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 September 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
--------
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)
------------------------------------------------------
(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 November 6, 2000 - 6,881,010
shares
<PAGE>
BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES
INDEX
Page No.
Part I Financial Information
Item 1. Financial Statements
- Consolidated Balance Sheets as of September 30, 2000
(unaudited) and December 31, 1999.................................. 3
- Consolidated Statements of Operations (unaudited) for the
three months and nine months ended September 30, 2000 5
and 1999...........................................................
- Consolidated Statement of Stockholders' Equity and
Comprehensive Income for the nine months ended
September 30, 2000................................................. 7
- Consolidated Statements of Cash Flows (unaudited) for the
three months and nine months ended September 30, 2000 8
and 1999...........................................................
- 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 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 September 30, December 31,
2000 1999
------------- ------------
(unaudited)
Current assets:
Cash and cash equivalents $20,789,000 $26,933,000
Marketable securities 6,915,000 1,178,000
Accounts receivable, less allowances of
$198,000 and $393,000 9,082,000 7,397,000
Inventories 5,731,000 5,543,000
Prepaid expenses and other 1,560,000 1,154,000
Deferred tax asset (note 2) 1,547,000 2,677,000
----------- -----------
Total current assets 45,624,000 44,882,000
Property and equipment 2,458,000 2,309,000
Other assets 2,190,000 1,574,000
----------- -----------
Total assets $50,272,000 $48,765,000
=========== ===========
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<PAGE>
BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY September 30, December 31,
2000 1999
-------------- -------------
(unaudited)
<S> <C> <C>
Current liabilities:
Accounts payable $ 1,599,000 $ 1,055,000
Accrued liabilities 647,000 228,000
Accrued payroll and related taxes 1,308,000 1,122,000
Income taxes payable 354,000 19,000
Accrued commissions payable 90,000 175,000
Unearned revenues 585,000 314,000
----------- ----------
Total current liabilities 4,583,000 2,913,000
Non-current liabilities 809,000 599,000
----------- ----------
Total liabilities 5,392,000 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, 12,500 and 22,500 shares outstanding, respectively 25,000 45,000
Common stock, $.01 par value, 20,000,000 shares authorized,
7,865,000 shares issued; 6,880,000 and 6,907,000
outstanding, respectively 79,000 79,000
Additional paid-in capital 51,647,000 54,776,000
Retained earnings (accumulated deficit) 577,000 (3,090,000)
Cumulative comprehensive other loss (986,000) (742,000)
------------ -----------
51,384,000 51,110,000
Less: common stock in treasury at cost, 985,000 and 958,000
shares, respectively (6,504,000) (5,857,000)
------------ -----------
Total stockholders' equity 44,880,000 45,253,000
------------ -----------
Total liabilities and stockholders' equity $50,272,000 $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 Nine Months Ended
September 30, September 30,
--------------------- ---------------------
2000 1999 2000 1999
-------- ------- -------- --------
<S> <C> <C> <C> <C>
Revenues $7,166 $5,261 $ 20,662 $ 15,581
Cost of revenues 3,194 2,407 9,772 6,720
------ ------ -------- --------
Gross profit 3,972 2,854 10,890 8,861
------ ------ -------- --------
Operating expenses:
Selling, general and administrative 1,610 1,621 4,961 4,895
Business development 82 117 295 462
Product development 590 340 1,197 1,140
Compensation attributable to stock plan
(note 7) 132 -- 132 --
------ ------ -------- --------
2,414 2,078 6,585 6,497
------ ------ -------- --------
Operating income 1,558 776 4,305 2,364
------ ------ -------- --------
Other income (expense):
Interest income 490 343 1,345 1,248
Other, net (10) 43 (36) 85
------ ------ -------- --------
480 386 1,309 1,333
------ ------ -------- --------
Income from continuing operations
before income tax provision 2,038 1,162 5,614 3,697
Income tax provision 727 442 1,942 1,405
------ ------ -------- --------
Income from continuing operations 1,311 720 3,672 2,292
Discontinued operation (note 4)
Loss from operations, net of tax
benefit of $146 and $210 -- -- -- (344)
Loss on disposition, net of tax
benefit of $555 and $555 -- -- -- (909)
------ ------ -------- --------
-- 0 -- (1,253)
------ ------ -------- --------
Net Income 1,311 720 3,672 1,039
Preferred stock dividends (2) (2) (7) (7)
------ ----- -------- --------
Net income attributable to common
stockholders $1,309 $ 718 $ 3,665 $ 1,032
====== ===== ======== ========
</TABLE>
(Continued)
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<PAGE>
<TABLE>
<CAPTION>
BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
(continued)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ --------------------
2000 1999 2000 1999
----- ----- ----- -------
<S> <C> <C> <C> <C>
Basic earnings per common share (note 3)
Continuing operations $0.19 $0.10 $0.52 $ 0.31
Discontinued operation - loss from operations -- -- -- (0.05)
Discontinued operation - loss on disposition -- -- -- (0.12)
----- ----- ----- -------
$0.19 $0.10 $0.52 $ 0.14
===== ===== ===== =======
Diluted earnings per common share (note 3)
Continuing operations $0.18 $0.10 $0.50 $ 0.29
Discontinued operation - loss from operations -- -- -- (0.04)
Discontinued operation - loss on disposition -- -- -- (0.12)
----- ----- ----- -------
$0.18 $0.10 $0.50 $ 0.13
===== ===== ===== =======
Weighted average common and common
equivalent shares outstanding:
Basic 6,947 6,982 7,113 7,269
===== ===== ====== =======
Diluted 7,271 7,518 7,413 7,859
===== ===== ====== =======
</TABLE>
See notes to consolidated financial statements.
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<PAGE>
<TABLE>
<CAPTION>
BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
AND COMPREHENSIVE INCOME
Class A Preferred Class B Preferred
Common Stock Stock Stock
----------------- ------------------- -------------------- Paid-in
Total Equity Shares Amount Shares Amount Shares Amount Capital*
--------------- ---------- -------- ---------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance - January 1, 2000 $ 45,253 7,865 $79 35 $ 42 23 $ 45 $ 54,776
Net income 3,672
Translation adjustment (244)
Comprehensive Income
Exercise of stock options and
warrants and compensation expense 897 (3,192)
Repurchase of common stock (4,758)
Repayment of stockholder loan 65 65
Dividend on preferred stock (5)
Conversion of preferred stock 0 (10) (20) (2)
---------- ------ --- --- ---- ---- ------- ----------
Balance - September 30, 2000 $ 44,880 7,865 $79 35 $ 42 13 $ 25 $ 51,647
========== ====== === === ==== ==== ======== ==========
</TABLE>
<TABLE>
<CAPTION>
Cumulative
comprehen-
sive other
income Treasury Comprehensive
Deficit (loss) Stock Income
--------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Balance - January 1, 2000 $ (3,090) $ (742) $ (5,857)
Net income 3,672 $ 3,677
Translation adjustment (244) (161)
-------
Comprehensive Income $ 3,516
=======
Exercise of stock options and
warrants and compensation expense 4,089
Repurchase of common stock (4,758)
Repayment of stockholder loan
Dividend on preferred stock (5)
Conversion of preferred stock 22
--------- ------ ----------
Balance - September 30, 2000 $ 577 $ (986) $ (6,504)
========= ====== ==========
</TABLE>
--------------
* At September 30, 2000, net of notes receivable of $1,857 from the sale of
stock.
See notes to consolidated financial statements.
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<PAGE>
<TABLE>
<CAPTION>
BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS) (UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------- ---------------------------
OPERATING ACTIVITIES 2000 1999 2000 1999
------------- -------------- ------------- ------------
<S> <C> <C> <C> <C>
Net Income $ 1,311 $ 720 $ 3,672 $ 1,039
Items not affecting cash:
Depreciation and amortization 280 175 789 619
Deferred tax provision 560 300 1,130 450
Inventory and accounts receivable reserves (215) 27 (195) 185
Compensation attributable to stock plan 132 - 132 -
Loss from discontinued operation - - - 1,253
Other (57) 47 (201) (5)
Decrease (increase) in non-cash working capital
balances - continuing operations 1,802 (2,167) (414) (5,473)
------------- -------------- ------------- ------------
Cash provided by (used in) operating
activities - continuing operations 3,813 (898) 4,913 (1,932)
Net cash used in discontinued operation - (384) - (187)
------------- -------------- ------------- ------------
Cash provided by (used in) operating
activities 3,813 (1,282) 4,913 (2,119)
------------- -------------- ------------- ------------
INVESTING ACTIVITIES
Purchase of equipment and other (437) (488) (1,387) (1,213)
Sale (purchase) of marketable securities (1,992) 7,774 (5,737) 9,295
------------- -------------- ------------- ------------
Cash provided by (used in) investing
activities (2,429) 7,286 (7,124) 8,082
------------- -------------- ------------- ------------
FINANCING ACTIVITIES
Warrant and option exercises 4 - 765 40
Payment of dividends on preferred stock - - (5) (5)
Payment of shareholder loan 65 - 65 65
Acquisition of treasury stock (1,359) (374) (4,758) (5,074)
------------- -------------- ------------- ------------
Cash used in financing activities (1,290) (374) (3,933) (4,974)
------------- -------------- ------------- ------------
Increase (decrease) in cash and cash equivalents 94 5,630 (6,144) 989
Cash and cash equivalents at beginning of period 20,695 14,161 26,933 18,802
------------- -------------- ------------- ------------
Cash and cash equivalents at end of period $ 20,789 $ 19,791 $ 20,789 $ 19,791
============= ============== ============= ============
CHANGES IN COMPONENTS OF NON-CASH WORKING
CAPITAL BALANCES RELATED TO OPERATIONS
Accounts receivable $ 1,935 $ (1,496) $ (1,490) $ (2,766)
Inventories 456 931 (188) (1,935)
Other current assets (145) 21 (406) (303)
Accounts payable and accrued liabilities (444) (1,623) 1,670 (469)
------------- -------------- ------------- ------------
Decrease (increase) in non-cash working capital
balances - continuing operations $ 1,802 $ (2,167) $ (414) $ (5,473)
============= ============== ============= ============
Cash paid during the period for income taxes $ 49 $ 74 $ 198 $ 310
============= ============== ============= ============
</TABLE>
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<PAGE>
See notes to consolidated financial statements.
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 September 30, 2000 and the results of its operations and its cash
flows for the three months and nine months ended September 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 nine months ended September 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 September 30, 2000, the gross deferred tax asset of $1,547,000 included
approximately $445,000 and $1,102,000 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 nine months ended September 30, 2000 and 1999, respectively, have
been computed as follows:
<TABLE>
<CAPTION>
For the three months ended September 30, For the nine months ended September 30,
2000 2000
--------------------------------------------- ---------------------------------------------
Income Shares Per Income Shares Per
(Numerator) (Denominator) Share (Numerator) (Denominator) Share
Amount Amount
--------------- ----------------- ----------- --------------- ----------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Basic Earnings Per Share
Income attributable to
common stockholders
from continuing operations 1,316 6,947 $ 0.19 3,677 7,113 $ 0.52
=========== ===========
Effect of dilutive securities
Warrants and options 307 283
Convertible preferred
dividend requirements 2 17 7 17
--------------- ----------------- --------------- -----------------
Diluted Earnings Per Share
Income attributable to
common stockholders and
assumed conversions from
continuing operations $ 1,318 7,271 $ 0.18 $ 3,684 7,413 $ 0.50
=============== ================= =========== =============== ================= ===========
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
For the three months ended September 30, For the nine months ended September 30,
1999 1999
--------------------------------------------- ---------------------------------------------
Income Shares Per Income Shares Per
(Numerator) (Denominator) Share (Numerator) (Denominator) Share
Amount Amount
--------------- ----------------- ----------- --------------- ----------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Basic Earnings Per Share:
Income attributable to
common stockholders
from continuing operations 718 6,982 $ 0.10 1,032 7,269 $ 0.14
=========== ===========
Effect of dilutive securities
Warrants and options 516 570
Convertible preferred
dividend requirements 2 20 7 20
--------------- ----------------- --------------- -----------------
Diluted Earnings Per Share:
Income attributable to
common stockholders and
assumed conversions from
continuing operations $ 720 7,518 $ 0.10 $ 1,039 7,859 $ 0.13
=============== ================= =========== =============== ================= ===========
</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 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 and $40,000 during the three months and nine months ended
September 30, 2000, respectively.
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 September 30, 2000, the Company had repurchased 1,788,550
shares at an aggregate cost of approximately $11.6 million
7. In December 1998, the Company sold an aggregate of 153,000 shares of Common
Stock held in treasury to the senior executive officers of the Company and
certain of the Company's independent directors at a purchase price of $8.375 per
share, the closing price of the Common Stock on the date of the sale.
Substantially all of the purchase price for the shares of Common Stock sold was
paid in the form of five-year non-recourse promissory notes aggregating
approximately $1.3 million secured by pledges of the underlying Common Stock.
The notes bear interest at a rate of 4.52% per annum. In January 1999, the
Company sold an additional 10,000 shares of Common Stock to a new independent
director at a purchase price of $9.75 per share, the closing price of the Common
Stock on the date of sale. The consideration paid was substantially the same as
described above, except that the note bears interest at a rate of 4.64% per
annum. Such interest represents a non-recourse obligation and, accordingly, the
purchase of company shares through the use of non-recourse notes is being
accounted for in a manner similar to a variable option plan. Under these
guidelines any increase in the fair market value of the related shares in excess
of their original purchase price will be recorded as a compensation expense by
the Company. At September 30, 2000, the Company recognized $132,000 of non-cash
expense relating to these transactions.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
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<PAGE>
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................................ 44.6 45.8 47.3 43.1
----------- ----------- ----------- ----------
GROSS PROFIT.................................... 55.4 54.2 52.7 56.9
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 22.5 30.8 24.0 31.4
BUSINESS DEVELOPMENT............................ 1.1 2.2 1.4 3.0
PRODUCT DEVELOPMENT............................. 8.2 6.5 5.8 7.3
COMPENSATION ATTRIBUTABLE TO STOCK PLAN......... 1.9 - 0.7 -
----------- ----------- ----------- ----------
OPERATING INCOME ............................... 21.7 14.7 20.8 15.2
OTHER INCOME, NET............................... 6.7 7.3 6.4 8.6
INCOME TAX PROVISION ........................... (10.1) (8.3) (9.4) (9.1)
----------- ----------- ----------- ----------
INCOME FROM CONTINUING OPERATIONS .............. 18.3 13.7 17.8 14.7
PREFERRED STOCK DIVIDEND ....................... * * * *
----------- ----------- ----------- ----------
INCOME ATTRIBUTABLE TO COMMON
STOCKHOLDERS FROM CONTINUING OPERATIONS...... 18.3 13.7 17.8 14.7
=========== =========== =========== ==========
</TABLE>
* LESS THAN 0.1%
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<PAGE>
COMPARISON OF THE THREE MONTHS ENDED SEPTEMBER 30, 2000 TO THE
THREE MONTHS ENDED SEPTEMBER 30, 1999
Revenues. For the quarter ended September 30, 2000, revenues increased by
$1.9 million, or 36.2%, to $7.2 million from $5.3 million for the quarter ended
September 30, 1999. Revenues increased due to an increase in the number of units
sold including sales of the SABRE. Consumables, spares, service and other
revenues represented 28.4% of revenues for the quarter ended September 30, 2000
as compared to 24.5% in the same quarter last year primarily the result of a
larger installed base of the Company's instruments.
Gross Profit. For the quarter ended September 30, 2000, gross profit
increased by $1.1 million, or 39.2%, to $4.0 million from $2.9 million in the
1999 period. As a percentage of revenues, gross profit increased to 55.4% in the
quarter ended September 30, 2000 from 54.2% in the 1999 period. The increase in
gross profit was primarily attributable to greater revenues.
Selling, General and Administrative. For the quarter ended September 30,
2000, selling, general and administrative expenses decreased by approximately
$11,000, or 0.7%, to $1.6 million. As a percentage of revenues, selling, general
and administrative expenses decreased to 22.5% in the 2000 period from 30.8% in
the 1999 period as a result of the Company's ability to increase revenues
without significantly increasing selling, general and administrative expenses.
Selling and marketing expenses increased by approximately $114,000 over the same
period of the prior year, primarily due to increased commission expense and
personnel costs. General and administrative expenses decreased by $125,000 over
the same period of the prior year, primarily due to a reduction in the provision
for doubtful accounts.
Business Development. For the quarter ended September 30, 2000, business
development expenses decreased by $35,000, or 29.9%, to $82,000 from $117,000 in
the comparable 1999 period. The decrease was the result of lower payroll
expenses due to reduced headcount.
Product Development. For the quarter ended September 30, 2000, product
development expenses increased by $250,000, or 73.5%, to $590,000 from $340,000
in the comparable 1999 period. As a percentage of revenues, product development
expenses also increased to 8.2% for the quarter ended September 30, 2000 from
6.5% in the comparable 1999 period. The increase was primarily attributable to
increased work on applications development. During the period approximately
$296,000 of development expense relating to new products utilizing our existing
technology was capitalized.
Operating Income. For the quarter ended September 30, 2000, operating
income increased by $782,000, or 101%, to $1.6 million from $776,000 in the
comparable 1999 period. As a percentage of revenues, operating income increased
to 21.7% for the quarter ended September 30, 2000 from 14.8% in the comparable
1999 period. The increase was due to the combination of factors noted above.
Other Income and Expense. For the quarter ended September 30, 2000, other
income increased by $96,000, or 25.0%, to $480,000 from $384,000 in the
comparable 1999 period. The increase was attributable to an increase in interest
income.
Income Taxes. For the quarter ended September 30, 2000, the Company had a
tax provision of $727,000, as compared to $440,000 in the comparable 1999
period. The Company's effective tax rate was approximately 36% as compared to
38% for the same period in 1999 due to the utilization of various tax planning
strategies.
COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 2000
TO THE NINE MONTHS ENDED SEPTEMBER 30, 1999
Revenues. For the nine months ended September 30, 2000, revenues increased
by $5.1 million, or 32.6%, to $20.7 million from $15.6 million for the nine
months ended September 30, 1999. Revenues increased due to the shipment of $4.5
million of equipment 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 30.5% of revenues for the nine months
ended September 30, 2000 as compared to 24.7% in the same period last year
-12-
<PAGE>
primarily as a result of the Israeli contract and a larger installed base of the
Company's instruments.
Gross Profit. For the nine months ended September 30, 2000, gross profit
increased by $2.0 million, or 22.9%, to $10.9 million from $8.9 million in the
comparable 1999 period. As a percentage of revenues, gross profit decreased to
52.7% in the period ended September 30, 2000 from 56.9% in the comparable 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 Company's product service department ahead of
anticipated revenues.
Selling, General and Administrative. For the nine months ended September
30, 2000, selling, general and administrative expenses increased by
approximately $66,000, or 1.3%, to $5.0 million from $4.9 million in the
comparable 1999 period. As a percentage of revenues, selling, general and
administrative expenses decreased to 24.0% in the 2000 period from 31.4% in the
comparable 1999 period primarily as a result of the Company's ability to
increase revenues without significantly increasing selling, general and
administrative. Selling and marketing expenses increased by approximately
$151,000 over the same period last year and general and administrative expenses
decreased by $85,000 over the same period last year.
Business Development. For the nine months ended September 30, 2000,
business development expenses decreased by $167,000, or 36.1% to $295,000 from
$462,000 in the 1999 period. The decrease was the result of lower payroll
expenses due to reduced headcount.
Product Development. For the nine months ended September 30, 2000, product
development expenses increased by $57,000, or 5.0%, to $1.2 million from $1.1
million in the comparable 1999 period. As a percentage of revenues, product
development expenses decreased to 5.8% for the period ended September 30, 2000
from 7.3% in the comparable 1999 period. During the period approximately
$451,000 of development expense relating to new products utilizing our existing
technology was capitalized.
Operating Income. For the nine months ended September 30, 2000, operating
income increased by $1.9 million, or 82.1%, to $4.3 million from $2.4 million in
the 1999 period. As a percentage of revenues, operating income increased to
20.8% from 15.2% in the 1999 period. The increase was due to the combination of
factors noted above.
Other Income and Expense. For the nine months ended September 30, 2000,
other income decreased by $24,000, or 1.8%, to $1.3 million. The decrease was
attributable to an increase in foreign exchange losses partially offset by an
increase in investment and other interest income.
Income Taxes. For the nine months ended September 30, 2000, the Company had
a tax provision of $1.9 million, as compared to $1.4 million in the comparable
1999 period. The Company's effective tax rate is approximately 34.6% 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 $4.9 million in the nine months ended
September 30, 2000, as compared to cash used in operations of $1.9 million, for
the same period in 1999. Cash provided by operations in the nine months ended
September 30, 2000 resulted primarily from net income of $3.7 million,
depreciation, amortization and changes in reserves of $1.9 million, partially
offset by net increases in working capital items. Cash used in operations in the
nine months ended September 30, 1999, resulted primarily from net increases in
working capital items, partially offset by net income of $1.0 million,
depreciation, amortization and changes in reserves of $1.2 million and the loss
on discontinued operations.
Cash used in investing activities was $7.1 million in the nine months ended
September 30, 2000, as compared to cash provided by investing activities of $8.1
million in the same period in 1999. Cash used in investing activities in the
nine months ended September 30, 2000 resulted from the purchase of $5.7 million
of marketable securities and the purchase of $1.4 million of equipment. Cash
provided by investing activities in the nine months ended September 30, 1999
resulted from the sale of $9.3 million of marketable securities, partially
offset by the purchase of $1.2 million of equipment.
Cash used in financing activities was $3.9 million in the nine months ended
September 30, 2000, and $5.0 million in the same period in 1999. Cash used in
financing activities in the nine months ended September 30, 2000
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resulted from the repurchase of common stock, partially offset by the exercise
of options and warrants. Cash used in financing activities in the nine months
ended September 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 nine months ended September 30,
2000 aggregated approximately $1.4 million. Such expenditures consisted
primarily of capitalized product development cost, tooling, equipment and
computers and software. The Company believes that it will require approximately
$150,000 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 September, 2000, $500,000 in standby letters of
credit were issued and outstanding and $4.5 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 September 30, 2000, the Company had cash and cash equivalents of
$20.8 million and marketable securities of $6.9 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 September 30, 2000, the Company had repurchased 1,788,550
shares at an aggregate cost of approximately $11.6 million.
INFLATION
Inflation was not a material factor in either the sales or the operating
expenses of the Company during the periods presented herein.
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
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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 0.33
years, therefore changes in interest rates 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. The Company's
Canadian operation, on occasion, will hedge its US dollar intercompany
receivables. At September 30, 2000, in connection therewith, the Company has
$3,000,000 of such forward contracts in place coming due between October 1, 2000
and December 18, 2000. The impact of foreign exchange transactions is reflected
in the statement of operations and has not been material.
BARRINGER TECHNOLOGIES INC. AND SUBSIDIARIES
Part II - Other Information
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: November 6, 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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