<PAGE>
Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 29, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transaction period from to
Commission file number 0-9321
PRINTRONIX, INC.
(Exact name of registrant as specified in its charter)
Delaware 95-2903992
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
17500 Cartwright
P.O. Box 19559
Irvine, California 92713
(Address of principal executive offices) (Zip Code)
(714) 863-1900
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class of Common Stock Outstanding at November 3, 1995
$ .01 par value 5,156,120
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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)
Item 4. Submission of Matters to a Vote of Security Holders (12)
Signatures (13)
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PRINTRONIX, INC. AND SUBSIDIARIES
FORM 10-Q
------------
FOR THE QUARTER ENDED SEPTEMBER 29, 1995
----------------------------------------
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 31, 1995, as filed with the Securities and Exchange
Commission.
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PRINTRONIX, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
---------------------------
<TABLE>
<CAPTION>
Assets
September 29, March 31,
1995 1995
(Derived from audited
(Unaudited) financial statements)
-------------------- ---------------------
(In thousands)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents (Note 2) $12,150 $8,345
Accounts receivable, net of allowances
for doubtful accounts of
$ 876 as of September 29, 1995 and
$ 908 as of March 31, 1995 20,782 22,305
Inventories (Note 3)
Raw materials, subassemblies and
work in process 14,084 16,139
Finished goods 4,490 2,959
----------- -----------
18,574 19,098
Prepaid expenses 807 715
----------- -----------
TOTAL CURRENT ASSETS 52,313 50,463
----------- -----------
Property and Equipment, at cost:
Machinery and equipment 29,213 26,809
Furniture and fixtures 13,033 12,037
Leasehold improvements 3,442 3,311
----------- -----------
45,688 42,157
Less-Accumulated depreciation
and amortization (32,832) (31,215)
----------- -----------
12,857 10,942
----------- -----------
Other assets 265 270
----------- -----------
TOTAL ASSETS $65,435 $61,675
======= =======
See accompanying notes to consolidated financial statements
</TABLE>
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PRINTRONIX, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - continued
---------------------------
Liabilities and Stockholders' Equity
------------------------------------
<TABLE>
<CAPTION>
September 29, March 31,
1995 1995
(Derived from audited
(Unaudited) financial statements)
-------------------- ---------------------
(In thousands)
<S> <C> <C>
CURRENT LIABILITIES:
Current portion of long-term debt 270 257
Accounts payable 10,030 11,192
Accrued expenses:
Payroll and employee benefits 3,424 3,758
Warranty 1,136 1,136
Environmental 214 214
Restructuring expenses 37 93
Other 962 1,619
Accrued income taxes 227 379
----------- -----------
TOTAL CURRENT LIABILITIES 16,300 18,648
----------- -----------
Other long-term liabilities 1,485 1,485
STOCKHOLDERS' EQUITY:
Common stock, par value $0.01-
Authorized 18,000,000 shares,
issued and outstanding
5,148,283 and 4,972,561
shares as of September 29, 1995 and
March 31, 1995, respectively. 51 50
Additional paid-in capital 28,893 27,393
Retained earnings 18,706 14,099
----------- -----------
Total Stockholders' Equity 47,650 41,542
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $65,435 $61,675
======= =======
See accompanying notes to consolidated financial statements
</TABLE>
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PRINTRONIX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
Sep. 29, Sep. 23, Sep. 29, Sep. 23,
1995 1994 1995 1994
(Amounts in thousands, except share data)
<S> <C> <C> <C> <C>
NET SALES $39,509 $34,301 $81,721 $67,766
COST OF SALES 29,772 25,456 61,050 50,267
----------- ----------- ----------- -----------
Gross Profit 9,737 8,845 20,671 17,499
OPERATING EXPENSES:
Engineering and development 3,575 3,116 7,163 5,838
Selling, general and
administrative 4,307 4,045 8,853 8,232
----------- ----------- ----------- -----------
Total operating expenses 7,882 7,161 16,016 14,070
----------- ----------- ----------- -----------
INCOME FROM OPERATIONS 1,855 1,684 4,655 3,429
----------- ----------- ----------- -----------
Other (income) expense, net (106) 105 (145) 349
----------- ----------- ----------- -----------
INCOME BEFORE TAXES 1,961 1,579 4,800 3,080
Provision for income taxes 30 52 193 153
----------- ----------- ----------- -----------
NET INCOME $ 1,931 $ 1,527 $ 4,607 $ 2,927
======= ======= ======= =======
EARNINGS PER SHARE (Note 4):
Primary $ .35 $ .29 $ .84 $ .57
Fully Diluted $ .35 $ .29 $ .84 $ .56
======== ======= ======= =======
WEIGHTED AVERAGE
SHARES OUTSTANDING (Note 4):
Primary 5,529,594 5,227,361 5,495,391 5,114,319
Fully Diluted 5,529,675 5,264,004 5,513,138 5,220,309
========= ========= ========= =========
See accompanying notes to consolidated financial statements
</TABLE>
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PRINTRONIX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
For the Six Months Ended:
September 29, 1995 and September 23, 1994
- -----------------------------------------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
1995 1994
Cash flows from operating activities:
Net income $ 4,607 $2,927
Adjustments to reconcile net income to
net cash provided (used) by operating activities:
Depreciation and amortization 2,772 2,503
Loss (gain) on sales of property & equipment (30) -
Compensation expense related to restricted stock plan 876 -
Changes in assets and liabilities:
Accounts receivable 1,523 (3,212)
Inventories 524 (1,187)
Accounts payable (1,162) 1,243
Payroll and employee benefits (334) 1,217
Other current assets and liabilities, net (805) 372
Accrued income taxes (152) 50
Other 5 (64)
----------- -----------
Net cash provided by operating activities 7,824 3,849
----------- -----------
Cash flows from investing activities:
Investment in property and equipment (4,493) (2,324)
Proceeds from disposition of equipment 101 118
----------- -----------
Net cash used in investing activities (4,392) (2,206)
----------- ----------- ------------
See accompanying notes to consolidated financial statements
</TABLE>
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PRINTRONIX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - continued
-------------------------------------
For the Six Months Ended:
September 29, 1995 and September 23, 1994
--------------------------------------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Cash flows from financing activities:
(Decrease) / increase in loans payable - (543)
Payment of short-term loan - (2,100)
Proceeds from issuance of common stock 625 571
Payments against debt borrowing (252) (174)
----------- -----------
Net cash (used) provided by financing activities 373 (2,246)
----------- -----------
Increase (decrease) in cash and cash equivalents 3,805 (603)
----------- -----------
Cash and cash equivalents at beginning of period 8,345 3,604
----------- -----------
Cash and cash equivalents at end of period $12,150 $3,001
======= =======
- ---------------------------------------------------------------------
Supplementary disclosures of cash flow information:
Taxes paid $272 $79
Interest paid $ 14 $80
Capital lease additions $265 $ -
See accompanying notes to consolidated financial statements
</TABLE>
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PRINTRONIX, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------------------------------------------
SEPTEMBER 29, 1995
-------------------------
(Unaudited)
1) Management Opinion
In the opinion of management, the consolidated financial statements reflect
all adjustments (which include only normal recurring adjustments) necessary
to present fairly the financial position and results of operations as of
and for the periods presented.
2) Cash and Cash Equivalents
The Company considers all highly liquid temporary cash investments with
maturities of three months or less to be cash equivalents. The effect of
exchange rate changes on cash balances held in foreign currencies was not
material for the periods presented.
3) Inventories
Inventories are priced at the lower of cost (FIFO) or market and include
the cost of material, labor and manufacturing overhead.
4) Earnings per Share
The number of shares used in computing earnings per share equals the total
of the weighted average number of shares outstanding during the periods
presented plus common stock equivalents relating to options. Common stock
equivalents relating to options represent additional shares which may be
issued in connection with their exercise, reduced by the number of shares
which could be repurchased with the proceeds at the average market price
per share computed on a quarterly basis during the year. The following
table shows the calculation for primary and fully diluted shares
outstanding:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
Sep. 29, Sep. 23, Sep. 29, Sep. 23,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Weighted avg. shares outstanding 5,131,444 4,757,109 5,079,267 4,707,945
Common stock equivalents:
Options - Primary 398,150 470,252 416,124 406,374
Options - Fully Diluted 398,231 506,895 433,871 512,364
Shares outstanding:
Primary 5,529,594 5,227,361 5,495,391 5,114,319
Fully Diluted 5,529,675 5,264,004 5,513,138 5,220,309
</TABLE>
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PRINTRONIX, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------------------------------------------
SEPTEMBER 29, 1995
-------------------------
(Unaudited)
5) Capital Stock
In December 1994, Printronix 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 all share and per share data presented.
<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 31, 1995 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 September 29, 1995 were 6.4% lower than last
quarter and 15.2% higher than the year-ago quarter. The decline in second
quarter revenue over last quarter is primarily attributable to lower sales of
800 and 1200 line per minute line matrix printers to major OEMs. An increase
of $1.4 million in laser products partially offset the decrease in line matrix
revenues for the quarter. On a year-to-date basis, sales were up $14.0
million or 20.6% over the first six months of the prior fiscal year. The
increase in revenue for the first six months of the year compared with the
same period last year is due to higher sales levels of impact and laser
products to both domestic and international customers.
Revenue from the Company's five largest customers, which primarily represents
OEM business, decreased 11.5% over the prior quarter and increased 21.2% over
the year-ago quarter. For the first six months of the fiscal year, sales to
these customers was up $7.7 million or 21.5% over the prior year period.
Order backlog at quarter-end was $13.7 million compared with $17.6 million at
the end of the previous quarter and $15.4 million at the end of the second
quarter for the previous fiscal year. The decrease in backlog over the prior
year continues to be driven by decreasing lead times for customer orders and
more customers being converted to the Company's just-in-time drop shipment
program.
Over the next two quarters, the Company will continue its manufacturing
transition to a new family of fourth generation line matrix printers which
will replace prior generations of all line matrix models. During this period,
sales of line matrix printers could fluctuate from prior quarter's levels due
to inherent risks associated with a rapid changeover and replacement of product
lines. Factors which could influence sales during the transition include but
are not limited to suppliers' ability to meet production requirements for
certain critical components, the production of mature products, and customers'
ability to manage the transition and estimate their inventory requirements for
new and mature line matrix products.
Gross Profit
Gross profit as a percentage of sales for the quarter decreased to 24.6%
compared with 25.9% in the prior quarter and 25.8% in the prior year quarter.
The year-to-date gross profit percentage fell to 25.3% for the first six
months of the fiscal year compared with 25.8% for the first six months of the
prior fiscal year. The decline in gross profit percentage was partly due to
additional manufacturing start-up costs associated with the transition from
older line matrix products to the Company's new line matrix models, and
partly from manufacturing inefficiencies associated with the drop in second
quarter production levels.
<PAGE>
PRINTRONIX, INC. AND SUBSIDIARIES
Operating and Other Expenses and Taxes
Engineering expense for the quarter was flat with the prior quarter and
increased 14.7% over the prior year quarter. On a year-to-date basis,
engineering expenses grew 22.7% to $7.2 million compared with $5.8 million
for the first six months of the prior fiscal year. Increases over the prior
year quarter and prior year six months have been driven by increased product
development costs for newer line matrix printer models and higher customer
support costs due primarily to the increased OEM business. Selling, general,
and administrative expenses decreased 5.3% over the prior quarter and
increased 6.5% over the prior year quarter. Year-to-date expenses increased
by 7.5% to $8.9 million compared to $8.2 million for the corresponding prior
year six months. The decrease in spending over last quarter was primarily
due to lower European sales expenses. The increased spending over the prior
year periods continues to be driven by higher sales expenses for advertising,
marketing, and customer support due to higher OEM business and laser product
sales. As a percentage of sales, selling, general, and administrative
spending decreased to 10.8% for the current six months ended compared with
12.1% for the first six months of the prior fiscal year.
Other income was $0.1 million, on a year-to-date basis, compared with other
expense of $0.3 million for the first six months of the prior fiscal year.
The increase in other income was due to additional interest income earned
from higher cash levels from a year ago. Furthermore, short-term debt balances
have declined resulting in lower levels of interest expense.
The year-to-date tax provision increased 26% due to an improvement in taxable
income over the prior year. The Company continues to utilize Federal and
California net operating loss carryforwards and is required to provide only
for certain state and foreign taxes.
LIQUIDITY AND CAPITAL RESOURCES
The Company maintained a strong financial position ending the quarter with
cash, net of short-term borrowings, of $11.9 million compared with $11.0
million last quarter and $8.0 million for the year-ago quarter. Cash flow
from operating activities grew primarily from profitable operations and
aggressive management of receivables and inventory. Accordingly, the
Company has not needed to utilize its $7.5 million unsecured line of credit
with Wells Fargo Bank as of September 29, 1995.
Investment in capital equipment for the first six months of the fiscal year
was $4.5 million compared with $2.3 million for the prior year six months.
Year-to-date capital expenditures related primarily to additional machinery
and tooling for new line matrix products and upgrades of computer hardware.
The Company expects capital expenditure requirements to gradually decline 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 stockholder's equity accounts as of September 29,1995, and
in all share and per share data presented (see note 5). In addition, cash of
$0.6 million was received for the first six 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>
PRINTRONIX, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
-------------------------------
Item 1. Legal Proceeding
-----------------------------
See "Item 3. Legal Proceedings" reported in Part I of the Company's Report
on Form 10K for the fiscal year ended March 31, 1995.
Item 4. Submission of Matters to a Vote of Security Holder
-------------------------------------------------------------
The annual meeting of stockholders of the Company was held on August 15,
1995, at which five persons, constituting the entire board of directors,
were elected to serve until the next annual meeting of stockholders. The
names of the persons elected as directors are as follows:
<TABLE>
<CAPTION>
Shares for Shares Withheld
<S> <C> <C>
Bruce T. Coleman 4,662,070 18,365
John R. Dougery 4,664,840 15,595
Ralph Gabai 4,664,490 15,945
Erwin A. Kelen 4,664,840 15,595
Robert A. Kleist 4,664,490 15,945
</TABLE>
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PRINTRONIX, INC. AND SUBSIDIARIES
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PRINTRONIX, INC.
(Registrant)
Date: November 9, 1995 By: 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> 6-MOS
<FISCAL-YEAR-END> MAR-29-1996
<PERIOD-END> SEP-29-1995
<CASH> 12150
<SECURITIES> 0
<RECEIVABLES> 21658
<ALLOWANCES> 876
<INVENTORY> 18574
<CURRENT-ASSETS> 52313
<PP&E> 45688
<DEPRECIATION> 32832
<TOTAL-ASSETS> 65435
<CURRENT-LIABILITIES> 34714
<BONDS> 0
<COMMON> 51
0
0
<OTHER-SE> 47599
<TOTAL-LIABILITY-AND-EQUITY> 65435
<SALES> 39509
<TOTAL-REVENUES> 39509
<CGS> 29772
<TOTAL-COSTS> 37654
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14
<INCOME-PRETAX> 1961
<INCOME-TAX> 30
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1931
<EPS-PRIMARY> .35
<EPS-DILUTED> .35
</TABLE>
