Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 23, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transaction period from to
Commission file number 0-9321
PRINTRONIX, INC.
B (Exact name of registrant as specified in its charter)
Delaware 95-2903992
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
17500 Cartwright
P.O. Box 19559
Irvine, California 92713
(Address of principal executive offices) (Zip Code)
(714) 863-1900
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months, and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO
Indicate the number of shares outstanding of each of the issuer's classes
of common stock,as of the latest practicable date.
Class of Common Stock Outstanding at January 27, 1995
$ .01 par value 4,962,124
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PRINTRONIX, INC AND SUBSIDIARIES
TABLE OF CONTENTS
------------------------------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Statement Regarding Financial Information . . . . . . . . . . . .(2)
Consolidated Balance Sheets
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . .(3)
Liabilities and Stockholders' Equity . . . . . . . . . . . .(4)
Consolidated Statements of Operations . . . . . . . . . . . . . .(5)
Consolidated Statements of Cash Flows . . . . . . . . . . . . . .(6)
Condensed Notes to Consolidated Financial Statements. . . . . . .(8)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations. . . . . . . . . . . . . . . . (10)
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . (12)
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13)
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PRINTRONIX, INC. AND SUBSIDIARIES
FORM 10-Q
------------
FOR THE QUARTER ENDED DECEMBER 23, 1994
----------------------------------------
PART I. FINANCIAL INFORMATION
-------------------------------------------
Item 1. Financial Statements
---------------------------------
Statement Regarding Financial Information
---------------------------------------------------------
The financial statements included herein have been prepared by Printronix,
Inc. (the "Company"), without audit, pursuant to the rules and regulations
of the Securities and Exchange Commission. Certain information normally
included in the financial statements prepared in accordance with generally
accepted accounting principles has been omitted pursuant to such rules and
regulations. However, the Company believes that the disclosures are adequate
to make the information presented not misleading. It is suggested that
the financial statements be read in conjunction with the financial
statements and notes thereto included in the Company's annual report on
Form 10-K for the fiscal year ended March 25, 1994, as filed with the
Securities and Exchange Commission.
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<TABLE>
PRINTRONIX, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
---------------------------
Assets
<CAPTION>
December 23, March 25,
1994 1994
(Unaudited)
-------------------- -----------
(In thousands)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents (Note 2) $5,625 $3,604
Accounts receivable, net of allowances
for doubtful accounts
$ 745 as of December 23, 1994 and
$ 677 as of March 25, 1994 22,543 19,303
Inventories (Note 3)
Raw materials, subassemblies and
work in process 14,844 14,202
Finished goods 4,133 2,302
----------- -----------
18,977 16,504
Prepaid expenses 787 1,228
----------- -----------
TOTAL CURRENT ASSETS 47,932 40,639
----------- -----------
Property and Equipment, at cost:
Machinery and equipment 26,353 24,643
Furniture and fixtures 11,729 11,582
Leasehold improvements 3,267 3,173
----------- -----------
41,349 39,398
Less-Accumulated depreciation
and amortization (30,453) (28,395)
----------- -----------
10,896 11,003
----------- -----------
Other assets 275 274
----------- -----------
TOTAL ASSETS $59,103 $51,916
======= =======
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PRINTRONIX, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - continued
---------------------------
Liabilities and Stockholders' Equity
------------------------------------
<CAPTION>
December 23, March 25,
1994 1994
(Unaudited)
-------------------- --------
(In thousands)
<S> <C> <C>
CURRENT LIABILITIES:
Loans payable - 543
Current portion of long-term debt 428 2,458
Accounts payable 11,533 9,476
Accrued expenses:
Payroll and employee benefits 3,580 2,700
Restructuring expenses 562 732
Warranty 869 769
Other 1,462 821
Accrued income taxes 238 201
----------- -----------
TOTAL CURRENT LIABILITIES 18,672 17,700
----------- -----------
Long-term debt - 256
Other long-term liabilities 1,594 1,594
STOCKHOLDERS' EQUITY:
Common stock, par value $0.01-
Authorized 18,000,000 shares,
issued and outstanding
4,957,637 and 4,647,656
shares as of December 23, 1994 and
March 25, 1994, respectively. 50 47
Additional paid-in capital 27,019 25,380
Retained earnings 11,768 6,939
----------- -----------
Total Stockholders' Equity 38,837 32,366
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $59,103 $51,916
======= =======
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<TABLE>
PRINTRONIX, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
-------------------------------------
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
Dec. 23, Dec. 24, Dec. 23, Dec. 24,
1994 1993 1994 1993
(Amounts in thousands, except share data)
<S> <C> <C> <C> <C>
NET SALES $37,645 $28,234 $105,411 $76,923
COST OF SALES 27,798 21,673 78,065 57,843
--------------------------------- -----------
Gross Profit 9,847 6,561 27,346 19,080
OPERATING EXPENSES:
Engineering and development 3,262 2,561 9,100 7,550
Selling, general and
administrative 4,579 3,523 12,811 10,362
--------------------------------- -----------
Total operating expenses 7,841 6,084 21,911 17,912
--------------------------------- -----------
INCOME FROM OPERATIONS 2,006 477 5,435 1,168
--------------------------------- -----------
Other expense, net 85 131 434 141
--------------------------------- -----------
INCOME BEFORE TAXES 1,921 346 5,001 1,027
Provision for income taxes 19 21 172 75
--------------------------------- -----------
NET INCOME $ 1,902 $ 325 $ 4,829 $ 952
======= ======= ======= =======
EARNINGS PER SHARE (Note 4):
Primary $ .35 $ .07 $ .92 $ .20
Fully Diluted $ .35 $ .07 $ .90 $ .20
======== ======= ======= =======
WEIGHTED AVERAGE
SHARES OUTSTANDING (Note 4):
Primary 5,401,299 4,847,411 5,254,745 4,829,595
Fully Diluted 5,454,763 4,874,183 5,387,049 4,879,419
======== ======== ======== ========
</TABLE>
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<TABLE>
PRINTRONIX, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
-------------------------------------
For the Nine Months Ended:
December 23, 1994 and December 24, 1993
-----------------------------------------------------------------------------
(Unaudited)
<CAPTION>
1994 1993
<S> <C> <C>
Cash flows from operating activities:
Net income $ 4,829 $952
Adjustments to reconcile net income to
net cash provided (used) by operating activities:
Depreciation and amortization 3,756 3,366
Loss (gain) on sales of property & equipment 119 (54)
Compensation expense related to restricted
stock plan 432 -
Changes in assets and liabilities:
Accounts receivable (3,177) (2,857)
Inventories (2,473) 767
Accounts payable 2,057 (987)
Payroll and employee benefits 880 (649)
Other current liabilities 571 (997)
Accrued income taxes 37 (140)
Other 440 (93)
----------- -----------
Net cash provided (used) by operating
activities 7,471 (692)
----------- -----------
Cash flows from investing activities:
Investment in property and equipment (3,993) (4,274)
Disposition of office building - 766
Proceeds from disposition of equipment 225 197
----------- -----------
Net cash used in investing activities (3,768) (3,311)
----------- -----------
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PRINTRONIX, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows - continued
-------------------------------------
For the Nine Months Ended:
December 23, 1994 and December 24, 1993
------------------------------------------------------------------------------
(Unaudited)
<CAPTION>
1994 1993
<S> <C> <C>
Cash flows from financing activities:
(Decrease) / increase in loans payable (543) 983
Payment of short-term loan (2,100) -
Proceeds from short-term loan - 2,100
Proceeds from issuance of common stock 1,147 2
Retirement of common stock - (24)
Payments against debt borrowing (186) (237)
----------- -----------
Net cash (used) provided by financing
activities (1,682) 2,842
----------- -----------
Increase (decrease) in cash and cash
equivalents 2,021 (1,161)
----------- -----------
Cash and cash equivalents at beginning
of period 3,604 3,055
----------- -----------
Cash and cash equivalents at end of period $5,625 $1,894
======= =======
---------------------------------------------------------------------
Supplementary disclosures of cash flow information:
Taxes paid $103 $114
Interest paid $ 95 $129
</TABLE>
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PRINTRONIX, INC. AND SUBSIDIARIES
Condensed Notes to Consolidated Financial Statements
-----------------------------------------------
DECEMBER 23, 1994
-------------------------
(Unaudited)
1) Management Opinion
In the opinion of management, the consolidated financial statements
reflect all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position and results of
operations as of and for the periods presented.
2) Cash and Cash Equivalents
The Company considers all highly liquid temporary cash investments with
maturities of three months or less to be cash equivalents. The effect of
exchange rate changes on cash balances held in foreign currencies was not
material for the periods presented.
3) Inventories
Inventories are priced at the lower of cost (FIFO) or market and include
the cost of material, labor and manufacturing overhead.
4) Earnings per Share
The number of shares used in computing earnings per share equals the
total of the weighted average number of shares outstanding during the
periods presented plus common stock equivalents relating to options.
Common stock equivalents relating to options represent additional shares
which may be issued in connection with their exercise, reduced by the
number of shares which could be repurchased with the proceeds at the
average market price per share computed on a quarterly basis during the
year. The following table shows the calculation for primary and fully
diluted shares outstanding:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
Dec. 23, Dec. 24, Dec. 23, Dec. 24,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Weighted avg. shares
outstanding 4,886,344 4,629,023 4,767,411 4,627,737
Common stock equivalents:
Options - Primary 514,955 218,388 487,334 201,858
Options - Fully Diluted 568,419 245,160 619,638 251,682
Shares outstanding:
Primary 5,401,299 4,847,411 5,254,745 4,829,595
Fully Diluted 5,454,763 4,874,183 5,387,049 4,879,419
</TABLE>
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PRINTRONIX, INC. AND SUBSIDIARIES
Condensed Notes to Consolidated Financial Statements
-----------------------------------------------
DECEMBER 23, 1994
-------------------------
(Unaudited)
5) Capital Stock
On November 8, 1994, the Board of Directors declared a split-up
effected in the form of a fifty percent (50%) stock dividend of the
Company's common stock to stockholders of record at the close of
business on November 11, 1994. 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 capital in excess of stated value to the common
stock account. Retroactive effect has been given to the dividend in
stockholders' equity as of December 23, 1994, and in all share and per
share data in the accompanying financial statements.
<PAGE>
PRINTRONIX, INC. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
-------------------------------------------
Reference is made to the Company's annual report on Form 10-K for the
fiscal year ended March 25, 1994 for a detailed discussion and analysis
of the Company's financial condition and results of operations for the
periods covered by that report.
RESULTS OF OPERATIONS
Revenues and Backlog
Net sales for the quarter ended December 23, 1994 were 9.7% higher than
last quarter and 33.3% higher than the year-ago quarter. On a year-to-date
basis, sales were up 37.0% over the first nine months of the prior fiscal
year. The growth in revenue is primarily attributable to higher sales of
newer line matrix products with the Company's P4000 and P9000 product
lines showing the greatest increases at 11.6% growth over the prior
quarter and 69.0% over the year-ago quarter. In addition, higher sales of
non-impact printers, consumables, and higher than expected sales of mature
line matrix products further contributed to the improved revenue for both
the quarter and first nine months of the fiscal year. Revenue generated
by the Company's three largest customers increased 12.5% over the prior
quarter and 54.0% over the year-ago quarter and for the first nine months
of the fiscal year was up $23.5 million or 94.8% over the prior year
period. The increase in OEM business also helped to grow international sales
for the first nine months of the fiscal year to 37.7% of total revenue up
from 35.1% for the prior year. Order backlog at quarter-end was $16.4
million compared to $15.4 million at the end of the previous quarter and
$10.5 million at the end of the third quarter for the previous fiscal
year.
Gross Profit
Gross profit as a percentage of sales for the quarter increased to 26.2%
compared to 25.8% in the prior quarter and 23.2% in the prior year quarter.
Year-to-date gross profit grew to $27.3 million, up $8.3 over the prior
year period, and as a percentage of sales grew to 25.9% for the first nine
months of the fiscal year compared to 24.8% for the first nine months of
the prior fiscal year. The improvement in gross profit results from a
combination of material cost reductions, labor productivity improvements
and lower overhead costs from manufacturing efficiencies associated with
higher production levels. The consolidation of Irvine manufacturing
operations into a single facility late in the prior year also contributed
to decreased overhead costs in the year-to-date period compared to the
same period in the prior year.
Operating and Other Expenses and Taxes
Engineering expense for the quarter increased 4.7% over the prior quarter
and 27.4% over the prior year quarter. On a year-to-date basis, engineering
expenses grew by 20.5% to $9.1 million compared to $7.6 million for the
first nine months of the prior fiscal year. Engineering expenses have grown
primarily to provide the necessary product development and support to an
increased OEM customer base. These customers have generally chosen to
purchase multiple printer products within the Company's various product
families and therefore require higher levels of customer support.
In addition, engineering continues to work on development of new products
which also contributed to the increase in spending for the periods compared.
Although engineering spending has increased, expenses as a percentage of
sales have dropped to 8.6% for the current nine months ended compared
to 9.8% for the first nine months of the prior fiscal year.
<PAGE>
Operating and Other Expenses and Taxes-continued
Selling, general, and administrative expenses increased 13.2% over the
prior quarter and 30.0% over the prior year quarter. Year-to-date expenses
increased by 23.6% to $12.8 million compared to $10.4 million for the
corresponding prior year nine months. The increased spending is being driven
primarily from higher sales and marketing related expenses for trade shows,
promotions and business conferences to support increasing OEM business and
other customer requirements. As a percentage of sales, selling, general,
and administrative spending has decreased to 12.2% for the current nine
months ended compared to 13.5% for the first nine months of the prior fiscal
year.
Other expense increased to $0.4 million, on a year-to-date basis, compared
to $0.1 million for the first nine months of the prior fiscal year. The
higher expense level resulted primarily from currency translation losses
due to a significant weakening of the U.S. dollar against foreign currencies
in the current fiscal year. The required tax provision has remained low
as the Company is currently utilizing a net operating loss carryforward and
is only required to provide for certain state and foreign taxes.
LIQUIDITY AND CAPITAL RESOURCES
The Company maintained a strong financial position ending the quarter with
no long-term debt and cash, net of short-term debt, of $5.2 million. Cash
flow from operating activities grew primarily from increased profitibility,
improved inventory turns, and a higher level of accounts payable related to
increased requirements for production material.
During the last five quarters the Company has been able to fund its
operations by increasing profitability resulting in no borrowings against
the Company's $7.5 million unsecured line of credit with Wells Fargo Bank
as of December 23, 1994.
Investment in capital equipment for the quarter was $1.6 million compared
to $1.3 million in the prior quarter and $1.4 million in the year-ago quarter.
Capital expenditures for the quarter related primarily to additional
machinery and tooling for line matrix products and upgrades of computer
software. Similar levels of capital expenditures are anticipated over the
next few quarters.
In December 1994 the Company completed a split-up effected in the form
of a fifty percent (50%) stock dividend. Retroactive effect has been given
to the stock dividend in shareholder's equity accounts as of December 23,1994,
and in all share and per share data presented (see note 5). In addition,
cash of $1.1 million was received for the first nine months of the fiscal
year, relating to the exercise of stock options pursuant to the Company's
Stock Incentive Plan.
The Company believes that its internally-generated funds, together with
available financing, will be adequate in providing its working capital
requirements, capital expenditures, and engineering development needs
through the current fiscal year.
<PAGE>
PART II. OTHER INFORMATION
---------------------------------------
Item 1. Legal Proceedings
------------ -----------------
See "Item 3. Legal Proceedings" reported in Part I of the Company's Report
on Form 10K for the fiscal year ended March 25, 1994.
<PAGE>
Signatures
------------ -
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PRINTRONIX, INC.
(Registrant)
Date: February 2, 1995 By: George L. Harwood
George L. Harwood
Sr. Vice-President, Finance,
Chief Financial Officer, and
Secretary
(Principal Financial Officer
and Duly Authorized Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-END> DEC-23-1994
<CASH> 5625
<SECURITIES> 0
<RECEIVABLES> 22543
<ALLOWANCES> 745
<INVENTORY> 18977
<CURRENT-ASSETS> 47932
<PP&E> 41349
<DEPRECIATION> 30453
<TOTAL-ASSETS> 59103
<CURRENT-LIABILITIES> 18672
<BONDS> 0
<COMMON> 50
0
0
<OTHER-SE> 38787
<TOTAL-LIABILITY-AND-EQUITY> 59103
<SALES> 37645
<TOTAL-REVENUES> 37645
<CGS> 27798
<TOTAL-COSTS> 7841
<OTHER-EXPENSES> 72
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13
<INCOME-PRETAX> 1921
<INCOME-TAX> 19
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1902
<EPS-PRIMARY> .35
<EPS-DILUTED> .35
</TABLE>
