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Previous: QMS INC, SC 13G/A, 1994-02-11 |
Next: MAXTOR CORP, S-8, 1994-02-11 |
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
FORM 10-Q
(MARK ONE)
{X} QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended DECEMBER 31, 1993
OR
{ } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________________ to ______________________
Commission file number 1-9348
QMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 63-0737870
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
ONE MAGNUM PASS, MOBILE, AL 36618
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (205) 633-4300
NOT APPLICABLE
(Former name, former address and former fiscal year, if changed since last
report)
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 preceding 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 90 days.
Yes X No
_________ _________
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the latest
practicable date 10,707,755 AT JANUARY 28, 1994.
<PAGE> 2
QMS, INC. AND SUBSIDIARIES
INDEX
PART I - FINANCIAL INFORMATION PAGE NUMBER
-----------
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
(unaudited) as of December 31, 1993 and
October 1, 1993 3 - 4
Condensed Consolidated Statements of Operations
(unaudited) for the three months ended
December 31, 1993 and January 1, 1993 5
Condensed Consolidated Statements of Cash Flows
(unaudited) for the three months ended
December 31, 1993 and January 1, 1993 6
Notes to Condensed Consolidated Financial Statements
(unaudited) for the three months ended
December 31, 1993 and January 1, 1993 7
Computation of Earnings Per Common Share 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9 - 10
PART II - OTHER INFORMATION 11
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. (a) Exhibits
(b) Reports on Form 8 - K
SIGNATURES 12
2
<PAGE> 3
QMS, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
as of December 31, 1993 and October 1, 1993
(Unaudited)
<TABLE>
<CAPTION>
DECEMBER 31, OCTOBER 1,
in thousands 1993 1993
------------ ------------ ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $5,883 $3,582
Trade Receivables (less allowance for doubtful accounts of
$520 in December 1993 and $580 in October 1993) 41,768 39,471
Inventories (Note 3) 67,550 70,461
Other, Net 8,595 7,806
-------- --------
Total Current Assets 123,796 121,320
-------- --------
PROPERTY, PLANT AND EQUIPMENT 67,447 66,440
Less Accumulated Depreciation 36,031 33,774
-------- --------
Property, Plant and Equipment, Net 31,416 32,666
-------- --------
OTHER ASSETS, NET 15,981 16,231
-------- --------
TOTAL ASSETS $171,193 $170,217
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
3
<PAGE> 4
QMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
as of December 31, 1993 and October 1, 1993
(Unaudited)
<TABLE>
<CAPTION>
DECEMBER 31, OCTOBER 1,
in thousands 1993 1993
------------ ------------ ----------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts and Notes Payable $16,904 $11,060
Other 30,395 31,901
-------- --------
Total Current Liabilities 47,299 42,961
-------- --------
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS 38,918 41,527
COMMITMENTS AND CONTINGENCIES (Note 4) --- ---
STOCKHOLDERS' EQUITY 84,976 85,729
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $171,193 $170,217
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
4
<PAGE> 5
QMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1993 AND JANUARY 1, 1993
(Unaudited)
THREE MONTHS ENDED
--------------------------
DECEMBER 31, JANUARY 1,
in thousands, except per share amounts 1993 1993
-------------------------------------- ------------ ----------
NET SALES $70,654 $77,273
COST OF GOOD SOLD 46,822 51,306
-------- --------
GROSS PROFIT 23,832 25,967
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 22,673 23,282
-------- --------
OPERATING INCOME 1,159 2,685
OTHER INCOME (EXPENSE)
Interest Income 17 118
Interest Expense (872) (818)
Miscellaneous (834) 43
-------- --------
Total Other Income (Expense) (1,689) (657)
INCOME (LOSS) BEFORE INCOME TAXES (530) 2,028
PROVISION FOR INCOME TAXES (164) 669
-------- --------
NET INCOME (LOSS) ($366) $1,359
======== ========
EARNINGS (LOSS) PER COMMON SHARE (Note 2)
Primary ($0.03) $0.13
Fully Diluted ($0.03) $0.13
SHARES USED IN PER SHARE COMPUTATION (Note 2)
Primary 10,706 10,714
Fully Diluted 10,706 10,819
See Notes to Condensed Consolidated Financial Statements
5
<PAGE> 6
QMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1993 AND JANUARY 1, 1993
(Unaudited)
<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 1,
in thousands 1993 1993
------------ ------------ ----------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income (Loss) ($366) $1,359
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by
(Used in) Operating Activities:
Depreciation of Property, Plant and Equipment 2,363 2,218
Amortization of Capitalized and Deferred Software & Other 3,580 2,114
Provision for Losses on Inventory (663) (178)
Other (60) 324
Changes in Assets and Liabilities
Trade Receivables (2,237) (4,245)
Inventories 3,574 3,621
Accounts Payable 5,844 (585)
Income Tax Payable 0 168
Other (3,552) (3,986)
-------- --------
Net Cash Provided by Operating Activities 8,483 810
Cash Flows from Investing Activities:
Purchase of Property, Plant and Equipment (1,220) (1,502)
Additions to Capitalized and Deferred Software Costs (1,842) (2,036)
Proceeds from Sales of Short-Term Investments 0 0
Other 0 (121)
-------- --------
Net Cash Used in Investing Activities (3,062) (3,659)
Cash Flows from Financing Activities:
Proceeds from Long-Term Debt 0 4,300
Payments of Long-Term Debt, including Current Maturities (2,347) (632)
Purchase of Treasury Stock 0 (151)
Proceeds from Stock Options Exercised 9 64
Other (244) (289)
-------- --------
Net Cash (Used in) Provided by Financing Activities (2,582) 3,292
-------- --------
Effect of Exchange Rate Changes on Cash (538) (606)
-------- --------
Net Change in Cash and Cash Equivalents 2,301 (163)
Cash and Cash Equivalents at Beginning of Period 3,582 8,086
-------- --------
Cash and Cash Equivalents at End of Period $5,883 $7,923
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
6
<PAGE> 7
QMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1993 AND JANUARY 1, 1993
________________________________________________________________________________
(Unaudited)
1. MANAGEMENT OPINION
In the opinion of management, the condensed consolidated financial
statements reflect all adjustments necessary to present fairly the
financial position of the Company as of December 31, 1993 and October 1,
1993 and the results of operations and changes in cash flows for the three
months ended December 31, 1993 and January 1, 1993. The results of
operations for the three months ended December 31, 1993 are not
necessarily indicative of the results to be expected for the fiscal year
ending September 30, 1994.
2. EARNINGS (LOSS) PER COMMON SHARE
The computation of earnings (loss) per common share is based on the
weighted average number of common shares outstanding during the period.
Shares issuable upon exercise of stock options have been excluded in the
per share computation because there was a loss for the quarter.
3. INVENTORIES
Inventories at December 31, 1993 and October 1, 1993 are summarized as
follows (in thousands):
DECEMBER 31, October 1,
1993 1993
----------- ----------
Raw materials $ 23,568 $ 26,104
Work in process 4,577 4,052
Finished goods 45,046 46,609
Inventory reserve (5,641) (6,304)
----------- ----------
TOTAL $ 67,550 $ 70,461
=========== ==========
4. COMMITMENTS AND CONTINGENCIES
At October 1, 1993, the Company had a commitment of approximately
$31,000,000 under contracts to purchase print engines. As of December 31,
1993 the Company had a commitment of approximately $17,000,000 to
purchase print engines under these contracts.
The Company was contingently liable for approximately $1,319,000 as of
December 31, 1993. This was principally the result of letters of credit
issued in the normal course of business for the purchase of inventory.
7
<PAGE> 8
QMS, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE
(Unaudited)
THREE MONTHS ENDED
-------------------------
DECEMBER 31, JANUARY 1,
in thousands, except per share amounts 1993 1993
-------------------------------------- ------------ ----------
Net Income (Loss) ($366) $1,359
Shares used in this computation:
Weighted average common shares
outstanding 10,706 10,669
Shares applicable to stock options, net
of shares assumed to be purchased
from proceeds at average market 0 45
-------- --------
Total shares for earnings per common
share computation (primary) 10,706 10,714
Shares applicable to stock options in
addition to those used in primary
computation due to the use of period-
end market price when higher than
average 0 105
-------- --------
Total fully diluted shares 10,706 10,819
======== ========
Earnings (loss) per common share - primary ($0.03) $0.13
======== ========
Earnings (loss) per common share - fully diluted ($0.03) $0.013
======== ========
8
<PAGE> 9
QMS, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
________________________________________________________________________________
RESULTS OF OPERATIONS
Net sales in the first quarter of fiscal 1994 (the three months ended December
31, 1993) were $70,654,000, down 8.5% from the $77,273,000 achieved in the
first quarter of fiscal 1993 (the three months ended January 1,1993). In the
United States, the net sales generated through resellers was $6 million and 33%
less in the quarterly year-to-year comparison. The reseller channel is the
Company's primary method of distribution in the United States for 4-page per
minute and 8-page per minute monochrome laser printers and color thermal
transfer printers. New competition in this product class was the primary cause
for the lower revenue. Sales through QMS Europe BV, a wholly owned subsidiary
with headquarters in The Netherlands, had $3 million less in net sales in the
same comparison, approximately 14% less. QMS Europe markets the entire line of
QMS non-impact printers. Poor economic conditions in Germany and Great Britain
along with new competitive pressures were the principal causes of the
shortfall. Net sales were up significantly, $3.4 million and 182%, in QMS
Japan Inc., the Company's wholly owned Japanese subsidiary. These increases
were primarily attributable to new products made available during the quarter
which support the special Japanese language requirements.
Gross profit dollars were down in the first quarter of fiscal 1994 by $2.1
million when compared to the first quarter of fiscal 1993, substantially all of
which was due to the revenue shortfall. The gross profit as a percentage of
sales was 33.7% in the fiscal 1994 first quarter compared to 33.6% in the first
quarter of fiscal 1993.
Operating expenses were 2.6% lower in the first quarter of fiscal 1994 compared
to the first quarter of fiscal 1993. Compared to the fourth quarter of fiscal
1993, operating expenses were 15% lower in the first quarter of fiscal 1994.
The Company implemented cost reduction measures in the fourth quarter of fiscal
1993 that resulted in a one-time charge to operating expenses of approximately
$3 million and included a reduction in the labor force of about 200 people.
The Company intends to continue to closely monitor and manage the expense
structure.
The other income (expense) was impacted by foreign exchange translation. The
negative impacts came from the translation of balance sheet elements that were
denominated in foreign currencies, primarily European currencies. Interest
expense was greater in the first quarter of fiscal 1994 due to greater
borrowings on the Company's revolving credit agreement.
The Company's effective tax rate was 31% in the first quarter of fiscal 1994
compared to 33% in the first quarter of fiscal 1993. The effective tax rate
for the full fiscal year 1993 was 31%.
9
<PAGE> 10
LIQUIDITY AND CAPITAL RESOURCES
During the first quarter of fiscal 1994 the Company's financing came
principally from operations, credit line borrowings and capital leases. The
Company's net working capital was $76.5 million at December 31,1993, down from
$78.4 million at October 1,1993. The current ratio was 2.62 at the end of the
first fiscal quarter, down from 2.82 at the end of the 1993 fiscal year. The
Company was not in compliance with certain of its revolving credit agreement
covenants at the end of the first quarter of fiscal 1994, and has received a
waiver of the non-compliance. Despite losses in four of the last six quarters,
the Company has been able to maintain balance sheet strength.
Management believes that the Company's continuing working capital and capital
expenditure needs will be met by cash flow from operations and by the secured
revolving credit agreement. However, unless the Company is able to restore
profitability, further waivers from its bank lenders may be necessary to
continue to borrow under the Company's revolving credit agreement. Although
management believes the Company's relationship with its lenders is good, future
waivers from the lenders, if necessary, will depend on the Company's
performance.
10
<PAGE> 11
QMS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
________________________________________________________________________________
ITEM 1 - LEGAL PROCEEDINGS - None.
ITEM 2 - CHANGES IN SECURITIES - None.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES - None.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - None
ITEM 5 - OTHER INFORMATION - None.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits - None
b) Reports - None
11
<PAGE> 12
QMS, INC. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
QMS, INC.
(Registrant)
Date: February 10, 1993 /s/ CHARLES D. DALEY
_________________________________________
CHARLES D. DALEY
Executive Vice President - Finance and
Administration, Chief Financial Officer
(Mr. Daley is the Principal Financial
Officer and has been duly authorized
to sign on behalf of the registrant.)
12
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