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 June 28, 1996
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
PO Box 19559
Irvine, California 92623-9559
(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 July 18, 1996
$ .01 par value 7,867,871
<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 (10)
PART II. OTHER INFORMATION
Item 1. Legal Proceedings (12)
Signatures (13)
<PAGE>
PRINTRONIX, INC. AND SUBSIDIARIES
FORM 10-Q
- ------------
FOR THE QUARTER ENDED JUNE 28, 1996
- ----------------------------------------
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 29,1996, as filed with the Securities and Exchange
Commission.
PRINTRONIX, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
- ---------------------------
<TABLE>
<CAPTION>
Assets
June 28, 1996 March 29, 1996
(Derived from audited
(Unaudited) financial statements)
-------------------- ----------------------------
(In thousands)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents (Note 2) $ 5,531 $ 6,486
Accounts receivable, net of allowances
for doubtful accounts of
$ 960 as of June 28, 1996 and
$ 937 as of March 29, 1996 25,000 23,576
Inventories (Note 3)
Raw materials, subassemblies and
work in process 21,487 18,969
Finished goods 5,465 3,741
----------- -----------
26,952 22,710
Prepaid expenses 656 753
----------- -----------
TOTAL CURRENT ASSETS 58,139 53,525
----------- -----------
Property and Equipment, at cost:
Building and improvements 3,681 --
Machinery and equipment 32,642 33,010
Furniture and fixtures 14,313 12,864
Leasehold improvements 3,507 3,448
----------- -----------
54,143 49,322
Less-Accumulated depreciation
and amortization (35,118) (33,968)
----------- -----------
19,025 15,354
----------- -----------
Other assets 306 251
----------- -----------
TOTAL ASSETS $77,470 $69,130
======= =======
</TABLE>
See accompanying notes to consolidated financial statement
<PAGE>
PRINTRONIX, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - continued
- ---------------------------
Liabilities and Stockholders' Equity
- ------------------------------------
<TABLE>
<CAPTION>
June 28, 1996 March 29, 1996
(Derived from audited
(Unaudited) financial statements)
------------------ --------------------------
(In thousands)
<S> <C> <C>
CURRENT LIABILITIES:
Current portion of long-term debt $ 322 $ --
Other short-term borrowings 92 205
Accounts payable 13,392 11,846
Accrued expenses:
Payroll and employee benefits 4,162 3,492
Warranty 1,236 1,136
Environmental 214 214
Other 1,242 1,018
Accrued income taxes 365 329
----------- -----------
TOTAL CURRENT LIABILITIES 21,025 18,240
----------- -----------
Long-term debt 2,593 --
Other long-term liabilities 817 817
----------- -----------
TOTAL LONG-TERM LIABILITIES 3,410 817
----------- -----------
STOCKHOLDERS' EQUITY:
Common stock, par value $0.01-
Authorized 27,000,000 shares,
issued and outstanding
7,867,871 and 7,823,366
shares as of June 28, 1996 and
March 29, 1996, respectively. 79 78
Additional paid-in capital 29,594 29,125
Retained earnings 23,362 20,870
----------- -----------
Total Stockholders' Equity 53,035 50,073
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $77,470 $69,130
======= =======
</TABLE>
See accompanying notes to consolidated financial statement
<PAGE>
PRINTRONIX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
- -------------------------------------
<TABLE>
<CAPTION>
(Unaudited)
Three Months Ended
June 28, June 30,
1996 1995
(Amounts in thousands, except share data)
<S> <C> <C>
NET SALES $44,619 $42,212
COST OF SALES 33,636 31,278
------------ ------------
Gross Profit 10,983 10,934
OPERATING EXPENSE:
Engineering and development 3,456 3,588
Selling, general and administrative 4,905 4,546
----------- -----------
Total Operating Expenses 8,361 8,134
----------- -----------
INCOME FROM OPERATIONS 2,622 2,800
Other (income) expense, net 30 (39)
----------- -----------
INCOME BEFORE TAXES 2,592 2,839
Provision for income taxes 100 163
----------- -----------
NET INCOME $ 2,492 $ 2,676
======== =======
EARNINGS PER SHARE (Note 4):
Primary and fully-diluted $ .30 $ .32
======== ========
WEIGHTED AVERAGE
SHARES OUTSTANDING (Note 4):
Primary 8,323,213 8,299,904
Fully Diluted 8,350,659 8,350,605
======== ========
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
PRINTRONIX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
- -------------------------------------
<TABLE>
<CAPTION>
For the Three Months Ended:
June 28, 1996 and June 30, 1995
- -----------------------------------------------------------------------------
(Unaudited)
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income $2,492 $2,676
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 1,925 1,346
Loss on sale of property & equipment 99 11
Compensation expense related to restricted stock plan 366 366
Changes in assets and liabilities:
Accounts receivable (1,424) (32)
Inventories (4,242) 204
Accounts payable 1,546 (542)
Payroll and employee benefits (351) 880
Payroll and employee benefits 670 707
Other current assets and liabilities, net 419 (170)
Accrued income taxes 36 (16)
Other (55) 5
----------- -----------
Net cash provided by operating activities 1,832 4,555
----------- -----------
Cash flows from investing activities:
Investment in property and equipment (2,407) (1,993)
Purchase of building (3,681) --
Proceeds from disposition of equipment 395 10
----------- -----------
Net cash used in investing activities (5,693) (1,983)
----------- ------------
</TABLE>
See accompanying notes to consolidated financial statement
<PAGE>
PRINTRONIX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - continued
- -------------------------------------
For the Three Months Ended:
June 28, 1996 and June 30, 1995
- ---------------------------------------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Cash flows from financing activities:
Payment of short-term debt (113) (95)
Proceeds from issuance of common stock 104 366
Increase in long-term debt 2,915 --
----------- -----------
Net cash provided by financing activities 2,906 271
----------- -----------
Increase (decrease) in cash and cash equivalents (955) 2,843
----------- -----------
Cash and cash equivalents at beginning of period 6,486 8,345
----------- -----------
Cash and cash equivalents at end of period $5,531 $11,188
======= =======
- ---------------------------------------------------------------------
Supplementary disclosures of cash flow information:
Taxes paid $ 50 $121
Interest paid $ 7 $ 9
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
PRINTRONIX, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -----------------------------------------------
JUNE 28, 1996
- -------------------------
(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
June 28, June 30,
1996 1995
<S> <C> <C>
Weighted avg. shares outstanding 7,861,299 7,622,778
Common stock equivalents:
Options - Primary 461,914 677,126
Options - Fully Diluted 489,360 727,827
Shares outstanding:
Primary 8,323,213 8,299,904
Fully Diluted 8,350,659 8,350,605
</TABLE>
<PAGE>
PRINTRONIX, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -----------------------------------------------
JUNE 28, 1996
- -------------------------
(Unaudited)
5) Long-term Debt
In May 1996, the Company secured a five-year term commitment note of $5.0
million with Wells Fargo Bank. At June 28, 1996, $2.9 million was
outstanding on this loan. The proceeds were used to acquire a new
manufacturing facility in Singapore. The interest rate on the loan is
variable based either on the bank's prime rate or 2% above the LIBOR
rate. There are no payments due on the loan until December 1996, at which
time principal and interest will be paid over a fifty-four months.
6) Capital Stock
On May 9, 1996, the Board of Directors declared a stock 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 May 20, 1996.
The stock dividend resulted in a distribution of 2,622,494 shares on
June 10, 1996. 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
stockholder's equity as of March 29, 1996, 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 29, 1996 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 June 28, 1996 set a new quarterly high of $44.6
million compared with $40.4 million last quarter and $42.2 million in the
year-ago quarter. The increase in revenue compared with both the prior and
year-ago quarters resulted primarily from increasing demand for the Company's
new ProLine series line matrix products. These products increased in sales to
$29.2 million compared with $16.3 million last quarter. As most customers have
already transitioned to the ProLine products, sales of mature line matrix
products continued to decline, falling $7.3 million from the prior quarter.
Laser and thermal printer sales decreased slighty from the prior quarter.
North American sales for the quarter increased to $26.1 million, compared
with $22.3 million last quarter and $25.5 million in the year-ago quarter.
The increase was due primarily to increased sales of the new ProLine series
line matrix products. International sales for the quarter increased to $18.5
million, compared with $18.2 million last quarter and $16.7 million in the
year-ago quarter. The increase in international sales over the year-ago
quarter reflects growth in shipments to the Company's major OEM's with
customers located outside the United States.
Printer sales to distributors for the quarter increased to $12.4 million,
compared with $11.0 million last quarter and $11.6 million in the year-ago
quarter. Printer sales to major OEM customers were $19.1 million in the
current quarter, compared to $15.0 million last quarter and $18.1 million in
the year-ago quarter. Revenue increases across all distribution channels
reflect increased sales of the new ProLine series line matrix printers.
Order backlog as of June 28, 1996 was $21.4 million compared with $23.7
million at the end of the previous quarter and $17.6 million at the end of
the year-ago quarter. The backlog decreased from the prior quarter due to
decreased lead times for customer orders. The increased backlog compared with
the prior year reflects higher customer orders for the Company's new products.
Gross Profit
Gross profit as a percentage of sales was 24.6% compared with 22.3% in the
prior quarter and 25.9% in the year-ago quarter. The increase in the gross
profit percentage from the prior quarter resulted primarily from higher sales
of the newer products with higher profit margins, coupled with declining
start-up costs on the new ProLine products. The decline in gross profit
percentage from the same quarter of the prior year was due to ramp-up costs
of the new ProLine products, and higher manufacturing costs from the
inefficiencies of lower production volumes on mature line matrix products.
<PAGE>
PRINTRONIX, INC. AND SUBSIDIARIES
Operating, Other Expenses and Taxes
Engineering spending for the quarter of $3.4 million remained flat from the
prior quarter and decreased slightly from $3.5 million the year-ago quarter.
Decreased spending for the quarter compared with the year-ago quarter
reflects lower engineering costs on expendable materials and certain labor
costs. As a percentage of sales, engineering expense decreased to 7.7%
compared with 8.5% in both the prior and year-ago quarters, primarily as a
result of expenses remaining flat while sales increased.
Selling, general and administrative expense increased 9.3% from the prior
quarter and 7.9% compared with the year-ago quarter primarily as a result of
increased sales and marketing costs associated with the increase in sales of
new products. Selling, general and administrative expense, as a percentage of
sales remained relatively constant at 11.0%, 11.1% and 10.8% for the current,
prior, and year-ago quarters, respectively.
Other income and expense was a net expense of $0.03 million compared with
income of $0.16 million for the prior quarter and income of $0.04 million
for the same quarter of the prior year. The decrease in other income and
expense resulted primarily from lower interest income on lower average cash
balances combined with higher losses on fixed asset dispositions and foreign
currency remeasurement.
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 provision of $0.1 million for the quarter represents expected
income taxes based on estimates of taxable income for the fiscal year.
LIQUIDITY AND CAPITAL RESOURCES
Cash, net of short-term borrowing, was $5.1 million, a decrease of $1.1
million over last quarter and $5.9 million over the year-ago quarter. The
Company's decreased cash balance compared with the prior and year-ago
quarters resulted primarily from capital additions and higher inventory
levels. Inventory levels have been increased to enable the Company's
production facility in Singapore to move into a new factory without
interrupting its operations or customer deliveries.
Capital investments were $6.1 million, compared with $2.0 million for the
same quarter of the prior fiscal year. Capital additions during the quarter
included manufacturing equipment for ProLine printer production, a new
building for Singapore manufacturing, and project expenditures on a
corporate information system.
In April 1996 the Company entered into an agreement to purchase a new
manufacturing facility in Singapore. This facility resulted in capital
expenditures of $3.7 million for the building and an additional $2.0 million
is expected for building improvements. To finance the building, the Company
secured a five-year term loan of $5.0 million, of which $2.9 million was
outstanding as of June 29, 1996.
In June 1996 Printronix completed a stock split effected as a fifty-percent
(50%) stock dividend. Retroactive effect has been given to the stock split
in all share and per share data presented.
The Company believes that its internally generated funds, together with
available financing, will be adequate in providing working capital
requirements and engineering development needs through the current fiscal year.
<PAGE>
PRINTRONIX, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
- ---------------------------------------------------
Item 1. Legal Proceedings
- ---------------------------------------
See "Item 3. Legal Proceedings" reported in Part I of the Company's Report
on Form 10K for the fiscal year ended March 29, 1996.
Printronix, Inc. vs. Kentek Information Systems, Inc.
On May 16, 1996, the Company filed suit against Kentek Information Systems,
Inc. ("Kentek") in the United States District Court for the Central District
of California. On or about June 19, 1996, the case was transferred to the
United States District Court for the District of Colorado.
The suit alleges that Kentek has discriminated against the Company in the
prices that it charges the Company for the purchase of consumable products,
in violation of the Robinson-Patman Act, and in breach of a contract between
the parties governing the purchase of such consumables. The suit seeks
damages of $2.5 million for breach of contract and violation of the Robinson-
Patman Act (damages for which are trebled) and seeks an injunction against
further price discrimination.
<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: August 2, 1996 By: George L. Harwood
Sr. Vice-President, Finance,
Chief Financial Officer, and
Secretary
(Principal Financial Officer
and Duly Authorized Officer)
<PAGE>
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-27-1997
<PERIOD-END> JUN-28-1996
<CASH> 5531
<SECURITIES> 0
<RECEIVABLES> 25960
<ALLOWANCES> 960
<INVENTORY> 26952
<CURRENT-ASSETS> 58139
<PP&E> 54143
<DEPRECIATION> 35118
<TOTAL-ASSETS> 77470
<CURRENT-LIABILITIES> 21025
<BONDS> 0
<COMMON> 79
0
0
<OTHER-SE> 52956
<TOTAL-LIABILITY-AND-EQUITY> 77470
<SALES> 44619
<TOTAL-REVENUES> 44619
<CGS> 33636
<TOTAL-COSTS> 41997
<OTHER-EXPENSES> 30
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7
<INCOME-PRETAX> 2592
<INCOME-TAX> 100
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</TABLE>
