UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 December 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 outstanding as of January 31, 1996, 1,545,088
<PAGE>
IMTEC, INC.
INDEX
Page #
Part I Financial Information
Condensed Balance Sheets -
December 31, 1995 and June 30, 1995 3 - 4
Condensed Statements of Income -
Three Months and Six Months Ended
December 31, 1995 and 1994 5
Condensed Statements of Cash Flows
Three Months and Six Months Ended
December 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
<TABLE>
<CAPTION>
December 31, June 30,
1995 1995 .
(Unaudited) *
ASSETS
Current Assets:
<S> <C> <C>
Cash $ 351,894 $ 285,727
Marketable Securities 300,000 400,000
Accounts and notes receivable: Trade,
less allowance for doubtful accounts:
December 31, 1995 - $101,825
June 30, 1995 - $101,042 1,140,580 1,640,008
Inventories 1,319,968 1,241,964
Prepaid expenses and deferred charges 126,182 78,683
Deferred income tax 148,489 148,489
----------- -----------
Total Current Assets 3,387,113 3,794,871
------------ ------------
Plant and equipment 3,519,419 3,266,232
Less: Accumulated depreciation 2,411,866 2,237,151
------------ ------------
1,107,553 1,029,081
------------ -------------
Other Assets:
Deposits 8,815 28,205
Computer software less accumulated amortization
of $354,256 in 1996 and $317,718 in 1995, 139,982 161,160
Other intangibles less accumulated amortization of,
$406,925 in 1996 and $362,535 in 1995 227,101 254,859
----------- -----------
367,083 444,224
----------- -----------
$ 4,870,564 $ 5,268,176
========= =========
* From audited financial statements.
</TABLE>
The accompanying notes are an integral part of these
condensed financial statements.
<PAGE>
PART I - FINANCIAL INFORMATION
IMTEC, INC.
CONDENSED BALANCE SHEETS (CONTINUED)
<TABLE>
<CAPTION>
December 31, June 30,
1995 1995 .
(Unaudited) *
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities
<S> <C> <C>
Notes payable - bank $ 0 $ 0
Current installments of long term debt 0 0
Current capital lease obligations 0 0
Accounts payable 313,306 636,721
Income tax payable (26,433) 4,161
Accrued liabilities
Salaries and wages 89,258 358,750
Commissions 203,959 67,113
Other 443,819 801,872
----------- ------------
Total Current Liabilities 1,023,909 1,868,617
Long term debt less current installments - -
Long term capital lease obligations - -
---------- ----------
1,023,909 1,868,617
---------- ----------
Stockholder's equity:
Common stock - $.01 par value;
authorized 5,000,000 shares, issued and outstanding:
1,478,888 shares December 31, 1995
1,470,138 shares June 30, 1995 14,789 14,701
Additional paid-in capital 2,227,102 2,199,689
Retained Earnings 1,604,764 1,185,169
----------- -----------
Total Stockholder's Equity 3,846,655 3,399,559
----------- -----------
$ 4,870,564 $ 5,268,176
======== ========
* From audited financial statements.
</TABLE>
The accompanying notes are an integral part of these
condensed financial statements.
<PAGE>
<TABLE>
<CAPTION>
IMTEC, INC.
CONDENSED STATEMENTS OF INCOME
(Unaudited)
Six Months Ended Three Months Ended
December 31, December 31,
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales $4,764,384 $4,114,963 $2,184,273 $2,261,396
Cost of Sales 2,685,783 2,298,172 1,259,346 1,267,863
----------- ----------- ----------- -----------
Gross Profit 2,078,601 1,816,791 924,927 993,533
Selling, general and
administrative expenses 1,090,016 1,038,138 403,271 564,259
Research and development
expenses 305,960 256,704 151,866 142,950
----------- ---------- ---------- ----------
Operating Profit/(Loss) 682,625 521,949 369,790 286,324
Other Income (Expenses):
Miscellaneous income
and other expenses 12,820 26,900 1,411 26,875
Interest Expense 0 (23,561) 0 (13,077)
---------- -------- -------- --------
Income (Loss) Before
Income Taxes 695,445 525,288 371,201 300,122
---------- ---------- ---------- ----------
Income Tax Expense (Benefit) 275,850 191,827 147,237 108,957
--------- --------- --------- ---------
Net Income (Loss) $ 419,595 $ 333,461 $ 223,964 $ 191,165
======= ======= ======= =======
Weighted average number of
common shares and common
shares equivalents outstanding 1,563,634 1,467,663 1,579,532 1,470,213
Earnings per common share and
common share equivalents $ .27 $ .23 $ .14 $ .13
====== ====== ====== ======
</TABLE>
The accompanying notes are an integral part of these
condensed financial statements.
<PAGE>
<TABLE>
<CAPTION>
IMTEC, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended Three Months Ended
December 31, December 31,
1995 1994 1995 1994
---- ---- ---- ----
Cash flows from operating activities:
<S> <C> <C> <C> <C>
Net Earnings $419,595 $333,453 $223,964 $191,165
Adjust, to reconcile net earnings to,
net cash provided by operating activities:
Depreciation & amortization of
property plant, equipment
and other assets 255,643 239,666 133,508 117,608
Decrease(inc.) in accounts receivable 499,428 (585,490) (53,849) (181,642)
Decrease(inc.) income tax refundable 163,576 50,890
Decrease (inc.) in inventory (78,004) (469,809) (41,596) (422,561)
Decrease (inc.) in prepaid expenses
and other assets (28,109) (25,895) (5,898) (10,223)
Increase (dec.) in accounts payable (323,415) 330,545 (64,819) 315,715
Increase (dec.) in income tax payable (30,594) 30,144 (122,213) 30,144
Increase (dec.) in accrued liabilities (490,699) 367,290 (300,130) 265,823
---------- -------- ---------- ---------
Net cash from by operating activities 223,845 383,480 (213,033) 356,955
Cash flows from (used in) investment activities:
Expenditures for property & equipment,
computer software and other
intangible assets (285,179) (173,536) (88,672) (98,789)
---------- ---------- ---------- ----------
Net cash used in invest. activities (285,179) (173,536) (88,672) (98,789)
Cash flows from (used in) financing activities:
Principal notes payable to bank (149,224) (253,454)
Proceeds from new long term debt
Principal payments on long term debt (51,019) (16,641)
Principal payments under capital
lease obligations (6,171) (3,694)
Proceeds from issuance of stock 27,501 4,751 2,748
--------- -------- ---------
Net cash provided by finance
activities 27,501 (201,663) 0 (271,041)
Net increase (decrease) in cash (33,833) 8,281 (319,705) (12,875)
Cash at the beginning of period 685,727 3,627 971,599 24,783
-------- ---------- -------- ---------
Cash at the end of period $ 651,894 $ 11,908 $ 651,894 $ 11,908
======= ======= ======= =======
Supplemental Information Disclosures:
Interest paid $ 23,561 $ 13,077
--------- ---------
Income tax paid $ 306,444 $ 256,913 $ 269,450 $ 255,535
--------- --------- --------- ---------
,The accompanying notes are an integral part of these condensed financial statements.
</TABLE>
<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 six month period ended December 31,
1995 are not necessarily indicative of the results to be expected for the full
year.
2 - Inventories
<TABLE>
<CAPTION>
Inventories consist of:
December 31, June 30,
1995 1995
<S> <C> <C>
Finished Products $ 11,128 $ 403,512
Work in Process 35,096 121,200
Purchased Components 1,273,744 1,046,906
----------- -----------
1,319,968 1,571,618
Less: Progress billing -- (329,654)
----------- -----------
$ 1,319,968 $ 1,241,964
======== ========
</TABLE>
Inventory cost consisted of the cost of purchased components and
supplies, manufacturing labor and manufacturing overhead.
3 - Liability for Estimated Product Warranty
On December 31, 1995 and June 30, 1995, the Company had provided
$264,660 and $289,906 respectively, against future product warranties based on
its experience with customer claims. Warranty expenses charged to income
amounted to approximately $57,704 for the six month period ended December 31,
1995 and $29,944 for the six month period ended December 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 December 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:
<TABLE>
<CAPTION>
Six months ended December 31,
1995 1994
<S> <C> <C>
Common shares 1,477,122 1,333,128
Options 86,512 81,995
Warrants 0 42,834
---------- ----------
Total for primary calculation 1,563,634 1,457,957
Options 0 7,899
Warrants 0 1,808
---------- ----------
Total for fully-diluted calculation 1,563,634 1,467,663
======= =======
Three months ended December 31,
1995 1994
Common shares 1,478,888 1,334,054
Options 100,644 90,380
Warrants 0 44,654
---------- ----------
Total for primary calculation 1,579,532 1,469,089
Options 0 920
Warrants 0 205
---------- -----------
Total for fully-diluted calculation 1,579,532 1,470,213
======= =======
</TABLE>
<PAGE>
IMTEC, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Three Months and Six Months Ended December 31, 1995
as compared to Three Months and Six Months Ended December 31, 1994
Revenues for the three months decreased approximately 3.4% and revenues
for the six months ended December 31, 1995 increased approximately 15.8%,
respectively, over the corresponding periods in 1994.
Revenues from the sales of Industrial Bar Code Equipment were $943,933
and $2,349,104 for the three and six month periods ended December 31, 1995
compared to $1,065,662 and $1,778,782 for the same periods in 1994. Industrial
Bar Code Equipment sales represented 43.2% and 49.3% of total revenue for the
three month and six month periods ended December 31, 1995 compared to 47.1% and
43.2% respectively for the same periods last year. It should be noted that
approximately $279,000 for the three months and approximately $1,059,000 for the
six months ended December 31, 1995 represented sales to a single customer
compared to approximately $195,000 and $550,000 respectively for the same
periods last year to the same customer. Equipment backlog, exclusive of the
single customer mentioned above, increased from $506,255 at December 31, 1994 to
$549,211 at December 31, 1995. The backlog for the order by the single customer
mentioned above was approximately $2,800,000 at December 31, 1994. That order
completed shipment in October, 1995.
Revenues from Bar Code labels and printing supplies were $1,240,340 and
$2,415,280 for the three month and six month periods ended December 31, 1995
compared to $1,195,734 and $2,336,041 respectively for the same periods last
year. Bar Code labels and printing supplies represented 56.8% and 50.7% of total
revenue for the three month and six month periods ended December 31, 1995
compared to 52.9% and 56.8% respectively for the same periods last year.
Cost of sale for the three months and six months ended December 31,
1995 were 57.7% and 56.4% respectively, compared to 56.1% and 55.8% for the same
periods in 1994.
Selling, general and administrative expenses were $403,271 for the
quarter ended December 31, 1995 and $1,090,016 for the six months ended December
31, 1995, as compared to $564,259 and $1,038,138 respectively for the
corresponding periods ended December 31, 1994. The decrease for the quarter is
the result of the Vermont Supreme Court's ruling in favor of the Company in a
wrongful termination suit, reversing a lower court's earlier ruling in favor of
the plianiff, in the amount of $175,000 plus interest. The Supreme Court's
decision resulted in the Company's reversal of a $215,000 reserve, the majority
of which was originally expensed in June, 1994. The effect of the reversal
represents $.08 per share in earnings. Total backlog as of December 31, 1995 was
$1,486,852, all of which is shipable by June 30, 1996, compared to approximately
$4,100,000 ($2,800,000 was to a single customer mentioned above) as of December
31, 1994.
<PAGE>
Development and engineering expenses for the three months and six
months ended December 31, 1995 were $151,866 (6.9% of sales) and $305,960 (6.4%
of sales) compared to $142,950 (6.3% of sales) and $256,704 (6.2% of sales),
respectively, for the same periods last year. This increase reflects ongoing
commitment to advancing the Company's technology and the efforts to bring
several new products to the market.
Income tax expense is a direct result of the Company's net income or
loss before taxes.
Net income for the three months and six months ended December 31, 1995
was $223,964 and $419,595, respectively, compared to $191,165 and $333,461,
respectively, for the same periods ended December 31, 1994.
As of December 31, 1995, the Company's principal available sources of
liquidity were, respectively, from operations and a $700,000 bank line of
credit, all of which was available as of December 31, 1995.
Accounts receivable decreased by $499,428, from $1,640,008 at June 30,
1995 to $1,140,580 at December 31, 1995, a direct result of the increase in
efforts to encourage customers to pay within terms. The average aged receivable
dropped from 59.9 days for the quarter ended December 31, 1994 to 51.7 days for
the quarter ended December 31, 1995
Inventories increased by $78,008, from $1,241,964 at June 30, 1995 to
$1,319,968 at December 31, 1995, as a result of increasing levels of business.
The Company's capital commitments for fiscal 1996 are expected to be at
the same level as fiscal 1995.
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 if Matters to a Vote of Security Holders
---------------------------------------------------
A. December 4, 1995 - Annual Meeting of Stockholders
B. Election of Directors - all nominees elected
C. Proposal to Ratify Election of KPMG Peat Marwick LLP as
Independent Certified Public Accountants for the Company's
fiscal year ending June 30, 1996.
Item 5 - 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
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
IMTEC, Inc., EX-27, FDS for 10-Q, December 31, 1995
</LEGEND>
<CIK> 0000730045
<NAME> IMTEC, Inc.
<MULTIPLIER> 1
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1
<CASH> 351894
<SECURITIES> 300000
<RECEIVABLES> 1242405
<ALLOWANCES> 101825
<INVENTORY> 1319968
<CURRENT-ASSETS> 3387113
<PP&E> 3519419
<DEPRECIATION> 2411866
<TOTAL-ASSETS> 4870564
<CURRENT-LIABILITIES> 1023909
<BONDS> 0
<COMMON> 14789
0
0
<OTHER-SE> 2227102
<TOTAL-LIABILITY-AND-EQUITY> 4870564
<SALES> 4764384
<TOTAL-REVENUES> 4764384
<CGS> 1746047
<TOTAL-COSTS> 2685783
<OTHER-EXPENSES> 1395976
<LOSS-PROVISION> 3000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 695445
<INCOME-TAX> 275850
<INCOME-CONTINUING> 419595
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 419595
<EPS-PRIMARY> 0.27
<EPS-DILUTED> 0.27
</TABLE>
