<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended May 31, 1995 Commission File Number 0-12353
PLASMA-THERM, INC.
------------------
(Exact name of registrant as specified in its charter)
FLORIDA 04-2554632
- - ------------------------------- --------------------------
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
9509 INTERNATIONAL COURT, ST. PETERSBURG, FLORIDA 33716
-------------------------------------------------------
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code (813) 577-4999
--------------
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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, par value $.01 per share 10,234,561
- - -------------------------------------- -----------------------------
Class Outstanding at June 28, 1995
<PAGE> 2
INDEX
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C>
Item 1. Consolidated Financial Statements
Balance Sheets - May 31, 1995 and
November 30, 1994 . . . . . . . . . . . . . . . . . . . . . . . 3
Statements of Income - Three Months and Six Months Ended
May 31, 1995 and May 31, 1994 . . . . . . . . . . . . . . . . . 5
Statements of Cash Flows - Six Months Ended . . . . . . . . . .
May 31, 1995 and May 31, 1994 . . . . . . . . . . . . . . . . . 6
Notes to Consolidated Financial Statements . . . . . . . . . . . 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . 10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . 11
</TABLE>
-2-
<PAGE> 3
PLASMA-THERM, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
May 31, November 30,
ASSETS 1995 1994
----------- ------------
(Unaudited) (Note 1)
<S> <C> <C>
Current assets
Cash and cash equivalents $ 5,244,694 $ 2,625,850
Accounts receivable 6,514,420 4,725,876
Income tax deposits 598,653 --
Inventories 8,955,307 7,219,340
Current portion - note receivable 75,771 60,000
Prepaid expenses and other 282,432 218,569
Deferred tax asset 208,000 208,000
----------- -----------
Total current assets 21,879,277 15,057,635
----------- -----------
Property and equipment, at cost
Machinery and equipment 2,323,100 2,118,537
Leasehold improvements 416,696 375,099
----------- -----------
2,739,796 2,493,636
Less accumulated depreciation and
amortization 1,685,238 1,633,535
----------- -----------
1,054,558 860,101
----------- -----------
Other assets
Note receivable, less current portion 15,000 45,000
Deferred tax asset 498,380 498,380
Deferred offering costs -- 86,878
Other 12,152 35,904
----------- -----------
525,532 666,162
----------- -----------
$23,459,367 $16,583,898
=========== ===========
</TABLE>
See accompanying notes to these consolidated financial statements.
-3-
<PAGE> 4
PLASMA-THERM, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
May 31, November 30,
LIABILITIES 1995 1994
------------ ------------
(Unaudited) (Note 1)
<S> <C> <C>
Current liabilities
Short-term borrowings $ 800,000 $ 1,000,000
Current portion of notes payable 333,333 375,000
Current maturities of obligations under
capital leases 86,098 111,565
Accounts payable 2,478,139 1,544,791
Billings in excess of costs and estimated
earnings on uncompleted contracts -- 27,330
Accrued payroll and related 315,585 390,913
Accrued expenses 564,227 327,958
Income taxes payable -- 151,962
Customer deposits 351,400 738,000
----------- -----------
Total current liabilities 4,928,782 4,667,519
----------- -----------
Long-term obligations
Notes payable 333,333 500,000
Obligations under capital leases 275,866 311,484
----------- -----------
609,199 811,484
----------- -----------
SHAREHOLDERS' EQUITY
Shareholders' equity
Common stock
$.01 par value
Authorized - 25,000,000 shares
Issued and outstanding - 10,234,561
shares - 1995 and 8,428,561 shares -
1994 102,347 84,287
Additional paid-in capital 14,499,818 7,885,857
Retained earnings 3,319,221 3,134,751
----------- -----------
17,921,386 11,104,895
----------- -----------
$23,459,367 $16,583,898
=========== ===========
</TABLE>
See accompanying notes to these consolidated financial statements.
-4-
<PAGE> 5
PLASMA-THERM, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
May 31, May 31,
------------------------------ -----------------------------
1995 1994 1995 1994
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $7,159,661 $5,540,371 $12,116,521 $10,909,925
License income -- -- 30,000 --
---------- ---------- ----------- -----------
7,159,661 5,540,371 12,146,521 10,909,925
---------- ---------- ----------- -----------
Costs and expenses
Cost of products sold 4,776,213 3,500,530 8,193,726 6,723,875
Research and development 673,725 561,919 1,188,537 1,106,402
Selling and administrative 1,484,766 1,156,418 2,562,766 2,299,257
Interest expense 38,889 8,229 74,545 19,054
Other (income) expense, net (94,157) 8,870 (174,761) 23,376
---------- ---------- ----------- -----------
6,879,436 5,235,966 11,844,813 10,171,964
---------- ---------- ----------- -----------
Income before income taxes and cumulative
effect of change in accounting principle 280,225 304,405 301,708 737,961
Income taxes 104,188 80,891 117,238 185,356
---------- ---------- ----------- -----------
Income before cumulative effect of change
in accounting principle 176,037 223,514 184,470 552,605
Cumulative effect of change in
accounting for income taxes -- -- -- 350,000
---------- ---------- ----------- -----------
Net income $ 176,037 $ 223,514 $ 184,470 $ 902,605
========== ========== =========== ===========
Income per share (primary and fully dilutive)
Income per share before cumulative effect
of change in accounting principle $ 0.02 $ 0.02 $ 0.02 $ 0.06
Cumulative effect of change
in accounting principle -- -- -- 0.04
---------- ---------- ----------- -----------
$ 0.02 $ 0.02 $ 0.02 $ 0.10
========== ========== =========== ===========
</TABLE>
See accompanying notes to these consolidated financial statements.
-5-
<PAGE> 6
PLASMA-THERM, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended May 31,
--------------------------------------
1995 1994
----------- ----------
<S> <C> <C>
Cash flows from operating activities
Net income $ 184,470 $ 902,605
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization 212,143 216,365
Gain on disposal of assets 5,100 (21,070)
Deferred taxes -- (346,278)
Compensation - stock options 17,043 144,966
Changes in assets and liabilities
(Increase) decrease in accounts receivable (1,788,544) 330,200
Increase in income tax deposits (115,100) --
Increase in inventories (1,735,967) (1,249,991)
Increase in prepaid expenses and other (63,863) (71,678)
(Decrease) in accounts payable 933,348 (73,846)
Decrease in billings in excess of costs and
estimated earnings on uncompleted contracts (27,330) --
Increase (decrease) in accrued payroll and related (75,328) 81,891
Increase in accrued expenses 236,269 (83,458)
Increase (decrease) in income taxes payable (151,962) 111,809
Increase (decrease) in customer deposits (386,600) 1,204,580
---------- ----------
Net cash provided by (used in)
operating activities (2,756,321) 1,146,095
---------- ----------
Cash flows from investing activities
Capital expenditures (411,700) (184,225)
Proceeds from sale of assets -- 61,500
Payments received on loan to former subsidiary 30,000 30,000
Issuance of note receivable (15,771) --
Other 23,752 1,222
---------- ----------
Net cash used in investing activities (373,719) (91,503)
---------- ----------
</TABLE>
See accompanying notes to these consolidated financial statements.
-6-
<PAGE> 7
PLASMA-THERM, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended May 31,
-------------------------------------
1995 1994
---------- ----------
<S> <C> <C>
Cash flows from financing activities
Proceeds from issuance of notes payable -- 1,033,649
Principal payments on notes payable (208,334) (162,132)
Principal payments under capital lease obligations (61,085) --
Net payments under line of credit agreements (200,000) --
Issuance of common stock 6,131,425 59,060
Deferred offering costs 86,878 --
---------- ----------
Net cash provided by (used in)
financing activities 5,748,884 930,577
---------- ----------
Net increase in cash and cash
equivalents 2,618,844 1,985,169
---------- ----------
Cash and cash equivalents, beginning of period 2,625,850 1,496,113
---------- ----------
Cash and cash equivalents, end of period $5,244,694 $3,481,282
========== ==========
</TABLE>
See accompanying notes to these consolidated financial statements.
-7-
<PAGE> 8
PLASMA-THERM, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 1995 AND NOVEMBER 30, 1994
(UNAUDITED)
NOTE 1 BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited
consolidated financial statements contain all adjustments
(consisting of only normal recurring adjustments) necessary to
present fairly the financial position as of May 31, 1995 and
1994 and the results of operations and cash flows for the six
months ended May 31, 1995 and 1994.
The results of operations for the six months ended May 31,
1995 and 1994 are not necessarily indicative of results for
the full year.
The November 30, 1994 balance sheet amounts and disclosures
included herein have been delivered from the November 30, 1994
audited financial statements of the Registrant. While the
Company believes that the disclosures presented are adequate
to make the information not misleading, it is suggested that
these consolidated financial statements be read in conjunction
with the consolidated financial statements and the notes
included in the Company's latest annual report on Form 10-K.
NOTE 2 PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of
Plasma-Therm, Inc. (the Company) and its wholly owned
subsidiary. All significant intercompany transactions and
balances have been eliminated.
NOTE 3 INCOME PER SHARE
Earnings per share is computed based on the weighted average
number of shares of common stock adjusted for the conversion
of dilutive common stock equivalents. The primary and fully
dilutive income per share are the same for all periods
presented. The following is the weighted average outstanding
share information.
<TABLE>
<CAPTION>
Three Months Ended
---------------------------------
May 31, 1995 May 31, 1994
------------ ------------
<S> <C> <C>
Primary 10,723,039 9,007,961
Fully Dilutive 10,723,020 8,887,730
<CAPTION>
Six Months Ended
---------------------------------
May 31, 1995 May 31, 1994
------------ ------------
<S> <C> <C>
Primary 10,662,953 9,027,477
Fully Dilutive 10,676,119 9,015,085
</TABLE>
-8-
<PAGE> 9
PLASMA-THERM, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 1995 AND NOVEMBER 30, 1994
(UNAUDITED)
NOTE 4 SHORT TERM BORROWINGS
In January 1995, the Company replaced its existing line of
credit with a $2,000,000 line due May 19, 1996. Interest is
payable monthly at the bank's prime rate. The line is
collateralized by accounts receivable. The bank has a
security interest in the proceeds for the collection of
accounts receivable in the Company's depository account(s).
NOTE 5 NOTES PAYABLE
In January 1995, the note payable, payable in monthly
installments of $27,788 plus interest at 8.28%, was amended to
change the collateral requirements from all the assets of the
Company to accounts receivable and inventory only. The bank
has a security interest in the proceeds for the collection of
accounts receivable in the Company's depository account(s).
NOTE 6 SHAREHOLDERS' EQUITY
Changes in the Company's common stock and additional paid-in
capital during the six months ended May 31, 1995 consist of
the following:
<TABLE>
<CAPTION>
COMMON STOCK
------------------------------ ADDITIONAL
SHARES PAID-IN-
ISSUED AMOUNT CAPITAL
------ ------ -------
<S> <C> <C> <C>
Balance at November 30, 1994 8,428,561 $ 84,287 $ 7,885,857
Exercise of stock options 56,000 560 135,788
Compensation on unexercised
stock options 17,043
Exercise of warrants 250,000 2,500 632,680
Sale of 1,500,000 shares of
common stock 1,500,000 15,000 5,744,097
Repayment of obligations under
Section 16(b) of the Securities
Exchange Act of 1934 -- -- 84,353
---------- -------- -----------
Balance at February 28, 1995 10,234,561 $102,347 $14,499,818
========== ======== ===========
</TABLE>
-9-
<PAGE> 10
PLASMA-THERM, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 1995 AND NOVEMBER 30, 1994
(UNAUDITED)
NOTE 6 SHAREHOLDERS' EQUITY (CONTINUED)
In connection with the Company's borrowing from its former
primary bank, The Company's president and chief operating
officer executed a limited guarantee of the Company's
indebtedness which was released in 1989. The Company agreed to
compensate the Company's president for giving such guarantee
by issuing to him a warrant expiring in April 2002, for the
purchase of 500,000 shares of the Company's common stock at a
purchase price per share of $.875. In accordance with the
anti-dilution provisions contained in the above warrants, the
exercise price of the warrants was adjusted as a result of the
spin-off of the Company's subsidiary in 1992. The adjusted
conversion price of the warrants is $.7721 per share. One
hundred thousand warrants were exercised in April 1995 for
$77,210.
In conjunction with previous financing agreements, two
warrants expiring in 1995 were issued to a third party in
November 1988 and June 1989 to purchase 50,000 and 100,000
shares of common stock, respectively, at a price of $1.25 per
share. In accordance with the anti-dilution provisions
contained in the above warrants, the exercise price of the
warrants was adjusted as a result of the spin-off of the
Company's subsidiary in 1992. The adjusted conversion price
of the warrants is $1.1029 per share. Both warrants were
exercised in February 1995 for $165,435.
The Company completed a private placement offering of its
Common Stock in December 1994, raising $6,375,000 from the
sale of 1,500,000 shares. Costs, including commissions,
associated with the offering were approximately $631,000.
Part of these proceeds were used to pay off the Company's line
of credit balance of $1,000,000 at November 30, 1994.
NOTE 7 DISTRIBUTORSHIP AGREEMENT
The Company is not renewing its exclusive distributorship
agreement with its current Japanese distributor, Nissin
Hi-Tech, Inc./Nissin Electric Co., Ltd., which expires in
August 1995. The Company expects to have a replacement
distributor by the end of the third quarter. The transition
from Nissin Electric to the new distributor is anticipated to
be smooth.
NOTE 8 CONSTRUCTION OF NEW FACILITY
The Company is progressing toward its goal of constructing a
manufacturing facility and expects to finalize its bank
financing and begin construction in the third quarter.
-10-
<PAGE> 11
PLASMA-THERM, INC. AND SUBSIDIARY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FINANCIAL POSITION, LIQUIDITY AND CAPITAL REQUIREMENTS
The Company's cash position increased by $2,618,844 from
November 30, 1994 to May 31, 1995. Working capital at May 31,
1995 was $16,950,495 which is an increase of $6,560,379 over
November 30, 1994. The increases were due primarily to the
completion of a private placement offering of the Company's
Common Stock in December 1994, raising net cash of
approximately $5,744,000. A portion of the proceeds have been
used to invest in working capital requirements, including
inventory which increased approximately $1,700,000.
Additional inventory has turned into accounts receivable at
May 31, 1995 which can be seen by the increase in accounts
receivable of approximately $1,800,000 over November 30, 1994.
These two items primarily account for the difference between
the increase in cash and the cash received from the private
placement of approximately $3,100,000 and the difference
between the increase in cash and the increase in working
capital of approximately $3,900,000.
Uses of cash included the repayment of approximately $269,000
of notes payable and capital lease obligations and $200,000 of
short-term borrowings under the line of credit agreement. In
addition, the Company has incurred $411,700 in capital
expenditures, of which approximately $208,000 incurred to date
relates to the computer software and hardware required for
current and anticipated growth and approximately $128,000
relates to the initial costs associated with the construction
of the new building (See Note 8 to the financial statements).
The Company has extensive ongoing capital requirements for
research and development, the repayment of debt, capital
equipment and inventory. The Company believes that its
current cash reserves, together with the proceeds of the
private placement, working capital expected to be generated by
operations and additional funds available under its line of
credit, should be sufficient to meet its capital requirements
for the immediate future. Should order input exceed projected
1995 levels, additional working capital may be required.
The Company believes that inflation has had no material impact
upon its operations.
RESULTS OF OPERATIONS
Net sales of $7.2 million for the second quarter of 1995
increased by 29% from net sales of $5.5 million for the second
quarter of 1994. For the first half of 1995, the Company
reported net sales of $12.1 million, 11% higher than net sales
of $10.9 million for the first six months of 1994. The
increase in net sales for both the second quarter and six
month period was attributable to an increase in Clusterlock(R)
7000 sales.
-11-
<PAGE> 12
PLASMA-THERM, INC. AND SUBSIDIARY
RESULTS OF OPERATIONS-CONTINUED
Cost of products sold of $4.8 million for the second quarter
of 1995 was 67% of net sales, compared to 63% for the same
period last year. Cost of products sold of $8.2 million for
the first six months of 1995 was 68% of net sales compared to
62% for the same period last year. The increase for both the
quarter and the six month period relates primarily to lower
margins on Clusterlock(R) 7000 orders which shipped during the
second quarter. The initial Clusterlock(R) 7000 sales were
taken at lower margins to enable the Company to gain market
share. In addition, the planned recognition of approximately
$311,000 for field service costs (principally warranty costs)
and a planned inventory provision of $150,000 through May 31,
1995 contributed to higher cost of products sold.
Research and development expense for the second quarter and
first half of 1995 was consistent with the same periods of
1994. For the second quarter of 1995 research and development
expense was $673,725 compared to $561,919 in the same quarter
in 1994 which are 9.4% and 10.1% of net sales, respectively.
Research and development expense for the first half of 1995
was $1,188,537 (9.8% of sales), compared to $1,106,402 (10.1%
of sales) for the first half of 1994.
Selling and administrative expense was $1,484,766 in the
second quarter of 1995, up from $1,156,418 in the second
quarter of 1994. Selling and administrative expense for the
first six months of 1995 was $2,562,766, up from $2,299,257
for the first six months of 1994. Although actual expenses
have increased, as a percentage of net sales, selling and
administrative expense has remained constant at 21% both for
the second quarter and first six months of 1995 and 1994.
The Company recorded income before income taxes of $280,225 in
the second quarter of 1995, down from $304,405 in the second
quarter of 1994. Income before income taxes for the first
half of 1995 was $301,708, a $436,253 decrease from $737,961
earned the first half of 1994. The decrease is the result of
an increase in cost of products sold, as discussed above.
-12-
<PAGE> 13
PLASMA-THERM, INC. AND SUBSIDIARY
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 Financial Data Schedule (for SEC use only)
(b) No reports on Form 8-K were filed during the second quarter of
fiscal 1995.
-13-
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PLASMA-THERM, INC.
Dated: June 30, 1995 /s/ RONALD H. DEFERRARI
----------------------------------
Ronald H. Deferrari, President and
Chief Financial Officer
-14-
<PAGE> 15
EXHIBIT INDEX
Exhibit Number Description
- - -------------- -----------
27 Financial Data Schedule (for SEC use only)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
CONSOLIDATED BALANCE SHEETS AS OF MAY 31, 1995 AND CONSOLIDATED STATEMENTS OF
INCOME FOR THE SIX MONTHS ENDED MAY 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1994
<PERIOD-END> MAY-31-1995
<CASH> 5,244,694
<SECURITIES> 0
<RECEIVABLES> 6,605,191
<ALLOWANCES> 0
<INVENTORY> 8,955,307
<CURRENT-ASSETS> 21,879,277
<PP&E> 2,739,796
<DEPRECIATION> 1,685,238
<TOTAL-ASSETS> 23,459,367
<CURRENT-LIABILITIES> 4,928,782
<BONDS> 0
<COMMON> 102,374
0
0
<OTHER-SE> 17,819,039
<TOTAL-LIABILITY-AND-EQUITY> 17,921,386
<SALES> 12,116,521
<TOTAL-REVENUES> 12,146,521
<CGS> 8,193,726
<TOTAL-COSTS> 11,945,029
<OTHER-EXPENSES> (174,761)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 74,545
<INCOME-PRETAX> 301,708
<INCOME-TAX> 117,238
<INCOME-CONTINUING> 184,470
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 184,470
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
