UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the quarterly period ended March 31, 1995.
Commission File Number: 0-12661
Exact Name of Registrant as Specified in its Charter: IMTEC, Inc.
State of Incorporation: Delaware
I.R.S. Employer Identification Number: 03-0283466
Address of Principal Executive Offices: One Imtec Lane
Bellows Falls, VT 05101
Registrant's Telephone Number: 802-463-9502
Indicate by check mark whether the registrant (1) has filled 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 shorted period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
[X] YES [ ] 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.
Common shares outstnading as of May 9, 1995: 1,470,138
<PAGE>
IMTEC, INC.
INDEX
Page #
Part I Financial Information
Condensed Balance Sheets -
March 31, 1995 and June 30, 1994 3 - 4
Condensed Statements of Income -
Three Months and Nine Months Ended
March 31, 1995 and 1994 5
Condensed Statements of Cash Flows
Three Months and Nine Months Ended
March 31, 1995 and 1994 6
Notes to Condensed Financial Statements 7 - 8
Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
Part II Other Information
Item 4 Submission of Matters to a Vote of
Security Holders 11
Item 6 Exhibits and Reports on Form 8-K 11
Signatures 12
<PAGE>
PART I - FINANCIAL INFORMATION
IMTEC, INC.
CONDENSED BALANCE SHEETS
March 31, June 30,
1995 1994
(Unaudited) *
ASSETS
Current Assets:
Cash $ 605,183 $ 3,627
Accounts and notes receivable:
Trade, less allowance for doubtful accounts:
March 31, 1995 - $73,982
June 30, 1995 - $59,320 1,904,804 1,033,552
Income Tax Receivable 44,170 177,602
Inventories 1,281,080 905,755
Prepaid expenses & deferred charges 106,232 77,845
Deferred income tax 46,376 46,376
--------- ---------
Total Current Assets 3,987,845 2,244,757
--------- ---------
Plant and equipment 3,165,174 2,903,036
Less: Accumulated depreciation 2,173,004 1,930,238
--------- ---------
992,170 972,798
--------- ---------
Other Assets:
Deposits 13,340 20,207
Computer software less accum amort. of
$308,137 in 1995 & $243,768 in 1995, 167,058 210,089
Other intangibles less accum amort of,
$345,139 in 1995 & $276,799 in 1995 271,499 315,648
--------- ---------
451,897 545,944
--------- ---------
$5,431,912 $3,763,499
========== ==========
* From audited financial statements.
The accompanying notes are an integral part of these condensed financial
statements.
<PAGE>
PART I - FINANCIAL INFORMATION
IMTEC, INC.
CONDENSED BALANCE SHEETS (CONTINUED)
March 31, June 30,
1995 1994
(Unaudited) *
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities
Notes payable - bank $ 149,224
Current installments of L/T debt $ 86,734 86,734
Current capital lease obligations 6,171
Accounts payable 618,130 394,155
Income tax payable 154,640 -
Accrued liabilities
Salaries and wages 119,113 76,627
Commissions 456,598 43,149
Other 869,809 412,430
--------- ---------
Total Current Liabilities 2,305,024 1,168,490
Long term debt less current installments 218,027 386,904
Long term capital lease obligations - -
--------- ---------
Total Liabilities 2,523,051 1,555,394
--------- ---------
Stockholder's equity:
Common stock - $.01 par value;
authorized 5,000,000 shares, issued and outstanding:
1,470,138 shares March 31, 1995
1,331,664 shares June 30, 1995 14,027 13,317
Additional paid-in capital 2,020,068 1,860,714
Retained Earnings 874,766 334,074
--------- ---------
Total Stockholder's Equity 2,908,861 2,208,105
--------- ---------
Total Liabilities & Equity $ 5,431,912 $ 3,763,499
========== ==========
* From audited financial statements.
The accompanying notes are an integral part of these condensed financial
statements.
<PAGE>
IMTEC, INC.
CONDENSED STATEMENTS OF INCOME
(Unaudited)
Nine Months Ended Three Months Ended
March 31, March 31,
<TABLE>
<S> <C> <C> <C> <C>
1995 1994 1995 1994
Net Sales $7,839,741 $5,023,772 $3,724,777 $1,921,700
Cost of Sales 4,473,703 2,988,725 2,175,527 1,082,041
--------- --------- --------- ---------
Gross Profit 3,366,038 2,035,047 1,549,250 839,659
Selling, general and
administrative expenses 2,002,403 1,772,617 964,262 582,983
Research and development
expenses 503,754 398,728 247,054 112,881
--------- --------- --------- ---------
Operating Profit/(Loss) 859,881 (136,298) 337,934 143,795
Other Income (Expenses):
Miscellaneous income
and other expenses 30,968 2,045 4,068 (65)
Interest Expense (33,835) (37,999) (10,275) (15,088)
--------- --------- --------- --------
Income (Loss) Before
Income Taxes 857,014 (172,252) 331,727 128,642
Income Tax Exp(Benefit) 316,323 (63,699) 124,496 56,472
--------- --------- --------- --------
Net Income (Loss) $ 540,691 $(108,553) $ 207,231 $ 72,170
========= ========= ========== =========
Weighted average number of
common shares and common shares
equivalents outstanding 1,472,069 1,392,104 1,479,986 1,405,231
Earnings per common share and
common share equivalents $ .37 $ (.08) $ .14 $ .05
======= ======== ======= =======
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
<PAGE>
IMTEC, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended Three Months Ended
March 31, March 31,
<TABLE>
<S> <C> <S> <C> <C> <C> <C>
1995 1994 1995 1994
Cash flows from operating activities:
Net Earnings $540,691 $(108,223) $207,230 $ 72,486
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation & amortization of
property plant, equipment
and other assets 375,475 432,979 135,809 144,689
Decrease(inc.) in A/R (871,252) (177,377) (285,762) (380,391)
Decrease(inc.) income
tax refundable 133,432 (39,080) (30,144) 81,091
Decrease (inc.) in inv. (375,325) (22,430) 94,484 181,058
Decrease (inc.) in prepaid
expenses and other assets (21,520) (11,164) 4,375 1,881
Increase (dec.) in A/P 223,975 (130,753) (106,570) 18,932
Increase (dec.) in income
tax payable 154,640 (3,829) 124,496 (13,222)
Increase (dec.) in
accrued liabilities 913,314 20,536 546,032 (62,021)
Net cash from operating --------- --------- --------- ---------
activities 1,073,430 (39,341) 689,950 44,503
Cash flows from (used in) investment activities:
Expenditures for property & equipment,
computer software and other
intangible assets (307,667) (399,748) (134,131) (107,972)
--------- --------- --------- ---------
Net cash used in invest. (307,667) (399,748) (134,131) (107,972)
Cash flows from (used in) financing activities:
Proceeds from issuance notes payable 112,067
Principal notes payable/bank (149,224) (20,330)
Proceeds from new long term debt 500,000
Principal payments on L/T debt (168,876) (109,176) (117,858) (46,313)
Principal payments under capital
lease obligations (6,171) (9,953) (3,437)
Proceeds from issuance of stock 160,064 51,562 155,313
Net cash provided by finance --------- --------- --------- ---------
activities (164,207) 412,103 37,455 62,317
Net increase (decrease) in cash 601,556 (26,986) 593,274 (1,152)
Cash at the beginning of period 3,627 44,529 11,909 18,695
--------- --------- --------- --------
Cash at the end of period $605,183 $ 17,543 $605,183 $ 17,543
========= ========= ========= ========
Supplemental Information Disclosures:
Interest paid $ 33,835 $ 37,999 $ 10,275 $ 15,888
--------- --------- -------- --------
Income tax paid $256,913 $255,535
--------- --------- -------- --------
</TABLE>
The accompanying n otes are an integral part of these condensed financial
statements.
<PAGE>
IMTEC, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1 - Basis of Presentation
The financial information included herein is unaudited: however, such
information reflects all adjustments (consisting solely of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
statement of results for the interim periods.
The results of operations for the nine month period ended March 31, 1995 are
not necessarily indicative of the results to be expected for the full year.
2 - Inventories
Inventories consist of:
March 31, June 30,
1995 1994
Finished Products $ 46,944 $ 27,375
Work in Process 211,496 67,360
Purchased Components 1,022,640 811,020
---------- ---------
$1,281,080 $ 905,755
========== =========
Inventory cost consisted of the cost of purchased components and supplies,
manufacturing labor and manufacturing overhead.
3 - Liability for Estimated Product Warranty
On March 31, 1995 and June 30, 1994, the Company had provided $284,871 and
$87,107 respectively, against future product warranties based on its
experience with customer claims. Warranty expenses charged to income amounted
to approximately $152,532 for the nine month period ended March 31, 1995 and
$78,303 for the nine month period ended March 31, 1994.
<PAGE>
4 - Earnings (Loss) per Common Share
Primary earnings per share were computed by dividing net earnings (loss) by
the weighted average number of shares of common stock equivalents outstanding
during the year, if dilutive. Common stock equivalents (stock options and
warrants) are assumed to be exercised when they are issued and the proceeds
used to repurchase outstanding shares of the Company's common stock at the
average price during the period.
The fully-diluted computation is performed using the same method as for the
primary computation, except that the proceeds from exercised stock options and
warrants are assumed to be used to repurchase outstanding shares of the
Company's common stock at the higher of the average or March 31, market price.
The average number of common share and common share equivalents entering into
the calculation of primary and fully-diluted earnings per share are as follows:
Nine months ended March 31,
1995 1994
Common shares 1,358,750 1,299,274
Options 76,959 50,986
Warrants 28,556 34,522
--------- ---------
Total for primary calculation 1,464,265 1,384,782
Options 6,599 5,409
Warrants 1,205 1,913
--------- ---------
Total for fully-diluted calculation 1,472,069 1,392,104
========= =========
Three months ended March 31,
1995 1994
Common shares 1,409,098 1,306,829
Options 66,887 57,714
Warrants 0 39,669
--------- ---------
Total for primary calculation 1,475,985 1,404,212
Options 4,001 769
Warrants 0 250
--------- ---------
Total for fully-diluted calculation 1,479,986 1,405,231
========= =========
<PAGE>
IMTEC, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Three Months and Nine Months Ended March 31, 1995
as compared to Three Months and Nine Months Ended March 31, 1994
Revenues for the three months and nine months ended March 31, 1995 increased
approximately 93.8% and 56.0% respectively over the corresponding periods in
1994.
Revenues from the sales of Industrial Bar Code Equipment were $2,326,489 and
$4,105,272 for the three and nine month periods ended March 31, 1995 compared
to $899,176 and $2,200,722 for the same periods in 1994. Industrial Bar Code
Equipment sales represented 62.5% and 52.4% of total revenue for the three
month and nine month periods ended March 31, 1995 compared to 46.8% and 43.8%
respectively for the same periods last year. It should be noted that
approximately $1,540,000 for the three months and approximately $2,094,000 for
the nine monthd ended March 31, 1995 represented sales to a single customer
compared to approximately $595,000 and $810,000 respectively for the same
periods last year to the smae customer. Management believes that the upward
trend in Industrial Bar Code Equipment sales will continue due to a maturing
sales force and new sales management direction. This is reflected by the
increase in the Industrial Bar Code Equipment backlog, exclusive of the single
customer mentioned above, from $242,721 at March 31, 1994 to $305,772 at
March 31, 1995. The backlog for the order by the single customer mentioned
above increased from $0 at March 31, 1994 to approximately $1,300,000 at
March 31, 1995.
Revenues from Bar Code labels and printing supplies were $1,398,288 and
$3,734,300 for the three month and nine month periods ended March 31, 1995
compared to $1,022,980 and $2,824,330 respectively for the same periods last
year. Bar Code labels and printing supplies represented 37.5% and 47.6% of
total revenue for the three month and nine month periods ended March 31, 1995
compared to 53.2% and 56.2% respectively for the same periods last year.
Management believes that the increase in sale of bar code labels and printing
supplies is attributable to increased sales and marketing efforts that have
shown positive results since started more than a year ago.
Total cost of sale for the three months and nine months ended March 31, 1995
were 58.4% and 57.1% respectively, compared to 56.3% and 59.5% for the same
periods in 1994.
Selling, general and administrative expenses were $964,262 for the quarter
ended March 31, 1995 and $2,002,403 for the nine months ended March 31, 1995,
as compared to $582,983 and $1,772,617 respectively for the corresponding
periods ended March 31, 1994. This increase is primarly attributed to increased
levels of compensation arising from increased revenues and profitability in the
current fiscal year.
Total backlog, for all products, as of March 31, 1995 was approximately
$2,500,000, about half of which is shipable by June 30, 1995, compared to
$754,000 as of March 31, 1994.
Development and engineering expenses for the three months and nine months ended
March 31, 1995 were $247,054 (6.6% of sales) and $503,754 (6.4% of sales)
compared to $112,881 (5.9% of sales) and $398,728 (7.9% of sales), respectively,
for the same periods last year. The increase in Developement and Engineering
expenses is the direct result of an increased effort to develope new products.
Income tax expense is a direct result of the Company's net income or loss
before taxes.
The increase in Other Income is the result of the sale of some of the Company's
aged equipment that is no longer used in operations.
Net income for the three months and nine months ended March 31, 1995 was
$207,231 and $540,691, respectively, compared to $72,170 and a loss of
($108,553), respectively, for the same periods ended March 31, 1994. The major
reasons for this swing to profitability have been discussed above.
As of March 31, 1995, the Company's principal available sources of liquidity
were, respectively, from operations, a $700,000 bank line of credit, all of
which was available as of March 31, 1995, and a seven (7) year bank term note
taken in December, 1993, with an outstanding balance of $404,762 as of
March 31, 1995.
Accounts receivable increased by $871,252, from $1,033,552 at June 30, 1994
to $1,904,804 at March 31, 1995, a direct result of the increase in revenues
from $1,441,834 for the quarter ended June 30, 1994 to $3,366,036 for the
quarter ended March 31, 1995.
Inventories increased by $375,325, from $905,755 at June 30, 1994 to
$1,281,080 at March 31, 1995, as a result of increasing levels of business.
The Company's capital commitments for fiscal 1995 are expected to be at the
same level as fiscal 1994.
The Company believes that it will be able to offset the effects of inflation
by selected price increases in its products, although it can give no assurances
in this regard.
<PAGE>
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
None
Item 2 - Changes in Securities
Not applicable
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
None
<PAGE>
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 hereunto duly authorized.
IMTEC, INC.
BY: /s/ Richard L. Kalich
----------------------------
Richard L. Kalich
President &
Chief Executive Officer
BY: /s/ George S. Norfleet III
----------------------------
George S. Norfleet III
Secretary / Treasurer
