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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of report (date of earliest event reported): July 28, 1998
AXIOHM TRANSACTION SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
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California 0-13459 94-2917470
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(State or jurisdiction (Commisson File Number) (I.R.S. Employer
incorporation or organization) Identification No.)
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16 Sentry Park West, Suite 450
1787 Sentry Parkway West
Blue Bell, Pennsylvania 19422
(Address, including zip code, of principal executive offices)
Registrant's telephone number, including area code: (215) 591-0940
15070 Avenue of Science
San Diego, California 92128
(Former name or former address, if changed since last report)
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Item 5. Other Events
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FOR RELEASE AT 1PM EAST COAST TIME, JULY 28TH, 1998
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AXIOHM TRANSACTION SOLUTIONS REPORTS SECOND QUARTER
RESULTS AND ANNOUNCES MAJOR RESTRUCTURING PROGRAM
Blue Bell, PA/July 28, 1998--- Axiohm Transaction Solutions, Inc.
(Nasdaq: AXHM) today announced results for the second quarter and six months
ended July 4, 1998.
Sales in the second quarter rose 85% to $58,617,000 compared to
$31,724,000 in the second quarter of 1997. Net loss for the quarter was
$6,286,000 or $0.96 per share compared with net income of $3,355,000 or $0.52
per share in the same period last year. Excluding acquisition related non-cash
amortization, net income would have been $2,175,000 or $0.33 per share for the
second quarter of 1998. 1998 financial results reflect the merger of Axiohm S.A.
and DH Technology, Inc. in August 1997.
Sales in the six months ended July 4, 1998 grew 104% to $115,686,000
compared to $56,615,000 in the first six months of 1997. Net loss for the six
months was $13,022,000 or $2.00 per share, compared with net income of
$4,980,000 or $0.76 per share in the same period last year. Excluding
acquisition related non-cash amortization, net income for the six months would
have been $3,901,000 or $0.60 per share.
The Company also announced that it currently anticipates generally flat
sales and a decline in operating income before acquisition related charges and
amortization and restructuring charges in the second half of 1998 compared to
the first half because of new product delays and lower order rates from one
customer. The Company currently expects that full year operating income before
acquisition related charges and amortization and restructuring charges will be
approximately 11 to 12 percent of net sales. The Company currently expects debt
levels, on average, to remain near current levels during the next several
months.
"Due to the focus on the integration of Axiohm and DH Technology, we
experienced a six month delay in the roll-out of several new product lines,"
commented Mr. Nicolas Dourassoff, Chief Executive Officer. "These programs are
now on track with their revised schedules, and we expect to see a revenue impact
from their roll-out in 1999. In addition to the roll-out of new products, we
also are increasing our research and development program and expect R&D spending
in the second half to exceed first half R & D spending. We are working to
diversify our product mix and customer base in the financial services industry
and believe that there are significant opportunities for growth in this
marketplace."
Axiohm today also announced a major restructuring program designed to
streamline the Company's operations and improve manufacturing efficiencies. As
part of this program, the Company will consolidate its Paso Robles, California
and Riverton, Wyoming manufacturing operations principally into its Ithaca, New
York manufacturing operation. The Company expects that these actions will result
in the reduction of approximately 200 jobs in the closing locations and the
addition of approximately 100 jobs in Ithaca, New York. This final program is
the result of an assessment that began at the time of the acquisition of DH
Technology.
The Company expects that when the moves are completed by late 1999,
pre-tax operating costs will be reduced by approximately $3.5 million a year.
The Company expects to incur approximately $6 million of costs to fully
implement the plan by the end of 1999, of which approximately $3 million was
recorded in the second quarter of 1998 as an adjustment of the purchase price of
DH Technology, Inc.
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Mr. Dourassoff commented, "As a result of the acquisition of DH
Technology, Inc., we have too many manufacturing locations for a company of our
size. We expect this restructuring program to create a leaner, more efficient
company that can more quickly respond to market needs."
With the exception of the reported actual results, the information
presented herein contains predictions, estimates and other forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934, including, without
limitation, statements that include the words "expects" "anticipates" and
"believes" or similar expressions and statements relating to anticipated sales
and operating income, anticipated debt levels, new product plans, anticipated
spending levels, growth objectives and anticipated restructuring costs and
related operating cost reductions. Such forward-looking statements involve known
and unknown risks, uncertainties and other factors that may cause actual
results, performance or achievements of the Company to differ materially from
those expressed or implied by such forward-looking statements. Although the
company believes that its plans, intentions and expectations reflected in such
forward-looking statement are based on reasonable assumptions, it can give no
assurance that such plans, intentions, expectations, objectives or goals will be
achieved. Important factors that could cause actual results to differ materially
from those included in the forward looking statements include: the timing of
customer orders; the timing of completion of existing customer contracts; market
acceptance of new and enhanced versions of the Company's products; the economies
in the areas in which the Company operates; the revenue and cost impact of
closing two of the Company's manufacturing facilities; the efficiency and cost
of labor in its Ithaca, New York facility; the potential ability of the Company
to transfer/relocate employees from its Paso Robles and Riverton manufacturing
facilities; the inability of the Company to produce realize anticipated cost
reductions because of the substantial amount of management time involved;
difficulties in year 2000 compliance and the impact of substantial leverage and
debt service on the company. Additional important factors are also set forth in
the Company's 1997 10-K and 10-Qs for 1998.
Axiohm Transaction Solutions is one of the two largest non-captive
designers, manufacturers and marketers of transaction printers in the world and
is the only transaction printer manufacturer currently manufacturing its own
thermal and impact printheads. Axiohm's transaction printer products are used in
retail, financial and commercial transactions to provide transaction records
such as receipts, tickets, register journals, checks and other documents. Axiohm
also has an increasing sales presence in the markets for magnetic stripe and
computer chip card readers and bar code printers and related consumable
supplies.
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AXIOHM TRANSACTION SOLUTIONS, INC. AND SUBSIDIARIES
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Condensed Consolidated Statements of Operations (Unaudited)
(In Thousands, except per share amounts)
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Three Months Ended Six Months Ended
Jul. 4, Jun. 30, Jul. 4, Jun. 30,
1998 1997 1998 1997
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Net sales $58,617 $31,724 $115,686 $56,615
Cost of net sales $37,084 $21,478 $74,079 $38,802
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Gross margin $21,533 $10,246 $41,607 $17,813
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Operating expenses:
Selling, general and admin. $9,476 $2,828 $18,280 $5,805
Research and development $3,866 $1,884 $7,956 $3,624
Acquisition related amor. $8,461 -- $16,923 --
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Total operating expenses $21,803 $4,712 $43,159 $9,429
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Income (loss) from operations ($270) $5,534 ($1,552) $8,384
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Net interest exp. and other income $4,590 $66 $8,869 $192
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Income (loss) before income taxes ($4,860) $5,468 ($10,421) $8,192
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Income taxes $1,426 $2,113 $2,601 $3,212
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Net income (loss) ($6,286) $3,355 ($13,022) $4,980
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Basic: Net income (loss) per share ($0.96) $0.52 ($2.00) $0.76
Shares used in per calculation 6,519 6,513 6,519 6,513
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Dil: Net income (loss) per share ($0.96) $0.52 ($2.00) $0.76
Shares used in per calculation 6,519 6,513 6,519 6,513
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Consolidated Balance Sheets (Unaudited)
(In thousands)
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Jul. 4, Dec. 31,
1998 1997
(Unaudited)
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Assets
Current assets:
Cash and cash equivalents $1,811 $3,877
Restricted cash -- $8,594
Accounts receivable,net $36,559 $30,515
Inventories $33,956 $30,103
Prepaids and other current assets $14,109 $11,015
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Total current assets $86,435 $84,104
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Fixed assets, net $20,451 $21,535
Intangible assets, net $81,315 $92,371
Other assets $6,243 $6,034
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Total assets $194,444 $204,044
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $16,658 $17,351
Current portion of long-term debt $7,021 $6,597
Accrued expenses and other liabilities $18,311 $27,907
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Total current liabilities $41,990 $51,855
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Long-term debt $180,066 $167,133
Deferred tax liability $96 $131
Other long-term liabilities $3,235 $3,006
Shareholders' equity ($30,943) ($18,081)
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Total liabilities and shareholders' equity $194,444 $204,044
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SIGNATURE
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 hereunto duly authorized.
AXIOHM TRANSACTION SOLUTIONS, INC.
Dated: July 28, 1998 By: /s/ Walter S. Sobon
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Walter S. Sobon
Chief Financial Officer
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