<PAGE>
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 MARCH 28, 1996 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
------ ------
6,981,416 shares of no par value Common Stock outstanding as of May 1, 1996
Page 1 of 16
Exhibit Index on Page 16
<PAGE>
DATA I/O CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED MARCH 28, 1996
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 7
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 16
Exhibit 11 16
Page 2
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DATA I/O CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
Mar. 28, Dec. 28,
1996 1995
----------- ---------
(in thousands, except share data) (unaudited) (note 1)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 4,273 $4,496
Trade accounts receivable, less allowance
for doubtful accounts of $322 and $311 11,072 13,115
Inventories 9,311 8,539
Deferred income taxes 748 976
Other current assets 829 893
----------- ---------
TOTAL CURRENT ASSETS 26,233 28,019
Land held for sale 2,112 2,095
Property, plant and equipment - net 10,160 10,240
Other assets 4,092 4,422
----------- ---------
TOTAL ASSETS $42,597 $44,776
----------- ---------
----------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 2,340 $ 2,071
Accrued compensation 2,954 3,612
Deferred revenue 5,512 5,436
Other accrued liabilities 2,836 2,672
Accrued costs of business restructuring 546 965
Income taxes payable 201 1,141
Notes payable 113 117
----------- ---------
TOTAL CURRENT LIABILITIES 14,502 16,014
LONG TERM DEBT 1,500 1,500
LONG TERM OTHER PAYABLES 1,130 1,117
DEFERRED INCOME TAXES 447 216
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, 6,970,166
and 7,083,825 shares, respectively 16,566 17,528
Retained earnings 8,008 7,946
Currency translation adjustments 444 455
----------- ---------
TOTAL STOCKHOLDERS' EQUITY 25,018 25,929
----------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $42,597 $44,776
----------- ---------
----------- ---------
</TABLE>
See notes to consolidated financial statements
Page 3
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DATA I/O CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Mar. 28, Mar. 30,
FOR THE QUARTERS ENDED 1996 1995
--------- --------
<S> <C> <C>
(in thousands, except per share data)
Net sales $15,656 $16,208
Cost of goods sold 8,105 7,371
--------- --------
Gross margin 7,551 8,837
Operating expenses:
Research and development 2,465 2,334
Selling, general and administrative 5,014 5,104
--------- --------
Total operating expenses 7,479 7,438
--------- --------
Operating income 72 1,399
Non-operating (income) expense:
Interest income (63) (99)
Interest expense 54 62
Foreign currency exchange (2) 2
--------- --------
Total non-operating (income) expense (11) (35)
--------- --------
Income before taxes 83 1,434
Income tax expense 21 293
--------- --------
Net income $62 $1,141
--------- --------
--------- --------
Earnings per share:
Net income $0.01 $0.15
--------- --------
--------- --------
Weighted average shares outstanding 7,325 7,763
--------- --------
--------- --------
</TABLE>
See notes to consolidated financial statements.
Page 4
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DATA I/O CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Mar. 28, Mar. 30,
1996 1995
---------- ---------
<S> <C> <C>
(in thousands)
OPERATING ACTIVITIES:
Net income $62 $1,141
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 1,018 1,058
Deferred income taxes and tax refunds (480) 365
Deferred revenue 75 293
Changes in current items other
than cash and cash equivalents:
Trade accounts receivable 2,040 (1,792)
Inventories (772) (615)
Other current assets 63 56
Accounts payable and accrued liabilities (213) 773
Business restructure (419) (51)
---------- ---------
Net cash provided by operating activities 1,374 1,228
INVESTING ACTIVITIES:
Additions to property, plant and equipment (629) (673)
Additions to other assets (222)
---------- ---------
Cash used for investing activities (629) (895)
FINANCING ACTIVITIES:
Additions to (repayment of) notes payable (4) 758
Sale of common stock 154 166
Repurchase of common stock (1,433)
Proceeds from exercise of stock options 317 24
---------- ---------
Cash provided by (used for) financing activities (966) 948
---------- ---------
Increase (decrease) in cash and cash equivalents (221) 1,281
Effects of exchange rate changes on cash (2) (13)
Cash and cash equivalents - Beginning of quarter 4,496 7,279
---------- ---------
Cash and cash equivalents - End of quarter $4,273 $8,547
---------- ---------
---------- ---------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $16 $51
Income taxes $434 $11
</TABLE>
See notes to consolidated financial statements.
Page 5
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DATA I/O CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - FINANCIAL STATEMENT PREPARATION
The financial statements as of March 28, 1996 and March 30, 1995, 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 28, 1995
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 ended March 28, 1996 are not
necessarily indicative of the results that may be expected for the year
ending December 26, 1996. 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 28,
1995.
NOTE 2 - CLASSIFICATIONS
Certain prior period's 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):
Mar. 28, Dec. 28,
1996 1995
--------- ----------
Raw material $4,882 $ 4,839
Work-in-process 2,342 2,125
Finished goods 2,087 1,575
--------- ----------
$9,311 $ 8,539
--------- ----------
--------- ----------
NOTE 4 - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following components (in
thousands):
Mar. 28, Dec. 28,
1996 1995
--------- ----------
Land $ 910 $ 910
Building and improvements 7,545 7,539
Equipment 22,474 22,329
--------- ----------
30,778 30,929
Less accumulated depreciation 20,769 20,538
--------- ----------
$10,160 $10,240
--------- ----------
--------- ----------
Page 6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
AGREEMENT TO PURCHASE MINORITY INTEREST IN BUSINESS
On April 25, 1996 the Company announced it has reached an agreement in
principle to purchase a substantial minority interest in Needham's
Electronics and to enter into a worldwide distribution agreement for
Needham's Electronics' programmer products. Completion of the minority
investment and creation of the distribution rights are subject to negotiation
of definitive agreements and satisfaction of certain conditions, which the
Company plans to complete during the second quarter of 1996.
SHARE REPURCHASE PROGRAM
The Company announced on October 27, 1995 a share repurchase program which
authorized the Company to repurchase up to 7.5% (approximately 570,000
shares) of its outstanding shares of common stock. On February 21, 1996 the
Company announced an extension of the share repurchase program. The
extension authorized the Company to repurchase up to an additional 8%
(approximately 570,000 shares) of its outstanding common stock. These
purchases may be executed through open market purchases at prevailing market
prices, through block purchases or in privately negotiated transactions.
Purchases may commence or be discontinued at any time. At May 7, 1996, March
28, 1996 and December 28, 1995 the Company had repurchased 978,700, 760,700
and 562,400 shares at a total cost of approximately $6.9 million, $5.6
million and $4.1 million, respectively.
FORWARD-LOOKING STATEMENTS
Although most of the information contained in this report is historical,
certain of the statements contain forward-looking information. To the extent
these statements express or imply, without limitation, product development
and introduction plans, the Company's expectations for growth, estimates of
future revenue, expenses, profit, cash flow, balance sheet items,
sell-through or backlog, forecasts of demand or market trends for the
Company's various product categories and for the industries in which the
Company operates or any other guidance on future periods, these statements
are forward-looking and involve matters which are subject to a number of
known and unknown risks and uncertainties that could cause actual results to
differ materially from those expressed in such forward-looking statements.
Readers of this report should consider, along with other relevant
information, the risk factors identified by the Company under the caption
"Risk Factors" in Item 1 and elsewhere in the Company's Annual Report on Form
10-K for the year ended December 28, 1995, and other risks identified from
time to time in the Company's filings with the Securities and Exchange
Commission, press releases and other communications.
PROPERTY FOR SALE
The Company has listed its entire Redmond headquarters property as available
for sale for $14.6 million with long-term lease back provisions on the
building.
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 reduced sales and gross margins 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 in 1994. The Company began implementation of the
planned changes to its manufacturing processes in 1994 for completion in
1997. The manufacturing consolidation and relocation project was completed
in the first quarter of 1996, and the outsourcing of certain manufacturing
processes is scheduled to be completed in 1997.
Of the original restructuring charge, approximately $965,000 remained as an
accrued liability at December 28, 1995. At March 28, 1996, the remaining
accrued liability was approximately $546,000. The reduction during the first
quarter of 1996
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related primarily to implementation of changes in manufacturing processes,
facility consolidation and abandoned office space lease payments.
As of March 28, 1996, the Company's restructuring has proceeded approximately
as planned. No significant changes were made to the Company's restructuring
plans during the first quarter of 1996. The relocation to Redmond,
Washington of the Company's Anaheim, California manufacturing operations was
completed during the first quarter.
RESULTS OF OPERATIONS
NET SALES
(in thousands)
First Quarter First Quarter
1996 Change 1995
------------- ------------- -------------
Net sales $15,656 (3.4%) $16,208
------------- ------------- -------------
Net sales decreased 3.4% in the first quarter of 1996 compared to 1995, with
U.S. sales decreasing 11% and international sales increasing 6.3%. Orders in
the first quarter of 1996 declined approximately 17% to $14.9 million,
compared with $17.9 million in 1995. Sales of the Company's Programming
Systems products decreased 11.5% compared to the first quarter of 1995.
Partially offsetting this decline was a 14% increase in sales in the Synario
Design Automation Division. In addition, the Semiconductor Equipment
Division, obtained as part of the Reel-Tech acquisition in August of 1995,
contributed incremental sales growth of approximately $1 million. The
strengthening U.S. Dollar versus the Japanese Yen and the German Mark also
contributed to the decline in sales for the first quarter.
During the first quarter of 1996, net sales for the Company's non-automated
programming systems declined by $3.8 million or 38% compared to 1995. Orders
for non-automated programming systems declined 15% compared to the first
quarter of 1995. The Company believes these decreases were primarily due to
the slowdown in electronics consumer goods manufacturing capital spending in
the United States and Europe which reduced the demand for the Company's
programming systems. In addition, the Company believes the declines also
reflect the continuing market shift away from the Company's traditional line
of higher-priced IC programmers for the engineering market toward
lower-priced project specific programmers.
The Company believes the market shift toward lower-priced IC programmers has
been caused in part by advances in semiconductor processing technology that
have 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 technological improvements in personal computers and design software
tools have caused a shift in the demand for IC design tools by engineering
design teams away from hardware tools 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, 2700 and
Synario.
Sales of the Company's ProMaster line of automated handling systems for the
manufacturing environment increased by approximately 13% for the first
quarter of 1996 compared to the first quarter of 1995. A market shift in the
ProMaster product mix toward higher-priced models contributed to the sales
increase. Automated handling systems accounted for approximately 29% of
total revenues during the first quarter compared with 25% for the first
quarter of 1995. Orders for the ProMaster line decreased 42% compared to the
first quarter of 1995. The Company believes this decrease was primarily due
to the slowdown in electronics consumer goods manufacturing capital spending
in the United States and Europe during the first quarter, and greater use of
in-circuit programming by ATE testers in some very high-volume manufacturing
applications.
The Company believes the increase in sales of the Company's ProMaster
products reflects the expanded use of programmable integrated circuits in the
mid- to high-volume manufacturing environment. 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. Although,
during the first quarter orders have slowed
Page 8
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due to what the Company believes is the soft capital spending market, the
Company still feels that its line of automated handling systems is well
positioned to capitalize on the trend toward automation and integration of
manufacturing processes.
Sales of the Company's Programming Systems software products decreased by 48%
in the first quarter of 1996 compared to 1995. The Company's older software
design tool, ABEL, declined due to competitive pricing pressures and product
aging.
First quarter sales and orders of the Company's Semiconductor Equipment
products, acquired as part of the Reel-Tech acquisition, were approximately
$1 million. The Company believes the market for semiconductor equipment has
experienced strong growth as semiconductor manufacturers have expanded
capacity in response to increased demand for ICs. The Company is in the
process of expanding its personnel, space and systems to meet expected demand
for its semiconductor equipment. The Company believes that if this strong
demand continues and the Company executes well in integrating the Reel-Tech
acquisition, the Company's Semiconductor Equipment products may provide a
significant revenue growth opportunity. Due to the cyclical nature of demand
for ICs, the activities of competitors and other factors, there can be no
assurance that strong demand for this equipment will continue.
Partially offsetting the increase in international sales was the negative
impact of foreign currency exchange rate changes. These changes reduced
sales by approximately $360,000 during the first quarter of 1996 compared to
1995, which was due primarily to rate changes for the German Mark and the
Japanese Yen. International sales were 48% of total net sales for the first
quarter of 1996 compared to 44% of total net sales in the first quarter of
1995.
GROSS MARGIN
(in thousands) First Quarter First Quarter
1996 Change 1995
------------- ------------- -------------
Gross Margin $7,551 (14.5%) $8,837
Percentage of net sales 48.2% 54.5%
------------- ------------- -------------
Gross margin for the first quarter of 1996 decreased compared to the first
quarter of 1995 due primarily to lower volumes, lower product margins and
increases in inventory reserves. The relatively high fixed component of cost
of goods sold causes any swing in total volume to have a significant impact
on gross margin. The shift in mix of product revenues from software to
hardware and from higher-priced and higher-margin non-automated programming
systems to the lower-priced alternatives has lowered the overall product
gross margins. In addition, the gross margin on the ProMaster 9500 was below
that of the Company's traditional handlers due to higher material and labor
costs. The Company expects these costs to decline in future periods due to
anticipated improvements in the proficiency of manufacturing and service
personnel in building and servicing the ProMaster 9500 as a result of the
Reel-Tech acquisition in August 1995. Additionally, the Company completed
the relocation of its Anaheim manufacturing facility to its Redmond
headquarters and expects labor and overhead costs to decline in future
quarters as a result of this consolidation.
RESEARCH AND DEVELOPMENT
(in thousands) First Quarter First Quarter
1996 Change 1995
------------- ------------- -------------
Research and development $2,465 5.6% $2,334
Percentage of net sales 15.7% 14.4%
------------- ------------- -------------
The increase in research and development spending compared to the first
quarter of 1995 is primarily due to increased compensation and personnel
costs, as well as the addition of the Semiconductor Equipment division
obtained as part of the Reel-Tech acquisition in August 1995. The Company
expects to continue its significant investment in research and development
activities.
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
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strategic growth markets, namely automated handling systems for the
manufacturing environment, Windows-based EDA software design tools,
lower-priced IC programmers and semiconductor equipment.
SELLING, GENERAL AND ADMINISTRATIVE
(in thousands) First Quarter First Quarter
1996 Change 1995
------------- ------------- -------------
Selling, general & administrative $5,014 (1.8%) $5,104
Percentage of net sales 32.0% 31.5%
------------- ------------- -------------
The decrease in selling, general and administrative expenditures in the first
quarter of 1996 is due primarily to lower sales commissions due to the lower
volume of sales during the quarter and lower performance bonuses and
incentive compensation. In addition, the increased value of the U.S. Dollar
versus the Japanese Yen and German Mark also contributed to the decrease in
expenditures during the quarter. These reductions were partially offset by
increased personnel costs and increased marketing and promotion expenditures.
INTEREST
(in thousands) First Quarter First Quarter
1996 Change 1995
------------- ------------- -------------
Interest income $63 (36.4%) $99
Interest expense $54 (12.9%) $62
------------- ------------- -------------
Net interest income decreased during the first quarter of 1996 compared with
1995, primarily due to a decrease in the average level of funds available for
investment as a result of the Company's share repurchase program. Interest
rates were also slightly lower during the first quarter of 1996 compared to
1995.
INCOME TAXES
(in thousands) First Quarter First Quarter
1996 Change 1995
------------- ------------- -------------
Income taxes $21 (92.8%) $293
Effective tax rate 25.3% 20.4%
------------- ------------- -------------
The Company's effective tax rate for the first quarter of 1996 differed from
the statutory 34% tax rate primarily due to the benefits related to the
foreign sales corporation. Tax valuation reserves increased by approximately
$100,000 during the quarter. The Company has valuation reserves of $2.7
million that may reverse as the Company records income. The Company believes
the potential reversal of these valuation reserves may substantially reduce
its effective tax rate from the statutory rate during the balance of 1996.
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NET INCOME AND EARNINGS PER SHARE
(in thousands) First Quarter First Quarter
1996 Change 1995
------------- ------------- -------------
Net income $62 (94.6%) $1,141
Earnings per share $0.01 (93.3%) $0.15
------------- ------------- -------------
The decrease in net income and earnings per share compared with the first
quarter of 1995 is primarily due to decreased sales volume, a lower gross
margin percentage, and increased research and development expenses.
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. To date the foreign currency rate
changes have not significantly impacted the Company's profitability. This is
because approximately only 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, and the effect
of individual rate changes on sales and expenses tend to offset each other.
Additionally, the Company hedges its foreign currency exposure on the sales
of inventory and certain loans to its foreign subsidiaries through the use of
foreign exchange contracts.
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
March 28, Dec. 28,
1996 Change 1995
------------- ------------- -------------
Working capital $11,731 ($274) $12,005
Total debt $1,613 ($4) $1,617
------------- ------------- -------------
Working capital decreased during the first quarter of 1996 primarily due to
funds used to repurchase common stock as discussed above. This decrease was
partially offset by funds provided by operations.
The Company's trade accounts receivable decreased by approximately $2 million
during the first quarter. This decrease was primarily due to decreased sales
volume during the first quarter of 1996. The Company increased its inventory
level by approximately $772,000 during the first quarter. This increase was
primarily to support anticipated growth in the Semiconductor Equipment
products as well as to provide a level of safety stock during the Anaheim
factory relocation which was completed in March 1996. The Company reduced
its accrued expenses primarily due to payments of approximately $419,000 of
restructure related accruals and payments of 1995 incentive compensation,
contributions to the Company's employee retirement savings plan and payments
of 1995 income taxes. Funding for these changes was provided primarily by
operations and approximately $471,000 in stock sale proceeds under the
Company's employee stock benefit plans.
As of March 28, 1996, the Company had total debt of $1.6 million or
approximately 6% of its $25 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 $113,000 is current debt, consisting entirely
of borrowings on the Company's $1.5 million foreign line of credit. No
borrowings were outstanding under the Company's $8.0 million U.S. line of
credit.
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The U.S. line of credit matures May 31, 1996. The foreign line of credit
matures in August 1996. 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 1996 will be approximately $1.5 million.
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 this amount.
At March 28, 1996, the Company's material short-term unused sources of
liquidity consisted of approximately $4.3 million in cash and cash
equivalents, available borrowings of $8.0 million under its U.S. line of
credit and available borrowings of approximately $1.4 million 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, fund the Company's share
repurchase program, fund its remaining restructure accrued liabilities, fund
the minority investment in Needham's Electronics and fund the Reel-Tech
contingent payment obligations. In addition, if the Company is successful in
selling its property held for sale, additional capital will be available.
Page 12
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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
None
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: May 7, 1996
By://S//Steven M. Gordon
---------------------
Steven M. Gordon
Vice President
Finance and Administration
Chief Financial Officer
Chief Accounting Officer
Secretary and Treasurer
Page 14
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EXHIBIT INDEX
Exhibit Title Page
Number Number
- ------- ----------------------------------------------------- -----------
11 Statement Regarding Computation of Earnings per Share 16
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 March 28,
1996, and March 30, 1995 are based on the following (in thousands):
Mar. 28, Mar. 30,
1996 1995
-------- --------
Primary and fully diluted:
Weighted Average Shares Outstanding 7,053 7,473
Dilutive Effect of Stock Options 272 290
-------- --------
Weighted Average Common and
Equivalent Shares Outstanding 7,325 7,763
-------- --------
-------- --------
Page 16
<PAGE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-26-1996
<PERIOD-START> DEC-29-1995
<PERIOD-END> MAR-28-1996
<CASH> 4273
<SECURITIES> 0
<RECEIVABLES> 11394
<ALLOWANCES> 322
<INVENTORY> 9311
<CURRENT-ASSETS> 26233
<PP&E> 30929
<DEPRECIATION> 20769
<TOTAL-ASSETS> 42597
<CURRENT-LIABILITIES> 14502
<BONDS> 0
0
0
<COMMON> 16566
<OTHER-SE> 8452
<TOTAL-LIABILITY-AND-EQUITY> 42597
<SALES> 15656
<TOTAL-REVENUES> 15656
<CGS> 8105
<TOTAL-COSTS> 7467
<OTHER-EXPENSES> (65)
<LOSS-PROVISION> 12
<INTEREST-EXPENSE> 54
<INCOME-PRETAX> 83
<INCOME-TAX> 21
<INCOME-CONTINUING> 62
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 62
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
