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CONFORMED COPY
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended March 31, 1996 Commission File No. 0-9996
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DOTRONIX, INC.
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(Exact name of registrant as specified in its charter)
Minnesota 41-1387074
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
160 First Street S.E.
New Brighton, Minnesota 55112
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(Address of principal executive offices) (Zip Code)
(612) 633-1742
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(Registrant's telephone number, including area code)
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 (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
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Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of the latest practicable date.
Class Outstanding at April 30, 1996
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Common stock, par value 4,191,059
$.05 per share
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DOTRONIX, INC.
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INDEX
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<TABLE>
<CAPTION>
Part I - Financial Information Page(s)
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<S> <C>
Item 1. Financial Statements (Unaudited)
Balance Sheets 1
Statements of Operations 2
Statements of Cash Flows 3
Notes to Financial Statements 4
Item 2. Managements' Discussion and Analysis
of Financial Condition and Results
of Operations. 5
Part II - Other Information
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Item 6. Exhibits and Reports on Form 8-K 6
</TABLE>
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PART 1. FINANCIAL INFORMATION
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ITEM 1. FINANCIAL STATEMENTS
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DOTRONIX, INC.
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BALANCE SHEETS
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<TABLE>
<CAPTION>
ASSETS March 31, June 30,
- ------ 1996 1995
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(unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 2,346,829 $ 2,028,371
Accounts receivable, less allowance
for doubtful accounts of $102,642
and $48,865, respectively 2,698,518 2,377,797
Inventories:
Raw materials 3,277,841 3,850,551
Work-in-process 800,136 480,723
Finished goods 270,881 350,880
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Total inventories 4,348,858 4,682,154
Prepaid expenses 90,134 87,775
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Total current assets 9,484,339 9,176,097
PROPERTY, PLANT & EQUIPMENT, at cost net of
accumulated depreciation of $5,216,255
and $5,010,461, respectively 1,125,929 1,276,073
OTHER ASSETS:
Excess of cost over fair value of net assets
acquired, less amortization 791,974 845,973
Non-compete agreements, less amortization 1,250 12,500
Other 43,784 67,226
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TOTAL ASSETS $11,447,276 $11,377,869
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LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Revolving loan $ 1,514,458 $ 1,752,797
Accounts payable 1,013,394 833,898
Salaries, wages and payroll taxes 323,143 569,902
Other accrued liabilities 134,283 112,231
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Total current liabilities 2,985,279 3,268,828
STOCKHOLDERS' EQUITY:
Common stock, $.05 par value 209,289 208,661
Additional paid-in capital 10,952,761 10,940,929
Accumulated deficit ( 2,700,053) ( 3,040,549)
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Total stockholders' equity 8,461,997 8,109,041
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $11,447,276 $11,377,869
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</TABLE>
The balance sheet at June 30, 1995 has been taken from the audited financial
statements at that date.
See notes to financial statements.
1.
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DOTRONIX, INC.
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STATEMENTS OF OPERATIONS
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(Unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
March 31, March 31,
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1996 1995 1996 1995
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<S> <C> <C> <C> <C>
REVENUES: $3,135,751 $3,510,690 $10,253,924 $12,060,871
OPERATING EXPENSES:
Cost of Sales 2,041,945 2,378,443 6,820,026 8,368,523
Selling, general and administrative 923,932 958,679 2,907,126 2,920,638
Interest 57,283 62,356 186,277 179,172
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Total operating expenses 3,023,160 3,399,478 9,913,429 11,468,333
--------- --------- --------- ----------
Net income $ 112,591 $ 111,212 $ 340,495 $ 592,538
========== ========== =========== ==========
Net income per
common and common
equivalent share $ .03 $ .03 $ .08 $ .15
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Average number of common
and common equivalent
shares outstanding 4,289,087 4,191,823 4,292,751 4,047,845
---------- ---------- ----------- ----------
</TABLE>
See notes to financial statements
2
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DOTRONIX, INC.
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STATEMENTS OF CASH FLOWS
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(Unaudited)
<TABLE>
<CAPTION>
Nine months ended
March 31,
--------------------------
1996 1995
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 340,495 $ 592,538
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation and amortization 271,043 299,843
Provision for loss on accounts receivable 60,000 90,000
Changes in assets and liabilities:
Accounts receivable (380,721) 67,188
Inventories 333,296 (209,339)
Prepaid expenses (2,359) (14,610)
Other assets 23,442 (72,672)
Accounts payable and accrued liabilities (45,209) 193,175
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Net cash provided by operating activities 599,987 946,123
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (55,650) (71,391)
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Net cash used in investing activities (55,650) (71,391)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of stock 12,460 330,000
Borrowings on revolving and demand loans 9,758,474 13,352,510
Repayments on revolving and demand loans (9,996,813) (12,278,339)
Payments on other long-term obligations (132,942)
Payments on bank loans (720,000)
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Net cash (used in) provided by financing activities (225,879) 551,229
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NET INCREASE IN CASH AND CASH EQUIVALENTS 318,458 1,432,937
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD 2,028,371 578,592
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,346,829 $ 2,011,529
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</TABLE>
See notes to financial statements.
3.
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DOTRONIX, INC.
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NOTES TO FINANCIAL STATEMENTS
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(Unaudited)
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A. Basis of Presentation
The balance sheet as of March 31, 1996, the statements of operations for
the three and nine month periods ended March 31, 1996 and 1995 and the
statements of cash flows for the nine month periods then ended have been
prepared by the Company without audit. In the opinion of management, all
adjustments (consisting only of normal recurring accruals) necessary to present
fairly the financial position, results of operations and cash flows at March 31,
1996 and for the periods ended March 31, 1996 and 1995 presented herein have
been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these financial statements
be read in conjunction with the Company's financial statements and notes thereto
included in the Annual Report on Form 10-KSB of the Company for the fiscal year
ended June 30, 1995.
4.
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Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
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RESULTS OF OPERATIONS
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Revenue decreased 11% and 15%, respectively, for the quarter and nine months
ended March 31, 1996 compared to the prior year. Revenues were down for the
quarter primarily due to fewer units shipped for the FAA upgrade program. This
also affected the nine month period along with a larger than expected seasonal
slowdown in the retail multimedia markets, offset by a $350,000 price adjustment
due to a delay in the FAA program over the past twelve months.
Gross margin percentage for the quarter was 35% compared to 32% for the quarter
ended March 31, 1995. Gross margin for the nine month period was 33% compared to
30% in the prior year period.The increase for the year to date period is due
primarily to the recording of the price adjustment related to the FAA upgrade
project referred to above and an increase in the rate at which overhead is
capitalized to inventory, partially offset by the effect of lower volumes. The
increase for the quarter is due to the overhead adjustment referred to above and
to favorable product mix with a higher volume of higher margin products, also
offset by lower overall volume.
Selling, general and administrative expenses decreased $34,747, or 4% for the
quarter and $13,512 or 1% for the nine months ended March 31, 1996, from the
comparable prior year periods. The decreases for the quarter and nine month
periods are primarily due to a decrease in bonus accruals.
Interest expense decreased $5,073 and increased $7,105 for the three and nine
month periods, respectively, compared to the prior year periods. The decrease
for the quarter is due to lower levels of borrowing on the revolving loan. For
the nine month period the increase is due primarily to higher interest rates.
There is no income tax charge because the Company has available the tax benefit
of operating loss carryforwards.
LIQUIDITY AND CAPITAL RESOURCES
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During the nine months ended March 31, 1996 operations provided cash of
$600,000, primarily from net income, depreciation, and reductions in inventories
partially offset by an increase in accounts receivable. The Company received
$12,000 from the issuance of shares of common stock upon exercise of options.
Net payments on debt amounted to $238,000 and purchases of property, plant and
equipment used $56,000. The overall result was to increase cash by $318,000.
At March 31, 1996 working capital amounted to $6,499,000.
5.
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PART II - OTHER INFORMATION
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Item 6. Exhibits and reports on Form 8-K
(a) Exhibits
Exhibit 27......Financial Data Schedule
(b) No reports on Form 8-K were issued during the quarter.
6.
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SIGNATURES
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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.
Date: May 1, 1996 DOTRONIX, INC.
By /s/ William S. Sadler
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William S. Sadler,
President and Treasurer
(Principal Executive
Officer)
By /s/ David R. Beel
------------------------
David R. Beel,
Chief Financial Officer
7.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> JUN-30-1996 JUN-30-1996
<PERIOD-START> JAN-01-1996 JUL-01-1995
<PERIOD-END> MAR-31-1996 MAR-31-1996
<CASH> 2,346,829 0
<SECURITIES> 0 0
<RECEIVABLES> 2,801,160 0
<ALLOWANCES> (102,642) 0
<INVENTORY> 4,348,858 0
<CURRENT-ASSETS> 9,484,339 0
<PP&E> 6,342,184 0
<DEPRECIATION> (5,216,255) 0
<TOTAL-ASSETS> 11,447,276 0
<CURRENT-LIABILITIES> 2,985,279 0
<BONDS> 0 0
<COMMON> 209,289 0
0 0
0 0
<OTHER-SE> 8,461,997 0
<TOTAL-LIABILITY-AND-EQUITY> 11,447,276 0
<SALES> 3,102,740 10,164,656
<TOTAL-REVENUES> 3,135,751 10,253,924
<CGS> 2,041,945 6,820,026
<TOTAL-COSTS> 2,965,877 9,727,152
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 57,283 186,277
<INCOME-PRETAX> 112,591 340,495
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 112,591 340,495
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 112,591 340,495
<EPS-PRIMARY> .03 .08
<EPS-DILUTED> .03 .08
</TABLE>
