<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended February 28, 1998
-----------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-12353
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PLASMA-THERM, INC.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 04-2554632
- ------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
10050 16th Street North, St. Petersburg, Florida 33716
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(Address of principal executive offices and zip code)
(813)577-4999
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Registrant's telephone number, including area code
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(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
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APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13, or 15(d)
of the Securities Exchange Act of 1934 subsequent to the distribution
of securities under a plan confirmed by a court.
Yes No
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APPLICABLE ONLY TO CORPORATE ISSUERS:
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
Outstanding at March 11, 1998:
11,160,561
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Page 1 of 15 Pages
<PAGE> 2
INDEX
PAGE
NUMBER
PART 1. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Balance Sheets - February 28, 1998 and
November 30, 1997..................................................3
Statements of Income - Three Months Ended
February 28, 1998 and February 28, 1997 ...........................5
Statements of Cash Flows - Three Months Ended
February 28, 1998 and February 28, 1997 ...........................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 ...........................13
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<PAGE> 3
PLASMA-THERM, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
FEBRUARY 28, NOVEMBER 30,
ASSETS 1998 1997
------------ ------------
(UNAUDITED)
<S> <C> <C>
Current assets
Cash and cash equivalents $ 7,143,284 $ 5,398,030
Accounts receivable 14,799,199 13,755,778
Inventories 10,831,426 9,875,801
Prepaid expenses and other 251,255 414,521
Deferred tax asset 284,892 293,814
------------ ------------
Total current assets 33,310,056 29,737,944
------------ ------------
Propery, plant and equipment
Building 4,496,853 4,444,649
Machinery and equipment 8,109,406 7,678,097
Leasehold improvements 148,055 148,055
------------ ------------
12,754,314 12,270,801
Less accumulated depreciation and
amortization 3,969,370 3,405,935
------------ ------------
8,784,944 8,864,866
Land 1,012,992 786,017
------------ ------------
9,797,936 9,650,883
------------ ------------
Other assets 195,557 218,263
------------ ------------
$ 43,303,549 $ 39,607,090
============ ============
</TABLE>
See accompanying notes to these consolidated financial statements.
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<PAGE> 4
PLASMA-THERM, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
FEBRUARY 28, NOVEMBER 30,
LIABILITIES 1998 1997
------------ ------------
<S> <C> <C>
Current liabilities
Short-term borrowings $ 3,000,000 $ 2,000,000
Current maturities of long-term obligations 732,556 723,968
Accounts payable 3,551,755 3,141,397
Accrued payroll and related 531,512 651,505
Accrued expenses 1,318,505 734,720
Customer deposits 333,989 -
------------ ------------
Total current liabilities 9,468,317 7,251,590
------------ ------------
Long-term obligations 3,484,751 3,670,581
------------ ------------
SHAREHOLDERS' EQUITY
Shareholders' equity
Common stock, $.01 par value (25,000,000
shares authorized, 11,160,561 and
11,126,561 shares issued and outstanding
at February 28, 1998 and November 30, 1997) 111,607 111,267
Additional paid-in capital 16,886,795 16,695,253
Retained earnings 13,352,079 11,878,399
------------ ------------
30,350,481 28,684,919
------------ ------------
$ 43,303,549 $ 39,607,090
============ ============
</TABLE>
See accompanying notes to these consolidated financial statements.
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<PAGE> 5
PLASMA-THERM, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------------------
FEBRUARY 28, FEBRUARY 28,
1998 1997
-------------- --------------
<S> <C> <C>
Net sales $ 12,311,720 $ 9,480,580
Cost of sales 6,970,104 5,712,963
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Gross profit 5,341,616 3,767,617
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Operating expenses:
Research and development 1,103,727 792,549
Selling and administrative 1,847,251 1,575,054
------------- ------------
Total operating expenses 2,950,978 2,367,603
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Operating income 2,390,638 1,400,014
Interest (income) expense, net 45,755 21,131
------------- ------------
Income before income taxes 2,344,883 1,378,883
Income taxes 871,203 547,223
------------- ------------
Net income $ 1,473,680 $ 831,660
============= ============
Earnings per share:
Basic and Diluted $ 0.13 $ 0.08
============= ============
</TABLE>
See accompanying notes to these consolidated financial statements.
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<PAGE> 6
PLASMA-THERM, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED FEBRUARY 28,
----------------------------------------
1998 1997
-------------- -------------
<S> <C> <C>
Cash flows from operating activities
Net income $ 1,473,680 $ 831,660
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization 578,435 411,717
Deferred taxes 8,922 34,611
Compensation - stock options 6,000 2,280
Tax benefit related to certain stock options
and warrants 51,522 193,730
Changes in assets and liabilities
Increase in accounts receivable (1,043,421) (417,721)
(Increase) decrease in inventories (955,625) 691,971
Decrease in prepaid expenses and other 163,266 84,056
Increase (decrease) in accounts payable 410,358 (44,128)
Increase (decrease) in accrued payroll and related (119,993) 241,025
Increase in accrued expenses 583,785 186,842
Increase (decrease) in customer deposits 333,989 (218,000)
------------ ------------
Net cash provided by
operating activities 1,490,918 1,998,043
------------ ------------
Cash flows from investing activities
Capital expenditures (710,488) (272,745)
Other 7,706 9,329
------------ ------------
Net cash used in investing activities (702,782) (263,416)
------------ ------------
</TABLE>
See accompanying notes to these consolidated financial statements.
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<PAGE> 7
PLASMA-THERM, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED FEBRUARY 28,
----------------------------------------
1998 1997
-------------- -------------
<S> <C> <C>
Cash flows from financing activities
Principal payments on long-term obligations (177,242) (169,373)
Net proceeds (payments) under line of credit agreements 1,000,000 (1,000,000)
Exercise of common stock and warrants 134,360 948,560
------------ ------------
Net cash provided by (used in)
financing activities 957,118 (220,813)
------------ ------------
Net increase in cash and
cash equivalents 1,745,254 1,513,814
------------ ------------
Cash and cash equivalents, beginning of period 5,398,030 5,266,279
------------ ------------
Cash and cash equivalents, end of period $ 7,143,284 $ 6,780,093
============ ============
</TABLE>
See accompanying notes to these consolidated financial statements.
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<PAGE> 8
PLASMA-THERM, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 1998 AND NOVEMBER 30, 1997
(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 February 28, 1998 and
November 30, 1997 and the results of operations and cash flows for
the three months ended February 28, 1998 and 1997.
The results of operations for the three months ended February 28,
1998 and 1997 are not necessarily indicative of results for the full
year.
The November 30, 1997 balance sheet amounts and disclosures
included herein have been derived from the November 30, 1997
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. and its wholly-owned subsidiary, Magnetran
Inc. All significant intercompany transactions and balances
have been eliminated.
NOTE 3 INVENTORIES
<TABLE>
<CAPTION>
Inventories consist of the following:
February 28, November 30,
1998 1997
------------------ ------------------
<S> <C> <C>
Raw materials $ 6,206,953 $6,738,918
Work-in-process 4,042,370 2,494,527
Furnished goods 582,103 642,356
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$10,831,426 $ 9,875,801
=========== ===========
</TABLE>
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<PAGE> 9
NOTE 4 EARNINGS PER SHARE DISCLOSURES
<TABLE>
<CAPTION>
For the Three Months Ended February 28, 1998
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Income Shares Per-Share
(Numerator) (Denominator) Amount
-------------------- ----------------------- --------------------
<S> <C> <C> <C>
Basic EPS:
Income available to common
shareholders $1,473,680 11,141,183 $.13
====
Effect of Dilutive Securities:
Options -- 245,364
---------- ----------
Diluted EPS:
Income available to common
shareholders + assumed conversions $1,473,680 11,386,547 $.13
========== ========== ====
For the Three Months Ended February 28, 1997
---------------------------------------------------------------------
Income Shares Per-Share
(Numerator) (Denominator) Amount
-------------------- ------------------------ -------------------
<S> <C> <C> <C>
Basic EPS:
Income available to common
shareholders $ 831,660 10,592,794 $.08
====
Effect of Dilutive Securities:
Options -- 327,808
--------- ----------
Diluted EPS:
Income available to common
shareholders + assumed conversions $ 831,660 10,920,602 $.08
========= ========== ====
</TABLE>
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<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net sales of $12,311,720 for the first quarter of
1998 increased by 30% from net sales of $9,480,580 for the first
quarter of 1997. The increase in net sales for the first quarter was
attributable to higher product demand and increased sales of the
Company's fully automated production product line, the Versalock(R) 700
Series. Total sales related to this product in the first quarter of
1998 and 1997 were approximately $7,400,000 (60% of net sales) and
$2,700,000 (30% of net sales), respectively.
Gross profit increased to $5,341,616, or 43.4% of net
sales for the first quarter of 1998, compared to $3,767,617, or 39.7%
of net sales for 1997. The increase in gross margin percentage was due
to increased sales of the Versalock(R) 700 product line described in
the previous paragraph which has a higher gross margin than the
Company's other product lines.
Research and development expense for the first quarter of
1998 was $1,103,727 compared to $792,549 for the first quarter of 1997, or
9% and 8.4% of net sales, respectively. Research and development programs
continue to be implemented to enhance development efforts in the Company's
target markets: optoelectronics/telecommunications, thin film head,
photomask, and microelectromechanical (MEMS). As a result, the Company's R&D
lab is expanding requiring additional capital outlay. As new products and
technology are introduced, total dollars expended on research and
development are expected to continue to increase.
Selling and administrative expense for the quarter
ended February 28, 1998 was $1,847,251, up from $1,575,054 for the
comparable quarter in 1997, accounting for 15% and 16.6% of net sales,
respectively. The total dollar increase in selling and administrative
expense for the first quarter of 1998 relates primarily to the
marketing initiatives which did not begin until the second quarter of
1997. Total dollars expended in the first quarter of 1998 for this
marketing effort approximated $200,000. The decrease in selling and
administrative expense as a percentage of revenue is the result of
certain overhead expenditures increasing at a slower rate than the
increase in sales.
Income before income taxes for the first quarter of
1998 was $2,344,883, an increase of $966,000 from $1,378,883 earned the
first quarter of 1997. Net income per share was $.13 for the first
quarter of 1998, an increase of $.05 from $.08 for the first quarter of
1997. The primary reason for the increase in the first quarter of 1998
relates to increased net sales with higher margins as described in the
previous paragraphs.
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<PAGE> 11
FINANCIAL POSITION, LIQUIDITY AND CAPITAL REQUIREMENTS
Net cash provided by operations totaled approximately
$1,500,000 for the first three months of 1998, compared to
approximately $2,000,000 for the same period in 1997. The increase in
cash provided by operations of $1,500,000 for the first three months of
1998 consisted of various components, including net income of
$1,473,680 and non-cash expenses (depreciation and amortization) of
$578,435. Other sources of cash include an increase in accounts payable
and accrued expenses of $874,150 and an increase in customer deposits
of $333,989. Uses of cash include an increase in accounts receivable of
$1,043,421 and an increase in inventories of $955,625. The 19% increase
in accounts payable and accrued expenses was primarily related to a
higher level of purchases associated with increased sales. In addition,
accrued expenses include approximately $550,000 for corporate income
taxes. As of November 30, 1997, the corporate income tax liability for
the year was paid. The increase in customer deposits of $333,989 is
comprised primarily of prepayments from one customer for two orders to
be shipped in a subsequent quarter in fiscal 1998. The 7.6% increase in
accounts receivable is due to increased sales and the timing of sales
and related payments. The 9.7% increase in inventories is due to
purchases required for the increased level of sales.
Net cash used in investing activities for the first
three months of 1998 was $702,782 compared to $263,416 for the same
period in 1997. For the first three months of 1998, the Company
incurred approximately $710,000 in capital expenditures, of which
$227,000 was for the purchase of land to construct a building to be
used for additional research and development and office space.
Approximately $310,000 was for the purchase of various lab equipment to
be used in research and development. The remaining $173,000 was
primarily for various computer equipment.
Net cash provided by financing activities for the
first three months of 1998 was $957,118 as compared to $220,813 used in
financing activities for the same period in 1997. Cash used for
financing activities in the first quarter of 1998 included the
principal repayment of approximately $177,000 of notes payable and
capital lease obligations. Cash provided by financing activities
included net receipts of $1,000,000 on the line of credit.
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 funds available under its line of
credit, should be sufficient to meet its capital requirements for the
immediate future.
FORWARD LOOKING INFORMATION
From time to time, the Company may publish
forward-looking statements relating to such matters as anticipated
financial performance, business prospects, technological developments,
new products, inventory, research and development activities and
expenditures and similar matters. The Private Securities Litigation
Reform Act of 1995 provides a safe harbor for forward-looking
statements. In order to comply with the terms of the safe harbor, the
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<PAGE> 12
Company notes that a variety of factors could cause the Company's
actual results and experience to differ materially from the anticipated
results or other expectations expressed in the Company's
forward-looking statements. The risks and uncertainties that may affect
the operations, performance, development and results of the Company's
business include, but are not limited to, the following:
The Company sells relatively expensive capital
equipment, and, in any given quarter or financial period, any one
customer or any individual shipment may represent a significant portion
of revenue in that period. Therefore, a delay or cancellation of that
shipment could cause the Company to experience a revenue or earnings
shortfall for a given financial period.
The Company relies on distributors' and
representatives, which complement its direct sales and service staff,
to sell and service its products in various geographic locations.
Should these sales and service channels be rendered ineffective, it
could materially impact the Company's business. Some of the Company's
competitors have more extensive direct sales and service locations in
the Company's distributor's and representatives' channels, which could
provide these competitors with a competitive advantage in certain
geographic areas.
The Company depends heavily on the success and growth
of the high technology marketplace. In particular, the Company sells
equipment directly to manufacturers in the
optoelectronics/telecommunications, thin film head, photomask and
microelectromechanical (MEMS) industries. A slowdown in more than one
of these industries could materially effect the Company's business.
The Company also relies on the health of the general
semiconductor equipment marketplace. A slowdown in semiconductor
capital equipment purchases could also affect the Company's business
from time to time.
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<PAGE> 13
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
EXHIBIT METHOD OF FILING
------- ----------------
<S> <C>
(a) Exhibits
--------
27.Financial Data Schedule (for SEC use only) *
* Filed electronically herewith.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the
first quarter of fiscal 1998.
</TABLE>
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<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.
Date: March 12, 1998 /S/ STACY WAGNER
-------------------------------------
Stacy Wagner
V.P. of Finance and Administration,
Controller
Date: March 12, 1998 /S/ RONALD S. DEFERRARI
-------------------------------------
Ronald S. Deferrari
President, Chief Operating Officer
SIGNATURES
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AS OF FEBRUARY 28, 1998, AND CONSOLIDATED STATEMENTS
OF INCOME FOR THE PERIOD ENDED FEBRUARY 28, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-START> DEC-01-1997
<PERIOD-END> FEB-28-1998
<CASH> 7,143,284
<SECURITIES> 0
<RECEIVABLES> 14,799,199
<ALLOWANCES> 0
<INVENTORY> 10,831,426
<CURRENT-ASSETS> 33,310,056
<PP&E> 13,767,306
<DEPRECIATION> 3,969,370
<TOTAL-ASSETS> 43,303,549
<CURRENT-LIABILITIES> 9,468,317
<BONDS> 3,484,751
0
0
<COMMON> 111,607
<OTHER-SE> 30,238,874
<TOTAL-LIABILITY-AND-EQUITY> 43,303,549
<SALES> 12,311,720
<TOTAL-REVENUES> 12,311,720
<CGS> 6,970,104
<TOTAL-COSTS> 2,950,978
<OTHER-EXPENSES> (94,293)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 140,048
<INCOME-PRETAX> 2,344,883
<INCOME-TAX> 871,203
<INCOME-CONTINUING> 1,473,680
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,473,680
<EPS-PRIMARY> 0.13
<EPS-DILUTED> 0.13
</TABLE>
