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 EXCHANG
ACT OF 1934.
For the quarterly period ended December 31, 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 January 20, 1996, 1,545,088
<PAGE>
IMTEC, INC.
INDEX
Page #
Part I Financial Information
Condensed Balance Sheets -
December 31, 1996 and June 30, 1996 3 - 4
Condensed Statements of Income -
Three Months and Six Months Ended
December 31, 1996 and 1995 5
Condensed Statements of Cash Flows
Three Months and Six Months Ended
December 31, 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 4 Submission of Matters to a Vote of
Security Holders 11
Item 6 Exhibits and Reports on Form 8-K 11
Signatures 12
<PAGE>
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
IMTEC, INC.
CONDENSED BALANCE SHEETS
December 31, June 30,
1996 1996 .
(Unaudited) *
ASSETS
Current Assets:
<S> <C> <C>
Cash $ 920,964 $ 806,633
Marketable Securities 54,671 54,671
Accounts and notes receivable: Trade,
less allowance for doubtful accounts:
December 31, 1996 - $74,397
June 30, 1996 - $93,915 1,200,596 1,281,101
Inventories 1,603,349 1,512,037
Prepaid expenses and deferred charges 92,316 134,650
Income Tax Refundable 0 87,086
Deferred income tax 96,330 96,330
---------- ---------
Total Current Assets 3,968,226 3,972,508
Plant and equipment 4,076,616 3,569,012
Less: Accumulated depreciation 2,810,843 2,573,562
--------- ---------
1,265,773 995,450
Other Assets:
Deposits 41,605 150,481
Computer software less accumulated amortization
of $423,838 in 1996 and $317,718 in 1996, 77,399 109,008
Other intangibles less accumulated amortization of,
$486,928 in 1996 and $362,535 in 1996 233,230 211,638
--------- ---------
352,234 471,127
$ 5,586,233 $ 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)
December 31, 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 152,427 430,420
Income tax payable 141,103 0
Accrued liabilities
Salaries and wages 144,237 176,276
Commissions 199,715 45,899
Other 307,563 417,030
------- ---------
Total Current Liabilities 945,045 1,069,625
Long term debt less current installments - -
Long term capital lease obligations - -
945,045 1,069,625
Stockholders' equity:
Common stock - $.01 par value;
authorized 5,000,000 shares, issued and outstanding:
1,545,088 shares December 31, 1996
1,545,038 shares June 30, 1996 15,451 15,451
Additional paid-in capital 2,449,517 2,449,517
Retained Earnings 2,176,220 1,904,492
--------- ---------
Total Stockholders' Equity 4,641,188 4,369,460
$ 5,586,233 $ 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)
Six Months Ended Three Months Ended
December 31, December 31,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net Sales $4,197,209 $4,764,384 $2,097,066 $2,184,273
Cost of Sales 2,217,389 2,685,783 1,178,594 1,259,346
--------- --------- --------- ---------
Gross Profit 1,979,820 2,078,601 918,472 924,927
Selling, general and
administrative expenses 1,253,169 1,090,016 585,840 403,271
Research and development
expenses 300,946 305,960 158,274 151,866
--------- -------- ------- -------
Operating Profit 425,705 682,625 174,358 369,790
Other Income:
Miscellaneous income
and other expenses 23,141 12,820 10,877 1,411
Interest Expense 0 0 0 0
Income Before
Income Taxes 448,846 695,445 185,235 371,201
--------- -------- ------- -------
Income Tax Expense 177,118 275,850 72,164 147,237
--------- -------- ------- -------
Net Income $ 271,728 $ 419,595 $ 113,071 $ 223,964
========== ========= ========= =========
Weighted average number of
common shares and common
shares equivalents outstanding 1,604,691 1,563,634 1,609,280 1,579,532
Earnings per common share and
common share equivalents $ .17 $ .27 $ .07 $ .14
====== ====== ====== ======
</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,
1996 1995 1996 1995
Cash flows from operating activities:
<S> <C> <C> <C> <C>
Net Earnings $271,728 $419,595 $113,071 $223,964
Adjust, to reconcile net earnings to,
net cash provided by operating activities:
Depreciation & amortization of
property plant, equipment
and other assets 310,843 255,643 155,420 133,508
Decrease(inc.) in accounts receivable 80,505 499,428 (35,586) (53,849)
Decrease(inc.) income tax refundable 87,086
Decrease (inc.) in inventory (91,312) (78,004) (32,192) (41,596)
Decrease (inc.) in prepaid expenses
and other assets 151,210 (28,109) 23,286 (5,898)
Increase (dec.) in accounts payable (277,993) (323,415) (60,747) (64,819)
Increase (dec.) in income tax payable 141,103 (30,594) 123,561 (122,213)
Increase (dec.) in accrued liabilities 12,310 (490,699) (27,217) (300,130)
------- ------- ------- ---------
Net cash from by operating activities 685,480 223,845 259,596 (213,033)
Cash flows from (used in) investment activities:
Expenditures for property & equipment,
computer software and other
intangible assets (571,149) (285,179) (121,165) (88,672)
Net cash used in invest. activities (571,149) (285,179) (121,165) (88,672)
Cash flows from (used in) financing activities:
Principal notes payable to bank
Proceeds from new long term debt
Principal payments on long term debt
Principal payments under capital
lease obligations
Proceeds from issuance of stock 0 27,501 0 0
Net cash provided by finance
activities 0 27,501 0 0
Net increase (decrease) in cash 114,331 (33,833) 138,431 (319,705)
Cash at the beginning of period 806,633 685,727 782,533 971,599
--------- --------- --------- ---------
Cash at the end of period $ 920,964 $ 651,894 $ 920,964 $ 651,894
======= ======= ======= =======
Supplemental Information Disclosures:
Interest paid
Income tax paid $ 32,512 $ 306,444 $ 32,512 $ 269,450
</TABLE>
The accompanying notes 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 six month period ended December 31,
1996 are not necessarily indicative of the results to be expected for the full
year.
2 - Inventories
Inventories consist of:
December 31, June 30,
1996 1996
Finished Products $ 12,913 $ 39,299
Work in Process 141,624 97,310
Purchased Components 1,448,812 1,375,428
--------- ---------
1,603,349 1,512,037
========= =========
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, 1996 and June 30, 1996, the Company had provided
$137,739 and $119,954 respectively, against future product warranties based on
its experience with customer claims. Warranty expenses charged to income
amounted to approximately $45,925 for the six month period ended December 31,
1996 and $57,704 for the six month period ended December 31, 1995.
<PAGE>
4 - Earnings per Common Share
Primary earnings per share were computed by dividing net earnings 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 31st 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,
1996 1995
<S> <C> <C>
Common shares 1,545,088 1,477,122
Options 55,666 86,512
Warrants 0 0
--------- ---------
Total for primary calculation 1,600,754 1,563,634
Options 3,937 0
Warrants 0 0
--------- ---------
Total for fully-diluted calculation 1,604,691 1,563,634
========= =========
Three months ended December 31,
1996 1995
Common shares 1,545,088 1,478,888
Options 57,475 100,644
Warrants 0 0
--------- ---------
Total for primary calculation 1,602,563 1,579,532
Options 6,717 0
Warrants 0 0
--------- ---------
Total for fully-diluted calculation 1,609,280 1,579,532
========= =========
</TABLE>
<PAGE>
IMTEC, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Three Months and Six Months Ended December 31, 1996
as compared to Three Months and Six Months Ended December 31, 1995
Revenues for the three months and six months ended December 31, 1996
decreased approximately 4.0% and approximately 11.9%, respectively, over the
corresponding periods in 1995.
Revenues from Bar Code labels and printing supplies were $1,497,482 and
$3,000,021 for the three month and six month periods ended December 31, 1996
compared to $1,240,340 and $2,415,280, respectively, for the same periods last
year. Bar Code labels and printing supplies represented 71.4% and 71.5% of total
revenue for the three month and six month periods ended December 31, 1996
compared to 56.8% and 50.7%, respectively, for the same periods last year.
Revenues from the sales of Industrial Bar Code Equipment were $599,584
and $1,197,188 for the three and six month periods ended December 31, 1996
compared to $934,771 and $2,333,055 for the same periods in 1995. Industrial Bar
Code Equipment sales represented 28.6% and 28.5% of total revenue for the three
month and six month periods ended December 31, 1996 compared to 43.2% and 49.3%
respectively for the same periods last year. The decrease in bar code equipment
sales in the three month and six month periods ended December 31, 1996, when
contrasted with the same periods in 1995, is primarily attributable to the
completion, in October, 1995 of a contract with UPS. This contract represented
sales of approximately $278,938 for the three months and approximately
$1,115,752 for the six months ended December 31, 1995. When this contract is
removed from the revenues for the prior year, the remaining equipment business
decreased 8.6% from $655,833 for the three months ended December 31, 1995 , to
$599,584 for the three months ended December 31, 1996 and, decreased 1.7% from
$1,217,303 for the six months ended December 31, 1995 , to $1,197,188 for the
six months ended December 31, 1996. Equipment backlog decreased from $549,211 at
December 31, 1995 to $325,642 at December 31, 1996. Management believes that the
trend in Industrial Bar Code Equipment sales will move upward due to expanded
partnering and distribution relationships, new product offerings (including
three new machine products introduced during the prior fiscal quarter) and
expanded use of technology.
Cost of sales for the three months and six months ended December 31,
1996 were 56.2% and 52.8% respectively, compared to 57.7% and 56.4% for the same
periods in 1995.
<PAGE>
Selling, general and administrative expenses were $585,840 for the
quarter ended December 31, 1996 and $1,253,169 for the six months ended December
31, 1996, as compared to $403,271 and $1,090,016 respectively for the
corresponding periods ended December 31, 1995. Such 1995 expenses would have
been $618,271 and $1,305,016, respectively, but for a decision by the Vermont
Supreme Court in December 1995 which overturned a judgment against the Company
in a wrongful termination suit brought by a former employee, thereby enabling
the Company to reverse a previously established reserve against such judgment of
$215,000. The effect of the reversal represented $.08 per share in earnings
during the prior year. Total backlog as of December 31, 1996 was $1,482,170, all
of which is shipable by June 30, 1996, compared to approximately $1,486,852 as
of December 31, 1995.
Development and engineering expenses for the three months and six
months ended December 31, 1996 were $158,274 (7.5% of sales) and $300,946 (7.2%
of sales) compared to $151,866 (6.9% of sales) and $305,960 (6.4% of sales),
respectively, for the same periods last year.
Income tax expense is a direct result of the Company's net income
before taxes.
Net income for the three months and six months ended December 31, 1996
was $113,071 and $271,728, respectively, compared to $223,964 and $419,595,
respectively, for the same periods ended December 31, 1995.
As of December 31, 1996, the Company's principal available sources of
liquidity were, respectively, from operations and a $1,000,000 bank line of
credit, all of which was available as of December 31, 1996.
Inventories increased by $91,312, from $1,512,037 at June 30, 1996 to
$1,603,349 at December 31, 1996, as a result of increasing levels of business in
the sales of labels and printing supplies.
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 anticipates that it will fund such commitments from
operating revenues and, if required, its bank line of credit.
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 11, 1996 - Annual Meeting of Stockholders
B. Election of Directors - all nominees elected
Item 5 - Other Information
None
Item 6 - Exhibits and Reports on Form 8-K
Exhibit 27 - Financial Data Schedule
<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, 1996
</LEGEND>
<CIK> 0000730045
<NAME> IMTEC, Inc.
<MULTIPLIER> 1
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<CASH> 92694
<SECURITIES> 54671
<RECEIVABLES> 1200596
<ALLOWANCES> 74397
<INVENTORY> 1603349
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0
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<COMMON> 15451
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</TABLE>
