FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECU-
RITIES EXCHANGE ACT OF 1934
-- OR --
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECU-
RITIES EXCHANGE ACT OF 1934
For the quarter period ended September 30, 1995
------------------
Commission file number 0-14328
-------
ZING TECHNOLOGIES, INC.
(Exact Name of registrant as specified in its charter)
NEW YORK 13-2650621
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
115 Stevens Avenue, Valhalla, New York 10595
---------------------------------------------
(Address of principal executive offices)
(Zip Code)
(914) 747-7474
- --------------------------------------------------------------------------
(Registrant's telephone number, including area code)
No Change
- --------------------------------------------------------------------------
(Former name, former address and 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 (or for such
shorter periods 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
- -
The number of shares of common stock, $.01 par value, outstanding as
of September 30, 1995 was 2,597,497.
Page 1 of 11
<PAGE>
<TABLE><CAPTION>
INDEX
ZING TECHNOLOGIES, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION PAGE
<S> <C> <C>
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets - September 30, 1995 and
June 30, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Condensed consolidated statements of operations - three months ended
September 30, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Condensed consolidated statements of cash flows - three months ended
September 30, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Notes to condensed consolidated financial statements -
September 30, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . 9
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Exhibit 11 - Computation of earnings per share - three months ended
September 30, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
Page 2 of 11
<PAGE>
ZING TECHNOLOGIES, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE><CAPTION>
A S S E T S
September 30 June 30
1995 1995
-------------------------------------
(unaudited) (note)
-------------------------------------
(000's omitted)
<S> <C> <C>
Current Assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . $ 2,659 $ 1,366
Marketable securities . . . . . . . . . . . . . . . . . . . . . . . 2,968 1,489
Accounts receivable, less reserves of
$78 and $72, respectively . . . . . . . . . . . . . . . . . . . 2,164 3,533
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,143 3,817
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . 185 248
Other current assets . . . . . . . . . . . . . . . . . . . . . . . 345 380
------ ------
Total Current Assets . . . . . . . . . . . . . . . . . . . . . . . . . 12,464 10,833
Property, Plant and Equipment . . . . . . . . . . . . . . . . . . . . . 9,153 9,028
Less accumulated depreciation and amortization . . . . . . . . . . 4,593 4,427
------ ------
4,560 4,601
Marketable Securities - non-current . . . . . . . . . . . . . . . . . . 4,610 3,787
Deferred Income Taxes, net of valuation allowance . . . . . . . . . . . 1,284 1,284
Excess of Cost Over Assets Acquired, net of
amortization of $906 and $868, respectively . . . . . . . . . . . . 1,630 1,668
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 12
------ ------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $24,560 $22,185
====== ======
</TABLE>
<TABLE><CAPTION>
L I A B I L I T I E S A N D S T O C K H O L D E R S' E Q U I T Y
<S> <C> <C>
Current Liabilities
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,534 $ 2,035
Accrued expenses & taxes payable . . . . . . . . . . . . . . . . . 2,344 1,566
Accrued compensation expense . . . . . . . . . . . . . . . . . . . 672 524
Due to broker . . . . . . . . . . . . . . . . . . . . . . . . . . . 487 259
Current portion of long-term obligations . . . . . . . . . . . . . 231 231
------ ------
Total Current Liabilities . . . . . . . . . . . . . . . . . . . . . . . 5,268 4,615
Long-Term Obligations, less current portion . . . . . . . . . . . . . . 683 741
Deferred Income - non-complete agreement . . . . . . . . . . . . . . . 1,550 1,700
Stockholders' Equity
Common Stock, par value $.01 per share: Authorized 12,000,000
shares; issued 2,797,415 shares in 1995 . . . . . . . . . . . . . . 28 28
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . 13,466 13,466
Note receivable from stockholder . . . . . . . . . . . . . . . . . (170) (250)
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . 4,204 2,354
Less: treasury shares at cost
(199,918 shares - 1995 and 1994) . . . . . . . . . . . . . . . . (469) (469)
----- ------
Total Stockholders' Equity 17,059 15,129
------ ------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY . . . . . . . . . . . . $24,560 $22,185
====== ======
</TABLE>
Page 3 of 11
<PAGE>
ZING TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE><CAPTION>
Three Months Ended
September 30,
1995 1994
----------------------------------
(000's omitted, except
per share data)
----------------------------------
<S> <C> <C>
Net Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $9,287 $3,374
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . 4,632 2,044
----- -----
Gross Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,655 1,330
Selling, general and administrative expenses . . . . . . . . . . . . . 2,009 1,250
Provision for doubtful accounts . . . . . . . . . . . . . . . . . . . 6 6
Depreciation and amortization of property, plant, equipment
and excess of costs over assets acquired . . . . . . . . . . . . . 124 124
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 22
Interest and other income - net . . . . . . . . . . . . . . . . . . . . (516) (270)
---- ----
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . 3,002 198
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . 1,152 3
----- -----
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,850 $ 195
===== =====
Income per common and common equivalent share
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.69 $ 0.08
====== ======
Number of shares used in computation . . . . . . . . . . . . . . . . . 2,686,845 2,572,875
</TABLE>
Page 4 of 11
<PAGE>
ZING TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE><CAPTION>
Three Months Ended
September 30,
1995 1994
---------------------------------------
(000's omitted)
---------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,850 $ 195
Adjusted to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . 204 272
Amortization of non-complete agreement . . . . . . . . . . . (150) (150)
Provision for losses on accounts receivable . . . . . . . . . 6 6
Unrealized losses on marketable securities . . . . . . . . . 131 -
Deferred income taxes . . . . . . . . . . . . . . . . . . . . - 3
Changes in operating assets and liabilities:
Decrease in accounts receivable . . . . . . . . . . . . . 1,369 282
(Increase) in inventories . . . . . . . . . . . . . . . . (326) (275)
(Increase) decrease in prepaid expenses and
other current assets . . . . . . . . . . . . . . . . . 98 (127)
(Increase) decrease in other assets . . . . . . . . . . . - 26
Increase (decrease) in accounts payable,
accrued expenses and other current liabilities . . . . 652 (268)
------ -------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES . . . . . . . . . . . . . . . . . . . . . . . 3,834 (36)
------ -------
INVESTING ACTIVITIES
Purchases of property and equipment . . . . . . . . . . . . . . . . (130) (107)
Net purchases (sales) of marketable securities . . . . . . . . . . (2,433) 349
------- ------
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES . . . . . . . . . . (2,563) 242
------- ------
FINANCING ACTIVITIES
Proceeds from lines of credit and long-term
borrowings including reclassification . . . . . . . . . . . . . - 83
Reductions of lines of credit and long-term debt . . . . . . . . . (58) -
Repayment of loan receivable shareholder . . . . . . . . . . . . . 80 -
Repurchase of common stock for treasury . . . . . . . . . . . . . . - (418)
----- ------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES . . . . . . . . . . . . . . . . . . . . . . . 22 (335)
----- ------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . 1,293 (129)
Cash and cash equivalents at beginning of year . . . . . . . . . . 1,366 182
----- -----
CASH AND CASH EQUIVALENTS AT END OF YEAR . . . . . . . . . . . . . . . $2,659 $ 53
===== =====
</TABLE>
Page 5 of 11
<PAGE>
ZING TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 1995
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to
Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three-month period ended September 30, 1995 are not
necessarily indicative of the results that may be expected for the year
ending June 30, 1996.
Certain reclassifications have been made to the quarterly information
to conform to the current presentation.
NOTE B - INVENTORIES
Inventories are stated at the lower of cost (first in, first out method) or
market.
Inventories consist of the following:
<TABLE>
<CAPTION>
September 30, June 30,
1995 1995
--------------------------------
<S> <C> <C>
Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,427 $2,110
Work in process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,087 1,195
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 629 512
----- -----
$4,143 $3,817
===== =====
</TABLE>
NOTE C - NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE
Net income per common and common equivalent share is based on the
weighted average number of shares of Common Stock outstanding during each
period, including Common Stock equivalents of dilutive stock options and
warrants.
NOTE D - INCOME TAXES
As of July 1, 1993, the Company adopted FASB Statement No. 109, "Ac-
counting for Income Taxes". As permitted under the Statement, the Company
has elected not to restate the financial statements of prior years.
Under Statement 109, the liability method is used in accounting for
income taxes. Under this method, deferred tax assets and liabilities are
determined based on differences between financial reporting and tax bases
of assets and liabilities and are measured using the enacted tax rates and
laws that will be in effect when the differences are expected to reverse.
Deferred tax expense was based on items of income and expenses that were
reported in different years in the financial statements and tax returns and
were measured at the tax rate in effect in the year the difference origi-
nated.
Page 6 of 11
<PAGE>
ZING TECHNOLOGIES, INC. AND SUBSIDIARIES
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
The following table sets forth for the periods indicated the percentage
relationship to net sales of certain items from the consolidated statement
of operations:
<TABLE><CAPTION>
Percent of Net Sales
Three Months Ended
September 30,
1995 1994
----------------------------------
<S> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0% 100.0%
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . 49.9 60.6
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50.1 39.4
Selling, general and administrative expenses . . . . . . . . . . . . . . 21.6 37.1
Provision for doubtful accounts . . . . . . . . . . . . . . . . . . . . . 0.1 0.2
Depreciation and amortization of property, equipment and
excess of costs over assets acquired . . . . . . . . . . . . . . . . . 1.3 3.7
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.3 0.6
Interest and other income - net . . . . . . . . . . . . . . . . . . . . . (5.6) (8.0)
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . 32.3 5.8
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . 12.4 0.1
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.9 5.7
</TABLE>
Three Months Ended September 30, 1995 Compared to Three Months Ended
- ---------------------------------------------------------------------
September 30, 1994
- ------------------
The Company reported income of $1,850,000, or $.69 per share, for the
quarter ended September 30, 1995, compared to net income of $195,000, or
$.08 per share, for the comparable 1994 period.
Revenues for the three months ended September 30, 1995 were
$9,287,000, comprised of net sales of TACTech of $377,000 and Omnirel of
$8,910,000. Net sales for the three months ended September 30, 1994 were
$3,374,000, comprised of net sales of TACTech of $286,000 and net sales of
Omnirel of $3,088,000.
The 189% growth of Omnirel's sales was largely as a result of
continued fulfillment of a series of orders placed previously by General
Electric for multi-chip power module systems containing power hybrid
componentry. These orders accounted for 77% of Omnirel's revenues for the
three months ended September 30, 1995 compared to 47% for the comparable
1994 quarter.
Net sales for TACTech increased 31% for the three months ended
September 30, 1995 compared to the comparable 1994 quarter due principally
to an increase of approximately 20% in the subscription base.
Consolidated gross profit for the three months ending September 30,
1995 was $4,655,000 as compared to $1,330,000 for the comparable 1994
quarter. Omnirel's cost of goods sold decreased 14% as a percentage of net
sales primarily due to increased efficiency in usage of its manufacturing
facilities, as well as achieving higher yields on its shipped products,
which reduced its material costs.
Page 7 of 11
<PAGE>
ZING TECHNOLOGIES, INC. AND SUBSIDIARIES
As a result of the increased consolidated revenues, selling and
general administrative expenses decreased as a percentage of revenues to
21.6% of revenues for the three months ended September 30, 1995 compared to
37.1% in the comparable 1994 period. The $759,000 nominal increase in such
expenses were due primarily to increases in consolidated management
incentive compensation expense, as well as in sales related expenses
(including research and development) of approximately $383,000 and
approximately $258,000, respectively.
Interest income and other income for the three months ending September
30, 1995 is primarily comprised of interest, dividend income and net
realized and unrealized gains on marketable securities. The $516,000
increase from the comparable 1994 quarter was principally due to a net
realized and unrealized gain on marketable securities of $230,000.
In fiscal year 1994, the Company adopted FASB109, "Accounting for
Income Taxes". Pursuant to FASB109, the Company recorded a deferred tax
asset, a deferred tax liability and a valuation allowance account which
resulted in a provision for income taxes for the quarter ended September
30, 1995 of $1,152,000. The Company's provision for income taxes increased
significantly as a result of substantially increased pretax income. 1994
operations reflect the Company's utilization of net operating loss
carryforwards and the related release of valuation allowances previously
established for such losses.
Liquidity and Capital Resources
- -------------------------------
Management expects that its internally generated funds and available
bank lines of credit will be sufficient to finance the continued operations
of the Company. During the current fiscal quarter, Omnirel reduced its
intercompany debt to the parent Company by $1,500,000.
Due to the increase in net sales and net income, cash and marketable
securities increased to approximately $10.2 million at September 30, 1995,
compared to approximately $6.6 million at the end of the 1995 fiscal year,
earnings from which contributed to the Company's net income for the
quarter.
Page 8 of 11
<PAGE>
ZING TECHNOLOGIES, INC. AND SUBSIDIARIES
PART I. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
The following exhibit is included herein:
(ii) Statement re: computation of earnings per share
The company did not file any report on Form 8-K during the three months
ended September 30, 1995.
Page 9 of 11
<PAGE>
ZING TECHNOLOGIES, INC. AND SUBSIDIARIES
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.
ZING TECHNOLOGIES, INC.
-----------------------------------
(Registrant)
Date: November 13, 1995 /s/ Robert E. Schrader
-----------------------------------
Robert E. Schrader, President and
Chief Executive Officer
Date: November 13, 1994 /s/ Martin S. Fawer
-----------------------------------
Martin S. Fawer, Treasurer and
Chief Financial Officer
Page 10 of 11
Exhibit 11
ZING TECHNOLOGIES, INC. AND SUBSIDIARIES
<TABLE><CAPTION>
EXHIBIT 11-STATEMENT RE: COMPUTATION OF
COMMON AND COMMON EQUIVALENT PER SHARE EARNINGS
Three Months Ended
September 30,
1995 1994
---------------------------------
(000's omitted)
---------------------------------
<S> <C> <C>
Average shares outstanding . . . . . . . . . . . . . . . . . . . . . . 2,597 2,496
Net effect of dilutive stock options and warrants - based
on the treasury stock method using average market price . . . . . . 89 77
Shares used for computation . . . . . . . . . . . . . . . . . . . . . . 2,686 2,573
===== =====
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,850 $ 195
===== =====
Income per Common and Common
Equivalent Share:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ .69 $ .08
===== =====
</TABLE>
Page 11 of 11
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> SEP-30-1995
<CASH> 2,659,000
<SECURITIES> 7,578,000
<RECEIVABLES> 2,242,000
<ALLOWANCES> 78,000
<INVENTORY> 4,163,000
<CURRENT-ASSETS> 12,464,000
<PP&E> 9,153,000
<DEPRECIATION> 3,516,000
<TOTAL-ASSETS> 24,560,000
<CURRENT-LIABILITIES> 5,268,000
<BONDS> 683,000
<COMMON> 28,000
0
0
<OTHER-SE> 13,466,000
<TOTAL-LIABILITY-AND-EQUITY> 24,560,000
<SALES> 8,910,000
<TOTAL-REVENUES> 9,287,000
<CGS> 4,632,000
<TOTAL-COSTS> 2,009,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 6,000
<INTEREST-EXPENSE> 30,000
<INCOME-PRETAX> 3,002,000
<INCOME-TAX> 1,152,000
<INCOME-CONTINUING> 1,850,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,850,000
<EPS-PRIMARY> .69
<EPS-DILUTED> .69
</TABLE>
