Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 23, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transaction period from to
Commission file number 0-9321
PRINTRONIX, INC.
(Exact name of registrant as specified in its charter)
Delaware 95-2903992
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
17500 Cartwright
P.O. Box 19559
Irvine, California 92713
(Address of principal executive offices) (Zip Code)
(714) 863-1900
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months, 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 of Common Stock Outstanding at October 21, 1994
$ .01 par value 3,238,862
<PAGE>
PRINTRONIX, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
------------------------------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Statement Regarding Financial Information . . . . . . . . . . . .(2)
Consolidated Balance Sheets
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . .(3)
Liabilities and Stockholders' Equity . . . . . . . . . . . .(4)
Consolidated Statements of Operations . . . . . . . . . . . . . .(5)
Consolidated Statements of Cash Flows . . . . . . . . . . . . . .(6)
Condensed Notes to Consolidated Financial Statements. . . . . . .(8)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . .(9)
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . (11)
Item 4. Submission of Matters to a Vote of Security Holders. . (11)
Item 5. Other Information. . . . . . . . . . . . . . . . . . . (12)
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13)
Index of Exhibits . . . . . . . . . . . . . . . . . . . . . . . . (14)
<PAGE>
FORM 10-Q
------------
PRINTRONIX, INC. AND SUBSIDIARIES
---------------------------------
FOR THE QUARTER ENDED SEPTEMBER 23, 1994
----------------------------------------
PART I. FINANCIAL INFORMATION
-------------------------------------------
Item 1. Financial Statements
---------------------------------
Statement Regarding Financial Information
---------------------------------------------------------
The financial statements included herein have been prepared by Printronix, Inc.
(the"Company"), without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information normally included in
the financial statements prepared in accordance with generally accepted
accounting principles has been omitted pursuant to such rules and regulations.
However, the Company believes that the disclosures are adequate to make
the information presented not misleading. It is suggested that the financial
statements be read in conjunction with the financial statements and notes
thereto included in the Company's annual report on Form 10-K for the fiscal
year ended March 25, 1994, as filed with the Securities and Exchange
Commission.
<PAGE>
<TABLE>
PRINTRONIX, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
---------------------------
Assets
(Amounts in thousands, except per share data)
<CAPTION>
September 24, March 25,
1994 1994
(Unaudited)
-------------------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents (Note 2) $3,001 $3,604
Accounts receivable, net of allowances
for doubtful accounts of
$ 761 as of September 23, 1994 and
$ 677 as of March 25, 1994 22,515 19,303
Inventories (Note 3)
Raw materials, subassemblies and
work in process 14,558 14,202
Finished goods 3,133 2,302
----------- -----------
17,691 16,504
Prepaid expenses 938 1,228
----------- -----------
TOTAL CURRENT ASSETS 44,145 40,639
----------- -----------
Property and Equipment, at cost:
Machinery and equipment 25,491 24,643
Furniture and fixtures 12,168 11,582
Leasehold improvements 3,218 3,173
----------- -----------
40,877 39,398
Less-Accumulated depreciation
and amortization (30,170) (28,395)
----------- -----------
10,707 11,003
----------- -----------
Other assets 337 274
----------- -----------
TOTAL ASSETS $55,189 $51,916
======= =======
</TABLE>
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<TABLE>
PRINTRONIX, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - continued
---------------------------
Liabilities and Stockholders' Equity
------------------------------------
<CAPTION>
Sept. 23, March 25,
1994 1994
(Unaudited)
-------------------- ---------------
<S> <C> <C>
CURRENT LIABILITIES:
Loans payable - 543
Current portion of long-term debt 373 2,458
Accounts payable 10,719 9,476
Accrued expenses:
Payroll and employee benefits 3,917 2,700
Restructuring expenses 596 732
Warranty 869 769
Other 939 821
Accrued income taxes 251 201
----------- -----------
TOTAL CURRENT LIABILITIES 17,664 17,700
----------- -----------
Long-Term Debt 67 256
Other long-term liabilities 1,594 1,594
STOCKHOLDERS' EQUITY:
Common stock, par value $0.01-
Authorized 12,000,000 shares,
issued and outstanding
3,209,062 and 3,098,437
shares as of September 23, 1994 and
March 25, 1994, respectively. 32 31
Additional paid-in capital 25,966 25,396
Retained earnings 9,866 6,939
----------- -----------
Total Stockholders' Equity 35,864 32,366
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $55,189 $51,916
======= =======
</TABLE>
<PAGE>
<TABLE>
PRINTRONIX, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
-------------------------------------
(Unaudited)
(Amounts in thousands, except share data)
<CAPTION>
Three Months Ended Six Months Ended
Sept. 23, Sept. 24, Sept. 23, Sept. 24,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
NET SALES $34,301 $24,499 $67,766 $48,689
COST OF SALES 25,456 18,538 50,267 36,170
--------------------------------- -----------
Gross Profit 8,845 5,961 17,499 12,519
OPERATING EXPENSES:
Engineering and development 3,116 2,428 5,838 4,989
Selling, general and
administration 4,045 3,400 8,232 6,839
--------------------------------- -----------
Total operating expenses 7,161 5,828 14,070 11,828
--------------------------------- -----------
INCOME FROM OPERATIONS 1,684 133 3,429 691
--------------------------------- -----------
Other expense, net 105 30 349 10
--------------------------------- -----------
INCOME BEFORE TAXES 1,579 103 3,080 681
Provision for income taxes 52 7 153 54
--------------------------------- -----------
NET INCOME $ 1,527 $ 96 $ 2,927 $ 627
======= ======= ======= =======
EARNINGS PER SHARE (note 4):
Primary $ .44 $ .03 $ .86 $ .20
Fully Diluted $ .44 $ .03 $ .84 $ .19
======== ======= ======= =======
WEIGHTED AVERAGE
SHARES OUTSTANDING (Note 4):
Primary 3,484,907 3,208,919 3,409,546 3,213,010
Fully Diluted 3,509,336 3,247,598 3,480,206 3,249,222
======== ======== ======== ========
</TABLE>
<PAGE>
<TABLE>
PRINTRONIX, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
-------------------------------------
For the Six Months Ended:
September 23, 1994 and September 24, 1993
- - -------------------------------------------------------------------------------
(Unaudited)
<CAPTION>
1994 1993
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,927 $627
Adjustments to reconcile net income to
net cash used by operating activities:
Depreciation and amortization 2,503 2,253
Changes in assets and liabilities:
Accounts receivable (3,212) (712)
Inventories (1,187) (1,020)
Accounts payable 1,243 (674)
Accrued income taxes 50 (73)
Payroll and employee benefits 1,217 (362)
Other current liabilities 82 (581)
Other current assets 290 (155)
Other (64) (58)
----------- -----------
Net cash provided (used) by operating
activities 3,849 (755)
----------- -----------
Cash flows from investing activities:
Investment in property and equipment (2,324) (2,738)
Disposition of office building - 766
Proceeds from disposition of equipment 118 76
----------- -----------
Net cash used in investing activities (2,206) (1,896)
----------- -----------
</TABLE>
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<TABLE>
PRINTRONIX, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows - continued
-------------------------------------
For the Six Months Ended:
September 23, 1994 and September 24, 1993
- - -------------------------------------------------------------------------------
(Unaudited)
<CAPTION>
1994 1993
<S> <C> <C>
Cash flows from financing activities:
(Decrease) / increase in loans payable (543) 823
Payment of short-term loan (2,100) -
Proceeds from issuance of common stock 571 -
Retirement of common stock - (24)
Payments against debt borrowings (174) (158)
----------- -----------
Net cash (used) provided by financing
activities (2,246) 641
----------- -----------
Decrease in cash and cash equivalents (603) (2,010)
----------- -----------
Cash and cash equivalents at
beginning of period 3,604 3,055
----------- -----------
Cash and cash equivalents at end of period $3,001 $1,045
======= =======
- - ---------------------------------------------------------------------
Supplementary disclosures of cash flow information:
Taxes paid $64 $12
Interest paid $16 $24
</TABLE>
<PAGE>
PRINTRONIX, INC. AND SUBSIDIARIES
Condensed Notes to Consolidated Financial Statements
-----------------------------------------------
SEPTEMBER 23, 1994
-------------------------
(Unaudited)
1) Management Opinion
In the opinion of management, the consolidated financial statements reflect
all adjustments (which include only normal recurring adjustments) necessary
to present fairly the financial position and results of operations as of
and for the periods presented.
2) Cash and Cash Equivalents
The Company considers all highly liquid temporary cash investments with
maturities of three months or less to be cash equivalents. The effect of
exchange rate changes on cash balances held in foreign currencies was not
material for the periods presented.
3) Inventories
Inventories are priced at the lower of cost (FIFO) or market and include
the cost of material, labor and manufacturing overhead.
4) Earnings per Share
The number of shares used in computing earnings per share equals the total
of the weighted average number of shares outstanding during the periods
presented plus common stock equivalents relating to options. Common stock
equivalents relating to options represent additional shares which may be
issued in connection with their exercise, reduced by the number of shares
which could be repurchased with the proceeds at the average market price
per share computed on a quarterly basis during the year. The following
table shows the calculation for primary and fully diluted shares
outstanding:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
Sept. 23, Sept. 24, Sept. 23, Sept. 24,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Weighted avg. shares
outstanding 3,171,406 3,083,955 3,138,630 3,084,712
Common stock equivalents:
Options - Primary 313,501 124,964 270,916 128,298
Options - Fully Diluted 337,930 163,643 341,576 164,510
Shares outstanding:
Primary 3,484,907 3,208,919 3,409,546 3,213,010
Fully Diluted 3,509,336 3,247,598 3,480,206 3,249,222
</TABLE>
<PAGE>
PRINTRONIX, INC. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
-------------------------------------------
Reference is made to the Company's annual report on Form 10-K for the fiscal
year ended March 25, 1994 for a detailed discussion and analysis of the
Company's financial condition and results of operations for the periods
covered by that report.
RESULTS OF OPERATIONS
Revenues and Backlog
For the quarter ended September 23, 1994, sales were up 3% over last quarter
and were 40% higher over the year-ago quarter. For the first six months of
the fiscal year sales increased by 39% over the first six months of the prior
fiscal year. Higher sales of line matrix products to a larger base of OEM
customers was the primary contributor to revenue growth for these periods.
Year-to-date revenue from the Company's largest three OEM customers is up
approximately $8.8 million over the same period of the preceding fiscal year.
Sales of mature line matrix products which were expected to fall as newer
line matrix products were introduced have not declined as fast as anticipated
and helped to contribute to strong sales performance for the second fiscal
quarter. Further additions to sales were achieved through continued growth in
the Company's consumables products which have increased by $2.1 million in
the first six months of the current fiscal year compared to the first six
months of last year. Order backlog at quarter-end was $15.4 million compared
to $12.9 million at the end of the year-ago quarter and $10.7 million at the
end of last quarter. The higher backlog reflects higher levels of business
activity along with increased levels of OEM business.
Gross Profit
Gross profit as a percentage of revenue in the second quarter was flat with
the prior quarter at 26% and higher than the 24% in the year-ago quarter. For
the first six months of the fiscal year the gross profit percentage was flat
with the first six months of the prior year at 26%. Product costs have
gradually been declining as the Company has vigorously pursued cost
reductions from vendors in order to attain lower product material costs.
In addition, labor savings have been achieved through reductions in the
amount of time necessary to build certain impact printers.Furthermore, the
consolidation of the Company's printer subassembly and assembly operations,
in the previous fiscal year, into a single production facility helped to
achieve manufacturing overhead efficiencies including reduced rent and
utility costs. These various improvements to gross profit have been offset
mainly from shifts in the sales product mix from higher margin sales
to both lower margin consumable products and other lower margin sales.
<PAGE>
Operating and Other Expenses and Taxes
Engineering spending in the quarter was up approximately 28% over the
year-ago quarter and up 14% over last quarter. Year-to-date engineering
expenses increased $0.8 million or 17% over prior year levels to accommodate
additional customer support requirements resulting from a 40% increase in
sales over the same period. In addition, the Company continues to provide
the necessary engineering investment at a level above industry average to
maintain a future stream of new impact and non-impact products. Engineering
expense as a percentage of revenue at 9% in the latest quarter reflects this
commitment which is down only slightly from 10% of revenues in the year-ago
quarter.
Selling, general and administrative expenses have increased 19% over the
prior year quarter as selling expenses have increased to support the growth
in unit sales and added customer services needs. However, operating expenses
were down 3% over the prior quarter, as last quarter's results reflected
higher than usual charges related to a writeoff of miscellaneous computer
equipment. Selling, general and administrative expenses as a percentage of
revenues were 12% compared to 14% in the prior year quarter.
The major component of other expense continued to be a significant weakening
of the U.S. dollar against European currencies and the Singapore dollar,
which resulted in a loss of $0.4 million for the first six months of fiscal
1995 compared with a loss of $5,000 for the first six months of fiscal 1994.
Additional taxes were booked for expected higher foreign income tax
liabilities. However, no additional Federal liability is required due to
the Company's current net operating loss carryforward.
LIQUIDITY AND CAPITAL RESOURCES
The Company's balance sheet remains strong. Continued profitability together
with a reduction in inventory and increased payables helped grow the
Company's cash balance to $3.0 million from $1.3 million last quarter. The
Company's current ratio remained stable with last quarter at 2.5.
During the quarter, the Company formed a new banking relationship with Wells
Fargo Bank replacing the one with Silicon Valley Bank. This relationship
provides for an unsecured line of credit in the amount of $7.5 million. It
carries a two year term, and provides for an interest rate of the Bank's
prime rate plus 1/4 percent. At September 23, 1994, there were no borrowings
against this line.
Investment in capital equipment was $1.3 million compared with $1.0 million
for the prior quarter and $1.7 million in the prior year quarter.
Expenditures during the quarter consisted mainly of tooling for new impact
products along with upgrades of computer equipment and workstations
throughout the Company. The Company anticipates similar levels of capital
expenditures over the next few quarters.
The Company believes that its internally-generated funds, together with
available financing, will be adequate in providing its working capital
requirements, capital expenditures, and engineering development needs
through the current fiscal year.
<PAGE>
PRINTRONIX, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
---------------------------------------
Item 1. Legal Proceedings
-----------------
See "Item 3. Legal Proceedings" reported in Part I of the Company's Report
on Form 10K for the fiscal year ended March 25, 1994.
Item 4. Submission of Matters to a Vote of Security Holders
-------------------------------------------
The annual meeting of stockholders of the Company was held on August 16,
1994, at which five persons, constituting the entire board of directors, were
elected to serve until the next annual meeting of stockholders. The names of
the persons elected as directors are as follows:
Shares for Shares Withheld
Bruce T. Coleman 2,623,272 265,631
John R. Dougery 2,624,872 264,031
Ralph Gabai 2,624,872 264,031
Erwin A. Kelen 2,624,872 264,031
Robert A. Kleist 2,624,172 264,731
At the annual meeting the stockholders also voted upon and approved the
following matters:
1. An amendment to certain stock option agreements under the 1984 Stock
Incentive Plan.
For Against Abstain Broker Non-Vote
2,360,461 393,937 19,030 115,475
2. Adoption of the 1994 Stock Incentive Plan which authorizes the sale of not
more than 500,000 shares of Common Stock pursuant to either incentive
stock options, nonqualified stock options or restricted stock purchase
agreements.
For Against Abstain Broker Non-Vote
1,676,366 650,767 21,014 540,756
<PAGE>
PRINTRONIX, INC. AND SUBSIDIARIES
Item 5. Other Information
-------------------------------------------
The Company is party to restricted stock purchase agreements with certain of
its officers pursuant to which those officers purchased stock from the
Company at a discount to the market price. These agreements each provide for
a right of repurchase by the Company. The right of repurchase lapses as to a
portion of the shares in each fiscal year in which a certain performance
criterion is met. The lapse of the repurchase right means that such portion
of the shares becomes vested. In recognition of the officers' services to the
Company and the Company's improved performance in the first six months of
fiscal year 1995, effective October 4, 1994 the Company and those officers
each entered into agreements amending such restricted stock purchase
agreements by terminating the Company's right to repurchase the portion of
those shares in respect to fiscal year 1995, thus causing that portion of
shares to become vested.
<PAGE>
PRINTRONIX, INC. AND SUBSIDIARIES
Signatures
-------------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PRINTRONIX, INC.
(Registrant)
Date: November 4, 1994 By: GEORGE L. HARWOOD
George L. Harwood
Sr. Vice-President, Finance,
Chief Financial Officer, and
Secretary
(Principal Financial Officer
and Duly Authorized Officer)
<PAGE>
INDEX OF EXHIBITS
Exhibit Number Description
- - -------------- -----------
10.1 Form of Amendment to Restricted Stock
Purchase Agreement as used between the
Company and those officers who are
parties to Restricted Stock Purchase
Agreements.
<PAGE>
AMENDMENT TO RESTRICTED STOCK PURCHASE AGREEMENT
------------------------------------------------
This Agreement is made as of October 4, 1994 by and between Printronix,
Inc., a Delaware Corporation ("Printronix" or the "Company"), and
__________________________________________ ("Officer").
RECITALS
A. Officer is party to a Restricted Stock Purchase Agreement with
Printronix.
B. In accordance with that agreement, 25% of the shares (the "Shares")
owned by Officer are subject to a repurchase right by Printronix if certain
performance criteria is not met for fiscal year 1995.
C. In recognition of Officer's services to Printronix and the
performance of the Company in the first six months of fiscal year 1995,
Printronix wishes to relinquish its potential right to repurchase the
Shares for fiscal year 1995.
AGREEMENT
NOW, THEREFORE, the parties hereto agree as follows:
1. The potential right of Printronix to repurchase the Shares in
respect to fiscal year 1995 hereby lapses. Officer shall, as of the date
hereof, have the full right of ownership of the Shares.
2. Except as expressly modified herein, the Restricted Stock Purchase
Agreement shall remain in full force and effect.
PRINTRONIX, INC.
By_____________________________
OFFICER
_______________________________
EXHIBIT 10.1
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-25-1994
<PERIOD-END> SEP-23-1994
<CASH> 3001
<SECURITIES> 0
<RECEIVABLES> 22515
<ALLOWANCES> 761
<INVENTORY> 17691
<CURRENT-ASSETS> 44145
<PP&E> 40877
<DEPRECIATION> 30170
<TOTAL-ASSETS> 55189
<CURRENT-LIABILITIES> 17664
<BONDS> 0
<COMMON> 32
0
0
<OTHER-SE> 35832
<TOTAL-LIABILITY-AND-EQUITY> 55189
<SALES> 67766
<TOTAL-REVENUES> 67766
<CGS> 50267
<TOTAL-COSTS> 14070
<OTHER-EXPENSES> 349
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3080
<INCOME-TAX> 153
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2927
<EPS-PRIMARY> .44
<EPS-DILUTED> .44
</TABLE>
