<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, 1998
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, 1998: 1,909,090
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
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<PAGE>
ISOMET CORPORATION
Part I: Financial Information
-----------------------------
Item 1: Financial Statements
----------------------------
A. Statement of Income (1) (2) (3) (000 omitted)
Three Months Ended
March 31
1998 1997
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1. Revenues
a. Sales $2,306 $1,703
b. Interest Income 1 1
c. Other Income 17 -
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$2,324 $1,704
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2. Cost and Expenses
a. Cost of Sales $1,580 $1,084
b. Selling, General and Administrative 284 311
c. Research and Development - -
d. Interest Expense 25 32
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Total Cost and Expenses $1,889 $1,427
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3. Income (Loss) Before Taxes on Income $ 435 $ 277
4. Provisions for Taxes on Income 161 109
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5. Net Income (Loss) $ 274 $ 168
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Basic Net Income (Loss) Per Share $ 0.14 $ 0.09
------------------
Diluted Net Income (Loss) Per Share $ 0.14 $ 0.09
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6. Weighted Average Number of Shares Outstanding 1,909,090 1,905,590
Weighted Average Number of Shares and Stock
Equivalents Outstanding 1,993,368 1,919,988
7. Dividends Per Share - -
(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 management, all adjustments have been made which are
necessary to reflect a fair statement of the results for the three month
periods ended March 31, 1998 and March 31, 1997. 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
1998 1997
---------------------------
<S> <C> <C>
Current Assets
Cash and Equivalent $1,359 $1,534
Accounts Receivable, Net 1,698 1,488
Other Current Assets 519 456
Inventories (2) 3,267 3,381
---------------------------
$6,843 $6,859
---------------------------
Property and Equipment at Cost $2,574 $2,541
Less Accumulated Depreciation 2,295 2,264
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$ 279 $ 277
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Other Assets $ 52 $ 52
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$7,174 $7,188
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Accounts Payable $ 585 $ 316
Accrued Liabilities and Other 379 916
Notes Payable to Banks 351 364
---------------------------
$1,315 $1,596
Long Term Liabilities $ 576 $ 637
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Stockholders' Equity (Deficit (3))
Common Stock Par Value $1 Per Share:
Authorized 2,500,000 Shares; Issued and
Outstanding: $1,909 $1,909
Capital Contributed in Excess of Par Value 4,223 4,223
Unamortized Deferred Compensation (24) (33)
Accumulated Deficit (896) (1,170)
Foreign Exchange Adjustment 71 26
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$5,283 $4,955
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$7,174 $7,188
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(1) Unaudited. Subject to Year-End Adjustments
(2) Inventory Breakdown
Parts and Raw Material $ 750 $ 684
Work in Process 1,965 2,226
Finished Goods 552 471
---------------------------
$3,267 $3,381
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(3) The number of shares of common stock reserved
for issuance upon the exercise of options granted
or to be granted. 271,500 271,500
</TABLE>
<PAGE>
ISOMET CORPORATION
Financial Statements
--------------------
C. Statement of Cash Flows
Three Months Ended March 31
(000 omitted)
1998 1997
--------------
Cash Flow From Operating Activities
Net Income (Loss) $ 274 $ 168
Adjustment to Reconcile Net Income (Loss) to Net
Cash Provided by Operating Activities
Depreciation & Amortization $ 31 $ 22
Amortization of Deferred Compensation 9 9
Changes in Assets & Liabilities:
(Increase) Decrease in Accounts Receivable (210) 318
(Increase) Decrease in Other Current Assets (63) (83)
(Increase) Decrease in Inventories 114 (197)
Increase (Decrease) in Accounts Payable 269 (123)
Increase (Decrease) in Accrued Liabilities (537) (151)
(Increase) Decrease in Other Assets - -
--------------
Total Adjustments: $ (387) $(205)
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Net Cash Provided (Used) by Operating Activities $ (113) $ (37)
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Cash Flows from Investing Activities
Purchase of Property and Equipment $ (33) $ -
Proceeds from Sale of Property and Equipment - -
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Net Cash (Used) by Investing Activities $ (33) $ -
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Cash Flows from Financing Activities
Proceeds of Long-Term Debt and Notes Payable $ (13) $ 31
Principal Payments Under Long Term Debt and
Notes Payable (61) (60)
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Net Cash Provided (Used) by Financing Activities: $ (74) $ (29)
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Effect of Exchange Rate on Changes in Cash $ 45 $ 72
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Net Increase (Decrease) in Cash $ (175) $ 6
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Cash at Beginning of Year $1,534 $ 201
--------------
Cash at March 31 $1,359 $ 207
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Supplemental Disclosures of Cash Flow Information
Cash Paid During the Period for:
Interest $ 25 $ 32
--------------
Income Taxes $ 689 $ -
--------------
<PAGE>
ISOMET CORPORATION
------------------
Item 2: Management's Analysis of Quarterly Income Statements
Revenue for the first quarter of 1998 totaled $2,324,000, an increase of
$620,000 over $1,704,000 in 1997's first quarter. This improvement was due
primarily to increased deliveries of laser plotters to Polaroid Corporation.
For the current quarter, the Company had net income of $274,000 or $.14 per
share. This compares to net income of $168,000 or $.09 per share in the first
quarter of 1997. The increase in net income of $106,000 is almost entirely due
to larger gross profit from higher revenue levels.
New orders totaled $2,475,000 for the quarter, compared to $1,562,000 last
year. Unfilled orders on March 31, 1998 totaled $3,608,000, compared to
$4,323,000 on the same date last year and $3,451,000 on December 31, 1997.
Effective April 1, 1998, the Company entered into a new loan agreement with
NationsBank. The two notes pursuant to this agreement totaling $804,000,
provide for principal repayments of $20,000 per month through May 1, 2000 and
$12,000 per month from June 1, 2000 - June 1, 2002. The interest rate over this
period will be the prime rate, plus 0.50%. The agreement also provides for a
new line of credit up to $750,000. To date, this line has not been used.
During the period from April 1, 1997 - March 31, 1998, the Company expects to
generate sufficient cash flow from operations to meet its liquidity needs.
As of March 31, 1998 the Company has no material committments for capital
expenditures and accordingly, no funds from sources other than internally
generated funds are considered necessary over the next twelve months.
<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, 1998.
b. No reports on form 8K have been filed by the Registrant
during the quarter ended March 31, 1998.
<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: /s/ Jerry W. Rayburn
----------------------
Jerry W. Rayburn
Executive Vice President
Finance and Treasurer
Date: May 13, 1998
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ISOMET
CORPORATION 10QSB DATED 3/31/98 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-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,359
<SECURITIES> 0
<RECEIVABLES> 1,698
<ALLOWANCES> 0
<INVENTORY> 3,267
<CURRENT-ASSETS> 6,843
<PP&E> 2,574
<DEPRECIATION> 2,295
<TOTAL-ASSETS> 7,174
<CURRENT-LIABILITIES> 1,315
<BONDS> 0
0
0
<COMMON> 1,909
<OTHER-SE> 3,374
<TOTAL-LIABILITY-AND-EQUITY> 7,174
<SALES> 2,306
<TOTAL-REVENUES> 2,324
<CGS> 1,580
<TOTAL-COSTS> 1,889
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25
<INCOME-PRETAX> 435
<INCOME-TAX> 161
<INCOME-CONTINUING> 274
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 274
<EPS-PRIMARY> .14
<EPS-DILUTED> .14
</TABLE>
