1
Filed Pursuant to
Rules 424(b)(3)and
424(c) of the
Securities Act of 1933
Registration No.
333-38371
Prospectus Supplement
Supplement to Prospectus
dated
April 30, 1998
METRIKA SYSTEMS CORPORATION
967,828 Shares of
Common Stock
This prospectus supplement relates to 967,828 shares of Common Stock, par
value $.01 per share, of Metrika Systems Corporation (the "Company"). THESE
SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURANCY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. No dealer,
salesman, or any other person has been authorized to give any information or to
make any representations in connection with this offering other than those
contained in this Prospectus and, if given or made, such information or
representation must not be relied upon as having been authorized by the Company
or by any other person. All information contained in this Prospectus is as of
the date of this Prospectus. This Prospectus does not constitute any offer to
sell or a solicitation of any offer to buy any security other than the
securities covered by this Prospectus, nor does it constitute an offer to or
solicitation of any person in any jurisdiction in which such offer or
solicitation may not be lawfully made. Neither the delivery of this Prospectus
nor any sale or distribution made hereunder shall, under any circumstances,
create any implication that there has been no change in the affairs of the
Company since the date hereof.
____________________________
May 19, 1998
METRIKA SYSTEMS CORPORATION
METRIKA SYSTEMS CORPORATION
Consolidated Balance Sheet
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
April 4, January 3,
(In thousands) 1998 1998
Current Assets:
Cash and cash equivalents (includes $42,497
and $40,173 under repurchase agreement
with affiliated company) $ 45,347 $ 44,044
Available-for-sale investments, at quoted
market value (amortized cost of $6,079
and $6,231) 6,097 6,245
Accounts receivable, less allowances of
$913 and $671 12,567 17,377
Unbilled contract costs and fees 3,595 2,476
Inventories:
Raw materials and supplies 3,891 4,077
Work in process 2,718 2,416
Finished goods 861 652
Prepaid income taxes and other current
assets 2,692 1,621
77,768 78,908
Property, Plant, and Equipment, at Cost 14,518 14,769
Less: Accumulated depreciation and
amortization 4,562 4,396
9,956 10,373
Other Assets 677 727
Cost in Excess of Net Assets of Acquired
Companies 12,826 12,944
$101,227 $102,952
======== ========
</TABLE>
METRIKA SYSTEMS CORPORATION
1
Consolidated Balance Sheet (continued)
(Unaudited)
Liabilities and Shareholders' Investment
<TABLE>
<CAPTION>
<S> <C> <C>
April 4, January 3,
(In thousands except share amounts) 1998 1998
Current Liabilities:
Notes payable and current maturities of
long-term obligation $ 7,418 $ 9,895
Accounts payable 1,946 2,308
Accrued payroll and employee benefits 2,099 2,322
Accrued income taxes 3,512 2,445
Customer deposits 2,913 3,576
Accrued installation and warranty costs 2,206 2,132
Other accrued expenses 3,994 4,071
Due to parent company and affiliated companies 4,124 4,184
28,212 30,933
Accrued Pension Costs 4,302 4,356
Long-term Obligation 2,979 3,858
Shareholders' Investment:
Common stock, $.01 par value, 25,000,000
shares authorized; 8,267,828 shares
issued and outstanding 83 83
Capital in excess of par value 58,555 58,555
Retained earnings 7,571 6,157
Accumulated other comprehensive items (Note 3) (475) (990)
65,734 63,805
$101,227 $102,952
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
Consolidated Statement of Income
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
<S> <C> <C>
April 4, March 29,
(In thousands except per share amounts) 1998 1997
Revenues $14,712 $12,592
Costs and Operating Expenses:
Cost of revenues 8,174 7,036
Selling, general, and administrative expenses 3,747 3,376
Research and development expenses 992 1,007
12,913 11,419
Operating Income 1,799 1,173
Interest Income 691 220
Interest Expense (132) (201)
Income Before Provision for Income Taxes 2,358 1,192
Provision for Income Taxes 944 477
Net Income $ 1,414 $ 715
======= =======
Basic and Diluted Earnings per Share (Note 2) $ .17 $ .12
======= =======
Basic and Diluted Weighted Average Shares
(Note 2) 8,268 5,968
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
<S> <C> <C>
April 4, March 29,
(In thousands) 1998 1997
Operating Activities:
Net income $ 1,414 $ 715
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 402 421
Provision for losses on accounts
receivable 253 79
Other noncash items 218 96
Changes in current accounts, excluding
the effects of acquisition:
Accounts receivable 4,442 652
Inventories and unbilled contract
costs and fees (1,524) (2,392)
Other current assets (1,075) (496)
Accounts payable (347) 1,319
Other current liabilities 251 407
Net cash provided by operating activities 4,034 801
Investing Activities:
Acquisition - (1,347)
Purchases of property, plant, and equipment (101) (132)
Other - 37
Net cash used in investing activities (101) (1,442)
Financing Activities:
Decrease in due to parent company and
affiliated companies (60) (6,887)
Increase (decrease) in short-term obligations (2,945) 4,550
Repayment of long-term obligation (145) (169)
Net cash used in financing activities (3,150) $(2,506)
Exchange Rate Effect on Cash 520 $ 316
Increase (Decrease) in Cash and Cash
Equivalents 1,303 (2,831)
Cash and Cash Equivalents at Beginning of
Period 44,044 20,229
Cash and Cash Equivalents at End of Period $45,347 $17,398
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
Notes to Consolidated Financial Statements
1. General The interim consolidated financial statements presented have
been prepared by Metrika Systems Corporation (the Company) without audit and, in
the opinion of management, reflect all adjustments of a normal recurring nature
necessary for a fair statement of the financial position at April 4, 1998, the
results of operations for the three-month periods ended April 4, 1998, and March
29, 1997, and the cash flows for the three-month periods ended April 4, 1998,
and March 29, 1997. Interim results are not necessarily indicative of results
for a full year. The consolidated balance sheet presented as of January 3, 1998,
has been derived from the consolidated financial statements that have been
audited by the Company's independent public accountants. The consolidated
financial statements and notes do not contain certain information included in
the annual financial statements and notes of the Company. The consolidated
financial statements and notes included herein should be read in conjunction
with the financial statements and notes included in the Company's Registration
Statement on Form S-1 (File No. 333-38371), filed with the Securities and
Exchange Commission.
2. Earnings per Share
Basic and diluted earnings per share were calculated as follows:
<TABLE>
<CAPTION>
Three Months Ended
<S> <C> <C>
April 4, March 29,
(In thousands except per share amounts) 1998 1997
Net income $1,414 $ 715
Weighted average shares 8,268 5,968
Basic and diluted earnings per share $ .17 $ .12
====== ======
</TABLE>
The computation of diluted earnings per share for the three-month period
ended April 4, 1998, excludes the effect of assuming the exercise of outstanding
stock options because the effect would be antidilutive. As of April 4, 1998,
there were 300,700 of such options outstanding, with exercise prices ranging
from $15.00 to $15.34 per share.
3. Comprehensive Income During the first quarter of 1998, the Company
adopted Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income." This pronouncement sets forth requirements for disclosure
of the Company's comprehensive income and accumulated other comprehensive items.
In general, comprehensive income combines net income and "other comprehensive
items," which represent certain amounts that are reported as components of
shareholders' investment in the accompanying balance sheet, including foreign
currency translation adjustments and unrealized net of tax gains and losses from
available-for-sale investments. During the first quarter of 1998 and 1997, the
Company's comprehensive income totaled $1,929,000 and $1,728,000, respectively.
4. Subsequent Event
On May 6, 1998, the Company agreed to acquire the stock of Honeywell-
Measurex Data Measurement Corporation (DMC), a wholly owned subsidiary of
Honeywell-Measurex, for approximately $29,000,000 in cash, subject to a
post-closing adjustment. DMC is a manufacturer of computerized, noncontact
thickness, coating, and other measurement systems for the worldwide
web-processing industry. The transaction is subject to the satisfaction of
certain closing conditions and receipt of regulatory approvals, including
clearance from U.S. and German regulatory authorities. If this transaction is
consummated, the Company intends to use internal funds to finance the purchase
of the stock of DMC.
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Forward-looking statements, within the meaning of Section 21E of the
Securities Exchange Act of 1934, are made throughout this Management's
Discussion and Analysis of Financial Condition and Results of Operations. For
this purpose, any statements contained herein that are not statements of
historical fact may be deemed to be forward-looking statements. Without limiting
the foregoing, the words "believes," "anticipates," "plans," "expects," "seeks,"
"estimates," and similar expressions are intended to identify forward-looking
statements. There are a number of important factors that could cause the results
of the Company to differ materially from those indicated by such forward-looking
statements, including those detailed under the heading "Risk Factors" included
in the Company's Registration Statement on Form S-1 (File No. 333-38371), filed
with the Securities and Exchange Commission.
Overview
The Company develops, manufactures, and markets on-line process
optimization systems that employ proprietary ultrahigh-speed advanced scientific
measurement technologies for applications in raw-materials analysis and
finished-materials quality control. The Company's on-line raw-material analysis
business ("raw-materials business") is a pioneer in the development of process
optimization systems that provide real-time, nondestructive analysis of the
composition of raw materials in basic-materials production processes, including
coal, cement, and minerals. The Company's on-line finished-materials quality
control business ("finished-material business") manufactures advanced systems
that are used to measure and control parameters such as material thickness,
coating thickness, and coating weight in web-type materials, such as metal
strip, rubber, and plastic foils. Customers use these systems to improve product
quality and consistency, lower material costs, reduce energy consumption, and
minimize waste.
Overview (continued)
The Company intends to supplement its internal growth with strategic
acquisitions of complementary businesses. There can be no assurance that such
businesses will be available at prices attractive to the Company. On December
31, 1996, the Company acquired the assets, subject to certain liabilities, of
the Autometrics division of Svedala Industries Inc. (Autometrics), a
manufacturer and marketer of on-line analysis instruments for the
minerals-processing industry. On May 6, 1998, the Company agreed to acquire the
stock of Honeywell-Measurex Data Measurement Corporation (DMC), a wholly owned
subsidiary of Honeywell- Measurex, a manufacturer of computerized, noncontact
thickness, coating, and other measurement systems for the worldwide
web-processing industry.
A significant portion of the Company's sales are of large systems, the
timing of which can lead to variability in the Company's quarterly revenues and
income. In addition, in 1997, approximately 51% of the Company's revenues
originated outside the U.S. and approximately 33% of the Company's revenues were
exports from the U.S. Sales originating outside the U.S. represent revenues of
the Company's finished-materials business. The operations of the
finished-materials business are located in Germany, the United Kingdom, and
France, and principally sell in their local currencies. Exports from the
Company's U.S. operations are denominated in U.S. dollars. The Company generally
seeks to charge its customers in the same currency as its operating costs.
However, the Company's financial performance and competitive position can be
affected by currency exchange rate fluctuations. Since the operations of the
finished-materials business are conducted in Europe, principally Germany, the
Company's operating results could be adversely affected by capital spending and
economic conditions in Europe. The Company's strategy is to expand its
finished-materials business in geographic areas outside of Europe with
particular emphasis in North America, which in turn may reduce the Company's
exposure to European market conditions.
Results of Operations
First Quarter 1998 Compared With First Quarter 1997
Revenues increased 17% to $14,712,000 in the first quarter of 1998 from
$12,592,000 in the first quarter of 1997. Revenues from the Company's existing
operations grew by 20% excluding the effect of unfavorable foreign currency
translation. Revenues increased by $1,837,000 at the finished-materials
business, principally due to an increase in demand, offset in part by the
unfavorable effects of currency translation as a result of the strengthening of
the U.S. dollar relative to foreign currencies in countries in which the Company
operates, which decreased revenues by $427,000. Revenues increased $710,000 at
the raw-materials business, primarily due to increased sales in the U.S.
First Quarter 1998 Compared With First Quarter 1997 (continued)
The gross profit margin was 44% in the first quarter of 1998 and 1997. The
gross profit margin at the finished-materials business improved to 41% in 1998
from 39% in 1997 principally due to higher costs incurred in the 1997 period
relating to the introduction of new products, and an increase in higher-margin
sales in 1998 resulting from the introduction of such new products. The gross
profit margin at the raw-materials business decreased to 47% in 1998 from 48% in
1997, primarily as a result of costs incurred relating to the relocation and
integration of Autometrics.
Selling, general, and administrative expenses as a percentage of revenues
decreased to 25.5% in the first quarter of 1998 from 26.8% in the first quarter
of 1997, primarily due to increased revenues. Research and development expenses
remained relatively unchanged at $992,000 in the first quarter of 1998 compared
with $1,007,000 in the first quarter of 1997.
Interest income increased to $691,000 in the first quarter of 1998 from
$220,000 in the first quarter of 1997, primarily due to interest earned on the
invested net proceeds from the Company's June 1997 initial public offering.
Interest expense decreased to $132,000 in the first quarter of 1998 from
$201,000 in the first quarter of 1997, principally due to a decrease in
short-term borrowings at foreign divisions, as well as a decrease in applicable
interest rates.
The effective tax rate was 40% in the first quarter of 1998 and 1997. The
effective tax rate exceeded the statutory federal income tax rate primarily due
to the impact of state income taxes, nondeductible amortization of cost in
excess of net assets of acquired companies, and foreign tax rate and tax law
differences.
Liquidity and Capital Resources
Consolidated working capital was $49,556,000 at April 4, 1998, compared
with $47,975,000 at January 3, 1998. Included in working capital are cash, cash
equivalents, and available-for-sale investments of $51,444,000 at April 4, 1998,
compared with $50,289,000 at January 3, 1998.
During the first three months of 1998, $4,034,000 of cash was provided by
operating activities. Cash provided by the Company's operating results was
improved primarily by a $4,442,000 reduction in accounts receivable, offset in
part by a $1,524,000 increase in inventories and unbilled contract costs and
fees. The decrease in accounts receivable was principally due to the timing of
cash collections. The increase in inventories and unbilled contract costs and
fees resulted primarily from the timing of billing on percentage-of- completion
contracts.
During the first quarter of 1998, $101,000 of cash was used for investing
activities consisting of expenditures for the purchase of property, plant, and
equipment. In the remainder of 1998, the Company plans to make capital
expenditures for property, plant, and equipment of approximately $580,000.
Liquidity and Capital Resources (continued)
On May 6, 1998, the Company agreed to acquire the stock of DMC for
approximately $29,000,000 in cash (Note 4). If this transaction is consummated,
the Company intends to use internal funds to finance the acquisition.
During the first quarter of 1998, $3,150,000 of cash was used for financing
activities, principally to fund a decrease in short-term borrowings.
Although the Company expects to have positive cash flow from its existing
operations, the Company may require significant amounts of cash for the
acquisition of complementary businesses. The Company expects that it will
finance any such acquisitions through a combination of internal funds,
additional debt or equity financing from the capital markets, or short-term
borrowings from Thermo Instrument Systems Inc. or Thermo Electron Corporation,
although it has no agreement with these companies to ensure that funds will be
available on acceptable terms, or at all. The Company believes that its existing
resources are sufficient to meet the capital requirements of its existing
businesses for the foreseeable future.
