<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended JUNE 29, 1995 Commission File No. 0-10394
DATA I/O CORPORATION
(Exact name of registrant as specified in its charter)
Washington 91-0864123
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10525 Willows Road N.E., Redmond, Washington, 98073-9746
(address of principal executive offices, Zip Code)
Registrant's telephone number, including area code (206) 881-6444
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
---- ----
7,541,417 shares of no par value Common Stock outstanding as of July 25, 1995
Page 1 of 16
Exhibit Index on Page 15
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<PAGE>
DATA I/O CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED JUNE 29, 1995
INDEX
PART I - FINANCIAL INFORMATION PAGE
----
Item 1. Financial Statements (unaudited) 3
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 8
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
Exhibit Index 15
Exhibit 11 16
<PAGE>
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DATA I/O CORPORATION
CONSOLIDATED BALANCE SHEETS
------------------------------------------------------------------------------------------------------------------------------------
June 29, Dec. 29,
1995 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
(In thousands, except share data) (Unaudited) (Note 1)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 8,546 $ 7,279
Trade accounts receivable,
less allowance for doubtful
accounts of $293 and $277 12,425 10,145
Inventories 7,893 6,937
Recoverable income taxes 368 453
Deferred income taxes 773 675
Other current assets 674 1,361
---------- -----------
TOTAL CURRENT ASSETS 30,679 26,850
Land held for sale 2,058 2,006
Property, plant and equipment - net 10,413 10,737
Other assets 3,483 3,894
---------- -----------
TOTAL ASSETS $46,633 $43,487
---------- -----------
---------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 1,923 $ 1,908
Accrued compensation 3,219 3,460
Deferred revenue 5,721 5,331
Other accrued liabilities 2,736 2,786
Accrued costs of business restructuring 1,731 1,890
Income taxes payable 758 997
Notes payable 1,138 440
---------- -----------
TOTAL CURRENT LIABILITIES 17,226 16,812
LONG TERM DEBT 1,500 1,500
LONG TERM OTHER PAYABLES 426 361
DEFERRED INCOME TAXES 448 471
STOCKHOLDERS' EQUITY:
Preferred stock -
Authorized, 5,000,000 shares, including
200,000 shares of Series A Junior Participating
Issued and outstanding, none
Common stock, at stated value -
Authorized, 30,000,000 shares
Issued and outstanding, 7,537,167
and 7,431,901 shares, respectively 21,120 20,729
Retained earnings 5,516 3,185
Currency translation adjustments 397 429
---------- -----------
TOTAL STOCKHOLDERS' EQUITY 27,033 24,343
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $46,633 $43,487
---------- -----------
---------- -----------
</TABLE>
See notes to consolidated financial statements
Page 3
<PAGE>
DATA I/O CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
------------------------------------------------------------------------------------------------------------------------------------
June 29, June 30, June 29, June 30
1995 1994 1995 1994
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<S> <C> <C> <C> <C>
(in thousands, except per share data)
Net sales $16,126 $16,131 $32,334 $30,535
Cost of goods sold 7,323 7,359 14,694 14,747
------- ------- ------- -------
Gross margin 8,803 8,772 17,640 15,788
Operating expenses:
Research and development 2,397 2,246 4,730 4,448
Selling, general and administrative 4,967 5,284 10,072 10,427
------- ------- ------- -------
Total operating expenses 7,364 7,530 14,802 14,875
------- ------- ------- -------
Operating income 1,439 1,242 2,838 913
Non-operating (income) expense:
Interest income (111) (21) (211) (29)
Interest expense 80 68 143 135
Foreign currency exchange (1) 7 1 6
------- ------- ------- -------
Total non-operating (income) expense
(32) 54 (67) 112
------- ------- ------- -------
Income before taxes 1,471 1,188 2,905 801
Income tax expense 282 400 575 412
------- ------- ------- -------
Net income $1,189 $788 $2,330 $389
------- ------- ------- -------
------- ------- ------- -------
Earnings per share:
Net income $0.15 $0.11 $0.30 $0.05
------- ------- ------- -------
------- ------- ------- -------
Weighted average shares outstanding 7,930 7,360 7,875 7,347
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
See notes to consolidated financial statements.
Page 4
<PAGE>
DATA I/O CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
For the six months ended: June 29, June 30,
1995 1994
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<S> <C> <C>
(In thousands)
OPERATING ACTIVITIES:
Net income $2,330 $389
Adjustments to reconcile income
to net cash provided by operating activities:
Depreciation and amortization 2,184 2,439
Deferred income taxes and tax refunds (276) 1,860
Deferred revenue 387 402
Changes in current items other
than cash and cash equivalents:
Trade accounts receivable (2,290) (962)
Inventories (956) 1,459
Other current assets 686 228
Accounts payable and accrued liabilities (211) 787
Business restructure (159) (1,198)
------------- -------------
Cash provided by operating activities 1,695 5,404
INVESTING ACTIVITIES:
Additions to property, plant and equipment (1,276) (237)
(Additions to)/dispositions of other assets (232) 4
------------- -------------
Cash used for investing activities (1,508) (233)
FINANCING ACTIVITIES:
Additions to/(repayment of) notes payable 693 (1,422)
Sale of common stock 166 167
Proceeds from exercise of stock options 225 18
------------- -------------
Cash provided by/(used for) financing
activities 1,084 (1,237)
------------- -------------
Increase in cash and cash equivalents 1,271 3,934
Effects of exchange rate changes on cash (4) (24)
Cash and cash equivalents - Beginning of period 7,279 1,704
------------- -------------
Cash and cash equivalents - End of period $8,546 $5,614
------------- -------------
------------- -------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 73 $ 77
Income taxes $451 $113
</TABLE>
See notes to consolidated financial statements.
Page 5
<PAGE>
DATA I/O CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - FINANCIAL STATEMENT PREPARATION
The financial statements as of June 29, 1995 and June 30, 1994, have been
prepared by the Company pursuant to the rules and regulations of the Securities
and Exchange Commission (SEC). These statements are unaudited but, in the
opinion of management, include all adjustments (consisting of normal recurring
adjustments and accruals) necessary to present fairly the results for the
periods presented. The balance sheet at December 29, 1994 has been derived from
the audited financial statements at that date. 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 SEC rules and regulations. Operating results for the quarter
and six months ended June 29, 1995 are not necessarily indicative of the results
that may be expected for the year ending December 28, 1995. These financial
statements should be read in conjunction with the annual audited financial
statements and the accompanying notes included in the Company's Form 10-K for
the year ended December 29, 1994.
NOTE 2 - CLASSIFICATIONS
Certain prior periods balances have been reclassified to conform to the
presentation used in the current period.
NOTE 3 - INVENTORIES
Inventories consisted of the following components (in thousands):
<TABLE>
<CAPTION>
June 29, Dec. 29,
1995 1994
-------------- ---------------
<S> <C> <C>
Raw material $3,177 $3,327
Work-in-process 2,779 1,955
Finished goods 1,937 1,655
-------------- ---------------
$7,893 $6,937
-------------- ---------------
-------------- ---------------
</TABLE>
NOTE 4 - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following components (in
thousands):
<TABLE>
<CAPTION>
June 29, Dec. 29,
1995 1994
-------------- ---------------
<S> <C> <C>
Land $ 910 $ 910
Building and improvements 7,533 7,334
Equipment 22,175 21,507
-------------- ---------------
30,618 29,751
Less accumulated depreciation 20,205 19,014
-------------- ---------------
$10,413 $10,737
-------------- ---------------
-------------- ---------------
</TABLE>
Page 6
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NOTE 5 - ACCOUNTING FOR INCOME TAXES
Statement of Financial Accounting Standards ("SFAS") 109 requires the
establishment of deferred tax assets and liabilities for expected future tax
consequences of events that have been recognized in the financial statements or
tax returns. Under this method, deferred tax assets and liabilities are
determined based on the difference between the financial statement carrying
amounts and the tax basis of assets and liabilities using currently enacted tax
rates which are expected to be in effect during the years in which the
differences are anticipated to reverse.
The Company was able to reverse deferred tax asset valuation allowances for the
quarter ended June 29, 1995, due to the Company's profit generated in the
current period and utilization of alternative minimum tax credit carryforwards.
The valuation allowance for deferred tax assets decreased by approximately
$200,000 during the second quarter and $300,000 for the first six months of 1995
to $3.1 million as of June 29, 1995.
Page 7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
BUSINESS ACQUISITION
The Company has signed an agreement in principal to purchase Reel-Tech, Inc. of
Indianapolis, Indiana. Reel-Tech designs and manufactures handling equipment
primarily for use by semiconductor companies in their manufacturing operations.
Revenues for Reel-Tech in 1994, were approximately $2.0 million. For the last
year, Reel-Tech has been Data I/O's partner for the development and manufacture
of handling equipment for the ProMaster 9500. Data I/O expects to complete due
diligence, execute a definitive purchase agreement, and close this transaction
in the third quarter of 1995. The transaction will be accounted for using the
purchase method with a portion of the purchase price being contingent upon the
acquired operation achieving specified performance goals. The Company is
currently investigating the potential of a charge to earnings in the third
quarter related to this acquisition. The Company expects to fund this
acquisition from its existing cash balances and does not believe that the
acquisition will have a material impact on its liquidity.
RESTRUCTURE PROGRESS
During the fourth quarter of 1993, the Company recorded a pretax charge of $6.1
million related to the restructure of its sales and distribution channels,
downsizing its operations to a level consistent with anticipated lower sales and
product margins, and to consolidate and outsource certain manufacturing
processes. The purpose of the restructure was primarily to reduce expenses and
significantly lower the Company's break-even point in reaction to the reduced
sales and gross margins the Company was experiencing in 1993. Additionally, the
Company made several strategic changes to its sales and distribution channels to
better align distribution of the Company's current and anticipated future
products to their markets and customers. The general downsizing of operations
and restructure of the sales and distribution system were substantially
completed during the fourth quarter of 1993 and first quarter of 1994. The
Company began implementation of the planned changes to its manufacturing
processes in the first quarter of 1994 for completion by the end of 1996.
Of the total $6.1 million restructuring charge, approximately $1.9 million
remained as an accrued liability at December 29, 1994. At June 29, 1995, the
remaining accrued liability was approximately $1.7 million. The reduction
during the first six months of 1995 related primarily to implementation of
changes in manufacturing processes, facility consolidation and office space
lease payments.
As of June 29, 1995, the Company's restructuring has proceeded as planned. No
significant changes were made to the Company's restructuring plans during the
second quarter of 1995. The relocation to Redmond, Washington of the Company s
Anaheim, California manufacturing operations is scheduled to take place in
stages during the next three quarters. The Company has made significant efforts
to minimize disruption of production of the Company s automated handling
systems, most of which historically have been manufactured in Anaheim. However,
there can be no assurance that the transfer of these operations will not cause
delays in production and delivery of product or other adverse consequences.
RESULTS OF OPERATIONS
NET SALES
<TABLE>
<CAPTION>
Second Quarter First Six Months
-------------- ----------------
(in thousands) 1995 1994 1995 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $16,126 $16,131 $32,334 $30,535
Change Net Sales 0% 5.9%
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</TABLE>
Net sales in the Company's core IC programmer business were approximately at the
same level in the second quarter and first six months of 1995 as in the same
periods of 1994. These revenues had declined between 6% and 17% for the two
prior years. This stabilization in revenues reflects the growth in the
Company's parallel programmer products used in the manufacturing environment and
sales growth of the ChipLab product, the Company's lowest priced IC programmer
for the
Page 8
<PAGE>
engineering market. Offsetting this growth is the continued decline in
sales of the Company's traditional line of higher-priced IC programmers for the
engineering market. The Company believes the increase in sales of the Company's
parallel programmer products reflects the expanded use of programmable
integrated circuits in the mid- to high-volume manufacturing market which is
also driving the increased sales of the Company's automated handling systems.
The Company believes the increase in sales of its ChipLab product is indicative
of the continuing market shift toward lower-priced IC programmers.
The Company believes the market shift to lower-priced IC programmers has been
caused in part by advances in semiconductor processing technology that has
lowered the barriers to entry in the programmer business over the last several
years. This has caused new market entrants to appear regularly, each trying to
carve out a niche. New entrants cause downward price pressure, and each cycle
of new competitors lowers the acceptable price of a conventional IC programmer
in the customer's view. In addition, the Company believes that there has been
a shift in the demand for tools by engineering design teams in favor of
increased software design tools. These industry changes had, and are continuing
to have, an adverse effect on the Company's IC programmer sales and gross
margins, especially since the Company's products historically have been oriented
toward hardware tools and, within hardware tools, toward higher-priced IC
programmers. However, the Company believes these trends are creating and will
continue to generate increased sales for its newer products including ChipLab,
Synario, PSX and ProMaster.
Sales of the Company's ProMaster line of automated handling systems for the
manufacturing environment increased by approximately 9% for second quarter and
24% for the first six months of 1995 compared to 1994. For the second quarter
and first six months of 1995 automated handling systems accounted for
approximately 26% of total revenues, compared with 24% in the second quarter and
22% for the first six months of 1994. A market shift in the ProMaster product
mix toward higher priced models also contributed to the sales increase.
The Company'shipped the first unit of its newly introduced ProMaster 9500 in the
first quarter of 1995. Due to production constraints the Company was unable to
ship ProMaster 9500 units during the second quarter. The Company received
orders for three more units during the second quarter, bringing the total
backlog of these units to four at June 29, 1995 or approximately $2.1 million.
The Company is expecting shipments of this product to resume in the third
quarter, as production increases. The Company believes that in the electronic
manufacturing market, the proliferation of hard-to-handle surface mount packages
in a variety of types is causing a worldwide trend toward automation and
integration of manufacturing processes. The Company believes its line of
automated handling systems is well positioned to capitalize on this trend.
Software product sales declined by approximately 11% compared with the second
quarter of 1994. Software sales in the first six months of 1995 were
approximately equal to the same period of 1994. Revenues for the Company's
older design software products, FutureNet, which the Company discontinued
selling in 1995, and ABEL, combined declined by 31% for the second quarter and
24% for the first six months of 1995 compared to the same periods in 1994. The
Company's Synario software product sales increased by 22% in the second quarter
and 64% for the first six months of 1995 compared to the same periods in 1994.
International sales were favorably impacted by foreign currency exchange rate
changes by approximately $600,000 during the second quarter of 1995 compared to
the second quarter of 1994, which was due primarily to rate changes for the
Japanese Yen and the German Mark. International sales were 48% of total net
sales for the second quarter of 1995 compared to 45% of total net sales in the
second quarter of 1994.
<TABLE>
<CAPTION>
GROSS MARGIN
Second Quarter First Six Months
-------------- ----------------
(in thousands) 1995 1994 1995 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gross Margin $8,803 $8,772 $17,640 $15,788
Percentage of net sales 54.6% 54.4% 54.6% 51.7%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Gross margins for the second quarter remained at approximately the levels
recorded in 1994 as improvements due to manufacturing labor and overhead
reductions, improved service margins, and the positive currency effects of a
weaker dollar were offset by lower product margins. The shift in mix of product
revenues from software to hardware and from higher-priced and higher margin IC
programmers to the lower-priced alternatives have lowered the overall product
gross margins.
Page 9
<PAGE>
For the first six months of 1995 compared to 1994 the increase in gross margin
is largely due to the increase in sales volume. In particular, the Company is
achieving improved margins on automated handling system products due to higher
volume and a market shift toward higher priced models. In addition, gross
margin as a percent of net sales increased largely due to the better utilization
of fixed manufacturing overhead. This occurred as a result of increased
inventory production related to the higher sales volume, as well as reduced
costs in manufacturing, service and distribution operations as a result of the
Company's restructuring.
<TABLE>
<CAPTION>
RESEARCH AND DEVELOPMENT
Second Quarter First Six Months
-------------- ----------------
(in thousands) 1995 1994 1995 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Research and development $2,397 $2,246 $4,730 $4,448
Percentage of net sales 14.9% 13.9% 14.6% 14.6%
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</TABLE>
The increase in research and development spending compared to the second quarter
and the first six months of 1994 is primarily due to additional research and
development projects and increased compensation costs. The Company expects to
continue its significant investment in research and development.
The Company believes it is essential to invest in research and development to
support its existing products and to create new products as markets develop and
technologies change. The Company is focusing its research and development
efforts in its strategic growth markets, namely automated handling systems for
the manufacturing environment, Windows-based EDA software design tools and
lower-priced IC programmers.
<TABLE>
<CAPTION>
SELLING, GENERAL AND ADMINISTRATIVE
Second Quarter First Six Months
-------------- ----------------
(in thousands) 1995 1994 1995 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Selling, general & administrative $4,967 $5,284 $10,072 $10,427
Percentage of net sales 30.8% 32.8% 31.1% 34.1%
</TABLE>
The decrease in selling, general and administrative expenditures during the
second quarter and the first six months of 1995 relative to 1994 is due
primarily to the restructure efforts which decreased headcount world-wide by
approximately 28% and focused on matching cost effective sales channels to the
Company's products and markets. Partially offsetting these expense reductions
were increased expenses in the Company's foreign offices, due to currency rate
changes and increased incentive compensation.
<TABLE>
<CAPTION>
INTEREST
Second Quarter First Six Months
-------------- ----------------
(in thousands) 1995 1994 1995 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income $111 $21 $211 $29
Interest expense $80 $68 $143 $135
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</TABLE>
Interest income increased during the second quarter and first six months of 1995
compared with 1994, primarily due to an increase in the average level of funds
available for investment.
Page 10
<PAGE>
<TABLE>
<CAPTION>
INCOME TAXES
Second Quarter First Six Months
-------------- ----------------
(in thousands) 1995 1994 1995 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Income taxes $282 $400 $575 $412
Effective tax rate 19% 34% 20% 51%
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</TABLE>
The Company's effective tax rate for the second quarter and the first six months
of 1995 differed from the statutory 34% tax rate primarily due to the reversal
of tax valuation reserves. The valuation reserves reversed primarily due to the
Company utilizing net operating loss and alternative minimum tax credit
carryforwards. The Company has valuation reserves of $3.1 million that may
continue to reverse as the Company records income. The Company believes these
potential reversing valuation reserves may continue to substantially reduce its
effective tax rate from the statutory rate during the balance of 1995.
<TABLE>
<CAPTION>
NET INCOME AND EARNINGS PER SHARE
Second Quarter First Six Months
-------------- ----------------
(in thousands) 1995 1994 1995 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net income $1,189 $788 $2,330 $389
Earnings per share $0.15 $0.11 $0.30 $0.05
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The increase in net income and earnings per share compared with the second
quarter and first six months of 1994 is primarily due to a combination of
increased sales volume, a higher gross margin percentage, reduced costs and
operating expenses resulting from the Company's restructure of its operations
and reversal of deferred tax valuation reserves.
INFLATION AND CHANGES IN FOREIGN CURRENCY EXCHANGE RATES
Historically, the Company has been able to offset the impact of inflation
through efficiency increases and price adjustments. Increasing price
competition, especially in IC programmers, is currently diminishing and may
continue to diminish the Company's ability to offset the impacts of inflation in
the future.
Sales and expenses incurred by foreign subsidiaries are denominated in the
subsidiary's local currency and translated into U.S. dollar amounts at average
rates of exchange during the year. Exchange rates impact absolute U.S. dollar
amounts but do not have a significant impact on the percentage of net sales
ratios. Because only approximately one-third of the Company's sales are made by
foreign subsidiaries and independent currency fluctuations tend to minimize the
effect of any individual currency exchange, fluctuations to date in foreign
currency rates have not significantly impacted the Company's overall financial
results.
FINANCIAL CONDITION
<TABLE>
<CAPTION>
LIQUIDITY AND CAPITAL RESOURCES
June 29, Dec. 29,
1995 Change 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Working capital $13,453 $3,415 $10,038
Total debt $2,638 $698 $1,940
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 11
<PAGE>
Working capital increased during the second quarter and first six months of 1995
primarily due to the funds provided by operations.
The Company's trade accounts receivable increased by approximately $500,000 in
the second quarter and $2.3 million for the first six months of 1995. This
increase relates to a higher percentage of international sales which have a
longer collection period and a general increase in the collection period related
to automated handling products. The Company also increased its inventory level
by approximately $300,000 in the second quarter and $1.0 million in the first
six months, primarily to support the growth in the automated handling systems
volume as well as to provide a level of safety stock during the Anaheim factory
relocation. The Company reduced its other current assets by approximately
$700,000 primarily due to the collection of former lease deposits. The Company
reduced its accounts payable by approximately $900,000 during the second quarter
to levels consistent with the end of 1994. Funding for these changes were
provided primarily by operations, a net increase in notes payable during the
first six months of 1995 of approximately $700,000 and approximately $400,000 in
stock sale proceeds, under the Company's employee stock benefit plans, during
the first six months of 1995.
As of June 29, 1995, the Company had total debt of $2.6 million or approximately
10% of its $27.0 million in equity. Of this debt, $1.5 million is a note payable
due in 1998 for the balance of the purchase price of the CAD/CAM Group. The
remaining $1.1 million is current debt, consisting entirely of borrowings on the
Company's $1.8 million foreign line of credit. No amounts were borrowed on the
Company's $8.0 million U.S. line of credit.
The U.S. line of credit was renewed in May of 1995 and matures in 1996. The
foreign line of credit matures in November 1995. Historically, these credit
lines have been structured as short-term and have been renewed on their maturity
dates. The Company currently expects to be able to renew these lines of credit
on maturity under substantially the same terms as those presently in place.
The Company estimates that capital expenditures for property, plant and
equipment during the remainder of 1995 will be approximately $1.5 million, which
does not include any amount related to the Reel-Tech, Inc. proposed acquisition.
Such expenditures are currently expected to be funded from internally generated
funds and, if necessary, borrowings under the Company's existing credit lines.
Although the Company fully expects that such expenditures will be made, it has
purchase commitments for only a small portion of these amounts.
At June 29, 1995, the Company's material short-term unused sources of liquidity
consisted of approximately $8.5 million in cash and cash equivalents, available
borrowings of $8.0 million under its U.S. line of credit and available
borrowings of approximately $700,000 under its foreign line of credit. The
Company believes that cash, cash flow from operations and borrowings available
under its U.S. and foreign lines of credit will be sufficient to fund working
capital needs, service existing debt, finance planned capital expenditures,
finance the Reel-Tech, Inc. proposed acquisition and fund its remaining
restructure accrued liabilities. In addition, if the Company is successful in
selling its land held for sale, additional capital will be available.
Page 12
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Annual Meeting of Shareholders held on May 16, 1995, there were present
in person or by proxy the holders of 6,415,067 shares of the 7,492,042 shares of
Common Stock of the Corporation. The following presents matters ratified and
the voting results.
(a) Election of a Board of Directors consisting of the following four (4)
directors:
Name Votes For Votes Withheld
---- --------- --------------
William C. Erxleben 5,895,322 519,745
W. Hunter Simpson 5,862,187 552,880
Donald R. Stenquist 5,911,800 503,267
Milton F. Zeutschel 5,904,359 510,708
(b) Approval of an amendment to the Company's 1986 Stock Option
Plan whereby the number of shares of the Company's Common Stock reserved
for issuance under the Plan was increased by 500,000 shares; a maximum
number of options that may be granted to any one individual in any one
fiscal year was created; and the term of the Plan was extended until
terminated by the Board of Directors for Non-Qualified Stock Options or to
December 15, 2006 for Incentive Stock Options. Votes cast were 2,962,299
For, 1,084,111 Against, 155,309 Abstain and 2,213,348 Broker Non-Votes.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K Page
----
(a) Exhibits
11. Statement Regarding Computation of Earnings Per Share 16
(b) Reports on Form 8-K
None
Page 13
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
DATA I/O CORPORATION
(REGISTRANT)
DATED: August 3, 1995
By://S//Steven M. Gordon
---------------------
Steven M. Gordon
Vice President
Finance and Administration
Chief Financial Officer
Chief Accounting Officer
Secretary and Treasurer
Page 14
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit Number Title Page Number
-------------- ------------------------------------------------- -----------
<S> <C> <C>
11 Statement Regarding Computation of Earnings per Share 16
</TABLE>
Page 15
<PAGE>
EXHIBIT 11
DATA I/O CORPORATION
COMPUTATION OF EARNINGS PER SHARE
Earnings per share reported in Form 10-Q for the quarters ended June 29, 1995,
and June 30, 1994 are based on the following (In thousands):
<TABLE>
<CAPTION>
Quarters Ended Six Months Ended
-------------- ----------------
June 29, June 30, June 29, June 30,
Primary and fully Diluted: 1995 1994 1995 1994
-------------------------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Weighted Average Shares Outstanding 7,530 7,328 7,502 7,315
Dilutive Effect of Stock Options 400 32 373 32
----------- ------------ ------------ ------------
Weighted Average Common and
Equivalent Shares Outstanding 7,930 7,360 7,875 7,347
----------- ------------ ------------ ------------
----------- ------------ ------------ ------------
</TABLE>
Page 16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-28-1995
<PERIOD-END> JUN-29-1995
<CASH> 8,546
<SECURITIES> 0
<RECEIVABLES> 12,718
<ALLOWANCES> 293
<INVENTORY> 7,893
<CURRENT-ASSETS> 30,679
<PP&E> 30,618
<DEPRECIATION> 20,205
<TOTAL-ASSETS> 46,633
<CURRENT-LIABILITIES> 17,226
<BONDS> 0
<COMMON> 21,120
0
0
<OTHER-SE> 5,913
<TOTAL-LIABILITY-AND-EQUITY> 27,033
<SALES> 32,334
<TOTAL-REVENUES> 32,334
<CGS> 14,694
<TOTAL-COSTS> 16,778
<OTHER-EXPENSES> (210)
<LOSS-PROVISION> 24
<INTEREST-EXPENSE> 143
<INCOME-PRETAX> 2,905
<INCOME-TAX> 575
<INCOME-CONTINUING> 2,330
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,330
<EPS-PRIMARY> .30
<EPS-DILUTED> .30
</TABLE>
