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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 QUARTER ENDED MARCH 31, 1997.
OR
[ ] 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 0-20933
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RASTER GRAPHICS, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 94-3046090
(State of Incorporation) (I.R.S. Employer Identification Number)
3025 ORCHARD PARKWAY
SAN JOSE, CA 95134
(Address of principal executive office)
(408) 232-4000
(Registrant's telephone number)
================================================================================
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 (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [ X] No [ ]
As of May 1, 1997, there were 9,179,776 shares of Common Stock outstanding.
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INDEX
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Page
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PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Balance Sheets as of March 31, 1997
and December 31, 1996 3
Condensed Consolidated Statements of Operations for the three month
periods ended March 31, 1997 and March 31, 1996 4
Condensed Consolidated Statements of Cash Flows for the three
month periods ended March 31, 1997 and March 31, 1996 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 3. Defaults upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Items 13
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURE 14
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PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
RASTER GRAPHICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
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March 31, December 31,
1997 1996
----------- ------------
(Unaudited) (Restated,
Unaudited)
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ASSETS
Current assets:
Cash and cash equivalents $ 1,471 $ 2,963
Short-term investments 9,899 13,100
Accounts receivable, net of allowance for
doubtful accounts of $654 in 1997 and
$606 in 1996 14,116 10,070
Inventories 8,339 6,705
Prepaid expenses 665 506
-------- --------
Total current assets 34,490 33,344
Property and equipment, net 3,107 2,547
Deposits and other assets 379 585
Intangible assets related to the acquisition
of Onyx Graphics, Inc. 90 102
-------- --------
Total assets $ 38,066 $ 36,578
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,140 $ 4,953
Accrued payroll and related expenses 701 1,089
Accrued warranty 529 331
Other accrued liabilities 1,692 1,635
Deferred revenue 1,562 1,162
Current portion of long-term debt 301 303
-------- --------
Total current liabilities 9,925 9,473
Long-term debt 64 178
Stockholders' equity:
Common Stock 10 10
Additional paid in capital 42,881 42,746
Accumulated deficit (14,448) (15,417)
Deferred compensation (366) (392)
Notes receivable from stockholders -- (20)
-------- --------
Total stockholders' equity 28,077 26,927
-------- --------
Total liabilities and stockholders' equity $ 38,066 $ 36,578
======== ========
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
3
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RASTER GRAPHICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
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Three Months Ended
March 31,
---------------------------
1997 1996
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(Unaudited) (Restated,
Unaudited)
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Net revenues $ 12,587 $ 9,322
Cost of revenues 7,217 5,814
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Gross profit 5,370 3,508
Operating expenses:
Research and development 1,564 934
Sales and marketing 2,019 1,582
General and administrative 716 445
Merger expenses 139 --
-------- --------
Total operating expenses 4,438 2,961
-------- --------
Operating income 932 547
Interest income 188 16
Interest expense (31) (19)
-------- --------
Income before provision for income
taxes 1,089 544
Provision for income taxes 120 92
-------- --------
Net income $ 969 $ 452
======== ========
Net income per share $ 0.10 $ 0.06
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Shares used in computing net
income per share 10,148 7,616
======== ========
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
4
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RASTER GRAPHICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
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Three Months Ended
March 31,
------------------------------
1997 1996
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(Unaudited) (Restated,
Unaudited)
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OPERATING ACTIVITIES
Net Income $ 969 $ 452
Adjustments to reconcile net income to net cash
used in operating activities:
Deferred revenue 400 283
Depreciation and amortization 271 253
Amortization of deferred compensation 26 --
Changes in operating assets and liabilities:
Accounts receivable (4,046) (90)
Inventories (1,634) (339)
Prepaid expenses and other assets 47 (97)
Accounts payable 187 (19)
Accrued payroll and related expenses (388) 30
Other accrued liabilities 255 17
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Net cash provided by (used in) operating activities (3,913) 490
INVESTING ACTIVITIES
Capital expenditures (819) (384)
Net decrease in short-term investments 3,201 --
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Net cash provided by (used in) investing activities 2,382 (384)
FINANCING ACTIVITIES
Repayment of note (116) (102)
Repayment of note from shareholders 20 --
Proceeds from issuance of common stock 135 13
------- -------
Net cash provided by (used in) financing activities 39 (89)
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Net increase (decrease) in cash and cash equivalents (1,492) 17
Cash and cash equivalents at beginning of period 2,963 1,550
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Cash and cash equivalents at end of period $ 1,471 $ 1,567
======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest 31 19
Cash paid for taxes 56 33
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
5
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RASTER GRAPHICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared by Raster Graphics, Inc. (the "Company" or "Raster Graphics")
pursuant to the rules and regulations of the Securities and Exchange Commission
regarding interim financial reporting. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements and should be read in conjunction
with the audited financial statements included in the Company's Annual Report
and Form 10-K for the fiscal year ended December 31, 1996.
In the opinion of management the accompanying unaudited condensed
consolidated financial statements have been prepared on the same basis as the
audited financial statements and include all recurring adjustments necessary for
a fair presentation of the interim periods presented. The operating results for
the three months ended March 31, 1997 are not necessarily indicative of the
results for any other interim period or the full fiscal year ending December 31,
1997.
The unaudited condensed consolidated financial statements also include
adjustments that eliminated all significant intercompany transactions and
balances between the Company and ColourPass, which was merged into the Company's
wholly owned subsidiary, Raster Graphics Systems Limited effective March 18,
1997, for relevant periods prior to the merger (see Note 6). All periods
presented have been restated to reflect the merger which has been accounted for
as a pooling of interests.
2. CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
For financial statement purposes, the Company considers all highly
liquid debt instruments with original maturities of ninety days or less and with
insignificant interest rate risk to be cash equivalents.
The Company classifies all of its investments as "available-for-sale"
in accordance with the provisions of Financial Accounting Standards Board
Statement No. 115 "Accounting for Certain Investments in Debt and Equity
Securities." Accordingly, the Company states its investments at estimated fair
value, with material unrealized gains and losses reported in stockholders'
equity. The cost of securities sold is based on the specific identification
method. Such securities are anticipated to be used for current operations and
are, therefore, classified as current assets, even though maturities may extend
beyond one year.
As of March 31, 1997, the Company has $9.9 million of investments in
state and municipal bonds. These state and municipal bonds bear interest at a
rate that automatically resets to the prevailing market interest rate at
approximately 35-day intervals. At March 31, 1997, substantially all the
available-for-sale securities have principal maturity dates of over ten years.
The gross unrealized gains and gross unrealized losses at March 31, 1997 were
immaterial to the Company and, therefore, no amounts were recorded to
stockholders' equity.
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3. INVENTORIES
Inventories are stated at the lower of cost (first in, first out) or
fair market value and consist of the following (in thousands):
March 31, December 31,
1997 1996
--------- ------------
Raw materials $2,605 $ 956
Work-in-progress 1,476 1,708
Finished goods 4,258 4,041
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$8,339 $6,705
====== ======
4. NET INCOME PER SHARE
Net Income per share is computed using the weighted average number of
shares of common stock and dilutive common equivalent shares from convertible
preferred stock (using the if-converted method) and from stock options and
warrants (using the modified treasury stock method). Pursuant to the Securities
and Exchange Commission Staff Accounting Bulletins, common stock and common
equivalent shares issued by the Company at prices below the initial public
offering price during the twelve month period prior to the Company's initial
public offering have been included in the calculation as if they were
outstanding for all periods presented regardless of whether they are dilutive
(using the modified treasury stock method).
5. IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARD
In February 1997, the Financial Accounting Standards Board issued
Statement Number 128, "Earnings per Share"(FAS 128), which is required to be
adopted on December 31, 1997. At that time, the Company will be required to
change the method currently used to compute earnings per share and to restate
all prior periods.
The new earnings per share (basic earnings per share) is calculated by
dividing the net income for each period by the weighted average number of common
stock outstanding during the period. For the three-month period ended March 31,
1997, 9.3 million shares were used in computing the basic earnings per share
under FAS 128 compared to 10.1 million shares used in computing earnings per
share as reported (see note 4). For the three-month period ended March 31, 1996,
600,000 shares were used in computing basic earnings per share under FAS 128
compared to 7.6 million shares used in computing earnings per share as reported
(see note 4). The basic earnings per share calculation for the March quarter of
1996 excludes, among others, 5.4 million shares of convertible preferred stock
that converted into common stock in August 1996 upon the completion of the
Company's initial public offering.
The application of the new basic earnings per share calculation method
would result in earnings per share of $0.10 and $0.75 for the three months ended
March 31, 1997 and 1996, respectively. Under the current method of computing
earnings per share, which included common stock equivalents and convertible
preferred stock, earnings per share was $0.10 and $0.06 for the comparable
periods in 1997 and 1996. The Company does not expect the new diluted earnings
per share calculation to be materially different from the fully diluted earnings
per share.
6. MERGER
On March 18, 1997, the Company completed a merger with ColourPass, a
business in the United Kingdom, in which ColourPass was merged into Raster
Graphics System Limited, a wholly owned subsidiary of the Company.
The combination was accounted for as a pooling of interests.
Accordingly, the condensed consolidated statements of operations for the three
months ended March 31, 1997, and March 31, 1996, the balance
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sheets as of March 31, 1997 and December 31, 1996, and all related footnotes
presented herein have been restated to include the accounts of Raster Graphics,
Inc. and ColourPass.
The table below sets forth the composition of combined revenues and net
income (loss) for the periods indicated. Merger related expenses of $105,000 and
$34,000 were included in the Raster Graphics, Inc. and ColourPass net income,
respectively.
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Three months ended Three months ended
March 31, 1997 March 31, 1996
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Revenues
Raster Graphics, Inc $11,565 $ 8,591
ColourPass 1,022 731
======= =======
Combined $12,587 $ 9,322
======= =======
Net Income (loss)
Raster Graphics, Inc $ 775 $ 489
ColourPass 194 (37)
======= =======
Combined $ 969 $ 452
======= =======
</TABLE>
7. USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions. These assumptions affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following should be read in conjunction with the unaudited
condensed consolidated financial statements and notes thereto included in Part I
- -- Item 1 of this Quarterly Report and the audited financial statements and
notes thereto and Management's Discussion and Analysis of Financial Condition
and Results of Operations contained in the Company's Annual Report and Form 10-K
for the fiscal year ended December 31, 1996.
OVERVIEW
Raster Graphics was established in 1987 initially to develop low-cost
electrostatic raster printers for the computer-aided design ("CAD") market.
Raster Graphics commenced shipments of its first printer, a 22-inch printer, in
1989, followed by a 24-inch printer in 1990 and a 36-inch printer in 1992.
In 1993, the Company identified the on-demand production large format
digital printing ("LFDP") market as a new opportunity to develop a product based
on its proprietary high-speed printhead technology. As a result, in 1993 the
Company shifted its product focus and began to develop the DCS 5400 specifically
for the LFDP market. The Company began shipping the DCS 5400 in July 1994. Since
the Company began commercial production of the DCS 5442 in January 1996 as a
second generation to the DCS 5400, this line has represented an increasing
percentage of the Company's product shipments and, by September 1996,
substantially replaced the DCS 5400. In December 1996, the Company introduced
the PiezoPrintTM 1000, an inkjet printer manufactured by a third party, that is
targeted at the lower priced entry level production market. In March 1997, the
Company introduced the PiezoPrintTM 5000 as a mid-range, price/performance
product to complement the affordable PiezoPrintTM 1000 inkjet printer and the
high volume DCS 5442. Although the Company has no current plans to replace any
printer in its current line of products, the future success of the Company will
likely depend on its ability to develop and market new products that offer
different levels of performance for the production segment of the LFDP market.
In order to provide a complete digital printing solution to its
customers, the Company began shipping Onyx's image processing software with its
digital printers in July 1994. Onyx develops and markets image processing
software for the Company's digital printers as well as printers manufactured by
companies such as CalComp, Encad, Hewlett-Packard and ColorgrafX. In August
1995, the Company acquired Onyx. Onyx supplies its software to Raster Graphics
and also sells its software products to OEMs, VARs, systems integrators and
other printer manufacturers. Onyx's current image processing software product,
PosterShop, was introduced in April 1996 as a replacement for Onyx's Imagez
image processing software product, which Onyx had been shipping since May 1991.
Although the Company has no current plans to replace its PosterShop product, the
Company will likely introduce new versions of its image processing software in
the future.
Raster Graphics also sells related consumables, including specialized
inks and papers that it acquires from third party suppliers and resells under
the Raster Graphics name for use in the Company's digital printers. The sale of
consumables generates recurring revenues, which the Company believes will
continue to increase to the extent that the installed base of printing systems
expands. As the Company develops new printers, it may need to develop new
consumables to be used by its new printer products.
In the United States, Raster Graphics also derives revenues from
maintenance contracts of installed systems and printers, including the Company's
installed base of 22-inch, 24-inch and 36-inch printers. Revenue is also
generated from the sale of spare parts.
Raster Graphics' end user customers, OEMs, VARs, and international
distributors submit purchase orders that generally require product shipment
within two to eight weeks from receipt of order. Accordingly, the Company does
not use order backlog as a primary basis for management planning for longer
periods. Revenues are recognized upon shipment if there are no contingencies. If
contingencies exist, revenues are recognized only when such contingencies are
removed by the customer.
Cost of revenues includes materials, labor, overhead and software
royalties. Cost of revenues as a percentage of revenue varies depending upon the
revenue mix generated through end user, OEM, VAR and
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distributor sales, and the revenue mix generated from Onyx software license
fees, printing systems sales, consumables sales and service fees.
Raster Graphics expenses research and development costs as incurred.
Research and development expenses have increased from year to year. Raster
Graphics believes that research and development expenses will continue to
increase in absolute dollar amounts and may increase as a percentage of
revenues.
Raster Graphics' sales and marketing expenses and general and
administrative expenses have also increased to support the revenue growth of the
Company. The Company's strategy is to distribute its products through a direct
sales force and independent representatives in selected markets, as well as
through OEMs, VARs and distributors. Raster Graphics also incurs sales and
marketing expenses in connection with product promotional activities. The
Company intends to continue to expand its domestic and international sales and
marketing organizations. As a result, the Company believes that sales and
marketing expenses will continue to increase in absolute dollar amounts and may
increase as a percentage of revenues.
The Company has a limited operating history upon which an evaluation of
the Company and its prospects can be based. The Company's prospects must be
considered in light of the risks, expenses and difficulties frequently
encountered by companies in the early stages of development, particularly
companies in new and rapidly evolving markets. To address these risks, the
Company must, among other things, respond to competitive developments, attract,
retain and motivate qualified persons, and continue to upgrade its technologies
and commercialize products and services incorporating such technologies. There
can be no assurance that the Company will be successful in addressing these
risks. As of March 31, 1997, the Company had an accumulated deficit of $14.4
million. Although the Company was marginally profitable in 1995 and 1996, there
can be no assurance that the Company will be profitable in the future.
RESULTS OF OPERATIONS
ColourPass merged into Raster Graphics Systems Limited, a wholly owned
subsidiary of the Company, on March 18, 1997. The merger has been accounted for
as a pooling of interests, and accordingly, the financial results presented have
been restated to include ColourPass.
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
Net Revenues. Net revenues increased 35.0% to $12.6 million in the
three month period ended March 31, 1997, as compared to $9.3 million for the
comparable period of 1996. The increase was primarily due to the growth in sales
of printer systems following the introduction of the DCS 5442 printing system in
January 1996, the PiezoPrintTM 1000 in December 1996, and the PiezoPrintTM 5000
in March 1997; increase in sales of consumables; increase in sales of software;
and sales by the Company's United Kingdom and German subsidiaries. Compared to
the fourth quarter of 1996, revenue increased $445,000 or 3.7%. During the first
quarter of 1997 the product mix changed with sales of the PiezoPrint printers
becoming more significant compared to the fourth quarter of 1996.
Future revenue growth will depend on a number of factors, including the
Company's ability to develop, manufacture, market and sell innovative and
reliable new products, customer satisfaction, market growth, competitive
developments, product mix, vendor performance and the Company's ability to
handle growth, if any.
International sales, which include export sales and direct sales of the
Company's German and United Kingdom operations, were $7.3 million and $5.3
million for the three months ended March 31, 1997 and 1996, respectively. These
sales represented 58.3% and 57.2% of net revenues in the respective periods. The
increases in international sales were a result of the increased international
customer acceptance of the Company's printer systems, the establishment of new
distribution arrangements and increased sales made by the Company's German and
United Kingdom subsidiaries. Sales made by the Company's German and United
Kingdom subsidiaries are denominated in local currencies. The Company is subject
to transaction exposure that arises from foreign exchange movements between the
dates foreign currency sales are recorded and the dates cash is received in the
foreign
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currency. To date, the Company has not found it appropriate to hedge the
risks of foreign sales subject to fluctuations in exchange rates.
Future international revenues will depend on the factors set forth
above, and will be subject to unexpected changes in regulatory requirements and
tariffs, longer customer payment cycles, fluctuation in currency exchange rates,
seasonal factors and risks associated with managing business operations in
geographically distant locations. No assurance can be given that international
revenues will continue to grow at current rates, or at all.
Gross Profit. Gross profit was $5.4 million, or 42.7% of net revenues,
for the three month period ended March 31, 1997, compared to gross profit of
$3.5 million, or 37.6% of net revenues, for the comparable period of 1996. The
increase in gross profit was primarily the result of increased net revenues. The
improvement in gross profit as a percentage of net revenues was due to several
reasons including: increased direct sales to customers in the United Kingdom and
Germany; increased sales of higher margin software; the allocation of fixed
costs over a larger number of units sold and improvements in manufacturing
efficiency.
The Company's future level of gross profit will depend on a number of
factors, including product mix, its ability to control variable expenses
relative to revenue levels, maintaining a revenue base over which to allocate
fixed costs and continue to develop, manufacture, market and sell innovative and
reliable new products.
Research and Development. Research and development expenses were $1.6
million, or 12.4% of net revenues for the first quarter of 1997 as compared to
$934,000, or 10.0% of net revenues for the comparable quarter in 1996. The
increase in research and development expenses was primarily due to increased
payroll and related expenses, increased engineering material, and in particular,
product development expenses associated with the accelerated launch of the new
PiezoPrintTM 5000 ink-jet printer. The Company intends to continue to dedicate
substantial resources to research and development activities to maintain its
leadership in the LFDP market. The Company intends to expand its product lines,
including printers, to achieve lower price points and higher image quality, and
to enhance its PosterShop image processing software. Accordingly, the Company
believes that research and development expenses will continue to increase in
dollar amounts, and may increase as a percentage of revenues, in the future.
Sales and Marketing. Sales and marketing expenses were $2.0 million and
$1.6 million for the first quarter of 1997 and 1996, respectively. As a
percentage of net revenues, sales and marketing expenses was 16.0% for the first
quarter of 1997 as compared to 17.0% for the first quarter of 1996. The increase
in expenses was due primarily to the increase in payroll and payroll related
expenses, and expenses associated with the accelerated launch of the new
PiezoPrintTM 5000 ink-jet printer. The Company believes that sales and marketing
expenses will continue to increase in dollar terms, and may increase as a
percentage of revenues, in the future.
General and Administrative. General and administrative expenses were
$716,000 or 5.7% of net revenues as compared to $445,000, or 4.8% of net
revenues for the comparable quarter in 1996. The increase in general and
administrative expenses reflected the increased cost of payroll and payroll
related expenses and the increased cost of operating as a public company.
Merger Expenses. On March 18, 1997, the Company completed a merger with
ColourPass, a business in the United Kingdom. Approximately $139,000 of expenses
was incurred in connection with this transaction.
Provision for Income Taxes. For the three month periods ended March 31,
1997 and March 31, 1996, income taxes have been provided based upon estimated
effective tax rates of 11.0% and 16.9%, respectively, applied to the earnings
for the period. The provisions for income taxes for the three month periods
ended March 31, 1997 and March 31, 1996 differ from the statutory federal income
tax rate primarily due to the tax benefit of utilizing net operating loss
carryforwards.
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LIQUIDITY AND CAPITAL RESOURCES
Since inception, the Company has financed its operations primarily
through private sales of preferred stock and common stock, its initial public
offering of common stock, issuance of convertible debt, bank loans, and
equipment lease financing and private loans.
For the three months ended March 31, 1997, $3.9 million of cash was
used in operations as compared to $ 490,000 of cash generated from operations
for the same period in 1996. A major factor in the change in cash position was
the initial cash flows and investments associated with two new product launches.
In December 1996, the Company introduced the PiezoPrintTM 1000 printing system.
Accordingly, during the first quarter of 1997, cash was used to purchase base
line levels of consumables inventory and finished goods units in anticipation of
sales. In March 1997, the Company launched the PiezoPrintTM 5000 printing
system. During the first quarter, cash was used to purchase raw materials and
components for the initial production units. Cash was also used to finance the
increase in accounts receivable. Accounts receivable increased because of the
high volume of shipments towards the end of the quarter, which the Company
believes was caused primarily by customer delays in making purchase decisions
pending the expected announcement of new products in the industry. Accounts
receivable also increased because of extended payment terms granted to selected
customers as the Company entered or expanded its presence in certain geographic
markets. The extended payment terms granted were consistent with prevailing
credit terms in those markets.
The Company purchased $819,000 and $384,000 of capital equipment during
the three months ended March 31, 1997 and 1996, respectively.
To finance the working capital needs and the purchase of capital
equipment, the Company reduced its short-term investments. Other financing
activities principally consisted of repayment of notes payable in the amount of
$116,000 and $102,000 for the three months ended March 31, 1997 and 1996,
respectively, and cash received from the exercises of incentive stock options
and employee stock purchase plan.
At March 31, 1997, the Company had $11.4 million of cash, cash
equivalents and short-term investments. The Company also has available a $5.0
million bank line of credit that expires on December 14, 1997, which is secured
by the tangible assets of the Company. At March 31, 1997, there were no
borrowings outstanding under the bank line of credit.
The Company believes that the existing financial resources will be
sufficient to finance its capital requirements through at least the end of
fiscal 1997. Thereafter, the Company may require additional funds to support its
working capital requirements or for other purposes and may seek to raise such
additional funds through bank borrowings and public or private sales of its
securities, including equity and debt securities. The Company's future capital
requirements, however, depend on numerous factors, including, without
limitation, the success of marketing, sales and distribution efforts; the
progress of its research and development programs; the costs involved in
preparing, filing, prosecuting, defending and enforcing intellectual property
rights; competition; competing technological and market developments; and the
effectiveness of product commercialization activities and arrangements. There
can be no assurance that additional funds, if required, will be available to the
Company on favorable terms or at all.
FORWARD LOOKING STATEMENTS
The Company notes that certain of the foregoing statements in this
report are forward-looking, the accuracy of which is necessarily subject to
risks and uncertainties. Actual results may differ materially from the
statements made due to a variety of factors including, but not limited to, (i)
fluctuations in quarterly results, (ii) unforseen operational problems in the
Piezo Print or DCS 5442 products, (iii) unforseen reduced sales of the DCS 5442
products because of the introduction of the Piezo Print 5000, (iv) dependence on
third party relationships, (v) risks associated with international operations,
(vi) competitive products and technologies, and (vii) other risk factors
described in the Company's Annual Report on Form 10-K as currently filed with
the Securities and Exchange Commission.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable
ITEM 2. CHANGES IN SECURITIES
Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable
ITEM 5. OTHER ITEMS
Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: See exhibit index on page 14
(b) Reports on Form 8-K: None
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SIGNATURE
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.
RASTER GRAPHICS, INC.
By: /s/ DENNIS MAHONEY
---------------------------------
Dennis Mahoney
Chief Financial Officer
Date: May 12, 1997
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBITS PAGE NUMBER
- -------- -----------
<S> <C> <C>
11.1 Statement of Computation of net income per share 16
27.1 Financial Data Statement Filed via Edgar
</TABLE>
15
<PAGE> 1
Exhibit 11.1
Registrant: Raster Graphics, Inc.
Statement of Computation of Net Income Per Share
(In thousands, except per share data; unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1997 1996
------ -------
<S> <C> <C>
Net income $ 969 $ 452
======= =======
Weighted average common shares
outstanding 9,282 600
Common equivalent shares from
convertible preferred stocks -- 5,449
Common equivalent shares from
stock options and warrants 866 765
Shares related to SAB Nos. 55, 64
and 83 -- 802
------- -------
Shares used in computing net
income per share 10,148 7,616
======= =======
Net income per share $ 0.10 $ 0.06
======= =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,471
<SECURITIES> 9,899
<RECEIVABLES> 14,770
<ALLOWANCES> 654
<INVENTORY> 8,339
<CURRENT-ASSETS> 34,490
<PP&E> 7,377
<DEPRECIATION> 4,270
<TOTAL-ASSETS> 38,066
<CURRENT-LIABILITIES> 9,925
<BONDS> 64
0
0
<COMMON> 42,891
<OTHER-SE> (366)
<TOTAL-LIABILITY-AND-EQUITY> 38,066
<SALES> 12,587
<TOTAL-REVENUES> 12,587
<CGS> 7,217
<TOTAL-COSTS> 7,217
<OTHER-EXPENSES> 4,438
<LOSS-PROVISION> 48
<INTEREST-EXPENSE> 31
<INCOME-PRETAX> 1,089
<INCOME-TAX> 120
<INCOME-CONTINUING> 969
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 969
<EPS-PRIMARY> 0.10
<EPS-DILUTED> 0.10
</TABLE>
