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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 Commission File No.
March 31, 1999 0-4671
ISOMET CORPORATION
State of Incorporation IRS Employer Identification No.
New Jersey 22-1591074
Address of Principal Executive Offices
5263 Port Royal Road
Springfield, VA 22151
Registrant's Telephone Number: (703) 321-8301
Common Shares Outstanding on March 31, 1999: 1,927,590
Indicate by check mark whether the registrant has (1) filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceeding twelve (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. Consolidated Statements of Income (1) (2) (3) (000 omitted)
<TABLE>
<CAPTION>
Three Months Ended
March 31
1999 1998
---------- ----------
<S> <C> <C>
1. Revenues
a. Sales $ 2,571 $ 2,306
b. Interest Income - 1
c. Other Income 18 17
---------- ----------
$ 2,589 $ 2,324
2. Cost and Expenses
a. Cost of Sales $ 1,790 $ 1,580
b. Selling, General & Admin 305 284
c. Research & Develoment - -
d. Interest Expense 16 25
---------- ----------
Total Costs and Expenses $ 2,111 $ 1,889
---------- ----------
3. Income Before Taxes on Income $ 478 $ 435
4. Provisions for Taxes on Income 177 161
---------- ----------
5. Net Income $ 301 $ 274
---------- ----------
Basic Net Income Per Share $ .16 $ .14
---------- ----------
Diluted Net Income Per Share $ .16 $ .14
---------- ----------
6. Weighted Average Number of
Shares Outstanding 1,927,590 1,909,090
Weighted Average Number of Shares and
Stock Equivalents Outstanding 1,937,621 1,993,368
7. 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 management, all adjustments have been made which are
necessary to reflect a fair statement of the results for the three months
periods ended March 31, 1999 and March 31, 1998. All such adjustments are
of a normal and recurring nature.
<PAGE>
ISOMET CORPORATION
Financial Statements
B. Consolidated Statements of Comprehensive Income (000 omitted)
<TABLE>
<CAPTION>
Three Months Ended
March 31
1999 1998
---- ----
<S> <C> <C>
Net Income $301 $274
---- ----
Other Comprehensive Income
- --------------------------
Foreign Currency Translation Adj. (4) 45
---- ----
Comprehensive Income $297 $319
---- ----
</TABLE>
<PAGE>
ISOMET CORPORATION
Financial Statements
C. Segment Information Three Months Ended March 31 (000 omitted)
<TABLE>
<CAPTION>
1999
Systems Components Total
------- ---------- ------
<S> <C> <C> <C>
Sales $ 1,828 $ 743 $2,571
Cost of Sales 1,381 409 1,790
------- ---------- ------
Gross Profit $ 447 $ 334 $ 781
------- ----------
General Corporate:
Interest Income and Other Revenue 18
Selling, General and Admin Expenses (305)
Product Development -
Interest Expense (16)
------
Net Income Before Income Taxes $ 478
------
<CAPTION>
1998
Systems Components Total
------- ---------- ------
Sales $ 873 $ 1,433 $2,306
Cost of Sales 724 856 1,580
------- ---------- ------
Gross Profit $ 149 $ 577 $ 726
------- ----------
General Corporate:
Interest Income and Other Revenue 18
Selling, General and Admin Expenses (284)
Product Development -
Interest Expense (25)
------
Net Income Before Income Taxes $ 435
------
</TABLE>
<PAGE>
ISOMET CORPORATION
Financial Statements
D. Balance Sheet (1) (000 omitted)
<TABLE>
<CAPTION>
March 31 December 31
1999 1998
---- ----
<S> <C> <C>
Current Assets
Cash and Equivalent $2,240 $1,427
Accounts Receivable Net 1,625 1,838
Other Current Assets 705 672
Inventories (2) 3,031 3,785
------ ------
$7,601 $7,722
------ ------
Property and Equipment at Cost $2,621 $2,626
Less Accumulated Depreciation 2,347 2,341
------ ------
$ 274 $ 285
------ ------
Other Assets $ 7 $ 7
------ ------
$7,882 $8,014
------ ------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Accounts Payable $ 296 $ 814
Accrued Liabilities and Other 429 261
Notes Payable to Banks 322 339
------ ------
$1,047 $1,414
Long Term Liabilities $ 326 $ 388
------ ------
Stockholders' Equity (3)
Common Stock Par Value $1 Per Share:
Authorized 2,500,000 Shares; Issued
And Outstanding: $1,928 $1,928
Capital Contributed in Excess of Par Value 4,232 4,232
Retained Earnings 330 29
Foreign Exchange Adjustment 19 23
------ ------
$6,509 $6,212
------ ------
$7,882 $8,014
------ ------
(1) Unaudited. Subject to Year-End Adjustments
(2) Inventory Breakdown
Parts and Raw Material $ 819 $1,030
Work in Process 1,672 2,262
Finished Goods 540 493
------ ------
$3,031 $3,785
------ ------
(3) The number of shares of common stock
reserved for issuance upon the exercise
of options granted or to be granted: 253,000 253,000
</TABLE>
<PAGE>
ISOMET CORPORATION
Financial Statements
E. Statement of Cash Flows Three Months Ended March 31 (000 omitted)
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Cash Flows from Operating Activities
Net Income $ 301 $ 274
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities
Depreciation and Amortization $ 6 $ 31
Amortization of Deferred Compensation - 9
Changes in Assets and Liabilities:
(Increase) Decrease in Accounts Receivable 213 (210)
(Increase) Decrease in Other Current Assets (33) (63)
(Increase) Decrease in Inventories 754 114
Increase (Decrease) in Accounts Payable (518) 269
Increase (Decrease) in Accrued Liabilities 168 (537)
(Increase) Decrease in Other Assets - -
------ ------
Total Adjustments $ 590 $ (387)
------ ------
Net Cash Provided (Used) by Operating Activities $ 891 $ (113)
------ ------
Cash Flows from Investing Activities
Purchase of Property and Equipment $ 5 $ (33)
Proceeds from Sale of Property and Equipment - -
------ ------
Net Cash (Used) by Investing Activities $ 5 $ (33)
------ ------
Cash Flows from Financing Activities
Proceeds of Long-Term Debt and Notes Payables $ (59) $ (13)
Principal Payments Under Long-Term Debt and
Notes Payable (20) (61)
------ ------
Net Cash Provided (Used) by Financing Activities $ (79) $ (74)
------ ------
Effect of Exchange Rate Changes on Cash $ (4) $ 45
------ ------
Net Increase (Decrease) in Cash $ 813 $ (175)
------ ------
Cash at Beginning of Year $1,427 $1,534
------ ------
Cash at March 31 $2,240 $1,359
------ ------
Supplemental Disclosures of Cash Flow Information
Cash Paid During the Year for:
Interest $ 16 $ 25
------ ------
Income Taxes $ 15 $ 689
------ ------
</TABLE>
<PAGE>
ISOMET CORPORATION
------------------
Item 2: Management's Analysis of Quarterly Income Statements
------------------------------------------------------------
Revenue for the first quarter of 1999 totaled $2,589,000, an increase of
$265,000 over $2,324,000 in 1998'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 $301,000 or $.16 per
share. This compares to net income of $274,000 or $.14 per share in the first
quarter of 1998. The increase in net income of $27,000 resulted from the
following factors:
1. Increase in Gross Profit $ 55,000
2. Increase in Selling, G and A (21,000)
3. Decrease in Interest Expense 9,000
4. Increase in Income Tax Charge (16,000)
--------
$ 27,000
New orders totaled $857,000 for the quarter, compared to $2,475,000 last
year. Unfilled orders on March 31, 1999 totaled $1,577,000 compared to
$3,608,000 on the same date last year and $3,327,000 on December 31, 1998.
As reported in March, 1999, the Company's contract with Polaroid for the
supply of laser plotters was essentially completed April 1, 1999. As a result,
we expect a significant decline in shipments and revenue for the near term. In
the interim, any material follow-on orders for this product will be announced to
shareholders when they occur.
As of March 31, 1999, 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. During
the period from April 1, 1999 - March 31, 2000, the Company expects to generate
sufficient cash flow from operations to meet its liquidity needs.
The Company is in the process of assessing the potential impact of the year
2000 on the ability of the Company's computerized information systems to
accurately process information that may be date-sensitive. The purpose of this
assessment is to determine whether any of the Company's programs that recognize
a date using "00" as the year 1900 rather than the year 2000 could result in
errors or system failures, since the Company utilizes a number of computer
programs in its operations. The Company has not completed its assessment, but
currently believes that costs of addressing this issue will not have a material
adverse impact on the Company's financial position. However, if third parties
upon which the Company relies are unable to address this issue in a timely
manner, it could result in a material financial risk to the Company.
<PAGE>
ISOMET CORPORATION
------------------
Part 11: 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. Exhibits 27 Financial Data Schedule for quarter ended March 31, 1999.
b. No reports on form 8K have been filed by the Registrant during the
quarter ended March 31, 1999.
<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 10, 1999
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM ISOMET CORPORATION
10-QSB, DATED 03/31/1999 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-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 2,240
<SECURITIES> 0
<RECEIVABLES> 1,625
<ALLOWANCES> 0
<INVENTORY> 3,031
<CURRENT-ASSETS> 7,601
<PP&E> 2,621
<DEPRECIATION> 2,347
<TOTAL-ASSETS> 7,882
<CURRENT-LIABILITIES> 1,047
<BONDS> 0
0
0
<COMMON> 1,928
<OTHER-SE> 4,581
<TOTAL-LIABILITY-AND-EQUITY> 7,882
<SALES> 2,571
<TOTAL-REVENUES> 2,589
<CGS> 1,790
<TOTAL-COSTS> 2,111
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16
<INCOME-PRETAX> 478
<INCOME-TAX> 177
<INCOME-CONTINUING> 301
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 301
<EPS-PRIMARY> .16
<EPS-DILUTED> .16
</TABLE>
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