SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
----------------------------------------------------
FORM 10-Q
(mark one)
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the Quarter Ended April 3, 1999
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number 1-13085
METRIKA SYSTEMS CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 33-0733537
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5788 Pacific Center Boulevard
San Diego, California 92121
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (781) 622-1000
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [ X ] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.
Class Outstanding at April 30, 1999
Common Stock, $.01 par value 7,415,228
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PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
METRIKA SYSTEMS CORPORATION
Consolidated Balance Sheet
(Unaudited)
Assets
<S> <C> <C>
April 3, January 2,
(In thousands) 1999 1999
- ----------------------------------------------------------------------------------- ----------- ---------
Current Assets:
Cash and cash equivalents (includes $11,520 and $12,752 under $ 13,295 $15,093
repurchase agreement with affiliated company)
Accounts receivable, less allowances of $5,682 and $2,286 (Note 5) 19,657 25,066
Unbilled contract costs and fees 6,319 7,224
Inventories:
Raw materials and supplies 7,549 8,036
Work in process 3,390 3,746
Finished goods 566 475
Prepaid income taxes 4,428 4,439
Other current assets (Note 5) 9,462 806
-------- --------
64,666 64,885
-------- --------
Property, Plant, and Equipment, at Cost 16,500 17,596
Less: Accumulated depreciation and amortization 5,724 5,772
-------- --------
10,776 11,824
-------- --------
Other Assets 2,335 4,087
-------- --------
Cost in Excess of Net Assets of Acquired Companies 24,462 24,648
-------- --------
$102,239 $105,444
======== ========
2
<PAGE>
METRIKA SYSTEMS CORPORATION
Consolidated Balance Sheet (continued)
(Unaudited)
Liabilities and Shareholders' Investment
April 3, January 2,
(In thousands except share amounts) 1999 1999
- ----------------------------------------------------------------------------------- ----------- ----------
Current Liabilities:
Notes payable and current maturities of long-term obligation $ 5,572 $ 6,303
Accounts payable 2,315 3,291
Accrued payroll and employee benefits 2,226 2,589
Accrued income taxes 1,994 1,024
Customer deposits 1,725 1,302
Billings in excess of contract costs and fees 2,531 2,163
Accrued installation and warranty costs (Note 5) 4,925 3,508
Other accrued expenses (Note 5) 4,020 4,986
Due to parent company and affiliated companies 3,514 3,901
-------- --------
28,822 29,067
-------- --------
Deferred Income Taxes 1,572 1,572
-------- --------
Accrued Pension Costs 4,673 4,983
-------- --------
Long-term Obligation 3,008 3,437
-------- --------
Shareholders' Investment:
Common stock, $.01 par value, 25,000,000 shares authorized; 83 83
8,267,828 shares issued
Capital in excess of par value 58,665 58,641
Retained earnings 13,794 12,500
Treasury stock at cost, 852,600 and 533,700 shares (7,225) (4,620)
Deferred compensation (24) -
Accumulated other comprehensive items (Note 2) (1,129) (219)
-------- --------
64,164 66,385
-------- --------
$102,239 $105,444
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE>
METRIKA SYSTEMS CORPORATION
Consolidated Statement of Income
(Unaudited)
Three Months Ended
April 3, April 4,
(In thousands except per share amounts) 1999 1998
- ----------------------------------------------------------------------------------- ----------- ---------
Revenues $18,947 $14,712
------- -------
Costs and Operating Expenses:
Cost of revenues 10,798 8,174
Selling, general, and administrative expenses 4,520 3,747
Research and development expenses 1,564 992
------- ------
16,882 12,913
------- -------
Operating Income 2,065 1,799
Interest Income 165 691
Interest Expense (107) (132)
------- ------
Income Before Provision for Income Taxes 2,123 2,358
Provision for Income Taxes 829 944
------- ------
Net Income $ 1,294 $1,414
======= ======
Basic and Diluted Earnings per Share (Note 3) $ .17 $ .17
======= ======
Basic and Diluted Weighted Average Shares (Note 3) 7,575 8,268
======= ======
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
METRIKA SYSTEMS CORPORATION
Consolidated Statement of Cash Flows
(Unaudited)
Three Months Ended
April 3, April 4,
(In thousands) 1999 1998
- ----------------------------------------------------------------------------------- ----------- ---------
Operating Activities:
Net income $ 1,294 $ 1,414
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 649 402
Provision for losses on accounts receivable 149 253
Other noncash items 74 218
Changes in current accounts:
Accounts receivable 886 4,442
Inventories and unbilled contract costs and fees 1,156 (1,524)
Other current assets (914) (1,075)
Accounts payable (917) (347)
Other current liabilities (1,013) 251
------- -------
Net cash provided by operating activities 1,364 4,034
------- -------
Investing Activities:
Refund of acquisition purchase price (Note 5) 574 -
Purchases of property, plant, and equipment (134) (101)
Other 19 -
------- -------
Net cash provided by (used in) investing activities 459 (101)
------- -------
Financing Activities:
Purchases of Company common stock (2,605) -
Change in due to parent company and affiliated companies - (60)
Decrease in short-term obligations (489) (2,945)
Repayment of long-term obligation (164) (145)
------- -------
Net cash used in financing activities (3,258) (3,150)
------- -------
Exchange Rate Effect on Cash (363) 520
------- -------
Increase (Decrease) in Cash and Cash Equivalents (1,798) 1,303
Cash and Cash Equivalents at Beginning of Period 15,093 44,044
------- -------
Cash and Cash Equivalents at End of Period $13,295 $45,347
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
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 3, 1999, and the results
of operations and cash flows for the three-month periods ended April 3, 1999,
and April 4, 1998. Interim results are not necessarily indicative of results for
a full year.
The consolidated balance sheet presented as of January 2, 1999, 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 are presented as permitted by Form 10-Q and 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 Annual Report on Form 10-K for the fiscal year ended January 2, 1999,
filed with the Securities and Exchange Commission.
2. Comprehensive Income
Comprehensive income combines net income and "other comprehensive items,"
which represents certain amounts that are reported as a component of
shareholders' investment in the accompanying balance sheet, including foreign
currency translation adjustments and, in 1998, unrealized net of tax gains and
losses from available-for-sale investments. During the first quarter of 1999 and
1998, the Company's comprehensive income totaled $384,000 and $1,929,000,
respectively.
3. Earnings per Share
Basic and diluted earnings per share were calculated as follows:
Three Months Ended
April 3, April 4,
(In thousands except per share amounts) 1999 1998
- ----------------------------------------------------------------------------------- ----------- ---------
Net Income $1,294 $1,414
------ ------
Weighted Average Shares 7,575 8,268
------ ------
Basic and Diluted Earnings per Share $ .17 $ .17
====== ======
The computation of diluted earnings per share excludes the effect of
assuming the exercise of outstanding stock options because the effect would be
antidilutive. As of April 3, 1999, there were 371,426 of such options
outstanding, with exercise prices ranging from $8.45 to $15.34 per share.
6
<PAGE>
4. Business Segment Information
Three Months Ended
April 3, April 4,
(In thousands) 1999 1998
- ----------------------------------------------------------------------------------- ----------- ----------
Revenues:
On-line Finished Materials Quality Control $14,298 $ 7,048
On-line Raw Materials Analysis 4,649 7,664
------- -------
$18,947 $14,712
======= =======
Income Before Provision for Income Taxes:
On-line Finished Materials Quality Control $ 2,055 $ 861
On-line Raw Materials Analysis 290 1,361
Corporate (a) (280) (423)
------- -------
Total operating income 2,065 1,799
Interest income, net 58 559
------- -------
$ 2,123 $ 2,358
======= =======
(a) Primarily general and administrative expenses.
5. Acquisition Matters
In July 1998, the Company acquired the stock of Honeywell-Measurex Data
Measurement Corporation, a wholly owned subsidiary of Honeywell-Measurex
Corporation. This business was renamed Radiometrie Corporation (Radiometrie
U.S.). During the first quarter of 1999, the Company received a refund of
$574,000 related to a previously agreed upon purchase price adjustment for the
acquisition of Radiometrie U.S. Also, during the first quarter of 1999, the
Company and Honeywell negotiated a post-closing adjustment under the terms of
the purchase agreement for the acquisition of Radiometrie U.S. pertaining to the
determination of the amount of certain assets and liabilities of Radiometrie
U.S. at the date of acquisition for which Honeywell had maintained
responsibility. This negotiation resulted in an amount due to the Company of
$7,800,000, which is payable to the Company in three installments from April
through December 1999. This amount has been recorded as a receivable and is
included in other current assets in the accompanying April 1999 balance sheet. A
corresponding increase in the allowance for bad debts and certain liability
accounts has been recorded to reflect the transfer of responsibility for these
matters to the Company.
The Company has undertaken a restructuring in connection with its 1998
acquisitions. The Company's restructuring activities, accounted for in
accordance with Emerging Issues Task Force Pronouncement (EITF) 95-3, have
included a reduction in staffing levels, relocation of certain personnel, and
abandonment of excess facilities of the acquired businesses. In connection with
these restructuring activities, as part of the cost of the acquisitions, the
Company established reserves, primarily for severance and excess facilities. As
of January 2, 1999, the Company had remaining accrued acquisition expenses of
$663,000. During the first quarter of 1999, the Company expended $290,000 of the
established reserves, primarily for severance and abandoned-facility payments.
As of April 3, 1999, the remaining liability for accrued acquisition expenses
was $373,000. Accrued acquisition expenses are included in other accrued
expenses in the accompanying balance sheet. Unresolved matters at April 3, 1999,
primarily included completion of planned severances and abandonment or
consolidation of excess facilities for Radiometrie U.S. In accordance with the
requirements of EITF 95-3, the Company finalizes its restructuring plans no
later than one year from the date of the acquisition.
7
<PAGE>
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 "Forward-looking
Statements" in Exhibit 13 to the Company's Annual Report on Form 10-K for the
fiscal year ended January 2, 1999, 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. The Company operates in two segments:
On-line Raw Materials Analysis (Raw Materials) and On-line Finished Materials
Quality Control (Finished Materials). The Company's Raw Materials segment 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 Finished Materials segment manufactures advanced systems that 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.
The Company intends to supplement its internal growth with strategic
acquisitions of complementary businesses. In July 1998, the Company acquired the
stock of Honeywell-Measurex Data Measurement Corporation, a wholly owned
subsidiary of Honeywell-Measurex Corporation. This business, renamed Radiometrie
Corporation (Radiometrie U.S.), manufactures computerized, noncontact thickness,
coating, and other measurement systems for the flat metal processing industry.
In October 1998, the Company acquired MF Physics Corporation. MF Physics
manufactures neutron generators and neutron activation analysis systems. There
can be no assurance that additional businesses will be available at prices
attractive to the Company.
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 1998, approximately 43% of the Company's revenues
originated outside the U.S. and approximately 33% were exports from the U.S.
Sales originating outside the U.S. represent revenues of the Company's Finished
Materials segment, the operations of which are located in Germany, the United
Kingdom, and France. These business units 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 segment are conducted primarily
in Europe, 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 segment in geographic areas outside of Europe,
with particular emphasis on North America, which in turn may reduce the
Company's exposure to European market conditions. The Company's acquisition of
Maryland-based Radiometrie U.S. was part of this strategy.
8
<PAGE>
Results of Operations
First Quarter 1999 Compared With First Quarter 1998
Revenues increased 29% to $18.9 million in the first quarter of 1999 from
$14.7 million in the first quarter of 1998. Finished Materials segment revenues
increased principally due to the inclusion of $6.5 million in revenues from
Radiometrie U.S., acquired July 1998, and, to a lesser extent, internal growth.
Revenues also increased $0.2 million due to the favorable effects of currency
translation as a result of a decline in the value of the U.S. dollar relative to
currencies in foreign countries in which the Company operates. Raw Materials
segment revenues decreased $3.0 million, primarily due to a reduction in
spending by raw-material producers and increased competition resulting from the
entry of new competitors into the marketplace, offset in part by the inclusion
of $0.4 million in revenues from MF Physics, acquired October 1998. Total
backlog decreased to $24.7 million at April 3, 1999, from $30.8 million at
January 2, 1999, primarily due to a reduction in capital spending in the metals
industry at the Finished Materials segment and the factors discussed above at
the Raw Materials segment. The reduction in backlog is expected to continue to
adversely affect comparative sales and profitability at the Raw Materials
segment in 1999.
The gross profit margin decreased to 43% in the first quarter of 1999 from
44% in the first quarter of 1998, principally due to a decrease in the gross
profit margin at the Raw Materials segment due to reduced revenues and increased
competition. This decrease was offset in part by an increase in the gross profit
margin at the Finished Materials segment, principally due to the inclusion of
higher-margin revenues from Radiometrie U.S.
Selling, general, and administrative expenses as a percentage of revenues
decreased to 24% in the first quarter of 1999 from 25% in the first quarter of
1998, primarily due to a decrease at the Finished Materials segment due to
increased revenues and, to a lesser extent, the inclusion of lower expenses as a
percentage of revenues at Radiometrie U.S. The reduction in selling, general,
and administrative expenses as a percentage of revenues was offset in part by an
increase at the Raw Materials segment due to lower revenues.
Research and development expenses increased to $1.6 million in the first
quarter of 1999 from $1.0 million in the first quarter of 1998, due to the
inclusion of research and development expenses from Radiometrie U.S.
Interest income decreased to $0.2 million in the first quarter of 1999
from $0.7 million in the first quarter of 1998, primarily due to a decrease in
average invested balances due to the use of cash for the July 1998 acquisition
of Radiometrie U.S. Interest expense remained unchanged at $0.1 million in the
first quarter of 1999 and 1998.
The effective tax rate was 39% and 40% in the first quarter of 1999 and
1998, respectively. The effective tax rates 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 $35.8 million at April 3, 1999 and
January 2, 1999. Included in working capital are cash and cash equivalents of
$13.3 million at April 3, 1999, compared with $15.1 million at January 2, 1999.
During the first quarter of 1999, $1.4 million of cash was provided by operating
activities. Cash of $1.2 million was provided by a decrease in inventories and
unbilled contract costs and fees, principally due to timing of percentage of
completion revenues. This source of cash was offset by $1.9 million of cash used
to fund a decrease in accounts payable and other current liabilities, which was
primarily due to the timing of payments.
During the first quarter of 1999, investing activities provided $0.5
million of cash. The Company received a $0.6 million refund of a portion of the
purchase price for Radiometrie U.S. (Note 5). In addition, the Company
negotiated an additional post closing adjustment of $7.8 million for the
acquisition of Radiometrie U.S., which is payable to the Company in three
installments due in 1999 (Note 5). The Company used $0.1 million for purchases
of property, plant, and equipment. The Company plans to make additional capital
expenditures for the purchase of property, plant, and equipment of approximately
$0.8 million during the remainder of 1999.
9
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Liquidity and Capital Resources (continued)
In April 1999, the Company signed a nonbinding letter of intent to acquire
the assets of the Amdel Instrumentation, a division of Amdel Limited, for
approximately $8.0 million in cash and the assumption of certain liabilities.
Based in Australia, Amdel Instrumentation is a provider of on-line process
instruments for the minerals industry. This proposed acquisition is subject to
certain conditions, including completion of due diligence, negotiation of a
definitive agreement, and approval by the Company's Board of Directors. There
can be no assurance that this acquisition will be consummated.
The Company's financing activities used $3.3 million of cash during the
first quarter of 1999. The Company used $2.6 million of cash to repurchase
Company common stock pursuant to an authorization by the Company's Board of
Directors. At April 3, 1999, the Company had $2.8 million remaining under its
authorization to purchase Company common stock in the open market or negotiated
transactions through September 1999. Any such purchases are funded from working
capital. In addition, the Company used $0.5 million of cash 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 and/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.
Year 2000
The following information constitutes a "Year 2000 Readiness Disclosure"
under the Year 2000 Information and Readiness Disclosure Act. The Company
continues to assess the potential impact of the year 2000 date recognition issue
on the Company's internal business systems, products, and operations. The
Company's year 2000 initiatives include (i) testing and upgrading significant
information technology systems and facilities; (ii) testing and developing
upgrades, if necessary, for the Company's current products and certain
discontinued products; (iii) assessing the year 2000 readiness of its key
suppliers and vendors; and (iv) developing a contingency plan.
The Company's State of Readiness
The Company has implemented a compliance program to ensure that its
critical information technology systems and facilities will be ready for the
year 2000. The first phase of the program, testing and evaluating the Company's
critical information technology systems and facilities for year 2000 compliance,
has largely been completed. During phase one, the Company tested and evaluated
its significant computer systems, software applications, and related equipment
for year 2000 compliance. The Company also evaluated the potential year 2000
impact on its critical facilities. The Company's efforts included testing the
year 2000 readiness of its manufacturing, utility, and telecommunications
systems at its critical facilities. The Company is currently in phase two of its
program, during which any material noncompliant systems or facilities that were
identified during phase one are prioritized and remediated. Based on its
evaluations of its critical facilities, the Company does not believe any
material upgrades or modifications are required. The Company is currently
upgrading or replacing its material noncompliant information technology systems,
and this process was approximately 80% complete as of April 3, 1999. In many
cases, such upgrades or replacements are being made in the ordinary course of
business, without accelerating previously scheduled upgrades or replacements.
The Company expects that all of its material information technology systems and
critical facilities will be year 2000 compliant by September 1999.
The Company has also implemented a compliance program to test and evaluate
the year 2000 readiness of the material products that it currently manufactures
and sells. The Company believes that all of such material products are year 2000
compliant. However, as many of the Company's products are complex, interact
with, or incorporate third-party products, and operate on computer systems that
are not under the Company's control, there can be no assurance that the Company
has identified all of the year 2000 problems with its current products. The
Company believes that certain of its older products, which it no longer
manufactures or sells, may not be year 2000 compliant. The Company
10
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Year 2000 (continued)
is continuing to test and evaluate such products. The Company is focusing its
efforts on products that are still under warranty and/or are early in their
expected life. The Company is offering upgrades and/or identifying potential
solutions where reasonably practicable.
The Company is in the process of identifying and assessing the year 2000
readiness of key suppliers and vendors that are believed to be significant to
the Company's business operations. As part of this effort, the Company has
developed and is distributing questionnaires relating to year 2000 compliance to
its significant suppliers and vendors. To date, no significant supplier or
vendor has indicated that it believes its business operations will be materially
disrupted by the year 2000 issue. The Company is now following-up with its
significant suppliers and vendors that have not responded to the Company's
questionnaires. The Company has commenced its assessment of third-party risk,
and expects to be substantially completed by September 1999.
Contingency Plan
The Company is developing a contingency plan that will allow its primary
business operations to continue despite disruptions due to year 2000 problems.
This plan may include identifying and securing other suppliers, increasing
inventories, and modifying production facilities and schedules. As the Company
continues to evaluate the year 2000 readiness of its business systems and
facilities, products, and significant suppliers and vendors, it will modify and
adjust its contingency plan as may be required.
Estimated Costs to Address the Company's Year 2000 Issues
To date, costs incurred in connection with the year 2000 issue have not
been material. The Company does not expect total year 2000 remediation costs to
be material, but there can be no assurance that the Company will not encounter
unexpected costs or delays in achieving year 2000 compliance. Year 2000 costs
are funded from working capital. All internal costs and related external costs,
other than capital additions, related to year 2000 remediation have been and
will continue to be expensed as incurred. The Company does not track internal
costs incurred for its year 2000 compliance project. Such costs are principally
the related payroll costs for its information systems group.
Reasonably Likely Worst Case Scenario
At this point in time, the Company is not able to determine the most
reasonably likely worst case scenario to result from the year 2000 issue. One
possible worst case scenario would be that certain of the Company's material
suppliers or vendors experience business disruptions due to the year 2000 issue
and are unable to provide materials and services to the Company on time. The
Company's operations could be delayed or temporarily shut down, and it could be
unable to meet its obligations to customers in a timely fashion. The Company's
business, operations, and financial condition could be adversely affected in
amounts that cannot be reasonably estimated at this time. If the Company
believes that any of its key suppliers or vendors may not be year 2000 ready, it
will seek to identify and secure other suppliers or vendors as part of its
contingency plan.
Risks of the Company's Year 2000 Issues
While the Company is attempting to minimize any negative consequences
arising from the year 2000 issue, there can be no assurance that year 2000
problems will not have a material adverse impact on the Company's business,
operations, or financial condition. While the Company expects that upgrades to
its internal business systems will be completed in a timely fashion, there can
be no assurance that the Company will not encounter unexpected costs or delays.
Despite its efforts to ensure that its material current products are year 2000
compliant, the Company may see an increase in warranty and other claims,
especially those related to Company products that incorporate, or operate using,
third-party software or hardware. In addition, certain of the Company's older
products, which it no longer
11
<PAGE>
Year 2000 (continued)
manufactures or sells, may not be year 2000 compliant, which may expose the
Company to claims. As discussed above, if any of the Company's material
suppliers or vendors experience business disruptions due to year 2000 issues,
the Company might also be materially adversely affected. If any countries in
which the Company operates experience significant year 2000 disruption, the
Company could also be materially adversely affected. There is expected to be a
significant amount of litigation relating to the year 2000 issue and there can
be no assurance that the Company will not incur material costs in defending or
bringing lawsuits. In addition, if any year 2000 issues are identified, there
can be no assurance that the Company will be able to retain qualified personnel
to remedy such issues. Any unexpected costs or delays arising from the year 2000
issue could have a material adverse impact on the Company's business,
operations, and financial condition in amounts that cannot be reasonably
estimated at this time.
Item 3 - Quantitative and Qualitative Disclosures About Market Risk
The Company's exposure to market risk from changes in foreign currency
exchange rates has not changed materially from year-end 1998.
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
See Exhibit Index on the page immediately preceding exhibits.
(b) Reports on Form 8-K
None.
12
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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 as of the 10th day of May 1999.
METRIKA SYSTEMS CORPORATION
/s/ Paul F. Kelleher
-------------------------
Paul F. Kelleher
Chief Accounting Officer
/s/ Theo Melas-Kyriazi
-------------------------
Theo Melas-Kyriazi
Chief Financial Officer
13
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
27.1 Financial Data Schedule for the period ended April 3, 1999.
27.2 Amended Financial Data Schedule for the year ended January 2, 1999.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM METRIKA
SYSTEMS CORPORATION'S QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED APRIL
3, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-01-2000
<PERIOD-END> APR-03-1999
<CASH> 13,295
<SECURITIES> 0
<RECEIVABLES> 25,339
<ALLOWANCES> 5,682
<INVENTORY> 11,505
<CURRENT-ASSETS> 64,666
<PP&E> 16,500
<DEPRECIATION> 5,724
<TOTAL-ASSETS> 102,239
<CURRENT-LIABILITIES> 28,822
<BONDS> 3,008
0
0
<COMMON> 83
<OTHER-SE> 64,081
<TOTAL-LIABILITY-AND-EQUITY> 102,239
<SALES> 18,947
<TOTAL-REVENUES> 18,947
<CGS> 10,798
<TOTAL-COSTS> 10,798
<OTHER-EXPENSES> 1,564
<LOSS-PROVISION> 149
<INTEREST-EXPENSE> 107
<INCOME-PRETAX> 2,123
<INCOME-TAX> 829
<INCOME-CONTINUING> 1,294
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,294
<EPS-PRIMARY> 0.17
<EPS-DILUTED> 0.17
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
METRIKA SYSTEMS CORPORATION'S ANNUAL REPORT ON FORM 10-K FOR THE PERIOD ENDED
JANUARY 2, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-02-1999
<PERIOD-END> JAN-02-1999
<CASH> 15,093
<SECURITIES> 0
<RECEIVABLES> 27,352
<ALLOWANCES> 2,286
<INVENTORY> 12,257
<CURRENT-ASSETS> 64,885
<PP&E> 17,596
<DEPRECIATION> 5,772
<TOTAL-ASSETS> 105,444
<CURRENT-LIABILITIES> 29,067
<BONDS> 3,437
0
0
<COMMON> 83
<OTHER-SE> 66,302
<TOTAL-LIABILITY-AND-EQUITY> 105,444
<SALES> 70,029
<TOTAL-REVENUES> 70,029
<CGS> 40,537
<TOTAL-COSTS> 40,537
<OTHER-EXPENSES> 5,397
<LOSS-PROVISION> 470
<INTEREST-EXPENSE> 449
<INCOME-PRETAX> 10,293
<INCOME-TAX> 3,950
<INCOME-CONTINUING> 6,343
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,343
<EPS-PRIMARY> 0.77
<EPS-DILUTED> 0.77
</TABLE>
