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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.
September 30, 2000 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 September 30, 2000: 1,935,090
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 Nine Months Ended
September 30 September 30
2000 1999 2000 1999
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Revenues
a. Sales $ 2,222 $ 1,057 $ 6,968 $ 4,662
b. Interest Income 33 - 91 -
c. Other Income 17 33 27 80
-----------------------------------------------------------------
$ 2,272 $ 1,090 $ 7,086 $ 4,742
2. Cost and Expenses
a. Cost of Sales $ 1,278 $ 585 $ 4,343 $ 3,016
b. Selling, General & Admin 261 293 1,051 940
c. Research & Development 80 48 100 137
d. Interest Expense 8 12 24 41
-----------------------------------------------------------------
Total Costs and Expenses $ 1,627 $ 938 $ 5,518 $ 4,134
-----------------------------------------------------------------
3. Income Before Taxes on Income $ 645 $ 152 $ 1,568 $ 608
4. Provisions for Taxes on Income 49 66 397 248
-----------------------------------------------------------------
5. Net Income $ 596 $ 86 $ 1,171 $ 360
-----------------------------------------------------------------
Basic Net Income Per Share $ .31 $ .05 $ .61 $ .19
Diluted Net Income Per Share $ .29 $ .04 $ .57 $ .18
-----------------------------------------------------------------
6. Weighted Average Number of Shares
Outstanding 1,930,000 1,927,600 1,928,400 1,927,600
7. Weighted Average Number of Shares
and Stock Equivalents Outstanding 2,076,200 1,946,200 2,060,300 1,962,700
8. 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 and nine
months ended September 30, 2000 and September 30, 1999. 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 Nine Months Ended
September 30 September 30
2000 1999 2000 1999
---------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Income $ 596 $ 86 $ 1,171 $ 360
---------------------------------------------------------------
Other Comprehensive Income
--------------------------
Foreign Currency Translation Adj. (21) 9 (57) (10)
---------------------------------------------------------------
Comprehensive Income $ 575 $ 95 $ 1,114 $ 350
---------------------------------------------------------------
</TABLE>
<PAGE>
ISOMET CORPORATION
Financial Statements
C. Segment Information Nine Months Ended September 30 (000 omitted)
<TABLE>
<CAPTION>
2000
Systems Components Total
--------------------------------------------------------
<S> <C> <C> <C>
Sales $ 2,688 $ 4,280 $ 6,968
Cost of Sales 2,253 2,090 4,343
------------ -------------------- -------------
Gross Profit $ 435 $ 2,190 $ 2,625
------------ -------------------- -------------
General Corporate:
Interest Income and Other Revenue 118
Selling, General and Admin Expenses (1,051)
Product Development (100)
Interest Expense (24)
-------------
Net Income Before Income Taxes $ 1,568
-------------
<CAPTION>
1999
Systems Components Total
--------------------------------------------------------
<S> <C> <C> <C>
Sales $ 2,453 $ 2,209 $ 4,662
Cost of Sales 1,772 1,245 3,017
------------ -------------------- -------------
Gross Profit $ 681 $ 964 $ 1,645
------------ -------------------- -------------
General Corporate:
Interest Income and Other Revenue 81
Selling, General and Admin Expenses (940)
Product Development (137)
Interest Expense (41)
-------------
Net Income Before Income Taxes $ 608
=============
</TABLE>
<PAGE>
ISOMET CORPORATION
Financial Statements
C. Segment Information Three Months Ended September 30 (000 omitted)
<TABLE>
<CAPTION>
1999
Systems Components Total
-----------------------------------------------
<S> <C> <C> <C>
Sales $ 757 $1,465 $2,222
Cost of Sales 532 746 1,278
--------- ------ ------
Gross Profit $ 225 $ 719 $ 944
--------- ------ ------
General Corporate:
Interest Income and Other Revenue 50
Selling, General and Admin Expenses (261)
Product Development (80)
Interest Expense (8)
------
Net Income Before Income Taxes $ 645
------
<CAPTION>
1999
Systems Components Total
-----------------------------------------------
<S> <C> <C> <C>
Sales $ 173 $ 884 $1,057
Cost of Sales 102 483 585
--------- ------ ------
Gross Profit $ 71 $ 401 $ 472
--------- ------ ------
General Corporate:
Interest Income and Other Revenue 33
Selling, General and Admin Expenses (293)
Product Development (48)
Interest Expense (12)
------
Net Income Before Income Taxes $ 152
------
</TABLE>
<PAGE>
ISOMET CORPORATION
Financial Statements
D. Consolidated Balance Sheet (1) (000 omitted)
<TABLE>
<CAPTION>
September 30 December 31
2000 1999
-----------------------------------------
<S> <C> <C>
Current Assets
Cash and Investments $ 2,663 $ 2,189
Accounts Receivable Net 1,226 1,564
Other Current Assets 957 395
Inventories (2) 4,461 4,261
-----------------------------------------
$ 9,307 $ 8,409
-----------------------------------------
Property and Equipment at Cost $ 2,645 $ 2,423
Less Accumulated Depreciation (2,108) (2,087)
-----------------------------------------
$ 537 $ 336
-----------------------------------------
Other Assets $ 7 $ 7
-----------------------------------------
Total Assets $ 9,851 $ 8,752
-----------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 540 $ 656
Accrued Liabilities 653 422
Notes Payable to Banks 144 178
-----------------------------------------
$ 1,337 $ 1,256
-----------------------------------------
Long Term Liabilities $ 99 $ 209
-----------------------------------------
Total Liabilities $ 1,436 $ 1,465
-----------------------------------------
Stockholders' Equity (3)
Common Stock Par Value $1 Per Share:
Authorized 2,500,000 Shares; Issued
And Outstanding: $ 1,935 $ 1,928
Capital Contributed in Excess of Par Value 4,240 4,232
Retained Earnings 2,267 1,096
Foreign Exchange Adjustment (27) 31
-----------------------------------------
Total Stockholders' Equity $ 8,415 $ 7,287
-----------------------------------------
$ 9,851 $ 8,752
-----------------------------------------
(1) Unaudited. Subject to Year-End Adjustments
(2) Inventory Breakdown
Parts and Raw Material $ 1,184 $ 563
Work in Process 2,243 3,170
Finished Goods 1,034 528
-----------------------------------------
$ 4,461 $ 4,261
-----------------------------------------
(3) The number of shares of common stock
reserved for issuance upon the exercise
of options granted or to be granted: 246,000 253,000
</TABLE>
<PAGE>
ISOMET CORPORATION
Financial Statements
E. Consolidated Statement of Cash Flows
Nine Months Ended September 30 (000 omitted)
<TABLE>
<CAPTION>
2000 1999
---------------------------------------
<S> <C> <C>
Cash Flows from Operating Activities
Net Income $ 1,171 $ 360
---------------------------------------
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities
Depreciation and Amortization $ 21 $ 45
Changes in Assets and Liabilities
(Increase) Decrease in Accounts Receivable 338 1,155
(Increase) Decrease in Other Current Assets (562) 5
(Increase) Decrease in Inventories (200) 40
Increase (Decrease) in Accounts Payable (116) (301)
Increase (Decrease) in Accrued Liabilities 231 213
---------------------------------------
Total Adjustments $ (288) $ 1,157
---------------------------------------
Net Cash Provided (Used) by Operating Activities $ 883 $ 1,517
---------------------------------------
Cash Flows from Investing Activities
Purchase of Property and Equipment $ (222) $ (29)
---------------------------------------
Cash Flows from Financing Activities
Proceeds from Exercise of Incentive Stock Options $ 15 $ -
Principal Payments Under Long-Term Debt and
Notes Payable (144) (194)
---------------------------------------
Net Cash Provided (Used) by Financing Activities $ (129) $ (194)
---------------------------------------
Effect of Exchange Rate Changes on Cash $ (58) $ (10)
---------------------------------------
Net Increase in Cash and Investments $ 474 $ 1,284
---------------------------------------
Cash and Investments at Beginning of Year $ 2,189 $ 1,427
---------------------------------------
Cash and Investments at September 30 $ 2,663 $ 2,711
---------------------------------------
Supplemental Disclosures of Cash Flow Information
Cash Paid During the Year for:
Interest $ 24 $ 41
---------------------------------------
Income Taxes $ 678 $ 165
---------------------------------------
</TABLE>
<PAGE>
ISOMET CORPORATION
------------------
Notes to Condensed Financial Statements
September 30, 2000
1. Interim Financial Statements
This document includes unaudited interim financial statements that should
be read in conjunction with the Company's latest audited annual financial
statements. However, in the opinion of management, these financial
statements contain all adjustments consisting only of normal recurring
items necessary for a fair presentation of the Company's financial position
as of September 30, 2000 and December 31, 1999, as well as the results of
its operations and its cash flows for the three and nine months ended
September 30, 2000 and 1999.
<PAGE>
ISOMET CORPORATION
------------------
Item 2: Management's Analysis of Quarterly Income Statements
------------------------------------------------------------
Revenue for the third quarter of 2000 increased to $2,272,000 from
$1,090,000 in the same quarter of 1999. This increase of $1,182,000 reflects,
primarily, higher revenue in both product lines; increases of $581,000 in
components and $584,000 in systems. For the nine months ended September 30, 2000
revenue increased to $7,086,000 from $4,742,000 the previous year. Components
shipments were higher by $2,071,000 and systems deliveries increased by
$235,000. In addition, interest and other income rose by $38,000.
The higher revenue level resulted in net earnings for the quarter of
$596,000 or $.29 per share (diluted) vs. $86,000 or $.04 per share (diluted)
last year. For the current nine month period net income was $1,171,000 or $.57
per share (diluted) compared to $360,000 or $.18 per share (diluted) in 1999.
The net income increase of $811,000 resulted from the following factors:
1. Increase in Gross Profit $ 979,000
2. Increase in Interest and Other Income 38,000
3. Increase in Selling, G & A Costs (111,000)
4. Decrease in Product Development Cost 37,000
5. Decrease in Interest Expense 17,000
6. Increase in Income Tax Charge (149,000)
----------
$ 811,000
----------
New orders totaled $1,451,000 for the quarter and $6,371,000 for the
current nine month period, compared to $2,634,000 and $4,329,000, respectively
last year. Unfilled orders on September 30, 2000 totaled $3,020,000, compared to
$2,970,000 on the same date last year and $3,577,000 on December 31, 1999.
On October 12, 2000, we announced the receipt of $2,800,000 in
additional orders for the production and supply of birefringent materials to a
customer in the fiber optic industry. Shipments against these new orders are
scheduled to extend through December 31, 2001.
Beginning in the fourth quarter of 2000, the Company is planning for
the acquisition of significant capital equipment items. A leasing arrangement
has been approved and is in place to fund these requirements. Otherwise, over
the period from October 1, 2000 - September 30, 2001, the Company expects to
generate sufficient cash flow from operations to meet its liquidity needs.
<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. Exhibit 27 Financial Data Schedule for quarter ended September
30, 2000.
<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: November 13, 2000
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