<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
/ X / QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 30, 1996
------------------------------------------
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from: to:
------------------------------------------
Commission file number:
------------------------------------------
TRIDEX CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
CONNECTICUT 06-0682273
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
61 WILTON ROAD, WESTPORT CT 06880
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(Address of principal executive offices)
(Zip Code)
(203) 226-1144
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(Registrant's telephone number, including area code)
Former address
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(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 Months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES / X / NO / /
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
YES / / NO / /
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
CLASS OUTSTANDING MAY 8, 1996
- --------------------------- -----------------------
<S> <C>
COMMON STOCK, 3,818,071
NO PAR VALUE
</TABLE>
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TRIDEX CORPORATION AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I. Financial Information:
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Item 1. Financial Statements
Consolidated Condensed Balance Sheets
March 30, 1996 and December 31, 1995 3
Consolidated Statements of Income for the Quarters Ended
March 30, 1996 and April 1, 1995 4
Consolidated Statements of Cash Flows for the Quarters Ended
March 30, 1996 and April 1, 1995 5
Notes to Consolidated Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of the Results of
Operations and Financial Condition 7
PART II. Other Information:
- -------- ------------------
Item 6. Exhibits and Reports on Form 8-K 8
Signatures 9
EXHIBIT INDEX
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Exhibit 11 Computation of Per Share Earnings 10
- ----------
Exhibit 27 Financial Data Schedule
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</TABLE>
2
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TRIDEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 30, December 31,
1996 1995
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<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 363 $ 933
Receivables 9,923 7,406
Inventories 9,320 9,597
Prepaid expenses 803 732
Deferred tax assets 645 645
------------ -------------
Total current assets 21,054 19,313
------------ -------------
Plant and equipment, net 5,093 5,196
Excess of cost over fair value of net assets acquired 9,391 9,608
Other assets 1,660 1,608
------------ -------------
$ 37,198 $ 35,725
============ =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank loans payable $ 1,447 $ 396
Current portion of long term debt 2,632 2,411
Accounts payable 4,263 4,516
Accrued liabilities 4,608 4,516
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Total current liabilities 12,950 11,839
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Long term debt, less current portion:
Term loan payable 4,597 4,843
Senior subordinated convertible debentures,
due 1997, net of discount of $14 and $16 2,716 2,714
Subordinated convertible term promissory notes,
due 1997, net of discount of $150 and $186 450 614
Other 136 153
------------ -------------
7,899 8,324
------------ -------------
Shareholders' equity:
Common stock, at stated value 985 978
Additional paid-in capital 21,958 21,939
Accumulated deficit (5,813) (6,609)
Cumulative valuation adjustments 47 82
Common shares held in treasury, at cost (828) (828)
------------ -------------
16,349 15,562
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$ 37,198 $ 35,725
============ =============
</TABLE>
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
3
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TRIDEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTERS ENDED
-------------------------------
MARCH 30, April 1,
1996 1995
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<S> <C> <C>
Net sales $ 17,592 $ 15,330
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Operating costs and expenses:
Cost of sales 11,692 10,248
Engineering, design and product development costs 949 679
Selling, administrative and general expenses 3,346 3,272
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15,987 14,199
------------ -------------
Operating profit 1,605 1,131
Other charges (income):
Interest expense, net 311 308
Other, net (128) 43
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183 351
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Profit before income taxes 1,422 780
Income tax provision (benefit) 626 (431)
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Net income $ 796 $ 1,211
============ =============
Earnings per common and common equivalent share: $ 0.20 $ 0.31
============ =============
Average common and common equivalent shares outstanding 3,937,876 3,890,988
============ =============
</TABLE>
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
4
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TRIDEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTERS ENDED
-------------------------------
MARCH 30, April 1,
1996 1995
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<S> <C> <C>
Cash flows from operating activities:
Net income $ 796 $ 1,211
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 661 621
Deferred income taxes (522)
Loss (gain) on disposal of assets, including marketable securities (171) (2)
Changes in operating assets and liabilities:
Receivables (2,551) (2,226)
Inventory 255 (1,059)
Other current assets (239) (170)
Other assets (102) (145)
Accounts payable, accrued liabilities and income taxes payable (132) 894
Other 36
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Net cash used in operating activities (1,483) (1,362)
Cash flows from investing activities:
Purchases of plant and equipment (278) (772)
Proceeds from sale of assets, including marketable securities 345
Acquired assets and acquisition costs, net of cash acquired (68)
Other 79
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Net cash provided by (used in) investing activities 67 (761)
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Cash flows from financing activities:
Net change in borrowings under lines of credit 1,058 1,650
Net proceeds from issuance of long term debt 27 106
Principal payments on long term borrowings (263) (784)
Adjustment of common stock issuance (30)
Proceeds from exercise of stock options and warrants 26 1
Other (2) 24
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Net cash provided by financing activities 846 967
------------ -----------
Effect of exchange rate changes on cash 9
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Increase (decrease) in cash and cash equivalents (570) (1,147)
Cash and cash equivalents at beginning of period 933 1,494
------------ -----------
Cash and cash equivalents at end of period $ 363 $ 347
============ ===========
Supplemental cash flow information:
Interest paid $ 294 $ 167
Income taxes paid, net of refunds 25 657
</TABLE>
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
5
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TRIDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. In the opinion of the Company, the accompanying unaudited consolidated
condensed financial statements contain all adjustments (consisting only
of normal recurring adjustments) necessary to present fairly its
financial position as of March 30, 1996, the results of its operations
for the quarters ended March 30, 1996 and April 1, 1995 and changes in
its cash flows for the quarters ended March 30, 1996 and April 1, 1995.
The December 31, 1995 consolidated condensed balance sheet has been
derived from the Company's audited financial statements at that date.
These interim financial statements should be read in conjunction with the
financial statements included in the Company's Transitional Report on
Form 10-K for the nine months ended December 31, 1995.
The financial position and results of operations of the Company's foreign
subsidiaries are measured using local currency as the functional
currency. Assets and liabilities of such subsidiaries have been
translated at current exchange rates, and related revenues and expenses
have been translated at weighted average exchange rates. The aggregate
effect of translation adjustments so calculated is included as a separate
component of shareholders' equity. Transaction gains and losses are
included in other income.
The results of operations for the quarters ended March 30, 1996 and April
1, 1995 are not necessarily indicative of the results to be expected for
the full year.
2. Primary earnings per common share is based on the weighted average number
of shares outstanding during the period after consideration of the
dilutive effect of stock options and warrants.
3. Inventories:
Components of inventory are:
<TABLE>
<CAPTION>
March 30, 1996 December 31, 1995
-------------- -----------------
(Dollars in Thousands)
<S> <C> <C>
Raw materials and $7,023 $6,704
component parts
Work-in-process 876 1,271
Finished goods 1,421 1,622
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$9,320 $9,597
====== ======
</TABLE>
4. Other income, net:
Other non-operating income for the current quarter consists of a $179,000
gain on the sale of marketable securities offset by transactional foreign
exchange losses and an additional provision for loss on disposal of real
estate held for sale of $30,000.
5. Commitments and contingencies:
The Company is involved in an environmental matter discussed in footnote
number 8 to the financial statements included in the Company's Transition
Report on Form 10-K for the nine months ended December 31, 1995. As
of March 30, 1996 and to the date of this report, there has been no
material development in the resolution of this matter.
6
<PAGE> 7
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
QUARTER ENDED MARCH 30, 1996 COMPARED TO QUARTER ENDED APRIL 1, 1995
CONSOLIDATED NET SALES for the quarter ended March 30, 1996 increased
$2,262,000 (15%) to $17,592,000 from $15,330,000 in the comparable quarter of
the prior year. The increase reflects greater volume of shipments of printers
into both the point-of-sale ("POS") and gaming and wagering markets. Shipments
of cash drawers from the Company's Cash Bases GB Ltd. subsidiary also improved,
reflecting improvement over the comparable quarter of the prior year and a
reversal of sales declines in the later part of the 1995. Shipment of POS
terminals and related products declined slightly from the prior year's quarter.
CONSOLIDATED GROSS PROFIT increased $818,000 (16%) to $5,900,000 from
$5,082,000 in the prior year's quarter, primarily as a result of the higher
volume of shipments of printers. Consolidated gross profit percentage
increased slightly to 33.5% of sales from 33.2% of sales in the prior year's
quarter.
CONSOLIDATED ENGINEERING, DESIGN AND PRODUCT DEVELOPMENT COSTS increased
$270,000 (40%) to $949,000 from $679,000 in the prior year's quarter. The
increase is primarily the result of the cost of developing new products,
principally for the POS market, and, to a lesser degree, enhancing existing
products.
CONSOLIDATED SELLING, ADMINISTRATIVE AND GENERAL EXPENSES increased $74,000
(2%) to $3,346,000 from $3,272,000 in the prior year's quarter. The increase
in selling expenses is primarily the result of a more intensive sales effort in
the cash drawer operation. Administrative and general expenses were
approximately at the same level as the prior year's quarter.
CONSOLIDATED OPERATING PROFIT for the current quarter increased $474,000 (42%)
to $1,605,000 from $1,131,000 in the prior year's quarter, primarily the result
of the contribution of increased volume of shipments of printers. Consolidated
operating profit as a percentage of revenue increased to 9% from 7% in the
prior year's quarter and is primarily the result of higher volume of shipments
at the printer operations.
NET INTEREST EXPENSE $3,000 (1%) to $311,000 from $308,000 in the
prior year's quarter. The increase in interest expense reflects the increase
in debt under the Term Loan Facility, which replaced a prior bank term loan,
offset by decreased utilization of the domestic line of credit.
OTHER NON-OPERATING INCOME, NET for the current quarter consists of $179,000
gain on the sale of marketable securities offset by transactional foreign
exchange losses and an additional provision of $30,000 for real estate held for
sale. Other non-operating expense in the first quarter of last year includes
provisions for loss on disposal of unused property of $50,000 and for estimated
clean-up costs associated with certain environmental matters of $60,000, offset
by transactional foreign exchange gains.
PROVISION FOR INCOME TAXES in the current quarter reflects an estimated
effective tax rate of 44%. A net tax benefit resulted in the prior year due to
the recording of a tax credit of $770,000. Such credit reflected an adjustment
to the Company's valuation allowance to recognize federal deferred tax benefits
available to be used by the Company.
NET INCOME for the current quarter was $796,000 (or $0.20 per share) as
compared to $1,211,000 (or $0.31 per share) in the prior year's quarter. The
average number of common and common equivalent shares outstanding increased to
3,937,876 shares from 3,890,988 shares in the prior year's quarter.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital at March 30, 1996 was $8,104,000 compared with
$7,474,000 at December 31, 1995. The current ratio was 1.6 at March 30, 1996
and at December 31, 1995. The increase in working capital reflects a
higher level of operating activity. The increase in net operating assets was
funded by borrowings under the Company's lines of credit.
The Company has a $3,000,000 Working Capital Facility with Fleet Bank, N.A.
("Fleet") which provides critical capital for the Company. If for any reason
this or comparable financing is not available to the Company, it would have an
adverse effect on the Company and its ability to conduct its operations as
presently conducted. The Company is required to comply
7
<PAGE> 8
with certain financial covenants, including a minimum tangible net worth, a
minimum current ratio, a maximum leverage ratio and a minimum debt service
coverage ratio, otherwise Fleet may withdraw its commitment. The Company
was in compliance with these covenants at March 30, 1996 and expects to be
in compliance with these covenants for the remainder of 1996.
On April 30, 1996, the Company announced that it has engaged an investment
banking firm to pursue an underwritten public offering of up to 20% of its
Printer Group, which consist of two Company subsidiaries, Magnetec Corporation
and Ithaca Peripherals Incorporated. The Company also announced its intent to
spin-off its remaining equity intrest in the Printer Group in a tax-free
distribution to the shareholders of the Company. If these transactions are
completed, the Company expects to reduce its overall level of indebtedness,
including bank loans, and to amend its agreements with Fleet.
During the first quarter of 1996, the Company's operating cash needs were
satisfied by borrowings under its lines of credit and by the proceeds from the
sale of marketable securities. At March 30, 1996, the Company had
approximately $600,000 in commitments for capital expenditures and had
availability of $2,200,000 under the Working Capital Facility. During the
remainder of 1996, the Company expects that funds generated from operations,
supplemented by borrowings under the Working Capital Facility, if necessary,
will be sufficient to satisfy its cash needs for working capital, scheduled
debt retirements and capital expenditures, primarily tooling for new products.
Over the long term, the Company believes that funds generated from operations
and borrowings under the Working Capital Facility, if necessary, will continue
to satisfy its working capital needs, support a certain level of growth and
meet scheduled debt retirements.
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
a. Exhibits
Exhibit 11. Computation of Per Share Earnings
Exhibit 27. Financial Data Schedule
b. Reports on Form 8-K
The Company did not file any reports on Form 8-K
during the quarter covered by this report.
8
<PAGE> 9
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.
TRIDEX CORPORATION
------------------
(Registrant)
May 10, 1996 /s/Seth M. Lukash
-----------------
Seth M. Lukash
Chairman of the Board, President, Chief Executive
Officer, and Chief Operating Officer
May 10, 1996 /s/Richard L. Cote
------------------
Richard L. Cote
Senior Vice President and
Chief Financial Officer
May 10, 1996 /s/George T. Crandall
-----------------------
George T. Crandall
Vice President and Treasurer
9
<PAGE> 10
EXHIBIT INDEX
-------------
Exhibit 11 Computation of Per Share Earnings
Exhibit 27 Financial Data Schedule
<PAGE> 1
TRIDEX CORPORATION AND SUBSIDIARIES
EXHIBIT 11 COMPUTATION OF PER SHARE EARNINGS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED
--------------------------------
MARCH 30, April 1,
1996 1995
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<S> <C> <C>
PRIMARY:
EARNINGS:
Net income $ 796 $ 1,211
============= ============
SHARES:
Average common shares outstanding 3,803,919 3,678,749
Dilutive effect of outstanding options and warrants
as determined by the treasury stock method 133,957 212,239
------------- ------------
3,937,876 3,890,988
============= ============
EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE: $ 0.20 $ 0.31
============= ============
</TABLE>
10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM TRIDEX
CORPORATION QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 30, 1996
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-30-1996
<CASH> 363
<SECURITIES> 0
<RECEIVABLES> 10097
<ALLOWANCES> 174
<INVENTORY> 9320
<CURRENT-ASSETS> 21054
<PP&E> 11893
<DEPRECIATION> 6800
<TOTAL-ASSETS> 37198
<CURRENT-LIABILITIES> 12950
<BONDS> 7899
0
0
<COMMON> 985
<OTHER-SE> 15364
<TOTAL-LIABILITY-AND-EQUITY> 37198
<SALES> 17592
<TOTAL-REVENUES> 17592
<CGS> 11692
<TOTAL-COSTS> 11692
<OTHER-EXPENSES> 4150
<LOSS-PROVISION> 17
<INTEREST-EXPENSE> 311
<INCOME-PRETAX> 1422
<INCOME-TAX> 626
<INCOME-CONTINUING> 796
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 796
<EPS-PRIMARY> .20
<EPS-DILUTED> .20
</TABLE>
