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 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 February 5, 1996
$ .01 par value 5,172,057
<PAGE>
PRINTRONIX, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
------------------------------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Statement Regarding Financial Information (2)
Consolidated Balance Sheets
Assets (3)
Liabilities and Stockholders' Equity (4)
Consolidated Statements of Operations (5)
Consolidated Statements of Cash Flows (6)
Condensed Notes to Consolidated Financial Statements (8)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (9)
PART II. OTHER INFORMATION
Item 1. Legal Proceedings (11)
Item 5. Other Information (11)
Signatures (12)
<PAGE>
PRINTRONIX, INC. AND SUBSIDIARIES
FORM 10-Q
------------
FOR THE QUARTER ENDED DECEMBER 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.
<PAGE>
PRINTRONIX, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
---------------------------
Assets
<TABLE>
<CAPTION>
December 29, March 31,
1995 1995
(Derived from audited
(Unaudited) financial statements)
-------------------- --------------------
(In thousands)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents (Note 2) $10,420 $8,345
Accounts receivable, net of allowances
for doubtful accounts of
$ 891 as of December 29, 1995 and
$ 908 as of March 31, 1995 22,120 22,305
Inventories (Note 3)
Raw materials, subassemblies and
work in process 15,043 16,139
Finished goods 3,341 2,959
----------- -----------
18,384 19,098
Prepaid expenses 913 715
----------- -----------
TOTAL CURRENT ASSETS 51,837 50,463
----------- -----------
Property and Equipment, at cost:
Machinery and equipment 30,758 26,809
Furniture and fixtures 13,187 12,037
Leasehold improvements 3,458 3,311
----------- -----------
47,403 42,157
Less-Accumulated depreciation
and amortization (33,234) (31,215)
----------- -----------
14,169 10,942
----------- -----------
Other assets 264 270
----------- -----------
TOTAL ASSETS $66,270 $61,675
======= =======
</TABLE>
See accompanying notes to consolidated financial statement
<PAGE>
PRINTRONIX, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - continued
---------------------------
Liabilities and Stockholders' Equity
------------------------------------
<TABLE>
<CAPTION>
December 29, March 31,
1995 1995
(Derived from audited
(Unaudited) financial statements)
-------------------- -----------------------
(In thousands)
<S> <C> <C>
CURRENT LIABILITIES:
Short-term debt 310 257
Accounts payable 10,018 11,192
Accrued expenses:
Payroll and employee benefits 3,467 3,758
Warranty 1,136 1,136
Environmental 214 214
Restructuring expenses -- 93
Other 1,061 1,619
Accrued income taxes 155 379
----------- -----------
TOTAL CURRENT LIABILITIES 16,361 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
5,158,295 and 4,972,561
shares as of December 29, 1995 and
March 31, 1995, respectively. 52 50
Additional paid-in capital 28,836 27,393
Retained earnings 19,536 14,099
----------- -----------
Total Stockholders' Equity 48,424 41,542
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $66,270 $61,675
======= =======
</TABLE>
See accompanying notes to consolidated financial statement
<PAGE>
PRINTRONIX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
Dec. 29, Dec. 23, Dec. 29, Dec. 23,
1995 1994 1995 1994
(Amounts in thousands, except share data)
<S> <C> <C> <C> <C>
NET SALES $37,091 $37,645 $118,812 $105,411
COST OF SALES 29,302 27,798 90,352 78,065
----------- -------- ---------- ---------
Gross Profit 7,789 9,847 28,460 27,346
OPERATING EXPENSES:
Engineering and development 3,085 3,262 10,248 9,100
Selling, general and
administrative 4,117 4,579 12,970 12,811
----------- -------- --------- --------
Total operating expenses 7,202 7,841 23,218 21,911
----------- -------- --------- --------
INCOME FROM OPERATIONS 587 2,006 5,242 5,435
----------- -------- --------- --------
Other (income) expense, net (206) 85 (351) 434
----------- -------- --------- --------
INCOME BEFORE TAXES 793 1,921 5,593 5,001
Provision (credit) for
income taxes (37) 19 156 172
----------- -------- --------- --------
NET INCOME $ 830 $ 1,902 $ 5,437 $ 4,829
======= ======= ======= =======
EARNINGS PER SHARE (Note 4):
Primary $ .15 $ .35 $ .99 $ .92
Fully Diluted $ .15 $ .35 $ .99 $ .90
======== ======= ======= =======
WEIGHTED AVERAGE
SHARES OUTSTANDING (Note 4):
Primary 5,462,238 5,401,299 5,501,036 5,254,745
Fully Diluted 5,462,238 5,454,763 5,501,784 5,387,049
========= ========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
PRINTRONIX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
For the Nine Months Ended:
December 29, 1995 and December 23, 1994
-----------------------------------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income $ 5,437 $4,829
Adjustments to reconcile net income to
net cash provided (used) by operating
activities:
Depreciation and amortization 4,218 3,756
Loss on sale of property & equipment 22 119
Compensation expense related to
restricted stock plan 784 432
Changes in assets and liabilities:
Accounts receivable 185 (3,177)
Inventories 714 (2,473)
Accounts payable (1,174) 2,057
Payroll and employee benefits (351) 880
Accrued income taxes (224) 37
Other (783) 1,011
----------- -----------
Net cash provided by operating activities 8,828 7,471
----------- -----------
Cash flows from investing activities:
Investment in property and equipment (7,136) (3,993)
Proceeds from disposition of equipment 135 225
----------- -----------
Net cash used in investing activities (7,001) (3,768)
----------- ----------- ------------
</TABLE>
See accompanying notes to consolidated financial statement
<PAGE>
PRINTRONIX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - continued
-------------------------------------
For the Nine Months Ended:
December 29, 1995 and December 23, 1994
-------------------------------------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Cash flows from financing activities:
Decrease in loans payable - (543)
Payment of short-term loan - (2,100)
Proceeds from issuance of common stock 661 1,147
Payments against debt borrowing (413) (186)
----------- -----------
Net cash (used) provided by financing
activities 248 (1,682)
----------- -----------
Increase in cash and cash equivalents 2,075 2,021
----------- -----------
Cash and cash equivalents at
beginning of period 8,345 3,604
----------- -----------
Cash and cash equivalents at end
of period $10,420 $5,625
======= =======
- ---------------------------------------------------------------------
Supplementary disclosures of cash flow information:
Taxes paid $303 $103
Interest paid $ 19 $ 95
Capital lease additions $466 $ -
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
PRINTRONIX, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-----------------------------------------------
DECEMBER 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 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.
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. 29, Dec. 23, Dec. 29, Dec. 23,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Weighted avg. shares outstanding 5,148,283 4,886,344 4,972,561 4,767,411
Common stock equivalents:
Options - Primary 313,955 514,955 528,475 487,334
Options - Fully Diluted 313,955 568,419 529,223 619,638
Shares outstanding:
Primary 5,462,238 5,401,299 5,501,036 5,254,745
Fully Diluted 5,462,238 5,454,763 5,501,784 5,387,049
</TABLE>
<PAGE>
PRINTRONIX, INC. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
---------------------------------------------
Reference is made to the Company's annual report on Form 10-K for the fiscal
year ended March 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
Sales for the quarter ended December 29, 1995 were $37.1 million compared
with $39.5 million last quarter and $37.6 million in the year-ago quarter.
The revenue decline compared with both the prior and year-ago quarters
resulted primarily from lower sales of line matrix products to OEM customers
who are minimizing mature product inventory prior to fully phasing over to the
Company's new Proline Series 5 family of line matrix products. As a result of
this transition, revenue from the Company's five largest customers,
consisting primarily of OEMs, decreased 16% from the prior quarter and 11%
from the year-ago quarter. Sales of the new line matrix products totaled
$5.0 million for the quarter, or 13% of revenue, compared with 3% in the prior
quarter. All OEM customers have either already introduced the Proline Series 5
models or are expected to announce the new family during the next few
quarters. On a year-to-date basis, sales grew to $118.8 million compared with
$105.4 million for the first nine months of the prior fiscal year. Year-to-date
sales growth was driven by a $7.2 million increase in line matrix sales to
major OEM customers combined with a $6.2 million growth in non-impact revenue
to distribution customers.
Order backlog as of December 29, 1995 was $18.3 million compared with $13.7
million at the end of the previous quarter and $16.4 million at the end of
the year-ago quarter. The backlog reflects higher customer orders for the
Company's new line matrix products.
As the Company continues its transition from mature line matrix printers to
the new Proline Series 5 family, inherent risks associated with the
discontinuation of older product lines and the production ramp-up of the new
models could result in line matrix sales that fluctuate from prior quarter
levels. Risk conditions which could adversely influence sales levels include,
but are not limited to, suppliers' ability to meet production requirements,
the Company's ability to ramp-up production of the new products while
discontinuing the production of mature products and customer's 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 was 21% compared with 25% in the prior
quarter and 26% in the year-ago quarter. The decline in the gross profit
percentage from the prior and year-ago quarters resulted primarily from
manufacturing inefficiencies related to lower production volumes of mature
line matrix printers and continued start-up costs of the new Proline Series 5
models. Start-up costs for the quarter consisted primarily of rework,
training, and unfavorable purchase price variances. The Company anticipates
a gradual improvement in the gross profit percentage over the long-term as
customers begin taking higher volumes of the new Proline models.
<PAGE>
PRINTRONIX, INC. AND SUBSIDIARIES
Operating, Other Expenses and Taxes
Engineering spending for the quarter decreased to $3.1 million, down 14% from
the prior quarter and down 5% from the year-ago quarter. On a year-to-date
basis, engineering expense grew to $10.2 million compared with $9.1 million
for the first nine months of the prior fiscal year. Increased year-to-date
spending reflects higher development costs for new line matrix models, while
decreased spending for the quarter compared with the prior and year-ago
quarters reflects lower engineering costs on expendable materials and certain
labor costs. As a percentage of sales, engineering expense decreased to 8%
compared with 9% in the prior and year-ago quarters.
Selling, general and administrative expense decreased 4% compared with the
prior quarter and 10% compared with the year-ago quarter. On a year-to-date
basis, spending remained essentially flat with the prior fiscal year at $13
million. Decreased spending compared with the prior and year-ago quarters
reflects a decline in general and administrative expenses as the Company
focuses on minimizing and deferring discretionary administrative spending
until the new Proline products are in full production. Selling, general and
administrative expense, as a percentage of sales, was 11% for the current and
prior quarter compared with 12% for the year-ago quarter.
Other income on a year-to-date basis was $0.4 million compared with expense
of $0.4 million for the prior fiscal year. The increase in other income
resulted primarily from greater interest income on higher average cash
balances combined with decreasing interest expense on short-term debt.
The Company continues to utilize Federal and California net operating loss
carryforwards and is required to provide only for certain state and foreign
taxes. The tax credit of $37,000 for the quarter represents an adjustment to
accrued income taxes payable based on revised estimates of taxable income for
the fiscal year. The Company expects a minimal or zero tax provision during
the fourth quarter ending March 1996.
LIQUIDITY AND CAPITAL RESOURCES
Cash, net of short-term borrowing, was $10.1 million, up $5.2 million over
the year-ago quarter and down $1.8 million from the prior quarter. Increased
cash balances compared with the year-ago quarter resulted primarily from
increased year-to-date profitability, while the decline in cash compared with
the prior quarter resulted from lower net income together with increased
capital spending.
Investment in capital equipment on a year-to-date basis was $7.1 million
compared with $4.0 million for the first nine months of the prior fiscal
year. The increase in capital spending consisted primarily of $0.8 million in
initial expenditures for a new client server corporate information system,
$0.4 million for the purchase of a new phone system and additions of machinery
and equipment for production of new products. The Company anticipates increased
spending levels over the next few quarters.
The Company believes that its internally-generated funds, together with
available financing, will be adequate in providing working capital require-
ments and engineering development needs through calendar year 1996.
<PAGE>
PRINTRONIX, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
-------------------------------
Item 1. Legal Proceedings
-----------------------------
See "Item 3. Legal Proceedings" reported in Part I of the Company's Report
on Form 10K for the fiscal year ended March 31, 1995.
Item 5. Other Information
-----------------------------
The Company is party to restricted stock purchase agreements with certain of
its officers pursuant to which those officers purchased stock from the
Company at a discount to the market price. These agreements each provide for
a right of repurchase by the Company. The right of repurchase lapses as to a
portion of the shares in each fiscal year in which a certain performance
criterion is met. The lapse of the repurchase right means that such portion of
the shares becomes vested. In recognition of the officers' services to the
Company and the Company's performance in the first nine months of fiscal year
1996, effective December 29, 1995 the Company and those officers each entered
into agreements amending such restricted stock purchase agreements by
terminating the Company's right to repurchase the portion of those shares in
respect to fiscal year 1996, thus causing that portion of shares to become
vested.
<PAGE>
PRINTRONIX, INC. AND SUBSIDIARIES
SIGNATURES
-----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PRINTRONIX, INC.
(Registrant)
Date: February 12, 1996 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> 9-MOS
<FISCAL-YEAR-END> MAR-29-1996
<PERIOD-END> DEC-29-1995
<CASH> 10420
<SECURITIES> 0
<RECEIVABLES> 23011
<ALLOWANCES> 891
<INVENTORY> 18384
<CURRENT-ASSETS> 51837
<PP&E> 47403
<DEPRECIATION> 33234
<TOTAL-ASSETS> 66270
<CURRENT-LIABILITIES> 16361
<BONDS> 0
<COMMON> 52
0
0
<OTHER-SE> 48372
<TOTAL-LIABILITY-AND-EQUITY> 66270
<SALES> 118812
<TOTAL-REVENUES> 118812
<CGS> 90352
<TOTAL-COSTS> 23218
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19
<INCOME-PRETAX> 5593
<INCOME-TAX> 156
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5437
<EPS-PRIMARY> .99
<EPS-DILUTED> .99
</TABLE>
