7
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 30, 2000
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.)
14600 Myford Road
Irvine, California 92606
(Address of principal executive (Zip Code)
offices)
(714) 368-2300
(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 28, 2000
$0.01 par value 6,170,187
PRINTRONIX, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets at
June 30, 2000 and March 31, 2000
Assets (3)
Liabilities and Stockholders' Equity (4)
Consolidated Statements of Operations
for the Three Months Ended June 30, 2000
and June 25, 1999 (5)
Consolidated Statements of Cash Flows
for the Three Months Ended June 30, 2000
and June 25, 1999 (6)
Condensed Notes to Consolidated Financial
Statements (8)
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (10)
Item 3. Quantitative and Qualitative Disclosure About Market
Risk (13)
PART II. OTHER INFORMATION
Item 1. Legal Proceedings (14)
Item 6. Exhibits and Reports on Form 8-K (14)
Signatures (15)
Index to Exhibits (16)
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
PRINTRONIX, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
June 30, 2000 March 31, 2000
(Unaudited) (Audited)
ASSETS:
Current assets:
Cash and cash equivalents $ 13,462 $ 14,980
Accounts receivable, net of
allowance for doubtful
accounts of $1,844 and
$2,434 as of June 30, 2000
and March 31, 2000,
respectively 21,968 21,763
Inventories:
Raw materials, subassemblies
and work in progress 17,028 15,959
Finished goods 2,248 1,732
19,276 17,691
Prepaid expense 1,627 1,231
Deferred income tax assets 3,767 3,721
Total current assets 60,100 59,386
Property, plant and equipment, at cost:
Machinery and equipment 30,033 29,187
Furniture and fixtures 26,117 25,374
Land 8,100 8,100
Buildings and improvements 22,770 22,689
Leasehold improvements 814 1,189
87,834 86,539
Less: accumulated depreciation and
amortization (36,967) (35,472)
50,867 51,067
Intangible assets, net 601 663
Other assets 296 305
Total assets $ 111,864 $ 111,421
See accompanying notes to consolidated financial statements
PRINTRONIX, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - continued
(Amounts in thousands, except share and per share data)
June 30, 2000 March 31, 2000
(Unaudited) (Audited)
LIABILITIES AND STOCKHOLDERS'EQUITY:
Current liabilities:
Short-term debt $ 4,700 $ 13,500
Accounts payable 8,938 12,121
Accrued expenses:
Payroll and employee benefit 4,382 5,321
Warranty 1,615 1,559
Other 3,842 4,958
Income taxes 697 2,486
Environmental 214 214
Total current liabilities 24,388 40,159
Long-term debt, net of current portion 16,800 -
Minority interest in subsidiary 302 317
Commitments and contingencies
Stockholders' equity:
Common stock, par value $0.01
Authorized 30,000,000
shares, issued and
outstanding 6,211,687 and
6,257,417 shares as of June
30, 2000 and March 31,
2000, respectively 62 63
Additional paid-in capital 30,133 30,238
Retained earnings 40,179 40,644
Total stockholders' equity 70,374 70,945
Total liabilities and
stockholders' equity $ 111,864 $ 111,421
See accompanying notes to consolidated financial statements
PRINTRONIX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Amounts in thousands, except per share data)
Three Months Ended
June 30, 2000 June 25, 1999
(Unaudited)
Net sales $ 39,721 $ 44,885
Cost of sales 28,190 29,964
Gross profit 11,531 14,921
Operating expenses:
Engineering and development 4,578 4,647
Sales and marketing 4,553 4,535
General and administrative 1,861 2,392
Total operating expense 10,992 11,574
Income from operations 539 3,347
Other income (expense), net (293) 227
Income before provision for income taxes
and minority interest 246 3,574
Provision for income taxes 83 1,180
Minority interest in loss in subsidiary (15) (6)
Net income $ 178 $ 2,400
Net income per common share:
Basic $ 0.03 $ 0.37
Diluted $ 0.03 $ 0.36
Weighted-average common shares:
Basic 6,244,937 6,536,853
Diluted 6,491,307 6,702,957
See accompanying notes to consolidated financial statements
PRINTRONIX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
Three Months Ended
June 30, 2000 June 25, 1999
(Unaudited)
Cash flows from operating activities:
Net income $ 178 $ 2,400
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities:
Depreciation and amortization 2,217 1,865
(Gain) loss on sale of equipment (16) 42
Minority interest in loss of subsidiary (15) (6)
Changes in assets and liabilities:
Accounts receivable (205) (854)
Inventories (1,585) 886
Other assets (437) (25)
Accounts payable (3,183) 847
Payroll and employee benefits (939) 1,065
Accrued income taxes (1,789) 1,028
Other liabilities (1,060) (303)
Net cash (used in) provided by
operating activities (6,834) 6,945
Cash flows from investing activities:
Purchase of property and equipment (1,991) (2,060)
Construction of new corporate facility - (5,534)
Proceeds from disposition of equipment 52 61
Net cash used in investing activities (1,939) (7,533)
See accompanying notes to consolidated financial statements
PRINTRONIX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - continued
(Amounts in thousands)
Three Months Ended
June 30, 2000 June 25, 1999
(Unaudited)
Cash flows from financing activities:
Proceeds from the issuance of mortgage 17,500 -
Payment made on the line of credit (9,500) -
Repurchase and retirement of common stock (934) (1,964)
Proceeds from the exercise of stock option 189 173
Net cash provided by (used in)
financing activities 7,255 (1,791)
Net decrease in cash and cash equivalents (1,518) (2,379)
Cash and cash equivalents at
beginning of period 14,980 11,911
Cash and cash equivalents at end of period $ 13,462 $ 9,532
Supplementary disclosures of cash flow information:
Income taxes paid $ 3,100 $ 134
Interest paid $ 268 $ 4
See accompanying notes to consolidated financial statements
PRINTRONIX, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
(Unaudited)
1) Basis of Presentation
The unaudited consolidated financial statements included herein
have been prepared by Printronix, Inc. (the "Company"), pursuant
to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance
with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations.
However, the Company believes that the disclosures are adequate
to make the information presented not misleading.
In the opinion of management, the consolidated financial
statements reflect all adjustments (which include only normal
recurring adjustments) considered necessary to present fairly
the financial position and results of operations as of and for
the periods presented. These consolidated financial statements
should be read in conjunction with the consolidated financial
statements and footnotes thereto included in the Company's
latest Annual Report on Form 10-K for the fiscal year ended
March 31, 2000, as filed with the Securities and Exchange
Commission. The results of operations for such interim periods
are not necessarily indicative of the results for the full year.
Certain amounts from the prior year consolidated financial
statements have been reclassified to conform to the current year
presentation.
2) Bank Borrowings and Debt Arrangements
During the quarter, the Company increased its credit facility
with a United States bank to $27.5 million from $22.5 million.
The $27.5 million consists of a $17.5 million, seven year,
mortgage secured by the Company's new Irvine facility and a
$10.0 million three year unsecured line of credit. The Company
ended the quarter with long-term debt of $16.8 million. Short
term debt at the end of the quarter was $4.7 million, which
includes borrowings of $4.0 million against the line of credit
and $0.7 million mortgage repayment due within the current year.
PRINTRONIX, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
(Unaudited)
3) Earnings per Share
The number of shares used in computing diluted earnings per share
equals the total of the weighted-average number of common shares
outstanding during the periods presented plus the dilutive effect of
stock options. The dilutive effect of stock options represents
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 and year to date basis during the year.
The reduction in the number of shares outstanding from 1999 to 2000
is due to the Company's authorized share repurchase program (see note
4). The following table shows the calculation for basic and diluted
shares outstanding:
Three Months Ended
June 30, 2000 June 25, 1999
Basic weighted-average
common shares outstanding 6,244,937 6,536,853
Effect of dilutive stock options 246,370 166,104
Diluted weighted- average
common shares outstanding 6,491,307 6,702,957
4) Common Stock
As authorized by the Board of Directors, the Company repurchased and
retired 60,432 shares of common stock during the quarter at prices
ranging from $13.00 to $17.81 per share, at a cost of $0.9 million.
Purchases of an additional 41,500 shares of common stock were made
subsequent to the end of the quarter and future purchases of up to
314,462 shares of common stock may be made at the Company's
discretion.
PART I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
PRINTRONIX, INC. AND SUBSIDIARIES
FORWARD-LOOKING STATEMENTS
Except for historical information, this report may contain "forward-
looking statements" about Printronix, within the meaning of the Private
Securities Reform Act of 1995. Terms such as "objectives," "believes,"
"expects," "plans," "intends," "estimates," "anticipates," "forecasts,"
"projections," and variations of such words and similar expressions are
intended to identify such forward-looking statements. These statements
involve a number of risks, uncertainties and other factors that could
cause actual results to differ materially, including: adverse business
conditions and a failure to achieve growth in the computer industry and
in the economy in general; the ability of the Company to achieve growth
in the Asia Pacific market; adverse political and economic events in the
Company's markets; the ability of the Company to hold or increase market
share with respect to line matrix printers; the ability of the Company to
successfully compete against entrenched competition in the thermal
printer market; the ability of the Company to attract and retain key
personnel; the ability of the Company's customers to achieve their sales
projections, upon which the Company has in part based its sales and
marketing plans; and the ability of the Company to continue to develop
and market new and innovative products superior to those of the
competition and to keep pace with technological change.
RESULTS OF OPERATIONS
Revenues
Consolidated revenues for the first quarter ended June 30, 2000, were
$39.7 million, a decrease of 11.5% from the same period last year. Sales
to the Americas for the quarter were $24.4 million, down from $25.4
million a year ago, and accounted for 61.4% of total sales versus 56.5%
for the same period last year. Americas distribution sales decreased
7.4% to $11.7 million. Americas OEM sales remained flat at $12.0
million. Sales increases to the largest OEM customers were offset by
decreases to other OEM customers. EMEA (Europe, Middle East and Africa)
sales decreased 24.6% to $12.1 million from the same period last year.
This decrease reflected a soft market across nearly all customers and
channels, due in part, the Company believes, to projects that were halted
as a result of Y2K and have been slow to restart. Asia Pacific sales for
the quarter decreased 6.0% to $3.3 million, due to lower sales into the
ASEAN countries. Sales into south Asia increased 7.6%, and sales into
north Asia increased 3.5%. Sales by RJS were unchanged at $0.8 million.
In comparison with the prior quarter, revenue decreased $8.7 million, or
17.9%, which includes a 12.4% decrease in the Americas, a 22.4% decrease
in EMEA and a 25.1% decrease in Asia Pacific.
Sales by channel were 47.5% OEM and 52.5% distribution, compared with
45.8% OEM and 54.2% distribution for the same period last year. Sales to
OEM customers decreased 8.1% to $18.9 million, and distribution sales
decreased 14.3% to $20.8 million, compared with the same quarter last
year. In the prior quarter, sales by channel were 47.6% OEM and 52.4%
distribution.
Line matrix sales for the quarter were $31.4 million, a decrease of 14.9%
from the same period last year. Line matrix revenue was 79.1% of total
revenue for the quarter. Laser sales for the quarter totaled $5.2
million, down 10.3% from the prior year. Laser revenue was 13.0% of
total revenue for the quarter. Thermal printer sales for the quarter
were $2.4 million, up 78.1% over the same period last year. This
increase is due to the new T5000 thermal product line, and includes
shipments of the 6 inch and 8 inch thermal printers to IBM which
commenced in early June. Thermal sales were 6.0% of total revenue. In
the prior quarter, line matrix sales were $39.3 million or 81.2% of
revenue, laser sales were $5.6 million or 11.5% of revenue and thermal
printer sales were $2.1 million or 4.3% of revenue.
Sales to the largest customer, IBM, represented 31.0% of total sales for
the quarter, compared with 28.5% a year ago. Sales to the second largest
customer represented 7.5% of total sales for the quarter, compared with
8.4% last year.
The Company's forecasts, based in part upon customers' projections and on
other matters gathered by its sales and marketing departments, suggest
that sales in the September quarter may rebound to levels close to year
ago sales. The Company anticipates continuing growth in the T5000
thermal printer business in the third and fourth fiscal quarters,
augmented in part by IBM marketing the product as an OEM, and looks
forward to sales in those quarters comparing favorably with those of the
prior year quarters.
Gross Profit
Gross profit for the quarter ended June 30, 2000, was 29.0% of sales,
down from 33.2% a year ago and 32.8% in the previous quarter. The
decline is primarily due to volume, product mix, the introduction of the
4 inch thermal printer and the ramp up of the thermal printer production
that is based on high cost soft tooling.
Operating Expenses, Other Income (Expense)
Operating expenses consist of engineering and development, sales and
marketing, and general and administrative costs. For the quarter ended
June 30, 2000, total operating expenses were $11.0 million compared with
$11.6 million for the same period last year.
Engineering and development expenses for the quarter were relatively flat
at $4.6 million compared with the same period last year. As a percentage
of sales, engineering and development expenses were 11.5% for the current
quarter and 10.4% for the same quarter last year.
Sales and marketing expenses for the quarter were relatively flat at $4.6
million compared with $4.5 million for the same period last year. As a
percentage of sales, sales and marketing expenses were 11.5% for the
current quarter and 10.1% for the same quarter last year.
General and administrative expenses for the quarter were $1.9 million, a
decrease of $0.5 million or 22% compared with $2.4 million for the same
period last year. The decrease is primarily due to lower labor costs
and lower bad debt provision. As a percentage of sales, general and
administrative expenses were 4.7% for the current quarter and 5.3% for
the same quarter last year.
Other expense was $0.3 million for the quarter, compared with other
income of $0.2 million in the same quarter last year. The decrease was
due to higher interest expense and foreign currency exchange losses.
LIQUIDITY AND CAPITAL RESOURCES
The Company ended the quarter with cash and cash equivalents of $13.5
million, down $1.5 million from the prior quarter. During the quarter,
the Company increased its credit facility with a United States bank to
$27.5 million from $22.5 million. The $27.5 million consists of a $17.5
million, seven year, mortgage secured by the Company's new Irvine
facility and a $10.0 million three year unsecured line of credit. The
Company ended the quarter with long-term debt of $16.8 million. Short
term debt at the end of the quarter was $4.7 million, which includes
borrowings of $4.0 million against the line of credit and $0.7 million
mortgage repayment due within the current year. The current cash
position reflects expenditures during the quarter for the purchase and
retirement of 60,432 shares of Printronix common stock at an average
share price of $15.46, totaling $0.9 million. Capital expenditures for
the quarter were $2.0 million.
Inventories were $19.3 million, an increase of $1.6 million over the
prior quarter. The increase is due to higher thermal product line
inventory and the manufacture of Line Matrix ribbons in China.
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.
PART I. FINANCIAL INFORMATION
Item 3. Quantitative and Qualitative Disclosure About Market Risk
PRINTRONIX, INC. AND SUBSIDIARIES
MARKET RISK
The Company implemented a foreign currency hedging program as of April
2000 in order to mitigate currency rate fluctuation exposure related to
foreign currency cash inflows. The Company entered into foreign currency
forward exchange contracts with maturities from 30 to 180 days. All
contracts are with a major financial institution. As of June 30, 2000,
the Company had $5.4 million foreign currency forward exchange contracts
outstanding. The Company does not use the contracts for speculative or
trading purposes. Gains and losses under these contracts were immaterial
for the quarter.
PART II. OTHER INFORMATION
PRINTRONIX, INC. AND SUBSIDIARIES
Item 1. Legal Proceedings
See "Item 3. Legal Proceedings" reported in Part I of the Company's
Report on Form 10-K for the fiscal year end March 31, 2000.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
Financial Data Schedule
(b) Reports.
No reports on Form 8-K have been filed by the Registrant for the
quarterly period covered by this report.
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 10, 2000 By: s/s George L. Harwood
George L. Harwood
Sr. Vice-President, Finance,
Chief Financial Officer
and Secretary (Principal Financial
Officer and Duly Authorized Officer)
PRINTRONIX, INC. AND SUBSIDIARIES
Index to Exhibits to Form 10-Q
JUNE 30, 2000
EXHIBIT
NUMBER DESCRIPTION PAGE
27 Financial Data Schedule Filed only with
EDGAR version
