Gandalf Technologies Inc.
130 Colonnade Road South
Nepean, Ontario
K2E 7M4
February 10, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C.
USA 20549
Dear Sir/Madam:
Re: Gandalf Technologies Inc. - Quarterly Report of Form 10-Q
Commission File No. 0-12643
Transmitted herewith in electronic format for filing with the
Securities and Exchange Commission is the Quarterly Report on
Form 10-Q for Gandalf Technologies Inc. for the quarter ended
December 31, 1994.
If you have any comments or questions with respect to the
foregoing, please contact the undersigned at (613) 723-6500.
Please acknowledge receipt of this letter and validation of
documents by means of Compuserve to:
User Id# 72741,124
CIK: 0000355876
Yours truly,
s/Diana Cianciusi
Corporate Secretary
& Legal Counsel
<PAGE>
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 Quarter Ended December 31, 1994
Commission file number 0-12643
GANDALF TECHNOLOGIES INC.
- --------------------------------------------------------------
(Exact name of registrant as specified in its charter)
ONTARIO, CANADA NOT APPLICABLE
- ----------------------- ----------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
130 COLONNADE ROAD SOUTH, NEPEAN, ONTARIO K2E 7M4
- ----------------------------------------- ---------------
(Address of principal executive offices) (Postal Code)
Registrant's telephone number, including area code
(613) 723-6500
- --------------
NOT APPLICABLE
- -----------------------------------------------------------
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 Sections 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
----- -----
The number of shares outstanding as at January 31, 1995 was
28,172,310.
<PAGE>
GANDALF TECHNOLOGIES INC.
INDEX
Page No.
-------
PART I FINANCIAL INFORMATION
Consolidated Balance Sheet - 3
Consolidated Statements of Income and
Retained Earnings - 4
Consolidated Statement of Changes in
Financial Position - 5
Notes to Consolidated Financial Statements - 6
Management's Discussion and Analysis of
Financial Condition and Results of Operations - 9
PART II OTHER INFORMATION 14
SIGNATURE PAGE 14
<PAGE>
<TABLE>
<CAPTION>
GANDALF TECHNOLOGIES INC.
CONSOLIDATED BALANCE SHEET
(Unaudited)
(Thousands of U.S. dollars)
Dec 31 Mar 31
1994 1994
-------- --------
<C> <S> <S>
ASSETS
Current assets:
Cash and short-term deposits $ 10,063 $ 5,273
Accounts receivable 27,133 30,182
Inventories (note 1) 15,778 20,877
Other 1,813 4,022
-------- --------
Total current assets 54,787 60,354
Fixed assets (note 2) 18,415 20,214
Goodwill, net of amortization of $ 2,891
(March 31, 1994: $2,734) 3,523 3,680
Other assets 4,259 4,938
-------- --------
Total assets $ 80,984 $ 89,186
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank operating lines (note 3) $ 10,372 $ 10,512
Accounts payable and accrued liabilities (note 4) 20,052 27,854
Deferred revenue 5,770 7,424
Current portion of long-term debt 258 586
-------- --------
Total current liabilities 36,452 46,376
Long-term debt 1,785 2,020
8.5% convertible debentures, due 2002 21,387 21,681
Shareholders' equity:
Capital stock:
Common shares, 28,147,310 issued and
outstanding (March 31, 1994: 28,072,333) 79,868 79,811
Retained earnings (deficit) (52,573) (53,770)
Cumulative translation adjustment (5,935) (6,932)
-------- --------
Total shareholders' equity 21,360 19,109
-------- --------
Total liabilities and shareholders' equity $ 80,984 $ 89,186
======== ========
(See accompanying notes to consolidated financial statements)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GANDALF TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(Unaudited)
(Thousands of U.S. dollars except per share amounts)
13 Weeks Ended 39 Weeks Ended
December 31 December 31
--------------------- --------------------
1994 1993 1994 1993
-------- -------- -------- --------
<C> <S> <S> <S> <S>
INCOME
Revenues:
Product revenue $ 20,363 $ 20,301 $ 62,862 $ 68,386
Service revenue 9,388 9,965 27,267 31,071
-------- -------- -------- --------
29,751 30,266 90,129 99,457
Operating expenses:
Cost of product sales 10,661 11,295 32,651 35,754
Service expenses 5,754 6,963 17,364 20,569
Sales and marketing 7,854 11,274 24,598 33,027
Administration and general 1,957 2,825 5,793 7,938
Research and development 2,658 4,204 7,652 10,646
Restructuring costs (note 5) - - 685 -
-------- -------- -------- --------
Income (loss) from operations 867 (6,295) 1,386 (8,477)
Gain on sale of portfolio investment 2,024 - 2,024 -
Interest expense (795) (1,010) (2,416) (3,468)
Other income 58 517 203 863
-------- -------- -------- --------
Net income (loss) $ 2,154 $ (6,788) $ 1,197 $(11,082)
======== ======== ======== ========
EARNINGS PER SHARE (note 6)
Net income (loss):
Basic $ 0.08 $ (0.29) $ 0.04 $ (0.60)
======== ======== ======== ========
Fully diluted $ 0.06
========
Weighted average number of
shares outstanding (thousands):
Basic 28,145 23,517 28,101 18,460
======== ======== ======== ========
Fully diluted 43,320
========
RETAINED EARNINGS
Balance at beginning of period $(54,727) $(10,826) $(53,770) $ (6,532)
Net income (loss) 2,154 (6,788) 1,197 (11,082)
-------- -------- -------- --------
Balance at end of period $(52,573) $(17,614) $(52,573) $(17,614)
======== ======== ======== ========
(See accompanying notes to consolidated financial statements)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GANDALF TECHNOLOGIES INC.
CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION
(Unaudited)
(Thousands of U.S. dollars)
13 Weeks Ended 39 Weeks Ended
December 31 December 31
--------------------- --------------------
1994 1993 1994 1993
-------- -------- -------- --------
<C> <S> <S> <S> <S>
Operating activities:
Cash provided by (applied to)
operations (note 7) $ 1,587 $ (4,157) $ 3,462 $ (3,179)
Decrease (increase) in operating
working capital (note 8) 2,507 (907) (685) (8,038)
-------- -------- -------- --------
Cash provided by (applied to)
operating activities 4,094 (5,064) 2,777 (11,217)
-------- -------- -------- --------
Financing activities:
Decrease in bank operating lines (2,232) (9,837) (140) (7,068)
Issue of capital stock 4 34,157 57 34,157
Repayment of term debt - (19,543) - (20,382)
Other (72) (385) (432) (197)
-------- -------- -------- --------
Cash provided by (applied to)
financing activities (2,300) 4,392 (515) 6,510
-------- -------- -------- --------
Investing activities:
Proceeds on disposal of assets 2,690 - 4,062 2,246
Purchase of fixed assets (425) (1,370) (1,710) (3,110)
Deferred software development costs (10) (427) (140) (1,923)
Other 178 (24) 215 (159)
-------- -------- -------- --------
Cash provided by (applied to)
investing activities 2,433 (1,821) 2,427 (2,946)
-------- -------- -------- --------
Increase (decrease) in cash in
the period 4,227 (2,493) 4,689 (7,653)
Effect of currency translation
adjustments on cash flows (9) 20 101 (325)
Cash and short-term deposits,
beginning of period 5,845 4,232 5,273 9,737
-------- -------- -------- --------
Cash and short-term deposits,
end of period $ 10,063 $ 1,759 $ 10,063 $ 1,759
======== ======== ======== ========
(See accompanying notes to consolidated financial statements)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GANDALF TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(All amounts are stated in thousands of U.S. dollars.)
1. INVENTORIES
Dec 31 Mar 31
1994 1994
-------- --------
<C> <S> <S>
Raw materials $ 3,854 $ 5,587
Work-in-process 3,817 4,007
Finished goods 8,107 11,283
-------- --------
$ 15,778 $ 20,877
======== ========
2. FIXED ASSETS
Dec 31 Mar 31
1994 1994
-------- --------
Cost:
Land $ 224 $ 213
Buildings 4,631 4,535
Equipment 54,678 53,340
Leasehold improvements 1,853 1,779
-------- --------
61,386 59,867
Accumulated depreciation 42,971 39,653
-------- --------
Net book value $ 18,415 $ 20,214
======== ========
</TABLE>
3. BANK OPERATING LINES
The Company's authorized bank operating lines at December 31,
1994 totalled $18.7 million. At that time, there was
sufficient margin available to borrow $14.8 million and $10.4
million was being utilized. Cash and short-term deposits held
as of that date represented a further $10.1 million of
available cash resources, and cash and unused credit lines
totalled $14.5 million. The authorized lines include two
committed credit facilities with a Canadian chartered bank and
a demand facility with a bank in the United Kingdom. They are
secured by certain of the accounts receivable, inventories and
other assets of the Company and bear interest at rates ranging
from 1.0% to 2.5% above the respective banks' prime or base
rates.
<PAGE>
<TABLE>
<CAPTION>
4. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Dec 31 Mar 31
1994 1994
-------- --------
<C> <S> <S>
Trade accounts payable $ 6,398 $ 9,784
Payroll, commissions and related taxes 3,249 3,594
Other payables 8,741 13,012
Income and other taxes payable 1,664 1,464
-------- --------
$ 20,052 $ 27,854
======== ========
</TABLE>
5. RESTRUCTURING COSTS
Restructuring costs of $0.7 million during fiscal 1995
represent severance costs associated with the elimination of
approximately 70 positions at the end of the first quarter in
connection with an internal functional realignment which was
implemented in early July 1994.
6. EARNINGS PER SHARE
Basic earnings per share is calculated using the monthly
weighted average number of common shares outstanding for the
period.
Fully diluted earnings per share is calculated assuming
convertible debentures had been converted at the beginning of
the fiscal period, and all outstanding options had been
exercised on the date which is the later of the beginning of
the fiscal period or the dates the options were granted. For
the thirty-nine weeks ended December 31, 1994 and for the
comparative periods potential conversions are anti-dilutive.
<PAGE>
7. CASH PROVIDED BY (APPLIED TO)OPERATIONS
Cash provided by (applied to) operations is computed as
follows:
<TABLE>
<CAPTION>
13 Weeks Ended 39 Weeks Ended
December 31 December 31
-------------------- --------------------
1994 1993 1994 1993
-------- -------- -------- --------
<C> <S> <S> <S> <S>
Income (loss) from operations $ 867 $ (6,295) $ 1,386 $ (8,477)
Depreciation and amortization 1,428 2,511 4,165 7,541
Gain on disposal of assets - - (206) (542)
Income taxes (25) (125) 200 438
Interest paid (741) (765) (2,286) (3,002)
Other income 58 517 203 863
-------- -------- -------- --------
$ 1,587 $ (4,157) $ 3,462 $ (3,179)
======== ======== ======== ========
</TABLE>
8. DECREASE (INCREASE) IN OPERATING WORKING CAPITAL
The decrease (increase) in operating working capital is
computed as
follows:
<TABLE>
<CAPTION>
13 Weeks Ended 39 Weeks Ended
December 31 December 31
--------------------- -------------------
1994 1993 1994 1993
-------- -------- -------- --------
<C> <S> <S> <S> <S>
Accounts receivable $ 3,974 $ 2,825 $ 3,049 $ 4,339
Inventories 1,611 (783) 5,099 189
Other current assets 436 92 533 228
Accounts payable and accrued
liabilities (1,784) (1,727) (8,002) (9,244)
Deferred revenue (1,093) (635) (1,654) (1,383)
Foreign currency equity adjustment (637) (679) 290 (2,167)
-------- -------- -------- --------
$ 2,507 $ (907) $ (685) $ (8,038)
======== ======== ======== ========
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Introduction
- ------------
The consolidated financial statements for the third quarter
ended December 31, 1994, together with accompanying notes,
should be read as an integral part of this review. These
financial statements have been prepared by management in
accordance with accounting principles generally accepted in
Canada, the application of which, in the case of the Company,
conforms in all material respects for the periods
presented with accounting principles generally accepted in the
United States. All amounts are stated in U.S. dollars.
Results of Operations - Third Quarter Ended December 31, 1994
- -------------------------------------------------------------
The following table sets forth items derived from the
quarterly consolidated statements of income as a percentage of
revenues for the quarter ended December 31, 1994 and for each
of the preceding four quarters. The column in the table
entitled "Percentage Change Quarter 3, 1995 vs 1994"
represents the percentage change, either favourable or
(unfavourable), in the dollar amount of such items for the
third quarter of fiscal 1995 compared with the third quarter
of fiscal 1994.
<TABLE>
<CAPTION>
Percentage
Fiscal 1994 Fiscal 1995 Change
-------------------- ------------------------------- Quarter 3
Quarter 3 Quarter 4 Quarter 1 Quarter 2 Quarter 3 1995 vs.1994
--------- --------- --------- --------- --------- ------------
(Thousands of dollars)
<C> <S> <S> <S> <S> <S> <S>
Revenues $30,266 $31,866 $29,718 $30,660 $29,751 (1.7)%
======= ======= ======= ======= ======= =====
(Percentage of Revenues)
Revenues:
Product 67.1% 70.4% 69.8% 71.0% 68.4% 0.3%
Service 32.9 29.6 30.2 29.0 31.6 (5.8)
----- ----- ----- ----- -----
100.0% 100.0% 100.0% 100.0% 100.0% (1.7)
===== ===== ===== ===== =====
Gross Margin:
Product 44.4% 38.7% 47.5% 49.0% 47.7% 7.7
Service 30.1 31.6 34.6 35.6 38.7 21.1
Combined 39.7 36.6 43.6 45.1 44.8 11.1
Expenses:
Sales and marketing 37.3 33.4 29.4 26.1 26.4 30.3
Administration and general 9.3 9.9 6.5 6.2 6.6 30.7
Research and development 13.9 11.5 8.1 8.4 8.9 36.8
Restructuring and other costs - 90.0 2.3 - -
------ ------ ------ ------ ------
Income (loss) from operations (20.8) (108.2) (2.7) 4.4 2.9
Gain on sale of portfolio
investment - - - - 6.8
Interest expense (3.3) (2.1) (2.7) (2.7) (2.7)
Other income 1.7 0.4 0.2 0.3 0.2
Income taxes - (3.6) - - -
------ ------ ------ ------ ------
Net income (loss) (22.4%) (113.5%) (5.2%) 2.0% 7.2%
====== ====== ====== ====== ======
</TABLE>
<PAGE>
Revenues
- --------
The following table sets forth revenues by geographic segment
for the quarter ended December 31, 1994 and for each of the
preceding four quarters. The table also includes the change
in revenues, expressed as a percentage, in the third quarter
of fiscal 1995 compared to the corresponding period of fiscal
1994.
<TABLE>
<CAPTION>
Percentage
Fiscal 1994 Fiscal 1995 Change
-------------------- ------------------------------- Quarter 3
Quarter 3 Quarter 4 Quarter 1 Quarter 2 Quarter 3 1995 vs.1994
--------- --------- --------- --------- --------- --------------
(Thousands of dollars)
<C> <S> <S> <S> <S> <S> <S>
United States $ 7,480 $ 8,936 $ 8,205 $ 8,085 $ 8,309 11.1%
United Kingdom 9,061 9,954 8,927 10,186 8,648 (4.6)
Canada 5,078 6,348 5,736 6,184 5,434 7.0
Holland/France 4,024 3,074 4,040 3,358 4,379 8.8
Other International 4,623 3,554 2,810 2,847 2,981 (35.5)
-------- -------- -------- -------- --------
$ 30,266 $ 31,866 $ 29,718 $ 30,660 $ 29,751 (1.7)
======== ======== ======== ======== ========
</TABLE>
Revenues in the third quarter ended December 31, 1994 were
$29.8 million consisting of $20.4 million of product revenue
and $9.4 million of service revenue. In the second quarter of
fiscal 1995 product revenue was $21.7 million and service
revenue was $8.9 million for total revenues of $30.7 million.
Revenues in the third quarter of fiscal 1994 were $30.3
million ($20.3 million of product revenue and $10.0 million of
service revenue).
Product revenue in the third quarter of fiscal 1995 was
virtually
unchanged from the level achieved in the third quarter of the
previous fiscal year. Service revenue in the third quarter of
fiscal 1995 was $9.4 million, 5.8% below the level in the
third quarter of fiscal 1994. The Company has, in general,
experienced a decline in service revenue during the last year
as a result of declining product revenue in recent fiscal
years.
Revenues in the North American market (United States and
Canada) were $13.7 million during the third quarter of fiscal
1995, 9.4% higher than the comparable period a year ago and
3.7% lower than the second quarter of fiscal 1995. The
Company's European direct sales markets (United Kingdom,
Holland and France) reported revenues of $13.0 million,
unchanged from the third quarter a year ago and 3.8% lower
than the second quarter of fiscal 1995. Revenues in the
Company's other international markets were $3.0 million, $1.6
million lower than the revenues reported in the comparable
period a year ago and 4.7% higher than the second quarter of
fiscal 1995.
<PAGE>
Gross Profit
- ------------
The combined gross profit (total revenues minus cost of
product sales and service expenses) was $13.3 million in the
third quarter of fiscal 1995, an increase of $1.3 million or
11.1% over the third quarter of fiscal 1994, on approximately
the same revenue level. Restructuring actions taken in the
fourth quarter of fiscal 1994 reduced manufacturing overhead
costs and service costs which has resulted in a higher level
of combined gross profit.
The gross margin on product revenue (product revenue minus
cost of
product sales expressed as a percentage of product revenue)
was 47.7% in the third quarter of fiscal 1995 compared to
44.4% in the third quarter a year ago and 49.0% in the second
quarter of fiscal 1995.
The gross margin on service revenue (service revenue minus
service expenses expressed as a percentage of service revenue)
was 38.7% in the third quarter of fiscal 1995, 30.1% in the
third quarter of fiscal 1994 and 35.6% in the second quarter
of fiscal 1995.
Operating Expenses
- ------------------
Operating expenses (sales and marketing, administration and
general, and research and development) were $12.5 million in
the third quarter of fiscal 1995, unchanged from the second
quarter and 31.9% below the $18.3 million reported in the
third quarter of fiscal 1994. Reductions in operating
expenses from the level a year ago are primarily related to
the significant restructuring and downsizing actions
undertaken in the fourth quarter of fiscal 1994. The
elimination of approximately 70 positions in connection with a
functional realignment which took place at the end of the
first quarter of the current fiscal year has also reduced
operating expenses.
Since 1991, the Company has received grants of approximately
$4.0 million under the Canadian Federal Government's
Microelectronics and Systems Development Program ("MSDP").
This funding is required to be repaid in the form of a royalty
if certain conditions are met relating to the
commercialization of resulting technology. The Company
believes these conditions have substantially been met and
accordingly this funding will be required to be repaid in the
future following completion of the approved programs, which is
expected to occur during the fourth quarter of fiscal 1995 or
during fiscal 1996. Commencing with the completion of the
programs, annual royalties of up to 2% of product revenue will
be accrued and will be paid in the following year.
Operating Income
- ----------------
Income from operations in the third quarter of fiscal 1995 was
$0.9 million on revenues of $29.8 million. This represented
an improvement of $7.2 million over the $6.3 million loss from
operations reported for the third quarter of fiscal 1994 on
revenues of $30.3 million. For the three quarters ended
December 31, 1994, income from operations was $1.4 million
compared to a loss from operations of $8.5 million during the
same period a year ago.
<PAGE>
Interest Expense
- ----------------
Interest expense was $0.8 million in the third quarter of
fiscal 1995 compared with $1.0 million for the third quarter
of fiscal 1994. The decrease in interest expense occurred as
a result of the Company reducing its borrowings under bank
loans during fiscal 1994.
Net Income
- ----------
The net income for the third quarter of fiscal 1995 was $2.2
million or $0.08 per share. This included a gain of $2.0
million from the sale of a portfolio investment. The net loss
for the third quarter a year ago was $6.8 million or $0.29 per
share. The net income for the thirty-nine weeks ended
December 31, 1994 was $1.2 million or $0.04 per share compared
to a net loss of $11.1 million or $0.60 per share for the
corresponding period in fiscal 1994.
Liquidity and Capital Resources
- -------------------------------
The Company recorded positive cash flow of $6.4 million during
the third quarter of fiscal 1995, represented by an increase
in cash and short-term deposits of $4.2 million and a decrease
in borrowing under bank operating lines of $2.2 million. The
quarterly cash flow included proceeds of $2.6 million from the
sale of a portfolio investment. For the thirty-nine weeks
ended December 31, 1994, the Company recorded positive cash
flow of $4.9 million (comprised of an increase in cash and
short-term deposits of $4.8 million and a reduction in
borrowing under bank operating lines of $0.1 million).
At December 31, 1994 net bank borrowings (bank operating lines
net of cash and short-term deposits) of $0.3 million, were
$0.9 million lower than the $1.2 million of net bank
borrowings reported at the end of the third quarter twelve
months ago. During the first six months of this twelve month
period (represented by the fourth quarter of fiscal 1994 and
the first quarter of fiscal 1995), the Company reported
negative cash flow (defined as the net change in cash and
short-term deposits and borrowing under bank operating lines)
of $6.3 million. During the most recent six month period
(represented by the second and third quarters of fiscal 1995)
the Company has reported positive cash flow of $7.2 million.
Cash provided by operating activities in the third quarter of
fiscal 1995 was $4.1 million compared with negative cash flow
from operating activities of $5.1 million in the third quarter
a year ago. During the first three quarters of fiscal 1995
the Company has recorded positive cash flow from operating
activities of $ 2.8 million versus negative cash flow from
operating activities of $11.2 million during the same period a
year ago.
At December 31, 1994 the Company's authorized bank operating
lines totalled $18.7 million. This included $15.2 million
relating to two committed credit facilities with a Canadian
chartered bank bearing interest at the bank's prime rate plus
1.0%. During November 1994 these committed facilities were
renewed until the next annual review date of July 31, 1995.
Upon maturity of these facilities on July 31, 1995, the
outstanding borrowings convert to demand facilities unless a
renewal of the committed operating facilities is agreed
between the Company and the bank. The additional authorized
amount of $3.5 million related to a demand facility with a
bank in the United Kingdom. During the third quarter of
fiscal 1995, this facility was renewed until September 1995.
Under the new agreement the authorized amount of the facility
was increased by $0.8 million to $3.5 million and the interest
rate was reduced by up to 0.5%. The interest rate varies
depending on borrowing levels and ranges from 2.0% to 2.5%
above the bank's base rate.
<PAGE>
The operating lines are secured by certain of the accounts
receivable, inventories and other assets of the Company. The
amount available for borrowing at any time under the
facilities is determined based on margin formulas relating to
levels of accounts receivable, inventories and other bank
covenants. Under such formulas, $14.8 million was available
to the Company at December 31, 1994 and $10.4 million was
being utilized. Cash and short-term deposits held as of that
date represented a further $10.1 million of cash resources
available to the Company. Cash and unused credit facilities
totalled $14.5 million at December 31, 1994, compared to $10.5
million at October 1, 1994 and $10.2 million at March 31,
1994.
Financial covenants contained in the bank loan agreements
measure among other items, the tangible net worth of the
Company, the current ratio and the debt to tangible net worth
ratio. The Company is currently in full compliance under all
of its bank loan agreements. At March 31, 1994 and July 2,
1994, the Company had been in default of certain financial
covenants contained in its previous loan agreements but
obtained waivers at the time in respect of such defaults.
The Company believes that its current financial base, together
with available credit facilities, provides sufficient
financial resources to meet its short-term operating
requirements. The Company anticipates that its long-term cash
requirements will be satisfied through future operating cash
flows and the refinancing or conversion of term debt, the
majority of which relates to convertible subordinated
debentures due in 2002.
The Company's current ratio was 1.5:1 at December 31, 1994
compared to 1.3:1 at March 31, 1994. Accounts receivable and
inventories at December 31, 1994 were $42.9 million (accounts
receivable - $27.1 million; inventories - $15.8 million)
versus $51.1 million at March 31, 1994 (accounts receivable -
$30.2 million; inventories - $20.9 million). Lower
manufacturing costs as a result of the restructuring actions
taken in the fourth quarter of fiscal 1994, contributed to the
decrease in inventory levels. Accounts payable and accrued
liabilities have decreased $7.8 million since March 31, 1994
as a result of the payment of restructuring costs accrued in
the fourth quarter of fiscal 1994 and lower levels of trade
accounts payable.
<PAGE>
II - OTHER INFORMATION
- ----------------------
Item 6(b) - Reports on Form 8-K
- ------------------------------
There were no reports on Form 8-K filed for the quarter ended
December 31, 1994.
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.
GANDALF TECHNOLOGIES INC.
February 8, 1995 BY: s/THOMAS A. VASSILIADES
- ------------------------- ----------------------------
Date Thomas A. Vassiliades
President
(Chief Executive Officer)
February 8, 1995 BY: s/WALTER R. MACDONALD
- -------------------------- ---------------------------
Date Walter R. MacDonald
Vice President, Finance
(Chief Financial Officer)
