SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
FORM 10-Q
________________
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 1995
[ ] 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 0-11069
INTERPOINT CORPORATION
Incorporated under the laws I.R.S. Identification
of the State of Washington No. 91-0850556
10301 Willows Road
P.O. Box 97005
Redmond, Washington 98073-9705
(206) 882-3100
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.
[X] Yes [ ] No
The total shares of common stock without par value outstanding at the end of
the quarter reported is 3,820,885.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial statements
<TABLE>
CONSOLIDATED BALANCE SHEETS
April 30, 1995 and October 31, 1994
<CAPTION>
April 30, 1995 October 31, 1994
(Unaudited)
-------------- ----------------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 16,909 $ 541,805
Trade accounts receivable, less
allowance for doubtful accounts
of $125,000 in 1995 and $108,000
in 1994 11,761,704 12,095,295
Inventories 16,378,257 14,453,920
Prepaid expenses and other 374,117 399,206
Deferred income taxes 464,950 467,830
----------- -----------
Total current assets 28,995,937 27,958,056
Property, plant and equipment, at cost:
Land 1,324,988 1,324,988
Buildings and improvements 4,919,210 4,890,474
Machinery and equipment 12,499,814 11,946,535
Office equipment 2,737,061 2,620,412
Leasehold improvements 481,784 405,929
----------- -----------
21,962,857 21,188,338
Less accumulated depreciation and
amortization 12,920,292 11,950,335
----------- -----------
Net property, plant and
equipment 9,042,565 9,238,003
Investment in common stock 1,371,534 1,331,669
Other assets 628,276 611,593
----------- -----------
$ 40,038,312 $ 39,139,321
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Loans payable $ 6,747,226 $ 6,253,840
Accounts payable 4,127,812 4,584,858
Income taxes payable 493,684 230,409
Accrued wages and commissions 2,360,351 2,484,036
Other current liabilities 593,286 564,131
Long-term debt, current portion 1,500,142 1,504,502
----------- -----------
Total current liabilities 15,822,501 15,621,776
Long-term debt 3,766,220 4,029,172
Accrued retirement benefits 569,884 518,451
Other liabilities 99,970 112,870
Deferred income taxes 828,075 834,387
Commitments:
Stockholders' equity:
Preferred stock, 500,000 shares
authorized, none issued -- --
Common stock, 10,000,000 shares
authorized, 3,820,885 shares
issued and outstanding,
(3,802,272 in 1994) 509,156
shares reserved 4,637,708 4,561,859
Retained earnings 13,852,113 13,125,229
Cumulative translation adjustments 461,841 335,577
----------- -----------
Total stockholders' equity 18,951,662 18,022,665
----------- -----------
$ 40,038,312 $ 39,139,321
=========== ===========
<FN>
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months and six months ended April 30, 1995 and 1994
(Unaudited)
<CAPTION>
Three months ended Six months ended
April 30, April 30,
------------------------- ------------------------
<S> <C> <C> <C> <C>
1995 1994 1995 1994
----------- ----------- ----------- -----------
Net sales $16,041,106 $11,359,330 $29,583,105 $23,786,399
Cost of sales 10,946,894 8,392,612 20,266,685 17,117,719
---------- ---------- ---------- ----------
Gross profit 5,094,212 2,966,718 9,316,420 6,668,680
Selling and
administrative 3,615,457 2,404,479 7,002,289 5,024,562
Research and
development 392,318 422,737 860,492 883,628
Acquisition expenses -- -- -- 728,743
---------- ---------- ---------- ----------
Operating profit 1,086,437 139,502 1,453,639 31,747
Other expenses (net) 216,101 173,494 462,463 357,808
Equity in net
income (loss)
of an affiliate (1,068) 35,072 39,865 39,041
---------- ---------- ---------- ----------
Income (loss) before
provision for
income taxes 869,268 1,080 1,031,041 (287,020)
Provision for income
taxes 251,528 -- 304,157 (35,000)
---------- ---------- ---------- ----------
Net income (loss) $ 617,740 $ 1,080 $ 726,884 $ (252,020)
========== ========== ========== ==========
Average number of
common and common
equivalent shares
outstanding 3,978,468 4,014,714 3,979,499 3,751,432
========== ========== ========== ==========
Net income (loss)
per share $ .16 $ -- $ .18 $ (.07)
========== ========== ========== ==========
<FN>
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended April 30, 1995 and 1994
(Unaudited)
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Operating activities:
Net income (loss) $ 726,884 $ (252,020)
Adjustments to reconcile net income(loss)
to net cash provided by (used in)
operating activities:
Depreciation and amortization 969,277 886,163
Deferred income tax -- (110,605)
Equity in net income of an affiliate (39,865) (39,041)
Net book value of assets retired 2,156 10,932
Foreign currency translation of
intercompany debt (34,928) --
Change in assets and liabilities:
Receivables 430,824 (174,650)
Inventories (1,866,722) (924,351)
Prepaid expenses and other 29,761 114,224
Other assets (47,911) (12,002)
Accounts payable (464,169) 1,262,822
Income taxes payable 264,682 (495,448)
Accrued liabilities (131,851) (110,040)
Accrued retirement benefits 37,558 35,616
Other liabilities (12,900) (7,674)
----------- -----------
Net cash provided by (used in)
operating activities (137,204) 183,926
Investing activities:
Purchases of property, plant and equipment (690,027) (446,721)
Financing activities:
Net proceeds from loans payable 493,386 405,184
Proceeds from long-term borrowings 312,045 154,807
Repayment of long-term debt (579,357) (1,538,426)
Proceeds from issuance of common stock
for stock options 75,848 63,299
----------- -----------
Net cash provided by (used in)
financing activities 301,922 (915,136)
Effect of exchange rate changes on cash 413 84
----------- -----------
Net decrease in cash (524,896) (1,177,847)
Cash at beginning of period 541,805 1,350,157
----------- -----------
Cash at end of period $ 16,909 $ 172,310
=========== ===========
<FN>
See accompanying notes.
</TABLE>
<PAGE>
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
April 30, 1995
(Unaudited)
Note 1. Basis of presentation - The accompanying condensed financial
statements are unaudited and should be read in conjunction with the
Interpoint financial statements included in the Company's fiscal 1994
Annual Report on Form 10-K. Operating results for the six-month period
ended April 30, 1995, are not necessarily indicative of the results that
may be expected for the full year. In the opinion of management, all
adjustments necessary for a fair presentation of interim operating results
are reflected herein.
Note 2. Per share calculations - Per-share calculations are determined on
the weighted average number of common and common equivalent shares
outstanding during each period. Due to the net loss incurred in the six
months ended April 30, 1994, and in accordance with Accounting Principles
Board Opinion No. 15 "Earnings Per Share," per share calculations for this
period do not include common equivalent shares outstanding.
Note 3. Merger agreement with Advanced Digital Information Corporation - On
February 11, 1994, Interpoint Corporation acquired Advanced Digital
Information Corporation (ADIC) pursuant to an Agreement and Plan of Merger
dated October 29, 1993, in which ADIC was merged into a wholly-owned
subsidiary of Interpoint. Pursuant to the terms of the merger agreement,
each outstanding share of Common Stock of ADIC was converted into .55 shares
of Interpoint Common Stock. A total of 1,340,255 shares of Common Stock of
Interpoint were issued to ADIC shareholders. The acquisition was accounted
for as a pooling-of-interests in accordance with Accounting Principles Board
Opinion No. 16 "Business Combinations."
All amounts are presented as if Interpoint and ADIC had been combined as of
the beginning of the period presented.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
RESULTS OF OPERATIONS
Net sales for the quarter ended April 30, 1995, increased 41 percent versus
the same quarter a year ago. The most significant factor in the growth is
the acquisition of ADIC Europe in June of last year which is contributing
strongly to ADIC's net sales number during 1995. ADIC's net sales for the
second quarter of 1994 were $3,338,000. Net sales for the same quarter of
1995 were $6,676,000, an increase of 100 percent. The Custom
Microelectronics and Power Products Divisions also showed increases in sales
of 25 and 13 percent, respectively, with the custom growth coming primarily
from medical applications. We expect that all three divisions will continue
to show growth in sales compared to prior year quarters throughout the
remainder of fiscal year 1995.
Quarterly gross profit improved from 26 percent in 1994 to 32 percent
in 1995. The increase results primarily from the Power Products Division.
The trend to produce more of these products at our Kaohsiung, Taiwan
facility has helped to reduce costs and improve margins. Also, the gross
profit percentage in the Custom Microelectronics Division has increased as
lower margin programs have been completed and replaced with more profitable
business. ADIC has comparable margins to last year, the net result of
greater Library product shipments from its Redmond facility which improve
margins and greater non-Library, lower margin products from its Europe
facility.
Sales and administrative costs have increased significantly over 1994,
largely as a result of the acquisition of ADIC Europe which serves as a
sales, marketing and distribution organization for ADIC Library products
and other tape storage products. Other marketing related increases were
seen in the domestic businesses as well. As a whole, however, sales and
administrative costs for the second quarter of 1995 are comparable as a
percentage of sales with the second quarter of 1994.
Other expenses consists primarily of interest expense which has increased
as a result of both greater short-term borrowings and higher interest rates.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal sources of liquidity are cash provided by operations
and bank lines of credit. The domestic line of $8.5 million bears interest
at the bank's prime rate or adjusted LIBOR rate. This line is subject to
certain restrictive covenants on working capital, etc. The Company is well
within acceptable limits with regard to these covenants. Interpoint has no
material commitments for capital expenditures. In addition to the working
lines of credit, the Company has credit facilities in place to finance
capital equipment.
Inventories have grown between fiscal year-end and April 30, 1995. The
largest change results from ADIC, which has increased both raw material and
finished good inventories in order to respond to higher sales forecasts.
The Custom Microelectronics and Power Product Divisions have both also grown
inventories to support higher shipping volumes. Interpoint expects to see a
decrease in these inventory levels throughout the remainder of the year. A
decrease in these levels coupled with greater sales volumes should allow the
Company to generate significant cash in fiscal year 1995.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other information.
None.
Item 6. Exhibits and Reports on Form 8-K.
None.
<PAGE>
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.
INTERPOINT CORPORATION
June 13, 1995 /s/Peter H. van Oppen
Peter H. van Oppen
Chairman
Chief Executive Officer
June 13, 1995 /s/Leslie S. Rock
Leslie S. Rock
Vice President, Treasurer
Chief Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the second
quarter 10-Q and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> APR-30-1995
<CASH> 17
<SECURITIES> 0
<RECEIVABLES> 11,762
<ALLOWANCES> 125
<INVENTORY> 16,378
<CURRENT-ASSETS> 28,996
<PP&E> 21,963
<DEPRECIATION> 12,920
<TOTAL-ASSETS> 40,038
<CURRENT-LIABILITIES> 15,823
<BONDS> 3,766
<COMMON> 4,638
0
0
<OTHER-SE> 13,852
<TOTAL-LIABILITY-AND-EQUITY> 40,038
<SALES> 29,583
<TOTAL-REVENUES> 29,583
<CGS> 20,267
<TOTAL-COSTS> 20,267
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 462
<INCOME-PRETAX> 1,031
<INCOME-TAX> 304
<INCOME-CONTINUING> 727
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 727
<EPS-PRIMARY> .18
<EPS-DILUTED> .18
</TABLE>
