<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
ISOMET CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Jerry W. Rayburn
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
ISOMET CORPORATION
5263 Port Royal Road
Springfield, VA 22151
Notice of
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD
June 1, 2000
NOTICE IS HEREBY GIVEN THAT, the Annual Meeting of Stockholders of Isomet
Corporation, a New Jersey Corporation (the "Corporation") will be held at the
principal office of the Corporation, 5263 Port Royal Road, Springfield,
Virginia, on Thursday, June 1, 2000, at 10:30 a.m., Eastern Standard Time, for
the following purposes:
1. To elect five (5) directors of the Corporation to serve for the term
of one (1) year and until their respective successors have been
elected and qualified; and
2. To transact such other business as may be properly brought before the
meeting or any adjournment or adjournments thereof. Management is not
aware of any such other business.
Only holders of record shares of Common Stock of the Corporation at the
close of business on April 15, 2000 will be entitled to notice of and to vote at
the meeting or any adjournment thereof.
All stockholders of the Corporation are invited to attend the annual
meeting. Whether or not you plan to attend the Annual Meeting of Stockholders in
person, it is important that your shares be represented and voted. After reading
the enclosed Notice of Annual Meeting and Proxy Statement, please complete,
sign, date and return the enclosed Proxy in the envelope to which no postage
need be affixed if mailed in the United States. Any stockholder who chooses to
attend and vote in person has the power to revoke his proxy at any time before
it is used by giving written notice of such revocation to the Secretary of the
meeting.
By Order of The Board of Directors
Jerry W. Rayburn
Secretary
April 28, 2000
Springfield, Virginia
<PAGE>
ISOMET CORPORATION
5263 Port Royal Road, Springfield, Virginia 22151
PROXY STATEMENT
The enclosed Proxy is being solicited by the Board of Directors of Isomet
Corporation (the "Corporation) in connection with the Annual Meeting of
Stockholders of the corporation to be held at the main office of the
Corporation, on Thursday, June 1, 2000, at 10:30 a.m., Eastern Standard Time,
and at any adjournment or adjournments thereof. Only record holders of shares of
Common Stock, $1.00 par value ("Common Stock") of the Corporation at the close
of business on April 15, 2000 will be entitled to notice of or to vote at the
Annual Meeting or any adjournments of such meeting. On that date there were
1,927,590 shares of Common Stock outstanding and entitled to vote at the
meeting.
Any stockholder who executes and returns the enclosed form of proxy may
revoke it at any time before it is voted by (i) submitting a duly executed proxy
bearing a later date; (ii) giving written notice to the Secretary of the
Corporation (Jerry W. Rayburn, Executive Vice President Finance and Secretary,
Isomet Corporation, 5263 Port Royal Road, Springfield, Virginia 22151 or; (iii)
by voting in person at the meeting. Unless so revoked, the shares represented by
the proxy will be voted in accordance with the instructions specified therein at
the Annual Meeting, if the proxy is properly executed and is received in time
for voting. If no instructions are specified, the shares represented by the
Proxy will be voted FOR all of the matters described herein.
All expenses attributable to this solicitation will be borne by the
Corporation. Further solicitation of Proxies may be made by telephone or in
person by officers, directors and regular employees of the Corporation.
The Corporation's Annual Report for the fiscal year ended December 31,
1999, is transmitted herewith. None of the statements or information in said
Annual Report is intended or shall be construed to be part of the proxy
soliciting material of the Corporation.
The approximate mailing date of the Proxy Statement and accompanying form
of Proxy is April 28, 2000.
VOTING SECURITIES AND
PRINCIPAL HOLDERS THEREOF
Stockholders are entitled to one vote for each share of Common Stock.
However, in the election of directors, a stockholder has the right to cumulate
his shares by giving one candidate as many votes as shall equal the number of
directors to be elected, multiplied by the total number of shares or to
distribute them, on the same principle, among any number of candidates as the
stockholder wishes. There are no prerequisites to the exercise of these
cumulative voting rights. Directors are elected by a plurality of votes cast.
Persons named as proxies intend to cast votes equally among the five nominees
for directors, but they reserve the right to cumulate and cast votes for less
than all nominees or to distribute the votes among nominees at their discretion.
The holders of forty percent (40%) of the common stock entitled to vote at
the Annual Meeting, present in person or by proxy, shall constitute a quorum for
purposes of the Annual Meeting. Abstensions and broker non-votes are counted for
purposes of establishing a quorum, but will have no affect on the outcome of the
vote to elect directors.
The following table sets forth as of February 29, 2000 the number of shares
and percentage of outstanding Common Stock owned by (I) each person known to the
Corporation to be the beneficial owner of more than 5% of the corporation's
outstanding Common Stock, (ii) each director and director nominee who owns
Common Stock and (iii) all directors and officers of the Corporation as a group.
The address for the directors and officers is the same of the Corporation's
address unless otherwise indicated.
<PAGE>
<TABLE>
<CAPTION>
Common Stock
------------
Name of Amount and Nature Percent
Beneficial Owner of Beneficial Ownership/1/ of Class/2/
- ---------------- -------------------------- -----------
<S> <C> <C>
Leon Bademian 1,050 .05
Director and Nominee
Jerry W. Rayburn 15,000/3/ .77
Officer, Director and Nominee
Lee R. Marks 2,333 .12
Director and Nominee
Thomas P. Meloy 131,103 6.80
Director and Nominee
413 Jefferson Street
Morgantown, WV 26505
Henry Zenzie 616,838/4/ 31.75
Officer, Director and Nominee
All Directors and Officers as a
Group (8 persons) 782,924 39.92
</TABLE>
/1/Unless otherwise indicated, each person has sole voting and investment power
with respect to the shares beneficially owned.
/2/Calculated on the basis of 1,927,590 shares of Common Stock outstanding at
April 15, 2000, plus in the case of the individual option holder, additional
shares of Common Stock deemed to be outstanding because such shares may be
acquired within 60 days of that date through the exercise of outstanding
options.
/3/Includes 15,000 shares that Mr. Rayburn has an option to acquire within 60
days of April 15, 1999.
/4/Includes 15,000 shares that Mr. Zenzie has an option to acquire within 60
days of April 15, 2000 and 93,060 shares as to which Mr. Zenzie, as Nominee
under certain Nominee and Option Agreements dated as of March 9, 1993, shares
investment power for a maximum term of ten (10) years, but holds no voting
powers hereto. Pursuant to these agreements, Mr. Zenzie also has an option to
immediately acquire 18,612 of such shares.
<PAGE>
ELECTION OF DIRECTORS
At the annual meeting of stockholders five (5) directors are to be selected
to hold office until the next annual meeting or until their successors are
elected and qualified. Should the nominees be unable to serve or refuse to serve
as directors (an event that Management does not anticipate), proxies solicited
hereunder will be voted for substituted nominees.
The enclosed form of proxy provides a means for a stockholder to vote for
one or more of the proposed nominees or to withold authority to vote for all of
such proposed nominees. Each properly executed proxy received in time for the
meeting will be voted as specified herein. If a stockholder executes and returns
a proxy, but does not specify otherwise, the shares represented by such
stockholder's proxy will be voted FOR each of the proposed nominees listed
therein or should any one or more of such proposed nominees become unavailable,
for another nominee or other nominees to be selected by the Board of Directors.
THE CORPORATION'S BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS
VOTE FOR THE NOMINEES IDENTIFIED BELOW.
Identification of Directors and Nominees for Directors:
The following table sets forth certain information regarding each director
and nominee.
<TABLE>
<CAPTION>
Position With Director
Nominee Age The Corporation Since
------- --- --------------- -----
<S> <C> <C> <C>
Leon Bademian 68 Director of Technology and 1981
Development and Director
Lee R. Marks 64 Director 1987
Thomas P. Meloy 74 Director 1977
Jerry W. Rayburn 59 Executive Vice President 1977
Finance, Treasurer, Secretary and Director
Henry Zenzie 70 President and Director 1968
</TABLE>
Business Experience:
The principal occupation of each director and nominee for the last five
years and directorships held by each such person is as follows:
Leon Bademian is Director of Technology and Development for the
Corporation. Previously, Mr. Bademian was Executive Vice President, Operations
and Technical Director for the Corporation.
Lee R. Marks is a member of the law firm of Greenberg, Traurig. Previously,
Mr. Marks was a member of the law firm of Ginsburg, Feldman and Bress,
Chartered.
Thomas P. Meloy, PhD is Benedum Professor, West Virginia University.
Jerry W. Rayburn is Executive Vice President, Finance, Treasurer and
Secretary of the Corporation.
Henry Zenzie is President of the Corporation. He is also a private investor
in Henry Zenzie & Company, Princeton, New Jersey. Prior to joining the
Corporation as President in 1981, Mr. Zenzie was Senior Vice President of
Prescott, Ball and Turben, New York, New York from 1978.
<PAGE>
Family Relationships
There are no family relationships between any director, executive officer
or director nominee.
Certain Relationships and Related Transactions
The law firm of Greenberg, Traurig, of which Lee R. Marks, a Director and
Nominee Director of the Corporation, is a member, received fees in fiscal 1999
for legal services rendered to the Corporation. It is anticipated that
Greenberg, Traurig will continue to provide legal services to the Corporation,
to be billed at the law firms usual hourly rates in 2000.
Meetings and Committees of the Board of Directors
The Board of Directors held two meetings in the fiscal year ended December
31, 1999. Lee R. Marks did not attend one of the meetings.
The Board of Directors has an audit committee consisting of Lee R. Marks,
Thomas P. Meloy and Jerry W. Rayburn. The audit committee held one meeting
during the fiscal year ended December 31, 1999. The audit committee reviews the
adequacy of the Company's internal controls and meets periodically with
management and the independent auditors. The Board of Directors does not have
standing nominating or compensation committees.
OTHER EXECUTIVE OFFICERS
Set forth below is information concerning the execuutive officers of the
Corporation who do not serve on the Board of Directors.
<TABLE>
<CAPTION>
Name Age Position with the Corporation
---- --- -----------------------------
<S> <C> <C>
Robert G. Bonner 52 Vice President Components Manufacturing
Frank V. Hamby 62 Vice President Systems Manufacturing
Delmar R. Rader 63 Vice President Product Engineering
</TABLE>
The above officers have held these positions for more than five (5) years.
<PAGE>
EXECUTIVE COMPENSATION
(a) The following information is furnished with respect to the President of the
Corporation and the other two (2) Executive Officers of the Corporation
whose total annual salary and bonus during fiscal 1999 exceeded $100,000
(collectively the "Named Executive Officers").
(b) Summary Compensation Table
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other
Name Annual Restricted Securites All
And Compe Stock Underlying LTIP Other
Principal Salary Bonus ensation Award(s) Options/ Payouts Comp
Position Year ($) ($) (1) ($) (2) SARs (#) SAR's ($) ($)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Henry Zenzie 1999 76,294 -0- -0- -0- 15,000 (3) -0- -0-
President 1998 76,294 -0- -0- -0- -0- -0- -0-
1997 76,294 -0- -0- -0- -0- -0- -0-
Jerry Rayburn 1999 130,998 2,620 $25,000 -0- 15,000 (3) -0- -0-
Exec Vice 1998 127,000 2,540 -0- -0- -0- -0- -0-
President of 1997 123,566 2,471 -0- -0- -0- -0- -0-
Finance and
Treasurer
Leon Bademian 1999 123,769 2,475 $20,000 -0- 15,000 (3) -0- -0-
Director of 1998 138,403 2,768 -0- -0- -0- -0- -0-
Technology & 1997 138,403 2,768 -0- -0- -0- -0- -0-
Development
</TABLE>
(1) These amounts represent Corporation's annual contribution to 401(k) plan.
(2) These amounts represent loans from the Corporation which were converted to
compensation.
(3) Represents options to acquire shares of common stock.
<PAGE>
(c) Option/SAR Grants in Last Fiscal Year Table
The following table sets certain information concerning individual grants of
stock options awarded to the Named Executive Officers during 1999.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of
Number of Stock Price Appreciation
Securities Percent of for Option Term (1)
Underlying Total Exercise Exp -------------------
Name Options (2) Options Price/Shr (3) Date 5% 10%
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Henry Zenzie 15,000 9.52% $2.00 8/5/09 $48,867 $77,811
Jerry Rayburn 15,000 9.52% $2.00 8/5/09 $48,867 $77,811
Leon Bademian 15,000 9.52% $2.00 8/5/09 $48,867 $77,811
</TABLE>
(1) The potential realizable value portion of the foregoing table illustrates
value that might be received upon exercise of the options immediately prior
to the expiration of their term, assuming the specified compounded rates of
appreciation on the Common Stock over the terms of the options.
(2) Options to acquire shares of Common Stock.
(3) The exerxise price equaled the fair market value of the Common Stock on the
date of grant.
(d) Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year End Option/SAR Value Table
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of
Securities Value of
Underlying Unexercised
Unexercise In-the-Money
Options/SAR's Options/SAR's
at FY-End (#) at FY-End($)(1)
Shares Acquired Value
Name on Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Henry Zenzie -0- -0- 15,000/-0- 19,650 (2)/-0-
Jerry W. Rayburn -0- -0- 15,000/15,000 26,850 (3)/19,650 (2)
Leon Bademian -0- -0- -0-/15,000 -0-/19,650 (2)
Robert Bonner -0- -0- 3,500/15,000 6,265 (3)/19,650 (2)
Frank Hamby -0- -0- -0-/15,000 -0-/19,650 (2)
Delmar R. Rader -0- -0- -0-/15,000 -0-/19,650 (2)
</TABLE>
(1) Closing price on December 31, 1999 was above the exercise price for
exercisable option shares.
(2) December 31, 1999 closing stock price was $3.31 per share. Option price is
$2.00 per share.
(3) Option price is $1.52 per share.
<PAGE>
(e) Long-Term Incentive Plans - Awards in Last Fiscal Year
None. The Corporation does not maintain any long-term incentive plan.
(f) Defined Benefit or Actuarial Plan Disclosure - Pension Plan Table
Not applicable.
(g) Compensation of Directors
The Corporation does not pay director's fees.
(h) Employment Contracts and Termination of Employment and Change-in-Control
Arrangements
Termination of Employment Arrangement: Effective as of June 1, 1994, the
Corporation entered into a severance agreement with Jerry W. Rayburn. The
terms of the severance agreement provides that in the event the Corporation
terminates the executive's employment with the Corporation for any reason,
the executive shall be entitled to receive severance pay equal to twelve
months compensation based upon his then annual base salary only (i.e.,
exclusive of any bonus or other compensation), but in no event shall the
severance pay be less than the total amount of $123,573, his annual base
salary in effect as of the effective date of the severance agreement.
Based upon the foregoing, the executive will not be entitled to severance
in the event he voluntarily terminates his employment with the Corporation
(which by way of illustration, but not limiation, includes death,
disability, retirement or resignation). The severance agreement provide
that the severance pay shall be paid in twelve equal monthly installments
commencing one month after the Corporation terminates the executive's
employment with the Corporation, provided however, that the Corporation can
within it's sole discretion prepay all or any part of such severance pay.
The severance agreement also contain covenants restricting the executive
from engaging in competing businesses or certain conduct with the
Corporation's vendors; requiring the executive to return all Corporation
owned materials and equipment; prohibiting the disclosure of confidential
information of the Corporation; and requiring the executive to assist the
Corporation in acquiring intellectual property rights in any invention the
executive may have made or conceived while employed by the Corporation.
The severance agreement also provides for injunctive relief as well as
other remedies for breach.
Employee Contracts: In 1998, Leon Bademian, previously Executive Vice
President of Operations, assumed the position of Director of Technology and
Development under a three year employment agreement with the Corporation
dated July 21, 1998. The agreement specifies compensation at $138,403 for
the first year and decreasing by 25% in the second year and 25% in the
third year. The agreement also contains covenants restricting the
executive from engaging in competing businesses or certain conduct with the
Corporation's vendors; requiring the executive to return all Corporation
owned materials and equipment; prohibiting the disclosure of confidential
information of the Corporation; and requiring the executive to assist the
Corporation in acquiring intellectual property rights in any invention the
executive may have made or conceived while employed by the Corporation.
The severance agreement also provides for injunctive relief as well as
other remedies for breach.
(i) Report on Repricing of Options/SARs
None. The Corporation did not adjust or amend the exercise price of
stock options or SARs previously awarded to any of the named executive
officers during the last fiscal year.
(j) Additional information with Respect to Compensation Committee
Interlocks and Insider Participation in Compensation Decisions
<PAGE>
In 1999, four of the Corporation's directors participated in deliberations
and decisions regarding executive officer compensation. They were Mr.
Zenzie, Mr. Bademian, Mr. Rayburn and Mr. Marks.
(k) Board Compensation Committee Report on Executive Compensation
Not applicable.
(l) Performance Graph
Not applicable.
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Corporation's directors, officers and persons who
own more than ten percent of the Common Stock of the Corporation, to file with
the Securities and Exchange Commission (the "SEC") initial reports of ownership
and reports of changes in ownership of the Common Stock.
Directors, officers and greater then ten percent holders are required by
the SEC regulation to furnish the Corporation with copies of all Section 16(a)
reports they file. To the Corporation's knowledge, except as noted below, based
solely on review of the copies of the above mentioned reports furnished to the
Corporation and written representations regarding all reportable transactions,
during the fiscal year ended December 31, 1999, all Section 16(a) filing
requirements applicable to its directors and officers and greater than ten
percent beneficial owners were complied with on time. Leon Bademian filed one
Form 4 report late reflecting a sale of Common Stock of the Corporation.
<PAGE>
INDEPENDENT ACCOUNTANTS
The Board of Directors has responsibility for selecting its independent
auditors and engaged the firm of Aronson, Fetridge & Weigle, Certified Public
Accountants, for the current calendar year. The Corporation has requested that
a representative of Aronson, Fetridge & Weigle be present at the Annual Meeting
of Stockholders with the opportunity to make a statement, if he desires to do so
and is expected to be available to respond to appropriate questions.
STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Any stockholders wishing to submit a proposal for action at the 2001 Annual
Meeting of Stockholders, pursuant to and in accordance with the requirement of
Securities and Exchange Commission Regulation 240.14a-8, must present the
proposal in writing to the Corporation no later than December 27, 2000.
OTHER MATTERS
At the date of this Proxy Statement the Corporation does not know of any
business to be presented for consideration at the Annual Meeting other than
stated in the Notice of such meeting. It is intended, however, that the persons
authorized under management proxies may, in the absence of instruction to the
contrary, vote or act in accordance with their best judgement with respect to
any other proposal presented for action at such meeting.
REPORTS TO STOCKHOLDERS
A copy of the Corporation's Annual Report on Form 10-KSB for the year ended
December 31, 1999, including the financial statements and financial statement
schedules, as filed with the Securities and Exchange Commission, may be obtained
without charge by sending a written request therefor to Jerry W. Rayburn,
Executive Vice President, Finance, Isomet Corporation, Springfield, Virginia
22151.
BY ORDER OF THE BOARD OF DIRECTORS
Jerry W. Rayburn
Secretary
April 28, 2000
Springfield, Virginia
<PAGE>
ISOMET CORPORATION
1999 ANNUAL REPORT
<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 materials, components and electronics
for information handling, telecommunications and other applications. It also
produces high resolution digital color scanners, film recorders, laser plotters
and related equipment for color image reproduction markets.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
1999 1998 % of Change
-----------------------------------
<S> <C> <C> <C>
Revenue $7,017,000 $9,413,000 -25
Net Income $1,067,000 $1,199,000 -11
Number of Shares of Common
Stock and Common Stock
Equivalents Outstanding 1,944,000 1,970,000 -1
Diluted Net Income Per Share $ .55 $ .61 -10
Inventory December 31 $4,261,000 $3,786,000 +13
Working Capital $7,153,000 $6,308,000 +13
Current Ratio 6.70:1 5.46:1 -
Number of Employees 51 49 +4
Revenue Per Employee $ 137,600 $ 192,100 -28
New Orders $7,159,000 $9,606,000 -25
Unfilled Orders at 12/31 $3,577,000 $3,327,000 +8
</TABLE>
<PAGE>
To Shareholders and Employees
We ended 1999 on a strong note with revenues and profits increasing from
the prior two quarters. With the solid fourth quarter results we generated $7
million in revenue for the year and net income of about $1.1 million or $.55 per
share. Deliveries to Polaroid Graphics Imaging picked up in the fourth quarter
and increased shipments of components also contributed to the improved last
quarter. In addition, a material follow-on agreement was completed in December
for the laser plotter component of the PolaProof 2230 Digital Halftone Proofing
System. It calls for shipments extending into 2001. New orders received in
1999 totaled approximately $7.2 million with year-end backlog at $3.6 million.
This backlog does not include purchase orders against the new December 1999
plotter agreement; these will occur in the first quarter of 2000.
Recently we have been experiencing a broadening of interest in Isomet's
products, technology and capabilities. We carefully sell and service customers
worldwide who are purchasing prototypes for research purposes, including
commercial companies, universities and national laboratories. At times,
customers require special designs to fulfull their needs. We focus on those
applications that have the greatest chance to go into production and we
assiduously pursue those programs whether they are components, subsystems or
systems.
In 1999 significant progress was made for products supplied to the fiber-
optic and biotech industries. For the first time Isomet became involved in the
rapidly developing telecom's need for increased bandwidth, which is expected to
double every 10-12 months. We are supplying product that is incorporated into
components used in Dense Wavelength Division Multiplexing (DWDM) and we are
endeavoring to expand our participation in this exciting field. We have
increased our exposure in the biotechnology and related health care field by
supplying devices and technology covering an increasing number of applications.
This includes products used in the field of analytical instrumentation and
confocal and fluoresence microscopy. We look to the fiber-optic and biotech
industry for growth.
In our search for new markets and applications, we increased our marketing
efforts. For the first time we exhibited at the Photonics West show in February
2000. This was an applications show which produced a number of new potential
customers and opportunities for us. This participation is in addition to our
usual CLEO attendance scheduled for May 2000. We also increased our direct
customer contact worldwide and participated in technical seminars. As a result
of the expanded activity, customer visits to Isomet are increasing.
Financially we ended the year with over $2 million in liquid funds. Long
term debt is rapidly being paid off and for the near term we expect our cash
flow to take care of our capital needs. However, this could change if volumes
continue to rise and if the need for additional equipment and facilities
develops. It is noteworthy that in 1999 we issued stock options to eleven
members of management covering 157,500 common shares.
We believe 2000 will be a year of growth as our established component and
systems base points to higher shipment levels. Our ability to continue this
growth is dependent on how rapidly our new markets develop.
<PAGE>
Henry Zenzie
President
This letter contains forward-looking statements that involve risks and
uncertainties. Actual results, events and performance could vary materially
from those contemplated by these forward-looking statements.
<PAGE>
Management's Discussion and Analysis
------------------------------------
Revenue
Consolidated net revenue in 1999 totaled $7,017,000, a decrease of
$2,396,000 from $9,413,000 in 1998. The following table reflects the sales and
total revenue comparisons for both years by product line and operating entity:
<TABLE>
<CAPTION>
1999
Components 1999 1998 Increase/(Decrease)
- -------------------------------------------------------------
<S> <C> <C> <C>
Isomet US (1) $2,379,000 $2,760,000 $ (381,000)
Isomet UK 910,000 1,551,000 (641,000)
------------------------------------------
Total: $3,289,000 $4,311,000 $(1,022,000)
Systems
- -------
Isomet US (1) $3,531,000 $4,953,000 $(1,422,000)
Isomet UK 83,000 62,000 21,000
------------------------------------------
Total: $3,614,000 $5,015,000 $(1,401,000)
Total Sales: $6,903,000 $9,326,000 $(2,423,000)
Other Income 114,000 87,000 27,000
------------------------------------------
Total Revenue: $7,017,000 $9,413,000 $(2,396,000)
</TABLE>
(1) - Includes sales to foreign countries other than in Europe.
As shown above, the net sales decrease in 1999 of $2,423,000 is composed of
a decrease in systems sales of $1,401,000 and a decline in components of
$1,022,000. A lower level of shipments of laser plotters to Polaroid Corporation
caused the systems decrease in 1999. Component deliveries declined in 1999 due,
primarily, to a decrease in demand from customers in the semiconductor industry
and lower demand from European customers.
Costs and Expenses
On a consolidated basis, the Company had net earnings in 1999 of $1,067,000
or $.55 per share (diluted). This compares to a net income in 1998 of
$1,199,000 or $.62 per share (diluted).
<PAGE>
1. The cost of sales percentage decreased in 1999 to 57.1% from 66.6% in 1998.
However, resultant gross profit decreased by approximately $154,000 in
1999. The decrease in the cost of sales percentage is due, primarily to
the following:
1. Improvement in manufacturing efficiency for systems products
in 1999 vs. 1998.
2. A more favorable mix in sales of components in 1999 of acousto-optic
devices that traditionally produce higher margins.
2. Selling and G & A expenses in 1999 increased by $9,000 from 1998. As
a percentage of revenue, these expenses increased to 18.9% from 14.0%
in 1998.
3. Interest expense declined in 1999 to $53,000 from $85,000 in 1998, as
the Company continued to reduce its borrowing level.
4. Expensed product development and improvement costs were $141,000 in 1999
compared to $3,000 in 1998. The 1999 effort was primarily directed to new
acousto-optic component designs and improvement of existing units.
5. For the two years ended December 31, 1999, 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 systems product line due to competitive
pressures.
Foreign Exchange Risks
In 1999 $1,683,000 of the $6,903,000 Company total sales were to customers
in foreign countries, primarily Japan and Europe. From the United States, all
sales to foreign customers are invoiced in US dollars. The Company's operating
subsidiary in the United Kingdom imports products from the Parent Company and
resells to customers in various European countries; the majority of these sales
are in US dollars. As a result, the Company's foreign currency risks are limited
to pound sterling - US dollar relationship, which has been relatively stable
over time. Consequently, the Company has not had and does not expect to have a
material exposure to foreign exchange risks.
<PAGE>
Liquidity and Capital Resources
Combined cash and investment balances on December 31, 1999 of $2,190,000 is
a $763,000 increase from the previous year. The major elements constituting this
improvement are as follows:
<TABLE>
<S> <C> <C>
1. Operating Activities
--------------------
Increase in Inventories $ (475,000)
Decrease in Accounts Receivable 300,000
Net Income 1,067,000
Decrease in Refundable Income Taxes 233,000
Depreciation and Amortization 69,000
Increase in Income Taxes Payable 161,000
Decrease in Accounts Payable (158,000)
Other 21,000 $1,218,000
----------
2. Investing Activities
--------------------
Purchase of Property and Equipment (124,000)
3. Financing Activities
--------------------
Repayment of Debt (339,000)
4. Exchange Rate Effect 8,000
-------------------- ----------
Total: $ 763,000
</TABLE>
The Company has no material commitments for capital expenditures as of
December 31, 1999 and accordingly, no funds from sources other than internally
generated funds are considered necessary.
<PAGE>
A summary of working capital and order backlog over the Company's 1999
fiscal year by quarterly period is as follows:
<TABLE>
<CAPTION>
3/31/99 6/30/99 9/30/99 12/31/99
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Current Assets $7,601,000 $7,392,000 $7,806,000 $8,409,000
Current Liabilities 1,047,000 914,000 1,274,000 1,256,000
---------- ---------- ---------- ----------
Working Capital $6,554,000 $6,478,000 $6,532,000 $7,153,000
Order Backlog $1,577,000 $1,370,000 $2,970,000 $3,577,000
---------- ---------- ---------- ----------
</TABLE>
Bank Arrangements
Pursuant to the Nations Bank loan agreement extension of April 1, 1998, the
Company paid $240,000 of principal in 1999. According to the provisions of the
agreement, the Company was in compliance with all terms, conditions and
operating ratios. The two notes that constitute the debt to Nations Bank
continue to be payable in monthly installments of $8,000 and $12,000
respectively and will be fully repaid in May 2000 and June 2002 respectively.
The interest rate applicable to both notes is the Bank's prime rate plus .5%.
In 1999, the Company also renewed a $750,000 revolving line of credit
agreement with Nations Bank, which is available through June 30, 2000, with
interest at the Euro dollar daily floating rate, plus 2.95%. The Company did
not utilize this line in 1999.
Working Capital
In 2000, additional working capital, if required, is expected to be generated
from operations.
<PAGE>
Revenue
Total Revenue for 1999 and 1998 was distributed as follows:
<TABLE>
<CAPTION>
1999 % 1998 %
--------------------------------------------------------
<S> <C> <C> <C> <C>
Commercial Sales
Foreign $1,683,000 24.0 $2,627,000 27.9
Domestic 5,168,000 73.6 6,642,000 70.6
Government Sales Direct 52,000 .7 57,000 .6
Interest and Other Income 114,000 1.7 87,000 .9
---------------------------------------------------------
Total Revenue: $7,017,000 100.0 $9,413,000 100.0
Cost and Expenses
An analysis of costs and expenses as a percentage of revenue is shown below:
1999 1998
---- ----
Revenue 100.0% 100.0%
Cost and Expenses
Cost of Sales 56.2 66.0
Selling, General and Admin 18.9 14.0
Product Development 2.0 -
Interest .8 .9
-------------------
Total Cost and Expenses: 77.9 80.9
Income Before Tax 22.1 19.1
Income Tax (6.9) (6.3)
-------------------
Net Income 15.2% 12.8%
</TABLE>
Selected Financial Data
For the Years Ended December 31,
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Revenue $7,017,000 $9,413,000 $8,653,000 $5,804,000 $4,800,000
Net Income (Loss) $1,067,000 $1,199,000 $1,331,000 $ 682,000 $ (44,000)
Weighted Avg #
Shares Outstanding 1,944,000 1,970,000 1,971,000 1,949,000 1,906,000
Income (Loss) Per
Share (Diluted) $ .55 $ .61 $ .68 $ .35 $ (.02)
Working Capital $7,153,000 $6,308,000 $5,263,000 $4,095,000 $3,595,000
Total Assets $8,752,000 $8,014,000 $7,189,000 $6,201,000 $4,991,000
Long Term
Liabilities $ 210,000 $ 388,000 $ 637,000 $ 876,000 $1,122,000
Stockholders'
Equity $7,287,000 $6,212,000 $4,955,000 $3,588,000 $2,901,000
</TABLE>
<PAGE>
CORPORATE INFORMATION
Corporate Headquarters: 5263 Port Royal Road, Springfield, Virginia 22151
Tel: 703-321-8301 e-mail: [email protected]
Fax: 703-321-8546 Web Site: http://www.isomet.com
Officers: Henry Zenzie - President
Robert G. Bonner - Vice President, Components Mfg
Frank V. Hamby - Vice President, Systems Mfg
Delmar R. Rader - Vice President, Product Engineering
Jerry W. Rayburn - Executive Vice President, Finance,
Treasurer and Secretary
Transfer Agent: ChaseMellon Shareholder Services
One Mellon Bank Center, 500 Grant Street, Room 2122
Pittsburgh, PA 15258
General Counsel: Greenberg Traurig
1750 Tysons Boulevard, 12th Floor
Tysons Corner, VA 22102
Directors: Leon Bademian - Director Technology and Dev, Isomet
Lee R. Marks - Member, Greenberg Traurig, Tysons
Corner, VA
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, New Jersey
Auditors: Aronson, Fetridge & Weigle
700 King Farm Boulevard, Rockville, MD 20850
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.
Closing Prices High Low
---------------------------------
1997 7.00 1.50
1998 5.88 2.38
1999 4.31 1.63
<PAGE>
10K Report: A copy of Isomet's annual report on form 10-KSB for the
fiscal year ended December 31, 1999, 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, Virginia 22151
Operating Subsidiary: Isomet UK, Ltd., 18 John Baker Close, Llantarnam
Industrial Park, Cwmbran Gwent NP44 3AX United Kingdom
Tel: (44) 16338-72721 Fax: (44) 16338-74678
Representatives and Distributors
Components: Isramex, 16 Hazaz Street, Tel-Aviv 69407 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
BFI Optilas B.V., P.O. Box 222, 2400 AE Alphen A/D,
Rijn Huygensweg, Holland
Tel: (31) 1720-31234 Fax: (31) 1724-43414
BFI Optilas GmbH, Postfach 1464, D82170, Pucheim
Germany
Tel: (49) 8989-013522 Fax: (49) 89800-2561
BFI Optilas SA,Isabel Colbrand 64A, 28050 Madrid,
Spain
Tel: (34) 135-88611 Fax: (34) 135-89271
BFI Optilas, Ltd., Mill Square, Featherstone Road,
Wolverton Mill South, Milton Keynes MK12 5ZY
Buckinghamshire, England
Tel: (44) 1908-326326 Fax: (44) 1908-221110
BFI Optilas SA, 4 Allee Du Cantal, ZI LaPetite Montagne,
Sud LISSES 91010 Evey Cedex, France
Tel: (33) 1-6079-8943 Fax: (33) 1-6079-8901
<PAGE>
BFI Optilas, Chaussee de Charleroi 95, B-6060
Charleroi, Belgium
Tel: (32) 714-88448 Fax: (32) 714-88444
BFI Optilas,Hedelykke, Hovedgaden 451K, DK2640
Hedehusene, Denmark
Tel: (45) 46559999 Fax: (45) 46559998
Crisel Instruments SRL, Clivo di Cinna, 196-00136
Rome, Italy
Tel: (396) 354-02933 Fax: (396) 354-02879
<PAGE>
PROXY
ISOMET CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Lee R. Marks and Jerry W. Rayburn as
Proxies, with the power to appoint his substitute, and hereby authorizes them to
represent and to vote as designated hereon all the shares of common stock of
Isomet Corporation held on record by the undersigned on April 15, 2000, at the
annual meeting of shareholders to be held on Thursday, June 1, 2000, or any
adjournment thereof.
(Continued on reverse side)
FOLD AND DETACH HERE
<PAGE>
<TABLE>
<S> <C> <C>
This proxy when properly executed will be voted in the manner herein by the undersigned stockholder. Please mark
If no direction is made, this proxy will be voted For proposal 1. your vote as X
indicated in
this sample
1. ELECTION OF DIRECTORS Leon Badermian, Lee R. Marks, Thomas P. Meloy, Jerry W. Rayburn and Henry Zenzie
FOR all nominees WITHHOLD (INSTRUCTION: To withhold authority to vote for any individual nominee, write
listed to the right AUTHORITY that nominee's name on the line provided below.)
(except as marked to to vote for all
the contrary) nominees listed _________________________________________________________________________________
to the right
[__] [__]
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON.
2. In their discretion, the Proxies are authorized to __________________________________________________________________
vote upon such other business as may properly
come before the meeting. __________________________________________________________________
Signature
Dated: ____________________________________________________, 2000
When shares are held by tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please
give full title as such. If a corporation name, by President or
other authorized officer. If a partnership, please sign in
partnership name by authorized person.
__________________________________________________________________
Signature if held jointly
Dated: ____________________________________________________, 2000
PLEASE SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE
. FOLD AND DETACH HERE .
</TABLE>
