UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(Mark One)
XX QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 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 1-9603
STEVENS INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 75-2159407
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
5500 Airport Freeway, Fort Worth, Texas 76117
(Address of principal executive offices) (zip code)
817/831-3911
(Registrant's telephone number, including area code)
__________________________________________
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter 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 XX No _____
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Title of Each Class Outstanding at May 6, 1999
Series A Stock, $0.10 Par Value 7,443,174
Series B Stock, $0.10 Par Value 2,058,959
<PAGE>
TABLE OF CONTENTS
Part I. FINANCIAL INFORMATION PAGE NUMBER
Item 1. Financial Statements
Consolidated Condensed Balance Sheets 3
December 31, 1998 and March 31, 1999
(unaudited)
Consolidated Condensed Statements of Operations 4
Three months ended March 31, 1999 and 1998
(unaudited)
Consolidated Condensed Statements of 5
Stockholders' Equity December 31, 1998 and
Three months ended March 31, 1999 (unaudited)
Consolidated Condensed Statements of Cash Flows 6
Three months ended March 31, 1999 and 1998
(unaudited)
Notes to Consolidated Condensed Financial 7
Statements (unaudited)
Item 2. Management's Discussion and Analysis of 9
Financial Condition and Results of Operations
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 6. Exhibits and Reports on Form 8-K 13
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<TABLE>
STEVENS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Amounts in thousands, except share data)
<CAPTION>
March 31, 1999 December 31, 1998
-------------- -----------------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 25 $ 164
Trade accounts receivable, less
allowance for losses of $509 and
$138 in 1999 and 1998, respectively 1,444 1,711
Costs and estimated earnings in excess
of billings on long term contracts 686 665
Inventory (Note 3). 5,784 6,146
Other current assets 890 1,076
Assets held for sale (Note 6) 988 988
------ ------
Total current assets 9,817 10,750
Property, plant and equipment 2,454 2,600
Other assets, net 1,435 1,301
------ ------
$13,706 $14,651
====== ======
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 2,174 $ 3,035
Billings in excess of costs and
estimated earnings on long-term contracts -- --
Other current liabilities 3,205 3,780
Customer deposits 476 310
Advances from stockholder 1,700 1,645
Current portion of long-term debt (Note 4) 13 15
------ ------
Total current liabilities 7,568 8,785
Long-term debt 2,676 2,294
Note payable - stockholder 2,950 2,950
Accrued pension costs 3,577 3,577
Commitments and contingencies -- --
Stockholders' equity:
Preferred stock, $0.10 par value,
2,000,000 shares authorized, none
issued and outstanding -- --
Series A common stock, $0.10 par
value, 20,000,000 shares authorized,
7,443,000 and 7,418,000 shares
issued and outstanding at March 31, 1999
and December 31, 1998, respectively 743 741
Series B common stock, $0.10 par value,
6,000,000 shares authorized, 2,060,000
and 2,085,000 shares issued and
outstanding at March 31, 1999 and
December 31, 1998, respectively 207 209
Additional paid-in-capital 39,961 39,961
Accumulated other comprehensive (loss) (4,303) (4,150)
Retained (deficit) (39,673) (39,716)
------ ------
Total stockholders' equity (deficit) (3,065) (2,955)
------ ------
$13,706 $14,651
====== ======
See notes to consolidated condensed financial statements.
</TABLE>
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<TABLE>
STEVENS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Amounts in thousands, except per share data)
Three Months Ended March 31,
1999 1998
------ ------
<S> <C> <C>
Net sales $ 3,314 $ 9,697
Cost of sales (1,911) (6,912)
------ ------
Gross profit 1,403 2,785
Selling, general and administrative expenses (1,133) (2,228)
------ ------
Operating income (loss) 270 557
Other income (expense):
Interest expense (176) (825)
Other, net (48) (148)
------ ------
(224) (973)
------ ------
Income (loss) before income taxes 46 (416)
Income tax (expense) (Note 7) (3) --
------ ------
Net income (loss) $ 43 $ (416)
====== ======
Net income (loss) per common share - basic $ 0.005 $ (0.04)
====== ======
Net loss per common share - diluted $ 0.005 $ (0.04)
====== ======
Weighted average number of shares of common
and common stock equivalents outstanding
during the periods - basic 9,492 9,488
====== ======
Weighted average number of shares of common
and common stock equivalents outstanding
during the periods - diluted 9,492 9,488
====== ======
See notes to consolidated condensed financial statements.
</TABLE>
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<TABLE>
STEVENS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited)
(Amounts in thousands)
Accumulated
Additional Other
Series A Stock Series B Stock Paid-In Retained Comprehensive
Shares Amount Shares Amount Capital (Deficit) Loss Total
----- ---- ----- ---- ------ ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1999 7,418 $741 2,085 $209 $39,961 $(39,716) $(4,150) $(2,955)
Net income -- -- -- -- -- 43 -- 43
Foreign currency
translation adjustment -- -- -- -- -- -- (153) (153)
Excess pension liability
adjustment -- -- -- -- -- -- -- --
------
Comprehensive loss (110)
------
Conversion of Series B
stock to Series A stock 25 2 (25) 2 -- -- -- --
----- ---- ----- ---- ------ ------- ------ ------
Balance, March 31, 1999 7,443 $743 2,060 $207 $39,961 $(39,673) $(4,303) $(3,065)
===== ==== ===== ==== ====== ======= ====== ======
See notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
STEVENS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Amounts in thousands)
Three Months Ended
March 31,
-------------------
1999 1998
----- ------
<S> <C> <C>
Cash provided by operations:
Net income (loss) $ 43 $ ( 416)
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization 215 453
Other (152) (217)
Changes in operating assets and liabilities:
Trade accounts receivable 267 1,544
Contract costs in excess of billings (21) (1,356)
Inventory 362 110
Other assets (31) 1,191
Trade accounts payable (861) 193
Other liabilities (408) (683)
----- ------
Total cash (used in) provided by
operating activities (586) 819
----- ------
Cash provided by (used in) investing activities:
Additions to property, plant and equipment (10) (160)
Decreases to property, plant and equipment 24 --
----- ------
Total cash provided by (used in)
investing activities 14 (160)
----- ------
Cash provided by (used in) financing activities:
Net proceeds from (repayments of) long-
term debt 433 (171)
----- ------
Total cash provided by (used in)
financing activities 433 (171)
----- ------
Increase (decrease) in cash and temporary
investments (139) 488
Cash and temporary investments at
beginning of period 164 211
----- ------
Cash and temporary investments at
end ofperiod $ 25 $ 699
===== ======
Supplemental disclosure of cash flow
information:
Cash paid during the period for:
Interest $ 60 $ 285
Income taxes 5 --
See notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
STEVENS INTERNATIONAL, INC. AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
(Unaudited)
1. The consolidated condensed balance sheet as of March 31, 1999, the
consolidated condensed statement of stockholders' equity for the
period ended March 31, 1999, the consolidated condensed statements
of operations for the three months ended March 31, 1999 and 1998,
and the consolidated condensed statements of cash flows for the
three month periods then ended have been prepared by the Company
without audit. In the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary to present
fairly the financial position as of March 31, 1999 and the results
of operations for the three months ended March 31, 1999 and 1998 and
the cash flows for the three months ended March 31, 1999 and 1998
have been made. The December 31, 1998 consolidated condensed
balance sheet is derived from the audited consolidated balance sheet
as of that date. Complete financial statements for December 31,
1998 and related notes thereto are included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1998 (the "1998
Form 10-K").
The above financial statements have been prepared in accordance with
the instructions to Form 10-Q and therefore do not include all
information included in the 1998 Form 10-K. The results of
operations for the three months ended March 31, 1999 and 1998 are
not necessarily indicative of the results to be expected for the
full year.
2. The Company designs, manufactures, markets and services web-fed
packaging and printing systems and related equipment for its
customers in the packaging industry and in the specialty/commercial
and banknote and securities segments of the printing industry. The
Company also markets and manufactures high-speed digital image
processing systems primarily for use in the banknote and security
printing industry. The Company combines various types of equipment
capable of converting and printing, among other items, food and
beverage containers, liquid container cartons, banknotes, postage
stamps, lottery tickets, direct mail inserts, personal checks
and business forms. The Company's technological and engineering
capabilities allow it to combine any of the four major printing
technologies (offset, flexography, rotogravure and intaglio) in its
systems. Complete press systems are capable of multiple color and
multiple size printing and perform such related functions as
numbering, punching, perforating, slitting, cutting, creasing,
folding and stacking. The presses can be custom engineered for non-
standard form size and special auxiliary functions.
3. Inventories consist of the following:
<TABLE>
March 31, December 31,
1999 1998
------- -------
(Amounts in thousands)
<S> <C> <C>
Finished product $ 1,118 $ 630
Work in progress 1,180 1,458
Raw materials 3,486 4,058
------- -------
$ 5,784 $ 6,146
======= =======
4. For a description of the status of the bank credit facility at March
31, 1999, see "Liquidity and Capital Resources". Substantially all
assets of the Company continue to be pledged as collateral on the
Company's credit facilities.
5. The Company is subject to various claims, including product
liability claims, which arise in the ordinary course of business,
and is a party to various legal proceedings that constitute ordinary
routine litigation incidental to the Company's business. A
successful product liability claim brought against the Company in
excess of its product liability coverage could have a material
adverse effect upon the Company's business, operating results and
financial condition.
In management's opinion, the Company has adequate legal defense
and/or insurance coverage in respect to each of these legal actions
and does not believe that such actions, if they occur either
individually or in the aggregate, will materially affect the
Company's operations or financial position. See "Legal Proceedings"
herein and in the 1998 Form 10-K.
6. A description of the Company's divestitures in 1999 and 1998 follow:
Proposed Sale of Hamilton Production Facility
In the second quarter of 1999, the Company anticipates that it will
conclude the sale of the real property at its Hamilton, Ohio
production facility for an aggregate consideration of $725,000. The
transaction should result in no gain or loss since the property was
written down to its estimated ultimate realizable value at December
31, 1998. Proceeds of the transaction will be used to repay
certain expenses of the sale, certain property taxes and repay
a portion of the $2.5 million loan from Paul I. Stevens, the
Company's chairman and chief executive officer, which was partially
collateralized by a lien on this production facility.
Sale of Hamilton Machining Center in July 1998
On July 28, 1998 the Company sold the real and personal property at
its Hamilton, Ohio machining center ("HMC") and the major portion of
its machinery and equipment at its assembly facility in Hamilton,
Ohio for an aggregate consideration of approximately $4.33 million.
This transaction resulted in a second quarter 1998 loss on sale of
assets of approximately $0.8 million and an additional loss of $0.5
million in the third quarter of 1998 as a result of HMC inventory
and other inventory that was abandoned by the Company and included
in the sale. Proceeds of the transaction were used to repay the $4
million secured bridge term loan from the Company's new bank lender
(the "Bridge Loan") which was loaned to the Company on June 30,
1998. HMC had outside sales of $1.2 million and operating losses of
$0.35 million in 1997. The Company has replaced certain of the
capabilities of its machining center with a group of new and
traditional suppliers.
Sale of Assets of Zerand Division in April 1998
On April 27, 1998, the Company sold substantially all the assets of
the Zerand division to Valumaco Incorporated, a new company formed
for the asset purchase. In addition, Valumaco Incorporated assumed
certain liabilities of the Zerand division. The assets sold
included the real property, platen die cutter systems, and other
original Zerand products such as delivery equipment, wide-web
rotogravure printing systems, stack flexographic printing systems,
unwind and butt splicer systems, and related spare parts, accounts
payable, and other assumed liabilities. Excluded from the proposed
transaction were the System 2000 flexographic printing systems and
the System 9000 narrow-web rotogravure printing systems produced at
the Zerand division and related accounts receivable, inventory and
engineering drawings. The sale price was approximately $13.7
million, which consisted of cash proceeds of $10.1 million, a one-
year $1 million escrow "holdback", and the purchaser's assumption of
approximately $2.6 million of certain liabilities of Zerand,
including the accounts payable.
This transaction resulted in an approximate $10 million reduction of
the Company's senior debt. The Company realized an approximate $3.6
million gain on the sale of Zerand assets in the second quarter of
1998.
7. The Company's effective tax rate was 6.5% in 1999 and 0.0% in 1998.
Due to accumulated losses, there were no recoverable income taxes
for the three months ended March 31, 1998.
8. Basic EPS excludes dilution and is computed by dividing income
available to common shareholders by the weighted-average number of
common shares outstanding for the period. Diluted EPS reflects the
potential dilution that could occur if securities or other contracts
to issue common stock were exercised or converted into common stock.
Since the Series A and Series B stock have identical dividend and
participation rights in the Company's earnings, they have been
considered to be comparable in the calculation.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Year 2000 Compliance Disclosure
The Company's main computer system and software are not currently year
2000 compliant. The Year 2000 issue is the result of computer programs
being written using two digits rather than four to define the applicable
year. Any of the Company's computer programs that have date sensitive
software may recognize a date using "00" as the year 1900 rather than the
year 2000. This could result in a system failure or miscalculations
causing disruptions of operations, including, but not limited to, a
temporary inability to process transactions, invoices, or other similar
normal business activities.
Based on a recent assessment, the Company has determined that it will
need to modify a significant portion of its software so that its computer
system will properly utilize data beyond December 31, 1999. The Company
is working on its Year 2000 modifications, and plans to complete such
modifications by the end of the second quarter of 1999 utilizing certain
software upgrades and consultant and internal resources for all program
changes. The Company anticipates costs of $50,000 to $75,000 will be
incurred to complete its Year 2000 program modifications. There can be
no assurance that this time frame will be achieved and actual results
could differ materially from these plans. Specific factors that might
cause such material differences include, but are not limited to, the
availability and cost of personnel trained in this area, the ability to
locate and correct all relevant computer codes and similar uncertainties.
As a contingency, the Company's consultant, who developed the software
used by the Company, is capable of backup processing on its own
compatible computer system that is already Year 2000 compliant.
RESULTS OF OPERATIONS
Comparison of Three Months Ended March 31, 1999 and 1998
Sales The Company's sales for the three months ended March 31, 1999
decreased by $6.4 million (or 65.8%) compared to sales in the same period
in 1998 due primarily to decreases in packaging systems products ($2.8
million) and to decreased sales resulting from the sale of the Zerand
division in April 1998, which contributed $3.6 million in sales in the
first quarter of 1998.
Gross Profit The Company's gross profit for the three months ended March
31, 1999 decreased by $1.4 million compared to gross profit in the same
period in 1998 due primarily to decreased sales volume for packaging
systems net of reduced depreciation and product development costs in
1999. In addition, the Company evaluated its last-in first out ("LIFO")
inventory reserve in conjunction with the sale of its production facility
in Ohio including certain inventory, and other inventory usage in 1999.
The financial impact of the decrement in the LIFO inventory for the three
months ended March 31, 1998 was $0.27 million. Accordingly, the gross
profit for the three months was increased $0.27 million ($0.03 per share)
and the LIFO reserve was reduced $0.27 million. Gross profit margin for
1999 increased to 42.3% of sales as compared to 28.7% for 1998. This
increase in gross profit margin in 1999 was due primarily to normal
margins on standard products in 1999, the benefit of the reduction of the
LIFO reserve, and an adjustment in the recording of revenues on the ACE
project due to favorable exchange rates ($0.2 million) in 1999, as well
as reduced depreciation charges due to assets sold in 1998.
Selling, General and Administrative Expenses The Company's selling,
general, and administrative expenses decreased by $1.1 million (or 49.1%)
for the three months ended March 31, 1999 compared to the same period in
1998 due to continuing cost reduction efforts, and the 1998 sale of the
Zerand and Hamilton Machining Center (HMC) divisions. Selling, general
and administrative expenses for the three months ended March 31, 1999
were 34.2% of sales compared to 23% of sales for the same period in 1998
due to the large decrease in sales in 1999. The reduction in expenses
was not proportionate to the reduction in sales discussed above.
Other Income (Expense) The Company's interest expense decreased by $0.6
million for the three months ended March 31, 1999 compared to the same
period in 1998 due to the reduced borrowing in 1999. The approximate $20
million in debt reduction since March 31, 1998 resulted from the sale of
Zerand and HMC and the June 30, 1998 debt restructuring discussed in
"LIQUIDITY AND CAPITAL RESOURCES."
TAX MATTERS
The Company's effective state and federal income tax rate ("effective tax
rate") was 6.5% for the three months ended March 31, 1999, due to the
alternative minimum tax imposed on corporations, and 0% for the three
months ended March 31, 1998. Due to continuing losses in 1998, there
were no recoverable tax benefits for the three months ended March 31,
1998.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity and Capital Resources
The Company requires capital primarily to fund its ongoing operations, to
service its existing debt and to pursue its strategic objectives
including new product development and penetration of international
markets. The Company's working capital needs typically increase because
of a number of factors, including the duration of the manufacturing
process and the relatively large size of most orders.
Historically, the Company has funded its capital requirements with cash
provided by operating activities, borrowings under credit facilities,
issuances of long-term debt and the sale and private placement of common
stock. Net cash provided by (used in) operating activities (before
working capital requirement) was $0.1 million and $(0.2) million for the
three months ended March 31, 1999 and 1988, respectively. Working
capital provided (used) cash of $(0.7) million and $1.0 million for the
three months ended March 31, 1999 and 1998, respectively. The Company's
working capital needs increase during periods of sales growth because of
a number of factors, including the duration of the manufacturing process
and the relatively large size of most orders. During periods of sales
decline such as 1999 and 1998, the Company's working capital generally
provides cash as receivables are collected and inventory is utilized.
However, in 1999 the Company concentrated on reducing its trade payables
and other liabilities.
The Company's capital expenditures for the first quarter of 1999 and 1998
were $0.01 million and $0.16 million, respectively, and were used
primarily for certain machinery and equipment modernization.
On June 30, 1998 the Company refinanced a major portion of its secured
indebtedness ("the Debt Restructuring") as part of its plan to reduce its
debt. Through a combination of new secured bank borrowings of
approximately $6 million, and loans from its Chairman, CEO and principal
shareholder, Paul I. Stevens, aggregating $4.5 million, the Company paid
off principal amounts due its senior secured bank lender and its secured
senior subordinated noteholders, aggregating approximately $19.5 million.
Repayment of the secured Senior Subordinated Notes resulted in an
extraordinary gain on early extinguishment of debt of approximately $11.2
million in the second quarter of 1998.
Under its credit facility, the Company's maximum borrowings are limited
to a borrowing base formula, which cannot exceed $7.5 million in the form
of direct borrowings and letters of credit. As of March 31, 1999 there
were $2.67 million in direct borrowings and no standby letters of
credit outstanding under the bank credit facility, with no additional
availability for such borrowings.
The Company's bank credit facilities have first liens on certain assets
of the Company, principally inventory, accounts receivable, and the
Company's Texas real estate. Paul I. Stevens' loans aggregating $4.65
million at March 31, 1999 have first liens on certain assets of the
Company, principally certain Ohio assets that are being held for sale,
the remaining $0.5 million escrow hold back on the sale of the Zerand
division, the assets of a foreign subsidiary, and certain accounts
receivable for new customer equipment. The Company was paid $500,000 of
the Zerand escrow hold back funds net of amounts owed to the purchaser on
November 6, 1998. Because these hold back funds collateralize certain
Paul I. Stevens advances, the $500,000 was paid to him to reduce his
secured loans to the Company.
Interest on the bank facility is 1.25% over prime with a two-year
maturity on the revolving credit facility. The amount borrowed on the
revolving credit facility was approximately $2.67 million on March 31,
1999. The Company paid in full a $4.0 million bank Bridge Loan on July
28, 1998 from the sale of HMC and the major portion of its machinery and
equipment at its assembly facility in Hamilton, Ohio. The secured loans
from Paul I. Stevens are due June 30, 2000 and bear interest at rates
that vary up to 2% over bank prime.
The borrowings under the bank credit facility are subject to various
restrictive covenants related to financial ratios as well as limitations
on capital expenditures and additional indebtedness. The Company is not
allowed to pay dividends.
The Company's pension plans have 1999 minimum payments due of
approximately $0.5 million payable on or before September 15, 1999.
With the expected May 1999 sale of the Hamilton, Ohio manufacturing
facility, and assuming that one of several strategic financial
alternatives, principally the return of normalized order flow rates and
the additional sale of assets, among others presently being pursued by
the Company is consummated, management believes that cash flow from
operations will be adequate to fund its existing operations and repay
scheduled indebtedness over the next 12 months.
In addition, the Company may incur, from time to time, additional short-
and long-term bank indebtedness (under its existing credit facility or
otherwise) and may issue, in public or private transactions, its equity
and debt securities to provide additional funds necessary for the
continued pursuit of the Company's operational strategies. The
availability and terms of any such sources of financing will depend on
market and other conditions. There can be no assurance that such
additional financing will be available or, if available, will be on terms
and conditions acceptable to the Company. Through March 31, 1999, the
Company's Chairman and Chief Executive Officer has loaned the Company
$1.7 million for its short-term cash requirements. As of March 31, 1999,
this amount has not been repaid.
The success of the Company's plans will continue to be impacted by its
ability to achieve a satisfactory level of orders for printing systems,
timely deliveries, the degree of international orders (which generally
have less favorable cash flow terms and require letters of credit that
reduce credit availability), and improved terms of domestic orders.
While the Company believes it is making progress in these areas, there
can be no assurance that the Company will be successful in these
endeavors.
Backlog and Orders The Company's backlog of unfilled orders at March 31,
1999 was approximately $4.1 million compared to $2.5 million at December
31, 1998 . The backlog of packaging systems at March 31, 1999 increased
$1.9 million as compared to year-end 1998, offset by small changes in the
Company's other product lines. The backlog at March 31 in each of the
preceding five years has ranged from a low of $8.1 million in 1998 to a
high of $68.0 million in 1995.
Orders for the three months ended March 31, 1999 were $4.9 million
compared to $1.6 million for the comparable period in 1998, an increase
of $3.3 million while shipments decreased $2.7 million, excluding Zerand
in 1998. The Company believes the above noted increased order flow is
the result of normal fluctuations in the flow of major printing and
packaging system orders.
When sales are recorded under the completed contract method of
accounting, the Company normally experiences a six to nine month lag
between the time new orders are booked and the time they are reflected in
sales and results of operations. Larger orders, which are accounted for
using the percentage of completion method of accounting, are reflected in
sales and results of operations as the project progresses through the
manufacturing cycle.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
The Company is subject to various claims, including product liability
claims, which arise in the ordinary course of business, and is a party to
various legal proceedings that constitute ordinary routine litigation
incidental to the Company's business. No assurance can be given
regarding the outcome of any case; however a negative outcome in excess
of insurance coverage could have a material adverse effect on the
Company's business, operating results and financial condition.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit Number Description of Exhibit
------- -----------------------------
3.1 Second Amended and Restated Certificate of
Incorporation of the Company.(1)
3.2 Bylaws of the Company, as amended.(2)
4.1 Specimen of Series A Common Stock Certificate.(3)
4.2 Specimen of Series B Common Stock Certificate.(4)
10.1 Asset Contract to Purchase Real Estate dated February
8, 1999 by and between
the Company and Production Manufacturing, Inc. (5)
11.1 Computation of Net Income per Common Share.(*)
27.1 Financial Data Schedule.(*)
* Filed herewith.
(1) Previously filed as an exhibit to the Company's Annual Report on
Form 10-K for the year ended December 31, 1990 and incorporated
herein by reference.
(2) Previously filed as an exhibit to the Company's Registration
Statement on Form S-1 (No. 33-15279) and incorporated herein by
reference.
(3) Previously filed as an exhibit to the Company's Registration
Statement on Form S-1 (No. 33-24486) and incorporated herein by
reference.
(4) Previously filed as an exhibit to the Company's report on Form 8-A
filed August 19, 1988 and incorporated herein by reference.
(5) Previously filed as an exhibit to the Company's Annual Report on
Form 10-K for the year ended December 31, 1998 and incorporated
herein by reference.
(b) Reports on Form 8-K.
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Stevens International, Inc. has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
STEVENS INTERNATIONAL, INC.
Date: May 12, 1999 By: /s/ Paul I. Stevens
------------------------
Paul I. Stevens
Chief Executive Officer
and Acting Chief Financial Officer
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<TABLE>
EXHIBIT 11.1
STEVENS INTERNATIONAL, INC. AND SUBSIDIARIES
COMPUTATIONS OF NET INCOME (LOSS) PER COMMON SHARE
(UNAUDITED)
(Amounts in thousands, except per share data)
Three Months Ended
March 31,
1999 1998
----- -----
<S> <C> <C>
Basic and diluted:
Weighted average shares outstanding - basic 9,492 9,488
Assumed exercise of Series A and B stock
options (Treasury stock method) -- --
----- -----
Total common share equivalents - diluted 9,492 9,488
===== =====
Net income (loss) $ 43 $ (416)
===== =====
Per share amounts -- Basic and fully diluted:
Net income (loss) - basic $0.005 $(0.04)
===== =====
Net income (loss) - diluted $0.005 $(0.04)
===== =====
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS OF STEVENS INTERNATIONAL, INC.
AND SUBSIDIARIES AS OF MARCH 31, 1999 AND FOR THE THREE MONTHS THEN ENDED
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 25
<SECURITIES> 0
<RECEIVABLES> 1,953
<ALLOWANCES> 509
<INVENTORY> 5,784
<CURRENT-ASSETS> 9,817
<PP&E> 6,839
<DEPRECIATION> 4,385
<TOTAL-ASSETS> 13,706
<CURRENT-LIABILITIES> 7,568
<BONDS> 5,626
0
0
<COMMON> 950
<OTHER-SE> (4,015)
<TOTAL-LIABILITY-AND-EQUITY> 13,706
<SALES> 3,314
<TOTAL-REVENUES> 3,314
<CGS> 1,911
<TOTAL-COSTS> 1,911
<OTHER-EXPENSES> 1,133
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 176
<INCOME-PRETAX> 46
<INCOME-TAX> 3
<INCOME-CONTINUING> 43
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 43
<EPS-PRIMARY> 0.005
<EPS-DILUTED> 0.005
</TABLE>
