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 27, 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
P.O. Box 19559
Irvine, California 92623
(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 theissuer's
classes of common stock, as of the latest practicable date.
Class of Common Stock Outstanding at February 4, 1997
$ .01 par value 7,997,515
<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 (13)
Signatures (14)
<PAGE>
PRINTRONIX, INC. AND SUBSIDIARIES
FORM 10-Q
------------
FOR THE QUARTER ENDED DECEMBER 27, 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.
<PAGE>
<TABLE>
PRINTRONIX, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
---------------------------
Assets
<CAPTION>
December 27, 1996 March 29, 1996
(Derived from audited
(Unaudited) financial statements)
-----------------------------------------------
(In thousands)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $12,476 $6,486
Accounts receivable, net of
allowances for doubtful
accounts of
$1,496 as of December 27,
1996 and $937 as of March
29, 1996 25,578 23,576
Inventories
Raw materials, subassemblies
and work in process 17,408 18,969
Finished goods 3,765 3,741
----------- -----------
21,173 22,710
Prepaid expenses 730 753
----------- -----------
TOTAL CURRENT ASSETS 59,957 53,525
----------- -----------
Property and Equipment, at cost:
Building and improvements 5,777 --
Machinery and equipment 33,800 33,010
Furniture and fixtures 14,131 12,864
Leasehold improvements 2,050 3,448
----------- -----------
55,758 49,322
Less-Accumulated depreciation
and amortization (32,685) (33,968)
----------- -----------
23,074 15,354
----------- -----------
Other assets 452 251
----------- -----------
TOTAL ASSETS $83,483 $69,130
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
PRINTRONIX, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - continued
---------------------------
Liabilities and Stockholders' Equity
------------------------------------
<TABLE>
<CAPTION>
December 27, 1996 March 29, 1996
(Derived from audited
(Unaudited) financial statements)
-----------------------------------------------
(In thousands)
<S> <C> <C>
CURRENT LIABILITIES:
Short-term borrowings 1,111 205
Accounts payable 10,555 11,846
Accrued expenses:
Payroll and employee benefits 4,369 3,492
Warranty 1,236 1,136
Environmental 214 214
Other 1,361 1,018
Accrued income taxes 503 329
----------- -----------
TOTAL CURRENT LIABILITIES 19,349 18,240
----------- -----------
Long-term debt 3,796 --
Other long-term liabilities 815 817
----------- -----------
TOTAL LONG-TERM LIABILITIES 4,611 817
----------- -----------
STOCKHOLDERS' EQUITY:
Common stock, par value $0.01-
Authorized 27,000,000 shares,
issued and outstanding
7,953,652 and 7,823,366
shares as of December 27,
1996 and March 29, 1996,
respectively. 80 78
Additional paid-in capital 30,440 29,125
Retained earnings 29,003 20,870
----------- -----------
Total Stockholders' Equity 59,523 50,073
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $83,483 $69,130
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
PRINTRONIX, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
-------------------------------------
<TABLE>
<CAPTION>
(Unaudited)
Three Months Ended Nine Months Ended
Dec. 27, Dec. 29, Dec. 27,Dec. 29,
1996 1995 1996 1995
(Amounts in thousands, except share data)
<S> <C> <C> <C> <C>
NET SALES $44,521 $37,091 $132,333 $118,812
COST OF SALES 32,606 29,302 98,243 90,352
----------------------------------------
Gross Profit 11,915 7,789 34,090 28,460
OPERATING EXPENSES:
Engineering and development 3,486 3,085 10,691 10,248
Selling, general
and administrative 5,171 4,117 15,051 12,970
----------------------------------------
Total operating expenses 8,657 7,202 25,742 23,218
----------------------------------------
INCOME FROM OPERATIONS 3,258 587 8,348 5,242
----------------------------------------
Other income, net (96) (206) (99) (351)
----------------------------------------
INCOME BEFORE TAXES 3,354 793 8,447 5,593
Provision/(credit) for
income taxes 114 (37) 314 156
----------------------------------------
NET INCOME $ 3,240 $ 830 $ 8,133 $ 5,437
====== ====== ====== ======
EARNINGS PER SHARE:
Primary $ .39 $ .10 $ .98 $ .66
Fully Diluted $ .39 $ .10 $ .98 $ .66
====== ====== ====== ======
WEIGHTED AVERAGE
SHARES OUTSTANDING:
Primary 8,286,092 8,193,357 8,309,483 8,251,554
Fully Diluted 8,286,092 8,193,357 8,309,483 8,252,676
========= ========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
PRINTRONIX, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
-------------------------------------
<TABLE>
<CAPTION>
For the Nine Months Ended:
December 27, 1996 and December 29, 1995
- ----------------------------------------------------------------------
(Unaudited)
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income $8,133 $5,437
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 5,414 4,218
Loss on sales of property & equipment 36 22
Compensation expense related to
restricted stock plan 918 784
Changes in assets and liabilities:
Accounts receivable (2,002) 185
Inventories 1,537 714
Accounts payable (1,291) (1,174)
Payroll and employee benefits 877 (351)
Accrued income taxes 174 (224)
Other 263 (783)
----------- -----------
Net cash provided by operating activities 14,059 8,828
----------- -----------
Cash flows from investing activities:
Investment in property and equipment (7,880) (7,136)
Purchase of building and improvements (5,777) -
Proceeds from disposition of equipment 487 135
----------- -----------
Net cash used in investing activities (13,170) (7,001)
----------- ------------
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
PRINTRONIX, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows - continued
-------------------------------------
<TABLE>
<CAPTION>
For the Nine Months Ended:
December 27, 1996 and December 29, 1995
- ----------------------------------------------------------------------
(Unaudited)
1996 1995
<S> <C> <C>
Cash flows from financing activities:
Payment of debt (298) -
Proceeds from issuance of common stock 399 661
Proceeds from issuance of long-term debt 5,000 (413)
----------- -----------
Net cash provided by financing activities 5,101 248
----------- -----------
Increase in cash and cash equivalents 5,990 2,075
----------- -----------
Cash and cash equivalents at
beginning of period 6,486 8,345
----------- -----------
Cash and cash equivalents at end of period $12,476 $10,420
=========== ===========
</TABLE>
- ---------------------------------------------------------------------
<TABLE>
<CAPTION>
Supplementary disclosures of cash flow information:
<S> <C> <C>
Taxes paid $89 $303
Interest paid 214 19
Capital lease additions 0 466
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
PRINTRONIX, INC. AND SUBSIDIARIES
Condensed Notes to Consolidated Financial Statements
-----------------------------------------------
DECEMBER 27, 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 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. 27, Dec. 29, Dec. 27, Dec. 29,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Weighted avg. shares
outstanding 7,923,644 7,722,425 7,898,617 7,458,842
Common stock equivalents:
Options - Primary 362,448 470,932 410,866 792,712
Options - Fully Diluted 362,448 470,932 410,866 793,834
Shares outstanding:
Primary 8,286,092 8,193,357 8,309,483 8,251,554
Fully Diluted 8,286,092 8,193,357 8,309,483 8,252,676
</TABLE>
<PAGE>
PRINTRONIX, INC. AND SUBSIDIARIES
Condensed Notes to Consolidated Financial Statements
-----------------------------------------------
DECEMBER 27, 1996
-------------------------
(Unaudited)
5) Long-term Debt
In May 1996, the Company secured a five-year term commitment of
$5.0 million with Wells Fargo Bank. At December 27, 1996, $4.9
million was outstanding on this loan which was 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. Principal and interest payments began in December
1996 and will be paid over a term of fifty-four months.
6) Capital Stock
In June 1996, Printronix completed a stock split-up 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 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
Net sales for the quarter ended December 27, 1996 were 3% higher than
last quarter and 20% higher than the year-ago quarter. On a year-to-
date basis, sales were up $13.5 million or 11% over the first nine
months of the prior fiscal year. The increase in revenue for the first
nine months of the year compared with the same period last year is due
to higher unit sales of ProLine impact printers to the Company's major
OEM customers. Thermal product sales for the quarter increased 41%
compared with the prior quarter and continue to represent
approximately 2% of the Company's total sales. Regionally, year-to-
date sales to U.S. customers increased 5% compared with the same
period of the prior year and sales to international customers
increased approximately 22%. Revenue from the Company's five largest
customers, which primarily represent OEM business, decreased 6% from
the prior quarter but increased 25% over the year-ago quarter. For
the first nine months of the fiscal year, sales to these customers
were up $11.6 million or 19% over the prior year period.
Order backlog at quarter-end was $13.4 million compared with $18.0
million at the end of the previous quarter and $18.3 million at the
end of the third quarter for the previous fiscal year. The reduction
in backlog reflects the continuing conversion of the Company's
customers to a just-in-time delivery process.
<PAGE>
PRINTRONIX, INC. AND SUBSIDIARIES
Gross Profit
Gross profit as a percentage of sales for the quarter increased to
26.8% compared with 25.9% in the prior quarter and 21.0% in the prior
year quarter. The higher margin is attributable to manufacturing
efficiencies from higher sales volumes of new line matrix printers,
increased production efficiencies from the transition to the new
ProLine Series, and the completion of the planned move of the
Singapore manufacturing facility. The margins in the year ago quarter
were unfavorably impacted by the transition to the new ProLine Series
printers. The year-to-date gross profit percentage increased to
25.8% for the first nine months of the fiscal year compared with 24.0%
for the first nine months of the prior fiscal year. The increase in
margin is due to the transition to the new ProLine Series and
increased manufacturing efficiencies from higher sales volumes,
partially offset by the move of the Singapore manufacturing facility.
Operating and Other Expenses and Taxes
Engineering expense for the quarter was 7% lower than the prior
quarter and increased 13% over the prior year quarter. On a year-to-
date basis, engineering expenses increased to $10.7 million compared
with $10.2 million for the first nine months of the prior fiscal year.
Selling, general, and administrative expenses increased 4% over the
prior quarter and increased 26% over the prior year quarter. Year-to-
date expenses increased by 16% to $15.1 million compared with $13.0
million for the corresponding prior year nine months. The increased
spending over the prior year periods continues to be driven by higher
sales expenses for advertising and marketing due to the rollout of the
new ProLine series printers. As a percentage of sales, selling,
general, and administrative spending remained flat at 11% for the
first nine months of the year.
The year-to-date income tax provision increased to $0.3 million as
compared with $0.2 million in the prior year. The Company continues
utilizing Federal and California net operating loss carryforwards and
is required to provide only for certain state and foreign taxes. The
Company anticipates fully utilizing its California net operating loss
carryforward by year end and accordingly expects to increase its
quarterly tax provision percentage from 4% to 10%.
LIQUIDITY AND CAPITAL RESOURCES
The Company ended the quarter with cash, net of short-term borrowings,
of $11.4 million compared with $5.1 million last quarter and $10.1
million for the year-ago quarter. The Company's stronger cash
position relative to the prior quarter results primarily from lower
inventory levels which declined $4.8 million. The reduction in
inventory results partially from the completion of the planned move of
the Singapore manufacturing facility and partially due to the Company
completing the final phase of the conversion to the new ProLine Series
line matrix printers.
<PAGE>
PRINTRONIX, INC. AND SUBSIDIARIES
LIQUIDITY AND CAPITAL RESOURCES - CONTINUED
Net investment in capital equipment for the first nine months of the
fiscal year was $13.2 million compared with $7.0 million for the same
period in the prior year. Year-to-date capital expenditures included
manufacturing equipment for ProLine printer production, a new building
for Singapore manufacturing, and project expenditures on a corporate
information system.
In June 1996, 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
December 27,1996, and in all share and per share data presented (see
note 6).
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 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.
On December 23, 1996, Kentek's counterclaims against the Company were
filed. The counterclaims allege that the Company is in breach of the
contract for failing to exercise its best efforts in the sale of
Kentek products and that the Company misrepresented its intentions to
perform under the contract in the course of negotiations. The
counterclaims seek damages and punitive damages in unspecified
amounts. The Company believes that the counterclaims are without
merit and intends to vigorously defend against them.
<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 7, 1997 By: George L. Harwood
Sr. Vice-President, Finance,
Chief Financial Officer, and
Secretary
(Principal Financial Officer
and Duly Authorized Officer)
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-28-1997
<PERIOD-END> DEC-27-1996
<CASH> 12,476
<SECURITIES> 0
<RECEIVABLES> 27,074
<ALLOWANCES> 1,496
<INVENTORY> 21,173
<CURRENT-ASSETS> 59,957
<PP&E> 55,758
<DEPRECIATION> 32,685
<TOTAL-ASSETS> 83,483
<CURRENT-LIABILITIES> 19,349
<BONDS> 0
<COMMON> 80
0
0
<OTHER-SE> 86,517
<TOTAL-LIABILITY-AND-EQUITY> 83,483
<SALES> 132,333
<TOTAL-REVENUES> 132,333
<CGS> 98,243
<TOTAL-COSTS> 123,985
<OTHER-EXPENSES> (99)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 210
<INCOME-PRETAX> 8,447
<INCOME-TAX> 314
<INCOME-CONTINUING> 8,133
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,133
<EPS-PRIMARY> .98
<EPS-DILUTED> .98
</TABLE>
