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<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1996
Commission File No. 0-4671
ISOMET CORPORATION
State of Incorporation - New Jersey
IRS Employer Identification No. 22-1591074
Address of Principal Executive Offices
5263 Port Royal Road
Springfield, Virginia 22151
Registrant's Telephone Number: (703) 321-8301
Common Shares Outstanding on March 31, 1996: 1,905,590
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 preceeding 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 ninety (90) days.
X Yes _____ No
-----
<PAGE>
ISOMET CORPORATION
Part 1: Financial Information
-----------------------------
Item 1: Financial Statements
----------------------------
A. Statement of Income (1) (2) (3) (000 omitted)
<TABLE>
<CAPTION>
Three Months Ended
March 31
1996 1995
----------------
<S> <C> <C>
1. Revenues
a. Sales $1,336 $1,203
b. Interest Income 1 1
c. Other Income - 2
------------------
$1,337 $1,206
------------------
2. Cost and Expenses
a. Cost of Sales $ 911 $ 783
b. Selling, General and Administrative 314 369
c. Research and Development 8 40
d. Interest Expense 41 51
------------------
Total Cost and Expenses $1,274 $1,243
------------------
3. Income (Loss) Before Taxes on Income $ 63 $ (37)
4. Provisions for Taxes on Income 1 1
------------------
5. Income (Loss) Before Extraordinary Items $ 62 $ (38)
6. Extraordinary Item - Gain on Disposal
of Subsidiary - -
------------------
7. Net Income (Loss) $ 62 $ (38)
------------------
8. Earnings (Loss) Per Share:
Income (Loss) Before Extraordinary Item $ 0.03 $(0.02)
Extraordinary Item - -
------------------
Net Income (Loss) Per Share $ 0.03 $(0.02)
------------------
9. Weighted Average Number of Shares Outstanding 1,905,590 1,905,590
10. Dividends Per Share - -
</TABLE>
(1) This Financial Statement is unaudited.
(2) The results for interim periods are not necessarily indicative of results
to be expected for the year due to:
a. Fluctuations in order receipt and customer delivery.
b. Fluctuations in yield in manufacturing processes may cause
fluctuations in operating results for interim periods.
(3) In the opinion of mangement, all adjustments have beeen made which are
necessary to reflect a fair statement of the results for the three month
periods ended March 31, 1996 and March 31, 1995.
All such adjustments are of a normal and recurring nature.
<PAGE>
ISOMET CORPORATION
Financial Statements
B. Balance Sheet (1) (000 omitted)
<TABLE>
<CAPTION>
March 31 December 31
Current Assets 1996 1995
-----------------------------
<S> <C> <C>
Cash and Equivalent $ 118 $ 86
Accounts Receivable, Net 847 832
Other Current Assets 439 392
Inventories (2) 3,212 3,249
-----------------------------
$4,616 $4,559
-----------------------------
Property and Equipment at Cost $2,497 $2,495
Less Accumulated Depreciation 2,138 2,121
-----------------------------
$ 359 $ 374
-----------------------------
Other Assets $ 52 $ 58
-----------------------------
$5,027 $4,991
-----------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Accounts Payable $ 307 $ 303
Accrued Liabilities 301 312
Notes Payable to Banks 343 326
Notes Payable to Others 39 23
-----------------------------
$ 990 $ 964
Long Term Liabilities $1,062 $1,122
-----------------------------
Minority Interest in Consolidated Subsidiary 4 4
-----------------------------
Stockholders' Equity (Deficit (3))
Common Stock Par Value $1 Per Share:
Authorized 2,500,000 Shares; Issued and
Outstanding: $1,906 $1,906
Capital Contributed in Excess of Par Value 4,221 4,221
Unamortized Deferred Compensation (92) (102)
Accumulated Deficit (3,121) (3,182)
Foreign Exchange Adjustment 57 58
-----------------------------
$2,971 $2,901
-----------------------------
$5,027 $4,991
-----------------------------
(1) Unaudited. Subject to Year-End Adjustments
(2) Inventory Breakdown
Parts and Raw Material $1,011 $1,110
Work in Process 1,560 1,599
Finished Goods 641 540
-----------------------------
$3,212 $3,249
-----------------------------
(3) The number of shares of common stock reserved
for issuance upon the exercise of options granted
or to be granted. 257,000 257,000
</TABLE>
<PAGE>
ISOMET CORPORATION
Financial Statements
--------------------
C. Statement of Cash Flows
Three Months Ended March 31
(000 omitted)
<TABLE>
<CAPTION>
1996 1995
------------
<S> <C> <C>
Cash Flow From Operating Activities
Net Income (Loss) $ 62 $(38)
Adjustment to Reconcile Net Income (Loss) to Net
Cash Provided by Operating Activities
Depreciation & Amortization $ 22 $ 23
Amortization of Deferred Compensation 9 8
Changes in Assets & Liabilities:
(Increase) Decrease in Accounts Receivable (15) 15
(Increase) Decrease in Other Current Assets (47) (17)
(Increase) Decrease in Inventories 37 (120)
Increase (Decrease) in Accounts Payable 4 18
Increase (Decrease) in Accrued Liabilities (11) 44
(Increase) Decrease in Other Assets 6 (18)
-------------
Total Adjustments: $ 5 $(47)
-------------
Net Cash Provided (Used) by Operating Activities $ 67 $(85)
-------------
Cash Flows from Investing Activities
Purchase of Property and Equipment $ - $ -
Proceeds from Sale of Property and Equipment - -
-------------
Net Cash (Used) by Investing Activities $ - $ -
-------------
Cash Flows from Financing Activities
Proceeds of Long-Term Debt and Notes Payable $ 48 $153
Principal Payments Under Long Term Debt and
Notes Payable (84) (107)
-------------
Net Cash Provided (Used) by Financing Activities: $(36) $ 46
-------------
Effect of Exchange Rate on Changes in Cash $ 1 $(35)
-------------
Net Increase (Decrease) in Cash $ 32 $(74)
-------------
Cash at Beginning of Year $ 86 $293
-------------
Cash at March 31 $118 $219
-------------
Supplemental Disclosures of Cash Flow Information
Cash Paid During the Period for:
Interest $ 41 $ 51
-------------
Income Taxes $ - $ -
-------------
</TABLE>
<PAGE>
ISOMET CORPORATION
------------------
Part II: Other Information
1. Legal Proceedings
None
2. Change in Securities
None
3. Defaults Upon Senior Securities
None
4. Submission of Matters to a Vote of Security Holders
None
5. Other Information
None
6. Exhibits and Reports on Form 8K
a. Exhibit 27 - Financial Data Schedule for quarter ended
March 31, 1996.
b. No reports on form 8K have been filed by the Registrant
during the quarter ended March 31, 1996.
<PAGE>
ISOMET CORPORATION
------------------
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Quarterly report to be signed on its behalf by
the undersigned thereunto duly authorized.
ISOMET CORPORATION
________________________
Registrant
By:_____________________
Jerry W. Rayburn
Executive Vice President
Finance and Treasurer
Date:__________________
<PAGE>
ISOMET CORPORATION
------------------
Item 2: Management's Analysis of Quarterly Income Statements
Revenue for the first quarter of 1996 totaled $1,337,000, about 11% above
the 1995 level of $1,206,000. Increased shipments of laser component products
accounted primarily for the increase.
For the current quarter, the Company generated net income of $62,000 or
$.03 per share, compared to a net loss in the same period of 1995 of $(38,000)
or $(.02) per share. Lower period costs accounted for most of the earnings
improvement. G & A and sales expenses declined by approximately $54,000 and
interest expense, as a result of lower borrowing levels, decreased by
approximately $11,000. In addition, product development costs decreased by
approximately $32,000 due to a higher level of engineering costs being expended
against funded purchase orders.
New orders totaled $1,283,000 for the quarter, compared to $1,624,000 last
year. Unfilled orders on March 31, 1996 totaled $5,878,000, compared to
$1,456,000 on the same date last year and $5,861,000 on December 31, 1995.
Effective February 8, 1996, the Company's loan agreement with NationsBank
was renewed through April 1, 1997 with a fixed principal repayment schedule of
$20,000 per month. During the twelve month period from April 1, 1996 - March
31, 1997, the Company expects to generate sufficient cash flow from operations
to meet its liquidity needs and to renew its existing loan agreement in April
1997.
As of March 31, 1996 the Company has no material commitments for capital
expenditures and accordingly, no funds from sources other than internally
generated funds are considered necessary over the next twelve months.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 10-QSB
3/31/96 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-31-1996
<CASH> 118
<SECURITIES> 0
<RECEIVABLES> 847
<ALLOWANCES> 1
<INVENTORY> 3,212
<CURRENT-ASSETS> 4,616
<PP&E> 2,497
<DEPRECIATION> 2,138
<TOTAL-ASSETS> 5,027
<CURRENT-LIABILITIES> 990
<BONDS> 0
0
0
<COMMON> 1,906
<OTHER-SE> 1,065
<TOTAL-LIABILITY-AND-EQUITY> 5,027
<SALES> 1,336
<TOTAL-REVENUES> 1,337
<CGS> 911
<TOTAL-COSTS> 1,274
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1
<INTEREST-EXPENSE> 41
<INCOME-PRETAX> 63
<INCOME-TAX> 1
<INCOME-CONTINUING> 62
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 62
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
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