<PAGE> 1
===============================================================================
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended March 31, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition 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 Identification No.)
Incorporation or Organization)
17500 CARTWRIGHT ROAD 92713
P.O. BOX 19559, IRVINE, CALIFORNIA (Zip Code)
(Address of Principal Executive Offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (714) 863-1900
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, PAR VALUE $.01,
INCLUDING COMMON SHARE PURCHASE RIGHTS
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 by check mark(X) if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. /X/
On May 12, 1995, there were 5,016,710 shares of the Registrant's Common
Stock outstanding. The aggregate market value of the Common Stock (based upon
the closing price of $ 23.13 per share in the over-the-counter market on May 12,
1995) held by non-affiliates of the Registrant was approximately $88,329,654.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Stockholders for the
fiscal year ended March 31, 1995 are incorporated by reference into Parts I, II
and IV of this report.
Portions of the Registrant's Proxy Statement for the Annual Meeting of
Stockholders to be held on August 15, 1995 are incorporated by reference into
Part III of this report.
===============================================================================
<PAGE> 2
PART I
ITEM 1. BUSINESS
Certain geographic information for Item 1 is contained in the Company's
1995 Annual Report to Stockholders on page 16, which information is incorporated
herein by reference (and except for that page, the Company's Annual Report to
Stockholders for the fiscal year ended March 31, 1995 is not deemed filed as
part of this report).
GENERAL
Printronix, Inc. designs, manufactures, and markets medium and high
speed printers which support a wide range of computer systems and software
platforms. Printronix printers produce "hard copy" through the application of
impact printing and non-impact printing technologies. The Company's product line
is designed primarily for business and industrial applications, quickly and
reliably producing every type of printed computer output, from reports and
graphics to bar code labels. The Company also produces and markets the
Intelligent Graphics Printing which resides in the printer, enabling it to
produce bar codes, forms, and logos.
Printronix, Inc. was incorporated in California in 1974 and was
reincorporated in Delaware in December 1986. Unless the context otherwise
requires, the terms "Company" and "Printronix" refer to Printronix, Inc. and its
consolidated subsidiaries.
COMPUTER PRINTERS
Computer printers are output devices that use electromechanical
techniques to convert digitized information sent from a host computer to printed
form. The printed output produced can then be read by humans and/or machines,
depending upon the format of the output. Such devices can print on paper and
other substances, such as card stock or mylar, by means of impact or non-impact
technologies.
Impact printers are generally classified as being either text or
graphics printers and as either serial or line printers. Text printers generally
print a predetermined set of fully formed characters. Graphics printers, also
referred to as All Points Addressable (APA), can place dots anywhere on the
paper and are used for text and graphics applications. Serial printers print one
character at a time and line printers print one line at a time. Most serial
printers produced today are serial matrix printers, which use serial graphics
technology to print text one character at a time. Higher speed line printers,
that also print fully formed characters, use high speed mechanical devices, such
as metal bands, upon which alphanumeric characters are embossed. With these
devices, a hammer presses the paper and ribbon against the proper character when
the band moves past the appropriate print location. Band printers and line
matrix printers are examples of line printers.
Matrix printers form characters by printing dots in combinations of
patterns. Most manufacturers who use the matrix technique produce serial matrix
printers, which create characters one at a time in horizontal sweeps across the
page. Printronix manufactures line matrix printers. The Company's line matrix
printers print a complete line of dots at a time, thus combining the flexibility
of the matrix technique with the reliability and durability of a line printer.
Non-impact printers print on paper by means of thermal, electrostatic,
inkjet, laser, LED, and other techniques that deliver high resolution printed
output for letter quality and graphics applications.
TECHNOLOGY
The current Printronix product line encompasses impact line matrix
printers, and three non-impact printer technologies: laser printers, LED
printers, and thermal printers. The Company's line matrix printers are designed
for heavy duty cycle, medium and high speed printing and plotting; Printronix
laser, LED and thermal printers offer medium speed, high quality text and
graphics printing.
Printronix line matrix printers electromechanically create an image
on paper in a manner similar to the "raster scan" method by which a television
creates a picture on its screen. The printers utilize small leaf-spring ham-
-2-
<PAGE> 3
mers and electromagnetic coils combined in a row or "bank" of hammers. When at
rest, the hammers are held retracted by a permanent magnet; this "stored energy"
is selectively released by electrical pulses passing through the coils.
Printronix line matrix printer models operate between 200 and 1200 lines
per minute as summarized below. Printing is accomplished as the hammer bank
shuttles a small distance back and forth, enabling the hammers to place dots
anywhere along a row across the paper. Successive dot rows are produced by the
paper advancing while the hammer bank reverses for printing the next dot row.
Dots overlap horizontally and vertically to produce graphics as well as
alphanumeric characters.
<TABLE>
<CAPTION>
Model Speed (LPM) Hammers Hammer Speed
(Impacts per Second)
- ----------------------------------------------------------------------
<S> <C> <C> <C>
MVP Series 200 22 1350
- ----------------------------------------------------------------------
P3000 Series 400 34 1292
- ----------------------------------------------------------------------
P6040/P6240 400 44 1000
- ----------------------------------------------------------------------
P6080/P6280 800 66 1400
- ----------------------------------------------------------------------
P4000 Series 800 47 2700
- ----------------------------------------------------------------------
P9000 Series 1200 88 1800
- ----------------------------------------------------------------------
</TABLE>
The dot placement of Printronix line matrix printers is very precise,
permitting accurate character alignment. The combination of precise dot
placement anywhere on the page and the use of overlapping dots rather than fully
formed characters enables Printronix printers, under computer control, to
produce graphic output. Another key feature of the line matrix technology is
that hammer energy is optimized to print dots only, resulting in improved print
quality on multi-part forms.
The Company's non-impact page printers create images on paper
electrographically. Laser printers direct a laser beam onto a drum by means of a
rotating mirror; LED array printers use fixed, light emitting diodes (LEDs) to
image each dot position onto a belt. Both processes are facilitated by an
electronic controller which provides intelligence to the printer by converting
data sent from the host computer system into a raster image. The image is
subsequently fixed to the paper with toner in the same manner as copiers. The
intelligent controllers that are designed by the Company are integrated with
print engines purchased from outside suppliers.
<TABLE>
<CAPTION>
MODEL PAPER TECHNOLOGY SPEED
(PAGES PER MINUTE)
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
L1016 A-Size Continuous Form Laser 16 PPM
- ----------------------------------------------------------------------------
L1024 A-Size Continuous Form Laser 24 PPM
- ----------------------------------------------------------------------------
T1006 6.3 Inch Label Thermal 6 inches per second
- ----------------------------------------------------------------------------
L5031 13.6 Inch Continuous LED 31 PPM
Form and B-Size Cut
Sheet
- ----------------------------------------------------------------------------
</TABLE>
The Company's thermal printer creates an image on paper by heating
thermal sensitive media. The image is created either by heating an ink based
ribbon which transfers its ink to the paper label material or by heating paper
label material in which the thermally sensitive ink is already impregnated. This
type of printer is especially useful in "on-demand" label applications. As in
the case of the Company's other non-impact printers, this process is facilitated
by an electronic controller which provides intelligence to the printer by
converting data sent from the host computer system into a raster image. The same
intelligent controllers, designed by the Company and also used on its page
printers, are integrated with a print engine purchased from an outside supplier.
-3-
<PAGE> 4
PRODUCTS
Line matrix printer models include the P4000 Series with speeds up to
800 lines per minute; the P9000 Series with speeds up to 1200 lines per minute;
the P6000L Series with speeds up to 800 lines per minute; the P3000 Series with
speeds up to 400 lines per minute; and the MVP Series with speeds up to 200
lines per minute. Applications for line matrix printers include reports,
multi-part forms, electronic forms generation, bar code labels and program
listings.
The L5031 Multifunction Page Printer is an LED Printer that prints
continuous forms at 31 pages per minute, A-Size, and cut sheet applications at
25 pages per minute. The L5031 has a unique Xenon flash fusing process which
produces output of exceptionally high quality. It can handle continuous forms up
to 12" x 16" and cut sheet stock up to 11" x 17" and has a duty cycle of 200,000
pages per month. The LED array imaging of the L5031 provides precise 300x300
dot-per-inch resolution. Both 400x400 or 240x240 dot-per-inch resolutions are
available as options.
The L1016 Continuous Form Laser Printer combines 300 x 300 dot-per-inch
resolution with the convenience and data integrity of continuous form operation.
Printing at 16 pages per minute, the L1016 supports a variety of emulations,
including bar code label, text and forms applications. A built-in disk drive
makes it easy to load emulations, fonts, and upgrades. The L1024 is a 24 page
per minute version.
The T1006 Thermal Printer operates at a speed of 6 inches per second,
has a resolution of 203 dots-per-inch, and has a wide throat design to
accommodate media up to 6.7 inches wide. Supporting both direct thermal and
thermal transfer printing, the T1006 can print in either batch or on-demand
mode. The T1006 serves a wide variety of label printing needs. A built-in disk
drive makes it easy to load emulations, fonts, and upgrades.
All of the Company's printers are supported by the Intelligent Graphics
Printing (IGP trademark) Series. This graphics productivity tool enables users
to generate on-line forms, bar codes, logos, expanded/compressed text, and
reversed and rotated print. IGPs are available with either Printronix Graphics
Language or QMS Code V trademark protocols.
MARKETING AND CUSTOMERS
The market for the Company's products is related to the market for
computer systems. Printronix printers are marketed worldwide directly to
original equipment manufacturers (OEMs) and to end users through a network of
full-service distributors and resellers.
The Company's 10 largest customers accounted for an aggregate of
approximately 66, 57, and 51 percent of net sales during the fiscal years ended
March 1995, 1994, and 1993, respectively. During fiscal 1995, the Company sold
its products to OEMs and full-service distributors/resellers, which accounted
for approximately 47 percent and 48 percent of net sales, respectively. In
addition, the Company sold consumables to end users, accounting for
approximately 5 percent of fiscal 1995 net sales.
In fiscal 1995, the Company had two customers which individually
represented greater than 10 percent of consolidated net sales. Sales to the
largest customer, IBM, represented 28.8 percent and 10.7 percent of net sales
for fiscal years 1995 and 1994, respectively. No sales were made to the largest
customer in fiscal 1993. On a geographic basis, fiscal 1995 sales to the largest
customer represented 30.2 percent of domestic net sales and 26.6 percent of
international net sales. A significant decline in sales to our largest customer
could have an adverse effect on the Company's operations. Sales to the second
largest customer represented 10.5 percent, 14.6 percent and 13.7 percent of
consolidated net sales for fiscal years 1995, 1994, and 1993, respectively.
-4-
<PAGE> 5
COMPETITION
The Company has a wide range of printers that compete in the overall
market for medium and high speed computer printers. The overall market includes
serial, line matrix, band and non-impact printers. This overall market includes
a large captive market which consists of computer systems manufacturers that
produce their own printers and in the past have not bought from independent
printer manufacturers. Due to the increasing competitive nature and the level
of investment now required for ongoing printer development, more of these OEMs
are now either buying or considering buying from independent manufacturers.
The Company competes on a direct basis with several companies of varying sizes,
including some of the largest businesses in the United States and Japan, in
the non-captive market. Competing products include high end serial printers,
medium and high speed line printers, laser printers, thermal printers, and
other non-impact technologies.
Competitive factors in the Company's markets include reliability,
durability, price, print quality, versatility of special performance features,
and after sales support. The Company believes that its printers are highly
competitive with regard to price/performance and cost of ownership, and that the
Company rates highly in after sales support.
The Company has periodically evaluated other printing technologies and
intends to continue to do so. Introduction of products with superior performance
or substantially lower prices could adversely affect the Company's business.
ORDER BACKLOG
The Company's order backlog at March 31, 1995 was approximately
$17,559,000, compared with approximately $18,533,000 at March 25, 1994 and
$11,258,000 at March 24, 1993. During fiscal 1995, the Company's improved
product availability, achieved through reductions in the required time to build
printers and faster response time on customer orders, resulted in a decline in
the customers' lead time on product orders. The order backlog represents orders
for which a delivery date within six months has been specified by the customer
and the Company expects to ship within six months.
RAW MATERIALS
The Company purchases basic mechanical and standard electronic
components from numerous outside vendors. Most of those components used in the
Company's impact printers are immediately available from alternate sources. The
Company also purchases certain components from sole sources and has no reason to
believe that it will be unable to obtain those components. However, if the
Company were to lose any sole source for a component there could be a delay in
shipment of printers using those components until an alternate source begins
production. The Company's non-impact printer products are designed to use
specific print engines manufactured by outside vendors. The Company has entered
into written purchase agreements for each of the printer engines and has no
reason to believe that it will be unable to obtain the engines it requires.
ENGINEERING AND DEVELOPMENT
The Company operates in an industry which is subject to rapid
technological change, and its ability to compete successfully depends upon,
among other things, its ability to react to change. Accordingly, the Company is
committed to the development of new products. During fiscal 1995, 1994, and
1993, its engineering and development expenditures incurred were approximately
$12,666,000, $10,201,000, and $10,186,000, respectively. Substantially all
expenditures were Company sponsored. A substantial portion of engineering and
development expenditures were associated with the continued development of lower
cost line matrix printers, software and hardware development of the Printronix
System Architecture for both non-impact printers and line matrix printers.
New products under development in fiscal 1995 included the following:
(1) higher performance and lower cost fourth generation (P4200) line matrix
printers with twinax, coax, and IPDS emulation capabilities; (2) customized
versions of standard model printers for major OEM customers; and (3) non-impact
printers including the L1024 and the L5031 with IBM, IPDS, IGP, and HP PCL 5
emulation capabilities.
-5-
<PAGE> 6
PATENTS AND LICENSES
The Company has been issued 40 United States patents, and related
foreign patents (primarily in Canada, the United Kingdom, France and Germany)
associated with various aspects of its printers. None of these patents will
expire before 1996. The Company believes that its patented line dot matrix
printing technology has competitive value and intends to continue its practice
of enforcing its patent rights against potential infringers where it deems
appropriate. Although there can be no assurance that the Company will be
successful in defending its rights to any of its patents, the Company believes
that its patents are valid.
The Company has no material licenses from others pertaining to the
manufacture of its products, including those under development, and believes
that none are currently required. The Company believes that, based on industry
practice, any such licenses as might be required in the future could be obtained
on terms which would not have a material effect on it. However, the Company does
have licenses for the use of IPDS, POSTSCRIPT and PCL5 graphic languages.
The Company previously entered into a limited number of agreements
granting others certain rights to manufacture printers using one or more of the
Company's patents. The final agreement expired in March 1993 and the Company did
not earn any royalty income in fiscal 1995 or 1994.
IGP is a trademark of Printronix, Inc. PCL 5 is a trademark of Hewlett-Packard
Corporation. IPDS is a registered trademark of International Business Machines
Corporation. Code V is a trademark of QMS, Inc.
EMPLOYEES
The Company had approximately 880 employees as of March 31, 1995
including 486 in the United States, 342 in Singapore and 52 in Europe.
None of the Company's employees in North America or Singapore is subject
to a collective bargaining agreement. Printronix Nederland BV is a member of the
Employers Union F.M.E., and some of its 41 employees have elected to become
members of an employee union. This employee union is not government sponsored
and is supported by contributions from its members. The Company believes that
its relationship with its employees is good.
FOREIGN OPERATIONS
The Company has manufacturing facilities in Singapore, wherein line
matrix printer products and some printed circuit board assemblies are produced.
In The Netherlands, the Company has a facility that provides assembly of
selected models of impact and non-impact printers, product support and customer
service, and product distribution. Foreign sales, including exports from the
United States, represented approximately 38 percent, 38 percent, and 35 percent
of the Company's total sales in fiscal years 1995, 1994, and 1993, respectively.
The Company has sales offices within Germany, France, the United Kingdom and
Singapore. The Company is not aware of any significant risks with respect to its
foreign business other than those inherent in the competitive nature of the
business and fluctuations in foreign currency exchange rates. Selected financial
information regarding foreign and export sales by geographic area is set forth
in Note 4 of Notes to Consolidated Financial Statements.
ITEM 2. PROPERTIES
The Company's executive, manufacturing, engineering, administrative and
marketing offices are located in a total of approximately 169,000 square feet of
leased facilities in Irvine, California.
The Company's foreign operations are located in The Netherlands and
Singapore in leased facilities of 41,000 and 79,000 square feet, respectively.
The Company also leases several small offices, generally on short-term leases,
throughout the United States and Europe for sales or service. The Company has
certain idle facilities of approximately 7,500 square feet in The Netherlands.
See Note 2 of Notes to Consolidated Financial Statements for a summary of the
expiration dates and lease or rental commitments.
-6-
<PAGE> 7
ITEM 3. LEGAL PROCEEDINGS
ENVIRONMENTAL ASSESSMENT
In January 1994, the Company was notified by the California Regional
Water Quality Control Board - Santa Ana Region (the "Board") that groundwater
monitoring reports indicate that the groundwater under one of the Company's
former production plants is contaminated with various chlorinated volatile
organic compounds (VOCs).
Evidence adduced from site studies undertaken to date indicate that
compounds containing the VOCs were not used by the Company during its tenancy,
but were used by the prior tenant during its long-term occupancy of the site.
The tests also indicate that the composition of the soil is such that off-site
migration of contamination is very slow and contamination is most likely
confined to the site. Accordingly, the Board is presently devoting its attention
to the predecessor occupant of the site. Investigation indicates that the prior
occupant is a well established business enterprise which has substantial assets
and is affiliated with a publicly traded company.
Because of the focus of the Board's investigation, there are no further
orders outstanding against the Company. Therefore, there are no recurring costs,
capital expenditures or other mandated expenditures. As of March 31, 1995, the
Company has reserved $214,000 which is expected to be more than adequate to
cover further legal fees or any additional expenses related to environmental
tests, which could be requested by the Board, at the site. To date, the Company
has incurred only minimal expense in its initial response to the Board's request
for information and for environmental testing. However, the Company could be
subject to charges related to remediation of the site. These charges on a
preliminary (and very general) basis, could be estimated as follows:
Remediation involves a two-step procedure. The first step would include
the installation of a soil vapor extraction system. The cost of installation
could range from $50,000 to $100,000. There would also be annual operating costs
of up to $50,000 for a period of several years. The second step would be the
installation of a pump and water treatment system to cleanse the groundwater.
The cost of installation would range from $100,000 to $200,000. The annual
operating costs would range up to $100,000 for a period which cannot now be
ascertained.
The Company is convinced that it bears no responsibility for any
contamination at the site and intends to vigorously defend any action which
might be brought against it in respect thereto. Furthermore, the Company
believes it has adequately accrued for any future expenditures in connection
with further legal fees or additional environmental tests that could be
requested by the Board at the site, and that such expenditures will not have a
materially adverse effect on its financial condition or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company did not submit any matter during the fourth quarter of the
fiscal year covered by this report to a vote of security holders, through the
solicitation of proxies or otherwise.
-7-
<PAGE> 8
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company and their ages as of May 12, 1995
are as follows:
<TABLE>
<S> <C> <C>
Robert A. Kleist 66 President, Chief Executive Officer
and Director
J. Edward Belt, Ph.D. 61 Senior Vice President, Engineering, Chief
Technical Officer, and Assistant Corporate
Secretary
George L. Harwood 50 Senior Vice President, Finance and Management
Information Systems, Chief Financial Officer,
and Corporate Secretary
C. Victor Fitzsimmons 47 Senior Vice President, Worldwide Manufacturing
Richard A. Steele 50 Senior Vice President, Sales and Marketing
</TABLE>
Officers are appointed by and hold office at the pleasure of the Board
of Directors.
Mr. Kleist is one of the founders of the Company and has served as a
director and its President and Chief Executive Officer since its formation in
1974. In addition, Mr. Kleist served as Chief Financial Officer from February
1987 to October 1988, a position he also held from August 1985 until January
1986. Mr. Kleist is a director of Seagate Technology, a manufacturer of computer
memory disk drives.
Dr. Belt joined the Company in December 1985 as Vice President,
Engineering, Line Matrix Division. In February 1987, he was appointed Senior
Vice President, Engineering and Chief Technical Officer. Dr. Belt was appointed
to the additional position of Assistant Corporate Secretary in August 1989. From
October 1984 to December 1985, Dr. Belt was Manager of Engineering, Large
Communication Systems Division of Rolm Corp. From December 1979 to October 1984,
he was Manager of Engineering, Schlumberger Sentry. In prior years, Dr. Belt has
held engineering management positions at General Electric Co. and Pertec
Computer Corp. He was also a founder and Engineering Vice President of Courier
Terminal Systems in 1969.
Mr. Harwood joined the Company in October 1988 as Senior Vice President,
Finance and Chief Financial Officer. Mr. Harwood was appointed to the additional
office of Corporate Secretary in January 1989. In October 1994, Mr. Harwood
assumed responsibility for the Company's Management Information Systems. From
December 1984 to October 1988, Mr. Harwood was Chief Financial Officer and Vice
President, Finance at Qume Corporation. From December 1982 to December 1984, Mr.
Harwood was Group Controller of ITT Automotive Products, Worldwide. In prior
years, Mr. Harwood has held various senior financial positions at ITT in
Brussels, London and Zambia. Mr. Harwood is a Fellow of the Institute of
Chartered Accountants in England and has had seven years of public accounting
experience, primarily at Price Waterhouse.
Mr. Fitzsimmons joined the Company in September 1985 as Director of
Management Information Systems. In December 1988, he was appointed Vice
President, Management Information Systems. In May 1990, Mr. Fitzsimmons assumed
responsibility for Printronix B.V., the Company's Netherlands subsidiary. Mr.
Fitzsimmons was appointed to the additional office of Vice President, Irvine
Manufacturing in October 1990. In July 1991, he assumed responsibility for
Printronix A.G., the Company's Singapore subsidiary. From May 1992 to October
1994 Mr. Fitzsimmons was Senior Vice President, Manufacturing and Management
Information Systems. In October 1994, he was appointed Senior Vice President,
Worldwide Manufacturing. From September 1979 to September 1985, Mr. Fitzsimmons
held various senior MIS positions at Magnavox Government and Industrial
Electronics Company.
Mr. Steele joined the Company in July 1991 as Senior Vice President,
Sales and Marketing. From May 1990 to June 1991, Mr. Steele was Senior Vice
President, Sales and Marketing at DataWare. From May 1989 to May 1990, Mr.
Steele was Vice President, Sales and Marketing at Talaris. From April 1972 to
January 1987, Mr. Steele held various positions including District Sales
Manager, National Sales Manager and Vice President, Sales and Marketing
-8-
<PAGE> 9
at Datagraphix. In January 1987, Datagraphix became Anacomp, Inc. and Mr. Steele
was appointed Senior Vice President, Sales and Marketing, a position he held
until October 1988. In prior years, Mr. Steele held various positions in sales
management and systems engineering at IBM.
PART II
Information for Items 5, 6, 7 and 8 is contained in the Company's 1995
Annual Report to Stockholders on the following pages, which information is
incorporated herein by reference (and except for these pages, the Company's
Annual Report to Stockholders for the fiscal year ended March 31, 1995 is not
deemed filed as part of this report):
<TABLE>
<CAPTION>
ANNUAL REPORT TO
STOCKHOLDERS
ITEM NO. TITLE PAGE REFERENCE
- -------- ----- --------------
<S> <C> <C>
Item 5. Market for Registrant's Common Equity 15, 20
and Related Stockholder Matters
Item 6. Selected Financial Data 1
Item 7. Management's Discussion and Analysis 9-10
of Financial Condition and Results of
Operations
Item 8. Financial Statements and Supplementary Data 11-21
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
NONE
PART III
Information required under Item 10 "Directors and Executive Officers of
the Registrant" (except for certain information concerning the Executive
Officers provided in Part I of this report), Item 11 "Executive Compensation,"
Item 12 "Security Ownership of Certain Beneficial Owners and Management," and
Item 13 "Certain Relationships and Related Transactions" has been omitted from
this report. Such information is hereby incorporated by reference from
Printronix' Proxy Statement for its Annual Meeting of Stockholders to be held on
August 15, 1995, which the Company intends to file with the Securities and
Exchange Commission not later than July 11 , 1995.
-9-
<PAGE> 10
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Index to Financial Statements
<TABLE>
<CAPTION>
*Page in
Annual Report
-------------
<S> <C> <C>
1. Financial Statements included in Part II of this report:
Report of Independent Public Accountants 20
Consolidated Balance Sheets as of March 31, 1995 and
March 25, 1994 11
Consolidated Statements of Operations for Each of the
Three Years in the Period Ended March 31, 1995 12
Consolidated Statements of Stockholders' Equity for Each
of the Three Years in the Period Ended March 31, 1995 12
Consolidated Statements of Cash Flows for Each of the
Three Years in the Period Ended March 31, 1995 13
Notes to Consolidated Financial Statements 14-19
* Incorporated by reference from the indicated pages of the Company's
Annual Report to Stockholders for the fiscal year ended March 31, 1995
(and except for these pages, the Company's Annual Report to
Stockholders for the fiscal year ended March 31, 1995, is not deemed
filed as part of this report).
2. Schedules Supporting the Consolidated Financial Statements:
<CAPTION>
Page in
This Report
-----------
<S> <C> <C>
Report of Independent Public Accountants on Schedules 11
Schedule II - Valuation and Qualifying Accounts 13
</TABLE>
All schedules except Schedule II have been omitted for the reason that
the required information is shown in financial statements or notes
thereto, the amounts involved are not significant or the schedules are
not applicable.
(b) Reports on Form 8-K
None
(c) Exhibits
Reference is made to the Index of Exhibits beginning at page 14 of
this report, which index is incorporated herein by reference.
(d) Other Financial Statements There are no financial statements required
to be filed by Regulation S-X which are excluded from the annual
report to stockholders by Rule 14a-3(b)(1).
-10-
<PAGE> 11
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Printronix, Inc.:
We have audited in accordance with generally accepted auditing
standards, the financial statements included in Printronix, Inc.'s annual report
to stockholders incorporated by reference in this Form 10-K, and have issued our
report thereon dated April 26, 1995. Our audit was made for the purpose of
forming an opinion on those statements taken as a whole. The schedule listed in
the index is presented for purposes of complying with the Securities and
Exchange Commission rules and is not part of the basic financial statements.
This schedule has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Orange County, California
April 26, 1995
<PAGE> 12
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: June 28, 1995
PRINTRONIX, INC.
BY ROBERT A. KLEIST
------------------------
Robert A. Kleist, President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
ROBERT A. KLEIST President, Chief Executive June 28, 1995
Robert A. Kleist Officer and Director (Principal
Executive Officer)
GEORGE L. HARWOOD Senior Vice President, June 28, 1995
George L. Harwood Finance, Chief Financial
Officer and Corporate
Secretary (Principal Accounting
and Financial Officer)
BRUCE T. COLEMAN Director June 28, 1995
Bruce T. Coleman
JOHN R. DOUGERY Director June 28, 1995
John R. Dougery
RALPH GABAI Director June 28, 1995
Ralph Gabai
ERWIN A. KELEN Director June 28, 1995
Erwin A. Kelen
</TABLE>
-12-
<PAGE> 13
PRINTRONIX, INC. AND SUBSIDIARIES
--------------
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED MARCH 31, 1995
<TABLE>
<CAPTION>
ADDITIONS
--------------------
BALANCE AT CHARGED TO CHARGED BALANCE
BEGINNING COST AND TO OTHER AT END
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS OF PERIOD
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED
MARCH 31, 1995
Allowance for
product warranty $769,000 $1,458,000 $- $1,091,000 A $1,136,000
======== ========== == ========== ==========
Allowance for
doubtful accounts $677,000 $ 330,000 $- $ 99,000 B $ 908,000
======== ========== == ========== ==========
YEAR ENDED
MARCH 25, 1994
Allowance for
product warranty $769,000 $1,046,000 $- $1,046,000 A $ 769,000
======== ========== == ========== ==========
Allowance for
doubtful accounts $922,000 $ 120,000 $- $ 365,000 B $ 677,000
======== ========== == ========== ==========
YEAR ENDED
MARCH 26, 1993
Allowance for
product warranty $797,000 $ 745,000 $- $ 773,000 A $ 769,000
======== ========== == ========== ==========
Allowance for
doubtful accounts $738,000 $ 220,000 $- $ 36,000 B $ 922,000
======== ========== == ========== ==========
</TABLE>
DESCRIPTIONS OF OTHER ADDITIONS AND DEDUCTIONS:
A - Expenses incurred in providing warranty services
B - Write-off of bad debt
<PAGE> 14
INDEX OF EXHIBITS
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
3.1 Certificate of Incorporation of Printronix, Inc.
(incorporated by reference to Exhibit 3.1 to the Company's
Report on Form 10-K for the fiscal year ended March 27,
1987).
3.2 By-laws of Printronix, Inc. currently in effect
(incorporated by reference to Exhibit 3.2 to the Company's
Report on Form 10-K for fiscal year ended March 31, 1989).
4.1 Copies of certain instruments, which in accordance with
paragraph (b)(4)(iii) of Item 601 of Regulation S-K are not
required to be filed as exhibits to Form 10-K, have not been
filed by Printronix. Printronix agrees to furnish a copy of
any such instrument to the Securities and Exchange
Commission upon request.
4.2 Common Shares Rights Agreement dated as of March 17, 1989
between Printronix, Inc. and Chemical Trust Company of
California, including the form of Rights Certificate and the
Summary of Rights attached thereto as Exhibits A and B,
respectively (incorporated by reference to Exhibit 1 to the
Company's Registration Statement on Form 8-A filed on or
about March 17, 1989).
4.3 Corporate Guarantee for Tat Lee Bank Limited dated April 12,
1995.
10.1 Printronix, Inc. 1980 Employee Stock Purchase Plan, as
amended (incorporated by reference to Exhibits 4.1 and 4.2
to Post-Effective Amendment No. 5 to Registration Statement
No. 2-70035 on Form S-8).
10.2 Printronix, Inc. 1984 Stock Incentive Plan, as amended
(incorporated by reference to Exhibits 4.3 and 4.4 to
Registration Statement No. 33-14288 on Form S-8).
10.3 Form of Indemnification Agreement between Printronix, Inc.
and its directors (incorporated by reference to Exhibit 10.4
to the Company's Report on Form 10-K for the fiscal year
ended March 27, 1987).
10.4 Printronix, Inc. Executive Health Insurance Plan
(incorporated by reference to Exhibit 10.5 to the Company's
Report on Form 10-K for the fiscal year ended March 29,
1985).
10.5 Restricted Stock Purchase Agreement dated July 6, 1990
between the Company and Robert A. Kleist (incorporated by
reference to Exhibit 10.7 to the Company's Report on Form
10-K for the fiscal year ended March 29, 1991).
10.6 Restricted Stock Purchase Agreement dated July 6, 1990
between the Company and J. Edward Belt (incorporated by
reference to Exhibit 10.8 to the Company's Report on Form
10-K for the fiscal year ended March 29, 1991).
10.7 Restricted Stock Purchase Agreement dated July 6, 1990
between the Company and George L. Harwood (incorporated by
reference to Exhibit 10.9 to the Company's Report on Form
10-K for the fiscal year ended March 29, 1991).
10.8 Restricted Stock Purchase Agreement dated May 7, 1992
between the Company and C. Victor Fitzsimmons (incorporated
by reference to Exhibit 10.10 to the Company's Report on
Form 10-K for the fiscal year ended March 27, 1992).
-14-
<PAGE> 15
INDEX OF EXHIBITS (continued)
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
10.9 Restricted Stock Purchase Agreement dated May 7, 1992
between the Company and Richard A. Steele (incorporated by
reference to Exhibit 10.11 to the Company's Report on Form
10-K for the fiscal year ended March 27, 1992).
10.10 Printronix, Inc. 1994 Stock Incentive Plan (incorporated by
reference to Exhibit 10.10 to the Company's Report on Form
10-K for the fiscal year ended March 25, 1994).
13 The Company's Annual Report to Stockholders for the fiscal
year ended March 25, 1994, (with the exception of the
information incorporated by reference into Items 5, 6, 7 and
8 of this report, the Annual Report to Stockholders is not
deemed to be filed as part of this report).
21 List of Printronix' subsidiaries.
23 Consent of Independent Public Accountants, Arthur Andersen
LLP, to the incorporation of their reports herein to
Registration Statement Nos. 2-70035, 33-14288 and 33-83156.
27 Financial Data Schedule ("This schedule contains summary
financial information extracted from the Company's Annual
Report for the fiscal year ended March 31, 1995 and is
qualified in its entirety by reference to such financial
statements.")
-15-
<PAGE> 1
EXHIBIT 4.3
CORPORATE GUARANTEE
1. In consideration of TAT LEE BANK LIMITED a Company incorporated in the
Republic of Singapore and having its registered office at 63 MARKET
STREET #09-06/10, TAT LEE BANK BUILDING, SINGAPORE 0104 (hereinafter
called "the Bank" which expression shall where the context so admits
includes the Bank's assigns and successors) making or continuing to
make at our request advances loans credit and other banking facilities
for so long as the Bank may think fit to PRINTRONIX AG a Company
incorporated in Fribourg, Switzerland and having its registered office
at 512 CHAI CHEE LANE #02-15, BEDOK INDUSTRIAL ESTATE, SINGAPORE 1646
(hereinafter called "the Company" which expression shall include the
Company's assigns and successors) We, PRINTRONIX, INC a Company
incorporated in Delaware, USA having its registered office at 17500
CARTWRIGHT, POBOX 19559, IRVINE CA 92713, USA (hereinafter called "the
Guarantor") HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREE as a
continuing obligation to pay and satisfy to the Bank on first written
demand all sums of money which are now or shall at any time be owing to
the Bank any where on any account whatsoever whether from the Company
solely or from the Company jointly with any other person or persons
including the amount of notes drafts or bills (whether negotiable or
non-negotiable) discounted or paid and other loans credit or advances
made to or for the accommodation or at the request either of the
Company solely or jointly with any other person or persons or for any
monies for which the Company may be liable as surety or in any other
way whatsoever together with in all cases as aforesaid interest thereon
at the Bank's rate or rates for the time being in relation to such
accounts calculated on a daily basis, with monthly rests or such other
periodic rests that the Bank may determine from time to time,
notwithstanding the relationship of banker and customer may have
ceased, discount and other banker's charges including legal charges
occasioned by or incidental to this or any other security held by or
offered to the Bank for the same indebtedness and all costs charges and
expenses which the Bank may incur in enforcing or seeking to obtain
payment of all or any part of the monies hereby guaranteed until full
payment is received by the Bank both after as well as before judgment
shall have been obtained in respect thereof.
2. This Guarantee shall not be considered as satisfied by any intermediate
payment or satisfaction of the whole or any part of any sum or sums of
money owing as aforesaid but shall be a continuing security and shall
extend to cover all or any sum or sums of money which shall for the
time being constitute the balance due or owing from the Company to the
Bank upon any account or otherwise as hereinbefore mentioned.
<PAGE> 2
-2-
3. (1) Although the liability of the Guarantor under this Guarantee shall
be up to the limit or extent of the principal sum only of Singapore
Dollars Three Millions Only (SIN$3,000,000/-) this Guarantee shall be a
continuing guarantee for the purpose of securing securing not merely an
equivalent amount but (subject always to the said principal limit of
SIN$3,000,000/-) the whole of the monies or general balance mentioned
in Clause 1 hereof.
(2) In addition to the said principal limit the Guarantor shall be
liable for interest on all the monies guaranteed hereunder on daily
balances at such rate or rates as the Bank may from time to time
stipulate with monthly rests or such other periodic rests as the Bank
may determine.
(3) Subject to the provisions next hereinafter appearing the interest
on any principal sum for the time being owing including capitalised
interest shall at the end of each calendar month be capitalised and
added for all purposes to the principal sum then owing and shall
thenceforth bear interest at such rate or rates as the Bank may from
time to time stipulate with monthly rests or such other periodic rests
as the Bank may determine and be secured and payable accordingly and
all the covenants and conditions contained in or implied by this
Guarantee and all powers and remedies conferred on the Bank by law or
by this Guarantee and all rules of law or equity in relation to the
principal sum and interest shall equally apply to such capitalised
arrears of interest and to interest on such arrears.
(4) For the purpose of ascertaining whether the limit of the principal
sum intended to be hereby secured has been exceeded or not all
accumulated and capitalised interest shall be deemed to be interest and
not principal moneys.
(5) When the payment of any monies hereby secured or intended so to be
shall be further secured to the Bank by any bill of exchange promissory
note draft receipt or other instrument reserving a higher rate of
interest to be paid in respect thereof than that hereinbefore
covenanted to be paid such higher rate of interest shall be payable in
respect of such moneys and nothing contained in or to be implied from
these presents shall affect the right of the Bank to enforce and
recover payment of such higher rate of interest or as the case may be
the difference between such higher rate and the rate which shall have
been paid hereunder.
<PAGE> 3
-3-
4. The Bank shall be at liberty at any time and without thereby affecting
its rights against the Guarantor hereunder to determine enlarge or vary
any credit to the Company, to vary exchange abstain from perfecting or
releasing any other securities held or to be held by the Bank for or on
account of the monies intended to be hereby secured or guaranteed or
any part thereof to open a fresh account or accounts and/or continue
with any account or accounts current or otherwise with or for the
Company, to renew bills and promissory notes in any manner and to
compound with, give time for payment, to accept compositions from, and
make any other arrangements with the Company or any obligants on bills
notes or other securities held or to be held by the Bank for and on
behalf of the Company.
5. This Guarantee shall be in addition to and shall not be in any way
prejudiced or affected by any collateral or other security now or
hereafter held by the Bank for all or any part of the monies hereby
guaranteed, nor shall such collateral or other security or any lien to
which the Bank may be otherwise entitled or the liability of any person
or persons not parties hereto for all or any part of the monies hereby
secured or guaranteed be in any way prejudiced or affected by this
Guarantee. The Bank shall have full power at its discretion to give
time for payment to or make any other arrangement with any such other
person or persons without prejudice to this Guarantee or any liability
hereunder. All monies received by the Bank from the Guarantor or the
Company or any person or persons liable to pay the same may be applied
by the Bank to any account or the item of account or to any transaction
to which the same may be applicable.
6. No disposition assurance security or payment which may be or may become
avoided under any provision or provisions of the Companies Act (Cap.
50) or its equivalent in USA or any statutory modification thereof and
no release settlement or discharge which may have been given or made on
the faith of any such disposition assurance security or payment shall
prejudice or affect the Bank's right to recover from the Guarantor
monies to the full extent of this Guarantee, as if such disposition
assurance security payment release settlement or discharge (as the case
may be) had never been made given or granted.
7. Notwithstanding any defect informality or insufficiency in the
borrowing powers or the liquidation winding up or insolvency of the
Company the liability of the Guarantor hereunder shall continue in full
force and effect until the Bank shall have been paid in full all monies
owing to the Bank from the Company.
<PAGE> 4
-4-
8. All dividends compositions and monies received by the Bank from the
Company or from any other company person or estate capable of being
applied by the Bank in reduction of the indebtedness of the Company
shall be regarded for all purposes as payments in gross and should the
Company be wound-up or liquidated the Bank shall be entitled to prove
in the winding-up or liquidation of the Company in respect of the whole
of the Company's indebtedness to the Bank and without any right of the
Guarantor to be subrogated to the Bank in respect of any such proof
until the Bank shall have received in the liquidation of the Company or
from other sources one hundred (100) cents in the dollar.
9. The Bank shall be at liberty (but not bound to do) to resort for the
Bank's own benefit to any other means of payment at any time and in any
order the Bank may think fit without thereby diminishing the liability
of the Guarantor hereunder and the Bank may exercise its rights under
this Guarantee in force either for the payment of the ultimate balance
after resorting to other means of payment or for the balance due
notwithstanding that other means of payment have not been resorted to
and in the latter case without entitling the Guarantor to any benefit
from such other means of payment so long as any monies guaranteed
hereunder remain owing and unpaid by the Company and in addition the
Bank shall be at liberty to require payment by the Guarantor of any
monies owing to it without taking any proceedings first to enforce such
payment by the Company.
10. If any monies shall be paid by the Guarantor to the Bank under this
Guarantee, The Guarantor shall not in respect of the amount so paid by
the Guarantor seek to enforce repayment or to exercise any other rights
or legal remedies of whatsoever kind which may accrue however to the
Guarantor in respect of the amount so paid until all monies guaranteed
hereunder and owing from the Company to the Bank have been fully paid
to the Bank. The Guarantor will not prove in competition with the Bank
for any monies owing by the Company to the Guarantor on any account
whatsoever and/or in respect of any monies due or owing from the
Company to the Bank but will give to the Bank the benefit of any proof
which the Guarantor may be able to make in the liquidation of the
Company or in any arrangement or composition with creditors until the
Bank shall have received all monies outstanding and remaining unpaid by
the Company to the Bank.
11. Any indebtedness of the Company now or hereafter held by the Guarantor
shall be subordinated to the indebtedness of the Company to the Bank
and such indebtedness of the Company to the Guarantor if the Bank so
requires shall
<PAGE> 5
-5-
be collected enforced and received by the Guarantor as trustee for the
Bank and shall be paid over to the Bank on account of the indebtedness
of the Company to the Bank but without reducing or affecting in any
manner the liability of the Guarantor under this Guarantee until all
monies guaranteed hereunder have been fully paid to the Bank.
12. The obligations of the Guarantor hereunder shall not be impaired by any
forbearance or concession given by the Bank to the Company or any
assertion of or failure to assert any right or remedy on the part of
the Bank against the Company. Nothing done or omitted by the Bank in
pursuance of any authority or permission contained in this Guarantee
shall affect or discharge the liability of the Guarantor hereunder.
13. This Guarantee may be enforced by the Bank at any time notwithstanding
that any bills or other instruments covered by it may be in circulation
or outstanding and the Bank may include the amount of the same or any
of them in the general balance or not at the Bank's option and this
Guarantee shall not be determinable by the Guarantor except on terms of
the Guarantor making fullprovision for any other outstanding
liabilities or obligations to the Bank of the Company's account
guaranteed hereunder.
14. Though as between the Guarantor and the Company the Guarantor is surety
only for the Company yet as between the Guarantor and the Bank the
Guarantor shall be deemed to be principal debtor for all the monies the
payment of which is hereby guaranteed and accordingly shall not be
discharged nor shall the Guarantor's liability be affected in any way
by any act thing omission means whatever whereby the Guarantor's
liability would not have been discharged if the Guarantor had been the
principal debtor.
15. The Guarantor hereby declares that the Guarantor has not taken and
undertakes not to take directly or indirectly from the Company in
respect of the Guarantor's liability and obligation hereunder any
security of any nature whatsoever whereby the Guarantor or any person
claiming under the Guarantor might in the Company's winding-up increase
the proofs in such winding-up or diminish the property available for
distribution to the Bank's detriment. In the event any security is or
may hereafter be held by the Guarantor from the Company in respect of
the Guarantor's liability hereunder the same shall be held in trust for
the Bank and as security for the Guarantor's liability hereunder.
<PAGE> 6
-6-
16. (1) For the consideration aforesaid and as a separate and independent
stipulation:-
(a) the Guarantor hereby agrees that all sums of money
which may not be recoverable from the Guarantor on the
footing of a guarantee whether by reason of any legal
limitation disability or incapacity on or of the
Company or any other fact or circumstance and whether
known to the Bank or not shall nevertheless be
recoverable from the Guarantor on demand as though the
Guarantor were the sole and principal debtor;
(b) the Guarantor hereby irrevocably and unconditionally
undertakes to indemnify the Bank in full and keep the
Bank fully indemnified against all loss damage
liabilities costs and expenses whatsoever which the
Bank may sustain or incur as a result of or arising
from the Bank's advances credit or financial
accommodation to the Company as well as all legal
costs as between solicitors and clients on full
indemnity basis and other costs and disbursements
incurred for or in connection with demanding and
enforcing payment of all monies guaranteed hereunder
or otherwise howsoever in enforcing this Guarantee
and/or any of the covenants undertakings stipulations
terms conditions or provisions of this Guarantee; and
(c) The Guarantor hereby agrees to furnish and provide the
Bank with and permit the Bank to obtain all such
statements information explanation and data as the
Bank may reasonably require regarding the financial
affairs of the Guarantor.
(2) As a separate, additional and continuing obligation the Guarantor
unconditionally and irrevocably undertakes with the Bank that
should the moneys guaranteed hereunder not be recoverable from the
Guarantor under clause (1) hereof for any reason whatsoever
(including but without prejudice to the generality of the
foregoing, by reason of any provision of the loan agreement with
the Company being or becoming void, unenforceable or otherwise
invalid under any applicable law) then notwithstanding that may
have been known to the Bank the Guarantor will as sole, original
and independent obligor upon first written demand by the Bank under
clause (1) make payment of the moneys guaranteed hereunder by way
of a full indemnity and that the Guarantor will indemnify the Bank
against all losses costs claims charges and expenses to which it
may be subject or which it may incur whilst acting in good faith
under or in connection with the loan agreement or this Guarantee.
<PAGE> 7
-7-
17. A statement or certificate signed by the Vice President Accountant or
other officer of the Bank as to the monies and liabilities for the time
being due to or incurred by the Bank shall subject only to computation
and/or clerical mistakes be final and conclusive and be binding on the
Guarantor.
18. This Guarantee shall bind and continue to bind the Guarantor
notwithstanding the occurrence at any time whether before on/or after
the execution of this Guarantee of:-
(a) any change by amalgamation reconstruction or otherwise which
may be made in the constitution of the Company by which the
business of the Bank may for the time being be carried on and
shall be available to the Company carrying on the business of
the Bank for the time being; or
(b) any winding-up (whether voluntary or compulsory) amalgamation
or reconstruction or otherwise of or affecting the
Company; or
(c) any winding-up (whether voluntary or compulsory) amalgamation
or reconstruction or otherwise or affecting the Guarantor.
19a. Any demand for payment of monies or any other demand or notice under
this Guarantee may be made by any Vice President, First Vice President,
Secretary or other officer for the time being of the Bank or by any
person or firm for the time being acting as solicitor or solicitors for
the Bank by letter fax or otherwise in writing. Each communication or
document to be delivered to either party under this Guarantee shall be
sent to that party at the fax number, or address from time designated
by that party for the purpose of this Guarantee. The initial fax number
and address (if any) so designated are set out hereunder :-
The Guarantor The Bank
Telefax Number : (714) 6608682 Telefax Number : 5345827
Telex Number : (910) 5952535 Telex Number : Rs 26767
Address : 17500 Cartwright Address : 63 Market street
POBOX 19559 Singapore 0104
Irvine CA 92713
U.S.A.
b. Any communication from the Guarantor to the Bank shall not be effective
until received by the Bank. Any communication from the Bank to the
Guarantor shall be deemed to be received by the Guarantor (if sent by
fax) on the next working day in the place to which it is sent or within
seven days after being sent by prepaid post by airmail addressed to it
at the aforesaid address or the Guarantor's last known address.
<PAGE> 8
-8-
20. This Guarantee shall not be revocable by the Guarantor but shall
continue and remain in full force and effect until all monies hereby
guaranteed are paid to the Bank in full and shall be binding on the
successors and assigns of the Guarantor.
21. The Guarantor further covenants with the Bank that:-
(1) the Guarantor will furnish and provide the Bank with and permit
the Bank to obtain all such statements information explanation
and data, except information of a proprietary nature, as the
Bank may reasonably require regarding the affairs operations
administration financial or other state or condition whatsoever
of the Guarantor or any of the matters in this clause
mentioned;
(2) the Guarantor will deliver to the Bank every year immediately
after their issue or in any case not later than six (6) months
after the close of its financial year audited balance sheet and
profit and loss accounts together with Director's reports;
(3) the Guarantor shall immediately upon the occurrence of the
following events notify the Bank of:-
(a) the giving of notice by the Guarantor to convene its
general meeting for passing any resolution to wind up
the Guarantor;
(b) the filing of any application for placing the
Guarantor under judicial management; or
(c) the filing of any petition for winding up the
Guarantor.
Where any such notification as aforesaid is given verbally by
the Guarantor to the Bank, the Guarantor shall confirm it in
writing within twenty-four (24) hours thereof.
<PAGE> 9
-9-
(4) (a) payments under this Guarantee shall be made in
SINGAPORE DOLLARS or such other currency as the Bank
may approve in writing. All payments made under this
Guarantee shall be made free and clear of any
restrictions, conditions or set-off and without any
deduction or withholding on account of tax or
otherwise (except to the extent required by the laws).
If any such withholding is required to be made by the
law, the amount payable under this Guarantee shall be
increased to the extent necessary to ensure that,
after the making of that deduction, withholding or
payment, the Bank receives on the due date and retains
a net sum equal to what it would have received and
retained had no such deduction, withholding or payment
been required or made. The Guarantor shall furnish to
the Bank within the period of payment permitted by
applicable law, all official receipt of the relevant
taxation or other authorities involved for all amounts
deducted or withheld as aforesaid.
(b) Any amount received or recovered in a currency other
than SINGAPORE DOLLARS (whether as a result of, or the
enforcement of, a judgment or order of a court of any
jurisdiction, or in the dissolution of the Company or
the Guarantor or otherwise) by the Bank in respect of
any sum expressed to be due to it from the Guarantor
under this Guarantee shall only constitute a discharge
to the Guarantor to the extent of the SINGAPORE
DOLLARS amount which the Bank is able, in accordance
with its usual practice, to purchase with the amount
so received or recovered in that other currency on the
date of that receipt or recovery (or, if its is not
practicable to make that purchase on that date, on the
first date on which it is practicable to do so).
(c) If the SINGAPORE DOLLARS amount purchased is less than
the SINGAPORE DOLLARS amount expressed to be due to
the Bank under this Guarantee, the Guarantor shall
indemnify the Bank against any loss sustained by it as
a result thereof. In any event, the Guarantor shall
indemnify the Bank against the cost of making any such
purchase referred to in (4) (b) above.
(d) The indemnity herein shall constitute a separate and
independent obligation from the other obligations in
this Guarantee, shall give rise to a separate and
independent cause of action, shall apply irrespective
of any indulgence granted by the Bank and shall
continue in full force and effect despite any
judgment, order, claim or proof for a liquidated
amount in respect of any sum due under this Guarantee.
<PAGE> 10
-10-
22. The Guarantor hereby agrees and acknowledges that the obligations and
liabilities of the Guarantor hereunder shall be absolute and
unconditional and in addition to the other provisions hereof, shall not
be abrogated, prejudiced, affected or discharged:-
(a) by the Bank granting explicitly or by conduct or otherwise,
whether directly or indirectly, to the Company or any other
person of any time forbearance, concession, credit compounding,
compromise, waiver, variation, renewal, release, discharge or
other advantage or indulgence;
(b) by the Bank failing or neglecting to or deciding not to recover
the monies hereby guaranteed or any part thereof by the
realisation of any collateral or other security or in any
manner otherwise or, in the event of the enforcement by the
Bank of any collateral or other security or any other remedy
whatsoever, by any act, omission, negligence or other conduct
or failure on the part of the Bank or any other person in
connection therewith;
(c) by any laches, acquiescence, delay, acts, omissions, mistakes
on the part of the Bank or any other person;
(d) by reason of any agreement, deed mortgage, charge, debenture,
guarantee, indemnity or security held or taken at any time by
the Bank or by reason of the same being void, voidable or
unenforceable;
(e) by any moratorium or other period staying or suspending by
statute or the order of any court or other authority all or any
of the Bank's rights, remedies or recourse against the Company
or any other person;
(f) by the Bank entering into any arrangement with the Company or
with any other person which but for the provision of this
clause could or might operate to affect or discharge all or any
part of the obligations and liabilities of the Guarantor
hereunder or could or might otherwise provide a defence to the
Guarantor.
(g) by reason of any other dealing, matter or thing which, but for
the provisions of this Clause, could or might operate to affect
or discharge all or any part of the obligations and liabilities
of the Guarantor hereunder or could or might otherwise provide
a defence to the Guarantor.
<PAGE> 11
-11-
23. In addition to any lien right of set-off or other right which the Bank
may have the Bank shall be entitled at any time and without notice to
the Company or the Guarantor to combine or consolidate all or any of
the accounts and liabilities of the Company or the Guarantor or either
of them with or to the Bank anywhere whether in the Republic of
Singapore or outside the Republic of Singapore or set-off or transfer
any sums standing to the credit of one or more of such accounts in or
towards satisfaction of any of the liabilities of the Company or the
Guarantor or either of them to the Bank on any other account or
accounts whether in the Republic of Singapore or outside the Republic
of Singapore or in any other respect whether such liabilities be actual
or contingent primary or collateral several or joint notwithstanding
that the credit balances on such accounts and the liabilities on any
other accounts may not be addressed in the same currency and the Bank
is hereby authorised to effect any necessary conversions at the Bank's
own rate of exchange then prevailing.
24. In the events that any goods and services tax or any other taxes levies
or charges whatsoever are now or hereafter required by law to be paid
on or in respect of any sums whatsoever payable by the Guarantor or any
other matters whatsoever under or relating to the banking facilities
provided for and/or secured hereunder the same shall (except to the
extent prohibited by law) be borne by the Guarantor and the Guarantor
shall indemnify the Bank (to such extent as shall not be prohibited by
law) against all such goods and services tax or other taxes levies or
charges whatsoever and shall from time to time on demand pay to the
Bank the amount verified by the Bank to be necessary to indemnify the
Bank.
25. The Guarantor represents and warrants to and for the benefit of the
Bank as follows:-
(1) Status: It is a company duly incorporated and validly existing
under the laws of USA and has the power and authority to own
its assets and to conduct the business which it conducts and/or
proposes to conduct;
(2) Powers: it has the power to enter into, exercise its rights and
perform and comply with its obligations under this Guarantee;
(3) Authorisation and Consents: all action, conditions and things
required to be taken, fulfilled and done (including the
obtaining of any necessary consents) in order (a) (i) to enable
it lawfully to enter into, exercise its rights and perform and
comply with its obligations under this Guarantee and (ii) to
ensure that those obligations are valid, legally binding and
enforceable, b(i) to enable the Company lawfully to
<PAGE> 12
-12-
enter into, exercise its rights and perform and comply with its
obligations under the facility letters dated 23rd October 1993
and 28th September 1994 and any other facility letter from time
to time issued by the Bank and accepted by the Company
(hereinafter called the "Facility Letter") and (ii) to ensure
that those obligations are valid, legally binding and
enforceable and (c) to make this Guarantee and the Facility
Letter admissible in evidence in the courts of Singapore have
been taken, fulfilled and done;
(4) Non-Violation of Laws: (a) its entry into, exercise of its
rights and/or performance of or compliance with its obligations
under this Guarantee do not and will not violate, or exceed any
power or restriction granted or imposed by, (i) any law to
which it is subject or (ii) its Memorandum or Articles of
Association;
(5) Obligations Binding: its obligations under this Guarantee are
legal, valid, binding and enforceable;
(6) Non-Violation of Other Agreements: (a) its entry into, exercise
of its rights and/or performance of or compliance with its
obligations under this Guarantee do not and will not (i)
violate any agreement to which it is a party, or (ii) result in
the existence of, or oblige it to create, any security over its
assets;
(7) Existing Security: no security exists on or over any of its
assets;
(8) Accounts: (a) its audited accounts and consolidated accounts
(if any) as at 26th March 1993 and for the financial year then
ended and as delivered to the Bank (with copies of the reports
and approvals referred to in (i) below);-
(i) include such financial statements as are required by
the laws of USA and, save as stated in the notes
thereto, were prepared, audited, examined, reported on
and approved in accordance with accounting principles
and practices generally accepted in USA and
consistently applied and in accordance with the laws
of USA and its constitutive documents;
(ii) together with the notes thereto give a true and fair
view of its state of affairs and financial condition
and operations (or, in the case of consolidated
accounts, the consolidated state of affairs and
<PAGE> 13
-13-
financial condition and operations of the Guarantor
and its subsidiaries) as at that date and for the
financial year then ended; and
(iii) together with the notes thereto and to the extent
required by accounting principles, standards and
practices generally accepted in USA, disclose or
reserve against all liabilities (contingent or
otherwise) of the relevant person(s) as at that date
and all material unrealised or anticipated losses from
any commitment entered into by the relevant person(s)
and which existed on that date;
(9) No Material Adverse Change: there has been no material adverse
change in its financial condition or operations since 26th
March 1993 nor in the consolidated financial condition or
operations of it and its subsidiaries since that date;
(10) Litigation: no litigation, arbitration or administrative
proceeding is current or pending or, so far as it is aware,
threatened to restrain the entry into, exercise of its rights
under and/or performance or enforcement of or compliance with
its obligations under this Guarantee or which could or might
materially and adversely affect its financial condition or
operations or impair its ability to carry on its business
substantially as now conducted;
(11) Winding-up of Guarantor: no meeting has been convened for its
winding-up or for the appointment of a receiver, trustee,
judicial manager or similar officer of it, its assets or any of
them, no such step is intended by it and, so far as it is
aware, no petition, application or the like is outstanding for
its winding-up or for the appointment of a receiver, trustee,
judicial manager or similar officer of it, its assets or any of
them;
(12) No Immunity: neither it nor any of its assets is entitled to
immunity from suit, execution, attachment or other legal
process, and its entry into this Guarantee constitutes, and the
exercise of its rights and performance of and compliance with
its obligations under this Guarantee will constitute, private
and commercial acts done and performed for private and
commercial purposes;
(13) Repetition: each of the representations and warranties herein
will be correct and complied with in all material respects so
long as any sum remains to be lent or remains payable under
this Guarantee.
<PAGE> 14
-14-
26. For the purpose of Section 47(4)(a) of the Banking Act (Cap19) (as the
same may be varied or re-enacted from time to time), the Guarantor for
themselves hereby irrevocably (so long as any moneys or liabilities
shall remain owing to the Bank hereunder or any Banking facility or
service is extended by the Bank to the Company) permits the Bank and
all persons to whom Section 47(3) of that Act applies, to give divulge
or reveal, in any manner howsoever, any information whatsoever
regarding the money and other relevant particulars of any account or
accounts which the Guarantor now has or may hereafter have with the
Bank or of any matters or transactions in relation to the banking
facilities provided for and/or secured hereunder, for any such
commercial, banking or business purposes as the Bank at its discretion
thinks fit and, without prejudice to the foregoing, for purposes in
connection with any enforcement or assignment of or any funding or
operational arrangement concerning any right and benefit of the Bank
hereunder or in relation to the banking facilities provided for and/or
secured hereunder.
27. GOVERNING LAW AND JURISDICTION
(A) GOVERNING LAW: This Guarantee shall be governed by, and construed in
accordance with the laws of Singapore.
(B) SINGAPORE COURTS: For the benefit of the Bank, the Guarantor
irrevocably agrees that the courts of Singapore are to have
jurisdiction to settle any disputes which may arise out of or in
connection with this Guarantee and that, accordingly, any legal action
or proceedings arising out of or in connection with this Guarantee
("Proceedings") may be brought in those courts and the Guarantor
irrevocably submits to the jurisdiction of those courts.
(C) OTHER COMPETENT JURISDICTION: Nothing in this clause shall limit the
right of the Bank to take proceedings against the Guarantor in any
other court of competent jurisdiction nor shall the taking of
Proceeding in one or more jurisdictions preclude the Bank from taking
Proceedings in any other jurisdiction, whether concurrently or not.
(D) VENUE: The Guarantor irrevocably waives any objection which it may at
any time have to the laying of the venue of any Proceedings in any
court referred to in this Clause and any claim that any such
Proceedings have been brought in an inconvenient forum.
<PAGE> 15
-15-
(E) SERVICE OF PROCESS: (1). The Guarantor irrevocably appoints Printronix
Ag (now of) 512 Chai Chee Lane #02-15, Bedok Industrial Estate,
Singapore 1646 to receive, for it and on its behalf, service of process
in any Proceedings in Singapore. Such service shall be deemed completed
on delivery to the process agent (whether or not it is forwarded to and
received by the Guarantor). If for any reason the process agent ceases
to be able to act as such or no longer has an address in Singapore, the
Guarantor irrevocably agrees to appoint a substitute process agent
acceptable to the Bank, and to deliver to the Bank a copy of the new
agent's acceptance of that appointment, within 30 days. (2). The
Guarantor irrevocably consents to any process in any Proceedings
anywhere being served by mailing a copy by registered prepaid airmail
post to it in accordance with Clause 18. Such service shall become
effective 14 days after mailing. (3). Nothing shall affect the right to
serve process in any other manner permitted by law.
(F) PRIVY COUNCIL APPEAL: In relation to any Proceedings, the Guarantor
irrevocably agrees that an appeal from a decision of the appellate
court in Singapore in Proceedings in Singapore may be brought before
the Judicial Committee of the Privy Council and further irrevocably
agree to be bound by an appeal to, and decision of, the Judicial
Committee of the Privy Council in such Proceedings.
(G) CONSENT TO ENFORCEMENT, ETC: The Guarantor irrevocably and
unconditionally consents in respect of any proceedings anywhere to the
giving of any relief or the issue of any process in connection with
those proceedings including, without limitation, the making,
enforcement or execution against any assets whatsoever (irrespective of
their use or intended use) of any order or judgment which may be made
or given in those proceedings.
(H) WAIVER OF IMMUNITY: The Guarantor irrevocably agrees that, should the
Bank take any proceedings anywhere (whether for any injunction,
specific performance, damages or otherwise), no immunity (to the extent
that it may at any time exists, whether on the grounds of sovereignty
or otherwise) from those proceedings, from attachment (whether in aid
of execution, before judgment or otherwise) of its assets or from
execution, of judgment shall be claimed by it or on its behalf or with
respect to its assets, any such immunity being irrevocably waived. The
Guarantor irrevocably agrees that it and its assets are, and shall be,
subject to such proceedings, attachment or execution in respect of its
obligations under this Guarantee.
<PAGE> 16
-16-
28. The illegality, invalidity or unenforceability of any provision of this
Guarantee under the law of any jurisdiction shall not affect its
legality, validity or enforceability under the law of any other
jurisdiction nor the legality, validity or enforceability of any other
provision.
29. In this Guarantee where the context so admits:-
(a) words importing the singular number include the plural number
and vice versa;
(b) words importing the masculine gender include the feminine or
neuter gender;
(c) the expression "the Guarantor" includes the successors and
assigns of the Guarantor;
(d) the word "person" includes any company or association or body
of persons, corporate or inincorporate.
IN WITNESS WHEREOF the Guarantor has hereunto affixed its common seal.
Dated the .......12th...... day of.... April.... 1995
The Common Seal of PRINTRONIX, INC
was hereunto affixed in the
presence of
DIRECTOR /s/ ROBERT A. KLEIST
----------------------
Robert A. Kleist
DIRECTOR/SECRETARY /s/ GEORGE L. HARWOOD
----------------------
George L. Harwood
Before me-
Signature of Notary Public: /s/ SALLY R. HAMILTON State of California)
---------------------- ) ss
Name of Notary Public: Sally R. Hamilton County of Orange )
On April 12, 1995 before me, Sally R. Hamilton, Notary Public, personally
appeared Robert A. Kleist and George L. Harwood, personally known to me to be
the persons whose names are subscribed to the within instrument and acknowledged
to me that they executed the same in their authorized capacities, and that by
their signatures on the instrument the persons, or the entity upon behalf of
which the persons acted, executed the instrument.
<PAGE> 1
EXHIBIT 13
SELECTED FINANCIAL DATA ($ in thousands, except share data)
(For the fiscal years ended March)
<TABLE>
<CAPTION>
RESULTS OF OPERATIONS 1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET SALES $ 146,589 $ 107,419 $ 93,864 $ 88,555 $ 106,894
GROSS PROFIT 37,968 26,380 22,742 20,321 27,781
OPERATING EXPENSES 29,988 24,078 26,769 28,998 31,185
INCOME (LOSS) FROM OPERATIONS 7,980 2,302 (4,027) (8,677) (3,404)
NET INCOME (LOSS) $ 7,160 $ 1,869 $ (2,340) $ (8,412) $ (1,801)
EARNINGS (LOSS) PER SHARE
PRIMARY $ 1.34 $ 0.39 $ (0.50) $ (1.84) $ $(0.35)
FULLY DILUTED $ 1.33 $ 0.38 $ (0.50) $ (1.84) $ $(0.35)
WEIGHTED AVG. SHARES OUTSTANDING
PRIMARY 5,324,784 4,848,261 4,636,920 4,570,578 5,180,708
FULLY DILUTED 5,382,388 4,971,722 4,636,920 4,570,578 5,180,708
<CAPTION>
SELECTED BALANCE SHEET DATA
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CURRENT ASSETS $ 50,463 $ 40,639 $ 37,367 $ 39,283 $ 45,989
CURRENT LIABILITIES 18,648 17,700 15,619 14,200 11,775
WORKING CAPITAL 31,815 22,939 21,748 25,083 34,214
LONG-TERM LIABILITIES 1,485 1,850 2,214 1,596 2,232
TOTAL ASSETS 61,675 51,916 48,276 50,668 57,289
STOCKHOLDERSO EQUITY $ 41,542 $ 32,366 $ 30,443 $ 34,872 $ 43,282
</TABLE>
<PAGE> 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
- --------------------------------------------------------------------------------
RESULTS OF OPERATIONS
NET SALES
Fiscal 1995 revenue of $146.6 million was up $39.2 million or 36% over fiscal
1994 sales of $107.4 million. This compares with prior year growth of $13.6
million or 14% over 1993 revenue of $93.9 million. Year-to-year revenue growth
has come from both line matrix and non-impact product families. Line matrix
product sales grew 41% over the prior year driven primarily by higher sales of
the P4280 and P9212 printers to the Company's major OEM customers. Printronix
has been able to increase sales to these OEMs primarily by penetrating new
markets such as the management information systems applications segment. Higher
revenue levels were also achieved through the Company's continued commitment to
the laser and thermal printer markets, which combined with greater sales of the
Company's Genuine Printronix Supplies business, led to non-impact revenue growth
of 15% over the prior year. Foreign sales, including export sales from the
United States, grew to $56.4 million in fiscal 1995, a $15.5 million or 38%
increase compared to fiscal 1994 sales of $40.9 million. This increase in
foreign sales compares to growth of $7.6 million or 23% in fiscal 1994. The
higher revenues resulted primarily from increased sales to our major OEM
customers with operations located outside the United States (see note 4). The
Company's aggressive emphasis on productivity improvements caused sales per
employee to increase 31% to $168,000 compared with $128,000 in the prior year.
GROSS PROFIT
Gross profit, as a percentage of sales, grew to 25.9% in fiscal 1995 compared
with 24.6% in fiscal 1994 and 24.2% in fiscal 1993. The improving gross profit
percentage reflects the Company's focus on identifying and implementing
manufacturing improvements that result in higher quality, lower cost products
that can be manufactured more quickly. Production efficiencies realized in
fiscal 1995 included: 1) lower overhead expenses resulting from the
consolidation of multiple factory operations in Irvine into a single production
facility during the prior fiscal year, 2) reduced inventory costs driven by
improved Just-In-Time inventory processes and 3) production volume efficiencies
associated with the 36% increase in sales over the prior year. Cost reductions
were partially offset by the continued shift in product mix from the Company's
higher margin mature line matrix products to lower margin consumables and OEM
products.
OPERATING EXPENSES
In fiscal 1995 the Company spent $12.7 million on engineering and development
compared with $10.2 million in both fiscal 1994 and 1993. The growth in
engineering and development spending reflects the Company's belief that, to meet
or exceed customer expectations, and gain additional market share in the line
matrix and non-impact printer markets, we must continue to deliver new products
that provide a higher level of functionality and reliability with features that
lead the industry. The 24% increase in engineering spending over fiscal 1994
resulted partly from higher OEM customization requirements, and partly from
further development of the latest generation of new line matrix products that
began shipping to current OEM customers in the fourth quarter of fiscal 1995.
Fiscal 1994 spending remained flat with fiscal 1993 due to higher spending
required to support new OEM customers, offset primarily by lower support costs
on mature products. The Company expects to hold engineering expense to a
decreasing percentage of total sales. Percentage spending has decreased to 8.6%
in fiscal 1995 compared to 9.5% and 10.9% in fiscal years 1994 and 1993,
respectively.
Selling, general and administrative expense, as a percentage of sales, fell to
11.8% in fiscal 1995 compared with 12.9% and 14.9% in fiscal 1994 and 1993,
respectively. Total dollar spending in fiscal 1995 compared with fiscal 1994
increased $3.4 million, or 24.8%, while fiscal 1994 compared with fiscal 1993
remained essentially flat. The growth in spending, over the prior year, resulted
primarily from increased sales and marketing costs associated with higher sales
volume and the introduction of new products. Fiscal 1994 expenses were
maintained at fiscal 1993 levels through lower labor and administrative costs
primarily due to the benefit of the Company's worldwide restructuring,
implemented beginning fiscal 1993, along with management's commitment to control
discretionary spending as the Company returned to profitability.
During fiscal 1993, the Company incurred restructuring charges of $2.6 million
to reorganize worldwide operations, reduce personnel throughout the Company, and
realign manufacturing and administrative facilities in both Irvine and
Singapore. At March 31, 1995, only $0.1 million of the original restructuring
reserve remained for future payment obligations on building leases terminated at
the time of the restructuring. This compares with the March 25, 1994
restructuring reserve balance of $0.7 million. This amount related to remaining
facility consolidation costs, future payment obligations on terminated building
leases and an environmental issue associated with the closing down of the
Company's Irvine hammerbank facility in fiscal 1994. During fiscal 1995, the
amount associated with the environmental issue was reclassified from the
restructuring reserve to a separate line item on the Company's consolidated
balance sheet.
[GRAPH 1, PAGE 9, 1995 ANNUAL REPORT ($ IN MILLIONS) 1995 1994 1993 NET SALES
$146.6 $107.4 $93.9]
[GRAPH 2, PAGE 9, 1995 ANNUAL REPORT ($ IN MILLIONS) 1995 1994 1993 SALES PER
EMPLOYEE $168 $128 $109.5]
[GRAPH 3, PAGE 9, 1995 ANNUAL REPORT ($ IN MILLIONS) 1995 1994 1993 NET INCOME
$7.2 $1.9 $(2.3)]
9
<PAGE> 3
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
- --------------------------------------------------------------------------------
OPERATING EXPENSES (CONTINUED)
At March 31,1995, this environmental reserve was $0.2 million (see note 2). The
Company estimates that total cost savings from all restructuring activities
approximate $5.0 million per year from reductions in labor, utilities, rent and
other overhead costs.
OTHER INCOME AND EXPENSE
Interest expense in fiscal 1995 decreased $0.2 million compared with fiscal 1994
due primarily to lower average debt requirements. Fiscal 1994 interest expense
increased $0.1 million compared with fiscal 1993 as a result of a $2.1 million
short-term loan issued during fiscal 1994. Interest income grew $0.1 million in
both fiscal 1995 and fiscal 1994, compared with the prior fiscal year, due to
higher average cash balances.
Other income in fiscal 1995 grew $0.1 million over the prior year basically from
a significant increase in handling fees to expedite orders for certain
customers. Other income in fiscal 1994 declined by $0.5 million over fiscal 1993
primarily due to the Company's remaining royalty agreement expiring in fiscal
1993. Accordingly, there were no royalty payments earned in fiscal years 1995 or
1994.
Foreign currency exchange loss totaled $0.7 million in fiscal 1995 compared with
a loss of $0.1 million in fiscal 1994 and a gain of $1.4 million in fiscal 1993.
The increase in foreign currency exchange loss over the prior year resulted from
a greater weakening of the United States dollar against international currencies
in fiscal 1995 compared with fiscal 1994. The gain in fiscal 1993 compared with
the loss in fiscal 1994 resulted primarily from a cumulative foreign currency
translation gain of $2.0 million in fiscal 1993 (see note 1).
INCOME TAXES
The Company currently has available a net operating loss carryforward of
approximately $29.6 million for Federal income tax purposes. However, improved
profitability in United States operations in fiscal 1995 has resulted in some
alternative minimum tax liability for both Federal and California income taxes.
No Federal tax provision was booked for either fiscal 1994 or 1993. Other tax
provisions have been booked for certain state and foreign income taxes.
In fiscal 1996, the Company expects its tax liability to increase slightly as
the Singapore pioneer tax status will expire in August 1995. The Company has
recently filed for, and believes it will receive, either pioneer status on the
manufacturing of new line matrix products or post-pioneer status on the
manufacturing of current products. The granting of either pioneer status will
result in a foreign tax liability at below the maximum statutory rate.
SUPPLEMENTAL INFORMATION
Fiscal 1995 utilized a fifty-three week year compared with a fifty-two week
period for fiscal 1994 and 1993. This week was added to the fiscal year's fourth
quarter.
In December 1994, the Company completed a stock split effected in the form of a
fifty percent (50%) stock dividend. Retroactive effect has been given to the
stock split in stockholders' equity accounts as of March 31,1995, and in all
share, price, and per share data presented.
The Company believes that the effects of inflation on its operations and
financial condition are minimal.
LIQUIDITY AND CAPITAL RESOURCES
The Company's financial position remains solid with cash flow from operations
increasing $8.2 million to $11.6 million in fiscal 1995 compared to $3.4 million
in fiscal 1994 and $0.9 million in fiscal 1993. The improved cash position was
due primarily to increased profitability. However, improved collections on
accounts receivable prior to fiscal year-end and greater inventory turns from
the increased utilization of the Just-In-Time inventory processes, contributed
to the improved cash flow.
Purchases of property and equipment totaled $5.3 million in fiscal 1995 compared
with $5.0 million in fiscal 1994. Capital expenditures consisted primarily of
investment in manufacturing equipment for the production of new line matrix and
non-impact products. In addition, the Company continued to upgrade its personal
computer hardware infrastructure to better serve its customers by increasing
employee productivity and improving the Company's internal processes.
Unsecured lines of credit available at March 31, 1995, totaled $10.7 million of
which $8.9 million was available for borrowing (see note 6). The Company also
has $0.3 million of outstanding borrowing related to equipment financing, which
are collateralized by certain of the Company's fixed assets. In addition, during
fiscal 1995 the Company paid off a $2.1 million short-term loan issued during
fiscal 1994.
The Company believes that its internally-generated funds, together with
available bank credit agreements, will adequately provide for working capital
requirements, capital expenditures and engineering and development needs through
fiscal 1996.
[GRAPH 4, PAGE 10, 1995 ANNUAL REPORT 1995 1994 1993 OPERATING EXPENSE% 20.5%
22.4% 28.5%]
[GRAPH 5, PAGE 10, 1995 ANNUAL REPORT 1995 1994 1993 INVENTORY TURNS 6.1 4.6
3.9]
[GRAPH 6, PAGE 10, 1995 ANNUAL REPORT 1995 1994 1993 DAYS SALES OUTSTANDING 49
58 56]
10
<PAGE> 4
CONSOLIDATED BALANCE SHEETS
As of March 31, 1995 and March 25, 1994 ($ in thousands, except share data)
<TABLE>
<CAPTION>
ASSETS 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current Assets
Cash and cash equivalents (Note 1) $ 8,345 $ 3,604
Accounts receivable, net of allowance for doubtful
accounts of $908 in 1995 and $677 in 1994 22,305 19,303
Inventories (Note 1)
Raw materials, subassemblies and work in process 16,139 14,202
Finished goods 2,959 2,302
-----------------------------
19,098 16,504
Prepaid expenses 715 1,228
-----------------------------
Total Current Assets 50,463 40,639
-----------------------------
Property and Equipment, at cost (Note 1)
Machinery and equipment 26,809 24,643
Furniture and fixtures 12,037 11,582
Leasehold improvements 3,311 3,173
-----------------------------
42,157 39,398
Less: Accumulated Depreciation and Amortization (31,215) (28,395)
-----------------------------
10,942 11,003
Other Assets 270 274
-----------------------------
Total Assets $ 61,675 $ 51,916
====================================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------------------------------------------------------------------------------------------------------
CURRENT LIABILITIES
Loans payable (Note 6) $ -- $ 543
Current portion of long-term debt (Note 6) 257 2,458
Accounts payable 11,192 9,476
Accrued expenses
Payroll and employee benefits 3,758 2,700
Warranty 1,136 769
Environmental 214 250
Restructuring 93 482
Other 1,619 821
Accrued income taxes 379 201
-----------------------------
Total Current Liabilities 18,648 17,700
-----------------------------
Long-Term Debt (Note 6) -- 256
-----------------------------
Other Long-Term Liabilities (Note 2) 1,485 1,594
-----------------------------
Stockholders' Equity (Notes 1& 5)
Common stock, $0.01 par value
(Authorized 18,000,000 shares; issued and outstanding 4,972,561
shares in 1995 and 4,647,656 shares in 1994) 50 47
Additional paid-in capital 27,393 25,380
Retained earnings 14,099 6,939
-----------------------------
Total Stockholders' Equity 41,542 32,366
-----------------------------
Total Liabilities and Stockholders' Equity $ 61,675 $ 51,916
====================================================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
11
<PAGE> 5
CONSOLIDATED STATEMENTS OF OPERATIONS
For each of the three years in the period ended March 31, 1995 ($ in thousands,
except share data)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
March 31 March 25 March 26
1995 % 1994 % 1993 %
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net sales (Notes 1 & 4) $ 146,589 $ 107,419 $ 93,864
Cost of sales 108,621 81,039 71,122
-------------------------------------------------------------------
Gross profit 37,968 25.9% 26,380 24.6% 22,742 24.2%
-------------------------------------------------------------------
Operating expenses
Engineering and development (Note 1) 12,666 8.6% 10,201 9.5% 10,186 10.9%
Selling, general & administrative 17,322 11.8% 13,877 12.9% 13,959 14.9%
Restructuring expenses -- -- 2,624
-------------------------------------------------------------------
29,988 20.5% 24,078 22.4% 26,769 28.5%
-------------------------------------------------------------------
Income (loss) from operations 7,980 5.4% 2,302 2.1% (4,027) (4.3%)
Foreign currency remeasurement (loss) gain (Note 1) (723) (68) 1,440
Interest income (expense) net 113 (186) (87)
Other income, net 85 6 522
-------------------------------------------------------------------
Income (loss) before taxes 7,455 5.1% 2,054 1.9% (2,152) (2.3%)
Provision for taxes (Notes 1 & 7) 295 185 188
-------------------------------------------------------------------
Net income (loss) $ 7,160 4.9% $ 1,869 1.7% $ (2,340) (2.5%)
===================================================================
Net Income (loss) per share (Note 1)
Primary $ 1.34 $ 0.39 $ (0.50)
Fully diluted $ 1.33 $ 0.38 $ (0.50)
Weighted average common shares & common
stock equivalents outstanding (Note 1)
Primary 5,324,784 4,848,261 4,636,920
Fully diluted 5,382,388 4,971,722 4,636,920
</TABLE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For each of the three years in the period ended March 31, 1995
($ in thousands, except share data)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Cumulative
Foreign
COMMON STOCK Currency
Number of Additional Retained Translation
Shares Amount Paid-in Capital Earnings Adjustments
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE, MARCH 27, 1992 4,570,578 $45 $ 25,414 $ 7,410 $ 2,003
Issuance of restricted stock 75,000 - 225 - -
Value of restricted stock not vested - - (225) - -
Net loss - - - (2,340) -
Foreign currency translation adjustment - - - - (2,003)
Repurchase and retirement of common stock (15,145) - (86) - -
- -------------------------------------------------------------------------------------------------------------------------------
BALANCE, MARCH 26, 1993 4,630,433 45 25,328 5,070 -
Issuance of common stock 21,723 2 76 - -
Repurchase and retirement of common stock (4,500) - (24) - -
Net income - - - 1,869 -
- -------------------------------------------------------------------------------------------------------------------------------
BALANCE, MARCH 25, 1994 4,647,656 47 25,380 6,939 -
Issuance of common stock 324,973 3 1,196 - -
Compensation expense for stock options and restricted stock - - 736 - -
Purchase price of vested portion of restricted stock - - 83 - -
Redemption and retirement of fractional common shares (68) - (2) - -
Net income - - - 7,160 -
- -------------------------------------------------------------------------------------------------------------------------------
BALANCE, MARCH 31, 1995 4,972,561 $50 $ 27,393 $ 14,099 $ -
===============================================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
12
<PAGE> 6
CONSOLIDATED STATEMENTS OF CASH FLOWS
For each of the three years in the period ended March 31, 1995 ($ in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
March 31 March 25 March 26
1995 1994 1993
-------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities :
Net income (loss) $ 7,160 $ 1,869 $ (2,340)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities :
Depreciation and amortization 4,952 4,462 4,492
Loss on sale of property and equipment 55 36 49
Compensation expense for stock options & restricted stock 736 - -
Foreign currency translation adjustment - - (2,003)
Changes in assets and liabilities :
Accounts receivable (2,939) (5,052) (240)
Inventories (2,458) 1,875 (103)
Accounts payable 1,716 2,166 61
Accrued income taxes 178 (98) (381)
Accrued restructuring expenses (389) (1,420) 1,902
Accrued environmental expenses (36) 250 -
Accrued warranty expenses 367 - 28
Other current assets and liabilities, net 2,369 (632) (606)
Other, net (105) (52) 62
-------------------------------------------
Net cash provided by operating activities 11,606 3,404 921
-------------------------------------------
Cash flows from investing activities :
Purchase of property and equipment (5,262) (4,995) (3,982)
(Purchase) sale of building - 766 (2,286)
Proceeds from disposition of property and equipment 180 182 208
-------------------------------------------
Net cash used in investing activities (5,082) (4,047) (6,060)
-------------------------------------------
Cash flows from financing activities :
Borrowings (payments) under credit facility, net (543) (634) 1,177
Proceeds from debt borrowing - - 1,043
Payments against debt borrowing (357) (328) (101)
Issuance (payment) of short term loan (2,100) 2,100 -
Proceeds from issuance of common stock 1,219 78 -
Repurchase and retirement of common stock (2) (24) (86)
-------------------------------------------
Net cash provided by (used in) financing activities (1,783) 1,192 2,033
-------------------------------------------
Increase (decrease) in cash and cash equivalents 4,741 549 (3,106)
Cash and cash equivalents at beginning of year 3,604 3,055 6,161
-------------------------------------------
Cash and cash equivalents at end of year $ 8,345 $ 3,604 $ 3,055
-------------------------------------------
Supplementary disclosures of cash flow information :
Interest paid $ 105 $ 164 $ 80
Taxes paid $ 112 $ 176 $ 141
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
13
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 1995 and March 25, 1994 and for each of the three years in the
period ended March 31, 1995 ($ in thousands)
- --------------------------------------------------------------------------------
NOTE 1 . SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
BASIS OF CONSOLIDATION -
The consolidated financial statements include the accounts of the Company,
Printronix, Inc. and its wholly owned subsidiaries. All intercompany accounts
and transactions have been eliminated.
ACCOUNTING PERIOD -
The Company utilizes a fifty-two, fifty-three week fiscal year ending on the
last Friday of March. The Company is reporting a fifty-three week fiscal year
for the period ended March 31, 1995, compared to a fifty-two week fiscal year
for the periods ended March 25, 1994 and March 26, 1993.
CASH EQUIVALENTS -
For cash flow reporting purposes, the Company considers all highly liquid
temporary cash investments with maturities of three months or less at the time
of purchase to be cash equivalents. The effect of exchange rate changes on cash
balances held in foreign currencies was not material for the periods presented.
INVENTORIES -
Inventories are valued at the lower of cost (first-in, first-out method) or
market.
PROPERTY AND EQUIPMENT -
Depreciation and amortization of property and equipment are provided using the
straight-line method over the following estimated useful lives :
Machinery and equipment 3 to 5 years
Furniture and fixtures 3 to 7 years
Leasehold improvements Term of lease
Maintenance, repairs and minor renewals are charged directly to expense as
incurred. Additions and betterments to property and equipment are capitalized.
When assets are disposed of, the applicable costs and accumulated depreciation
and amortization thereon are removed from the accounts and any resulting gain or
loss is included in operations.
SALES RECOGNITION -
Sales are recorded as of the date shipments are made to customers. The
Company's products are sold primarily to customers in the computer industry.
Accordingly, the majority of the Company's accounts receivable are concentrated
among such customers within the computer industry. Sales returns and allowances
are reflected as a reduction in sales and reflected in inventory at cost or
expected net realizable value, whichever is lower. Every six months the Company
allows domestic distributors a stock rotation, whereby 2% of the prior six
months sales can be returned, subject to various limitations, in exchange for
other products. The Company has not experienced sales returns of a material
amount, as they are limited to the utilized portion of the 2% stock rotation
for domestic distributor revenue. Products that are defective upon arrival are
handled under the Company's warranty policy.
INCOME ON MAINTENANCE CONTRACTS -
The Company generates income on extended maintenance contracts through the sale
of the service obligation to a third party provider. The third party provider is
responsible for the performance of all maintenance services for the contract
period. The income on such contracts is recognized fully in the period the
contract is sold to the third party provider as the Company assumes no further
material obligation after the date of sale. Revenue generated from maintenance
contracts was less than 3% of total sales in fiscal years 1995, 1994, and 1993.
WARRANTY COSTS-
The Company's financial statements reflect accruals for potential warranty
claims based on the Company's claim experience. Estimated product warranty costs
are accrued at the time products are sold.
FOREIGN CURRENCY REMEASUREMENT AND TRANSLATION -
The United States dollar is the functional currency for all of the Company's
foreign subsidiaries. For these subsidiaries, the assets and liabilities have
been remeasured at the end of the period exchange rates, except inventories and
property which have been remeasured at historical rates. The statements of
operations have been remeasured at average rates of exchange for the period,
except cost of sales and depreciation which have been remeasured at historical
rates. Losses from remeasurement recognized currently in income totaled $723,
$68 and $161 for fiscal years 1995, 1994 and 1993, respectively. A cumulative
foreign currency translation gain of $2,003 and a foreign currency exchange loss
on a building held for sale of $402 were also recognized in fiscal 1993.
Prior to fiscal 1991, certain of the Company's foreign subsidiaries utilized a
functional currency other than the United States dollar. Accounts were
translated at current exchange rates with any differences reflected in the
cumulative foreign currency translation adjustment in the accompanying
consolidated balance sheets. In fiscal 1993, the Company had substantially
liquidated its investments in this related foreign subsidiary. Accordingly,
under the provisions of SFAS No. 52 "Foreign Currency Translation," the
cumulative foreign currency translation adjustment was recognized as a gain in
the statement of operations during fiscal 1993.
INCOME TAXES -
Provisions are made for the amount of income taxes on the reported operations of
each year. Tax credits are treated as reductions of the applicable Federal
income tax provisions in the years earned. On a quarterly basis, the Company
provides for state and foreign income taxes based on an estimate of the
effective rate for the entire year.
On March 27, 1993, the Company adopted, prospectively, SFAS No. 109. The
adoption of this statement had no material effect on the financial statements.
SFAS No. 109 requires the use of the asset and liability method for financial
accounting and reporting for income taxes, and further prescribes that current
and deferred tax balances be determined based on the difference between the
financial statement and tax basis of assets and liabilities using tax rates in
effect for the year in which the differences are expected to reverse.
ENGINEERING AND DEVELOPMENT -
Company-funded engineering and development costs are expensed as incurred. A
substantial portion of the engineering and development expense is related to
developing new products and making significant improvements to existing products
or processes.
14
<PAGE> 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 1995 and March 25, 1994 and for each of the three years in the
period ended March 31, 1995 ($ in thousands)
- --------------------------------------------------------------------------------
DIVIDENDS -
The Company has not paid cash dividends on its stock. However, in 1989, the
Company declared a dividend of one common share purchase right per share of
common stock (see Note 5 (c)).
EARNINGS AND LOSS PER COMMON SHARE -
Earnings and loss per common share are calculated using the weighted average
number of shares outstanding and the dilutive effects of stock options, using
the treasury stock method.
CAPITAL STOCK -
During fiscal 1995, the Board of Directors declared a stock split effected in
the form of a fifty percent (50%) stock dividend of the Company's common stock.
The stock dividend resulted in a distribution of 1,652,500 common shares on
December 21, 1994. An amount equal to the stated value of the common shares
issued was transferred from additional paid in capital to the common stock
account. Retroactive effect has been given to the dividend in stockholders'
equity as of March 31, 1995, and in all share, price, and per share data in the
accompanying financial statements.
RECLASSIFICATIONS -
Certain amounts for previous fiscal years have been reclassified to conform with
the fiscal 1995 presentation.
NOTE 2 . COMMITMENTS AND CONTINGENCIES -
OPERATING LEASES -
The Company conducts its operations using leased facilities under non-cancelable
operating leases which expire at various dates from fiscal years 1996 through
2000.
The following is a summary of rental expense of non-cancelable building and
equipment operating leases incurred for each of the three years in the period
ended March 31, 1995:
<TABLE>
<CAPTION>
1995 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Gross rental expenses $ 3,343 $ 3,279 $ 3,917
Less-Sublease rental income (76) (38) (201)
- -------------------------------------------------------------------------------
Net rental expense $ 3,267 $ 3,241 $ 3,716
</TABLE>
The minimum rental commitments required under existing non-cancelable operating
leases for each fiscal year are as follows:
<TABLE>
<CAPTION>
1996 1997 1998 1999 2000 Thereafter Total
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$3,204 $1,942 $573 $147 $22 - $5,888
</TABLE>
OTHER LONG-TERM LIABILITIES -
Other long-term liabilities consist of potential liabilities related to ongoing
tax issues.
ENVIRONMENTAL ASSESSMENT -
In January 1994, the Company was notified by the California Regional Water
Quality Control Board - Santa Ana Region (the "Board") that groundwater
monitoring reports indicate that the groundwater under one of the Company's
former production plants is contaminated with various chlorinated volatile
organic compounds (VOCs). Evidence adduced from site studies undertaken to date
indicate that compounds containing the VOCs were not used by the Company during
its tenancy, but were used by the prior tenant during its long-term occupancy of
the site. The tests also indicate that the composition of the soil is such that
off-site migration of contamination is very slow and contamination is most
likely confined to the site. Accordingly, the Board is presently devoting its
attention to the predecessor occupant of the site. Investigation indicates that
the prior occupant is a well-established business enterprise which has
substantial assets and is affiliated with a publicly traded company.
Because of the current focus of the Board's investigation, there are no further
orders outstanding against the Company. Therefore, there are no recurring costs,
capital expenditures or other mandated expenditures. As of March 31, 1995, the
Company has reserved $214 which is expected to be more than adequate to cover
further legal fees or any additional expenses related to environmental tests
which could be requested by the Board at the site. To date, the Company has
incurred only minimal expense in its initial response to the Board's request for
information and for environmental testing.
The Company is convinced that it bears no responsibility for any contamination
at the site and intends to vigorously defend any action which might be brought
against it in respect thereto. Furthermore, the Company believes that it has
adequately accrued for any future expenditures in connection with environmental
matters and that such expenditures will not have a materially adverse effect on
its financial condition or results of operations.
NOTE 3. 401(K) SAVINGS AND PROFIT SHARING PLANS -
Effective January 1, 1985, the Company adopted a 401(k) Savings and Investment
Plan (the "401(k) Plan"), for all employees working a minimum of 1,000 hours per
year, which is designed to be tax deferred in accordance with the provisions of
Section 401(k) of the Internal Revenue Code. All United States employees
(including officers but not outside directors) may contribute from 1% to 17% of
compensation per week (subject to certain limitations) on a tax-free basis
through a "salary reduction" arrangement. Employee contributions are always 100%
vested. The Company matches employee contributions up to a maximum of 2% of
salary or one thousand dollars per year, whichever is less. All Company
contributions become fully vested after four full years of employment. Company
contributions to the 401(k) plan were $286, $282, and $206 for fiscal years
1995, 1994, and 1993, respectively.
The Company also maintains a discretionary worldwide profit-sharing plan for
qualified employees. Employees who have been with the Company for 90 days of
continuous service are eligible to participate in the profit sharing plan. The
Company allocates a percentage of pre-tax profits to a profit sharing pool which
is then distributed to employees pro rata based on quarterly salary. In
addition, certain executives are eligible to participate in a bonus plan which
is subject to achieving specific operating performance targets established by
the Board of Directors. Company contributions to these plans were $2,604 , $612,
and $399 for fiscal years 1995, 1994, and 1993, respectively.
15
<PAGE> 9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 1995 and March 25, 1994 and for each of the three years in the
period ended March 31, 1995 ($ in thousands)
- --------------------------------------------------------------------------------
NOTE 4 . SEGMENT DATA AND EXPORT SALES -
Printronix operates in one industry segment - the design, manufacture and
marketing of medium and high speed printers which support a wide range of
computer systems and software platforms. Regional segment data is as follows:
<TABLE>
<CAPTION>
NORTH
1995 AMERICA EUROPE ASIA ELIMINATIONS CONSOLIDATED
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
REVENUES :
Net sales $ 113,417 $ 27,414 $ 5,758 $ -- $ 146,589
Transfers between
geographic locations 11,038 446 40,392 (51,876) --
-----------------------------------------------------------------------------
124,455 27,860 46,150 (51,876) 146,589
Income from operations $ 3,620 $ 3,515 $ 845 $ -- $ 7,980
Identifiable assets $ 40,899 $ 8,836 $ 11,940 $ $ 61,675
1994
- ------------------------------------------------------------------------------------------------------------------------------------
REVENUES :
Net sales $ 80,717 $ 21,174 $ 5,528 $ -- $ 107,419
Transfers between
geographic locations 11,366 220 26,667 (38,253) --
-----------------------------------------------------------------------------
92,083 21,394 32,195 (38,253) 107,419
Income from operations $ 94 $ 1,800 $ 408 $ -- $ 2,302
Identifiable assets $ 33,665 $ 8,064 $ 10,187 $ -- $ 51,916
1993
- ------------------------------------------------------------------------------------------------------------------------------------
REVENUES :
Net sales $ 68,134 $ 21,286 $ 4,444 $ -- $ 93,864
Transfers between
geographic locations 8,079 220 30,378 (38,677) --
-----------------------------------------------------------------------------
76,213 21,506 34,822 (38,677) 93,864
Income (loss) from
operations $ (5,175) $ 1,203 $ (55) $ -- $ (4,027)
Identifiable assets $ 30,474 $ 8,652 $ 9,150 $ -- $ 48,276
</TABLE>
Geographic information is based upon principal location of the Company's
operations and not necessarily on the location of the customers. Transfers
between geographic locations are billed at manufacturing costs plus a margin
representing a reasonable rate of return for activities performed. Certain
operating expenses have been redistributed among geographic regions to reflect a
reasonable allocation of operating expenses which support worldwide operations.
North America sales included export sales of approximately $23,261, $14,202 and
$7,560 for fiscal years 1995, 1994, and 1993, respectively. Export sales are
principally to Europe, Canada, and Asia. Increases in export sales during fiscal
1995 and 1994 were due to higher shipments of product to major OEMs with
operations located outside the United States.
In fiscal 1995, the Company had two customers each of which represented more
than 10% of consolidated net sales. Sales to the largest customer, IBM,
represented 28.8 percent and 10.7 percent of net sales for fiscal years 1995 and
1994, respectively. No sales were made to this customer in fiscal 1993. On a
geographic basis, fiscal 1995 sales to IBM represented 30.2 percent of domestic
and 26.6 percent of international net sales. A significant decline in sales to
this customer could have an adverse effect on the CompanyOs operations. Sales to
the second largest customer represented 10.5 percent, 14.6 percent, and 13.7
percent of net sales for fiscal years 1995, 1994, and 1993, respectively.
16
<PAGE> 10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 1995 and March 25, 1994 and for each of the three years in the
period ended March 31, 1995 ($ in thousands, except share data)
- --------------------------------------------------------------------------------
NOTE 5. STOCK OPTION PLANS AND COMMON SHARE PURCHASE RIGHTS -
(A) STOCK OPTIONS -
The Company has one stock option plan under which options may be granted to
purchase shares of its common stock. A total of 750,000 shares is authorized for
issuance under this plan. An additional plan which expired April 30, 1994 has
options outstanding, but no further options may be granted under this plan.
Options under the plans are granted at prices not less than the fair market
value of the common stock on the date of grant and can become exercisable in
installments at dates ranging from one to ten years from the date of grant, as
determined by the Stock Option Committee of the Board of Directors. Generally,
outstanding options become exercisable at the rate of 25 percent per year, and
expire five years from the date of grant. Grants of restricted stock can be made
at any price.
The following is a summary of the transactions, including restricted stock,
relating to the plans for the year ended March 31, 1995 :
<TABLE>
<CAPTION>
COMMON STOCK OPTIONS SHARES PRICE
- ----------------------------------------------------------------
<S> <C> <C>
Beginning, outstanding 813,557 $ 2.92 - $ 5.33
Granted 147,400 5.50 - 19.67
Exercised (324,973) 3.00 - 5.33
Cancelled (22,425) 3.00 - 6.42
- ----------------------------------------------------------------
Ending, outstanding 613,559 $ 2.92 - $ 19.67
</TABLE>
As of March 31, 1995, options to acquire 206,536 shares were exercisable, and
options to acquire 587,487 shares remained available to grant.
(B) RESTRICTED STOCK -
Under the 1984 Stock Incentive Plan the Company has sold restricted stock to
certain officers and key employees. The shares issued under the plan are subject
to repurchase agreements which lapse over an extended period not exceeding 7
years if certain Company performance measures are met. In fiscal 1991, 172,500
shares were issued under the plan and an additional 75,000 shares were issued in
fiscal 1993. The excess of the fair market value on the date of vesting over the
purchase price is charged to operations as the restrictions lapse. In fiscal
1995, 61,875 or 25% of the issued shares vested, and $681 was charged to
operations. There were no charges to operations in fiscal years 1994 and 1993 as
the required performance objectives were not met.
(C) COMMON SHARE PURCHASE RIGHTS -
On March 16, 1989, the Company declared a dividend payable on April 4, 1989, of
6,874,402 Common Share Purchase Rights.
Each right, when exercisable, entitles a stockholder to buy one share of the
Company's common stock at an exercise price of $23.33, subject to adjustment.
The rights become exercisable ten days after certain persons or groups announce
acquisition of 20 percent or more, or announce an offer for 30 percent or more,
of the Company's common stock. The rights are nonvoting, expire in ten years and
may be redeemed prior to becoming exercisable. In the event that the Company was
acquired in a merger or other business combination, each outstanding right would
entitle a holder to purchase, at the then current exercise price, that number of
shares of common stock of the surviving company having a market value equal to
two times the exercise price of the right. The foregoing is a general
description only and is subject to the detailed terms and conditions set forth
in the Common Share Rights Agreement, dated as of March 17, 1989, between the
Company and Chemical Trust Company of California.
NOTE 6. BANK BORROWING AND DEBT ARRANGEMENTS -
The Company maintains an unsecured line of credit of $7,500 with a United States
bank. The credit agreement generally provides for interest at the prime rate
plus 1/4 percent, contains certain standard financial and non-financial
restrictions, provides for an annual commitment fee of 1/2 percent of the unused
portion of the line, and is renewable in September 1995. At the end of fiscal
1995, 1994, and 1993, there were no cash borrowings against this line of credit.
At March 31, 1995, one of the Company's foreign subsidiaries maintained
unsecured lines of credit with foreign banks of $3,200 which includes a standby
Letter of Credit of $1,300, and additional restrictions on the available credit
balance of $507 relating to import letters of credit and bank guarantees for
building leases and utilities in Singapore. These credit facilities are subject
to parent guarantees, require payment of certain loan fees, and provide for
interest at approximately 3/4 to 1 percent above the bank's cost of raising
capital. At March 31, 1995, there were no cash borrowings against this line of
credit.
During fiscal 1993, the Company arranged equipment financing for $1,043 with
interest rates ranging between 9.25 percent and 10.4 percent. Outstanding
borrowings related to this were $257, $614 and $942 at March 31, 1995, March 25,
1994, and March 26, 1993, respectively. The borrowings are due and payable in
equal installments through fiscal year 1996 and are collateralized by certain of
the Company's fixed assets. All remaining principal of $257 will be paid during
fiscal year 1996.
17
<PAGE> 11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 1995 and March 25, 1994 and for each of the three years in the
period ended March 31, 1995 ($ in thousands)
- --------------------------------------------------------------------------------
NOTE 7 . INCOME TAXES -
<TABLE>
<CAPTION>
TAX PROVISION 1995 1994 1993
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Current
Federal $ 100 $ - $ -
State 158 36 35
Foreign 37 149 153
- ------------------------------------------------------------------------------
Total $ 295 $ 185 $ 188
<CAPTION>
COMPONENTS OF INCOME (LOSS) BEFORE TAXES 1995 1994 1993
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
United States $ 2,363 $ 2,591 $ (7,853)
Foreign 5,092 (537) 5,701
- ------------------------------------------------------------------------------
Total $ 7,455 $ 2,054 $ (2,152)
</TABLE>
Amounts for tax provision and components of income (loss) before taxes shown in
the two preceding tables are classified based on location of the taxing
authority and not on geographic region.
<TABLE>
<CAPTION>
DEFERRED INCOME TAX PROVISION 1995 1994 1993
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Tax depreciation over (under) depreciation
for financial reporting purposes $ (72) $ (174) $ 120
Inventory costs (capitalized) expensed on
tax return and (expensed) capitalized for
financial reporting (50) 133 (97)
Decrease (increase) in liability reserves (95) 1,261 (839)
Net operating income (loss) 1,352 (800) (2,280)
Valuation reserve (1,135) (420) 3,096
- ----------------------------------------------------------------------------------------
Total $ -- $ -- $ --
</TABLE>
Deferred income taxes are not provided on the undistributed earnings (which
totaled approximately $37,646 as of March 31, 1995) of the Company's foreign
subsidiaries as the Company intends to reinvest these earnings indefinitely
outside of the United States. Deferred income taxes result from differences in
the timing of reporting income and expenses for financial statement and income
tax reporting purposes.
18
<PAGE> 12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 1995 and March 25, 1994 and for each of the three years in the
period ended March 31, 1995 ($ in thousands, except share data)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DEFERRED INCOME TAX ASSET 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Tax depreciation over depreciation
for financial reporting purposes $ 145 $ 217
Inventory costs capitalized on tax return
and expensed for financial reporting (540) (490)
Liability reserves (1,721) (1,626)
Net operating loss (10,064) (11,416)
Foreign tax credit (2,700) (2,700)
Gross deferred tax asset (14,880) (16,015)
Valuation reserve 14,880 16,015
- --------------------------------------------------------------------------------
Total $ -- $ --
</TABLE>
At March 31, 1995, the Company had available net operating loss carryforwards
for Federal income tax purposes of approximately $29,600 expiring in 2002 to
2009. Additionally, at March 31, 1995, the Company had foreign tax credit
carryforwards of approximately $2,700 expiring in 1997.
<TABLE>
<CAPTION>
RECONCILIATION OF EFFECTIVE
TAX RATE TO STATUTORY 1995 1994 1993
FEDERAL TAX RATE OF 34% AMOUNT % AMOUNT % AMOUNT %
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Provision (credit) computed
at statutory rates $ $ 2,534 34.0 $ 699 34.0 $ (731) (34.0)
State income taxes, net
of Federal tax benefit 126 1.7 36 1.8 35 1.6
Book (income) loss from which
Federal benefit is not available (utilized) (672) (9.0) 857 41.7 2,063 95.9
Rate reductions due to foreign
operations (including carryback) (1,693) (22.7) (1,407) (68.5) (1,179) (54.8)
- ----------------------------------------------------------------------------------------------------------------------------------
Total $ 295 4.0 $ 185 9.0 $ 188 (8.7)
</TABLE>
The Company has been granted pioneer status in Singapore through mid-1995, and
is exempt from tax liability for earnings generated there, until that time. The
aggregate dollar effect of the pioneer status was to reduce foreign taxes by
$1,032, $620, and $1,080 for the fiscal years 1995, 1994, and 1993,
respectively. The primary and fully diluted income per share effects of this
pioneer status would be 19 cents, 12 cents, and 23 cents for fiscal years 1995,
1994, and 1993, respectively. The Company has recently filed for, and believes
it will receive, either pioneer status on the manufacturing of new line matrix
products or post-pioneer status on the manufacturing of current products. The
granting of either pioneer status will result in a foreign tax liability at
below the maximum statutory rate beginning in fiscal 1996.
19
<PAGE> 13
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF PRINTRONIX, INC. :
We have audited the accompanying consolidated balance sheets of Printronix, Inc.
(a Delaware Corporation) and subsidiaries as of March 31, 1995 and March 25,
1994, and the related consolidated statements of operations, stockholders'
equity and cash flows for each of the three years in the period ended March 31,
1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Printronix, Inc. and
subsidiaries as of March 31, 1995 and March 25, 1994, and the results of their
operations and their cash flows for each of the three years in the period ended
March 31, 1995, in conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
- -----------------------
ARTHUR ANDERSEN LLP
Orange County, California
April 26, 1995
QUARTERLY DATA (DERIVED FROM AUDITED FINANCIAL STATEMENTS, EXCEPT STOCK PRICE
INFORMATION) ($ in thousands, except share data)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
QUARTER
----------------------------------------------
FISCAL 1995 First Second Third Fourth
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $33,465 $34,301 $37,645 $41,178
Gross profit 8,654 8,845 9,847 10,622
Net income 1,400 1,527 1,902 2,331
Earnings per share
- primary & fully diluted $ 0.28 $ 0.29 $ 0.35 $ 0.43
Stock Price
high $ 6.50 $ 13.50 $ 27.75 $ 28.25
low $ 5.17 $ 5.83 $ 10.67 $ 16.50
<CAPTION>
QUARTER
----------------------------------------------
FISCAL 1994 First Second Third Fourth
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $24,190 $24,499 $28,234 $30,496
Gross profit 6,558 5,961 6,561 7,300
Net income 531 96 325 917
Earnings per share
- primary $ 0.11 $ 0.02 $ 0.07 $ 0.19
- fully diluted $ 0.11 $ 0.02 $ 0.07 $ 0.18
Stock Price
high $ 5.00 $ 5.08 $ 5.33 $ 6.33
low $ 4.33 $ 4.33 $ 4.67 $ 4.67
</TABLE>
20
<PAGE> 14
CORPORATE INFORMATION
<TABLE>
<S> <C>
BOARD OF DIRECTORS
ROBERT A. KLEIST *RALPH GABAI
President and Chief Executive Officer, President, Bi-Coastal Consulting Ltd.
Printronix, Inc. (Business consulting to venture capital financed companies)
BRUCE T. COLEMAN *ERWIN A. KELEN
Chief Executive Officer, El Salto Advisors President, Kelen Ventures
(Advice and interim CEO services) (Venture Investments)
*JOHN R. DOUGERY
General Partner, Dougery & Wilder
(Venture capital investments)
* Member of the Audit Committee
</TABLE>
<TABLE>
<S> <C> <C>
CORPORATE OFFICERS
ROBERT A. KLEIST RICHARD A. STEELE JULI A. MATHEWS
President and Chief Executive Officer Senior Vice President, Vice President, Human Resources
Sales and Marketing
J. EDWARD BELT PH.D. GORDON B. BARRUS BRUCE E. MENN
Senior Vice President, Engineering, Vice President, Advanced Development Vice President, Product Development
Chief Technical Officer and
Asst. Corporate Secretary
GEORGE L. HARWOOD STEVEN M. EGOL
Senior Vice President, Finance & MIS, Vice President, International Sales
Chief Financial Officer and Corporate Secretary & Marketing
C. VICTOR FITZSIMMONS NORM E. FARB PH.D.
Senior Vice President, Worldwide Manufacturing Vice President, Strategic Technology
PHILIP F. LOW
Vice President, Singapore Manufacturing
</TABLE>
<TABLE>
<S> <C>
CORPORATE DIRECTORY
PRINTRONIX CORPORATE OFFICES ANNUAL MEETING
17500 Cartwright Road, P.O. Box 19559, Annual meeting will be held at 2:00 p.m.,
Irvine, California 92713 August 15, 1995, at Printronix Corporate Offices,
Telephone: (714) 863-1900 located at 17500 Cartwright Road, Irvine, California
Facsimile: (714) 660-8682
PRINTRONIX COMMON STOCK
LEGAL COUNSEL Traded OTC, NASDAQ, National Market System,
Kirshman & Harris Stock Symbol : PTNX
A Professional Corporation, General Counsel
11500 Olympic Blvd., Suite 605 STOCKHOLDERS
Los Angeles, California 90064 As of March 31, 1995, there were 343 record holders of the Company's
Telephone: (310) 312-4544 Common Stock.
INDEPENDENT AUDITORS CORPORATE AND INVESTOR INFORMATION
Arthur Andersen LLP A copy of Printronix' annual report on Form 10-K filed with the Securities and
18500 Von Karman Ave., Suite 1100 Exchange Commission (SEC) will be furnished without charge to any stockholder.
Irvine, California 92715 To obtain a copy, please write to:
Telephone: (714) 757-3100
Investor Relations Department, Printronix, Inc.
REGISTRAR AND TRANSFER AGENT 17500 Cartwright Road, P.O.Box 19559
Chemical Mellon Shareholder Services Irvine, California 92713, Telephone: (714) 863-1900
300 S. Grand Avenue
Los Angeles, California 90071
</TABLE>
<PAGE> 1
LIST OF SUBSIDIARIES
STATE OR OTHER
JURISDICTION OF
NAME INCORPORATION
---- ---------------
Printronix Nederland B.V. The Netherlands
Printronix Latinoamericana, S.A. de C.V. Mexico
Printronix Foreign Sales Corporation B.V. The Netherlands
Printronix GmbH West Germany
Printronix A.G. Switzerland
Printronix Ltd. United Kingdom
EXHIBIT 21
<PAGE> 1
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our reports incorporated by reference in this Form 10-K, into the Company's
previously filed Registration Statement File Nos. 2-70035, 33-14288 and
33-83156.
[ARTHUR ANDERSEN LLP SIG]
ARTHUR ANDERSEN LLP
Orange County, California
June 27, 1995
Exhibit 23
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
"This schedule contains summary financial information extracted from the
Company's Annual Report for the fiscal year ended March 31, 1995 and is
qualified in its entirety by reference to such financial statements."
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 8345
<SECURITIES> 0
<RECEIVABLES> 22305
<ALLOWANCES> 908
<INVENTORY> 19098
<CURRENT-ASSETS> 50463
<PP&E> 42157
<DEPRECIATION> 31215
<TOTAL-ASSETS> 61675
<CURRENT-LIABILITIES> 18648
<BONDS> 0
<COMMON> 50
0
0
<OTHER-SE> 41492
<TOTAL-LIABILITY-AND-EQUITY> 61675
<SALES> 146589
<TOTAL-REVENUES> 146589
<CGS> 108621
<TOTAL-COSTS> 138609
<OTHER-EXPENSES> 525
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 70
<INCOME-PRETAX> 7455
<INCOME-TAX> 295
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7160
<EPS-PRIMARY> 1.34
<EPS-DILUTED> 1.33
</TABLE>
