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 September 30, 1996.
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 October 29, 1996: 1,545,088
<PAGE>
IMTEC, INC.
INDEX
Page #
Part I Financial Information
Condensed Balance Sheets -
September 30, 1996 and June 30, 1996 3 - 4
Condensed Statements of Income -
Three Months Ended
September 30, 1996 and 1995 5
Condensed Statements of Cash Flows
Three Months Ended
September 30, 1996 and 1995 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 2 Changes in Securities 11
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>
September 30, June 30,
1996 1996 .
(Unaudited) *
ASSETS
Current Assets:
<S> <C> <C>
Cash $ 782,533 $ 806,633
Marketable Securities 54,671 54,671
Accounts and notes receivable: Trade, less allowance for doubtful accounts:
September 30, 1996 - $64,500
June 30, 1996 - $93,915 1,165,010 1,281,101
Inventories 1,571,157 1,512,037
Prepaid expenses and deferred charges 102,540 134,650
Income Tax Refundable 87,086
Deferred income tax 96,330 96,330
----------- ----------
Total Current Assets 3,772,241 3,972,508
------------ ------------
Plant and equipment 3,965,620 3,569,012
Less: Accumulated depreciation 2,692,203 2,573,562
------------ ------------
1,273,417 995,450
------------ ------------
Other Assets:
Deposits 54,667 150,481
Computer software less accumulated amortization
of $407,034 in 1996 and $390,229 in 1996, 94,203 109,008
Other intangibles less accumulated amortization of,
$466,952 in 1996 and $446,975 in 1996 243,037 211,638
----------- -----------
391,907 471,127
----------- -----------
$ 5,437,565 $ 5,439,085
========= =========
* From audited financial statements.
</TABLE>
The accompanying notes are an integral part of these
condensed financial statements.
<PAGE>
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
IMTEC, INC.
CONDENSED BALANCE SHEETS (CONTINUED)
September 30, June 30,
1996 1996 .
(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 213,174 430,420
Income tax payable 17,542 0
Accrued liabilities
Salaries and wages 127,823 176,276
Commissions 204,766 45,899
Other 346,154 417,030
----------- ------------
Total Current Liabilities 909,459 1,069,625
Long term debt less current installments - -
Long term capital lease obligations - -
----------------- ----------------
909,459 1,069,625
----------- ----------
Stockholder's equity:
Common stock - $.01 par value;
authorized 5,000,000 shares, issued and outstanding:
1,545,088 shares September 30, 1996
1,545,088 shares June 30, 1996 15,451 15,451
Additional paid-in capital 2,449,517 2,449,517
Retained Earnings 2,063,138 1,904,492
----------- -----------
Total Stockholder's Equity 4,528,106 4,369,460
----------- -----------
$ 5,437,565 $ 5,439,085
======== ========
* 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)
Three Months Ended
September 30,
1996 1995
---- ----
<S> <C> <C>
Net Sales $2,100,143 $2,580,110
Cost of Sales 1,038,799 1,426,444
----------- -----------
Gross Profit 1,061,344 1,153,666
Selling, general and
administrative expenses 667,334 686,739
Research and development
expenses 142,674 154,091
----------- ----------
Operating Profit 251,336 312,836
Other Income (Expenses):
Miscellaneous income
and other expenses 12,264 11,410
Interest Expense
Income (Loss) Before
Income Taxes 263,600 324,246
--------- ----------
Income Tax Expense 104,954 128,613
Net Income $ 158,646 $ 195,633
======= =======
Weighted average number of
common shares and common
shares equivalents outstanding 1,600,113 1,547,735
Earnings per common share and
common share equivalents $ .10 $ .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)
Three Months Ended
September 30,
1996 1995
---- ----
Cash flows from operating activities:
<S> <C> <C>
Net Earnings $158,646 $195,633
Adjust, to reconcile net earnings to,
net cash provided by operating activities:
Depreciation & amortization of
property plant, equipment
and other assets 155,423 122,125
Decrease(inc.) in accounts receivable 116,091 553,277
Decrease(inc.) income tax refundable 87,086 0
Decrease (inc.) in inventory (59,120) (36,408)
Decrease (inc.) in prepaid expenses
and other assets 127,924 (22,211)
Increase (dec.) in accounts payable (217,246) (258,596)
Increase (dec.) in income tax payable 17,542 91,619
Increase (dec.) in accrued liabilities 39,538 (190,561)
-------- ---------
Net cash provided by operating 425,884 454,878
Cash flows from (used in) investment activities:
Expenditures for property & equipment,
computer software and other
intangible assets (449,984) (196,507)
-------- ---------
Net cash used in invest. activities (449,984) (196,507)
Cash flows from (used in) financing activities:
Proceeds form issuance of notes
Principal notes payable to bank
Principal payments on long term debt
Principal payments under capital
lease obligations
Proceeds from issuance of stock 27,501
--------- ---------
Net cash provided by finance
activities 0 27,501
--------- ---------
Net increase (decrease) in cash (24,100) 285,872
Cash at the beginning of period 806,633 285,727
--------- ---------
Cash at the end of period $ 782,533 $ 571,599
========= =========
Supplemental Information Disclosures:
Interest paid
Income tax paid $ 36,994
</TABLE>
The accompanying notes are an integral part of these
condensed financial statements.
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 three month period ended September
30, 1996 are not necessarily indicative of the results to be expected for the
full year.
2 - Inventories
<TABLE>
<CAPTION>
Inventories consist of:
September 30, June 30,
1996 1996
<S> <C> <C>
Finished Products $ 21,175 $ 39,299
Work in Process 128,580 97,310
Purchased Components 1,421,402 1,375,428
----------- -----------
1,571,157 1,512,037
======== ========
</TABLE>
Inventory cost consisted of the cost of purchased components and
supplies, manufacturing labor and manufacturing overhead.
3 - Liability for Estimated Product Warranty
On September 30, 1996 and June 30, 1996, the Company had provided
$125,460 and $119,954 respectively, against future product warranties based on
its experience with customer claims. Warranty expenses charged to income
amounted to approximately $18,405 for the three month period ended September 30,
1996 and $32,812 for the three month period ended September 30, 1995.
<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 September 30, 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>
Three months ended September 30,
1996 1995
<S> <C> <C>
Common shares 1,545,088 1,475,355
Options 53,857 72,380
Warrants -- --
---------- ----------
Total for primary calculation 1,598,945 1,547,735
Options 1,167 --
Warrants -- --
---------- ----------
Total for fully-diluted calculation 1,600,113 1,547,735
========== ==========
</TABLE>
<PAGE>
IMTEC, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Three Months Ended September 30, 1996
as compared to Three Months Ended September 30, 1995
Revenues for the three months ended September 30, 1996 decreased
approximately 18.6% from the corresponding period in 1995.
Revenues from Bar Code labels and printing supplies were $1,502,539 for
the quarter ended September 30, 1996 compared to $1,174,939 for the same period
last year. Bar Code labels and printing supplies represented 71.5% of total
revenue for the three months ended September 30, 1996 compared to 45.5% for the
same period last year. Management believes that the upward trend in Bar Code
labels and printing supply sales are due to a stronger focus by the sales group
and expanded partnering and distribution relationships.
Revenues from the sales of Industrial Bar Code Equipment were $597,604
for the three months ended September 30, 1996 compared to $1,405,171 for the
same period in 1995. Industrial Bar Code Equipment sales represented 28.5% of
total revenue for the three months ended September 30, 1996 compared to 54.5%
for the same period last year. . The decrease in bar code equipment sales in the
three months ended September 30, 1996, when contrasted with the same period in
1995, is primarily attributable to the completion, in October, 1995, of a
contract with a single customer. When this contract is removed from the
revenues, the remaining equipment business increased 6.4% from $561,470 for the
three months ended September 30, 1995 , to $597,604 for the three months ended
September 30, 1996. Management believes that the upward trend in Industrial Bar
Code Equipment sales will continue due to expanded partnering and distribution
relationships, new product offerings and expanded use of technology. The machine
backlog, exclusive of the single customer mentioned above, has increased from
$560,560 at September 30, 1995 to $774,246 at September 30, 1996.
Cost of sales for the three months ended September 30, 1996 were 49.5%,
down from 55.4% for the same period in 1995. This decrease is directly related
to the product mix, heavily favoring the media products. As discussed above,
Media represented 71.5% of total revenue.
Selling, general and administrative expenses were $667,334 for the
quarter ended September 30, 1996 as compared to $693,229 for the quarter ended
September 30, 1995. This represents a 3.3% decrease in these expenses. Total
backlog as of September 30, 1996 was approximately $1,927 ,000, all of which is
expected to be shipped by June 30, 1996, compared to approximately $1,425,000 as
of September 30, 1995. This increase in backlog of orders is related to the
expanded partnering and distribution relationships discussed above..
Development and engineering expenses for the quarter ended September
30, 1996 were $142,674 (6.8% of sales) compared to $154,091 (6.0% of sales) for
the same period last year. These expenditures reflect 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 quarter ended September 30, 1996 was $158,646
compared to $195,626 for the quarter ended September 30, 1995. The major reason
for this decrease is reduced revenues.
As of September 30, 1996, 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 September 30, 1996.
Accounts receivable decreased from $1,281,101 at June 30, 1996 to
$1,165,010 at September 30, 1996, a direct result of the increase in efforts to
encourage customers to pay within terms and lower sales revenues.
Inventories increased slightly, from $1,512,037 at June 30, 1996 to
$1,571,157 at September 30, 1996.
The Company's capital commitments for fiscal 1997 are expected to be
approximately 50% above the level of fiscal 1996. This is the result of the
Company's commitment to improve the capability and capacity of its label
operations.
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
---------------------------------------------------
Not applicable
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, September 30, 1996
</LEGEND>
<CIK> 0000730045
<NAME> IMTEC, Inc.
<MULTIPLIER> 1
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Jun-30-1997
<PERIOD-START> Jul-01-1996
<PERIOD-END> Sep-30-1996
<EXCHANGE-RATE> 1
<CASH> 782533
<SECURITIES> 54671
<RECEIVABLES> 1229510
<ALLOWANCES> 64500
<INVENTORY> 1571157
<CURRENT-ASSETS> 3772241
<PP&E> 3965620
<DEPRECIATION> 2692203
<TOTAL-ASSETS> 5437565
<CURRENT-LIABILITIES> 909459
<BONDS> 0
0
0
<COMMON> 15451
<OTHER-SE> 2449517
<TOTAL-LIABILITY-AND-EQUITY> 5437565
<SALES> 2100143
<TOTAL-REVENUES> 2100143
<CGS> 579985
<TOTAL-COSTS> 1038799
<OTHER-EXPENSES> 797744
<LOSS-PROVISION> 64501
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 251336
<INCOME-TAX> 104954
<INCOME-CONTINUING> 158646
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 158646
<EPS-PRIMARY> 0.10
<EPS-DILUTED> 0.10
</TABLE>
