<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended August 28, 1994
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________________ to _________________
Commission File Number 1-8770
M E A S U R E X C O R P O R A T I O N
- - --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 94-1658697
- - --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Results Way, Cupertino, California 95014
- - --------------------------------------------------------------------------------
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code: (408) 255-1500
Not Applicable
- - --------------------------------------------------------------------------------
(Former name, former address & former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common stock outstanding at September 30, 1994: 18,013,023(1)
(1) Excludes common stock held in treasury.
This document contains 18 pages, with the Exhibit Index located on pages 15.
1
<PAGE>
MEASUREX CORPORATION
Index
Part I. Financial Information Page No.
- - ------------------------------ --------
Item 1. Financial Statements
Consolidated Statements of Income -
Three Months and Nine Months ended August 28, 1994
and August 29, 1993 3
Consolidated Balance Sheets -
August 28, 1994 and November 28, 1993 4-5
Consolidated Statements of Cash Flows -
Nine Months ended August 28, 1994 and
August 29, 1993 6
Notes to Consolidated Financial Statements 7-11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12-14
Part II. Other Information
- - ---------------------------
Item 1. Legal Proceedings 15
Item 2. Changes in Securities 15
Item 3, Defaults Upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
Exhibits:
10 - Material contracts
11 - Computation of Net Income Per Share
27 - Financial Data Schedule
2
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
MEASUREX CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollar amounts in thousands except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
--------------------- ----------------------
August 28, August 29, August 28, August 29,
1994 1993 1994 1993
- - ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Systems $39,542 $38,324 $113,642 $116,401
Service and other 26,112 25,944 76,235 75,847
------- ------- -------- --------
Total revenues 65,654 64,268 189,877 192,248
------- ------- -------- --------
Operating costs and expenses:
Systems 25,439 24,593 72,659 76,733
Service and other 16,541 16,068 47,899 48,221
Product development 4,985 5,550 14,929 15,454
Selling and administrative 15,681 15,674 46,886 45,986
------- ------- -------- --------
Total operating costs
and expenses 62,646 61,885 182,373 186,394
------- ------- -------- --------
Earnings from operations 3,008 2,383 7,504 5,854
Other income (expense):
Interest expense (331) (411) (997) (583)
Interest income and other 1,484 1,632 4,155 4,390
------- ------- -------- --------
Total other income, net 1,153 1,221 3,158 3,807
------- ------- -------- --------
Income before income taxes and
cumulative effect of accounting
change 4,161 3,604 10,662 9,661
Provision for income taxes 1,623 1,261 4,158 3,408
------- ------- -------- --------
Income before cumulative effect
of accounting change 2,538 2,343 6,504 6,253
Cumulative effect of accounting
change - - 524 -
------- ------- -------- --------
Net income $ 2,538 $ 2,343 $ 7,028 $ 6,253
======= ======= ======== ========
Income per share:
Income before cumulative effect
of accounting change $ .14 $ .13 $ .36 $ .35
Cumulative effect of accounting
change - - .03 -
------- ------- -------- --------
Net income per share $ .14 $ .13 $ .39 $ .35
======= ======= ======== ========
Dividends per share $ .11 $ .11 $ .33 $ .33
======= ======= ======== ========
Average number of common and
common equivalent shares 18,103 17,945 18,098 18,065
======= ======= ======== ========
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
3
<PAGE>
MEASUREX CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
August 28, November 28,
ASSETS 1994 1993
- - ------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 77,352 $ 76,040
Marketable securities and short-term
investments 23,471 35,371
Accounts receivable 58,781 55,126
Inventories 33,597 35,697
Prepaid expenses and other 11,779 11,473
-------- --------
Total current assets 204,980 213,707
-------- --------
Contracts receivable 30,455 26,651
Service parts, net 3,823 3,178
Property, plant and equipment, net 50,889 53,161
Other assets 20,789 21,619
-------- --------
Total assets $310,936 $318,316
======== ========
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
4
<PAGE>
MEASUREX CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands except share and per share data)
<TABLE>
<CAPTION>
August 28, November 28,
LIABILITIES AND STOCKHOLDERS' EQUITY 1994 1993
- - ------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
Current liabilities:
Short-term debt $ 4,063 $ -
Current portion of long-term debt 4,377 4,516
Accounts payable 4,494 6,732
Accrued expenses 55,744 62,594
Income taxes payable 633 2,145
-------- --------
Total current liabilities 69,311 75,987
-------- --------
Long-term debt 13,257 16,783
Deferred income taxes 11,768 13,682
-------- --------
Total liabilities 94,336 106,452
-------- --------
Commitments and Contingencies - -
Stockholders' Equity:
Preferred stock, $.01 par value:
Authorized: 10,000,000 shares;
issued and outstanding: none - -
Common stock, $.01 par value:
Authorized: 50,000,000 shares;
outstanding: 1994 - 19,035,868 shares,
1993 - 19,036,948 shares 190 190
Additional capital 75,379 75,202
Retained earnings 167,231 167,211
Net unrealized losses on marketable securities (252) -
Cumulative translation adjustments (4,020) (5,707)
Less: Treasury stock, at cost: 1994 - 1,069,304
shares, 1993 - 1,192,726 shares (21,928) (25,032)
-------- --------
Total stockholders' equity 216,600 211,864
-------- --------
Total liabilities and stockholders' equity $310,936 $318,316
======== ========
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
5
<PAGE>
MEASUREX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
-------------------------
August 28, August 29,
1994 1993
- - -------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 7,028 $ 6,253
Non-cash items included in net income:
Depreciation and amortization:
Service parts 791 1,065
Property, plant and equipment 6,867 7,391
Capitalized software and goodwill 3,222 2,895
Deferred income taxes (1,914) 173
Translation (gain)loss (477) 4,421
Inventory reserves 762 2,183
Net (increase) decrease in:
Accounts and contracts receivable (4,831) (9,113)
Inventories and service parts 440 (1,773)
Prepaid and other (45) (511)
Net increase (decrease) in:
Accounts payable and accrued expenses (10,482) (15,561)
Income taxes payable (1,661) (1,559)
Other, net 875 786
-------- --------
Net cash provided by (used in) operating activities 575 (3,350)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable securities and
short-term investments (73,724) (70,791)
Sale of marketable securities and short-
term investments 34,339 40,158
Maturities of short-term investments 51,285 37,112
Acquisition of property, plant and equipment (5,044) (5,582)
Acquisition of subsidiary, net of cash acquired - (1,668)
Capitalized software (2,307) (1,265)
-------- --------
Net cash provided by (used in) investing activities 4,549 (2,036)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Additions to short-term debt 4,063 -
Additions to long-term debt - 21,971
Reductions of long-term debt (3,665) (978)
Dividends (5,908) (5,926)
Stock issued under stock purchase and stock
option plans 1,929 1,382
Payment for treasury stock - (5,160)
-------- --------
Net cash provided by (used in) financing activities (3,581) 11,289
-------- --------
Effect of exchange rate fluctuations on
cash and cash equivalents (231) (5,570)
-------- --------
Net increase in cash and cash equivalents 1,312 333
Cash and cash equivalents at beginning of period 76,040 74,368
-------- --------
Cash and cash equivalents at end of period $ 77,352 $ 74,701
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ 997 $ 583
Income taxes $ 7,029 $ 5,187
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
6
<PAGE>
MEASUREX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements have been prepared in
accordance with SEC requirements for interim financial statements. They,
therefore, do not include all the disclosures which are presented in the
Measurex Corporation ("the Company") Annual Report on Form 10-K. It is suggested
that the financial statements be read in conjunction with the Consolidated
Financial Statements and notes thereto included in the Company's Annual Report
on Form 10-K.
The information furnished reflects all adjustments (consisting only of normal
recurring adjustments) which are, in the opinion of management, necessary for
the fair statement of financial position, results of operations and cash flows
for the interim period. The year-end condensed balance sheet data was derived
from audited financial statements, but does not include all disclosures required
by generally accepted accounting principles. The results of operations for the
periods presented are not necessarily indicative of results to be expected for
the full year.
Consolidations
The consolidated financial statements include the accounts of all subsidiaries
after elimination of inter company balances and transactions. The Company has
reclassified the presentation of certain prior year information to conform with
the current year presentation format.
Net Income per Share
Net income per share is computed based on the weighted average number of common
shares outstanding during the year adjusted to reflect the assumed exercise of
outstanding stock options to the extent these had a dilutive effect on the
computation.
Fiscal Year
The Company uses a 52-53 week fiscal year. 1994 and 1993 are 52 week fiscal
years.
Fair Value of Financial Instruments
In the first quarter of 1994, the Company elected to adopt Financial Accounting
Statement No. 115 "Accounting for Certain Investments in Debt and Equity
Securities". All marketable securities are deemed available for sale and
therefore reported at fair value with net unrealized gains and losses reported
net of related taxes as a separate component of stockholders' equity. When the
decline in market value is considered other than temporary, the loss is charged
to income as a write down. The Company believes that the fair value of its
long-term debt approximates the carrying value of those obligations as of August
28, 1994. The fair value of the Company's long-term debt is estimated based on
interest rates currently available to the Company for debt with similar terms
and maturities.
7
<PAGE>
MEASUREX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued)
(August 28, 1994 - Unaudited)
-----------------------------
NOTE 2. ACCOUNTS RECEIVABLE
Accounts receivable consist of the following:
(In thousands)
<TABLE>
<CAPTION>
August 28, November 28,
1994 1993
--------- ------------
<S> <C> <C>
Accounts receivable $ 54,444 $52,037
Contracts receivable 10,454 8,579
Less:
Allowance for non-collection and system returns (6,117) (5,490)
-------- -------
$ 58,781 $55,126
======== =======
</TABLE>
- - --------------------------------------------------------------------------------
NOTE 3. CONTRACTS RECEIVABLE
Contracts receivable consist of the following:
(In thousands)
<TABLE>
<CAPTION>
August 28, November 28,
1994 1993
-------- ------------
<S> <C> <C>
Contracts receivable $ 42,742 $36,887
Less:
Allowance for noncollection and system returns (1,833) (1,657)
-------- -------
40,909 35,230
Current portion (10,454) (8,579)
-------- -------
$ 30,455 $26,651
======== =======
</TABLE>
Customer financing for systems is collateralized by security in the related
asset. The Company maintains allowances for potential credit losses and such
losses have been within management's expectations. Contracts receivable from
two major customers amounted to approximately $11.2 million at August 28, 1994.
- - --------------------------------------------------------------------------------
NOTE 4. INVENTORIES
Inventories consist of the following:
(In thousands)
<TABLE>
<CAPTION>
August 28, November 28,
1994 1993
---------- ------------
<S> <C> <C>
Purchased parts and components $18,760 $18,217
Work in process 9,307 10,733
Finished subassemblies and systems 5,530 6,747
------- -------
$33,597 $35,697
======= =======
</TABLE>
- - --------------------------------------------------------------------------------
NOTE 5. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are recorded at cost and consist of the following:
(In thousands)
<TABLE>
<CAPTION>
August 28, November 28,
1994 1993
---------- ------------
<S> <C> <C>
Property, plant and equipment $113,991 $110,005
Less: Accumulated depreciation (63,102) (56,844)
-------- --------
$ 50,889 $ 53,161
======== ========
</TABLE>
- - --------------------------------------------------------------------------------
8
<PAGE>
MEASUREX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued)
(August 28, 1994 - Unaudited)
-----------------------------
NOTE 6. OTHER ASSETS
Other assets consist of the following:
(In thousands)
<TABLE>
<CAPTION>
August 28, November 28,
1994 1993
--------- ------------
<S> <C> <C>
Capitalized software, net $ 6,893 $ 7,246
Goodwill and other 13,896 14,373
------- -------
$20,789 $21,619
======= =======
</TABLE>
- - --------------------------------------------------------------------------------
NOTE 7. SHORT-TERM DEBT
The Company borrowed $4.1 million against its unsecured multicurrency line of
credit with a bank in July 1994. The proceeds of the loan were used to fund the
working capital needs of the Company's subsidiary in Japan.
- - --------------------------------------------------------------------------------
NOTE 8. LONG-TERM DEBT
In May 1993, the Company borrowed $20.0 million under a 5.35% five-year
unsecured term loan agreement with a bank. Proceeds from the loan were used
principally to support the Company's United States equipment lease portfolio and
provide a hedge against interest rate fluctuations. Interest is payable
quarterly, with principal payable in equal quarterly installments of $1.0
million through June 1998. The loan agreement contains certain restrictive
covenants which include the maintenance of minimum consolidated cash balances,
minimum tangible net worth, and certain financial ratios. The Company was in
compliance with all covenants at August 28, 1994.
- - --------------------------------------------------------------------------------
NOTE 9. COMMITMENTS AND CONTINGENCIES
As of August 28, 1994, the Company had unsecured bank lines of credit agreements
of $30.0 million, which provide for domestic and foreign currency borrowings,
advances and guarantees, Bankers' Acceptances, and letters of credit. At that
date, the Company was contingently liable for approximately $6.7 million
relating principally to letters of credit issued.
The agreements, which expire during fiscal year 1994 except for the unsecured
bank lines of credit which expire in fiscal 1995, require the Company to adhere
to certain covenants regarding working capital, indebtedness, and minimum
stockholders' equity. A revolving credit agreement ($20 million) provides for
variable interest rates based on the London Interbank Offer Rate (LIBOR). Under
a multicurrency credit agreement ($10 million), the Company may obtain loans at
the lending bank's base rate plus 3/8%.
The Company is subject to legal proceedings and claims that arise in the normal
course of its business. In the opinion of management, these proceedings will
not have a material adverse effect on the financial position and results of
operations of the Company.
- - --------------------------------------------------------------------------------
9
<PAGE>
MEASUREX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued)
(August 28, 1994 - Unaudited)
-----------------------------
NOTE 10. INTEREST INCOME AND OTHER
Components of interest income and other
are as follows:
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------- -------------------------
August 28, August 29, August 28, August 29,
1994 1993 1994 1993
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Interest income $1,933 $1,675 $5,283 $4,715
Loss on Marketable Securities (380) - (820) -
Foreign exchange gain (loss) (69) (43) (308) (325)
------ ------ ------ ------
$1,484 $1,632 $4,155 $4,390
====== ====== ====== ======
</TABLE>
During the first nine months of 1994, the Company recorded a loss of $0.8
million relating to an unrealized loss on Marketable Securities that is not
expected to be recovered.
- - --------------------------------------------------------------------------------
NOTE 11. INCOME TAXES
The Company's effective tax rate is based on the estimated income and related
tax provision for the entire year. It is the policy of the Company to provide
U.S. and foreign income taxes on the portion of the accumulated earnings of the
Company's foreign subsidiaries which are intended to be remitted to the parent
company within the foreseeable future. Income tax payments of $7.0 million were
made during the nine months ended August 28, 1994.
Effective November 29, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"). The
adoption of SFAS 109 resulted in a cumulative adjustment which increased first
quarter 1994 earnings by $0.5 million. After adoption of SFAS 109, the primary
components of the Company's deferred tax assets and liabilities as of November
29, 1993, were as follows (in thousands):
<TABLE>
<CAPTION>
<S> <C>
Deferred income tax assets:
Non-collection and system return
reserves $ 2,167
Inventory reserves 4,482
Employee expenses 2,051
Operating expenses not currently
deductible 1,184
Other 1,156
Net operating loss and tax credit
carryforward 8,432
Valuation allowance for deferred
tax assets (7,317)
-------
Net deferred tax assets 12,155
-------
Deferred income tax liabilities:
Finance leases $ (2,673)
Property, plant and equipment (2,478)
Capitalized software (2,776)
Undistributed earnings of foreign
subsidiaries (3,668)
Other (1,143)
--------
Gross deferred tax liabilities (12,738)
--------
Net deferred tax liabilities $ (583)
========
</TABLE>
- - --------------------------------------------------------------------------------
10
<PAGE>
MEASUREX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued)
(August 28, 1994 - Unaudited)
---------------------------------------
NOTE 12. SUBSEQUENT EVENT
On September 14, 1994, the Company announced its intentions to reorganize a
portion of its operations by establishing an independent Industrial Systems
Division to better focus on the plastics, aluminum and other industries. The
Company indicated that it has also developed a cross-functional team
organization for the Cupertino and Ireland operations that eliminates a layer of
management and is expected to improve both time to market and product cost. In
addition, some overseas facilities are being consolidated. These actions will
result in the reduction of approximately 100 positions. The changes were
approved by the Board of Directors on September 7, 1994 and will result in an
estimated restructuring charge of approximately $7.0 million in the fourth
quarter of fiscal 1994.
- - --------------------------------------------------------------------------------
11
<PAGE>
MEASUREX CORPORATION
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of
- - --------------------------------------------------------------------------
Operations
- - ----------
Liquidity and Capital Resources
- - -------------------------------
With $100.8 million in cash and cash equivalents, marketable securities and
short-term investments, Measurex's financial condition remained strong as of
August 28, 1994. Net cash provided by operations during the first nine months
of 1994 was approximately $0.6 million. Net income adjusted for noncash items
was $16.3 million, down from $24.4 million in the first nine months of 1993.
Offsetting the cash generated, accounts payable and accrued liabilities
decreased $10.5 million, and accounts and contracts receivable increased by $4.8
million. Increases in accounts and contracts receivable are primarily due to
increases in leasing activities. Accounts payable and accrued expenses decreased
due to severance payments and lower spending as a result of workforce
reductions.
Net cash used in operations during the first nine months of 1993 was $3.4
million. Net income adjusted for noncash items was $24.4 million for the first
nine months of 1993. Offsetting the cash generated, accounts and contracts
receivable increased by $9.1 million, and accounts payable and accrued
liabilities decreased $15.6 million. Accounts and contracts receivable increased
due to higher system shipments into Japan where customers typically pay more
slowly. Payments made for severance costs led to the decrease in accounts
payable and accrued liabilities.
Excluding marketable securities and short-term investments, net cash used for
investing activities totaled approximately $7.4 million in the first nine months
of 1994 as compared to approximately $8.5 million in the first nine months of
1993. Investments in property, plant and equipment totaled $5.0 million during
1994, slightly less than the level in 1993. No major facility expansions
occurred in the first nine months of 1994, or are planned for the remainder of
the year. On April 7, 1993, the Company acquired Roibox Oy, a worldwide
supplier of web-inspection products for the paper industry, for a cash payment
of approximately $2 million. Roibox Oy operates as a separate subsidiary of
Measurex, with manufacturing, engineering, product marketing and sales support.
The net assets and operating results from this subsidiary are included in the
consolidated financial statements from the date of acquisition.
During the first nine months of 1994, cash used for financing activities totaled
$3.6 million as compared to $11.3 million received from financing activities in
the first nine months of 1993 primarily due to $20.0 million borrowed by the
Company, in May 1993, under a 5.35% five year unsecured bank loan. Proceeds
from the loan were used to support the Company's United States equipment lease
portfolio and provide a hedge against interest rate fluctuations. The Company
was in compliance with all loan covenants as of August 28, 1994. In July 1994,
the Company borrowed $4.1 million against its unsecured multicurrency line of
credit. The proceeds of the loan were used to fund the working capital needs of
its subsidiary in Japan. Cash used to reduce outstanding debt and pay dividends
were partially offset by proceeds received from employee stock option and
purchase plans in the first nine months of 1994.
As a result of the above operating, investing and financing activities, and
giving effect to exchange rate fluctuations, the Company's cash and cash
equivalents increased $1.4 million from $76.0 million at year-end 1993 to $77.4
million at August 28, 1994 while marketable securities and short-term
investments decreased $11.9 million to $23.5 million. The Company's current
ratio (current assets divided by current liabilities) was approximately 3.0 as
of August 28, 1994 compared to 2.8 at year-end 1993. Total debt was 10% of
stockholders' equity at August 28, 1994 and November 28, 1993.
As of August 28, 1994, the Company's principal sources of liquidity included
cash, cash equivalents, marketable securities and short-term investments of
$100.8 million and unsecured bank lines of credit of $30.0 million, of which
$6.7 million was committed to letters of credit. In July 1994, the Company
negotiated a $5.0 million increase in its unsecured multicurrency line of
credit. The Company believes that its financial resources will provide
adequate flexibility to fund the Company's operating needs, capital expenditures
and cash dividends at least through the first six months of fiscal year 1995 at
which time the Company's lines of credits are subject to renewal.
12
<PAGE>
MEASUREX CORPORATION
Management's Discussion and Analysis of Financial Condition and Results of
- - --------------------------------------------------------------------------
Operations (cont.)
- - -------------------
Results of Operations
- - ---------------------
System orders for the third quarter ended August 28, 1994 were $38 million, an
increase of 15 percent from $33 million during the third quarter ended August
29, 1993. Orders for Pulp and Paper products for the third quarter of 1994
increased 25% over the same period in 1993. This increase was partially offset
by a decrease in Industrial system orders. For the first nine months ended
August 28, 1994, orders were $108 million versus $109 million in the comparable
prior year period reflecting lower Industrial system orders.
System backlog at the end of 1994's third quarter was $83 million. This was
down three percent from $86 million in the comparable period a year ago.
Approximately 90 percent of the $83 million backlog is scheduled to be shipped
during the next 12 months. The backlog reduction is due primarily to the
Company's focus on reducing the manufacturing cycle time for it's systems.
Systems revenue increased by three percent to $39.5 million in the third quarter
ended August 28,1994 compared to $38.3 million in the third quarter ended August
29, 1993. Systems revenue of $113.6 million for the nine months ended August
28,1994 declined by two percent from 1993 results. Overall sales continued to be
restrained by a depressed European market in the paper industry and ongoing
price competition. Service and other revenues increased $0.2 million to $26.1
million in the third quarter of 1994 from $25.9 million in the third quarter of
1993. Service revenues totaled $76.2 million for the first nine months of 1994
and remained unchanged from the comparable period in 1993.
Margins on systems revenue remained level at 36% of systems revenue in the third
quarter of 1994 and 1993. System margins for the first nine months of 1994
increased to 36% from 34% for the first nine months of 1993. System margins in
1993 were reduced primarily by factory startup costs and the initial
installation costs for the new MXOpen(TM) product line. Service and other
margins were 37% in the third quarter and first nine months of 1994. Third
quarter margins in 1994 were slightly less than in the third quarter of 1993
while service and other margins for the first nine months in 1994 were slightly
greater than the comparable period in 1993. The improvement in service margins
for the first nine months reflected ongoing cost controls and better utilization
of field service resources.
Product development expense decreased $0.6 million (10%) to $5.0 million in the
third quarter of 1994 from $5.6 million in the third quarter of 1993 due to
higher software capitalization. Measurex capitalized $0.7 million in the third
quarter of 1994 as compared to $0.1 million in 1993. Amortization of
capitalized software to system costs totaled $0.9 million in the third quarters
of 1994 and 1993. The Company's future results depend, to a considerable
extent, on its ability to maintain a competitive advantage in both the products
and services it provides. To this end, the Company believes it is critical to
continue to make investments in new product development.
Selling and administrative expenses of $15.7 million in the third quarter of
1994 remained unchanged from the same period of a year ago. For the first three
quarters of 1994, selling and administrative expenses increased $.9 million (2%)
from $46.0 million in the first three quarters of 1993 to $46.9 million in the
same period of 1994. This increase in expenditures in 1994 over 1993 was
attributable, in part, to the inclusion of Roibox operations beginning in the
second quarter of 1993 and higher profit sharing expenses.
On September 14, 1994, the Company announced its intentions to reorganize a
portion of its operations by establishing an independent Industrial Systems
Division to better focus on the plastics, aluminum and other industries. The
Company indicated that it has also developed a cross-functional team
organization for the Cupertino and Ireland operations that eliminates a layer of
management and is expected to improve both time to market and product cost. In
addition, some overseas facilities are being consolidated. These actions will
result in the reduction of approximately 100 positions. The changes were
approved by the Board of Directors on September 7, 1994 and will result in an
estimated restructuring charge of approximately $7.0 million in the fourth
quarter of fiscal 1994.
13
<PAGE>
MEASUREX CORPORATION
Management's Discussion and Analysis of Financial Condition and Results of
- - --------------------------------------------------------------------------
Operations (cont.)
- - -------------------
Results of Operations (cont)
- - ----------------------------
Interest income and other in the third quarter and first nine months of 1994 was
slightly lower than the same periods in 1993. This is due primarily to an
unrealized loss on Marketable Securities that is not expected to be recovered.
In the third quarter of 1994, the loss on Marketable Securities was $0.4 million
and $0.8 million for the first nine months of 1994.
In the first quarter of 1994, the Company elected to adopt Financial Accounting
Statement No. 115 "Accounting for Certain Investments in Debt and Equity
Securities". All marketable securities are deemed available for sale and
therefore reported at fair value with net unrealized gains and losses reported
net of related taxes as a separate component of stockholders' equity. As of
August 28, 1994, unrealized losses included in stockholder's equity total $0.3
million. When the decline in market value is considered other than temporary,
the loss is charged to income as a write down.
The Company's effective tax rate during the third quarter of 1994 was 39%,
compared with 35% during the third quarter of 1993. The effective tax rate for
the first three quarters of 1994 was 39% versus 35% for the first three quarters
of 1993. The increase in the tax rate is due to a change in the geographic mix
of earnings. In the first quarter of 1994, the Company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS
109"). The cumulative effect of this change increased net income by $0.5
million, or $0.03 per share.
Net income for the third quarter of 1994 was $2.5 million, or $0.14 a share,
compared with $2.3 million or $0.13 a share in 1993's third quarter. Income
before cumulative effect of accounting change was $6.5 million, or $0.36 per
share the first three quarters of 1994 and $6.3 million or $0.35 per share in
the comparable 1993 period.
14
<PAGE>
MEASUREX CORPORATION
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
None.
Item 2. Changes in Securities
---------------------
None.
Item 3. Defaults Upon Senior Securities
-------------------------------
Not applicable.
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 (cont)
---------------------------------------
(a) Exhibits
Exhibit
Number Exhibit Title
-------- ------------------------------------------------------------
10.11* Copy of Credit Agreement dated as of July 22, 1993, between
Measurex Corporation and ABN Amro Bank N.V. San Francisco
International Branch And/Or Cayman Islands Branch.
10.12* Copy of Multicurrency Credit Agreement dated as of October
29, 1993 between Measurex Corporation and Bank of America
National Trust and Savings Association, as amended.
10.13* Copy of Amendment to Multicurrency Credit Agreement dated as
of October 29, 1993 between Measurex Corporation and Bank of
America National Trust and Savings Association, dated as of
May 31, 1994, as amended.
10.14* Copy of Second Amendment to Multicurrency Credit Agreement
dated as of October 29, 1993 between Measurex Corporation and
Bank of America National Trust and Savings Association, dated
as of July 29, 1994, as amended.
11.0 Computation of Net Income per Share of Common Stock of the
Registrant.
27.0 Financial Data Schedule
Other exhibits have not been filed because conditions requiring filing
do not exist.
* Material contracts not incorporated by reference filed as separate
exhibits.
(b) Reports on Form 8-K
No report on Form 8-K has been filed during the quarter ended
August 28, 1994.
15
<PAGE>
MEASUREX CORPORATION
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 thereunto duly authorized.
Measurex Corporation
----------------------------
(Registrant)
Date: October 10, 1994 By:/s/ Robert McAdams Jr.
-------------------------
Senior Vice President and
Chief Financial Officer
16
<PAGE>
EXHIBIT 11
MEASUREX CORPORATION
COMPUTATION OF NET INCOME PER SHARE
(Unaudited)
---------------------------------
(Dollar amounts in thousands except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
---------------------- -----------------------
August 28, August 29, August 28, August 29,
1994 1993 1994 1993
- - -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Primary:
Average shares outstanding 17,942 17,793 17,915 17,942
Net effect of dilutive stock options
based on the treasury stock method
using average market price 161 152 183 123
------- ------- ------- -------
Average common and common
equivalent shares outstanding 18,103 17,945 18,098 18,065
======= ======= ======= =======
Income before cumulative effect of
accounting change $ 2,538 $ 2,343 $ 6,504 $ 6,253
======= ======= ======= =======
Net income $ 2,538 $ 2,343 $ 7,028 $ 6,253
======= ======= ======= =======
Income per share before cumulative effect
of accounting change $ .14 $ .13 $ .36 $ .35
======= ======= ======= =======
Net income per share $ .14 $ .13 $ .39 $ .35
======= ======= ======= =======
Fully diluted: (Note A)
Average shares outstanding 17,942 17,793 17,915 17,942
Net effect of dilutive stock options
based on the treasury stock method
using quarter-end market price or
average market price when greater
than quarter-end price 278 221 226 152
------- ------- ------- -------
Average common and common
equivalent shares outstanding 18,220 18,014 18,141 18,094
======= ======= ======= =======
Income before cumulative effect of
accounting change $ 2,538 $ 2,343 $ 6,504 $ 6,253
======= ======= ======= =======
Net income $ 2,538 $ 2,343 $ 7,028 $ 6,253
======= ======= ======= =======
Income per share before cumulative effect
of accounting change $ .14 $ .13 $ .36 $ .35
======= ======= ======= =======
Net income per share $ .14 $ .13 $ .39 $ .35
======= ======= ======= =======
</TABLE>
- - --------------------------------------------------------------------------------
Note A: Fully diluted earnings per share have been calculated in accordance
with Accounting Principles Board Opinion No. 15, "Earnings Per Share".
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S AUGUST 28,1994 CONSOLIDATED BALANCE SHEETS AND INCOME STATEMENTS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> NOV-27-1994
<PERIOD-START> NOV-29-1993
<PERIOD-END> AUG-28-1994
<CASH> 77,352
<SECURITIES> 23,471
<RECEIVABLES> 64,898
<ALLOWANCES> (6,117)
<INVENTORY> 33,597
<CURRENT-ASSETS> 204,980
<PP&E> 113,991
<DEPRECIATION> (63,102)
<TOTAL-ASSETS> 310,936
<CURRENT-LIABILITIES> 94,336
<BONDS> 0
<COMMON> 190
0
0
<OTHER-SE> 216,410
<TOTAL-LIABILITY-AND-EQUITY> 310,936
<SALES> 189,877
<TOTAL-REVENUES> 189,877
<CGS> 120,558
<TOTAL-COSTS> 182,373
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 805
<INTEREST-EXPENSE> 997
<INCOME-PRETAX> 10,662
<INCOME-TAX> 4,158
<INCOME-CONTINUING> 6,504
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 524
<NET-INCOME> 7,028
<EPS-PRIMARY> .39
<EPS-DILUTED> .39
</TABLE>
