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<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934.
FOR QUARTERLY PERIOD ENDED MARCH 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934.
For the transition period from ________________ to __________________.
Commission file number 0-5260
GENERAL AUTOMATION, INC.
(Exact name of registrant as specified in its charter).
<TABLE>
<S> <C>
DELAWARE 95-2488811
(State or other jurisdiction of (I.R.S. employer I.D. No.)
incorporation or organization)
</TABLE>
<TABLE>
<S> <C>
17731 MITCHELL NORTH, IRVINE, CALIFORNIA 92714
(Address of principal executive offices) (Zip code)
</TABLE>
Registrant's telephone number including area code: (714) 250-4800
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
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [x] No [ ]
As of April 12, 1995 there were 7,391,776 shares of common stock of
the Registrant outstanding.
<PAGE> 2
GENERAL AUTOMATION, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
March 31 September 30
1995 1994
----------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 147 $ 230
Accounts receivable, less allowances of
$603 and $688 respectively 2,499 9,144
Inventories 1,822 4,427
Prepaid expenses 285 409
------ -------
Total current assets 4,753 14,210
Long-term receivables 570 210
Property, plant and equipment, net of
accumulated depreciation and amortization 1,329 1,698
Other assets 816 1,923
------ -------
Total Assets $7,468 $18,041
====== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 3
GENERAL AUTOMATION, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
March 31 September 30
1995 1994
----------- ------------
(Unaudited)
<S> <C> <C>
LIABILITIES
Current liabilities:
Accounts payable $ 1,672 $ 3,731
Advances from customers 390 1,373
Accrued income taxes 688
Other accrued expenses 888 2,899
Notes payable and current portion of long-term debt 1,371 2,794
-------- --------
Total current liabilities 4,321 11,485
-------- --------
Long-term debt, excluding current portion 1,385 1,453
Deferred credits 26 70
Minority interest - SGA Pacific Ltd. 1,787
-------- --------
Total Liabilities 5,732 14,795
-------- --------
SHAREHOLDERS' EQUITY
Common Stock par value $.10 per share
Authorized 30,000,000 shares;
issued and outstanding 7,391,776 at March 31, 1995
and 11,366,776 at September 30, 1994 739 1,137
Additional paid-in capital 42,604 42,420
Deficit (41,607) (40,457)
Translation adjustments 146
-------- --------
Total Shareholders' Equity 1,736 3,246
-------- --------
Total Liabilities and Shareholders' Equity $ 7,468 $ 18,041
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 4
GENERAL AUTOMATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------------- --------------------------
March 31 March 31 March 31 March 31
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
SALES - PRODUCT $1,128 $5,218 $ 2,647 $10,223
SALES - SERVICE REVENUE 1,647 3,461 3,281 6,688
------ ------ ------- -------
Total 2,775 8,679 5,928 16,911
------ ------ ------- -------
COST AND EXPENSES:
Cost of sales - Product 1,101 3,417 2,359 6,251
Cost of sales - Service 1,201 2,252 2,394 4,493
Research and development 118 461 239 859
Selling and administrative 956 2,301 1,845 4,581
Other, net 17 43 81 159
------ ------ ------- -------
3,393 8,474 6,918 16,343
------ ------ ------- -------
OPERATING INCOME (LOSS) (618) 205 (990) 568
Interest income 12 29
Interest expense (104) (126) (210) (303)
------ ------ ------- -------
INCOME/(LOSS) BEFORE INCOME TAXES
AND EXTRAORDINARY ITEMS (710) 79 (1,171) 265
Provision for income taxes 138 276
Minority interests 237 476
------ ------ ------- -------
LOSS BEFORE EXTRAORDINARY INCOME (710) (296) (1,171) (487)
Extraordinary income 300 600
------ ------ ------- -------
NET INCOME (LOSS) $ (710) $ 4 $(1,171) $ 113
====== ====== ======= =======
PER SHARE - PRIMARY:
LOSS BEFORE EXTRAORDINARY ITEMS $ (.10) $ (.03) $ (.12) $ (.04)
Extraordinary income .03 .05
------ ------ ------- -------
NET INCOME (LOSS) $ (.10) $ .00 $ (.12) $ .01
====== ====== ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 5
GENERAL AUTOMATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
-----------------------------------
March 31 March 31
1995 1994
--------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(1,171) $ 113
Adjustments to reconcile net income to
net cash provided by or (used) for operations:
Depreciation and amortization 171 625
Write down of income tax accrual (600)
Minority interests 476
Changes in assets, (increase)/decrease
and liabilities, increase/(decrease):
Accounts receivable (111) 2,301
Inventories 496 1,216
Prepaid expenses (111) 93
Accounts payable 375 (1,787)
Customer advances 149 (1,354)
Accrued income taxes (261)
Accrued expense 59 (761)
------- -------
Cash flows provided by (used for) operating activities (143) 61
------- -------
CASH FLOWS PROVIDED BY (USED FOR) INVESTING ACTIVITIES:
Purchases of property, plant and equipment (1,267) (195)
Capitalized software (291)
Sale of equipment 456
Sale of SGA Pacific, Ltd. 1,045
------- -------
Net cash used for investing activities (222) (30)
------- -------
CASH FLOWS PROVIDED BY/(USED FOR) FINANCING ACTIVITIES:
Proceeds from issuance of notes payable 1,306 122
Principal payments on notes (1,024) (851)
Principal payments on accrued taxes (100)
------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES 282 829
------- -------
Effect of exchange rates on cash 202
------- -------
Decrease in cash (83) (1,000)
Cash at beginning of period 230 1,166
------- -------
Cash at end of period $ 147 $ 166
======= =======
Cash paid during the period for:
Interest $ 221 $ 291
======= =======
Income taxes $ 0 $ 100
======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 6
GENERAL AUTOMATION, INC, AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. FINANCIAL STATEMENTS:
The Financial statements for the current year included herein have
been prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission and reflect all
adjustments, consisting of normal recurring adjustments, which, in the opinion
of management, are necessary for a fair statement of the results of the interim
periods presented. 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 rules and
regulations, although the Company believes that disclosures are adequate to
make the information presented not misleading. It is suggested that these
condensed financial statements be read in conjunction with the Company's latest
annual report.
2. INVENTORIES ARE AS FOLLOWS: (IN THOUSANDS)
<TABLE>
<CAPTION>
March 31, September 30,
1995 1994
--------- -------------
<S> <C> <C>
Materials, subassemblies and service spares $1,608 $2,715
Work in process 214 297
Finished goods 0 1,415
------ ------
Total Inventories $1,822 $4,427
</TABLE>
3. EXTRAORDINARY ITEMS:
The Company recognized extraordinary income for the three month period
ended March 31, 1994, of $300,000, and for the six month period ended March 31,
1994, of $600,000, resulting from a decrease in the estimated Federal income
tax liability relating to a 1988 settlement agreement with the I.R.S., as
described in Note 6 to the consolidated financial statements included in the
Company's 1994 annual report on form 10-K.
4. EARNINGS PER COMMON SHARE:
Primary earnings or loss per common share for the three and six month
periods ended March 31, 1995 and 1994 is based on the weighted average of
shares outstanding, without inclusion of common stock equivalents, as such
inclusion would be anti-dilutive or dilution would be less than 3%.
Weighted average shares outstanding are 7,355,665 and 10,074,144 for
the three and six month periods, repectively, ended March 31, 1995, and
11,366,776 for the three and six month periods ended March 31, 1994.
<PAGE> 7
GENERAL AUTOMATION, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS AND FINANCIAL DATA
For a complete understanding of the financial analysis presented in
Item 2, please refer to the attached schedules:
A. Consolidated Sales
B. Consolidated Gross Margin
C. Consolidated Expenses
Effective in October, 1994, the Company's subsidiaries in Australia,
New Zealand and Singapore were sold to Sanderson Technology Limited for
$2,000,000 in cash and notes, plus 4,100,000 common shares of the Company which
had been owned by Sanderson. The Company retired the shares on December 1,
1994. (See Notes 8 and 11 to the consolidated financial statements included in
the Company's 1994 annual report on form 10-K).
In order to better analyze results for the three and six month periods
ended March 31, 1995 and 1994, certain financial schedules have been prepared
with the two General Automation Group Business Segments reported separately.
SALES
Domestic product sales decreased $380,000 for the three month period
ended March 31, 1995, as compared to the same three month period last year,
primarily on the decreased Dealer and International revenues of $224,000 and
$169,000 respectively.
Domestic product sales decreased $190,000 for the six month period
ended March 31, 1995, as compared to the same six month period last year,
primarily on the decreased Dealer and International revenues of $110,000 and
$119,000 respectively.
The decrease in revenues experienced during the three month and
year-to-date periods are directly attributable to the decline in Dealer/VAR
orders for the Company's Advantage Series of processors and a two month delay
in the new product introduction of the Power Advantage line.
Domestic service revenues decreased $155,000 in the three month period
ended March 31, 1995 compared to last year. Service revenues on Company
manufactured systems continue to deteriorate, as older contracts are being
canceled at a faster rate than they can be replaced with contracts on new
equipment, which generally carry one year warranties and do not generate
service revenues. It is anticipated that additional maintenance contracts will
be developed on the various vertical products and hardware products being
distributed by the Company.
In March of 1995, General Automation, Inc. and SunRiver Data Systems,
Inc. signed a letter of intent to form a strategic partnership to consolidate
their PICK systems businesses into a single entity under the General Automation
name. Existing SunRiver and General Automation resellers will have immediate
access to products and services of both firms.
Management believes that in the future, the Company will see declining
revenues from its own manufactured hardware. The decline is planned to be
offset with the introduction and market
<PAGE> 8
acceptance of new hardware produced by another manufacturer. In addition,
management has directed attention and resources to developing open system
solutions, such as its library management and hospitality systems, to provide
future sources of revenue and profit.
GROSS MARGIN
The overall domestic gross margin percentage for products and service
decreased 4 percentage points for both the three months ended March 31, 1995,
and the six months ended March 31, 1995, as compared with the previous year.
Product gross margins decreased 13 percentage points and 11 percentage points
respectively, due to a large percentage of entry level computer systems sales,
which carry lower margins and low recognition of income on vertical
installations. Service revenue gross margins for both periods are about the
same as last year.
Company management believes that margins on vertical products will
improve as it gains greater experience in installing the systems, inasmuch as
the Company had little previous United States experience in either the Library
or The Service Advantage Software products.
EXPENSES
Domestic research and development expenses decreased $28,000 in the
three month period ended March 31, 1995 and $84,000 in the six month period
ended March 31, 1995 compared to last year. These lower expenditures reflect
the Company's decision to greatly reduce the R & D investment in hardware in
keeping with its plans to market non-Company manufactured hardware products.
Domestic selling and administrative expenses decreased $17,000 in the
three month period ended March 31, 1995, and $149,000 in the six month period
ended March 31, 1995 compared to the same periods last year, due to staff
reductions and decreased use of outside services and consultants.
Other expenses decreased $10,000 in the three months ended March 31,
1995, and $41,000 in the six months ended March 31, 1995 compared to the same
periods last year in the U.S. Of this decrease for the six months ended March
31,1995, $18,000 is attributable to the fact that Goodwill on the purchase of
SGA Pacific, Limited (SGA) is no longer being amortized since SGA was sold at
the beginning of the current fiscal year.
Domestic interest expense increased $10,000 for the three month period
ended March 31, 1995 compared with the same period in 1994 due to increased
borrowings. Interest expense for the six month period ended March 31, 1995
were about the same compared to the same period last year.
<PAGE> 9
LIQUIDITY AND CAPITAL RESOURCES
The Company continues to operate on restricted cash resources.
Net cash consumed by operating activities for the six months ended
March 31, 1995 was $143,000. Cash generated by increases in receivables and
increases in accounts payable netted $264,000.
Net cash of $222,000 was consumed by investing activities. The
purchase of the new building and equipment consumed $1,267,000, while the sale
of the Company's Pacific Basin operations provided $1,045,000.
Financing activities provided net cash of $282,000, through new notes
issued of $1,306,000, including a $1,000,000 note on the new building, offset
by payments of debt of $1,024,000.
Currently, the Company has an agreement with a U.S. lender for a
revolving line of credit, not to exceed $800,000, which is collateralized by
domestic accounts receivable. The agreement is renewable at six month
intervals. The interest rate is prime plus 6%, but not less than 14%, payable
monthly. In addition, there are other monthly costs for maintaining the open
line of credit. Because the amount of borrowing is dependent upon accounts
receivable levels, varying levels of domestic activity could preclude full
utilization of the facility. Management believes that these funds will be
adequate, however, it continues to seek opportunities to secure additional
capital for expansion. At March 31, 1995, the balance of the loan was
$421,000. The Line of credit contains various covenants and restrictions. At
March 31, 1995, the Company was in full compliance with all covenants and
restrictions.
<PAGE> 10
GENERAL AUTOMATION, INC. AND SUBSIDIARIES
CONSOLIDATED SALES - SCHEDULE A
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
---------------------------
March 31 March 31
1995 1994
------ ------
<S> <C> <C>
PRODUCTS:
Domestic $1,128 $1,508
Pacific Basin 0 3,710
------ ------
1,128 5,218
------ ------
SERVICE:
Domestic 1,647 1,802
Pacific Basin 0 1,659
------ ------
1,647 3,461
------ ------
TOTAL GROUP:
Domestic 2,775 3,310
Pacific Basin 0 5,369
------ ------
TOTAL GROUP SALES $2,775 $8,679
====== ======
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended
---------------------------
March 31 March 31
1995 1994
------ -------
<S> <C> <C>
PRODUCTS:
Domestic $2,647 $ 2,837
Pacific Basin 0 7,386
------ -------
2,647 10,223
------ -------
SERVICE:
Domestic 3,281 3,729
Pacific Basin 0 2,959
------ -------
3,281 6,688
------ -------
TOTAL GROUP:
Domestic 5,928 6,566
Pacific Basin 0 10,345
------ -------
TOTAL GROUP SALES $5,928 $16,911
====== =======
</TABLE>
<PAGE> 11
GENERAL AUTOMATION, INC. AND SUBSIDIARIES
CONSOLIDATED GROSS MARGIN - SCHEDULE B
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
----------------------------------------------------
March 31, Pct. of March 31, Pct. of
1995 Sales 1994 Sales
---- ----- ---- -----
<S> <C> <C> <C> <C>
PRODUCTS:
Domestic $ 27 2% 228 15%
Pacific Basin 0 1,892 51%
---- ------
27 2% 2,120 41%
---- ------
SERVICE:
Domestic 446 27% 472 26%
Pacific Basin 418 25%
---- ------
446 27% 890 25%
---- ------
TOTAL GROUP:
Domestic 473 17% 700 21%
Pacific Basin 0 2,310 43%
---- ------
$473 17% $3,010 35%
==== ======
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended
----------------------------------------------------
March 31, Pct. of March 31, Pct. of
1995 Sales 1994 Sales
---- ----- ---- -----
<S> <C> <C> <C> <C>
PRODUCTS:
Domestic $ 288 11% 615 22%
Pacific Basin 0 3,793 51%
------ ------
288 11% 4,408 43%
------ ------
SERVICE:
Domestic 887 27% 1,019 27%
Pacific Basin 740 25%
------ ------
887 27% 1,759 26%
------ ------
TOTAL GROUP:
Domestic 1,175 20% 1,634 25%
Pacific Basin 0 4,533 44%
------ ------
$1,175 20% $6,167 36%
====== ======
</TABLE>
<PAGE> 12
GENERAL AUTOMATION, INC. AND SUBSIDIARIES
CONSOLIDATED COSTS AND EXPENSES - SCHEDULE C
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
----------------------------------------------------
March 31, Pct. of March 31, Pct. of
1995 Sales 1994 Sales
---- ----- ---- -----
<S> <C> <C> <C> <C>
RESEARCH AND DEVELOPMENT:
Domestic $118 4% $ 146 1%
Pacific Basin 0 0% 299 3%
---- ------
118 4% 461 5%
---- ------
SELLING AND ADMINISTRATIVE:
Domestic 956 35% 973 11%
Pacific Basin 0 0 1,328 15%
---- -- ------
956 35% 2,301 26%
---- ------
OTHER EXPENSE:
Domestic 17 1% 27 0%
Pacific Basin 0 0 16 0%
---- -- ------
17 1% 43 0%
---- -- ------ --
INTEREST:
Domestic 92 3% 82 1%
Pacific Basin 0 0% 44 1%
---- -- ------ --
92 3% 126 2%
---- -- ------ --
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended
----------------------------------------------------
March 31, Pct. of March 31, Pct. of
1995 Sales 1994 Sales
---- ----- ---- -----
<S> <C> <C> <C> <C>
RESEARCH AND DEVELOPMENT:
Domestic $ 239 4% $ 323 2%
Pacific Basin 0 0% 536 3%
------ ------
239 4% 859 5%
------ ------
SELLING AND ADMINISTRATIVE:
Domestic 1,845 32% 1,994 12%
Pacific Basin 0 0 2,587 15%
------ -- ------ --
1,845 32% 4,581 27%
------ ------
OTHER EXPENSE:
Domestic 81 1% 122 1%
Pacific Basin 0 0 37 0%
------ -- ------
81 1% 159 1%
------ -- ------ --
INTEREST:
Domestic 181 3% 179 1%
Pacific Basin 0 0% 124 1%
------ -- ------
181 3% 303 2%
------ -- ------ --
</TABLE>
<PAGE> 13
PART II OTHER INFORMATION
ITEM 6 Exhibits & Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule.
(b) Reports on Form 8-K.
None
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
GENERAL AUTOMATION, INC.
DATE: March 15, 1995 By: /s/ John R. Donnelly
--------------------------------
John R. Donnelly
Vice President, Finance
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A)
INTERNALLY PREPARED FOR SIX MONTHS ENDED MARCH 31, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH (B) FORM 10-Q FOR PERIOD ENDED MARCH 31, 1995.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> MAR-31-1995
<CASH> 147
<SECURITIES> 0
<RECEIVABLES> 3,102
<ALLOWANCES> 603
<INVENTORY> 1,822
<CURRENT-ASSETS> 4,753
<PP&E> 3,510
<DEPRECIATION> 2,180
<TOTAL-ASSETS> 7,468
<CURRENT-LIABILITIES> 4,321
<BONDS> 1,385
<COMMON> 739
0
0
<OTHER-SE> 997
<TOTAL-LIABILITY-AND-EQUITY> 7,468
<SALES> 2,647
<TOTAL-REVENUES> 5,928
<CGS> 2,359
<TOTAL-COSTS> 4,753
<OTHER-EXPENSES> 2,117
<LOSS-PROVISION> 48
<INTEREST-EXPENSE> 181
<INCOME-PRETAX> (1,171)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,171)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,171)
<EPS-PRIMARY> (0.12)
<EPS-DILUTED> (0.12)
</TABLE>
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