UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1998
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 0-24172
Metrologic Instruments, Inc.
(Exact name of registrant as specified in its charter)
New Jersey 22-1866172
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
90 Coles Road , Blackwood, New Jersey 08012
(Address of principal executive offices) (Zip Code)
(609) 228-8100
(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 __
As of November 9, 1998 there were 5,405,177 shares of Common Stock, $.01 par
value per share, outstanding.
<PAGE>
METROLOGIC INSTRUMENTS, INC.
INDEX
Page
No.
Part I - Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
September 30, 1998 and December 31, 1997 3
Condensed Consolidated Statements of Operations -
Three and Nine Months ended September 30, 1998 and
September 30, 1997 4
Condensed Consolidated Statements of Cash Flows -
Nine Months ended September 30, 1998 and
September 30, 1997 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures about
Market Risk 12
Part II - Other Information
Item 1. Legal Proceedings 13
Item 2. Changes in Securities and Use of Proceeds 13
Item 3. Defaults upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
Exhibit Index
Financial Data Schedule 16
<PAGE>
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
Metrologic Instruments, Inc.
Condensed Consolidated Balance Sheets
(amounts in thousands except share data)
September 30, December 31,
Assets 1998 1997
(unaudited)
Current assets:
Cash and cash equivalents $ 9,692 $13,096
Accounts receivable, net of allowance
of $460 and $408 in 1998 and 1997,
respectively 14,685 9,249
Inventory 7,023 4,684
Deferred income taxes 1,593 1,698
Other current assets 710 604
Total current assets 33,703 29,331
Property, plant and equipment, net 5,756 4,625
Patents and trademarks, net of amortization
of $573 and $511 in 1998 and 1997,
respectively 1,551 1,254
Holographic technology, net of amortization
of $224 and $154 in 1998 and 1997,
respectively 709 734
Deferred income taxes 227 414
Advance license fee 1,794 1,882
Security deposits and other assets 1,167 218
Total assets $44,907 $38,458
Liabilities and shareholders' equity
Current liabilities:
Current portion of notes payable $ 784 $ 543
Accounts payable 3,183 2,859
Accrued expenses 8,636 6,505
Accrued legal settlement 850 825
Total current liabilities 13,453 10,732
Notes payable, net of current portion 2,205 1,496
Deferred income taxes, net of current portion 539 524
Accrued legal settlement 93 805
Shareholders' equity:
Preferred stock, $0.01 par value: 500,000
shares authorized; none issued - -
Common stock, $0.01 par value: 10,000,000
shares authorized; 5,402,105 and
5,369,090 shares issued and
outstanding in 1998 and 1997,
respectively 54 54
Additional paid-in capital 16,872 16,389
Retained earnings 11,839 8,576
Deferred compensation - (2)
Accumulated other comprehensive (loss)
income (148) (116)
Total shareholders' equity 28,617 24,901
Total liabilities and shareholders' equity $44,907 $38,458
See accompanying notes.
<PAGE>
Metrologic Instruments, Inc.
Condensed Consolidated Statements of Operations
(amounts in thousands except share and per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
(unaudited) (unaudited)
Sales $ 17,001 $ 13,047 $ 48,297 $ 38,966
Cost of Sales 10,180 8,134 29,166 24,539
Gross Profit 6,821 4,913 19,131 14,427
Selling, general and
administrative expenses 4,143 2,980 11,320 8,661
Research and development
expenses 956 828 3,115 2,450
Operating income 1,722 1,105 4,696 3,316
Other (expense) income
Interest income 126 115 386 318
Interest expense (45) (42) (123) (144)
Foreign currency transaction
gain (loss) 63 (167) 83 (408)
Other income (loss), net (1) (5) 57 (5)
Total other income (expenses) 143 (99) 403 (239)
Income before provision for
income taxes 1,865 1,006 5,099 3,077
Provision for income taxes 671 382 1,835 1,169
Net income $ 1,194 $ 624 $ 3,264 $ 1,908
Basic earnings per share
Weighted average shares
outstanding 5,399,642 5,351,623 5,387,559 5,320,362
Basic earnings per share $ 0.22 $ 0.12 $ 0.61 $ 0.36
Diluted earnings per share
Weighted average shares
outstanding 5,399,642 5,351,623 5,387,559 5,320,362
Net effect of dilutive
securities 99,732 101,076 151,457 130,861
Total shares outstanding
used in computing diluted
earnings per share 5,499,374 5,452,699 5,539,016 5,451,223
Diluted earnings per
share $ 0.22 $ 0.11 $ 0.59 $ 0.35
See accompanying notes.
<PAGE>
Metrologic Instruments, Inc.
Condensed Consolidated Statements of Cash Flows
(amounts in thousands)
Nine Months Ended
September 30,
1998 1997
(unaudited)
Operating activities
Net cash (used in) provided by operating activities $ (1,072) $ 1,656
Investing activities
Purchase of property, plant and equipment (2,184) (315)
Proceeds from sale of property 65 -
Patents and trademarks (359) (283)
Advance license fee - (375)
Other intangibles (559) -
Purchase of Holoscan, Inc. and holographic
technology, net of cash acquired (45) (34)
Net cash used in investing activities (3,082) (1,007)
Financing activities
Proceeds from issuance of notes payable 1,371 -
Principal payments on notes payable (375) (238)
Proceeds from exercise of stock options and
employee stock purchase plan 353 958
Payments of amounts due to former officer - (84)
Capital lease payments (123) (188)
Net cash provided by financing activities 1,226 448
Effect of exchange rates on cash (476) (135)
Net (decrease) increase in cash and cash equivalents (3,404) 962
Cash and cash equivalents at beginning of period 13,096 10,358
Cash and cash equivalents at end of period $ 9,692 $ 11,320
Supplemental Disclosure
Cash paid for interest $ 139 $ 149
Cash paid for income taxes $ 607 $ 69
Capital lease obligations incurred $ - $ 210
Tax benefit from stock options $ 130 $ -
See accompanying notes.
<PAGE>
METROLOGIC INSTRUMENTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands)
(Unaudited)
1. Business
Metrologic Instruments, Inc. and its wholly owned subsidiaries (the "Company")
design, manufacture and market bar code scanning equipment incorporating laser
and holographic technology. These scanners rapidly, accurately and efficiently
read and decode all widely used bar codes and provide an efficient means for
data capture and automated data entry into computerized systems.
2. Accounting Policies
Interim Financial Information
The accompanying unaudited Condensed Consolidated Financial Statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and the instructions to Form 10-Q and Article 10
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
solely of normal recurring adjustments) necessary for a fair presentation of
the Condensed Consolidated Financial Statements have been included. The results
of the interim periods are not necessarily indicative of the results to be
obtained for a fiscal year. The Condensed Consolidated Financial Statements and
these Notes should be read in conjunction with Management's Discussion and
Analysis of Financial Condition and Results of Operations contained in this
Quarterly Report on Form 10-Q and the Company's Annual Report on Form 10-K for
the year ended December 31, 1997, including the Consolidated Financial
Statements and the Notes to Consolidated Financial Statements for the year
ended December 31, 1997.
3. Inventory
Inventory consists of the following:
September 30, December 31,
1998 1997
Raw materials $3,416 $2,542
Work-in-process 2,381 1,590
Finished goods 1,226 552
------ ------
$7,023 $4,684
====== ======
4. Comprehensive Income
The Company adopted Statement of Financial Accounting Standards No.
130, "Reporting Comprehensive Income" (SFAS 130), at December 31, 1997. SFAS
130 establishes standards for reporting comprehensive income and requires
foreign currency translation adjustments, which prior to adoption were reported
separately in shareholders' equity, to be included in other comprehensive
income. Adoption of SFAS 130 had no impact on net income or shareholders'
equity.
Total comprehensive income amounted to $1,168 and $617, in the three months
ended September 30, 1998 and 1997, respectively, and $3,232 and $1,517 in the
nine months ended September 30, 1998 and 1997, respectively.
5. Impact of Recently Issued Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities" (SFAS 133),
which is required to be adopted in years beginning after June 15, 1999. The
Company has not yet determined what the effect of SFAS 133 will be on the
earnings and financial position of the Company.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion of the Company's results of operations and liquidity
and capital resources should be read in conjunction with the unaudited
Condensed Consolidated Financial Statements of the Company and the related
Notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q and the
Consolidated Financial Statements and the Notes to Consolidated Financial
Statements for the year ended December 31, 1997 appearing in the Company's
Annual Report on Form 10-K for the year ended December 31, 1997. The Condensed
Consolidated Financial Statements for the three and nine months ended September
30, 1998 and September 30, 1997 are unaudited.
The Company derives its revenues from sales of its scanners through
distributors, value-added resellers ("VARs") and original equipment
manufacturers ("OEMs") and directly to end-users in the United States and in
over 85 foreign countries.
The Company's operating results have been impacted by significant
foreign currency fluctuations particularly with respect to the value of the
German mark against the U.S. dollar. Changes in the value of the German mark
relative to the U.S. dollar positively affected operating results for the three
months ended September 30, 1998 and negatively affected operating results for
the nine months ended September 30, 1998. The Company's German subsidiary
accounted for approximately 36.2% and 41.3%, respectively, of the Company's
consolidated sales for the three and nine months ended September 30, 1998.
Substantially all of the German subsidiary's products are manufactured at the
Company's U.S. facility. Therefore, the subsidiary's product manufacturing
costs, which represented approximately 81.7% and 81.3% respectively, of the
subsidiary's total operating costs for the three and nine months ended
September 30, 1998, were incurred by the Company in U.S. dollars. As a result,
the subsidiary's sales are significantly affected by fluctuations between the
German mark and the U.S. dollar, however, there is minimal offsetting effect in
the product costs of the subsidiary. Accordingly, the Company's consolidated
operating profit is significantly affected by changes in the exchange rate
between the German mark and U.S. dollar. (See "Liquidity and Capital Resources"
for a discussion of the Company's derivative financial instruments utilized to
mitigate such exposure.)
Three Months Ended September 30, 1998 Compared with Three Months Ended
September 30, 1997 (amounts in thousands except per share information)
Sales increased 30.3% to $17,001 in the three months ended September 30, 1998
from $13,047 in the three months ended September 30, 1997, principally as a
result of the continued increase in market acceptance of the Company's
point-of-sale ("POS") products, an increase in sales of the Company's HoloTrak
(tm) industrial holographic laser scanners, and increased sales and marketing
efforts. The increase in sales volume in 1998 was offset by lower average unit
selling prices on POS products, compared to the corresponding period in 1997.
The appreciation in the value of the German mark against the U.S. dollar during
the three months ended September 30, 1998, as compared to the corresponding
period in 1997, positively affected the recorded U.S. dollar value of the
Company's German subsidiary's sales by approximately 3.7% or $227.
International sales accounted for $9,603 (56.5% of total sales) in the three
months ended September 30, 1998 and $8,058 (61.8% of total sales) in the three
months ended September 30, 1997. Two customers accounted for 6.5% and 5.9%,
respectively, of the Company's revenues in the three months ended September
30, 1998. No customer accounted for 5% or more of the Company's revenues in
the three months ended September 30, 1997.
Cost of sales increased 25.2% to $10,180 in the three months ended September
30, 1998 from $8,134 in the three months ended September 30, 1997, and cost of
sales as a percentage of sales decreased to 59.9% from 62.3%. The decrease in
cost of sales as a percentage of sales was due primarily to reduced product
costs resulting from engineering enhancements to certain POS products,
manufacturing efficiencies and operating leverage that resulted from greater
unit volumes, and increased sales of the Company's industrial laser scanners
which traditionally yield higher gross profit margins than the Company's POS
products, partially offset by lower average unit selling prices on certain of
the Company's products as noted above. If sales are adjusted to negate the
effect of foreign currency fluctuations as compared to the corresponding period
in 1997, cost of sales as a percentage of sales would have been 60.7% for the
three months ended September 30, 1998.
<PAGE>
Selling, general and administrative ("SG&A") expenses increased 39.0% to $4,143
in the three months ended September 30, 1998 from $2,980 in the three months
ended September 30, 1997 and increased as a percentage of sales to 24.4% from
22.8%. The increase in SG&A expenses was due primarily to increased marketing
efforts, which include costs associated with the Company's Concert Program(tm),
a business partner program that markets and promotes the Company's products.
Research and development ("R&D") expenses increased 15.5% to $956 in the three
months ended September 30, 1998 from $828 in the three months ended September
30, 1997, and decreased as a percentage of sales to 5.6% from 6.3%. The
increase in R&D expenses was due primarily to higher expenditures for the
development of new POS and industrial products, including development of the
Company's HoloTunnel(tm), a six-sided holographic scanner tunnel system.
Operating income increased 55.8% to $1,722 in the three months ended September
30, 1998 from $1,105 in the three months ended September 30, 1997, and
operating income as a percentage of sales increased to 10.1% from 8.5%.
Other income/expenses reflect net other income of $143 in the three months
ended September 30, 1998 compared to net other expenses of $99 in the
corresponding period in 1997. Net other income for the three months ended
September 30, 1998 reflects higher interest income and foreign currency
transaction gains, compared to the corresponding period in 1997.
Net income increased 91.3% to $1,194 in the three months ended September 30,
1998 from $624 in the three months ended September 30, 1997. Net income
reflects a 36.0% effective income tax rate for the three months ended September
30, 1998 compared to 38.0% for the corresponding period in 1997. The reduced
effective income tax rate resulted from the utilization of the Company's
foreign sales corporation which permits the Company to reduce its United States
federal income tax liability on profits from sales to foreign customers.
Further, the Company utilized net operating loss carryforwards on certain of
its foreign subsidiaries in the three months ended September 30, 1998. The
appreciation in the value of the German mark against the U.S. dollar as
compared to the corresponding period in 1997 positively affected diluted
earnings per share by approximately $.03 per share.
Nine Months ended September 30, 1998 Compared with Nine Months ended September
30, 1997 (amounts in thousands except per share information)
Sales increased 23.9% to $48,297 in the nine months ended September 30, 1998
from $38,966 in the nine months ended September 30, 1997, principally as a
result of the continued increase in market acceptance of the Company's POS
products, an increase in sales of the Company's HoloTrak(tm) industrial
holographic laser scanners, and increased sales and marketing efforts. The
increase in sales volume in 1998 was offset by lower average unit selling
prices on its POS products, compared to the corresponding period in 1997, and
reflected unfavorable foreign currency exchange fluctuations. The reduction in
the value of the German mark against the U.S. dollar during the nine months
ended September 30, 1998, as compared to the corresponding period in 1997,
negatively affected the recorded U.S. dollar value of the Company's German
subsidiary's sales by approximately 3.3% or $668.
International sales accounted for $28,721 (59.5% of total sales) in the nine
months ended September 30, 1998 and $24,597 (63.1% of total sales) in the nine
months ended September 30, 1997. Two customers accounted for 5.7% and 5.4%,
respectively, of the Company's revenues in the nine months ended September 30,
1998. One customer accounted for 5.4% of the Company's revenues in the nine
months ended September 30, 1997.
Cost of sales increased 18.9% to $29,166 in the nine months ended September 30,
1998 from $24,539 in the nine months ended September 30, 1997, and cost of
sales as a percentage of sales decreased to 60.4% from 63.0%. The decrease in
cost of sales as a percentage of sales was due primarily to reduced product
costs resulting from engineering enhancements to certain POS products,
manufacturing efficiencies and operating leverage that resulted from greater
unit volumes, and increased sales of the Company's industrial laser scanners
which traditionally yield higher gross profit margins than the Company's POS
products, and partially offset by lower average unit selling prices on certain
of the Company's products as noted above. If sales are adjusted to negate the
effect of unfavorable foreign currency fluctuations as compared to the
corresponding period in 1997, cost of sales as a percentage of sales would have
been 59.6% for the nine months ended September 30, 1998.
<PAGE>
SG&A expenses increased 30.7% to $11,320 in the nine months ended September 30,
1998 from $8,661 in the nine months ended September 30, 1997 and increased as a
percentage of sales to 23.4% from 22.2%. The increase in SG&A expenses was due
primarily to increased marketing efforts, which include costs associated with
the Company's Concert Program(tm).
R&D expenses increased 27.1% to $3,115 in the nine months ended September 30,
1998 from $2,450 in the nine months ended September 30, 1997, and increased as
a percentage of sales to 6.4% from 6.3%. The increase in R&D expenses was due
primarily to higher expenditures for the development of new POS and industrial
products, including development of the Company's HoloTunnel(tm).
Operating income increased 41.6% to $4,696 in the nine months ended September
30, 1998 from $3,316 in the nine months ended September 30, 1997, and operating
income as a percentage of sales increased to 9.7% from 8.5%.
Other income/expenses reflect net other income of $403 in the nine months ended
September 30, 1998 compared to net other expenses of $239 in the corresponding
period in 1997. Net other income for the nine months ended September 30, 1998
reflects higher interest income and foreign currency transaction gains compared
to the corresponding period in 1997.
Net income increased 71.1% to $3,264 in the nine months ended September 30,
1998 from $1,908 in the nine months ended September 30, 1997. Net income
reflects a 36.0% effective income tax rate for the nine months ended September
30, 1998 compared to 38.0% for the corresponding period in 1997. The reduced
effective income tax rate resulted from the utilization of the Company's
foreign sales corporation which permits the Company to reduce its United States
federal income tax liability on profits from sales to foreign customers.
Further, the Company utilized net operating loss carryforwards on certain of
its foreign subsidiaries in the nine months ended September 30, 1998. The
reduction in the value of the German mark against the U.S. dollar as compared
to the corresponding period in 1997 negatively affected diluted earnings per
share by approximately $0.04 per share.
Inflation and Seasonality
Inflation and seasonality have not had a material impact on the Company's
results of operations. There can be no assurance, however, that the Company's
sales in future years will not be impacted by fluctuations in seasonal demand
from European customers in its third quarter or from reduced production days in
its fourth quarter.
Liquidity and Capital Resources (amounts in thousands)
The Company's working capital increased approximately 8.9% to $20,250 as of
September 30, 1998 from $18,599 as of December 31, 1997.
The Company's operating activities used net cash of $1,072 compared with cash
provided of $1,656 for the nine months ended September 30, 1998 and 1997,
respectively. Net cash used in operating activities for the nine months ended
September 30, 1998 resulted primarily from increases in accounts receivable
and inventory, partially offset by increases in accrued expenses and accounts
payable.
The Company's total deferred income tax asset (current and long-term) of $1,820
and deferred tax liability of $539 are based upon cumulative temporary
differences as of September 30, 1998, which provide approximately $3,089 of
future income tax deductions against future taxable income. The deferred tax
asset arises primarily from recording the December 1993 settlement of a patent
lawsuit as an expense for accounting purposes prior to receiving the related
tax benefit. The deferred tax liability arises primarily from recording the
advance license fee pursuant to the December 1996 licensing agreement with
Symbol Technologies, Inc. as an expense for tax purposes and an amortizable
asset for book purposes.
The Company is a party to an Amended and Restated Loan and Security Agreement,
as amended, with its primary bank which provides for an unsecured line of
credit in the amount of $7,500. The line of credit requires the Company to
comply with certain financial covenants and other restrictions. As of
September 30, 1998, the Company was in compliance with these financial
covenants and no amounts were outstanding under this line of credit. The
Amended and Restated Loan and Security Agreement expires on June 30, 1999.
<PAGE>
The Company also has a 500 German mark unsecured revolving credit facility with
a German bank in the name of its German subsidiary, Metrologic Instruments
GmbH. As of September 30, 1998, no amounts were outstanding under this
revolving credit facility. In April 1998, the Company entered into a
convertible line of credit with its primary bank, denominated in German marks,
in an amount not to exceed $1,500, for the purchase of fixed assets. As of
September 30, 1998, approximately $339 was available under this line of credit.
The Company is currently making interest-only payments on this line of credit
until December 31, 1998, at which time amounts outstanding under this line will
convert to a term note, payable over a 54 month period.
The Company's current plans for capital expenditures for the next twelve months
potentially include the purchase of (i) additional manufacturing facilities;
(ii) manufacturing automation equipment; (iii) office equipment; and (iv) a new
integrated management information system. Potential capital expenditures
amount to approximately $7,000. The Company expects to finance such potential
expenditures with a combination of term notes, operating and capital leases,
and mortgages.
The Company's liquidity has been, and may continue to be, adversely
affected by changes in foreign currency exchange rates, particularly in the
value of the German mark against the U.S. dollar. In an effort to mitigate the
financial implications of the volatility in the exchange rate between the
German mark and the U.S. dollar, the Company has selectively entered into
derivative financial instruments to offset its exposure to foreign currency
risks. Derivative financial instruments currently include (i) foreign currency
forward exchange contracts with its primary bank for periods not exceeding six
months, which partially hedge sales to the Company's German subsidiary and (ii)
German mark based loans, which act as a partial hedge against outstanding
intercompany receivables and the net assets of its German subsidiary, which are
denominated in German marks. Additionally, the German subsidiary invoices and
receives payment in certain other major European currencies, which result in an
additional mitigating measure that reduces the Company's exposure to the
fluctuation between the German mark and the U.S. dollar.
The Company believes that its current cash and cash equivalent balances, along
with cash generated from operations and availability under its revolving credit
facilities, will be adequate to fund the Company's operations through at least
the next twelve months.
Impact of Year 2000
The Year 2000 issue is the result of computer programs using only the
last two digits to indicate the year. If uncorrected, such computer programs
will be unable to interpret dates beyond the year 1999, which could cause
computer system failure or other computer errors disrupting operations. The
Company has been evaluating its year 2000 readiness and taking corrective
action where necessary. The scope of the Year 2000 readiness effort includes
(i) information technology ("IT") such as software and hardware; (ii) non-IT
systems or embedded technology such as microcontrollers contained in various
manufacturing and lab equipment, facilities and utilities, and the Company's
products with date-sensitivity; and (iii) readiness of key third parties,
including suppliers and customers. If needed modifications and conversions are
not made on a timely basis, the Year 2000 issue could have a material adverse
effect on the Company's operations.
Because of the scope of the Company's operations, the Company believes it is
impractical to seek to eliminate all potential non-mission-critial Year 2000
problems before they arise. As a result, the Company expects that its Year
2000 program corrections will include ongoing remedial efforts into the Year
2000.
The Company's current management information systems ("MIS") are not
year 2000 compliant. The Company is in the process of replacing its current
MIS system with a new, Year 2000 compliant, fully integrated MIS system for
itself and its subsidiaries. The total cost of the new MIS system is estimated
to be approximately $1,400, which includes external resource costs, a
substantial portion of which will be capitalized. The new MIS system is
estimated to be implemented in the Company's U.S.
operations in February 1999 and in its international operations by June 1999,
which is prior to any anticipated impact on its operating systems.
The Company is in contact with key suppliers to assure no
interruption in the relationship between the Company and these important third
parties from the Year 2000 issue. If third parties do not convert their systems
in a timely manner and in a way that is compatible with the Company's systems,
the Year 2000 issue could have a material adverse effect on the Company's
operations. The Company believes that its actions with key suppliers and
customers will mitigate these risks.
<PAGE>
The Company's current estimates of the amount of time and costs necessary to
resolve Year 2000 issues are based on the facts and circumstances existing at
this time. The estimates were made using assumptions of future events
including the continued availability of certain resources, Year 2000
modification plans, implementation success by key third-parties, and other
factors. There can be no assurance that these estimates will be achieved and
actual results could differ materially from those anticipated.
The discussion in this Quarterly Report on Form 10-Q includes
forward-looking statements based on current management expectations. Factors
which would cause the results to differ from these expectations include the
following: general economic conditions; competitive factors and pricing
pressures; technological changes in the scanner industry; fluctuations in the
exchange rate between the German mark and the U.S. dollar; the Company's
ability to enter into and settle forward exchange contracts; availability of
patent protection for the Company's holographic scanners and other products;
and market acceptance of the Company's new products.
Item 3. Quantitative and Qualitative Disclosure about Market Risk.
Not applicable.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities and Use of Proceeds
Not applicable.
Item 3. Defaults upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit Number
27 Financial Data Schedule.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed by the Company during
the quarter ended September 30, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed by the undersigned
thereunto duly authorized.
METROLOGIC INSTRUMENTS, INC.
Date: November 13, 1998 By:/s/ C. Harry Knowles
-----------------------
C. Harry Knowles
Chairman of the Board,
President and Chief Executive Officer
(Principal Executive Officer)
Date: November 13, 1998 By:/s/Thomas E. Mills IV
-------------------------
Thomas E. Mills IV
Executive Vice President,
Chief Operating Officer and Chief
Financial Officer
(Principal Financial Officer)
<PAGE>
EXHIBIT INDEX
Exhibit No. 27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM UNAUDITED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1998 AND SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 9-MOS
<PERIOD-START> JAN-01-1998 JAN-01-1997
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996
<PERIOD-END> SEP-30-1998 SEP-30-1997
<CASH> 9,692,000 11,320,000
<SECURITIES> 0 0
<RECEIVABLES> 14,685,000 9,483,000
<ALLOWANCES> 460,000 472,000
<INVENTORY> 7,023,000 5,829,000
<CURRENT-ASSETS> 33,703,000 28,280,000
<PP&E> 5,756,000 4,564,000
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 44,907,000 37,531,000
<CURRENT-LIABILITIES> 13,453,000 10,851,000
<BONDS> 0 0
0 0
0 0
<COMMON> 54,000 54,000
<OTHER-SE> 28,563,000 23,486,000
<TOTAL-LIABILITY-AND-EQUITY> 44,907,000 37,531,000
<SALES> 48,297,000 38,966,000
<TOTAL-REVENUES> 48,297,000 38,966,000
<CGS> 29,166,000 24,539,000
<TOTAL-COSTS> 43,601,000 35,650,000
<OTHER-EXPENSES> (140,000) 413,000
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> (263,000) (174,000)
<INCOME-PRETAX> 5,099,000 3,077,000
<INCOME-TAX> 1,835,000 1,169,000
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 3,264,000 1,908,000
<EPS-PRIMARY> .61 .36
<EPS-DILUTED> .59 .35
</TABLE>
