<PAGE> 1
CONFORMED COPY
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995 Commission File Number 1-4289
GTI CORPORATION
Delaware IRS ID# 05-0278990
9171 Towne Centre Drive, Suite 460
San Diego, California 92122
Telephone (619)546-0531
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
----- -----
As of August 1, 1995, the registrant had only one class of Common Stock, par
value $.04 per share, of which there were 8,930,600 shares outstanding.
This report on Form 10-Q, including an exhibit, contains 19 pages. The exhibit
is located on pages 16 through 19 of this report.
<PAGE> 2
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GTI CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - (Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
For the three months ended
--------------------------
June 30, June 30,
1995 1994
---------- ----------
<S> <C> <C>
Sales $33,020 $24,728
Cost of sales 22,339 18,262
Selling, general & administrative expense 8,516 5,556
---------- ----------
Operating profit 2,165 910
Other expense (income), net 333 (121)
---------- ----------
Income from continuing operations
before income taxes and minority interest 1,832 1,031
Provision for income taxes 367 163
Minority interest (income) expense (42) 36
---------- ----------
Income from continuing operations 1,507 832
Income from discontinued operations,
net of income taxes 470 618
---------- ----------
Net Income $ 1,977 $ 1,450
========== ==========
Earnings per share of common stock and
common stock equivalents:
Continuing operations $0.14 $0.08
Discontinued operations 0.04 0.06
---------- ----------
$0.18 $0.14
========== ==========
Weighted average number of shares 10,929,000 10,134,000
========== ==========
</TABLE>
Note: Earnings per share is based upon weighted average number of shares
outstanding and all dilutive common stock equivalents, which include
stock options and cumulative convertible preferred stock.
The accompanying notes are an intergal part of these
consolidated financial statements.
<PAGE> 3
GTI CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - (Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
For the six months ended
--------------------------
June 30, June 30,
1995 1994
---------- ----------
<S> <C> <C>
Sales $60,035 $46,049
Cost of sales 41,325 32,419
Selling, general & administrative expense 16,638 11,373
---------- ----------
Operating profit 2,072 2,257
Other expense (income), net 590 (143)
---------- ----------
Income from continuing operations
before income taxes and minority interest 1,482 2,400
Provision for income taxes 286 445
Minority interest (income) expense (89) 85
---------- ----------
Income from continuing operations 1,285 1,870
Income from discontinued operations,
net of income taxes 883 881
---------- ----------
Net income $ 2,168 $2,751
========== ==========
Earnings per share of common stock and
common stock equivalent:
Continuing operations $0.12 $0.18
Discontinued operations 0.08 0.09
---------- ----------
$0.20 $0.27
========== ==========
Weighted average number of shares 10,833,000 10,170,000
========== ==========
</TABLE>
Note: Earnings per share is based upon weighted average number of shares
outstanding and all dilutive common stock equivalents, which include
stock options and cumulative convertible preferred stock.
The accompanying notes are an intergal part of these
consolidated financial statements.
3
<PAGE> 4
GTI CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
Assets
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
-------- -------
(unaudited) (audited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,941 $ 4,021
Accounts receivable, net of allowance of $314
and $143, respectively 19,618 18,776
Inventories 24,282 20,287
Prepaid expenses and other assets 2,550 1,832
Net assets of discontinued operations 17,708 16,505
-------- -------
Total current assets 66,099 61,421
Property, plant and equipment, net 15,892 14,480
Goodwill, less amortization of $3,643 and $2,747,
respectively, and other assets 40,601 22,909
-------- -------
$122,592 $98,810
======== =======
Liabilities and Stockholders' Equity
Current liabilities:
Short term borrowings $8,648 $1,655
Current portion of note payable 1,000 -
Accounts payable, accrued and other liabilities 15,950 17,158
Acquisition liability - 500
-------- -------
Total current liabilities 25,598 19,313
Long-term debt and other non-current liabilities 5,426 1,373
Minority interest in subsidiary 1,570 561
Stockholders' equity:
Preferred stock, $35.00 cumulative convertible,
issued and outstanding 8,110 shares 8,110 8,110
Common stock, issued 8,923,100 and
8,459,350 shares, respectively 357 339
Additional paid in capital 43,566 34,567
Retained earnings 36,763 34,737
Treasury stock, 250,000 shares at cost - (1,040)
Cumulative translation adjustments 1,202 850
-------- -------
89,998 77,563
-------- -------
$122,592 $98,810
======== =======
</TABLE>
The accompanying notes are an intergal part of these
consolidated financial statements.
4
<PAGE> 5
GTI CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS - (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
For the six months ended
------------------------
June 30, June 30,
1995 1994
-------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,168 $ 2,751
Adjustments to reconcile net income to
net cash provided by continuing operations:
Depreciation and amortization 2,883 1,852
Minority interest in subsidiary (89) 85
Income from discontinued operations (883) (881)
Changes in assets and liabilities:
Accounts receivable 836 (3,109)
Inventories (2,458) (2,687)
Prepaid expenses and other assets (1,084) 52
Accounts payable, accrued liabilities and other liabilities (3,846) 3,418
-------- -------
Net cash (used) provided by continuing operations (2,473) 1,481
Net cash provided by discontinued operations 52 1,032
-------- -------
Net cash (used) provided by operating activities (2,421) 2,513
-------- -------
Cash flows from investing activities:
Purchases of property, plant and equipment (2,069) (3,053)
Capital expenditures of discontinued operations (372) (11)
Business acquisition, net of cash acquired (19,089) -
-------- -------
Net cash used by investing activities (21,530) (3,064)
-------- -------
Cash flows from financing activities:
Borrowings on lines of credit, net 7,190 548
Borrowings on note payable 5,000 -
Repayments on note payable (500) -
Issuance of common stock 10,057 218
Preferred cash dividend (142) (142)
-------- -------
Net cash provided by financing activities 21,605 624
-------- -------
Effect of exchange rate on cash 266 247
-------- -------
Net (decrease) increase in cash and cash equivalents (2,080) 320
Cash and cash equivalents at beginning of period 4,021 9,988
-------- -------
Cash and cash equivalents at end of period $ 1,941 $10,308
======== =======
</TABLE>
The accompanying notes are an intergal part of these
consolidated financial statements.
5
<PAGE> 6
GTI CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
Note 1 - Basis Of Presentation
The unaudited interim condensed consolidated financial statements presented
herein have been prepared in accordance with the instructions to Form 10-Q and
do not include all of the information and note disclosures required by generally
accepted accounting principles. The Company believes that the disclosures
contained herein are adequate to make the financial information not misleading.
In the opinion of management, these condensed consolidated financial statements
contain all adjustments (consisting of normal recurring accruals) necessary to
present fairly the Company's consolidated financial position, results of
operations and cash flows. These interim condensed consolidated financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 1994. The condensed consolidated
statements of income for the three and six months ended June 30, 1995 may not
be indicative of the expected results for the year ended December 31, 1995.
The condensed consolidated financial statements include the accounts of GTI
Corporation (the "Company"), its wholly-owned subsidiary ESCO Sales, Inc., and
its majority-owned subsidiaries Valor Electronics, Inc. ("Valor") and Promptus
Communications, Inc. ("Promptus"). All significant intercompany transactions
and account balances are eliminated in consolidation.
The condensed consolidated financial statements have been restated to reflect
the Company's electronic components and equipment segment and distribution
products segment as discontinued operations in accordance with Accounting
Principles Board Opinion No. 30 ("APB 30") (see Note 2).
Note 2 - Discontinued Operations
In May 1995, the Board of Directors of the Company adopted a formal plan to
sell its non core business segments, consisting of the electronic components
and equipment segment and distribution products segment (the "Segments"), as a
part of the Company's strategic focus on networking and network access markets.
The Segments have been accounted for as discontinued operations in accordance
with APB 30, which among other provisions, expects the plan of disposal to be
carried out within one year (the "Divestiture Period").
Company's management ("Management") does not anticipate that the Segments will
incur operating losses during the Divestiture Period. Furthermore, Managment's
current estimates indicate that total sale proceeds from the Segments disposal
will approximate the net assets of discontinued operations as of June 30, 1995.
However, the ultimate financial impact of the Segments disposal could differ
from Managment's current estimate.
6
<PAGE> 7
GTI CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
The operating (unaudited) results of the discontinued operations are summarized
as follows:
<TABLE>
<CAPTION>
Three-months ended
June 30, 1995 June 30, 1994
------------- -------------
<S> <C> <C>
Sales $10,296 $9,878
======= ======
Income before tax provision $ 723 $ 963
Tax provision 253 $ 345
------- ------
Net income $ 470 $ 618
======= ======
Net income per common share $ 0.04 $ 0.06
======= ======
</TABLE>
The net assets of discontinued operations are summarized as follows:
<TABLE>
<CAPTION>
June 30, 1995 December 31, 1994
------------- -----------------
(unaudited) (audited)
<S> <C> <C>
Current assets $13,145 $11,478
Property, plant and equipment, net 3,003 2,922
Goodwill, net of amortization
and other assets 6,379 6,471
Current liabilities (4,819) (4,366)
------- -------
Net assets $17,708 $16,505
======= =======
</TABLE>
Note 3 - Supplemental Statements of Cash Flows Disclosure
Supplemental cash flow information (unaudited) for the six months ended June
30, 1995 and 1994 are summarized as follows:
<TABLE>
<CAPTION>
Six-months ended
June 30, 1995 June 30, 1994
------------- -------------
<S> <C> <C>
Interest paid $ 603 $ 33
====== ======
Income taxes paid $1,179 $1,395
====== ======
</TABLE>
7
<PAGE> 8
GTI CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
Note 3 - Supplemental Statements of Cash Flows Disclosure (Continued)
<TABLE>
<CAPTION>
Six-months ended
June 30, 1995 June 30, 1994
------------- -------------
<S> <C> <C>
Business acquisition, net of cash acquired:
Working capital, other than cash acquired $ (644) $ -
Plant and equipment (1,314) -
Purchase price in excess of the net assets
acquired (17,230) -
Other assets (1,183) -
Noncurrent liabilities 1,282 -
-------- ----
Net cash used to acquire a business $ 19,089 $ -
======== ====
</TABLE>
Note 4 - Business Combination
In January 1995, the Company completed the acquisition of approximately 72% of
the issued and outstanding capital stock of Promptus. The acquisition was
accounted for using the purchase method. Promptus' results of operations have
been included in the Company's consolidated results of operations effective
January 1, 1995.
The following summarized unaudited pro forma results of operations for the
three and six-months ended June 30, 1994 assume the acquisition occurred as of
the beginning of the respective period. The pro forma information include
adjustments for: (i) amortization of goodwill; (ii) interest expense related to
the borrowings associated with the acquisition; and (iii) an increase in common
stock associated with the financing of the acquisition. The following
unaudited pro forma information is based on historical information and is not
necessarily indicative of the actual results that would have occurred or is it
indicative of future results of operations of the combined companies:
<TABLE>
<CAPTION>
Three-months ended Six-months ended
June 30, 1994 June 30, 1994
------------- -------------
<S> <C> <C>
Net sales $26,487 $49,583
======= =======
Income from continuing operations $ (299) $ (114)
Income from discontinued operations,
net of income taxes 618 881
------- -------
Net income $ 319 $ 767
======= =======
Earnings per common share:
Income from continuing operations $ (0.03) $ (0.01)
Income from discontinued operations,
net of income taxes 0.06 0.08
------- -------
$ 0.03 $ 0.07
======= =======
</TABLE>
8
<PAGE> 9
GTI CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
Note 5 - Inventories
Inventories, stated at the lower of cost (first-in, first-out) or market, are
summarized as follows:
<TABLE>
<CAPTION>
June 30, 1995 December 31, 1994
------------- -----------------
(Unaudited) (Audited)
<S> <C> <C>
Raw materials and supplies $ 7,942 $ 8,172
Work in process 7,330 6,898
Finished goods 9,010 5,217
-------- -------
Total inventories $24,282 $20,287
======= =======
</TABLE>
Note 6 - Acquisition Liability
The Company's December 31, 1994 balance sheet reflects an acquisition liability
of $500 representing the contingent purchase of the remaining Valor minority
shares (the "Shares"). In August 1995, the Company expects that it will
exercise its right to call the remaining Shares and purchase the Shares based
upon the predetermined valuation formula provided in the management shares
agreement. Accordingly, the value of the Shares has been recalculated as of
June 30, 1995, and management estimates no additional compensation will be paid
for the remaining Shares. Therefore, the acquisition liability has been
reduced to zero and goodwill has been reduced by $500 as of June 30, 1995.
Note 7 - Contingencies
Concurrent with the Promptus acquisition, the Company and the minority
shareholders of Promptus entered into an agreement to govern the contingent
purchase of the remaining 28% of the outstanding capital stock of Promptus.
Under the agreement, beginning in January 1997 and each year thereafter through
January 1999, the minority shareholders of Promptus have the right but not the
obligation to require the Company to acquire the remaining shares in predefined
percentage increments; and the Company has the right but not the obligation to
purchase the remaining shares, with the price to be paid base upon a
predetermined formula using a combination of forecasted and actual results of
Promptus for the period January 1, 1997 through December 31, 1999. The
percentage increment established for the first mutual put/call option in
January 1997 may not exceed 30% of the minority shares. In management's
opinion, there is no assurance that the minority shareholders will exercise
their rights nor is it presently possible to assess the probability of whether
the Company will purchase the minority shares. In addition, due to the
determinants involved in establishing a price for the minority shares, it is
not presently possible to estimate the price at which such shares might be
purchased. Accordingly, no accounting recognition has been provided for this
contingency in the accompanying financial statements.
9
<PAGE> 10
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Quarter Ended June 30, 1995:
Results of Operations
In May 1995, the Company approved a formal plan to divest the electronic
components and equipment segment and the product distribution segment (the
"Segments"). These Segments are accounted for as discontinued operations in
accordance with APB 30. Accordingly, the Company has reported the Segments as
discontinued operations and the condensed consolidated financial statements
have been reclassified to report separately the operating results of the
Segments. The Company's consolidated operating results for the three and
six-months ended June 30, 1994 have been restated to reflect the Company's
continuing operations. Additionally, the Company has restated the consolidated
statements of income for the quarterly period ended March 31, 1995 and each of
the four quarterly periods, as indicated, and fiscal years ended December 31,
1994 and 1993 in Exhibit 99 to this Form 10Q.
For the second quarter ended June 30, 1995, the Company reported sales of
$33,020,000, an increase of 33.5% from $24,728,000 for the same period ended
June 30, 1994. Compared with the first quarter of 1995, sales for the second
quarter of 1995 increased $6,005,000 or 22.2%. Sales for the six-months ended
June 30, 1995 were $60,035,000 an increase of 30.4% from June 30, 1994. This
increase in sales is primarily attributable to continued strong unit sales of
Valor LAN magnetics-based components ("Valor Products") as well as the
inclusion of sales of Promptus ("Promptus Products') effective January 1, 1995.
Sales by the Company's international operations remained strong for the second
quarter of 1995, representing 40.0% of total Company sales, compared to 26.8%
for the second quarter of 1994. Substantially all of the sales growth from
international operations is the result of increased Valor Product sales in the
Pacific Rim.
Valor Product sales for the second quarter of 1995 were $29,357,000, an
increase of 18.7% over the same quarter in 1994. The growth in sales of Valor
Products reflects continued strong unit demand for LAN magnetics-based
components. While Promptus Product sales for the second quarter of 1994 were
not included in the Company's results for the second quarter of 1994, Promptus
Product sales for the second quarter of 1995 increased 105.3% to $3,663,000.
The growth in Promptus Product sales was due to increased unit volume across
all product lines to OEMs and resellers. Compared with the first quarter of
1995, second quarter sales of Valor Products and Promptus Products increased
18.5% and 25.4%, respectively. The sales increase from the first quarter of
1995 was substantially all volume related.
10
<PAGE> 11
Cost of sales as a percent of sales was 67.7%, 68.8%, 73.9% and 70.4%, for the
second quarter of 1995, the six-months ended June 30, 1995, second quarter of
1994 and the six-months ended June 30, 1994, respectively, resulting in gross
margins of 32.3%, 31.2%, 26.1% and 29.6%, respectively. The increase in gross
margins as a percent of sales for the second quarter and six-months ended June
30, 1995 were primarily the result of Valor Products lower costs of production
attributable to economies of scale related to increased manufacturing volumes
and reduced manufacturing costs as well as the inclusion of Promptus Products
sales that carry higher margins than LAN magnetics based components. The
increase in gross margin as a percentage of sales for the second quarter of
1995 (32.3%) from the first quarter of 1995 (29.7%) is primarily due to Valor
Products lower costs of production attributable to economies of scale related
to increased manufacturing volumes and reduced manufacturing costs. Cost of
sales and gross profit dollars increased for the second quarter of 1995 as
compared to the same period in 1994 due primarily to the increased unit sales
associated with Valor Products and the inclusion of Promptus Products sales
effective January 1, 1995, which were not included in the Company's second
quarter of 1994 sales.
Selling, general and administrative expenses for the second quarter of 1995
were $8,516,000, or 25.8% of sales, compared to $5,556,000, or 22.5% of sales
for the second quarter of 1994. These expenses increased in percentage and
dollar terms principally due to the inclusion of Promptus' financial results
effective January 1, 1995, and, to a lesser extent, certain expenses associated
with increased sales. The second quarter impact from selling, general, and
administrative expenses incurred by Promptus and the amortization of goodwill
associated with the acquisition of Promptus amounted to $2,243,000, and
$208,000, respectively. While Promptus Products selling, general and
administrative expenses for the second quarter of 1994 were not included in the
Company's results for the second quarter of 1994, these expenses during the
second quarter of 1995 increased approximately 63.2% from the same quarter in
1994. Substantially all of this increase is associated with the addition of
sales and marketing personnel. The Company believes that these expenses will
continue to increase in dollar amount but may vary as a percentage of future
sales.
Other expense (net) for the second quarter was $333,000 compared with income of
$121,000 for the same period one year ago. The net decrease in other income
compared to the second quarter of 1994 is substantially associated with
interest expense incurred related to increased borrowings that financed the
Promptus acquisition. During the second quarter of 1994, no amounts were
outstanding on the credit facilities.
The provision for income taxes was incurred at an effective rate of 20% in the
second quarter compared to 16% for the second quarter of 1994. The Company's
effective tax rate is lower than the statutory United States rate due to lower
tax rates on the earnings of foreign operations.
Income from continuing operations for the second quarter of 1995 increased
81.1% to $1,507,000 from $832,000 and earnings per common share increased to
$0.14, a 75% increase from the comparable period one year ago.
11
<PAGE> 12
Income from discontinued operations for the second quarter of 1995 decreased
approximately $148,000 or $0.02 per common share from the same period in the
prior year. This is a result of a decrease in income from the distribution
products segment offset by an increase in income from the electronic components
and equipment segment. The decrease in the distribution products segment's
income is attributed to increased selling, general and administrative costs.
The increase in the electronic components and equipment segment's income is
attributed to increased sales and operating income in specialty glass
components and piece-parts for the worldwide diode market compared to the same
period in the prior year.
Net income for the second quarter of 1995 increased to $1,977,000 or 36.3% and
earnings per common share increased to $0.18 or 28.6% from the comparable
period one year ago.
Backlog at June 30, 1995, was $35,522,000, compared to $21,661,000 at June 30,
1994, and $28,698,000 at March 31, 1995. Backlog for Valor Products was
$29,647,000 at June 30, 1995, compared to $21,661,000 at June 30, 1994, and
$23,308,000 at March 31, 1995. The Valor Products backlog for the second
quarter reflects, in part, longer lead times from certain customers as compared
to the backlog at the same period in the prior year. The Company's future
performance on a quarter-to-quarter basis will be affected by the volume, mix
and timing of orders received.
Liquidity and Capital Resources
The Company is currently satisfying its working capital and capital expenditure
requirements through internally generated cash from operations and bank
borrowings. The ratio of current assets to current liabilities was 2.6 to 1.0
on June 30, 1995, compared to 2.4 to 1 on December 31, 1994. Net cash used by
continuing operations for the first six months of 1995 was $2,473,000 compared
to cash provided by continuing operations of $1,481,000 for the first six
months of 1994. This decline is attributable to the decrease in income from
continuing operations from the comparable period in 1994, an increase in
inventories to support production volume requirements and a decrease in
accounts payable, accrued and other liabilities offset by a decrease in
accounts receivable associated with increased collections and an increase in
depreciation and amortization related to increased capital and goodwill
amortization associated with the Promptus acquisition. Net cash provided by
discontinued operations decreased $980,000 as a result of an increase in
accounts receivable and inventories offset by an increase in accounts payable
and accrued liabilities for both the electronic components and equipment
segment and distribution products segment.
In the first six months of 1995, the Company made capital expenditures
approximating $2,441,000. These expenditures were primarily for equipment to
support production capacity for Valor Products. The Company anticipates that
additional capital expenditures of approximately $5,250,000 will be made during
the balance of 1995, primarily for manufacturing and process engineering
equipment for Valor Products.
12
<PAGE> 13
During the first quarter of 1995, the Company completed its acquisition of
approximately 72% of the outstanding capital stock of Promptus for
approximately $19,300,000, excluding acquisition costs of approximately
$200,000. The Company financed the acquisition of Promptus through a
combination of bank borrowings of approximately $9,800,000 and the issuance of
650,000 shares of common stock of approximately $9,700,000, net of issuance
costs.
Management believes that funds on hand, those generated by operations and
available through its lines of credit with a domestic bank for approximately
$10.0 million and a foreign bank of approximately $2.2 million will be
sufficient to finance working capital and currently projected capital
expenditure requirements at least through the next twelve months. As of June
30, 1995, outstanding borrowings from a domestic bank totaled $8.3 million
based on an eligible base of $10.0 million and $1.3 million from a foreign bank
based on an eligible base of $2.2 million. As of August 1, 1995, outstanding
borrowings from a domestic bank totaled approximately $9.0 million based on an
eligible base of $10.0 million. The amounts outstanding on the foreign bank
line of credit were paid in full during July 1995.
Dividends on the Company's 8,110 shares of outstanding $35.00 cumulative
convertible preferred stock accrue at an annual rate of $35.00 per share,
payable quarterly. In the first six months ended June 30, 1995, cash dividends
totaling $142,000 were paid.
13
<PAGE> 14
PART II - OTHER INFORMATION
Item 4. Submission of matters to a Vote of Security Holders
The Company's 1994 Annual Meeting of Stockholders was held on May
10, 1995 for the purpose of electing a Board of Directors of nine
members for the ensuing year and ratify the selection of Arthur
Andersen & Co. L.L.P. as the Company's independent public
accountants for 1995. The results of the stockholder vote are as
follows:
The following directors were elected:
<TABLE>
<CAPTION>
Against / Abstain /
Nominee For Withheld Not voted
------- --- -------- ---------
<S> <C> <C> <C>
Timothy M. Curtis 9,985,899 1,600 792,387
Edmund B. Fitzerald 9,985,364 2,135 792,387
Andre R. Horn 9,984,679 2,820 792,387
Henry N. Huta 9,985,399 2,100 792,387
Gary L. Luick 9,977,729 9,770 792,387
Kenneth E. Maud 9,985,949 1,550 792,387
Jesse Rifkind 9,985,399 2,100 792,387
Robert E. Venter 9,985,949 1,550 792,387
Arthur S. Walsh 9,985,399 2,100 792,387
</TABLE>
The ratification of Arthur Andersen & Co. L.L.P. as public
accountants for 1995 was approved with 9,989,722 affirmative
votes, 16,366 votes against and 773,798 abstained and unvoted
votes.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
See attached Exhibit 99, in this Form 10-Q pages 16 through 19,
restating the Condensed Consolidated Statements of Income for the
first quarter of 1995 and each of the four quarterly periods and
fiscal years ended 1994 and 1993. The restatement is a result of
the Company's formal plan to divest the electronics components
and equipment segment and distribution products segment adopted
in May 1995. Accordingly, these segments are accounted for in
accordance with APB 30.
(b) Reports on Form 8-K
None.
14
<PAGE> 15
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.
GTI CORPORATION
(Registrant)
Date: August 10, 1995
By: /s/ Douglas J. Downs
-----------------------------------------
Douglas J. Downs
Vice President Finance and Treasurer
(Principal Financial and
Accounting Officer)
15
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> APR-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 1,941
<SECURITIES> 0
<RECEIVABLES> 19,932
<ALLOWANCES> 314
<INVENTORY> 24,282
<CURRENT-ASSETS> 66,099
<PP&E> 25,080
<DEPRECIATION> 9,188
<TOTAL-ASSETS> 122,592
<CURRENT-LIABILITIES> 25,598
<BONDS> 0
<COMMON> 357
0
8,110
<OTHER-SE> 81,531
<TOTAL-LIABILITY-AND-EQUITY> 122,592
<SALES> 33,020
<TOTAL-REVENUES> 33,020
<CGS> 22,339
<TOTAL-COSTS> 8,516
<OTHER-EXPENSES> 333
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,832
<INCOME-TAX> 367
<INCOME-CONTINUING> 1,507
<DISCONTINUED> 470
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,977
<EPS-PRIMARY> .18
<EPS-DILUTED> .18
</TABLE>
<PAGE> 1
EXHIBIT 99
On May 10, 1995, the Board of Directors of GTI Corporation approved a
plan to divest its non-core business units as part of the Company's strategic
focus on networking and network access markets. On May 11, 1995, the Company
issued a press release to the public announcing the plan of divestiture and the
reporting of the electronic components and equipment segment and the
distribution products segment as discontinued operations, effective for the
second quarter ended June 30, 1995.
Pursuant to the Company's previously announced plan of divestiture of
the electronic components and equipment segment and the distribution products
segment, the following tables set forth historical, quarterly unaudited
consolidated statements of income with respect to the Company's continuing
operations for the first quarter of 1995 and each of the four quarterly
periods as indicated and fiscal years ended December 31, 1994, and 1993 and as
a percentage of sales. The intent of this disclosure is to provide the
financial statement reader with comparative, historical consolidated
statements of income from which to compare fiscal 1995 quarterly interim
results of operations.
(Table Follows)
16
<PAGE> 2
EXHIBIT 99 - Continued
Consolidated Statements of Income
Unaudited
<TABLE>
<CAPTION>
(dollars in thousands)
Quarter Ended
----------------------
Mar. 31, 1995
$ %
------- ------
<S> <C> <C>
Sales $27,015 100.0%
Cost of sales 18,986 70.3%
------- ------
Gross profit 8,029 29.7%
Selling, general and administrative expenses 8,122 30.1%
------- ------
Operating loss (93) -0.3%
Other expense - net 257 1.0%
------- ------
Loss from continuing operations
before income taxes and minority interest (350) -1.3%
Benefit for income taxes (81) -0.3%
Minority interest (47) -0.2%
------- ------
Loss from continuing operations (222) -0.8%
Income from discontinued operations, net of income taxes 413
-------
Net income $ 191
=======
Net income (loss) per share of common stock:
Continuing operations ($0.02)
Discontinued operations $0.04
------
$0.02
======
</TABLE>
17
<PAGE> 3
EXHIBIT 99 - Continued
Consolidated Statements of Income
Unaudited
<TABLE>
<CAPTION>
(dollars in thousands)
Quarter Ended Twelve
---------------------------------------------------------------- Months
Mar. 31, 1994 June 30, 1994 Sept. 30, 1994 Dec. 31, 1994 Ended
$ % $ % $ % $ % Dec. 31, 1994
------- ------ ------- ------ ------- ------ ------- ------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sales $21,321 100.0% $24,728 100.0% $27,216 100.0% $29,974 100.0% $103,239
Cost of sales 14,157 66.4% 18,262 73.9% 19,269 70.8% 24,434 81.5% 76,122
------- ------ ------- ------ ------- ------ ------- ------ --------
Gross profit 7,164 33.6% 6,466 26.1% 7,947 29.2% 5,540 18.5% 27,117
Selling, general and administrative expenses 5,817 27.3% 5,556 22.5% 6,100 22.4% 6,222 20.8% 23,695
------- ------ ------- ------ ------- ------ ------- ------ --------
Operating profit (loss) 1,347 6.3% 910 3.7% 1,847 6.8% (682) -2.3% 3,422
Other (income) expense - net (22) -0.1% (121) -0.5% (135) -0.5% 1 0.0% (277)
------- ------ ------- ------ ------- ------ ------- ------ --------
Income (loss) from continuing operations
before income taxes and minority interest 1,369 6.4% 1,031 4.2% 1,982 7.3% (683) -2.3% 3,699
Provision (benefit) for income taxes 282 1.3% 163 0.7% 408 1.5% (589) -2.0% 264
Minority interest 49 0.2% 36 0.1% 50 0.2% 1 0.0% 136
------- ------ ------- ------ ------- ------ ------- ------ --------
Income (loss) from continuing operations 1,038 4.9% 832 3.4% 1,524 5.6% (95) -0.3% 3,299
Income from discontinued operations, net of
income taxes 263 618 469 612 1,962
------- ------ ------- ------ ------- ------ ------- ------ --------
Net income 1,301 1,450 1,993 517 $ 5,261
======= ====== ======= ====== ======= ====== ======= ====== ========
Net income (loss) per share of common stock:
Continuing operations $0.10 $0.08 $0.15 ($0.01) $0.32
Discontinued operations 0.03 0.06 0.05 0.06 0.20
----- ----- ----- ----- -----
$0.13 $0.14 $0.20 $0.05 $0.52
===== ===== ===== ===== =====
</TABLE>
18
<PAGE> 4
EXHIBIT 99 - Continued
Consolidated Statements of Income
Unaudited
<TABLE>
<CAPTION>
(dollars in thousands)
Quarter Ended Twelve
------------------------------------------------------------------ Months
Mar. 31, 1993 June 30, 1993 Sept. 30, 1993 Dec. 31, 1993 Ended
$ % $ % $ % $ % Dec. 31, 1993
------- ------ ------- ------ ------- ------ ------- ------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sales $21,650 100.0% $23,409 100.0% $22,810 100.0% $20,706 100.0% $88,575
Cost of sales 13,062 60.3% 13,772 58.8% 13,679 60.0% 12,978 62.7% 53,491
------- ------ ------- ------ ------- ------ ------- ------ -------
Gross profit 8,588 39.7% 9,637 41.2% 9,131 40.0% 7,728 37.3% 35,084
Selling, general and administrative expenses 4,980 23.0% 5,345 22.8% 5,091 22.3% 4,851 23.4% 20,267
------- ------ ------- ------ ------- ------ ------- ------ -------
Operating profit 3,608 16.7% 4,292 18.3% 4,040 17.7% 2,877 13.9% 14,817
Other expense -net 49 0.2% 91 0.4% 78 0.3% 60 0.3% 278
------- ------ ------- ------ ------- ------ ------- ------ -------
Income from continuing operations
before income taxes and minority interest 3,559 16.4% 4,201 17.9% 3,962 17.4% 2,817 13.6% 14,539
Provision for income taxes 680 3.1% 991 4.2% 960 4.2% 195 0.9% 2,826
Minority interest 305 1.4% 351 1.5% 89 0.4% 78 0.4% 823
------- ------ ------- ------ ------- ------ ------- ------ -------
Income from continuing operations 2,574 11.9% 2,859 12.2% 2,913 12.8% 2,544 12.3% 10,890
Income from discontinued operations, net of
income taxes 353 543 645 769 2,310
------- ------ ------- ------ ------- ------ ------- ------ -------
Net income $ 2,927 $ 3,402 $ 3,558 $ 3,313 $13,200
======= ====== ======= ====== ======= ====== ======= ====== =======
Net income per share of common stock:
Continuing operations $0.26 $0.29 $0.29 $0.25 $1.09
Discontinued operations 0.04 0.06 0.06 0.07 0.23
----- ----- ----- ----- -----
$0.30 $0.35 $0.35 $0.32 $1.32
===== ===== ===== ===== =====
</TABLE>
19
