<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
F O R M 10 - QSB
Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act
of 1934
For the Quarter Ended Commission File Number 0-12370
October 31, 1995
STRUCTURAL INSTRUMENTATION, INC.
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(Exact name of Registrant as specified in its charter)
Delaware 95-3381440
- ------------------------------------ --------------------------------------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
4611 South 134th Place, Seattle, Washington 98168
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(Address of principal executive offices) (Zip Code)
(206) 244-6100
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Registrant's telephone number, including area code
SAME
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(Former name, former address and former fiscal year, if changed since last
report.)
Check 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. 2,347,240 shares of
Common Stock, par value $.01 on December 6, 1995.
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
STRUCTURAL INSTRUMENTATION, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
October 31, 1995 July 31, 1995
(Unaudited)
-----------------------------------
<S> <C> <C>
Current assets:
Cash $ 235,996 $ 540,044
Trade accounts receivable, less allowance for doubtful
accounts of $186,615 and $154,454 respectively 1,791,431 1,404,791
Inventories 1,110,855 926,088
Deferred tax asset 384,900 318,900
Other current assets 53,839 72,255
-----------------------------------
TOTAL CURRENT ASSETS 3,577,021 3,262,078
Property and equipment, less accumulated depreciation and
amortization 673,734 550,559
Other assets:
Intangible assets, net 2,852,285 2,874,881
Other 86,913 59,550
-----------------------------------
TOTAL ASSETS $ 7,189,953 $ 6,747,068
===================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long term debt $ 241,145 $ 257,364
Put option obligation - current 325,000 --
Trade accounts payable 768,174 496,225
Income taxes payable 208,991 260,991
Accrued liabilities 991,296 882,306
-----------------------------------
TOTAL CURRENT LIABILITIES 2,534,606 1,896,886
Long-term debt, less current maturities 6,646 53,729
Put option liability 60,000 385,000
Deferred taxes 22,200 22,200
Stockholders' Equity:
Common stock, par value $.01 per share. Authorized,
5,000,000 shares; issued and outstanding, 2,347,240
shares 23,472 23,472
Additional paid-in capital 4,769,268 4,769,268
Deficit in retained earnings (226,239) (403,487)
-----------------------------------
TOTAL STOCKHOLDERS' EQUITY 4,566,501 4,389,253
===================================
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 7,189,953 $ 6,747,068
===================================
</TABLE>
See notes to consolidated financial statements
2
<PAGE> 3
STRUCTURAL INSTRUMENTATION, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
OCTOBER 31
1995 1994
---------------------------------
<S> <C> <C>
Net sales $ 2,701,023 $ 2,042,410
Cost of sales 1,400,691 1,054,822
---------------------------------
GROSS PROFIT 1,300,332 987,588
Operating expenses:
Selling, service, general and administrative 785,806 679,874
Research, development and engineering 214,695 137,754
Amortization of intangibles 22,596 37,618
---------------------------------
TOTAL OPERATING EXPENSES 1,023,097 855,246
---------------------------------
EARNINGS FROM OPERATIONS 277,235 132,342
Interest expense (18,377) (32,419)
Other income (expense), net 28,389 15,450
---------------------------------
NET EARNINGS BEFORE INCOME TAXES 287,247 115,373
Income tax expense (110,000) (25,000)
---------------------------------
NET EARNINGS $ 177,247 $ 90,373
=================================
NET EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE $ .07 $ .04
=================================
Weighted average shares outstanding 2,431,914 2,493,414
=================================
</TABLE>
See notes to consolidated financial statements
3
<PAGE> 4
STRUCTURAL INSTRUMENTATION, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
OCTOBER 31
1995 1994
-----------------------------
<S> <C> <C>
Increase (Decrease) in Cash
Cash flows from operating activities:
Net earnings $ 177,247 $ 90,373
Adjustments to reconcile net earnings to net cash provided by
(used in) operating activities:
Depreciation and amortization 72,028 74,757
Gain on disposition of property and equipment -- (1,100)
Deferred income taxes (66,000) --
Changes in operating assets and liabilities:
Increase in trade accounts receivable (386,640) (228,120)
Decrease (increase) in inventories (184,767) 16,631
Decrease in other current assets 18,416 37,237
Increase (decrease) in trade accounts payable 271,949 (44,767)
Increase in accrued liabilities 108,992 57,659
Increase (decrease) in income taxes payable (52,000) 6,201
-----------------------------
Net cash provided (used) by operating activities (40,775) 8,871
Cash flows from investing activities:
Proceeds from sale of equipment -- 1,100
Purchase of equipment (199,971) (8,465)
-----------------------------
Net cash used in investing activities (199,971) (7,365)
Cash flows from financing activities:
Proceeds from notes payable to bank -- 54,584
Payments on long term debt (63,302) (54,541)
Payments on put option obligations -- (9,700)
-----------------------------
Net cash used in financing activities (63,302) (9,657)
-----------------------------
Net decrease in cash (304,048) (8,151)
Cash at beginning of period 540,044 17,341
-----------------------------
Cash at end of period $ 235,996 $ 9,190
=============================
Supplemental disclosures of cash flow information:
Cash paid during the period for
Interest $ 18,377 $ 106,797
Income taxes 228,000 18,800
</TABLE>
See notes to consolidated financial statements
4
<PAGE> 5
STRUCTURAL INSTRUMENTATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. FINANCIAL STATEMENTS
The following unaudited consolidated financial statements of the Company and its
subsidiary have been prepared by the Company pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. The results of operations for
interim periods are not necessarily indicative of the results to be expected for
the entire fiscal year ending July 31, 1996. This form 10-QSB should be read in
conjunction with the Annual Report and form 10-KSB for the year ended July 31,
1995.
NOTE 2. INVENTORIES
Inventories are stated at the lower of cost (on a first-in, first-out basis) or
market and consisted of the following at:
<TABLE>
<CAPTION>
OCTOBER 31, 1995 JULY 31, 1995
(UNAUDITED)
<S> <C> <C>
Raw Materials $ 457,509 $ 413,052
Work in Progress 255,857 192,292
Finished Goods 577,135 455,174
------------------------------
1,290,501 1,060,518
Less allowance for obsolescence 179,646 134,430
------------------------------
$1,110,855 $ 926,088
==============================
</TABLE>
NOTE 3. EARNINGS PER SHARE
Net earnings per share of common stock is based on the weighted average number
of common shares and common stock equivalents outstanding during the period.
5
<PAGE> 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
Structural Instrumentation, Inc. - SI - manufactures mobile and stationary
weighing systems for the transportation industry, vehicle fleet information
systems and force measurement devices.
The three general types of electronic weighing systems include: on-board
weighing systems installed in the frame or suspension system of a vehicle,
semi-permanent industrial axle scales, and portable platform scales used both by
weight enforcement agencies and general transportation companies.
Fleet information systems are made up of on-board vehicle and base operation
hardware and software that collect and report operating information used to
manage and improve the performance of fleet operations. Specific benefits from
system utilization include increased driver and truck efficiency, reduced
maintenance costs, better safety records, reduced manual report generation and
improved customer service.
Force measurement devices are electromechanical components that convert a
physical force to an electrical signal. When matched with microprocessor
controlled digital electronics, force measurement devices measure forces such as
pressure, weight, mass and torque. Commercially, force measurement devices are
used in electronic scales and a wide range of machinery and equipment.
RESULTS OF OPERATIONS
Sales
Net sales increased to $2,701,023 for the quarter ended October 31, 1995
from $2,042,410 for the same period last year. This is an increase of
$658,613 or 32% over the prior year's first quarter results.
The sales increase, is the result of very strong sales in the U.S. forestry
market, particularly in the southeast, a strong Canadian forestry industry
and a continuation of the company's growth in the US waste market. Sales to
international markets outside of Canada decreased slightly.
While continued sales growth is expected during the last nine months of
fiscal 1996, it is unlikely that the rate of growth experienced during the
quarter ended October 31, 1995 will be sustained for the balance of
the fiscal year.
Gross Profit
Gross profit for the quarter was $1,300,332 compared to $987,588 in the
first quarter last year. This is an increase of $312,744 or 32% over the
prior quarter's results. Gross profit as a percentage of sales remained the
same from quarter to quarter at 48%.
Selling, General and Administrative Expenses
SG & A expenses increased to $785,806 for the quarter ended October 31,
1995 from $679,874 for the same period last year. This is an increase of
$105,932 or 16% over the prior year's first quarter. SG & A expenses as a
percentage of revenue decreased to 29% down from 33% in the same quarter of
last year. The increased expenses are the result of higher compensation
costs related to the increased sales volume and increased fees for
professional services and debt collection expense.
Research and Development and Engineering Expenses
RD & E expenditures increased to $214,695 for the quarter ended October 31,
1995 from $137,754 for the same period last year. This is an increase of
$76,941 or 56% over the prior year's first quarter. RD & E expenses as a
percentage of revenues increased to 8% from 7% in the same quarter of last
year. The higher spending reflects a higher rate of investment in new
product development as well as increased product extensions for existing
product lines. The Company expects to continue its aggressive product
development program into the near term.
6
<PAGE> 7
Intangibles
The amortization of intangibles decreased to $22,596 for the quarter ended
October 31, 1995 from $37,618 for the same period last year. This is a
decrease of $15,022 or 40% from the prior year's first quarter. The lower
expense reflects the completion of amortization for non-compete agreements
associated with an acquisition.
Interest Expense and Other Income
Interest expense decreased to $18,377 for the quarter ended October 31,
1995 from $32,419 for the same period last year. This is a decrease of
$14,042 or 43% from the prior year's first quarter. The lower interest
expense is the direct result of reduced borrowings by the company. Other
income increase to $28,389 from $15,450 for the same period last year. This
is an increase of $12,939 or 84% from the prior year's first quarter. The
largest contribution to the increase was the partial recovery of a
previously written off debt.
Income Tax Expense
Income tax expense increased to $110,000 for the quarter ended October 31,
1995 from $25,000 for the same period last year. This is an increase of
$85,000 or 340% from the prior year's first quarter. The increased expense
reflects the higher pretax income recorded in the current quarter and a
higher effective tax rate. The effective tax rate for the quarter ended
October 31, 1995 increased from the same period last year due to the full
utilization of tax credits now consumed. The effective tax rate for the
quarter exceeds the U.S. federal corporate income tax rate of 34% due to
the amortization of intangible assets which expenses are not deductible for
income tax purposes and due to state income taxes.
INFLATION
Historically, the impact of inflation has been negligible, as the Company has
been able to offset the effects through efficiency and price increases.
LIQUIDITY AND CAPITAL RESOURCES
The Company's line of credit of $2,000,000 which matured November 29, 1995, was
renewed with U.S. Bank of Washington effective November 30, 1995. The new line
of credit was renewed for $2,000,000 and is for a two year term. The new
agreement included more favorable terms for the company than the prior
agreement. As of October 31, 1995 the Company had no outstanding borrowings
under the line of credit.
The Company believes cash flow from operations and the funds available under its
bank facility will be sufficient to meet the Company's working capital needs.
PUT OPTION OBLIGATIONS
The liability associated with the company's agreements to repurchase 77,000
shares of the Company's stock upon exercise of the remaining put options, is
included in liability section of the Company's balance sheet as of October 31,
1995.
7
<PAGE> 8
PART II. OTHER INFORMATION
EXHIBITS AND REPORTS AND FORM 8-K
(a) Exhibits to Part II
27 Financial Data Schedule
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter.
The items omitted are either inapplicable or are items to which the answer is
negative.
8
<PAGE> 9
STRUCTURAL INSTRUMENTATION, INC.
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.
STRUCTURAL INSTRUMENTATION, INC.
December 13, 1995 \S\ Rick A. Beets
------------------------------------------
Rick A. Beets
President, CEO & CFO
(Principal Executive & Financial Officer)
9
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<PERIOD-END> OCT-31-1995
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