<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
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 No. 0-9220
METATEC INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)
OHIO 31-1647405
(State of Incorporation) (IRS Employer Identification No.)
7001 Metatec Boulevard
Dublin, Ohio 43017
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (614) 761-2000
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, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Number of Common Shares outstanding as of August 11, 1999: 6,075,613
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<PAGE> 2
METATEC INTERNATIONAL, INC.
<TABLE>
<CAPTION>
INDEX PAGE
----- ----
<S> <C> <C>
Part I : Financial Information
Item 1 - Financial Statements
Condensed Consolidated Balance Sheets as of June 30,
1999 (unaudited) and December 31, 1998 3
Condensed Consolidated Statements of Earnings
for the three months ended June 30, 1999
and 1998 (unaudited) 4
Condensed Consolidated Statements of Earnings
for the six months ended June 30, 1999
and 1998 (unaudited) 5
Condensed Consolidated Statement of Shareholders'
Equity for the six months ended
June 30, 1999 (unaudited) 6
Condensed Consolidated Statements of Cash Flows
for the six months ended June 30,
1999 and 1998 (unaudited) 7
Notes to Condensed Consolidated Financial
Statements (unaudited) 8
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-11
Item 3 - Quantitative and Qualitative Disclosures about
Market Risk 11
Part II: Other Information
Items 1-6 12
Signatures 12
</TABLE>
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<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
METATEC INTERNATIONAL, INC. (Unaudited)
CONDENSED CONSOLIDATED BALANCE SHEETS June 30, December 31,
1999 1998
- ------------------------------------------------------------------------------------------- ------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 663,497 $ 2,557,221
Accounts receivable, net of allowance for doubtful accounts of $433,000 and $490,000 18,254,701 21,635,889
Inventory 3,202,362 3,207,460
Prepaid expenses 1,734,100 1,037,945
Prepaid income taxes 329,723 580,879
Deferred income taxes 143,000 143,000
------------- -------------
Total current assets 24,327,383 29,162,394
Property, plant and equipment - net 60,741,883 55,827,054
Goodwill - net 19,760,764 20,453,366
------------- -------------
TOTAL ASSETS $ 104,830,030 $ 105,442,814
============= =============
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 11,892,447 $ 12,052,442
Accrued royalties 1,861,653 2,053,691
Accrued personal property taxes 1,104,390 993,399
Other accrued expenses 830,331 2,526,684
Accrued payroll 800,685 1,598,507
Unearned income 281,702 156,440
Current maturities of long-term debt and capital lease obligations 5,290,995 3,080,185
------------- -------------
Total current liabilities 22,062,203 22,461,348
Long-term debt and capital lease obligations, less current maturities 39,239,119 39,506,376
Other long-term liabilities 66,713 45,193
Deferred income taxes 1,477,564 1,480,000
------------- -------------
Total liabilities 62,845,599 63,492,917
------------- -------------
Shareholders' equity:
Common stock, $.10 par value; authorized 10,083,500 shares;
issued 1999 - 7,157,355 shares; 1998 - 7,153,480 715,736 715,348
Additional paid-in capital 34,229,402 34,218,577
Accumulated other comprehensive income (244,886) 32,963
Retained earnings 13,106,716 12,805,546
Treasury stock, at cost - 1,081,742 shares (5,822,537) (5,822,537)
------------- -------------
Total shareholders' equity 41,984,431 41,949,897
------------- -------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 104,830,030 $ 105,442,814
============= =============
</TABLE>
See notes to condensed consolidated financial statements.
Page 3 of 12
<PAGE> 4
METATEC INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended June 30,
------------------------------
1999 1998
- ------------------------------------------------------------------------------- ------------ ------------
<S> <C> <C>
NET SALES $ 29,488,771 $ 14,085,060
Cost of sales 21,932,537 9,198,161
------------ ------------
Gross profit 7,556,234 4,886,899
Selling, general and administrative expenses 7,790,756 3,959,943
------------ ------------
OPERATING EARNINGS (234,522) 926,956
Other income and (expense):
Investment income 8,004 10,354
Interest expense (688,102) (72,475)
------------ ------------
EARNINGS BEFORE INCOME TAXES (914,620) 864,835
Income taxes (358,000) 389,159
------------ ------------
NET (LOSS) EARNINGS $ (556,620) $ 475,676
============ ============
NET (LOSS) EARNINGS PER COMMON SHARE
Basic $ (0.09) $ 0.08
============ ============
Diluted $ (0.09) $ 0.08
============ ============
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Basic 6,075,613 6,040,037
============ ============
Diluted 6,116,622 6,106,865
============ ============
</TABLE>
See notes to condensed consolidated financial statements.
Page 4 of 12
<PAGE> 5
METATEC INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended June 30,
------------------------------
1999 1998
- ------------------------------------------------------------------------------- ------------ ------------
<S> <C> <C>
NET SALES $ 60,556,754 $ 28,802,117
Cost of sales 42,932,857 19,028,536
------------ ------------
Gross profit 17,623,897 9,773,581
Selling, general and administrative expenses 15,614,285 7,736,049
------------ ------------
OPERATING EARNINGS 2,009,612 2,037,532
Other income and (expense):
Investment income 21,673 24,980
Interest expense (1,428,115) (138,767)
------------ ------------
EARNINGS BEFORE INCOME TAXES 603,170 1,923,745
Income taxes 302,000 870,000
------------ ------------
NET EARNINGS $ 301,170 $ 1,053,745
============ ============
NET EARNINGS PER COMMON SHARE
Basic $ 0.05 $ 0.17
============ ============
Diluted $ 0.05 $ 0.17
============ ============
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Basic 6,074,145 6,055,008
============ ============
Diluted 6,139,860 6,110,375
============ ============
</TABLE>
See notes to condensed consolidated financial statements.
Page 5 of 12
<PAGE> 6
METATEC INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)
<TABLE>
<CAPTION>
Additional
Common Paid-in Retained Accumulated Other Treasury
Stock Capital Earnings Comprehensive Income Stock
- --------------------------------------- ------------ ------------ ------------ -------------------- ------------
<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1998 715,348 $ 34,218,577 $ 12,805,546 $ 32,963 $ (5,822,537)
Net earnings 301,170
Accumulated other comprehensive income (277,849)
Comprehensive Income
Stock options exercised 388 10,825
------------ ------------ ------------ ------------ ------------
BALANCE AT JUNE 30, 1999 $ 715,736 $ 34,229,402 $ 13,106,716 $ (244,886) $ (5,822,537)
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Total
- --------------------------------------- ------------
<S> <C>
BALANCE AT DECEMBER 31, 1998 $ 41,949,897
Net earnings 301,170
Accumulated other comprehensive income (277,849)
------------
Comprehensive Income 23,321
Stock options exercised 11,213
------------
BALANCE AT JUNE 30, 1999 $ 41,984,431
============
</TABLE>
See notes to consolidated financial statements.
Page 6 of 12
<PAGE> 7
METATEC INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
For the six months ended June 30, 1999 1998
- ----------------------------------------------------------------- ------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 301,170 $ 1,053,745
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Depreciation and amortization 6,975,453 4,266,508
Net loss on sales of property, plant and equipment 127 69,394
Changes in assets and liabilities:
Accounts receivable 3,030,727 (922,312)
Inventory (22,291) (199,030)
Prepaid expenses and other assets (319,113) (402,368)
Accounts payable and accrued expenses (3,798,911) 781,894
Unearned income 134,583 (8,908)
------------ ------------
Net cash provided by operating activities 6,301,745 4,638,923
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease in long-term note receivable 0 356,929
Purchase of property, plant and equipment (10,270,840) (6,713,992)
Proceeds from the sales of property, plant and equipment 198,750 300
------------ ------------
Net cash used in investing activities (10,072,090) (6,356,763)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in long-term debt 2,739,741 3,750,000
Payment of long-term debt and capital lease obligations (796,192) (2,292,862)
Stock options exercised 11,213 15,000
Treasury stock acquired 0 (790,638)
------------ ------------
Net cash used in financing activities 1,954,762 681,500
------------ ------------
Effect of exchange rate on cash (78,141) 0
Decrease in cash and cash equivalents (1,893,724) (1,036,340)
Cash and cash equivalents at beginning of period 2,557,221 1,381,057
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 663,497 $ 344,717
============ ============
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid $ 2,152,879 $ 122,965
============ ============
Income taxes paid $ 71,399 $ 1,072,339
============ ============
Assets purchased by the assumption of a liability $ 2,702,606 $ 202,449
============ ============
</TABLE>
See notes to condensed consolidated financial statements.
Page 7 of 12
<PAGE> 8
METATEC INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Basis of presentation - The consolidated balance sheet as of June 30, 1999,
the consolidated statements of earnings for the three and six months ended June
30, 1999 and 1998, the consolidated statement of shareholders' equity for the
six months ended June 30, 1999, and the consolidated statements of cash flows
for the six month periods then ended have been prepared by the Company, without
audit. In the opinion of management, all adjustments, which consist solely of
normal recurring adjustments, necessary to present fairly, in accordance with
generally accepted accounting principles, the financial position, results of
operations and changes in cash flows for all periods presented have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. These consolidated financial statements should
be read in conjunction with the consolidated financial statements and notes
thereto included in the Company's December 31, 1998 annual report on Form 10-K.
The results of operations for the period ended June 30, 1999 are not necessarily
indicative of the results for the full year.
Certain reclassifications have been made to the 1998 financial statements to
conform with the 1999 presentation.
2. Property, Plant and Equipment Commitments - The Company has commitments under
contracts for the purchase of property, plant, and equipment. Portions of such
contracts not completed as of June 30, 1999 are not reflected in the
consolidated financial statements. The unrecorded commitments amounted to
approximately $316,000 at June 30, 1999. This amount represents manufacturing
equipment on order. The Company also has unrecorded commitments under contracts
of approximately $1,860,000 for a 151,000 square foot distribution center under
construction in Dublin, Ohio.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS THREE MONTHS ENDED JUNE 30, 1999 COMPARED TO THREE MONTHS ENDED
JUNE 30, 1998
RECENT ACQUISITION DEVELOPMENTS
On July 2, 1999, Metatec International, Inc. (the "Company" or "Metatec")
purchased the technology products and services business of SilverSpan for a
purchase price of $250,000, plus an earn out to be paid over a 42 month period.
SilverSpan is a software products and technology services firm specializing in
secure, managed delivery of software, digital documents and information products
for business customers over the Internet, corporate Intranets, and Extranets.
Metatec acquired the SilverSpan business through a court-approved sale under
Chapter 11 proceedings of Megasoft, SilverSpan's parent company. The Company
financed the purchase through funds borrowed under the Company's existing
revolving loan facility.
RESULTS OF OPERATIONS
Net sales for the three months ended June 30, 1999 were $29,489,000, an increase
of $15,404,000, or 109% over the same period of the prior year. This increase
resulted primarily from CD-ROM manufacturing sales increasing $14,948,000 to
$27,570,000 for the three months ended, or 118%. This increase was primarily a
result of significant sales attributable to the CD-ROM services business
acquired from Imation Corporation ("Imation") in September 1998. Radio
syndication sales decreased $348,000, or 27%, primarily as a result of some
customers choosing to use CD-Recordable as a distribution method
8 of 12
<PAGE> 9
for smaller size orders. The Company expects this trend to continue in the
foreseeable future. DVD sales accounted for $64,000, as compared to $31,000.
Net sales for the six months ended June 30, 1999 were $60,557,000, an increase
of $31,755,000, or 110% over the same period of the prior year. This increase
resulted primarily from CD-ROM manufacturing sales increasing $30,524,000 to
$56,488,000 for the six months ended, or 118%. This increase was primarily a
result of significant sales attributable to the CD-ROM services business
acquired from Imation. Radio syndication sales decreased $651,000, or 25%,
primarily as a result of some customers choosing to use CD-Recordable as a
distribution method for smaller size orders. The Company expects this trend to
continue in the foreseeable future. DVD sales accounted for $193,000, as
compared to $102,000.
Gross profit was 26% of net sales for the three months ended June 30, 1999 as
compared to 35% of net sales for the same period of the prior year. This
decrease is primarily attributed to reduced manufacturing capacity utilization
due to significant capacity added in the Dublin facility, seasonality of the
acquired Imation business, and emphasis on current account retention, rather
than new customer growth during the three months ended June 30, 1999. Gross
profit was 29% of net sales for the six months ended June 30, 1999 as compared
to 34% of net sales for the same period of the prior year. This decrease is
primarily attributed to reduced manufacturing capacity utilization, price
erosion, and change in product mix during the six month period ended June 30,
1999.
Selling, general and administrative ("SG&A") expenses were $7,791,000, or 26% of
net sales, for the three months ended June 30, 1999 as compared to $3,960,000,
or 28% of net sales, for same period of the prior year. SG&A expenses were
$15,614,000, or 26% of net sales, for the six months ended June 30, 1999 as
compared to $7,736,000, or 27% of net sales, for same period of the prior year.
Investment income was $8,000 and $10,000 for the three month periods ended June
30, 1999 and 1998, respectively. Investment income was $22,000 and $25,000 for
the six month periods ended June 30, 1999 and 1998, respectively.
Interest expense for the three months ended June 30, 1999 was $688,000 as
compared to $72,000 for the same period of the prior year. Interest expense for
the six months ended June 30, 1999 was $1,428,000 as compared to $139,000 for
the same period of the prior year. The increase in interest expense was due to
borrowings under revolving loan and term loan facilities used primarily for the
acquisition of the CD-ROM services business of Imation.
The income tax benefit was $358,000 for the three months ended June 30, 1999, or
an effective tax rate of 39%, as compared to a tax expense of $389,000 for the
same period of the prior year, or an effective tax rate of 45%. The income tax
expense was $302,000 for the six months ended June 30, 1999, as compared to a
tax expense of $870,000 for the same period of the prior year.
Net losses for the three months ended June 30, 1999 were $557,000, or a net loss
per common share of $.09, as compared to net earnings in the same period of the
prior year of $476,000, or net earnings per common share of $.08. Net earnings
for the six months ended June 30, 1999 were $301,000, or net earnings per common
share of $.05, as compared to net earnings in the same period of the prior year
of $1,054,000, or net earnings per common share of $.17. The net earnings
decrease was primarily a result of decreased profit margins due to
under-utilization of manufacturing capacities.
FINANCIAL CONDITION - LIQUIDITY AND CAPITAL RESOURCES
The Company financed its business during the six months ended June 30, 1999
through cash generated from operations and available cash balances and through
the use of debt. Cash flow from operating
Page 9 of 12
<PAGE> 10
activities was $6,302,000 for the six months ended June 30, 1999, as compared to
$4,639,000 for the six months ended June 30, 1998.
The Company has commitments under contracts for the purchase of computer
software and manufacturing equipment on order. These unrecorded commitments
amounted to approximately $551,000 at June 30, 1999. The Company also has
unrecorded commitments under contracts of approximately $1,860,000 for a 151,000
square foot distribution center under construction in Dublin, Ohio. The Company
began construction of the distribution center in October 1998. The Company was
financing the construction through funds available under the Company's
$7,000,000 construction loan at LIBOR rate plus 165 basis points.
The Company formed a single purpose limited liability company to hold all of the
real estate of the Company. The Company and the limited liability company
entered into a lease arrangement for the real estate. On July 23, 1999, the
limited liability company entered into a $19,000,000 ten-year term loan facility
with Huntington Capital Corp. This loan facility is payable in monthly principal
and interest payments based upon a thirty year amortization schedule and bears
interest at a fixed rate of 8.2%. This term loan facility was used to pay off
the construction loan and to pay down other bank debt. This loan facility is
secured by a first lien on all real property of the limited liability company.
The obligation to complete construction of the distribution center and certain
of the Company's obligations under the lease are secured by letters of credit in
favor of the lender, in an aggregate amount of $2.4 million.
The Company had cash and cash equivalents of $663,000 as of June 30, 1999. In
addition, the Company has a five year $20,000,000 revolving loan facility, of
which $14,000,000 was outstanding as of June 30, 1999. A portion of this
revolving loan facility, along with a five year $30,000,000 term loan facility,
was used to finance the Imation asset purchase. The remaining portion of the
revolving loan facility is available for general corporate purposes. Borrowing
under these credit facilities bear interest, at the Company's option, at either
the federal funds rate plus 50 basis points or prime rate (whichever of the two
are higher) or the London Interbank offered Rate (LIBOR) rate plus a margin
based upon the Company's debt coverage ratio (which ranges from not less than 75
basis points to not more than 150 basis points). These credit facilities are
secured by a first lien on all non-real estate business assets of the Company
and a pledge of the stock of the Company's subsidiaries. The Company is required
to comply with certain financial and other covenants.
Management believes that current cash balances, plus the funds available under
its current credit facilities, plus cash to be generated from future operations
should provide sufficient capital to meet the current business needs of the
Company for the foreseeable future.
YEAR 2000
The Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the year. Any of the Company's computer
programs that have date-sensitive software may recognize a date using "00" as
the year 1900 rather than 2000. This could result in a system failure or
miscalculations causing disruptions of uncertain duration in operations
including, among other things, a temporary inability to process transactions, or
engage in similar normal business activities.
The Company utilizes information technology ("IT") and non-IT systems which are
essential to its operations. Non-IT systems typically include embedded
technology, such as microcontrollers.
The Company created a task force during 1997 to address the Company's Year 2000
issues, and this task force has been actively assessing the Company's Year 2000
readiness since that time. The Company is employing a risk management approach
to minimize potential disruption to business workflow and revenues as well as
customers' and suppliers' businesses. This approach involves the identification,
ranking, correction, and testing of Year 2000 issues as well as the development
of contingency plans for unforeseen or external disruptions. The Company
retained a third party in the second quarter of 1999 to assist in implementing
this approach throughout the enterprise, which grew significantly through
acquisition in 1998.
Page 10 of 12
<PAGE> 11
As of July 30, 1999, the Company's headquarters, manufacturing, and distribution
facilities in Dublin, Ohio, were compliant with contingency plans in place to
address unforeseen or external disruptions. The Company expects the additional
sites, acquired last year, to be similarly verified as compliant with
appropriate contingency plans by September 30, 1999. The Company's task force is
continuing to work with third party vendors with which it has significant
relationships to verify that they are Year 2000 compliant.
The Company currently believes that all Year 2000 issues will be resolved in a
timely manner and that costs associated with Year 2000 compliance issues will
not be material to the Company's financial position or results of operations.
However, there is a risk that third parties will not achieve Year 2000
compliance in a timely manner, which could have an adverse effect on the
Company's operations. The task force intends to develop appropriate contingency
plans as necessary to address Year 2000 compliance issues as they arise.
Direct cost for third party assistance with implementation of Year 2000 risk
management was $31,000. The Company currently believes that the only additional
costs associated with Year 2000 compliance issues include in-house time
associated with administration, review and testing of systems. These costs have
not been calculated, but the Company believes the costs are not material.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Except for historical information, all other statements made in this report are
"forward-looking" within the meaning of the Private Securities Litigation Reform
Act of 1995. Such forward-looking statements are subject to certain risks and
uncertainties that could cause the Company's actual results to differ materially
from those projected. Such risks and uncertainties that might cause such a
difference include, but are not limited to, changes in general business and
economic conditions, changes in demand for CD-ROM products, excess capacity
levels in the CD-ROM industry, seasonality, the introduction of new products by
competitors, increased competition (including pricing pressures), changes in
manufacturing efficiencies, changes in technology, failure to achieve Year 2000
compliance by the Company or third party vendors with which it has significant
relationships, and other risks indicated in the Company's filings with the
Securities and Exchange Commission, including Form 10-K for Metatec's year ended
December 31, 1998.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
The Company does not use derivative financial instruments in its investment
portfolio. The Company places its investments in instruments that meet high
credit quality standards. The Company does not expect any material loss with
respect to its investment portfolio.
The Company utilizes term and revolving debt with variable interest rates of 75
to 150 basis points above LIBOR, and therefore affected by changes in market
interest rates. On July 23, 1999, the Company entered into a $19,000,000
ten-year term loan facility with a fixed rate of 8.2%, which converts a portion
of total debt to fixed rate debt. The Company does not expect changes in
interest rates to have a material effect on income or cash flows in fiscal 1999,
although there can be no assurances that interest rates will not significantly
change.
The effect of foreign exchange rate fluctuations on the Company for the three
months ended June 30, 1999 and 1998 was not material.
Page 11 of 12
<PAGE> 12
PART II - OTHER INFORMATION
Items 1-3. Inapplicable.
Items 4. Submission of Matters to a Vote of Security Holders
(a) The annual meeting of shareholders was held April 20, 1999.
(b) A. Grant Bowen and Jeffrey M. Wilkins were elected as Directors. Joseph
F. Keeler, Jr., Jerry D. Miller, James V. Pickett and Peter J. Kight
continued as Directors.
(c) The following two directors were elected to three year terms: A. Grant
Bowen with 4,325,287 votes for and 510,044 votes withheld; Jeffrey M.
Wilkins with 4,321,558 votes for and 513,773 votes withheld. The
proposal to amend the Company's 1990 Stock Option Plan was adopted with
2,423,041 votes for, 1,083,809 votes against and 32,754 abstain/broker
non-votes. The proposal to approve the Company's 1999 Directors' Stock
Option Plan was adopted with 2,594,287 votes for, 910,664 votes against
and 34,456 abstain/broker non-votes. The proposal to change the
Company's state of incorporation from Florida to Ohio through a merger
of the Company with and into Metatec International, Inc., was adopted
with 3,276,067 votes for, 244,136 votes against and 19,404
abstain/broker non-votes.
(d) Inapplicable.
Item 5. Inapplicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The exhibits on to this report begin on page ______.
(b) On April 26, 1999, the Company filed a Form 8-K (dated April 26, 1999)
under Item 5 to disclose shareholder approval of a proposal to change
the Company's state of incorporation from Florida to Ohio.
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.
Metatec International, Inc.
/s/ Daniel D. Viren
BY: Daniel D. Viren
Date: August 11, 1999 Senior Vice President and
Chief Financial Officer
(authorized signatory-
principal financial and
accounting officer)
12 of 12
<PAGE> 13
Form 10-Q
Exhibit Index
Exhibit Number Exhibit Description Page Number
- -------------- ------------------- -----------
27 Financial Data Schedule --
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 663,497
<SECURITIES> 0
<RECEIVABLES> 18,687,701
<ALLOWANCES> 433,000
<INVENTORY> 3,202,362
<CURRENT-ASSETS> 24,327,383
<PP&E> 95,792,395
<DEPRECIATION> (35,050,512)
<TOTAL-ASSETS> 104,830,030
<CURRENT-LIABILITIES> 22,062,203
<BONDS> 40,783,396
0
0
<COMMON> 715,736
<OTHER-SE> 41,268,695
<TOTAL-LIABILITY-AND-EQUITY> 104,830,030
<SALES> 60,556,754
<TOTAL-REVENUES> 60,556,754
<CGS> 42,932,857
<TOTAL-COSTS> 58,547,142
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 231,933
<INTEREST-EXPENSE> 1,428,115
<INCOME-PRETAX> 603,170
<INCOME-TAX> 302,000
<INCOME-CONTINUING> 301,170
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
