<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 JUNE 26, 1997 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
--- ---
6,942,444 shares of no par value Common Stock outstanding as of August
5, 1997
Page 1 of 16
Exhibit Index on Page 15
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
DATA I/O CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED JUNE 26, 1997
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 2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DATA I/O CORPORATION
CONSOLIDATED BALANCE SHEETS
- -------------------------------------------------------------------------------
June 26, Dec. 26,
1997 1996
- -------------------------------------------------------------------------------
(in thousands, except share data) (Unaudited) (note 1)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 4,664 $ 4,048
Short-Term Investments 15,553 0
Trade accounts receivable, less allowance
for doubtful accounts of $393 and $362 10,200 9,796
Inventories 7,198 8,260
Recoverable income taxes 597 474
Deferred income taxes 750 762
Other current assets 1,089 997
---------- ----------
TOTAL CURRENT ASSETS 40,051 24,337
Land held for sale 0 2,437
Property, plant and equipment - net 4,073 9,430
Other assets 2,480 3,115
Deferred income taxes 351 0
---------- ----------
TOTAL ASSETS $46,955 $39,319
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 2,805 $ 1,906
Accrued compensation 3,690 2,587
Deferred revenue 5,244 5,494
Other accrued liabilities 3,105 3,102
Accrued costs of business restructuring 108 312
Income taxes payable 1,565 777
Notes payable 2,132 105
---------- ----------
TOTAL CURRENT LIABILITIES 18,649 14,283
LONG TERM DEBT 0 1,500
LONG TERM OTHER PAYABLES 533 503
DEFERRED INCOME TAXES 0 474
DEFERRED GAIN ON SALE OF PROPERTY 3,248 0
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, 6,903,965
and 6,777,720 shares, respectively 15,813 15,247
Retained earnings 8,272 6,845
Currency translation adjustments 440 467
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 24,525 22,559
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $46,955 $39,319
---------- ----------
---------- ----------
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 26, June 27, June 26, June 27,
1997 1996 1997 1996
- ------------------------------------------------------------------------------------------
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Net sales $15,001 $15,308 $30,076 $30,964
Cost of goods sold 7,808 7,725 15,385 15,830
------- ------- ------- -------
Gross margin 7,193 7,583 14,691 15,134
Operating expenses:
Research and development 2,831 2,660 5,711 5,126
Selling, general and administrative 5,342 5,379 9,904 10,392
------- ------- ------- -------
Total operating expenses 8,173 8,039 15,615 15,518
------- ------- ------- -------
Operating loss (980) (456) (924) (384)
Non-operating income (expense):
Interest income 138 38 198 101
Interest expense (58) (80) (109) (134)
Foreign currency exchange (29) (5) (14) (3)
Gain on sale of property 2,347 2,347
------- ------- ------- -------
Total non-operating income (expense) 2,398 (47) 2,422 (36)
------- ------- ------- -------
Income (loss) before taxes 1,418 (503) 1,498 (420)
Income tax expense 40 203 72 224
------- ------- ------- -------
Net income (loss) $ 1,378 ($706) $1,426 ($644)
------- ------- ------- -------
------- ------- ------- -------
Earnings per share:
Net income (loss) $0.20 ($0.10) $0.20 ($0.09)
------- ------- ------- -------
------- ------- ------- -------
Weighted average shares outstanding 7,018 6,827 6,966 6,940
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
See notes to consolidated financial statements.
Page 4
<PAGE>
DATA I/O CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
- --------------------------------------------------------------------------------
For the six months ended: June 26, June 27,
1997 1996
- --------------------------------------------------------------------------------
(in thousands)
OPERATING ACTIVITIES:
Net income (loss) 1,426 ($644)
Adjustments to reconcile income
to net cash provided by operating activities:
Depreciation and amortization 1,777 2,046
Deferred income taxes and tax refunds (120) (408)
Deferred revenue (250) 290
Gain on sale of property (2,347)
Changes in current items other
than cash and cash equivalents:
Trade accounts receivable (395) 1,315
Inventories 1,061 (1,258)
Other current assets (91) 244
Accounts payable and accrued liabilities 2008 (126)
Business restructure accrual (204) (514)
-------- --------
Cash provided by operating activities 2,865 945
INVESTING ACTIVITIES:
Additions to property, plant and equipment (1,176) (1,296)
Net proceeds on sale of property 13,380
Purchase of short-term investments (15,553)
-------- --------
Cash used for investing activities (3,349) (1,296)
FINANCING ACTIVITIES:
Additions to/(repayment of) notes payable 531 172
Sale of common stock 179 154
Repurchase of common stock (3) (2,930)
Proceeds from exercise of stock options 390 397
-------- --------
Cash provided by/(used for) financing activities 1,097 (2,207)
-------- --------
Increase (decrease) in cash and cash equivalents 613 (2,558)
Effects of exchange rate changes on cash 3 (12)
Cash and cash equivalents - Beginning of period 4,048 4,496
-------- --------
Cash and cash equivalents - End of period $4,664 $1,926
-------- --------
-------- --------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 92 $ 34
Income taxes $143 $477
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 26, 1997 and June 27, 1996, 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 26, 1996
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 26,
1997 are not necessarily indicative of the results that may be expected for
the year ending December 25, 1997. These financial statements should be read
in conjunction with the annual audited financial statements and the
accompanying notes as well as management's discussion and analysis included
in the Company's Form 10-K for the year ended December 26, 1996.
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):
June 26 June 27,
1997 1996
------- --------
Raw material $3,709 $5,134
Work-in-process 2,348 2,694
Finished goods 1,141 1,969
------- --------
$7,198 $9,797
------- --------
------- --------
NOTE 4 - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following components (in
thousands):
June 26 June 27,
1997 1996
------- --------
Land $ 0 $ 910
Building and improvements 141 7,554
Equipment 21,949 22,386
------- --------
22,090 30,850
Less accumulated depreciation 18,017 20,685
------- --------
$ 4,073 $10,165
------- --------
------- --------
Page 6
<PAGE>
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
due to the Company's profit generated in the current period which allows
the recognition of the benefit of future reversing temporary
differences. The valuation allowance for deferred tax assets decreased
by approximately $875,000 during the second quarter and approximately
$1.1 million for the first six months of 1997 to $2.5 million as of June
26, 1997.
Page 7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General
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 and
May 13, 1997 the Company announced an extension of the share repurchase
program which authorized the Company to repurchase up to an additional 8%
(approximately 570,000 shares) and approximately 14.5% (up to 1,000,000
shares) respectively 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. As of June 26, 1997, the Company
had repurchased 1,016,200 shares at a total cost of approximately $7.1
million.
SALE OF HEADQUARTERS PROPERTY
On May 13, 1997 the Company announced the completion of the sale of land and
building comprising its Redmond, Wash., corporate headquarters and excess
land that had been held for resale for approximately $13.8 million. The sale
includes a 10 year lease-back of the building to the Company, with an option
to renew the lease for an additional 10 years. The Company realized
approximately $12 million in cash after payment of transaction fees and
taxes. The sale resulted an overall pre-tax gain of approximately $5.6
million, and of this approximately $2.3 million related to the excess land
was recognized in the second quarter of 1997. The remainder will be amortized
over the life of the lease.
FORWARD-LOOKING STATEMENTS
Although most of the information contained in this report is historical,
certain 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 26, 1996, and other risks identified from
time to time in the Company's filings with the Securities and Exchange
Commission, press releases and other communications.
Page 8
<PAGE>
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
NET SALES
- ----------------------------------------------------------------------------------------------------
Second Quarter First Six Months
----------------------------- -----------------------------
Net sales by division (in thousands) 1997 1996 % Change 1997 1996 % Change
- ------------------------------------ -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Programming Systems Division:
Non-automated programming systems $ 7,125 $8,579 (16.9%) $15,076 $16,792 (10.2%)
Automated programming systems 4,273 4,152 2.9% 8,189 8,757 (6.5%)
-------- -------- -------- -------- -------- --------
Total Programming Systems Division 11,398 12,731 (10.5%) 23,265 25,549 (8.9%)
Synario Design Automation Division 1,529 1,522 0.5% 3,452 3,330 3.7%
Semiconductor Equip. Div. (Reel-Tech) 2,074 1,055 96.6% 3,359 2,085 61.1%
-------- -------- -------- -------- -------- --------
Net sales $15,001 $15,308 (2.0%) $30,076 $30,964 (2.9%)
-------- -------- -------- -------- -------- --------
Second Quarter First Six Months
----------------------------- -----------------------------
Net sales by location (in thousands) 1997 1996 % Change 1997 1996 % Change
- ------------------------------------ -------- -------- -------- -------- -------- --------
United States $7,624 $6,723 13.4% $15,099 $14,798 2.0%
% of total 50.8% 43.9% 50.2% 47.8%
International $7,377 $8,585 (14.1%) $14,977 $16,166 (7.4%)
% of total 49.2% 56.1% 49.8% 52.2%
- ----------------------------------------------------------------------------------------------------
</TABLE>
The Company experienced a decline in revenues in the second quarter of 1997
of approximately 2% to $15.0 million compared with $15.3 million in the
second quarter of 1996. Orders increased approximately 2% to $14.5 million
compared with $14.2 million in the same period of 1996.
The Company believes that the decline in revenues for the Programming Systems
Division is due primarily to delays in new product introductions by the
Company. The Company believes that increased competition in the areas where
new Data I/O product introductions are not scheduled to occur until the later
half of 1997, or where products are nearing the end of their product life
cycles, is also adversely affecting sales. The Company's continued
expectation is that these new products will not be available in production
quantities until late in the second half of 1997 and early 1998. In
addition, the Company believes the declines in non-automated programming
systems also reflect the continuing market shift away from the Company's
traditional line of higher-price IC programmers for the engineering market,
toward lower-price programmers. As a result, the Company believes that until
its new products are released and shipping in production quantities, overall
demand for its programming systems will continue to be weak. The Company
released four new low-cost programming products late in the second quarter,
consisting of the ChipWriter-TM-, the ChipWriter-TM- Portable, the
ChipWriter-TM-Gang and the LabSite-TM- Programming System.
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 because the
Company's products historically have been oriented toward hardware tools and,
within hardware tools, toward higher-priced IC programmers.
However, the Company believes that recent changes in programmable IC
technology, such as increasingly complex logic ICs, lower voltage
requirements and higher pin counts, and the increasing need for higher
quality and high-volume programming by users of programmable ICs means that
there is a significant market need for more sophisticated programmers with
new programming
Page 9
<PAGE>
technology and automated programming systems. The company currently has
development projects underway for new programmer and automation technology to
address the needs created by these technology changes. The first of these
products, the ProMaster 970, a fine pitch automated programming system, was
introduced at the Nepcon trade show in February.
The Company's Semiconductor Equipment Division products, acquired as part of
the Reel-Tech acquisition, continued to experience strong demand, and
partially offset the decline in revenue for programming systems products.
Semiconductor Equipment Division revenues showed a strong 97% growth compared
to the second quarter of 1996. The Company believes the market for
semiconductor equipment, after experiencing several quarters of a slow down
in capital spending in 1996, has turned around. The Company believes this
favorable market condition is continuing; however 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. The
Company introduced its new high throughput TR4000 Tape and Reel System at the
Semicon West trade show in July in San Jose which is scheduled for shipment
in the fourth quarter.
Synario division sales were flat compared with the same quarter in the prior
year as it made major changes in its U.S. sales channels and competition
increased from low-priced semiconductor company software.
GROSS MARGIN
Second Quarter First Six Months
--------------------- -----------------------
(in thousands) 1997 1996 1997 1996
- --------------------------------------------------------------------------------
Gross margin $7,193 $7,583 $14,691 $15,134
Percentage of net sales 48.0% 49.5% 48.8% 48.9%
- --------------------------------------------------------------------------------
Gross margin declined slightly in amount and as a percentage of net sales for
the second quarter and first six months of 1997 as compared to the prior year
due primarily to lower sales volumes and lower product margins. Contributing
to the decline of gross margin was strengthening of the U.S. Dollar in
relation to the Japanese Yen and the German Mark, in which approximately 18%
of the company's sales were denominated.
RESEARCH AND DEVELOPMENT
Second Quarter First Six Months
--------------------- -----------------------
(in thousands) 1997 1996 1997 1996
- --------------------------------------------------------------------------------
Research and development $2,831 $2,660 $5,711 $5,126
Percentage of net sales 18.9% 17.4% 19.0% 16.6%
- --------------------------------------------------------------------------------
The increase in research and development spending compared to the second
quarter and the first six months of 1996 is primarily due to increased
personnel and product development costs related to the Company's continued
significant investment in new technology. The Company expects to continue
its significant investment in research and development activities during the
second half of 1997 in preparation for the anticipated new product releases
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, lower-priced IC programmers and semiconductor
equipment.
Page 10
<PAGE>
SELLING, GENERAL AND ADMINISTRATIVE
Second Quarter First Six Months
--------------------- -----------------------
(in thousands) 1997 1996 1997 1996
- --------------------------------------------------------------------------------
Selling, general and
administrative $5,342 $5,379 $9,904 $10,392
Percentage of net sales 35.6% 35.1% 32.9% 33.6%
- --------------------------------------------------------------------------------
Second quarter selling, general and administrative expenditures were
relatively flat as compared to the same quarter in 1996. Information
system year 2000 project charges of approximately $300,000 were included
during the second quarter which was offset by lower sales commissions as
a result of lower sales volume and continued cost control efforts during
the second quarter and first six months of 1997. In addition, the
increased value of the U.S. Dollar versus the Japanese Yen and German
Mark also contributed to a decrease in translated expenditures during
the second quarter and first six months of 1997.
INTEREST
Second Quarter First Six Months
--------------------- -----------------------
(in thousands) 1997 1996 1997 1996
- --------------------------------------------------------------------------------
Interest income $138 $38 $198 $101
Interest expense $58 $80 $109 $134
- --------------------------------------------------------------------------------
The increase in interest income is due primarily to increased funds available
for investment, primarily as a result of the sale of the Company's
headquarters property.
INCOME TAXES
Second Quarter First Six Months
--------------------- -----------------------
(in thousands) 1997 1996 1997 1996
- --------------------------------------------------------------------------------
Income taxes $40 $203 $72 $224
Effective tax rate 2.8% N/A 4.8% N/A
- --------------------------------------------------------------------------------
The Company's effective tax rate for the second quarter and the first six
months of 1997 differed from the statutory 34% tax rate primarily due to
reversing deferred tax valuation reserves. The valuation reserves decreased
primarily due to the Company's having recorded profits. The Company has
valuation reserves of $2.5 million that may increase should the Company
experience losses or reverse as the Company records income.
NET INCOME AND EARNINGS PER SHARE
Second Quarter First Six Months
--------------------- -----------------------
(in thousands) 1997 1996 1997 1996
- --------------------------------------------------------------------------------
Net income (loss) $1,378 ($706) $1,426 ($644)
Earnings per share $0.20 ($0.10) $0.20 ($0.09)
- --------------------------------------------------------------------------------
Net Income for the second quarter includes a gain on the sale and leaseback
of the corporate headquarters property of $2,347,000. Without the
headquarters sale, the Company would have recorded a net loss of $969,000 or
($.14) per share.
Page 11
<PAGE>
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 20% of the Company's sales are made by foreign
subsidiaries and independent currency fluctuations tend to minimize the
translation 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
(in thousands) June 26, Dec. 26,
1997 Change 1996
- --------------------------------------------------------------------------------
Working capital $21,402 $11,348 $10,054
Total debt $2,132 $527 $1,605
- --------------------------------------------------------------------------------
Working capital increased during the second quarter of 1997 primarily due to
the funds received from the sale of the corporate headquarters property.
The Company's trade accounts receivable decreased by approximately $1.2
million during the second quarter. This decrease is due primarily to
increased collection efforts and the timing of sales within the quarter. The
company decreased its inventory level by approximately $402,000 during the
second quarter. This decrease was primarily due to a continuing effort to
align the level of inventory to the sales volume the Company is experiencing.
As of June 26, 1997, the Company had total debt of $2.1 million or
approximately 9% 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 $600,000 is current debt, consisting entirely
of borrowings on the Company's $1.4 million foreign line of credit. No
borrowings were outstanding under the Company's $8.0 million U.S. line of
credit.
The U.S. line of credit expires on May 31, 1998. The foreign line of credit
expires in November 1997. Historically, these credit lines have been
structured as short-term and have been renewed by their expiration dates.
The Company currently expects to be able to renew these lines of credit
before expiration 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 1997 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 June 26, 1997, the Company's material short-term unused sources of
liquidity consisted of approximately $20.2 million in cash, cash equivalents,
and short-term investments, available borrowings of $8.0 million under its
U.S. line of credit and available borrowings of approximately $800,000 under
its foreign line of credit. The Company believes these sources of working
capital will be sufficient to fund working capital needs, service existing
debt, finance planned capital expenditures, fund the company's share
repurchase program, and fund the Reel-Tech contingent payment obligations.
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 13, 1997, there were
present in person or by proxy the holders of 5,823,511 shares of the
6,835,965 shares of Common Stock of the Corporation. Following are the
matters ratified and the voting results:
(a) Election of a Board of Directors consisting of the following six (6)
directors:
Name Votes For Votes Withheld
---- --------- --------------
William C. Erxleben 5,273,816 548,660
Keith L. Barnes 5,272,932 549,544
Frances M. Conley 5,279,482 542,994
Edward D. Lazowska 5,277,032 545,444
Donald R. Stenquist 5,276,381 546,095
Milton F. Zeutschel 5,276,847 545,629
(b) Approval of an amendment to the Company's 1996 Employee Stock
Option Plan whereby the number of shares of the Company's
Common Stock reserved for issuance under the Plan was
increased by 300,000 shares. Votes cast were 4,933,063 For,
762,987 Against, 79,057 Abstain and 48,404 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 8, 1997
By: //S// Alan J. Beauchamp
-----------------------
Alan J. Beauchamp
Vice President
Finance and Administration
Chief Financial Officer
Secretary and Treasurer
Page 14
<PAGE>
EXHIBIT INDEX
Exhibit Number Title Page Number
- -------------- ------------------------------------------------ -----------
11 Statement Regarding Computation of Earnings 16
per Share
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 26,
1997, and June 27, 1996 are based on the following (in thousands):
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
------------- ----------------
June 26, June 27, June 26, June 27,
Primary and Fully Diluted: 1997 1996 1997 1996
- -------------------------- -------- -------- -------- ------
<S> <C> <C> <C> <C>
Weighted Average Shares Outstanding 6,877 6,827 6,847 6,940
Dilutive Effect of Stock Options 141 119
-------- -------- -------- ------
Weighted Average Common and Equivalent
Shares Outstanding 7,018 6,827 6,966 6,940
-------- -------- -------- ------
-------- -------- -------- ------
</TABLE>
Page 16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-25-1997
<PERIOD-START> DEC-27-1996
<PERIOD-END> JUN-26-1997
<CASH> 4,664
<SECURITIES> 15,553
<RECEIVABLES> 10,593
<ALLOWANCES> 393
<INVENTORY> 7,198
<CURRENT-ASSETS> 40,051
<PP&E> 22,090
<DEPRECIATION> 18,017
<TOTAL-ASSETS> 46,955
<CURRENT-LIABILITIES> 18,649
<BONDS> 0
0
0
<COMMON> 15,813
<OTHER-SE> 8,712
<TOTAL-LIABILITY-AND-EQUITY> 46,955
<SALES> 30,076
<TOTAL-REVENUES> 30,076
<CGS> 15,385
<TOTAL-COSTS> 15,552
<OTHER-EXPENSES> (2,531)
<LOSS-PROVISION> 63
<INTEREST-EXPENSE> 109
<INCOME-PRETAX> 1,498
<INCOME-TAX> 72
<INCOME-CONTINUING> 1,426
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,426
<EPS-PRIMARY> 0.20
<EPS-DILUTED> 0.20
</TABLE>
