THE 10-Q IS BEING AMENDED TO CORRECT A CALCULATION
ERROR IN THE VALUE OF WORK-IN-PROCESS INVENTORY.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Amendment No. 1)
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 March 29, 1997
Commission File Number 0-8936
DATAMARINE INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Massachusetts 04-2454559
(State of Incorporation) (I.R.S. Employer Identification Number)
7030 220th SW, Mountlake Terrace, Washington 98043
(Address of principal executive offices)
(425)771-2182
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports 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 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 March 29, 1997
Common Stock, .01 Par Value 1,311,038
DATAMARINE INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------------- --------------------------
March 29, March 30, March 29, March 30,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 3,386,079 $ 3,963,374 $ 6,209,156 $ 7,960,575
Cost of products sold 2,413,345 2,335,990 4,212,946 4,475,906
--------------------------------------------------------
Gross profit 972,734 1,627,384 1,996,210 3,484,669
Operating expenses 1,351,320 1,375,663 2,638,175 2,742,577
--------------------------------------------------------
Operating income (loss) (378,586) 251,721 (641,965) 742,092
Other expense 143,238 99,331 263,237 111,609
--------------------------------------------------------
Income (loss) before income taxes (521,824) 152,390 (905,202) 630,483
Provision (benefit) for income taxes (176,703) 58,524 (305,242) 224,407
--------------------------------------------------------
Net income (loss) $ (345,121) $ 93,866 $ (599,960) $ 406,076
========================================================
Net income (loss) per share:
Primary $ (0.26) $ 0.06 $ (0.46) $ 0.28
Fully diluted $ (0.26) $ 0.06 $ (0.46) $ 0.27
Weighted average common and equivalent
shares outstanding:
Primary 1,309,800 1,557,151 1,309,746 1,476,819
Fully diluted 1,309,800 1,563,323 1,309,746 1,490,921
</TABLE>
DATAMARINE INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 29, September 28, March 30,
1997 1996 1996
------------ ------------- ------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 15,290 $ 330,076 $ 508,425
Accounts receivable 2,926,645 3,335,052 2,485,589
Inventories 5,045,124 5,230,705 4,067,506
Prepaid expenses and other current assets 232,285 202,067 186,112
Deferred income taxes, current 332,825 332,825 200,000
---------------------------------------------
Total current assets 8,552,169 9,430,725 7,447,632
Property, plant and equipment 5,210,011 5,169,121 4,772,591
Less accumulated depreciation 3,039,854 2,889,267 2,661,759
---------------------------------------------
Property, plant and equipment, net 2,170,157 2,279,854 2,110,832
Deferred income taxes, noncurrent 710,325 405,084 701,110
Other assets, net 510,250 534,183 504,030
---------------------------------------------
Total assets $ 11,942,901 $ 12,649,846 $ 10,763,604
=============================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to banks $ 1,750,000 $ 1,750,000 $ 124,895
Accounts payable 806,039 718,240 1,035,187
Accrued expenses 1,447,096 1,621,694 1,526,491
Current maturities of long-term debt 119,247 173,293 203,532
---------------------------------------------
Total current liabilities 4,122,382 4,263,227 2,890,105
Long-term debt, less current maturities 1,861,743 1,849,685 1,767,647
---------------------------------------------
Total liabilities 5,984,125 6,112,912 4,657,752
---------------------------------------------
Redeemable preferred stock, $1 par value, issued, none -- -- --
Stockholders' equity:
Convertible preferred stock, $1 par value, Authorized
1,000,000 shares; including redeemable preferred shares,
issued, none -- -- --
Common stock, $.01 par value, Authorized 3,000,000 shares;
1,311,038 shares issued and outstanding 13,110 13,094 12,971
Capital in excess of par value 3,720,677 3,644,662 3,561,046
Unearned compensation (66,650) (12,421) (14,859)
Retained earnings 2,291,639 2,891,599 2,546,694
---------------------------------------------
Total stockholders' equity 5,958,776 6,536,934 6,105,852
---------------------------------------------
Total liabilities and stockholders' equity $ 11,942,901 $ 12,649,846 $ 10,763,604
=============================================
</TABLE>
DATAMARINE INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
----------------------------
March 29, March 30,
1997 1996
----------- ------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ (599,960) $ 406,076
Adjustments to reconcile net income (loss) to net cash provided
by (used in) operating activities:
Depreciation and amortization 216,707 188,888
Amortization of debenture discount and issue costs 67,750 25,875
Provision for losses on accounts receivable 32,797 36,286
Employee investment plan expense 12,832 --
Amortization of unearned compensation 5,771 18,517
Provision for (benefit of) deferred income taxes (305,242) 224,882
Changes in operating assets and liabilities:
Accounts receivable 375,610 (184,268)
Inventories, prepaid expenses and other current assets 155,363 (639,494)
Accounts payable and accrued expenses (86,799) 434,641
----------------------------
Net cash provided by (used in) operating activities (125,171) 511,403
INVESTING ACTIVITIES
Purchases of property, plant and equipment, including self-
constructed equipment (88,665) (562,506)
Other (14,161) (258,104)
----------------------------
Net cash used in investing activities (102,826) (820,610)
FINANCING ACTIVITIES
Proceeds from sale of common stock 3,199 2,868
Proceeds from other borrowings -- 2,000,000
Principal payments on other borrowings -- (30,000)
Principal payments on revolving line of credit and long-term debt (89,988) (1,408,079)
----------------------------
Net cash provided by (used in) financing activities (86,789) 564,789
Increase (decrease) in cash and equivalents during period (314,786) 255,582
Cash and equivalents at beginning of period 330,076 252,843
----------------------------
Cash and equivalents at end of period $ 15,290 $ 508,425
============================
</TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note A - Basis of Presentation The accompanying consolidated condensed
financial statements have been prepared in accordance with SEC requirements for
interim financial statements. They, therefore, do not include all of the
disclosures which are presented in the Datamarine International, Inc. ("the
Company") Annual Report on Form 10-K. It is suggested that the financial
statements be read in conjunction with the Consolidated Financial Statements
and notes thereto included in the Company's Annual Report on Form 10-K.
The information furnished reflects all adjustments (consisting only of normal
recurring adjustments) which are, in the opinion of management, necessary for
the fair statement of financial position, results of operations and cash flows
for the interim period. The year-end condensed balance sheet was derived from
audited financial statements, but does not include all disclosures required by
generally accepted accounting principles. The results of operations for the
periods presented are not necessarily indicative of the results to be expected
for the full year.
Net income per share is computed using the weighted average number of common
shares outstanding during the period, adjusted to reflect the assumed exercise
of outstanding stock options to the extent these had a dilutieve effect on the
corporation.
Note B - Inventory Components Inventories consisted of the following at:
<TABLE>
<CAPTION>
March 29, 1997 September 28, 1996 March 30, 1996
-------------- ------------------ --------------
<S> <C> <C> <C>
Finished Goods $ 1,327,686 $ 1,603,671 $ 1,100,244
Work-in-Process 967,384 96,887 479,889
Raw Material 2,750,054 3,530,147 2,487,373
---------------------------------------------------
$ 5,045,124 $ 5,230,705 $ 4,067,506
---------------------------------------------------
</TABLE>
Note C - Income Taxes Management believes that it is more likely than not that
all of the deferred tax asset will be realized. The amount of the deferred tax
asset considered realizable, however, could be reduced in the near term if
estimates of future taxable income during the carryforward period are reduced.
MANAGEMENT'S DISCUSSION AND ANALYSIS
QUARTER ENDED MARCH 29, 1997
The following table sets forth the components of sales and gross profit by
product line for the Quarter Ended March 29, 1997 and the comparable quarter in
the prior fiscal year.
<TABLE>
<CAPTION>
Sales Gross Profit
------------------------- -------------------------
March 29, March 30, March 29, March 30,
1997 1996 1997 1996
----------------------------------------------------------------------------------
<C> <C> <S> <C> <C>
$ 1,479,378 $ 2,075,813 Land Mobile Communications $ 244,740 $ 698,547
1,292,250 1,285,293 Marine Communications 532,008 654,735
614,451 602,268 Marine Instrumentation 195,986 274,102
----------------------------------------------------------------------------------
$ 3,386,079 $ 3,963,374 Total $ 972,734 $ 1,627,384
----------------------------------------------------------------------------------
</TABLE>
Sales order backlogs were as follows: Land Mobile Communications $484,000,
Marine Communications $252,000 and Marine Instrumentation $16,000.
<TABLE>
<CAPTION>
Income and expense items as a Percentage
percentage of net sales increase (decrease)
----------------------------- -------------------
1996 1995
March 29, March 30, to to
1997 1996 1997 1996
------------------------------------------------------------------------------------
<C> <C> <S> <C> <C>
100% 100% Net sales (15) 12
71 59 Cost of products sold 3 15
29 41 Gross profit (40) 7
40 35 Operating expenses (2) (7)
(11) 6 Operating income (loss) (250) n.m.
4 2 Other expense 44 95
(15) 4 Income (loss) before taxes (442) n.m.
(5) 2 Provision (benefit) for taxes (402) n.m.
(10)% 2% Net income (loss) (468) 713
</TABLE>
Net sales decreased by $577,295 or 15% compared to the same quarter in the
prior fiscal year. Net sales of the Company's land mobile products decreased by
$596,435 or 29% compared to the same quarter in the prior fiscal year. Net
sales of the Company's marine communications systems increased by $6,957 or 1%.
Net sales of the Company's marine instrumentation systems increased by $12,183
or 2%.
The overall sales decrease was due to the decline in the sale of land mobile
base station equipment compared to the same quarter of FY96. Management
attributes the decline in land mobile sales to the Federal Communication
Commission (FCC)'s failure to act with respect to the auction of 220 MHz radio
service licenses. Until such auction licenses are issued, the Company's sales
of base station equipment is almost non-existent. Sales of marine
communications and marine instrumentation products continued to contribute to
the Company's overall performance for the quarter and were consistent with
management's expectations.
Gross profit was $972,734 (29% of net sales), as compared to $1,627,384 (41%
of net sales) in the prior year, a decrease of $654,650 or 40%. The gross
profit on land mobile products was $244,740 (17% of such sales), as compared to
$698,547 (34% of such sales) in the prior year, a decrease of $453,807 or 65%.
The gross profit on marine communications systems was $532,008 (41% of such
sales), as compared to $654,735 (51% of such sales) in the prior year, a
decrease of $122,727 or 19%. The gross profit on marine instrumentation systems
was $195,986 (32% of such sales), as compared to $274,102 (46% of such sales)
in the prior year, a decrease of $78,116 or 28%. The decrease in overall gross
profit margin was due mostly to a greater portion of the Company's land mobile
sales coming from mobile radio products. Land mobile margins vary depending
upon the sales mix across the product line, and mobile radio products typically
have substantially lower gross margins than base station equipment. Profit
margins on marine communication and marine instrumentation products declined
due to a change in product sales mix.
Operating expenses were $1,351,320 (40% of net sales), as compared to
$1,375,663 (35% of net sales) last year, a decrease of $24,343 or 2%. Operating
costs declined as a result of lower selling expenses and ongoing cost control
programs, but comprised a greater percentage of sales due to the larger decline
in total revenues.
Other expenses increased to $143,238 as compared to $99,331 last year. The
increase is due to additional interest expense on increased bank borrowings,
and increased site management expenses related to Narrowband Network Systems.
On March 29, 1997, the Company's principal sources of liquidity consisted of
$15,290 in cash and equivalents and $750,000 in the unused portion of a bank
revolving line of credit. The bank line is secured by the Company's assets and
availability is subject to a borrowing base requirement. At March 29, 1997 the
Company's borrowing base calculation was not in compliance with certain terms
of the bank line and no additional borrowings could be made against the line.
The Company believes that its existing cash balances, line of credit and other
sources of financing will provide adequate flexibility to fund the Company's
operating needs and capital expenditures during the next twelve months.
Statements included in this report which are not historical in nature are
forward-looking statements made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. The Annual Report on Form
10-K and Quarterly Reports on Form 10-Q contain certain detailed factors that
could cause the Company's actual results to materially differ from
forward-looking statements made by the Company.
PART II - OTHER INFORMATION
Items 1,2,3,4, and 5
There were no reportable events or matters under these captions during the
quarter ended March 29, 1997.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits.
11. Computation of Earnings Per Share
27. Financial Data Schedule
(b) There were no reports on FORM 8-K filed during the quarter ended
March 29, 1997.
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.
Datamarine International, Inc.
(Registrant)
Date: February 23, 1998 /s/ JAN KALLSHIAN
----------------- ------------------------------
Jan Kallshian
Chief Financial Officer
EXHIBIT 11
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
---------------------- ----------------------
March 29, March 30, March 29, March 30,
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Primary
- - -------
Weighted Average Shares Outstanding 1,309,800 1,297,095 1,309,746 1,296,930
Dilutive Effect on Stock Options -- 260,056 -- 179,889
------------------------------------------------
Weighted Average Common and Equivalent
Shares Outstanding 1,309,800 1,557,151 1,309,746 1,476,819
================================================
Fully Diluted
- - -------------
Weighted Average Shares Outstanding 1,309,800 1,297,095 1,309,746 1,296,930
Dilutive Effect on Stock Options -- 266,228 -- 193,991
------------------------------------------------
Weighted Average Common and Equivalent
Shares Outstanding 1,309,800 1,563,323 1,309,746 1,490,921
================================================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-27-1997
<PERIOD-END> MAR-29-1997
<CASH> 15,290
<SECURITIES> 0
<RECEIVABLES> 3,126,703
<ALLOWANCES> 200,058
<INVENTORY> 5,045,124
<CURRENT-ASSETS> 8,552,169
<PP&E> 5,210,011
<DEPRECIATION> 3,039,854
<TOTAL-ASSETS> 11,942,901
<CURRENT-LIABILITIES> 4,122,382
<BONDS> 1,861,743
0
0
<COMMON> 13,110
<OTHER-SE> 5,945,666
<TOTAL-LIABILITY-AND-EQUITY> 11,942,901
<SALES> 6,209,156
<TOTAL-REVENUES> 6,209,156
<CGS> 4,212,946
<TOTAL-COSTS> 4,212,946
<OTHER-EXPENSES> 53,093
<LOSS-PROVISION> 32,797
<INTEREST-EXPENSE> 210,144
<INCOME-PRETAX> (905,202)
<INCOME-TAX> (305,242)
<INCOME-CONTINUING> (599,960)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (599,960)
<EPS-PRIMARY> (.46)
<EPS-DILUTED> (.46)
</TABLE>
