<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
----------------------------------
WASHINGTON, D.C. 20549
FORM 10-Q/A
Amendment No. 1 to
(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, 1996
[_] 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 0-20215
MICROTOUCH SYSTEMS, INC.
(Exact name of Registrant as specified in its Charter)
<TABLE>
<CAPTION>
<S> <C>
Massachusetts 04-2802971
- ------------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
300 Griffin Park, Methuen, MA 01844
- ----------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number: 508-659-9000
- ----------------------------- ------------
</TABLE>
Indicate by check mark whether the Registrant (1) has filed all reports 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 last 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the Registrant's classes of
common stock as of the latest practical date.
As of October 31, 1996 there were outstanding: 7,649,263 shares of common stock
of the Registrant.
<PAGE>
MICROTOUCH SYSTEMS, INC. AND SUBSIDIARIES
INDEX
PAGE NO.
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - September 30, 1996
and December 31, 1995 3
Consolidated Statements of Operations - Three and Nine
Months Ended September 30, 1996 and 1995 4
Consolidated Statement of Stockholders' Equity -
Nine Months Ended September 30, 1996 5
Consolidated Statements of Cash Flows - Nine
Months Ended September 30, 1996 and 1995 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
Exhibit Index 13
2
<PAGE>
MICROTOUCH SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN 000S EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
As Restated
-----------
September 30, December 31,
1996 1995
---- ----
(Unaudited)
ASSETS
------
Current assets:
<S> <C> <C>
Cash and cash equivalents..................... $ 3,458 $ 5,706
Marketable securities......................... 30,525 31,507
Accounts receivable, net of allowances
of $3,754 at September 30, 1996 and
$2,669 at December 31, 1995................. 15,763 12,759
Inventories................................... 13,952 11,535
Deferred income taxes......................... 4,945 5,311
Prepaid expenses and other current assets..... 1,542 1,432
------ ------
Total current assets....................... 70,185 68,250
Property and equipment, net........................ 6,028 5,214
Other assets....................................... 3,831 2,889
------ ------
$ 80,044 $ 76,353
====== ======
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Current liabilities:
<S> <C> <C>
Accounts payable.............................. $ 6,654 $ 6,026
Accrued expenses.............................. 7,789 6,476
------ ------
Total current liabilities.................. 14,443 12,502
Stockholders' equity
Preferred stock, $.01 par value per share--
500,000 shares authorized, none issued
and outstanding at September 30, 1996
and December 31, 1995........................ --- ---
Common stock, $.01 par value per share--
authorized - 20,000,000 at September 30,
1996 and December 31, 1995;
8,220,623 issued at September 30, 1996 and
December 31, 1995............................ 82 82
Additional paid-in capital.................... 59,200 58,984
Treasury stock at cost -- 584,382 and 508,634
shares at September 30, 1996 and December
31, 1995..................................... (8,642) (7,513)
Cumulative translation adjustment............. (935) (648)
Net unrealized gain on securities available
for sale..................................... 61 142
Retained earnings............................. 15,835 12,804
------ ------
Total stockholders' equity............. 65,601 63,851
------ ------
$ 80,044 $ 76,353
====== ======
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
3
<PAGE>
MICROTOUCH SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(AMOUNTS IN 000'S EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
AS RESTATED
-----------
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- -------------------
1996 1995 1996 1995
------- ------ ------ ------
<S> <C> <C> <C> <C>
Net sales............................... $ 24,077 $ 17,613 $ 68,023 $ 57,141
Cost of sales........................... 14,897 11,054 42,294 35,428
--------- -------- -------- --------
Gross profit............................ 9,180 6,559 25,729 21,713
Operating expenses:
Research and development.............. 1,814 1,340 5,123 3,602
Sales and marketing................... 3,225 3,107 9,984 8,357
General and administrative............ 1,683 1,336 4,472 3,817
Amortization of intangible assets..... 117 99 340 270
Write-off of purchased technology and
related assets...................... --- --- --- 1,985
--------- -------- -------- --------
Purchased research and development and
related costs....................... --- --- --- 3,000
--------- -------- -------- --------
Total operating expenses........... 6,839 5,882 19,919 21,031
--------- -------- -------- --------
Operating income........................ 2,341 677 5,810 682
Other income............................ 294 367 1,072 1,605
Arbitration cost........................ 236 140 954 532
--------- -------- -------- --------
Income before provision for income
taxes.................................. 2,399 904 5,928 1,755
Provision for income taxes.............. 877 328 2,165 648
--------- -------- -------- --------
Net income.............................. $ 1,522 $ 576 $ 3,763 $ 1,107
========= ======== ======== ========
Earnings per share:
Primary.............................. $ 0.19 $ 0.07 $ 0.47 $ 0.13
Fully diluted........................ $ 0.19 $ 0.07 $ 0.46 $ 0.13
Weighted average common and common
equivalent shares:
Primary.............................. 7,983 8,656 8,047 8,687
Fully diluted........................ 8,066 8,656 8,109 8,687
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
4
<PAGE>
<TABLE>
<CAPTION>
MICROTOUCH SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30,1996 - AS RESTATED
(AMOUNTS IN 000S EXCEPT SHARE DATA)
Net Unrealized
Gain(Loss) On
Common Stock Additional Cumulative Securities Treasury Stock Total
-------------------- Paid-in Translation Available Retained -------------- Stockholders'
Shares Amount Capital Adjustment For Sale Earnings Shares Amount Equity
--------- --------- --------- ----------- -------- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance December 31, 1995 8,220,623 $82 $58,984 $(648) $142 $12,804 (508,634) $(7,513) $63,851
Exercise of stock options (732) 71,693 1,053 321
Employee stock purchase plan 11,773 173 173
Compensation expense related
to common stock options
and other 27 27
Effect of exchange rate
changes (287) (287)
Tax benefit related to
exercise of stock options
and disqualifying
dispositions 189 189
Unrealized loss on
securities sale,
net of tax (81) (81)
Purchase of treasury stock (159,214) (2,355) (2,355)
Net income 3,763 3,763
--------- --------- --------- ----------- -------- -------- -------- -------- ------------
Balance September 30, 1996 8,220,623 $82 $59,200 $(935) $ 61 $15,835 (584,382) $ (8,642) $65,601
========= ========= ========= =========== ======== ======== ======== ======== ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
5
<PAGE>
MICROTOUCH SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(AMOUNTS IN 000S)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30
-----------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,763 $ 1,107
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities--
Depreciation and amortization 1,305 1,225
Deferred income taxes 366 (1,920)
Compensation expense related to common
stock options and other 27 15
Write-off of purchased technology and related
assets ---- 1,985
Purchased research and development and
related costs ---- 3,000
(Increase) decrease in assets--
Accounts receivable (3,004) (3,899)
Inventories (2,417) 3,256
Prepaid expenses and other assets (1,250) (2,669)
Increase (decrease) in liabilities--
Accounts payable 605 (1,368)
Accrued expenses 1,335 458
Net cash provided by operating activities 730 1,190
Cash flows provided by/(used in) investing
activities:
Purchase of property and equipment, net (1,779) (3,083)
Sale and maturity of marketable securities 14,662 8,900
Purchase of marketable securities (13,902) (39,065)
Investments and acquisition of businesses,
net of cash acquired --- (2,486)
------- -------
Net cash used in investing activities (1,019) (35,734)
Cash flows provided by/(used in) financing activities:
Exercise of stock options and employee
stock purchase plan 494 338
Purchase of treasury stock (2,355) ---
Tax benefit from exercise of stock options and
disqualifying dispositions 189 473
------- -------
Net cash provided by (used in)
financing activities (1,672) 811
Effect of exchange rates on cash (287) (178)
------- -------
Net increase (decrease) in cash (2,248) (33,911)
Cash, beginning of period 5,706 43,613
Cash, end of period $ 3,458 $ 9,702
======= ========
Supplemental disclosures of cash flow information:
Interest paid $ 78 $ 57
======= ========
Income taxes paid $ 1,314 $ 2,644
======= ========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
6
<PAGE>
MICROTOUCH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(1) Nature of Business
------------------
MicroTouch Systems, Inc. develops, manufactures and sells touch sensitive
input systems, including touch-sensitive screens, digitizers for pen computers,
kiosk enclosures and electronic whiteboards.
(2) Consolidated Financial Statements
---------------------------------
The accompanying consolidated financial statements include the accounts of
MicroTouch Systems, Inc. and its wholly-owned subsidiaries (together, the
"Company"). All significant intercompany accounts, transactions and profits
have been eliminated.
(3) Interim Consolidated Financial Statements
-----------------------------------------
The accompanying consolidated financial statements as of September 30, 1996
and for the three-and nine-month periods ended September 30, 1996 and 1995
include the accounts of the Company, and have not been audited by independent
public accountants; however, these statements, prepared in accordance with
generally accepted accounting principles, reflect, in the opinion of management,
all adjustments (consisting only of normal recurring accruals) necessary to
present fairly the financial position as of September 30, 1996, and the results
of operations for the three-month and nine-month periods ended September 30,
1996 and 1995. The results of operations for the three-month and nine-month
periods ended September 30, 1996 are not necessarily indicative of the results
to be expected for the entire year.
These consolidated financial statements do not include all disclosures
associated with annual consolidated financial statements and, accordingly,
should be read in conjunction with the footnotes contained in the Company's
Annual Report on Form 10-K/A for the year ended December 31, 1995.
(4) Earnings Per Share
------------------
Earnings per share data are computed using the weighted average number of
shares of common and dilutive common equivalent shares outstanding during the
year. Dilutive common equivalent shares consist of stock options and are
calculated using the treasury stock method.
(5) Restatement of Prior Periods Financial Statements
-------------------------------------------------
In December 1996, the Company restated its December 31, 1995 and September
30, 1996 and 1995 Financial Statements to reflect Nissha arbitration costs as an
expense rather than as a charge to stockholders' equity representing a cost
incurred in connection with a treasury stock transaction. The following table
summarizes the effect on net income and related per share amounts.
(Amounts in 000's except per share data)
<TABLE>
<CAPTION>
As Reported As Restated
-------------------------------- -------------------------------
Three Months Nine Months Three Months Nine Months
Ended Sept. 30, Ended Sept. 30, Ended Sept. 30, Ended Sept. 30,
1996 1995 1996 1995 1996 1995 1996 1995
------- ------ ------- ------ ------- ----- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Pre-tax income $2,635 $1,044 $6,882 $2,287 $2,399 $ 904 $5,928 $1,755
Net income 1,673 665 4,370 1,441 1,522 576 3,763 1,107
Earnings per share
Primary $ 0.21 $ 0.08 $ 0.54 $ 0.17 $ 0.19 $0.07 $ 0.47 $ 0.13
Fully diluted 0.21 0.08 0.54 0.17 0.19 0.07 0.46 0.13
</TABLE>
7
<PAGE>
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
The following table sets forth, for the fiscal periods indicated, the percentage
of net sales represented by certain items in MicroTouch's statements of
operations:
<TABLE>
<CAPTION>
PERCENTAGE OF TOTAL REVENUE
---------------------------------------
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------- -------------------
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Sales 100.0% 100.0% 100.0% 100.0%
Cost of Sales 61.9 62.8 62.2 62.0
-------- ------- -------- -------
Gross Profit 38.1 37.2 37.8 38.0
Operating Expenses:
Research & Development 7.5 7.6 7.5 6.3
Sales & Marketing 13.4 17.6 14.7 14.6
General & Administrative 7.0 7.6 6.6 6.7
Amortization of Intangible Assets .5 .6 .5 .5
Write-off of Purchased Technology and
Related Assets -- -- -- 3.5
Purchased Research and Development
and Related Costs -- -- -- 5.2
-------- ------- -------- -------
Total Operating Expenses 28.4 33.4 29.3 36.8
-------- ------- -------- -------
Operating Income 9.7 3.8 8.5 1.2
Other Income 1.2 2.1 1.6 2.8
Arbitration costs 1.0 0.8 1.4 0.9
---------------------------------------
Income Before Provision for
Income Tax 9.9 5.1 8.7 3.1
Net Income 6.3 3.3 5.5 1.9
</TABLE>
NET SALES Net sales in the quarter ended September 30, 1996 increased over the
corresponding period of 1995 by $6,464,000 or 36.7%. For the nine month period
ended September 30, 1996 sales increased to $68,023,000 an increase of
$10,882,000 or 19.0% over the corresponding period of 1995. These increases in
net sales primarily reflect increased volume in domestic touchscreen and kiosk
products and higher European touchscreen sales volume for the three and nine
month periods ended September 30, 1996. Sales from international operations
were $8,210,000 and $24,080,000, respectively, for the three and nine month
periods ended September 30, 1996. Sales from international operations have
increased 38.8% and 30.1%, respectively over the comparable periods of 1995. In
the three month period ended September 30, 1996 this increase primarily reflects
the above mentioned higher touchscreen volume in Europe. For the nine month
period ended September 30, 1996 the increase also reflects higher sales volume
into the Japanese market.
GROSS PROFIT Gross profit for the three and nine month periods ended September
30, 1996 was $9,180,000 and $25,729,000, respectively, and represents increases
of 40.0% and 18.5% over the corresponding periods of 1995. As a percentage of
net sales, gross profit increased from 37.2% in the third quarter of 1995 to
38.1% in the third quarter of 1996. The increase in third quarter gross margins
as compared to 1995 primarily reflects a mix of higher margin kit revenue and
improved operating leverage in the kiosk business resulting from increased
revenue. For the nine month period ended
8
<PAGE>
September 30, 1996, gross profit as a percentage of net sales decreased to 37.8%
from 38.0% in the same period in 1995. This decrease resulted primarily from
lower margins at the Company's Japanese operation.
RESEARCH AND DEVELOPMENT Research and development expenses for the quarter
ended September 30, 1996 increased over the corresponding period of 1995 by
$474,000 or 35.4%. As a percentage of net sales, research and development
expenses were essentially flat, amounting to 7.6% in the third quarter of 1995
and 7.5% in the third quarter of 1996. For the nine month period ended
September 30, 1996, research and development spending increased $1,521,000 or
42.2% over the same period in 1995. The increase in research and development
expenses resulted primarily from development related to the Company's resistive
membrane technology and continued development in the Company's ThruGlass and
TouchPen product lines. The Company expects that research and development
expenses may increase in the future on an absolute spending basis primarily due
to research on the Company's new electronic whiteboard products.
SALES AND MARKETING Sales and marketing expenses in the quarter ended September
30, 1996 increased over the corresponding period of 1995 by $118,000 or 3.8%, to
$3,225,000. As a percentage of net sales, sales and marketing expenses
decreased from 17.6% in the third quarter of 1995 to 13.4% in the third quarter
of 1996 primarily on the strength of the quarterly sales increase and tight
controls over spending. For the nine month period ended September 30, 1996,
sales and marketing expenses increased by $1,627,000 or 19.5% to $9,984,000. As
a percentage of net sales, sales and marketing expenses increased slightly from
14.6% in the first nine months of 1995 to 14.7% in the first nine months of
1996. The increase in sales and marketing expenses resulted primarily from the
sales and marketing costs associated with the launch of a new Internet Kiosk
product (Prospector/TM/) and a new electronic whiteboard product (Ibid/TM/) the
resistive membrane technology business acquired in 1995 and the expenses
resulting from the opening of two new international sales offices in France and
Germany in mid-1995.
GENERAL AND ADMINISTRATIVE General and administrative expenses for the quarter
ended September 30, 1996 increased from the corresponding period of 1995 by
$347,000 or 26.0% to $1,683,000 and included approximately $150,000 in costs
associated with the move into a new headquarters facility in the United Kingdom.
For the nine month period ended September 30, 1996, general and administrative
expenses increased over the corresponding period of 1995 by $655,000 or 17.2%
to $4,472,000. As a percentage of net sales, general and administrative
expenses decreased from 7.6% for the third quarter of 1995 to 7.0% for the third
quarter of 1996 primarily as a result of the quarterly sales increase. For the
nine months ended September 30, 1996, general and administrative expenses as a
percentage of net sales decreased to 6.6% from 6.7% for the corresponding period
of 1995.
AMORTIZATION OF INTANGIBLE ASSETS For the quarter ended September 30, 1996,
operating expenses included $117,000 of amortization relating to various
acquisitions and purchases of technologies, as compared to $99,000 for the
quarter ended September 30, 1995. For the nine month period ended September 30,
1996, amortization expense was $340,000 as compared to $270,000 for the
comparable period of 1995.
WRITE-OFF OF PURCHASED TECHNOLOGY AND RELATED ASSETS During the second quarter
of 1995, the Company, as a result of an extensive technology review and a
strategic decision to focus on product development in the resistive technology
area rather than the TouchMate technology, recorded a one-time pretax charge of
$1,985,000. This charge included the write-off of the TouchMate technology and
the write down of related inventory to net realizable value. This charge is
reflected in the results through the nine months ended September 30, 1995.
CHARGE FOR PURCHASED RESEARCH AND DEVELOPMENT AND RELATED COSTS During the
second quarter of 1995, the Company expensed $3,000,000 of costs associated with
in-process research and development projects which were part of the acquisition
of Touch Technology. This charge is reflected in the results through the nine
months ended September 30, 1995.
OPERATING INCOME Operating income in the quarter ended September 30, 1996 of
$2,341,000 represented an increase of $1,664,000 over the third quarter of 1995,
primarily reflecting operating
9
<PAGE>
leverage due to the 36.7% increase in net sales over the 1995 period. For the
nine month period ended September 30, 1996, operating income of $5,810,000
reflects an increase of $5,128,000 over the comparable period of 1995, due
largely to the $4,985,000 in non-recurring charges during the 1995 period as
described above.
OTHER INCOME Other income in the quarter ended September 30, 1996 decreased
from that of the corresponding period in 1995 by $73,000 or 19.9% to $294,000.
Other income in the third quarter of 1996 included $39,000 in foreign currency
exchange losses. Foreign currency exchange losses in the third quarter of 1995
were $111,000. Interest income, net of interest expenses, on the investment of
the Company's cash and investment portfolio for the third quarter of 1996 was
$333,000, compared to $478,000 for the third quarter of 1995, reflecting
declining short-term interest rates and a decrease in the size of the Company's
investment portfolio to support working capital requirements and to continuing
repurchases of the Company's common stock. For the nine month period ended
September 30, 1996, other income reflects a decrease from the comparable period
of 1995 by $533,000 or 33.2% to $1,072,000 due primarily to decreased interest
income as described above.
ARBITRATION COSTS During the third quarter of 1996, the Company incurred
$236,000 in arbitration costs related to its international arbitration versus
Nissha Printing Company Ltd., ("Nissha") as compared to $140,000 in the third
quarter of 1995. For the first three quarters of 1996, the Company incurred
$954,000 in arbitration costs related to the arbitration as compared to $532,000
through three quarters of 1995. Hearings on this case will continue in 1996 and
the Company will continue to incur arbitration costs. A decision on the merits
of the case is anticipated by early 1997. If the Company does not prevail, the
Company may be required to pay a portion or all of Nissha's fees and costs,
which could be significant, as determined by arbitrators in this case. If the
Company is successful in its arbitration, the fair market value of any amount
awarded will be recorded as income at that time.
RESTATEMENT OF PRIOR PERIODS FINANCIAL STATEMENTS In December 1996, the Company
restated its December 31, 1995 and September 30, 1996 and 1995 financial
statements to reflect Nissha arbitration costs as an expense rather than as a
charge to stockholders' equity representing a cost incurred in connection with a
treasury stock transaction. The following table summarizes the effect on net
income and related per share amounts.
(Amounts in 000's except per share data)
<TABLE>
<CAPTION>
As Reported As Restated
----------- -----------
Three Months Nine Months Three Months Nine Months
Ended Sept. 30, Ended Sept. 30, Ended Sept. 30, Ended Sept. 30,
1996 1995 1996 1995 1996 1995 1996 1995
------- ------ ------- ------ ------- ----- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Pre-tax income $2,635 $1,044 $6,882 $2,287 $2,399 $ 904 $5,928 $1,755
Net income 1,673 665 4,370 1,441 1,522 576 3,763 1,107
Earnings per share
Primary $ 0.21 $ 0.08 $ 0.54 $ 0.17 $ 0.19 $0.07 $ 0.47 $ 0.13
Fully diluted 0.21 0.08 0.54 0.17 0.19 0.07 0.46 0.13
</TABLE>
PROVISION FOR INCOME TAXES The Company's effective tax rate for both the three
and nine month periods ended September 30, 1996 was 36.5%, as compared to 36.3%
for the three month period ended September 30, 1995 and 37.0% for the nine month
period ended September 30, 1995. The effective tax rates in all periods
differed from the federal statutory rate of 34% primarily as a result of the
provision for state income taxes and the inability of the Company to record a
tax benefit from certain foreign operating loss carryforwards, partially offset
by the benefit related to the Company's foreign sales corporation and tax-exempt
interest income.
GEOGRAPHIC SEGMENTS Domestic pre-tax income for the three month period ended
September 30, 1996 increased 38.8% over the comparable period of 1995 due
primarily to sales increases, especially at the Factura Kiosks product division.
Through the nine months ended September 30, 1996, pre-tax income from domestic
operations increased 70.8% due to the non-recurring charges recorded in 1995
10
<PAGE>
(discussed above) as well as the domestic sales increases. Pre-tax income from
international operations for the three and nine month periods ended September
30, 1996 increased 51.3% and 69.0%, respectively, over the comparable periods of
1995 on the strength of the previously discussed international sales increases
and the non-recurring charges recorded in 1995.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1996, the Company had net working capital of $55,742,000,
including approximately $33,983,000 in cash, cash equivalents and marketable
securities. The Company reported a net cash generated by operating activities
of $730,000 for the nine months ended September 30, 1996. Additionally, the
Company maintains a $3,000,000 bank line of credit. As of September 30, 1996,
the Company had no borrowings under its bank line of credit.
In September, 1995, the Board of Directors of the Company authorized a one-year
repurchase program of the Company's common stock, not to exceed $10 million.
Through September 30, 1996 the Company repurchased 672,138 shares at an
aggregate cost of $9,917,000. These shares have been and will be used for the
Company's stock option plan, employee stock purchase plan and for other
corporate purposes, including, possible acquisitions.
Pending operating needs, the Company has invested its cash in investment grade,
short-term, interest bearing securities and preferred stock. The Company
believes that these cash investments, together with anticipated cash flows from
operations pursuant to its current operating plan, will be sufficient to meet
the Company's working capital and capital expenditure requirements, at least
through 1997. While the Company regularly evaluates acquisition candidates,
conducts preliminary discussions regarding acquisitions and intends to pursue
acquisition opportunities available to it, there can be no assurance that any
such acquisition will be made.
The discussion contained in this section, as well as elsewhere in this Form 10-
Q/A, may contain forward-looking statements based on the current expectations of
the Company's management. Such statements are subject to certain risks and
uncertainties which could cause actual results to differ materially from those
projected. Readers are cautioned not to place undue reliance on these forward-
looking statements which speak only as of the date hereof. The Company
undertakes no obligation to publicly release any revisions to these forward-
looking statements which may be necessary to reflect events or circumstances
occurring after the date hereof or to reflect the occurrence of unanticipated
events.
PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) 27 Financial Data Schedule. Filed Herewith
(b) Reports on Form 8-K
None
11
<PAGE>
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.
MicroTouch Systems, Inc.
Dated: December 23, 1996 BY: /s/Geoffrey P. Clear
--------------------
Geoffrey P. Clear
Vice President -
Finance & Administration,
Chief Financial Officer &
Treasurer
12
<PAGE>
EXHBIT INDEX
------------
Exhibit Page
- ------- ----
27 Financial Data Schedule. Filed Herewith. 14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-START> JUL-01-1996 JAN-01-1996
<PERIOD-END> SEP-30-1996 SEP-30-1996
<CASH> 3,458 0
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<DEPRECIATION> 4,650 0
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0 0
0 0
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<TOTAL-LIABILITY-AND-EQUITY> 80,044 0
<SALES> 24,077 68,023
<TOTAL-REVENUES> 24,077 68,023
<CGS> 14,897 42,294
<TOTAL-COSTS> 14,897 42,294
<OTHER-EXPENSES> 6,645 19,481
<LOSS-PROVISION> 92 242
<INTEREST-EXPENSE> 46 78
<INCOME-PRETAX> 2,399 5,928
<INCOME-TAX> 877 2,165
<INCOME-CONTINUING> 0 0
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<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,522 3,763
<EPS-PRIMARY> .19 .47
<EPS-DILUTED> .19 .46
</TABLE>
