<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 September 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 November 1, 1995, the registrant had only one class of Common Stock, par
value $.04 per share, of which there were 8,951,725 shares outstanding.
This report on Form 10-Q contains 16 pages.
<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
-----------------------------
September 30, September 30,
1995 1994
------------- -------------
<S> <C> <C>
Sales $ 35,308 $ 27,216
Cost of sales 23,596 19,269
Selling, general & administrative expense 8,436 6,100
------------- -------------
Operating profit 3,276 1,847
Other expense (income), net 301 (135)
------------- -------------
Income from continuing operations
before income taxes and minority interest 2,975 1,982
Provision for income taxes 591 408
Minority interest (income) expense (66) 50
------------- -------------
Income from continuing operations 2,450 1,524
Income from discontinued operations,
net of income taxes 397 469
------------- -------------
Net Income $ 2,847 $ 1,993
============= =============
Earnings per share of common stock and
common stock equivalents:
Continuing operations $ 0.22 $ 0.15
Discontinued operations 0.04 0.05
------------- -------------
$ 0.26 $ 0.20
============= =============
Weighted average number of shares 10,947,000 10,189,000
============= =============
</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 integral part of these consolidated financial
statements.
2
<PAGE> 3
GTI CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - (Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
For the nine months ended
-----------------------------
September 30, September 30,
1995 1994
------------- -------------
<S> <C> <C>
Sales $ 95,344 $ 73,265
Cost of sales 64,921 51,688
Selling, general & administrative expense 25,075 17,473
------------- -------------
Operating profit 5,348 4,104
Other expense (income), net 891 (278)
------------- -------------
Income from continuing operations
before income taxes and minority interest 4,457 4,382
Provision for income taxes 877 853
Minority interest (income) expense (155) 135
------------- -------------
Income from continuing operations 3,735 3,394
Income from discontinued operations,
net of income taxes 1,280 1,350
------------- -------------
Net income $ 5,015 $ 4,744
============= =============
Earnings per share of common stock and
common stock equivalent:
Continuing operations $ 0.34 $ 0.33
Discontinued operations 0.12 0.14
------------- -------------
$ 0.46 $ 0.47
============= =============
Weighted average number of shares 10,871,000 10,176,000
============= =============
</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 integral 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>
September 30, December 31,
1995 1994
------------- ------------
(unaudited) (audited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 3,545 $ 4,226
Accounts receivable, net of allowance of $231
and $143, respectively 22,124 18,776
Inventories 24,999 20,287
Prepaid expenses and other assets 2,517 1,832
Net assets of discontinued operations 18,218 17,438
-------- --------
Total current assets 71,403 62,559
Property, plant and equipment, net 15,844 14,480
Goodwill, less amortization of $3,975 and $2,747,
respectively, and other assets 39,485 22,909
-------- --------
$126,732 $ 99,948
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short term borrowings $ 9,748 $ 1,655
Current portion of note payable 1,000 --
Accounts payable, accrued and other liabilities 17,058 18,296
Acquisition liability -- 500
-------- --------
Total current liabilities 27,806 20,451
Long-term debt and other non-current liabilities 5,255 1,373
Minority interest in subsidiary 838 561
Stockholders' equity:
Preferred stock, $35.00 cumulative convertible,
issued and outstanding 8,110 shares 8,110 8,110
Common stock, issued 8,951,725 and
8,459,350 shares, respectively 358 339
Additional paid in capital 43,767 34,567
Retained earnings 39,538 34,737
Treasury stock, 250,000 shares at cost -- (1,040)
Cumulative translation adjustments 1,060 850
-------- --------
92,833 77,563
-------- --------
$126,732 $ 99,948
======== ========
</TABLE>
The accompanying notes are an integral 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 nine months ended
---------------------------------
September 30, September 30,
1995 1994
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 5,015 $ 4,744
Adjustments to reconcile net income to
net cash used by continuing operations:
Depreciation and amortization 4,966 2,448
Minority interest in subsidiary (155) 135
Income from discontinued operations (1,280) (1,350)
Changes in assets and liabilities:
Accounts receivable (1,670) (4,987)
Inventories (3,175) (5,733)
Prepaid expenses and other assets (1,004) (713)
Accounts payable, accrued liabilities and other liabilities (3,600) 4,238
-------- --------
Net cash used by continuing operations (903) (1,218)
Net cash provided by discontinued operations 1,167 2,877
-------- --------
Net cash provided by operating activities 264 1,659
-------- --------
Cash flows from investing activities:
Purchases of property, plant and equipment (3,788) (6,670)
Capital expenditures of discontinued operations (554) (312)
Business acquisition, net of cash acquired (19,089) --
-------- --------
Net cash used by investing activities (23,431) (6,982)
-------- --------
Cash flows from financing activities:
Borrowings on lines of credit, net 8,093 1,288
Borrowings on note payable 5,000 --
Repayments on note payable (750) --
Issuance of common stock 10,259 272
Preferred cash dividend (213) (213)
-------- --------
Net cash provided by financing activities 22,389 1,347
-------- --------
Effect of exchange rate on cash 97 246
-------- --------
Net decrease in cash and cash equivalents (681) (3,730)
Cash and cash equivalents at beginning of period 4,226 10,037
-------- --------
Cash and cash equivalents at end of period $ 3,545 $ 6,307
======== ========
</TABLE>
The accompanying notes are an integral 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 nine months ended September 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 subsidiaries Valor Electronics,
Inc. ("Valor") and ESCO Sales, Inc., and its majority-owned subsidiary 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.
During September and October 1995, the Company entered into separate letters of
intent to sell the electronic components and equipment segment's assets for
approximately $12.5 million, consisting of $12 million in cash and $0.5 million
in the form of a note receivable, and sell the common stock of the distribution
products segment, ESCO Sales, Inc., for approximately $6 million, consisting of
$4 million in cash and $2 million in the form of a note receivable,
respectively.
6
<PAGE> 7
GTI CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
Note 2 - Discontinued Operations (Continued)
Both proposed sales are subject to the terms of negotiated definitive agreements
which could vary from the letters of intent. Management's current estimates
indicate that the total sale proceeds from the Segments disposal will
approximate the net assets of discontinued operations at September 30, 1995.
However, the ultimate financial impact of the negotiated definitive agreements
could differ from Management's current estimate.
The operating results (unaudited) of the discontinued operations are summarized
as follows:
<TABLE>
<CAPTION>
Three-months ended
September 30, 1995 September 30, 1994
------------------ ------------------
<S> <C> <C>
Sales $ 10,082 $ 10,033
======== ========
Income before tax provision $ 633 $ 761
Tax provision (236) (292)
-------- --------
Net income $ 397 $ 469
======== ========
Net income per common share $ 0.04 $ 0.05
======== ========
</TABLE>
<TABLE>
<CAPTION>
Nine-months ended
September 30, 1995 September 30, 1994
------------------ ------------------
<S> <C> <C>
Sales $ 29,774 $ 28,748
======== ========
Income before tax provision $ 1,850 $ 2,167
Tax provision (570) (817)
-------- --------
Net income $ 1,280 $ 1,350
======== ========
Net income per common share $ 0.12 $ 0.14
======== ========
</TABLE>
7
<PAGE> 8
GTI CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
Note 2 - Discontinued Operations (Continued)
The net assets of discontinued operations are summarized as follows:
<TABLE>
<CAPTION>
September 30, 1995 December 31, 1994
------------------ -----------------
(unaudited) (audited)
<S> <C> <C>
Current assets $ 12,691 $ 11,272
Property, plant and equipment, net 2,709 2,922
Goodwill, net of amortization,
and other assets 6,330 6,471
Current liabilities (3,512) (3,227)
-------- --------
Net assets $ 18,218 $ 17,438
======== ========
</TABLE>
Note 3 - Supplemental Statements of Cash Flows Disclosure
Supplemental cash flow information (unaudited) for the nine months ended
September 30, 1995 and 1994 are summarized as follows:
<TABLE>
<CAPTION>
Nine-months ended
September 30, 1995 September 30, 1994
------------------ ------------------
<S> <C> <C>
Interest paid $ 898 $ 54
======== ========
Income taxes paid $ 1,260 $ 1,601
======== ========
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.
8
<PAGE> 9
GTI CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
Note 4 - Business Combination (Continued)
The following summarized unaudited pro forma results of operations for the three
and nine-months ended September 30, 1994 assume the acquisition occurred as of
the beginning of the respective periods. The pro forma information include
adjustments for: (i) amortization of goodwill; (ii) interest expense related to
the borrowings associated with the acquisition; (iii) minority interest; and
(iv) 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 Nine-months ended
September 30, 1994 September 30, 1994
------------------ ------------------
<S> <C> <C>
Net sales $29,777 $79,360
======= =======
Income from continuing operations $ 914 $ 1,106
Income from discontinued operations,
net of income taxes 469 1,350
------- -------
Net income $ 1,383 $ 2,456
======= =======
Earnings per common share:
Income from continuing operations $ 0.08 $ 0.10
Income from discontinued operations,
net of income taxes 0.04 0.13
------- -------
$ 0.12 $ 0.23
======= =======
</TABLE>
Note 5 - Inventories
Inventories, stated at the lower of cost (first-in, first-out) or market, are
summarized as follows:
<TABLE>
<CAPTION>
September 30, 1995 December 31, 1994
(Unaudited) (Audited)
<S> <C> <C>
Raw materials and supplies $ 9,933 $ 8,172
Work in process 7,278 6,898
Finished goods 7,788 5,217
------- -------
Total inventories $24,999 $20,287
======= =======
</TABLE>
9
<PAGE> 10
GTI CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
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 exercised its right to call
and purchase the remaining Shares based upon the predetermined valuation formula
provided in the management shares agreement. Accordingly, the value of the
Shares has been recalculated as of August 30, 1995, and no additional
compensation was 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. Additionally, minority interest and goodwill have been reduced by
$583 representing the Valor minority interest ending balance on August 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 based 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.
10
<PAGE> 11
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Quarter Ended September 30, 1995:
Results of Operations
In May 1995, the Company approved a formal plan to divest the electronic
components and equipment segment and the distribution products segment (the
"Segments"). These Segments are accounted for as discontinued operations in
accordance with APB 30. Accordingly, the condensed consolidated financial
statements have been restated to report separately the operating results of the
continuing operations from the Segments. All prior year amounts have been
restated.
For the third quarter ended September 30, 1995, the Company reported sales of
$35,308,000, an increase of 29.7% from $27,216,000 for the same period ended
September 30, 1994. Compared with the second quarter of 1995, sales for the
third quarter of 1995 increased $2,288,000 or 6.9%. Sales for the nine-months
ended September 30, 1995 were $95,344,000 an increase of 30.1% from September
30, 1994. This increase in sales is primarily attributable to continued strong
unit sales of Valor LAN magnetics-based components ("Valor Products") and the
inclusion of sales of Promptus ("Promptus Products') effective January 1, 1995.
Sales by the Company's international operations remained strong for the third
quarter of 1995, representing 32.9% of total Company sales, compared to 30.9%
for the third quarter of 1994.
Valor Products sales for the third quarter of 1995 were $31,370,000, an
increase of 15.3% 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 Products sales for the third quarter of 1994 were
not included in the Company's results for the third quarter of 1994, Promptus
Products sales for the third quarter of 1995 increased 53.8% to $3,938,000. The
growth in Promptus Products sales was due to increased unit volume of OASIS
products to OEM's for video conferencing applications. Although no single
Promptus Products' customer accounts for 10% of consolidated revenues, one OEM
customer and its manufacturer accounted for approximately 31% and 26% of
Promptus Products' revenues for the three and nine months ended September 30,
1995, respectively. Compared with the second quarter of 1995, third quarter
sales of Valor Products and Promptus Products increased 6.9% and 7.5%,
respectively.
11
<PAGE> 12
Cost of sales as a percent of sales was 66.8%, 68.1%, 70.8% and 70.5%, for the
third quarter of 1995, the nine-months ended September 30, 1995, third quarter
of 1994 and the nine-months ended September 30, 1994, respectively, resulting in
gross margins of 33.2%, 31.9%, 29.2% and 29.5%, respectively. The increase in
gross margins as a percent of sales for the third quarter and nine-months ended
September 30, 1995 were primarily the result of the inclusion of Promptus
Products sales that carry higher margins than LAN magnetics based components,
and, to a lesser extent, 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
third 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 third quarter of 1994 sales.
Selling, general and administrative expenses for the third quarter of 1995 were
$8,436,000, or 23.9% of sales, compared to $6,100,000, or 22.4% of sales for the
third quarter of 1994. These expenses increased in percentage and dollar terms
principally due to the inclusion of Promptus' financial results effective
January 1, 1995, offset by reduced Valor Products spending of approximately
$375,000. The third quarter impact from selling, general, and administrative
expenses incurred by Promptus and amortization of goodwill associated with the
Promptus acquisition amounted to $2,433,000, and $211,000, respectively. While
Promptus Products selling, general and administrative expenses for the third
quarter of 1994 were not included in the Company's results for the third quarter
of 1994, these expenses during the third quarter of 1995 increased approximately
65.5% 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 third quarter was $301,000 compared with income
(net) of $135,000 for the same period one year ago. The net decrease in other
income compared to the third quarter of 1994 is a result of increased interest
expense incurred associated with increased borrowings that financed the Promptus
acquisition. During the third quarter of 1994, no amounts were outstanding on
the credit facilities and long term note payable.
The provision for income taxes was incurred at an effective rate of 19.9% in the
third quarter compared to 20.6% for the third 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 third quarter of 1995 increased 60.8%
to $2,450,000 from $1,524,000 and earnings per common share increased 46.7% to
$0.22, from the comparable period one year ago.
12
<PAGE> 13
Income from discontinued operations for the third quarter of 1995 decreased
approximately $72,000 or $0.01 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 product segment's income
is attributed to increased product and selling, general and administrative costs
when compared to the same period one year ago. The increase in the electronic
components and equipment segment's income is attributed to increased sales and
operating income in specialty glass components, piece-parts for the worldwide
diode market and equipment compared to the same period in the prior year.
Net income for the third quarter of 1995 increased 42.8% to $2,847,000 and
earnings per common share increased 30.0% to $0.26 from the comparable period
one year ago.
Backlog at September 30, 1995, was $34,823,000, compared to $16,492,000 at
September 30, 1994, and $35,522,000 at June 30, 1995. Backlog for Valor Products
was $33,012,000 at September 30, 1995, compared to $16,492,000 at September 30,
1994, and $29,647,000 at June 30, 1995. The Valor Products backlog for the third
quarter reflects, in part, longer lead times from certain customers as compared
to the backlog at the same period in the prior year. Although, Valor Products'
backlog reflects these longer lead times, Valor Products' historical quarterly
sales are also composed of orders that are received and shipped in the same
quarterly period. Should these short response orders not develop in any future
quarterly period, the Company's consolidated results of operations could be
adversely effected. 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
September 30, 1995, compared to 3.1 to 1.0 on December 31, 1994. Net cash used
by continuing operations for the first nine months of 1995 was $903,000 compared
to cash used by continuing operations of $1,218,000 for the first nine months of
1994. This decline in cash used by continuing operations is attributable to the
increase in income from continuing operations from the comparable period in 1994
and an increase in depreciation and amortization related to increased capital
and goodwill amortization associated with the Promptus acquisition offset by an
increase in accounts receivable associated with increased sales volume,
inventories to support increased production volume and a decrease in accounts
payable, accrued and other liabilities. Net cash provided by discontinued
operations decreased $1,710,000 as a result of an increase in accounts
receivable and inventories for both the electronic components and equipment
segment and distribution products segment. The increase in these working capital
accounts is mostly attributed to the electronic components and equipment
segment's increased sales and inventories, both are associated with increased
business experienced during 1995 when compared to the comparable period one year
ago.
13
<PAGE> 14
In the first nine months of 1995, for continuing operations, the Company
purchased capital equipment approximating $3,788,000. These expenditures were
primarily for equipment to support production capacity for Valor Products. The
Company anticipates that additional capital expenditures of approximately
$2,300,000 will be made during the balance of 1995, primarily for manufacturing
and process engineering equipment for Valor Products.
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.
The Company has entered into separate letters of intent to sell the electronic
components and equipment segment's assets and the common stock of the
distribution products segment, ESCO Sales, Inc., collectively for approximately
$16 million in cash and $2.5 million in the form of notes receivable. Both
proposed sales are subject to the terms and conditions of negotiated definitive
agreements which could vary from the letters of intent. Management intends to
use the cash proceeds from these divestitures to reduce existing debt.
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, to provide cash overdraft coverage, for
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 September 30, 1995, outstanding borrowings from a domestic
bank totaled approximately $8.0 million based on an eligible base of $10.0
million and approximately $1.8 million from a foreign bank based on an eligible
base of $2.2 million. As of November 1, 1995, outstanding borrowings from a
domestic bank were approximately $8.6 based on an eligible base of $10.0
million. The amounts outstanding from a foreign bank were paid in full as of
November 1, 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 nine months ended September 30, 1995, cash
dividends approximating $213,000 were paid.
14
<PAGE> 15
PART II - OTHER INFORMATION
Item 4. Submission of matters to a Vote of Security Holders
None.
Item 5. Other Information
On October 26, 1995, Arthur S. Walsh resigned from the Board of
Directors of GTI Corporation for personal reasons. Currently,
no replacement for Mr. Walsh is planned. Therefore, the number of
directors have been reduced to eight from nine.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
None.
(b) Reports on Form 8-K
None.
15
<PAGE> 16
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: November 14, 1995
-----------------------
By: /s/ Douglas J. Downs
-----------------------------
Douglas J. Downs
Vice President Finance and Treasurer
(Principal Financial and
Accounting Officer)
16
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<CURRENCY> U.S. CURRENCY
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JUL-1-1995
<PERIOD-END> SEP-30-1995
<EXCHANGE-RATE> 1
<CASH> 3,545
<SECURITIES> 0
<RECEIVABLES> 22,355
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0
8,110
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</TABLE>
