FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[ X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 1999
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: 0-14617
RHEOMETRIC SCIENTIFIC, INC.
(Exact name of registrant as specified in its charter)
New Jersey 61-0708419
(State or other jurisdiction of (I.R.S. Employer Identi-
incorporation or organization) fication Number)
One Possumtown Road, Piscataway, NJ 08854-2103
(Address of principal executive offices) (Zip Code)
(732) 560-8550
(Registrant's telephone number, including area code)
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 No _X___
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Class Outstanding at January 3, 2000
Common Stock, no par value 13,161,739
1 of 16
<PAGE>
RHEOMETRIC SCIENTIFIC, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands) (Unaudited)
<TABLE>
<CAPTION>
September December
30, 1999 31, 1998
_________ _________
<S> <C> <C>
ASSETS
Current Assets
Cash $ 628 $ 488
Accounts receivable, net 9,753 9,817
Inventories, net
Finished goods 2,776 3,491
Work in process 1,090 1,491
Assembled components, materials, and parts 5,643 5,648
_______ _______
9,509 10,630
Prepaid expenses and other assets 694 990
_______ _______
Total current assets 20,584 21,925
_______ ________
Property, plant, and equipment 15,340 15,370
Less accumulated depreciation and
Amortization 9,846 9,524
_______ _______
Property, plant, and equipment, net 5,494 5,846
Other assets 851 763
_______ _______
Total Assets $26,929 $28,534
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term bank borrowings $5,774 $ 5,718
Current maturity of long-term debt 198 242
Accounts payable 1,878 2,381
Borrowings against accounts receivable 778 874
Payable to affiliate 752 --
Accrued liabilities 3,590 3,267
_______ _______
Total current liabilities 12,970 12,482
_______ _______
Long-term debt lease obligation 4,568 4,643
Long-term debt - affiliate 6,258 6,258
Payable to affiliate 1,948 1,948
Long-term liability - Mettler 1,015 1,336
Other long-term liabilities 32 102
Total liabilities 26,791 26,769
_______ _______
Commitments and Contingencies
Shareholders' Equity
Common stock, stated value of $.001,
Authorized 20,000 shares; issued and
Outstanding 13,162 shares 13 13
Additional paid-in capital 25,523 25,523
Accumulated deficit (25,439) (23,691)
Accumulated other comprehensive income/(loss) 41 (80)
_______ _______
Total shareholders' equity 138 1,765
_______ _______
Total Liabilities & Shareholders' Equity $26,929 $28,534
======= =======
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
2 of 16
<PAGE>
RHEOMETRIC SCIENTIFIC, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
______ ______ ______ ______
<S> <C> <C> <C> <C>
Sales $ 6,939 $ 7,580 $20,630 $23,077
Cost of sales 4,065 3,952 11,381 11,949
_______ _______ _______ _______
Gross profit 2,874 3,628 9,249 11,128
_______ _______ _______ _______
General and administrative expenses 524 324 1,441 994
Marketing and selling expenses 2,173 1,959 6,202 6,559
Research and development expenses 526 583 1,603 1,677
Goodwill and intangible amortization 38 58 138 179
Total Operating Expenses 3,261 2,924 9,384 9,409
_______ _______ _______ _______
Operating (loss)/income (387) 704 (135) 1,719
Interest expense (285) (366) (789) (1,131)
Interest expense - Affiliate (261) (231) (752) (667)
Foreign currency gain/(loss) 228 179 (69) 46
_______ _______ _______ _______
Loss before income taxes (705) 286 (1,745) (33)
Income tax expense (1) (1) (3) (6)
Net (loss)/ income $ (706) $ 285 $(1,748) $ (39)
Net (loss)/income per share
Basic $(0.05) $ 0.02 $ (0.13) $(0.00)
Diluted $(0.05) $ 0.02 $ (0.13) $(0.00)
Average number of shares Outstanding
Basic 13,162 13,162 13,162 13,162
====== ====== ====== ======
Diluted 13,162 13,162 13,162 13,162
====== ====== ====== ======
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
3 of 16
<PAGE>
RHEOMETRIC SCIENTIFIC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1999 1998
_______ ________
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss $(1,748) $ (39)
Adjustments to reconcile net loss to
net cash (used in)/provided by
operating activities:
Depreciation and amortization of plant and
Equipment 492 576
Amortization of goodwill and intangibles 138 179
Provision for inventory reserves 502 373
Unrealized currency (gain)/loss (15) (150)
Loss on sale/retirement of plant and equipment 4 2
Warrants issued -- 31
Changes in assets and liabilities:
Accounts receivable 111 4,055
Inventories 575 (666)
Prepaid expenses and other current
Assets 296 (51)
Restructuring -- (629)
Payable to affiliate 752 667
Accounts payable and accrued
Liabilities (137) (2,148)
Other assets (212) 1
Other non-current liabilitis (202) 64
_______ _______
Net cash provided by operating activities 556 2,265
_______ _______
Cash Flows from Investing Activities:
Purchases of property, plant, and equipment (69) (43)
_______ _______
Net cash used in investing activities (69) (43)
_______ _______
Cash Flows from Financing Activities:
Net (repayment)/borrowings under line of
credit agreements (73) (1,596)
_______ _______
Net (repayments)/borrowings against
accounts receivables (145) (378)
Repayment of long-term debt/lease obligation (193) (169)
_______ _______
Net cash used in financing
Activities (411) (2,143)
_______ _______
Effect of exchange rate changes on cash 64 (33)
_______ _______
Net increase in cash 140 46
Cash at beginning of period 488 297
_______ ______
Cash at end of period $ 628 $ 343
======= =======
Cash payments for interest $1,003 $1,224
======= =======
Cash payments for income taxes $ 188 $ 137
======= =======
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
4 of 16
<PAGE>
RHEOMETRIC SCIENTIFIC, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
1999 1998 1999 1998
_______ _______ _______ _______
<S> <C> <C> <C> <C>
Net (loss)/income $ (706) $ 285 $(1,748) $ (39)
Other comprehensive loss
Foreign currency translation
Adjustments 9 (48) 121 (137)
______ ______ ______ ______
Other comprehensive income/(loss) 9 (48) 121 (137)
______ ______ ______ ______
Comprehensive income/(loss) $ (697) $ 237 (1,627) $ (176)
====== ====== ====== ======
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
RHEOMETRIC SCIENTIFIC, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Accounting Policies
The information included in the foregoing interim financial
statements is unaudited. In the opinion of management, all
adjustments, consisting of normal recurring accruals,
necessary for a fair presentation of financial position and
results of operations for the interim periods presented have
been reflected herein. The results of operations for the
interim periods are not necessarily indicative of the results
to be expected for the entire year.
In June 1997, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standards
(SFAS) No. 131, "Disclosures about Segments of an
Enterprise and Related Information," for fiscal years
beginning after December 15, 1997. The provisions of SFAS
No. 131 establish standards for the way that enterprises
report information about operating segments in annual
financial statements and require that selected
information about operating segments in interim financial
statements be reported. It also establishes standards
for related disclosure about products and services,
geographic areas, and major customers. The Company has
adopted these standards of disclosure for year end 1998
and interim periods beginning in 1999.
Effective January 1, 1998, the Company adopted Statement
of Financial Accounting Standards (SFAS) No. 130,
"Reporting Comprehensive Income." The provisions of SFAS
No. 130
5 of 16
<PAGE>
establish standards for reporting and display of
comprehensive income and its components in the financial
statements. This statement requires all items that are
required to be recognized under accounting standards as
components of comprehensive income be reported in the
financial statements and displayed with the same
prominence as other financial statements.
In June 1998, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standards
(SFAS) No. 133, "Accounting for Derivative Instruments
and Hedging Activities," for fiscal years beginning after
June 15, 2000. The provisions of SFAS No. 133 require
all derivatives to be recognized in the statement of
financial position as either assets or liabilities and
measured at fair value. In addition, all hedging
relationships must be designated, reassessed and
documented pursuant to the provisions of SFAS 133. At
present time the Company is reviewing the potential
impact of this standard.
2. Loss Per Share
In February 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 128,
"Earnings Per Share" ("SFAS No. 128"). SFAS 128 establishes
standards for computing and presenting earnings per share
("EPS") and supersedes APB Opinion No. 15. "Earnings per
Share" ("Opinion 15"). SFAS 128 replaces the presentation of
primary EPS with a presentation of basic EPS which excludes
dilution and is computed by dividing income available to
common stockholders by the weighted-average number of common
shares outstanding during the period. Diluted reflects the
potential dilution that could occur if outstanding options and
warrants were exercised. This statement has no effect on the
Company's prior period EPS data.
3. Long-term Debt and Short-term Borrowings
Long-term debt consists of the following:
<TABLE>
<CAPTION>
September 30, 1999 December 31, 1998
<S> <C> <C>
Obligation under sale/leaseback
payable through February 2011,
with interest imputed at a weighted-
average rate of 13.9% for 1999
and 1998, respectively $4,758,000 $4,806,000
Note payable through November
1999 with interest at 9.54% 8,000 79,000
__________ __________
4,766,000 4,885,000
Less current maturities 198,000 242,000
__________ ___________
$4,568,000 $4,643,000
========== ===========
</TABLE>
6 of 16
<PAGE>
The Company at September 30, 1999 had working capital
lines of credit with certain domestic and foreign banks.
The foreign working capital lines of credit were
supported by letters of credit issued under the Company's
Loan and Security Agreement, as amended, (the "Loan
Agreement"). Total borrowings were $5,774,000 with
remaining availability of approximately $790,000 as of
September 30, 1999. Interest on the domestic line of
credit at September 30, 1999 and December 31, 1998 was
9.75% and 9.25% respectively. Interest rates on the
foreign lines of credit ranged between 1.5% and 8.0% as
of September 30, 1999 and 1.9% and 8.0% as of December
31, 1998.
The Loan Agreement requires the Company to maintain a
minimum tangible net worth and working capital, generate
minimum consolidated and domestic cash flows, and achieve
a minimum adjusted funded debt to adjusted tangible net
worth ratio. In addition, the Loan Agreement prohibits
the payment of cash dividends or cash distributions to
shareholders. During the first three quarters of 1999
the Company had been in violation of certain debt
covenants and has obtained waivers covering these
violations.
The Company's lines and letters of credit are subject to
acceleration in the event that there is a material and
adverse change in the condition or affairs, financial or
otherwise, of the Company which in the reasonable opinion
of the lender impairs the lender's collateral or
increases its risk so as to jeopardize the repayment of
the obligations.
On August 12, 1998, the Company was notified by its
lender that the Company's Loan and Security Agreement
(the "Loan Agreement") would not be extended beyond the
expiration date of February 23, 1999. Following that
notification, the Company commenced discussions with
other prospective lenders to replace the credit facility
provided by the Loan Agreement with a credit facility
with a maximum available credit of $10,000,000. This
credit facility would take advantage of both the domestic
and foreign receivables in calculating the borrowing
base. The ability to proceed with a lesser maximum
credit than available under the current Loan Agreement is
based on existing improvements in the management of the
Company's working capital.
On February 19, 1999, the Loan Agreement was amended so
as to extend the Loan Agreement to May 21, 1999. In
addition, the facility limit was permanently reduced to
$10,000,000 and the inventory sublimit would continue to
be permanently and automatically decreased by $25,000
each week. The Loan Agreement was further extended for
one-month periods to June 25, July 26, August 30,
September 30 and then to October 31, 1999.
7 of 16
<PAGE>
On November 12, 1999 the Company's lender amended the
Loan Agreement extending its term to November 30, 2000.
As of this date, all foreign lines of credit have been
consolidated into the domestic line of credit and the
foreign receivables are no longer used in the calculation
of the borrowing base. Foreign working capital
requirements will be satisfied by cash generated from
current operations. In addition, the facility limit was
permanently reduced to $6,500,000 and the inventory
sublimit would continue to be permanently and
automatically decreased by $25,000 each week. The advance
rate of 69% on eligible receivables will be reduced in
March 2000 to 61% and then further decreased 2% each
month thereafter. Covenant requirements have been
revised based on the Company's forecast for 2000.
4. Operating Segments/Foreign Operations and Geographic
Information
Effective December 31, 1998 the Company adopted SFAS 131
"Disclosures about Segments of an Enterprise and Related
Information." Prior year information has been restated
to present the Company's three reportable segments:
Domestic, Europe, and the Far East. The accounting
policies of the reportable segments are the same as those
described in the Summary of Significant Accounting
Policies. The Company evaluates the performance of its
operating segments based on revenue performance and
operating income. Summarized financial information
concerning the Company's reportable segments is shown
below:
<TABLE>
<CAPTION>
(In thousands) Domestic Europe Japan Consolidated
_________ _________ _________ _________
<S> <C> <C> <C> <C>
Trade Sales:
9/30/99 10,756 4,777 5,097 20,630
9/30/98 12,335 5,763 4,979 23,077
Intercompany Sales:
9/30/99 4,381 837 0 -----
9/30/98 6,537 882 0 -----
Operating Income:
9/30/99 366 (934) 433 (135)
9/30/98 3,813 (2,141) 47 1,719
Identifiable Assets:
9/30/99 23,456 (1,034) 4,507 26,929
9/30/98 28,046 365 2,956 31,367
Depreciation and Amortization:
9/30/99 420 55 17 492
9/30/98 440 115 21 576
</TABLE>
8 of 16
<PAGE>
Sales between geographic areas are priced on a basis that
yields an appropriate rate of return based on assets
employed, risk and other factors.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
Results of Operations
Sales for the three- and nine-month period ended September
30, 1999 decreased $641,000 and $2,447,000 (or 8.5% and
10.6%), respectively, as compared to the corresponding
period in 1998. These figures include a positive impact of
$179,000 and $476,000 on sales for the three and nine months
ended September 30, 1999 due to favorable currency rates in
effect compared to last year. The decline in revenue for
the nine-month period resulted from a decrease in the
Americas and Europe of $1,579,000 and $986,000 respectively,
offset by an increase in Japan of $118,000. The decline in
revenue for the three-month period represents a decrease in
Japan and Europe of $86,000 and $658,000 respectively,
offset by an increase in the Americas of $103,000. For the
nine-month period, total international sales of $9,874,000
represented 47.9% of total sales compared to 1998
international sales of $10,742,000 that amounted to 46.5% of
total sales. The gross profit percentages for the three and
nine-months ended September 30, 1999 were 46.5% and 46.6%
respectively. This compares to 52.8% and 49.8% for the same
periods in the prior year.
Operating expenses for the three and nine months ended
September 30, 1999 were up $337,000 and down $25,000
respectively compared to the corresponding periods in the
prior year. The increase in expenses is the result of one-
time credits that were recorded in 1998 totaling
approximately $300,000. Excluding these one-time credits,
operating expenses for the three-month period would be up
$37,000 while expenses for the nine-month period would be
down $325,000. The increase for the three-month period is
due to higher advertising expenses compared to last year.
The decrease in the nine-month period is due to cost
reduction measures that the company had taken in 1998. For
both the three and nine-month periods, operating expenses
were unfavorably affected by foreign currency trends of
$74,000 and $150,000 respectively.
Net interest expense for the three and nine months ended
September 30, 1999 decreased $51,000 and $257,000
respectively, compared to the corresponding period in the
prior year. These decreases are the result of carrying
lower loan balances for the three and nine-month periods.
The Company is exposed to foreign currency gains and losses
related to its intercompany payables and another payable to
9 of 16
<PAGE>
Mettler Toledo AG, pursuant to the exclusive world-wide
property rights agreement between the Company and Mettler,
which is due in Swiss Francs. The Company's foreign
currency exposure policy is to not enter into foreign
currency derivative instruments.
The foreign currency adjustments for the three and nine
months ended September 30, 1999 totaled a gain of $228,000
and a loss of $69,000, respectively. The year-to-date adjustment
was primarily due to transaction losses of $259,000 resulting
from the German Mark, French Franc, Japanese Yen, and British Pound
against the U.S. Dollar. These were offset by an unrealized gain of
$190,000 resulting from the Swiss Franc against the U.S. Dollar.
Inherent in the Company's business is the potential for
inventory obsolescence for older products as the Company
develops new products. Obsolescence has historically related
to parts inventory. The Company continuously monitors its
exposure relating to excess and obsolete inventory and
establishes what in management's judgment at the time are
appropriate valuation reserves.
Liquidity and Capital Resources
Management believes that cash generated from operations and
funds available under lines of credit should be sufficient
to meet the Company's working capital needs for the next
year. Adequacy of cash flows beyond that period will depend
upon the Company's ability to achieve expected sales volumes
to support profitable operations.
On February 23, 1996 the Company entered into a three-year
Loan and Security Agreement (the "Loan Agreement"). The
Loan Agreement provides a working capital revolving credit
facility with a maximum available credit of $11,500,000.
The amount of available credit is determined by the level of
certain eligible receivables and inventories. On March 31,
1998, the Company's bank amended the Loan Agreement with
regards to the facility limit and inventory sub-limit.
Effective April 1, 1998 and on the opening of business on
Wednesday of each consecutive week thereafter, both the
facility limit and the inventory sublimit will decrease by
$25,000.
The Company's Loan Agreement expired on February 23, 1999,
and the lender had notified the Company in August 1998 that
the Loan Agreement would not be extended beyond the
expiration date. Following that notification, the Company
commenced discussions with other prospective lenders to
replace the credit facility with a maximum available credit
of $10,000,000. This credit facility would take advantage of
both the domestic and foreign receivables in calculating the
borrowing base. The ability to proceed with a lesser
maximum credit is based on existing improvements in the
management of the Company's working capital.
10 of 16
<PAGE>
On February 19, 1999, the Loan Agreement was amended so as
to extend the Loan Agreement to May 21, 1999. In addition,
the facility limit was permanently reduced to $10,000,000
and the inventory sub-limit would continue to be permanently
and automatically decreased by $25,000 each week. The Loan
Agreement was further extended for one-month periods to June
25, July 26, August 30, September 30 and then to October
31,1999.
The Company at September 30, 1999 had working capital lines
of credit with certain domestic and foreign banks. The
foreign working capital lines of credit were supported by
letters of credit issued under the Company's Loan and
Security Agreement, as amended, (the "Loan Agreement").
Total borrowings were $5,774,000 with remaining availability
of approximately $790,000 at September 30, 1999. Interest on
the domestic line of credit at September 30, 1999 was 9.75%
and at December 31, 1998 was 9.25%. Interest rates on the
foreign lines of credit ranged between 1.5% and 8.0% as of
September 30, 1999 and 1.9% and 8.0% as of December 31,
1998.
On November 12, 1999 the Company's lender amended the Loan
Agreement extending its term to November 30, 2000. As of
this date, all foreign lines of credit have been
consolidated into the domestic line of credit and the
foreign receivables are no longer used in the calculation of
the borrowing base. Foreign working capital requirements
will be satisfied by cash generated from current operations.
In addition, the facility limit was permanently reduced to
$6,500,000 and the inventory sublimit would continue to be
permanently and automatically decreased by $25,000 each
week. The advance rate of 69% on eligible receivables will
be reduced in March 2000 to 61% and then further decreased
2% each month thereafter. Covenant requirements have been
revised based on the Company's forecast for 2000.
Cash Flows from Operations. Net cash provided by operating
activities during the nine months ended September 30, 1999
was $556,000. This is a decrease of $1,709,000 over the
same period last year. Net loss for the nine months ended
September 30, 1999 was $1,748,000 compared to $39,000 during
the same period last year. During the nine months ended
September 30, 1999, accounts receivable decreased by
$111,000 reflecting lower third quarter 1999 sales as
compared to the last quarter 1998 sales. Inventories
decreased by $575,000 as a result of the Company's efforts
to better manage their inventory levels. Management
continuously monitors inventory levels on a worldwide basis
in order to ensure that excess inventory is kept to a
minimum. Other assets and payable to affiliate increased by
$212,000 and $752,000 respectively while prepaid expenses
and other non-current liabilities decreased by $296,000 and
$202,000 respectively. Accounts payable and accrued
expenses decreased by $137,000.
11 of 16
<PAGE>
Cash Flows From Investing. Net cash used in investing
activities during the nine months ended September 30, 1999
was $69,000 as compared to $43,000 during the same period in
1998.
Cash Flows From Financing. Net cash used in financing
activities during the nine-month period ended September 30,
1999 was $411,000. The Company's borrowing against its
accounts receivable during the nine-month period ended
September 30, 1999 decreased $145,000 and its borrowing
under line of credit agreements decreased $73,000.
Repayments of long term debt and the lease obligation total
$193,000 for the period.
Year 2000 Issues
Rheometric Scientific recognizes that its operations, as
well as those of its suppliers and customers are reliant
upon computer systems for many aspects of their business.
Computer programs and embedded computer chips that are not
Year 2000 compliant will not be able to distinguish between
the calendar years 1900 and 2000. The Company acknowledges
that the Year 2000 situation could adversely impact its
operations and is implementing a comprehensive plan to
address all known aspects of the Year 2000 problem.
In a program that was started in 1997, the Company has
completed an inventory of information systems, production
and facilities equipment, products, customers, and suppliers
that may potentially have a Year 2000 problem. The Company
has been formally addressing assessments, conversion plans
and conversion implementation and testing for all internal
systems running on a variety of computer platforms.
Approximately 90% of the internal systems conversions and
upgrades are completed. Certain non-compliant systems are
being replaced or retired from service. Converted programs
have been tested. Software and equipment found to be not
Year 2000 compliant will be upgraded or replaced before the
end of the fourth quarter of 1999.
In addition to efforts regarding internal systems, the
Company has also been assessing its significant suppliers.
These suppliers include raw material, energy and production
supply providers, as well as suppliers of financial,
communication and logistics services. The Company has
communicated with key suppliers and has sent questionnaires
to all critical suppliers regarding year 2000 readiness.
Rheometric Scientific has completed assessment of its
manufactured products and internal systems for Year 2000
compliance. This task was completed during the first
quarter of 1999. The majority of instruments were found to
be Year 2000 compliant. Software upgrades for non-compliant
products have been released via customer support and the
Internet. A
12 of 16
<PAGE>
summarized listing of instrument compliance status is posted
on the corporate web site at http://www.rheosci.com, which
includes individual instrument information and results of
internal system evaluations.
All internal systems that have not yet been updated for Year
2000 compliance are being revised or tested at this time.
Computer hardware is being replaced in an ongoing equipment
renewal program. Some software revisions are being
performed off-site by a Year 2000 consultant. This work has
entered the testing stage, and completion of testing and
implementation is expected during the fourth quarter of
1999. All identified systems have been evaluated, and no
unexpected problems have been encountered at this time.
Rheometric Scientific expects that its products, systems and
suppliers will remain fully operational and will not cause
any material disruptions due to Year 2000 problems. Because
of the uncertainties associated with assessing preparedness
of suppliers and customers, there is a risk of material
adverse effect on Rheometric's future results of operations
if these constituencies are not capable of correcting their
Year 2000 problems, if any. Contingency plans are being
developed to address any problems that may become known.
The Company's estimate of the total cost for Year 2000
compliance, based on the work completed to date plus
estimates of remediation costs for systems not yet fully
assessed, is approximately $50,000, of which approximately
$45,500 has been incurred through September 30, 1999.
Incremental spending has not been and is not expected to be
material because most Year 2000 compliance costs will be met
with amounts that are normally budgeted for procurement and
maintenance of the Company's information systems and
production and facilities equipment. The redirection of
spending from procurement of information systems and
production and facilities equipment to implementation of
Year 2000 compliance plans may in some instances delay
productivity improvements. The Company presently believes
that the Year 2000 issue will not cause material operational
problems for the Company. However, if the Company is not
successful in identifying all material Year 2000 problems,
or assessment and remediation of identified Year 2000
problems is not completed in a timely manner, there may be
an interruption in, or failure of, certain normal business
activities or operations. Such interruptions or failures
could have a material adverse impact on the Company's
consolidated results of operations and financial condition,
or on its relationships with customers, suppliers, or
others.
13 OF 16
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a)Exhibits (numbered in accordance with Item 601 of
Regulation S-K).
3.1 Certificate of Incorporation of the Registrant,
as Amended, incorporated by reference to Exhibit
3.1 to the Company's Quarterly Report on Form 10-
Q for the period ended March 31, 1995 (File No.
0-14617).
3.2 By-Laws of the Registrant, as Amended,
incorporated by reference to Exhibit 3.2 to the
Company's Annual Report on Form 10-K for the
year ended December 31, 1993 (File No. 0-14617).
4.1 Specimen Certificate representing Common Stock
of the Registrant, incorporated by reference to
the exhibits to the Company's Registration
Statement on Form S-1, File No. 33-807 filed on
October 10, 1985.
4.2 Warrant to Purchase 132,617 shares Common Stock of
Rheometric Scientific, Inc. issued to RSI (NJ) QRS 12-13,
Inc., incorporated by reference to Exhibit 1 to the
Company's Current Report on Form 8-K dated February 23, 1996
(File No. 0-14617).
4.3 Warrant to Purchase 331,543 shares of Common Stock of
Rheometric Scientific, Inc. issued to RSI (NJ) QRS 12-13,
Inc., incorporated by reference to Exhibit 2 to the
Company's Current Report on Form 8-K dated February 23, 1996
(File No. 0-14617).
*4.4 Rheometric Scientific, Inc. 1996 Stock
Option Plan, incorporated by reference to
Exhibit 4.3 to the Company's Quarterly Report on
Form 10-Q for the period ended June 30, 1996
(File No. 0-14617).
*10.1 Amended and Restated Employment Agreement
between Ronald F. Garritano and the Company
incorporated by reference to Exhibit 10.3 to the
Company's Annual Report on Form 10-K dated
December 31, 1997 (File No. 0-14617).
*10.2 Employment Agreement between Matthew Bilt
and the Company, incorporated by reference to
Exhibit 10.4 to the Company's Quarterly Report
on Form 10-Q for the period ended September 30,
1996 (File No. 0-14617).
*10.3 Employment Agreement between Joseph Musanti and
the Company incorporated by reference to Exhibit
10.4 to the Company's Annual Report on Form 10-K
dated December 31, 1997 (File No. 0-14617).
10.4 Loan and Security Agreement with Fleet Capital
Corporation dated February 23, 1996,
incorporated by reference to Exhibit 1 to the
Company's Current Report on Form 8-K dated
February 23, 1996 (File No. 0-14617).
14 of 16
<PAGE>
10.5 Lease Agreement by and between RSI (NJ) QRS 12-
13, Inc., and Rheometric Scientific, Inc. dated as of
February 23, 1996, incorporated by reference to Exhibit 5 to
the Company's Current Report on Form 8-K dated February 23,
1996 (File No. 0-14617).
10.6 Revolving Credit Facility Note - Fleet Capital
Corporation, incorporated by reference to Exhibit 6 to the
Company's Current Report on Form 8-K dated February 23, 1996
(File No. 0-14617).
10.7 Subordination Agreement between Axess
Corporation and Fleet Capital Corporation, incorporated by
reference to Exhibit 10.26 to the Company's Annual Report on
Form 10-K dated December 31, 1995 (File No. 0-14617).
10.8 Subordination Agreement between Axess
Corporation and RSI (NJ) QRS 12-13, Inc., incorporated by
reference to Exhibit 10.27 to the Company's Annual Report on
Form 10-K dated December 31, 1995 (File No. 0-14617).
10.9 Amended and Restated Subordinated Unsecured
Working Capital Note - Axess Corporation, incorporated by
reference to Exhibit 10.28 to the Company's Annual Report on
Form 10-K dated December 31, 1995 (File No. 0-14617).
10.10 First Amendment to Lease Agreement dated June 10,
1996 between RSI (NJ) QRS 12-13, Inc. and Rheometric
Scientific, Inc. incorporated by reference to Exhibit 10.12
to the Company's Annual Report on Form 10-K dated December
31, 1996 (File No. 0-14617).
10.11 Second Amendment to Lease Agreement dated February
20, 1997 between RSI (NJ) QRS 12-13, Inc. and Rheometric
Scientific, Inc. incorporated by reference to Exhibit 10.13
to the Company's Annual Report on Form 10-K dated December
31, 1996 (File No. 0-14617).
10.12 Amendment Letter dated May 2, 1997 by Fleet
Capital Corporation, amending Sections 9.1(J) and 9.3(D) of
the Loan and Security Agreement dated February 23, 1996,
incorporated by reference to Exhibit 10.14 to the Company's
Annual Report on Form 10-K dated December 31, 1996 (File No.
0-14617).
10.13 Amendment Letter dated May 6, 1997 by RSI (NJ) QRS-
12-13, Inc., amending paragraphs 7 and 8 of Exhibit D to the
Lease Agreement dated as of February 23, 1996, incorporated
by reference to Exhibit 10.15 to the Company's Annual Report
on Form 10-K dated December 31, 1996 (File No. 0-14617).
10.14 Amendment to Loan and Security Agreement with
Fleet Capital Corporation dated March 31, 1998 incorporated
by reference to Exhibit 10.16 to the Company's Annual Report
on Form 10-K dated December 31, 1997 (File No. 0-14617).
10.15 Second Amendment to Loan and Security Agreement
with Fleet Capital Corporation dated February 19, 1999
incorporated by reference to Exhibit 10.15 to the
15 of 16
<PAGE>
company's Annual Report of Form 10-K dated
December 31, 1998 (File No. 0-14617).
10.16 Third Amendment to Loan and Security Agreement
with Fleet Capital Corporation dated November 12, 1999
incorporated by reference to Exhibit 10.16 to the company's
Annual Report on Form 10-K dated December 31, 1998 (File No.
0-14617).
23 Consent of Independent Auditors incorporated by
reference to Exhibit 23 to the Company's Annual
Report on Form 10-K dated December 31, 1998
(File No. 0-14617).
27 Financial Data Schedule
(b) Reports on Form 8-K:
None.
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.
RHEOMETRIC SCIENTIFIC, INC.
(Registrant)
January 27, 2000 By /z/ Joseph Musanti
Joseph Musanti, Vice President,
Finance and Chief Financial Officer
16 of 16
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's consolidated financial statements for the quarter ended September 30,
1999 and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 628
<SECURITIES> 0
<RECEIVABLES> 9,753
<ALLOWANCES> 0
<INVENTORY> 9,509
<CURRENT-ASSETS> 20,584
<PP&E> 15,340
<DEPRECIATION> 9,846
<TOTAL-ASSETS> 26,929
<CURRENT-LIABILITIES> 12,970
<BONDS> 4,568
0
0
<COMMON> 13
<OTHER-SE> 125
<TOTAL-LIABILITY-AND-EQUITY> 26,929
<SALES> 20,630
<TOTAL-REVENUES> 20,630
<CGS> 11,381
<TOTAL-COSTS> 11,381
<OTHER-EXPENSES> 9,384
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,541
<INCOME-PRETAX> (1,745)
<INCOME-TAX> 3
<INCOME-CONTINUING> (1,748)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,748)
<EPS-BASIC> (0.13)
<EPS-DILUTED> (0.13)
</TABLE>
