<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-KSB/A
Amendment Number 1 to Form 10-KSB
Annual Report Pursuant to Section 13 or 15 (d) of
The Securities Exchange Act of 1934
For Fiscal Year Ended Commission File Number
December 31, 1995 0-4671
ISOMET CORPORATION
State of Incorporation IRS Employer Identification
New Jersey No. 22-1591074
Address of Principal Executive Offices
5263 Port Royal Road
Springfield, Virginia 22151
Company's Telephone Number: (703) 321-8301
Securities Registered Pursuant to Section 12(b) of the Act:
None
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock Par Value $1.00
1,905,590 Shares Were Outstanding on January 31, 1996
Indicate by check mark whether the Company (1) has filed all reports required to
be filed by Section 13 or 15(d) of The Securities Exchange Act of 1934 during
the preceeding 12 months (or for such shorter period the Company was required to
file such report(s)), and (2) has been subject to such filing requirements for
the past ninety (90) days. Yes X No
___ ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of regulation SB is not contained herein and will not be contained, to the best
of registrant knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. (X)
On January 31, 1996 the approximate aggregate market value of the voting stock
held by non-affiliates of the Company was $3,422,590.
-1-
<PAGE>
SIGNATURES
Pursuant to the requirement of The Securities and Exchange Act of 1934, the
Registrant has duly caused this Amendment Number 1 to form 10-KSB for the fiscal
year ended December 31, 1995 to be signed on it's behalf by the undersigned
thereunto duly authorized.
_________________________
ISOMET CORPORATION
(Registrant)
Date: April , 1996 By:______________________
---------------- Jerry W. Rayburn
Executive Vice President, Finance
and Treasurer and Director
<PAGE>
INDEX TO EXHIBITS
*3.1 Certificate of Incorporation of Registrant filed May 9, 1956.
*3.2 Certificate of Amendment of Certificate of Incorporation of Registrant
filed April 8, 1959.
*3.3 Certificate of Amendment of Certificate of Incorporation of Registrant
filed February 8, 1961.
*3.4 Certificate of Amendment of Certificate of Incorporation of Registrant
filed June 15, 1966.
*3.5 Certificate of Amendment of Certificate of Incorporation of Registrant
filed December 28, 1967.
*3.6 Certificate of Amendment of Certificate of Incorporation of Registrant
filed April 7, 1969.
*3.7 Certificate of Incorporation of Registrant (Restated) filed April 7,
1969.
**3.8 Certificate of Amendment to the Certificate of Incorporation of
Registrant (Restated) filed June 22, 1988.
*3.9 By-laws of Registrant.
***3.10 Subsidiaries of the Company.
27 Financial Data Schedule.
13 Annual Report to Shareholders
- -------------
*Incorporated by reference to Exhibits to the Registrant Report on Form 10-K
for the year ended December 31, 1987.
**Incorporated by reference to Exhibits to the Registrant Report on Form 10-K
for the year ended December 31, 1988.
***Incorporated by reference to Exhibits to the Registrant Report on Form 10-K
for the year ended December 31, 1990.
E-1
<PAGE>
Isomet, founded in 1956, is headquartered in Springfield, Virginia with an
operating subsidiary in the United Kingdom. The Company designs and
manufactures acousto-optic laser control components and electronics for
information handling and other applications. It also produces high resolution
digital color scanners, film recorders and related equipment for color image
reproduction markets.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Revenue $4,800,000 $5,746,000
Net Income (Loss) $ (44,000) $ 23,000
Weighted Average Number of
Shares Outstanding 1,906,000 1,906,000
Net Income (Loss) Per Share $ (.02) $ .01
Inventory at 12/31 $3,249,000 $3,129,000
Working Capital $3,595,000 $3,824,000
Current Ratio 4.7:1 4.9:1
Number of Employees 51 49
Revenue Per Employee $ 94,100 $ 117,300
New Orders $9,787,000 $5,511,000
Unfilled Orders at 12/31 $5,861,000 $ 943,000
</TABLE>
<PAGE>
To Shareholders and Employees
For fiscal year 1995 consolidated net revenue was $4.8 million, a 16%
decrease from $5.7 million in 1994. On this lower revenue level we incurred a
consolidated net loss of $(44,100) or $(.02) per share, compared to consolidated
net income of $23,000 or $.01 per share in 1994. The 1994 results included a
non-recurring charge of $232,000 related to the disposal of our subsidiary in
Japan.
The decline in revenue in 1995 is primarily due to a decrease in sales of
color scanner equipment in the United States and in Japan. Increased price
pressure and technological competition has had a material, negative impact on
the number of units sold of this product.
New orders received in 1995 totaled $9.8 million compared to $5.5 million
the previous year. As previously announced, 1995 new orders include the receipt
of a $4.5 million contract from Polaroid Corporation in the fourth quarter for
the manufacture of a significant quantity of laser plotters. At year-end 1995
unfilled orders totaled $5.9 million, compared to $943,000 the previous year.
As scheduled, in 1995 we reduced our bank debt to NationsBank by $240,000,
from $1,585,000 at the start of the year to $1,345,000 at year-end. Also, due
to our financial progress, our loan account was transferred from NationsBank's
special assets group to a regular branch office arrangement. Through this
office, we have renewed the loan agreements until April 1, 1997, with monthly
principal payments continuing at $20,000.
Our components product line continues at a very active rate, although
shipments were down by about $150,000 in 1995 due to a lower level of orders in
Europe. Prospects for 1996 are positive for this product line as the result of
a production quantity order received in late 1995 for multi-channel modulators
from a foreign customer. This application results from new product efforts in
the multi-channel area. Also, since year-end 1995, follow-on orders have been
received from this new customer. Over-all, we see a further broadening of
applications for our components and related technology.
As noted above, in the fourth quarter of 1995 we announced the receipt of a
$4.5 million contract from Polaroid Corporation for laser plotters. This new
plotter incorporates our acousto-optic modulator products and experience, as
well as our scanning and image recording technology. We are currently in the
process of standardizing this product, which will be followed by a build-up of
production to meet expected market demand.
<PAGE>
We expect the substantial new product efforts underway to result in increased
volume in the last half of 1996 and continuing into 1997. With costs under
excellent control, the expected volume should produce a rewarding level of
profitability.
Henry Zenzie
President
<PAGE>
Management's Discussion and Analysis
------------------------------------
Revenue
Consolidated net revenue in 1995 totaled $4,800,000, a decrease of $946,000
from $5,746,000 in 1994. The following table reflects the sales and total
revenue comparisons for both years by product line and operating entity:
<TABLE>
<CAPTION>
1995
Components 1995 1994 Increase/(Decrease)
- ---------- ---- ---- -------------------
<S> <C> <C> <C>
Isomet U.S. (1) $2,345,000 $2,018,000 $ 327,000
Isomet U.K. 1,253,000 1,728,000 (475,000)
---------- ---------- ---------
Total: $3,598,000 $3,746,000 $(148,000)
Systems
Isomet U.S. (1) $ 975,000 $1,722,000 $(747,000)
Isomet U.K. 216,000 254,000 (38,000)
---------- ---------- ---------
Total: $1,191,000 $1,976,000 $(785,000)
---------- ---------- ---------
Total Sales $4,789,000 $5,722,000 $(933,000)
Other Income 11,000 24,000 (13,000)
---------- ---------- ---------
Total Revenue: $4,800,000 $5,746,000 $(946,000)
</TABLE>
(1) - Includes sales to foreign countries other than Europe.
The sales decline in 1995 is mainly attributable to lower unit sales of
color scanner and related products, as well as lower average per unit prices due
to competitive pressure and a general over-all maturing of digital scanner
technology.
Costs and Expenses
The Company incurred a consolidated net loss in 1995 of $(44,000) or $(.02)
per share, compared to consolidated net income in 1994 of $23,000 or $.01 per
share. The 1994 results included non-recurring charges of $248,000, primarily
related to the sale of the Company's Japanese subsidiary.
1. In 1995 the over-all cost of sales percentage increased to 68% from 65%
in 1994. The effect on gross profit of $143,000 reflects engineering charges to
cost of sales for laser plotter and related prototypes for funded purchase
orders. Cost of sales levels for color scanners and acousto-optic component
products were consistent with those incurred in 1994.
<PAGE>
2. Selling and G & A expenses in 1995 increased by $103,000 from 1994.
Higher selling expenses for trade shows, commissions and promotional activities
accounted for $52,000 of the 1995 increase. In addition, legal fees for bank
loan agreement restructuring contributed $48,000 to the 1995 accounts.
3. Interest expense declined modestly in 1995 to $198,000 from $202,000 in
1994, as the Company continued to reduce its bank debt level.
4. Product development and improvement costs were lower by $211,000 in
1995 as compared to 1994, due primarily to increased engineering effort on
systems contracts. These costs, totaling approximately $143,000, are reflected
in cost of sales.
5. For the two years ended December 31, 1995, the Company's revenue and
cost of sales were not significantly impacted by the effects of inflation. In
addition, the Company's sales and costs have not been materially affected by
changing prices due to inflation. Lower unit sales prices, however, have been
experienced in the color scanner product line due to competitive pressures.
Foreign Exchange Risks
In 1995, $2,536,000 of the $4,789,000 Company total sales were to customers
in foreign countries, primarily Japan and in Europe. From the United States, all
sales to foreign customers are invoiced in U.S. dollars. The Company's
operating subsidiary in the United Kingdom imports products from the Parent
Company and re-sells to customers in various European countries; the majority of
these sales are in U.S. dollars. As a result, the Company's foreign currency
risks are limited to the pound sterling-U.S. dollar relationship, which has been
essentially stable. Consequently, the Company has not had and does not expect to
have a material exposure to foreign exchange risks.
<PAGE>
Liquidity and Capital Resources
Unrestricted cash balances on December 31, 1995 of $86,000 is a $207,000
decrease from the previous year. The major elements constituting this decline
are as follows:
<TABLE>
<CAPTION>
<S> <C>
1. Operating Activities
----------------------------------
Increase in Inventories $(120,000)
Net Loss Plus Depreciation and
Amortization 52,000
Decrease in Accounts and
Other Receivables 126,000
Other 70,000
2. Investing Activities
--------------------
Purchase of Property and Equipment (60,000)
Reduction in Notes Receivable 25,000
3. Financing Activities
--------------------
Repayment of Debts (304,000)
4. Exchange Rate Effect 4,000
-------------------- ---------
Total: $(207,000)
</TABLE>
The Company has no material commitment for capital expenditures as of
December 31, 1995 and accordingly, no funds from sources other than internally
generated funds are considered necessary.
<PAGE>
A summary of working capital and backlog over the Company's 1995 fiscal
year by quarterly period is as follows:
<TABLE>
<CAPTION>
3/31/95 6/30/95 9/30/95 12/31/95
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Current Assets $4,844,000 $4,783,000 $4,679,000 $4,559,000
Current Liabilities 2,395,000 2,268,000 2,143,000 964,000
---------- ---------- ---------- ----------
Working Capital $2,449,000 $2,515,000 $2,536,000 $3,595,000
Backlog $1,456,000 $1,138,000 $ 771,000 $5,861,000
----------------------------------------------
</TABLE>
Working capital levels were consistent over the first three quarters of
1995, but increased at year-end by $1,100,000 as the result of the
reclassification of bank debt to long-term debt. This reclassification was the
result of a loan extension agreement, effective February 8, 1996, entered into
with NationsBank. This agreement is effective until April 1, 1997.
The significant increase in backlog in the fourth quarter of 1995 results
from the receipt of a $4,500,000 contract for laser plotters. The production
quantities to be manufactured under this contract are scheduled to be delivered
over fiscal years 1996 and 1997. Terms of the contract provide for periodic
cash advances from the customer, which are structured to meet the Company's
working capital requirements pursuant to the contract.
Bank Arrangements
Pursuant to the loan agreement extension of January 8, 1995, the Company
paid $240,000 of principal in 1995. In addition, the Company was in compliance
with all other terms, conditions and operating ratios called for under the
agreement. Effective February 8, 1996, the loan agreement was renewed through
April 1, 1997 with essentially the same terms and conditions and with a fixed
principal repayment of $20,000 per month over the term of the renewal.
Working Capital
In 1996, additional working capital, if required, is expected to be
generated from operations.
<PAGE>
Revenue
Total Revenue for 1995 and 1994 was distributed as follows:
<TABLE>
<CAPTION>
1995 % 1994 %
---------------------------------
<S> <C> <C> <C> <C>
Commercial Sales
Foreign $2,536,000 52.8 $3,112,000 54.2
Domestic 2,189,000 45.6 2,602,000 45.3
Government Sales Direct 64,000 1.3 8,000 .1
Interest and Other Income 11,000 .3 24,000 .4
-------------------------------------
Total Revenue: $4,800,000 100.0 $5,746,000 100.0
</TABLE>
Cost and Expenses
An analysis of costs and expenses as a percentage of revenue is shown
below:
<TABLE>
<CAPTION>
1995 1994
--------------
<S> <C> <C>
Revenue 100.0% 100.0%
Cost and Expenses
Cost of Sales 67.9 64.8
Selling, General and Admin 28.6 22.1
Research and Development 1.3 4.7
Interest 4.1 3.5
Non-Recurring Charges .1 4.3
-------------
Total Cost and Expenses: 102.0 99.4
Income (Loss) Before Tax, Minority
Interest and Other (2.0) .6
Income Tax, Minority Interest and Other (1.1) .2
-------------
Net Income (Loss) (.9)% .4%
</TABLE>
Selected Financial Data
For the Years Ended December 31,
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
----------- ---------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C>
Revenue $4,800,000 $5,746,000 $ 5,801,000 $7,944,000 $8,417,000
Net Income (Loss) $ (44,000) $ 23,000 $(1,645,000) $ 11,000 $ (110,000)
Weighted Avg #
Shares Outstanding 1,906,000 1,906,000 1,906,000 1,906,000 1,903,000
Income (Loss) Per
Share $ (.02) $ .01 $ (.86) $ .01 $ (.06)
Working Capital $3,595,000 $3,824,000 $ 3,953,000 $3,768,000 $3,628,000
Total Assets $4,991,000 $5,289,000 $ 6,576,000 $8,739,000 $9,587,000
Long Term
Liabilities $1,122,000 $1,405,000 $ 1,659,000 $ 120,000 $ 160,000
Stockholders'
Equity $2,901,000 $2,905,000 $ 2,863,000 $4,370,000 $4,301,000
</TABLE>
<PAGE>
CORPORATE INFORMATION
Corporate Headquarters: 5263 Port Royal Road, Springfield, VA 22151
Tel: (703) 321-8301
Fax: (703) 321-8546
Officers: Henry Zenzie, President
Leon Bademian, Executive Vice President, Operations
Robert G. Bonner, Vice President, Components Mfg
Frank V. Hamby, Vice President, Systems Mfg
Lee R. Marks, Secretary
Delmar R. Rader, Vice President, Product Engineering
Jerry W. Rayburn, Executive Vice President, Finance
Transfer Agent: Chemical Mellon Shareholder Services
Four Station Square, Pittsburgh, PA 15219-1173
General Counsel: Ginsburg, Feldman and Bress, Chartered
1250 Connecticut Avenue NW, Suite 800
Washington, DC 20036
Directors: Leon Bademian, Exec Vice President, Operations, Isomet
Lee R. Marks, Member, Ginsburg, Feldman and Bress,
Chartered, Washington, DC
Thomas P. Meloy, Benedum Professor, West VA University
Jerry W. Rayburn, Exec Vice President, Finance, Isomet
Henry Zenzie, President, Isomet, Private Investor,
Henry Zenzie and Co., Princeton, NJ
Auditors: Pannell Kerr Forster PC, Alexandria, VA 22314
Market Information: The Company's common stock trades on the Nasdaq
Smallcap Market (SM) tier of the Nasdaq Stock Market
(SM) under the symbol IOMT.
<TABLE>
<CAPTION>
Price Range High Low
--------------------
<S> <C> <C>
1993 2 1/2
1994 1 3/8 3/8
1995 3 1/4 7/8
</TABLE>
<PAGE>
10K Report: A copy of Isomet's annual report on Form 10-KSB for the
fiscal year ended December 31, 1995, including financial
statements and schedules, as filed with the Securities
Exchange Commission, will be provided without charge to
those stockholders who request one.
Write: Executive Vice President, Finance
Isomet Corporation, 5263 Port Royal Road
Springfield, VA 22151
Operating Subsidiary: Isomet UK, Ltd., 18 John Baker Close, Llantarnam Ind
Park, Cwmbran Gwent NP44 3AX, United Kingdom
Tel: (44) 16338-72721
Fax: (44) 16338-74678
Representatives and Distributors
Components: Isramex, 16 Hazaz Street, Ramat HaHayal,
Tel-Aviv Israel
Tel: (972) 3-6474440 Fax: (972) 3-6473773
Indeco, Inc., 11-14 Kasuga, 1-Chome Bunkyo-Ku,
Tokyo 112 Japan
Tel: (03) 3818-4011 Fax: (03) 3818-4015
Optilas B.V., P.O. Box 222, 24000 AE Alphen A/D,
Rijn Huygensweg Holland
Tel: (31) 1-720-31234 Fax: (31) 1-720-43414
Optilas GmbH, Boschstrasse 12, D8039 Pucheim BHF,
Germany
Tel: (49) 898-801-085 Fax: (49) 898-800-2561
Optilas Iberica S.A., C/Maria Tubau, 5 28050 Madrid Spain
Tel: 11-629-68 Fax: 15-191-326
Optilas, Ltd., Mill Square, Featherstone Road,
Wolverton Mill South, Milton Keynes MK12 5ZY
Buckinghamshire, England
Tel: (44) 1908-326326 Fax: (44) 1908-221110
Optilas S.A., CE 1422-91019, ZI LaPetite Montagne,
Sud 91019 Evry France
Tel: (33) 16-077-4063 Fax: (33) 16-4971736
Opitlas, Chaussee de Charleroi 95, B-6060
Charleroi Belgium
Tel: (32) 71-488448 Fax: (32) 71-488444
<PAGE>
Optilas, Dilledvej 2, DK-2100 Copenhagen Denmark
Tel: (45) 35-43-01-33 Fax: (45) 35-43-83-34
Crisel Instruments, Clivo di Cinna, 196-001 36 Roma Italy
Tel: (39) 6-35402933 Fax: (39) 6-35402879
Lastek Pty, Ltd., 51 Symonds Pl, Adelaide,
GPO Box 2212, Adelaide SA 5001 Australia
Tel: (61) 8-231-2155 Fax: (61) 8-231-2169
Systems: Graphic Arts Trading (GmbH), Uhlenhorst 81, 21435
Stelle, Germany
Tel: (49) 41-74-5041 Fax: (49) 41-74-4885
MIG, SRL, Via Toselli 25/B, 20091 Bresso Italy
Tel: 392-610-4809 Fax: 392-614-1015
Isomet Japan, 15-5 Botan, 1-Chome Kohto-Ku,
Tokyo 135 Japan
Tel: (81) 35245-1101 Fax: (81) 35245-1102
