of DigiVision senior management. Accordingly,
the financial results of DigiVision have been accounted for as a discontinued
operation and reported as an operation sold. The selling price consisted of a
$500,000 interest bearing note which, if not paid by December 31, 2000, will
increase to $1,000,000. In addition, the Company will be entitled to receive an
earn-out based upon annual revenues in excess of $2,000,000. The Company will
recognize income on the note receivable and the earn-out when collectibility is
reasonably assured. The Company received income from the note receivable in the
amount of approximately $20,000 during the three months ended June 30, 2000.
For the six months ended June 30, 1999, DigiVision's revenues were
$352,000 and its net operating loss was $554,000.
5. On January 19, 2000, the Company granted options to acquire 37,500 shares of
the Company's Common Stock to 10 employees at an exercise price of $5.75. These
options were issued under the Company's 1997 Stock Compensation Program. On
February 21, 2000, the Company granted options to the Company's executive
officers and directors to acquire 465,000 shares of the Company's Common Stock
at $5.03 per share. These options are exercisable on November 21, 2006 and
expire on February 21, 2007. However, they can be exercised as to 25% at an
earlier time if and when the Company's Common Stock trades for $8.50 or higher
for at least 30 consecutive days; as to 50% if and when the Company's Common
Stock trades for $11.00 or higher for at least 30 consecutive days; as to 75% if
and when the Company's Common Stock trades for $12.50 or higher for at least 30
consecutive days; and as to 100% if and when the Company's Common Stock trades
for $15.00 or higher for at least 30 consecutive days. These options were issued
under the Company's 1997 Stock Compensation Program.
6) The Company has a common stock repurchase program under which it is
authorized to repurchase up to 2,000,000 shares of the Company's outstanding
Common Stock. As of June 30, 2000, the Company had repurchased 1,609,650 shares
at an aggregate cost of approximately $10.3 million.
-10-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following table sets forth certain income and expense items from
continuing operations from the Company's consolidated statements of operations
expressed as a percentage of revenues from continuing operations for the periods
indicated.
<TABLE>
<CAPTION>
PERCENTAGE OF REVENUES
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
---------------- ---------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues........................................... 100.0 100.0 100.0 100.0
Cost of revenues................................... 48.1 42.3 48.7 41.8
------ ------ ----- -----
Gross profit....................................... 51.9 57.7 51.3 58.2
Selling, general and administrative expenses 19.9 29.5 24.8 31.7
Business development............................... 1.1 2.8 1.6 3.4
Product development................................ 3.6 5.4 4.5 7.7
------ ------ ----- -----
Operating income .................................. 27.3 20.0 20.4 15.4
Other income, net.................................. 5.0 8.2 6.1 9.2
Income tax provisiont ............................. (11.0) (11.1) (9.0) (9.4)
------ ------ ----- -----
Income from continuing operations ................. 21.3 17.1 17.5 15.2
Preferred stock dividend .......................... * * * *
------ ------ ----- -----
Income attributable to common
Stockholders from continuing operations......... 21.3 17.1 17.5 15.2
====== ====== ===== =====
</TABLE>
-----------
* LESS THAN 0.1%
COMPARISON OF THE THREE MONTHS ENDED JUNE 30, 2000 TO THE THREE MONTHS
ENDED JUNE 30, 1999
Revenues. For the quarter ended June 30, 2000, revenues increased by $3.3
million, or 60.5%, to $8.7 million from $5.4 million for the quarter ended June
30, 1999. Revenues increased due to the shipment of $4.2 million to the
Government of Israel pursuant to a $6.1 million order received in November 1999
and sales of the SABRE. Consumables, spares, service and other revenues
represented 37.4% of revenues for the quarter ended June 30, 2000 as compared to
24.5% in the same quarter last year primarily as a result of the Israeli
contract.
Gross Profit. For the quarter ended June 30, 2000, gross profit increased
by $1.4 million, or 44.6%, to $4.5 million from $3.1 million in the 1999 period.
As a percentage of revenues, gross profit decreased to 51.9% in the quarter
ended June 30, 2000 from 57.7% in the 1999 period. The decrease in gross profit
percentage was attributable to a large percentage of purchased parts and
services used in connection with the Israeli sale and an expansion of the
product service department ahead of anticipated revenues.
Selling, General and Administrative. For the quarter ended June 30, 2000,
selling, general and administrative expenses increased by approximately
$130,000, or 8.1%, to $1.7 million from $600,000 in the 1999 period. As a
percentage of revenues, selling, general and administrative expenses decreased
to 19.9% in the 2000 period from 29.5% in the 1999 period primarily the result
of the higher revenues in 2000. Selling and marketing expenses increased by
approximately $217,000, primarily due to increased commission expense and
personnel costs. General and administrative expenses decreased by $87,000,
primarily due to decreased payroll costs.
Business Development. For the quarter ended June 30, 2000, business
development expenses decreased by $49,000, or 32.5% to $102,000 from $151,000 in
the 1999 period. The decrease was the result of lower payroll expenses.
-11-
<PAGE>
Product Development. For the quarter ended June 30, 2000, product
development expenses increased by $20,000, or 6.8%, to $316,000 from $296,000 in
the 1999 period. As a percentage of revenues, product development expenses
decreased to 3.6% for the quarter ended June 30, 2000 from 5.5% in the 1999
period primarily the result of the higher total revenues in the 2000 period.
During the period approximately $84,000 of development expense relating to new
products utilizing our existing technology was deferred.
Operating Income. For the quarter ended June 30, 2000, operating income
increased by $1.3 million, or 120%, to $2.4 million from $1.1 million in the
1999 period. As a percentage of revenues, operating income increased to 27.3%
from 20.0% in the 1999 period. The increase was due to the combination of
factors noted above.
Other Income and Expense. For the quarter ended June 30, 2000, other income
decreased by $18,000, or 4.0%, to $429,000 from $447,000 in the 1999 period. The
decrease was attributable to an increase in foreign exchange losses, partially
offset by increased investment income.
Income Taxes. For the quarter ended June 30, 2000, the Company had a tax
provision of $955,000, as compared to $600,000 in the 1999 period. The Company
used an effective tax rate of approximately 34% as compared to 39% for the same
period in 1999 due to the utilization of various tax planning strategies.
COMPARISON OF THE SIX MONTHS ENDED JUNE 30, 2000 TO THE SIX MONTHS ENDED
JUNE 30, 1999
Revenues. For the six months ended June 30, 2000, revenues increased by
$3.2 million, or 30.8%, to $13.5 million from $10.3 million for the six months
ended June 30, 1999. Revenues increased due to the shipment of $4.2 million to
the Government of Israel pursuant to a $6.1 million order received in November
1999 and sales of the SABRE. Consumables, spares, service and other revenues
represented 43.4% of revenues for the six months ended June 30, 2000 as compared
to 24.8% in the same period last year primarily as a result of the Israeli
contract.
Gross Profit. For the six months ended June 30, 2000, gross profit
increased by $912,000, or 15.2%, to $6.9 million from $6.0 million in the 1999
period. As a percentage of revenues, gross profit decreased to 51.3% in the
period ended June 30, 2000 from 58.2% in the 1999 period. The decrease in gross
profit percentage was attributable to a large percentage of purchased parts and
services used in connection with the Israeli sale and an expansion of the
product service department ahead of anticipated revenues.
Selling, General and Administrative. For the six months ended June 30,
2000, selling, general and administrative expenses increased by approximately
$77,000, or 2.4%, to $3.4 million from $3.3 million in the first half of 1999.
As a percentage of revenues, selling, general and administrative expenses
decreased to 24.8% in the 2000 period from 31.7% in the 1999 period primarily as
a result of higher revenues in 2000 . Selling and marketing expenses increased
by approximately $37,000 and general and administrative expenses increased by
$40,000.
Business Development. For the six months ended June 30, 2000, business
development expenses decreased by $132,000, or 38.3% to $213,000 from $345,000
in the 1999 period. The decrease was the result of lower payroll expenses.
Product Development. For the six months ended June 30, 2000, product
development expenses decreased by $192,000, or 24.0%, to $607,000 from $799,000
in the 1999 period. As a percentage of revenues, product development expenses
decreased to 4.5% for the period ended June 30, 2000 from 7.7% in the 1999
period. During the period approximately $155,000 of development expense relating
to new products utilizing our existing technology was deferred.
Operating Income. For the six months ended June 30, 2000, operating income
increased by $1.2 million, or 73.0%, to $2.8 million from $1.6 million in the
1999 period. As a percentage of revenues, operating income increased to 20.4%
from 15.4% in the 1999 period. The increase was due to the combination of
factors noted above.
Other Income and Expense. For the six months ended June 30, 2000, other
income decreased by $120,000, or 12.6%, to $829,000 from $949,000 in the 1999
period. The decrease was attributable to a decrease in investment and other
interest income and an increase in foreign exchange losses.
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Income Taxes. For the six months ended June 30, 2000, the Company had a tax
provision of $1.2 million, as compared to $1.0 million in the 1999 period. The
Company used an effective tax rate of approximately 34% as compared to 38% for
the same period in 1999 due to the utilization of various tax planning
strategies.
CAPITAL RESOURCES AND LIQUIDITY
Cash provided by operations was $1.1 million in the six months ended June
30, 2000, as compared to cash used in operations of $837,000, for the same
period in 1999. Cash provided by operations in the six months ended June 30,
2000 resulted primarily from net income of $2.4 million, depreciation,
amortization and changes in reserves of $1.1 million, partially offset by net
increases in working capital items. Cash used in operations in the six months
ended June 30, 1999, resulted primarily from net increases in working capital
items, partially offset by net income of $319,000, depreciation, amortization
and changes in reserves of $752,000 and the loss on discontinued operations.
Cash used in investing activities was $4.7 million in the six months ended
June 30, 2000, as compared to cash provided by investing activities of $796,000
million in the same period in 1999. Cash used in investing activities in the six
months ended June 30, 2000 resulted from the purchase of $3.8 million of
marketable securities and the purchase of $950,000 of equipment. Cash provided
by investing activities in the six months ended June 30, 1999, resulted from the
sale of $1.5 million of marketable securities, partially offset by the purchase
of $725,000 of equipment.
Cash used in financing activities was $2.6 million in the six months ended
June 30, 2000, and $4.6 million in the same period in 1999. Cash used in
financing activities in the six months ended June 30, 2000 resulted from the
repurchase of common stock, partially offset by the exercise of options and
warrants. Cash used in financing activities in the six months ended June 30,
1999 resulted primarily from the repurchase of common stock, partially offset by
the exercise of options and warrants and partial repayment of a loan from
employee.
The Company's capital expenditures in the six months ended June 30, 2000
aggregated approximately $950,000. Such expenditures consisted primarily of
tooling, equipment and computers. The Company believes that it will require
approximately $500,000 in additional capital investment in tooling, equipment,
and facility improvements for the remainder of 2000.
The Company has a $5.0 million unsecured credit facility with Fleet Bank,
N.A. to be used for general working capital purposes, including the issuance of
standby letters of credit. At June, 2000, $1.4 million in standby letters of
credit were issued and outstanding and $3.6 million was available under this
Facility.
At December 31, 1999, the Company had approximately $5.8 million of tax
loss carryforwards to offset future taxable income in the U.S and $3.7 million
of expenses available to offset future taxable income in Canada.
As of June 30, 2000, the Company had cash and cash equivalents of $20.7
million and marketable securities of $4.9 million. The Company believes that its
existing cash balances, marketable securities and income from operations in
future periods will be sufficient to fund its working capital requirements for
at least the next twelve months.
The Company has a common stock repurchase program under which it is
authorized to repurchase up to 2,000,000 shares of the Company's outstanding
Common Stock. As of June 30, 2000, the Company had repurchased 1,609,650 shares
at an aggregate cost of approximately $10.3 million.
INFLATION
Inflation was not a material factor in either the sales or the operating
expenses of the Company during the periods presented herein.
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DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, that are based
on the beliefs of the Company's management as well as assumptions made by and
information currently available to the Company's management. When used in this
Quarterly Report on Form 10-Q Report, the words "estimate," "project,"
"believe," "anticipate," "intend," "expect," "plan," predict," "may," "should,"
"will," the negative thereof and similar expressions are intended to identify
forward-looking statements.
Forward-looking statements are inherently subject to risks and
uncertainties, many of which cannot be predicted with accuracy and some of which
might not even be anticipated. Future events and actual results, financial and
otherwise, could differ materially from those set forth in or contemplated by
the forward-looking statements contained herein. Important factors that could
contribute to such differences include, but are not limited to, the development
and growth of markets for the Company's products, the Company's dependence on
and the effect of governmental regulations on demand for the Company's products,
the impact of both foreign and domestic governmental budgeting decisions and the
timing of governmental expenditures, the reliance of the Company on its
IONSCAN(R) products, and the dependency of the Company on its ability to
successfully develop and market new products applications, the effects of
competition, and the effect of general economic and market conditions, as well
as conditions prevailing in the markets for the Company's products. Certain of
the factors summarized above are described in more detail in the Company's
Registration Statement on Form SB-2 (File no. 333-33129) and reference is hereby
made thereto for additional information with respect to the matters referenced
above. Other factors may be described from time to time in the Company's other
filings with the Securities and Exchange Commission, news releases and other
communications. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. The Company
does not undertake any obligation to release publicly any revisions to these
forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
Subsequent written and oral forward-looking statements attributable to the
Company or persons acting on its behalf are expressly qualified in their
entirety by the cautionary statements set forth above and contained elsewhere in
this Quarterly Report on Form 10-Q.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The Company's exposure to interest rate risk relates primarily to its
investment portfolio. The primary objective of the Company's investment policy
is to preserve principal while maximizing yields. The Company's investment
portfolio consists of cash and cash equivalents and marketable securities
consisting of a diverse mix of high credit quality securities, including U.S.
government agency and corporate obligations, certificates of deposit and money
market funds. The Company's portfolio has a weighted average maturity of 0.23
years, therefore changes in interest rate will not materially impact the
Company's consolidated financial condition. However, such interest rate changes
can cause fluctuations in the Company's results of operations and cash flows.
The Company's $5 million unsecured credit facility has an interest rate
based on the prime rate or LIBOR, at the Company's option. The Company currently
has no borrowings outstanding under the unsecured credit facility. If the
Company should draw down on the unsecured credit facility, interest rate
fluctuations could have an impact on the Company's results of operations and
cashflows.
The Company's exposure to foreign currency exchange rate fluctuations is
the result of operating throughout the world. The Company has several foreign
subsidiaries whose financial statements are recorded in currencies other than
U.S. dollars. As these foreign currency financial statements are translated at
the end of each reporting period during consolidation, fluctuations in exchange
rates between the foreign currency and the U.S. dollar increase or decrease the
value of those investments. These fluctuations are recorded as a component of
accumulated comprehensive income within stockholders' equity. In addition, from
time to time, the Company enters into sales transactions in currencies other
than U.S. dollars. Accordingly, the Company may be impacted by changes in the
exchange rate between the time the sale is recorded and the time the trade
receivable is collected. Where appropriate, the Company may from time to time
hedge these transactions against foreign currency fluctuations. During 1999, the
Company did not engage in any hedging transactions. The impact of foreign
exchange transactions is reflected in the statement of operations and has not
been material.
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BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES
Part II - Other Information
ITEM 4. Submission of Matters to a Vote of Security Holders
(a) The 2000 Annual Meeting of Stockholders of the Company was held
on June 6, 2000.
(b) - (c) - The matters voted on at the Annual Meeting of
Stockholders and the results of such voting were as follows:
1) Election of Directors
Nominee For Withheld
------- --------- --------
Stanley S. Binder 4,104,714 0
John H. Davies 4,104,714 0
John J. Harte 4,104,714 0
Richard D. Condon 4,104,714 0
John D. Abernathy 4,104,714 0
James C. McGrath 4,104,714 0
Lorraine M. Lavet 4,104,714 0
Kenneth S. Wood 4,104,714 0
2) Ratification of appointment of BDO Seidman, LLP as independent
auditors of the Company's 1998 financial statements
FOR: 4,200,953: AGAINST: 24,464; ABSTAIN: 4,067
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3.1 The Company's Certificate of Incorporation of the Company, as
amended (previously filed as Exhibit 3.1A to the Company's
Registration Statement on Form SB-2 (File No. 333-33129) and
incorporated herein by reference).
3.2 By-laws of the Company is (previously filed as Exhibit 3.1 to
the Company's Current Report on Form 8-K dated August 26, 1998
(File No. 0-3207) and incorporated herein by reference).
27 Financial Data Schedule.
(b) Reports on Form 8-K
None
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BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES
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.
.
BARRINGER TECHNOLOGIES INC.
(Registrant)
/S/ STANLEY S. BINDER
---------------------
Stanley S. Binder
Chairman
/S/ RICHARD S. ROSENFELD
------------------------
Richard S. Rosenfeld, Chief Financial Officer
(Principal Accounting Officer)
Date: August 3, 2000
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BARRINGER TECHNOLOGIES INC.
INDEX TO EXHIBITS
Exhibit Number Page No.
27.1 Financial Data Schedule 18
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