<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended April 5, 1997
Commission file Number 000-20729
PRINTWARE, INC.
(Exact name of registrant as specified in its charter.)
Minnesota 41-1522267
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1270 Eagan Industrial Road, St. Paul, MN 55121
(Address of principal executive offices) (Zip Code)
(612) 456-1400
(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 [X] NO [ ]
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practical
date:
Common Stock, no Par Value - 4,853,106 shares as of
April 28, 1997.
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PART I - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
<TABLE>
PRINTWARE, INC.
CONDENSED STATEMENTS OF OPERATIONS
QUARTER ENDED APRIL 5, 1997 AND MARCH 30, 1996
DOLLARS IN THOUSANDS EXCEPT PER SHARE
(UNAUDITED)
<CAPTION>
Quarter ended
April 5 Mar 30
_______ _______
1997 1996
______ ______
<S> <C> <C>
REVENUES FROM NONAFFILIATES $ 477 $1,126
REVENUES FROM AFFILIATES 1,370 706
______ ______
TOTAL REVENUES 1,847 1,832
COST OF REVENUES 1,041 1,110
______ ______
GROSS MARGIN 806 722
PERIOD COSTS:
Research and development 213 179
Selling, general and administrative 328 238
______ ______
Total 541 417
______ ______
INCOME FROM OPERATIONS 265 305
OTHER INCOME (EXPENSE):
Interest expense -- --
Interest and other income 195 32
______ ______
INCOME BEFORE INCOME TAXES 460 337
INCOME TAXES -- 6
______ ______
NET INCOME $ 460 $ 331
====== ======
NET INCOME PER COMMON AND
COMMON EQUIVALENT SHARE: $ .09 $ .09
====== ======
WEIGHTED AVERAGE NUMBER OF
COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING 4,886,952 3,699,997
========= =========
See notes to condensed financial statements.
</TABLE>
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<TABLE>
PRINTWARE, INC.
CONDENSED BALANCE SHEETS
DOLLARS IN THOUSANDS EXCEPT SHARE INFORMATION
(UNAUDITED)
ASSETS
April 5, December 31,
1997 1996
____________ ____________
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 415 $ 524
Marketable securities available-for-sale 10,616 10,267
Receivables from nonaffiliates 308 693
Receivables from affiliates 516 467
Inventories 1,890 1,763
Deferred income taxes - current 600 551
Prepaid expenses 53 40
_______ _______
Total Current Assets 14,398 14,305
PROPERTY AND EQUIPMENT, net of accumulated
depreciation and amortization 121 109
INTANGIBLE ASSETS, net of accumulated
amortization 31 31
DEFERRED INCOME TAXES - long-term 130 130
_______ _______
$14,680 $14,575
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 462 $ 522
Accrued expenses 380 453
Deferred revenues 231 350
_______ _______
Total Current Liabilities 1,073 1,325
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred Stock, no specified par value;
1,000,000 shares authorized;
none issued and outstanding -- --
Common Stock, no par value, authorized
15,000,000 shares: issued and outstanding
4,852,894 shares at April 5, 1997;
4,850,694 at December 31, 1996,
respectively 21,994 21,984
Unrealized holding gain (loss) on securities
available-for-sale (27) 91
Unearned compensation on stock options (6) (11)
Accumulated deficit (8,354) (8,814)
_______ _______
Total shareholders' equity 13,607 13,250
_______ _______
$14,680 $14,575
======= =======
See notes to condensed financial statements.
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<TABLE>
PRINTWARE, INC.
CONDENSED STATEMENTS OF CASH FLOWS
QUARTER ENDED APRIL 5, 1997 AND MARCH 30, 1996
DOLLARS IN THOUSANDS
(UNAUDITED)
April 5, March 30,
1997 1996
____________ ____________
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 460 $ 331
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 15 16
Common Stock issued for services -- 8
Unearned compensation on stock options 5 --
Deferred income taxes (49) --
Changes in operating assets and liabilities:
Receivables from nonaffiliates 385 69
Receivables from affiliates (49) (39)
Inventories (127) 103
Prepaid expenses (13) (52)
Accounts payable (60) (46)
Accrued expenses (73) (161)
Deferred revenues (119) 12
______ ______
Net cash provided by
operating activities 375 241
INVESTING ACTIVITIES -
Purchases of marketable securities
available-for-sale (467) --
Purchases of property and equipment (27) (15)
Increase in intangible assets -- --
______ ______
Net cash used in
investing activities (494) (15)
FINANCING ACTIVITIES -
Proceeds from issuance of Common Stock 10 1
______ ______
NET (DECREASE)INCREASE IN CASH
AND CASH EQUIVALENTS (109) 227
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 524 2,569
______ ______
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 415 $2,796
====== ======
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Cash paid during the period for:
Interest $ -- $ --
====== ======
Income taxes $ -- $ 7
====== ======
See notes to condensed financial statements.
</TABLE>
<PAGE>
PRINTWARE, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
QUARTER ENDED APRIL 5, 1997 AND MARCH 30, 1996
1. INTERIM FINANCIAL INFORMATION
The accompanying condensed balance sheet as of April 5, 1997 and the
condensed statements of operations for the three months ended April 5, 1997
and March 30, 1996, and the condensed statements of cash flows for the three
months ended April 5, 1997 and March 30, 1996 are unaudited. In the opinion
of management, such unaudited financial statements include all adjustments,
consisting of only normal, recurring accruals, necessary for a fair
presentation thereof. The results of operations for any interim period are
not necessarily indicative of the results for the year.
<TABLE>
<CAPTION>
April 5, December 31,
1997 1996
____________ ____________
<S> <C> <C>
2. RECEIVABLES FROM NONAFFILIATES:
Trade $ 336 $ 719
Employees -- 1
Allowance for doubtful accounts (28) (27)
______ ______
Total receivables from nonaffiliates $ 308 $ 693
====== ======
3. INVENTORIES:
Raw materials $ 830 $ 847
Work-in-process 261 196
Finished goods 799 720
______ ______
Total inventories $1,890 $1,763
====== ======
4. PROPERTY AND EQUIPMENT:
Office equipment $ 424 $ 407
Software 103 103
Machinery and equipment 252 244
Leasehold improvements 75 75
Tooling and spares 335 335
Motor vehicles 10 10
______ ______
Total property and equipment 1,199 1,174
Less: accumulated depreciation and amortization 1,078 1,065
______ ______
Net property and equipment $ 121 $ 109
====== ======
</TABLE>
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PRINTWARE, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
QUARTER ENDED APRIL 5, 1997 AND MARCH 30, 1996
(Continued)
<TABLE>
<CAPTION>
April 5, December 31,
1997 1996
____________ ____________
<S> <C> <C>
5. INTANGIBLE ASSETS:
License rights $ 560 $ 560
Patents 54 54
______ ______
Total intangible assets 614 614
Less: accumulated amortization 583 583
______ ______
Net intangible assets $ 31 $ 31
====== ======
6. ACCRUED EXPENSES:
Accrued payroll and related $ 73 $ 89
Accrued vacation and benefits 132 147
Accrued professional services 111 158
Accrued warranty reserve 40 36
Accrued income taxes 11 --
Accrued other 13 23
______ ______
Total accrued expenses $ 380 $ 453
====== ======
</TABLE>
7. MARKETABLE SECURITIES
The Company classifies its marketable securities as available-for-sale.
At April 5, 1997 and December 31, 1996, securities available-for-sale are
carried at fair value with the net unrealized holding gain or loss included
in shareholders' equity.
8. SHAREHOLDERS' EQUITY
During the three months ended April 5, 1997, the Company issued 2,350
shares of Common Stock due to certain employees exercising their stock
options at $3.00 per share.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR THE QUARTER ENDED
APRIL 5, 1997 AND MARCH 30, 1996
Total revenues for the 1997 quarter were $1.85 million, an increase of 1%
over those of first quarter 1996 which were $1.83 million. The increase was
due to an increase in supplies sales to essentially offset a decline of Model
3240 Platesetter sales in the 1997 quarter compared to 1996.
The increase in revenues in the 1997 quarter from the Company's
affiliate was due primarily to variations in order timing.
The Company's gross margin was $806,000 in the first quarter 1997 versus
$722,000 in the comparable quarter in 1996. Gross margin as a percentage of
revenue increased from 39% in the first quarter 1996 to 44% in first quarter
1997. The increased margin in 1997 was due primarily to a change in product
mix to supplies from the lower margin Model 3240 Platesetter.
Research and development expenses increased to $213,000 in the first
quarter 1997 from $179,000 in the first quarter in 1996. The increase was
largely due to the increased expenses associated with the development of the
new PlateStream product.
Selling, general and administrative expenses increased to $328,000 in the
first quarter of 1997 from $238,000 in the first quarter of 1996. Selling
expenses increased by approximately $50,000 in the first quarter 1997 due to
hiring a new marketing manager for the PlateStream product line and increased
advertising and exhibition participation. General and administrative
expenses were up approximately $40,000 in the 1997 quarter due primarily to
higher annual report costs, audit fees and other costs associated with going
public.
Interest, other income and income taxes were $195,000 in the 1997 quarter
compared to $26,000 in the 1996 quarter. This interest increase in 1997 is
due primarily to increase in cash and investments of over $8.2 million from
1996 the quarter compared to 1997 quarter. This is largely due to the $6.4
million from Company's initial public offering, with the remainder from the
Company's positive cash flow from operations.
The Company's income tax expense primarily consist of minimum taxes due
offset by the net operation loss carryforwards.
Net income for the first quarter of 1997 was $460,000, or $.09 per common
and common equivalent share, up from $331,000 or $.09 per share in 1996 as
higher margins and investment income offset increased expenses.
LIQUIDITY AND CAPITAL RESOURCES
The current ratio was over 13 to 1 on April 5, 1997 compared to over 10 to 1
on December 31, 1996. Working capital was $13.3 million on April 5, 1997
compared to $13.0 at December 31, 1996. Cash, cash equivalents and
investments increased by approximately $200,000 at April 5, 1997 compared to
December 31, 1996. These increases were basically due to the past three
months profitable operations.
As of April 5, 1997 the Company has no material commitments which would
result in a significant cash outflow other than purchases of inventory in the
normal course of business.
<PAGE>
PART II - OTHER INFORMATION
Item #6 Exhibits and Reports on Form 8-K
a. Exhibits
Exhibit 11. Statement re computation of per share earnings
Exhibit 27. Financial Data Schedule
b. Reports on Form 8-K
No reports have been filed on Form 8-K during this
quarter.
<PAGE>
PRINTWARE, INC.
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly cause this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PRINTWARE, INC.
Registrant
Date: April 30, 1997 /s/ THOMAS W. PETSCHAUER
________________________
Thomas W. Petschauer
EXECUTIVE VICE PRESIDENT
& CHIEF FINANCIAL OFFICER
(Principal Financial Officer)
Date: April 30, 1997 /s/ DANIEL A. BAKER
________________________
Daniel A. Baker, Ph.D.,
PRESIDENT
& CHIEF EXECUTIVE OFFICER
(Principal Executive Officer)
<PAGE>
<TABLE>
PRINTWARE, INC.
EXHIBIT 11
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
<CAPTION>
Quarter ended
April 5, March 30,
1997 1996
_________ _________
<S> <C> <C>
PRIMARY EPS:
Weighted average number of
common shares outstanding 4,854,297 3,629,713
Common share equivalents
from assumed exercise of
options and warrants 32,655 70,284
_________ _________
Total shares 4,886,952 3,699,997
========= =========
Net income (000's) $ 460 $ 331
_________ _________
Earnings per share $ .09 $ .09
========= =========
FULLY DILUTED:
Weighted average number of
common shares outstanding 4,854,297 3,629,713
Common share equivalents
from assumed exercise of
options and warrants 20,744 70,284
_________ _________
Total shares 4,875,041 3,699,997
========= =========
Net income (000's) $ 460 $ 331
_________ _________
Earnings per share $ .09 $ .09
========= =========
<FN>
Note: Fully diluted net income per share is not reported
separately because it is substantially the same as
primary net income per share.
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-01-1997
<PERIOD-END> Apr-05-1997
<CASH> 415
<SECURITIES> 10616
<RECEIVABLES> 824
<ALLOWANCES> (27)
<INVENTORY> 1890
<CURRENT-ASSETS> 14398
<PP&E> 1199
<DEPRECIATION> 1078
<TOTAL-ASSETS> 14680
<CURRENT-LIABILITIES> 1073
<BONDS> 0
<COMMON> 21994
0
0
<OTHER-SE> (8387)
<TOTAL-LIABILITY-AND-EQUITY> 14680
<SALES> 1847
<TOTAL-REVENUES> 1847
<CGS> 1041
<TOTAL-COSTS> 1041
<OTHER-EXPENSES> 541
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (195)
<INCOME-PRETAX> 460
<INCOME-TAX> 0
<INCOME-CONTINUING> 460
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 460
<EPS-PRIMARY> .09
<EPS-DILUTED> .09
</TABLE>
