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FORM 10-QSB
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
for the quarterly period ended SEPTEMBER 30, 1995
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OR
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-3321
GRIFFIN TECHNOLOGY INCORPORATED
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(Exact name of small business issuer as specified in its charter)
NEW YORK 16-0864416
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(State or other jurisdiction (IRS Employer Identification No.)
incorporation or organization)
1133 Corporate Drive
Farmington, New York 14425
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (716) 924-7121
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
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As of November 10, 1995 the Issuer had outstanding 2,387,107 shares of
Common Stock.
Transitional Small Business Disclosure Format (check one):
Yes No X
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GRIFFIN TECHNOLOGY INCORPORATED
BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
September 30, June 30,
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1995 1994 1995
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<S> <C> <C> <C>
ASSETS
Current assets:
Cash $ 200,600 $ 94,400 $ 119,200
Accounts receivable 9,917,400 9,350,100 3,946,800
Inventories 3,488,100 4,218,900 3,903,900
Prepaid expenses and other current assets 239,200 186,900 218,000
Refundable income taxes 76,600
Deferred income tax charges 409,000 388,500 409,000
Electronic systems, at cost 13,947,900 13,948,100 13,947,900
Less - Accumulated amortization (13,946,900) (13,935,700) (13,945,600)
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Net electronic systems 1,000 12,400 2,300
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Total current assets 14,255,300 14,327,800 8,599,200
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Long-term electronic systems, at cost 16,308,300 15,797,300 16,942,500
Less - Accumulated amortization (11,454,600) (9,609,600) (11,174,700)
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Net electronic systems 4,853,700 6,187,700 5,767,800
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Property, plant and equipment, at cost 5,859,100 5,556,900 5,730,200
Less - Accumulated depreciation and amortization (4,282,000) (3,973,700) (4,213,100)
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Net property, plant and equipment 1,577,100 1,583,200 1,517,100
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Deferred software costs, net 990,400 1,110,400 1,018,000
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Other assets 480,800 114,100 371,900
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Total assets $22,157,300 $23,323,200 $17,274,000
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 600,000 $ 600,000 $ 600,000
Accounts payable 1,086,100 810,200 981,700
Accrued payroll and related taxes 590,300 670,700 484,300
Other accrued liabilities and expenses 440,400 204,100 448,600
Income taxes payable 47,200 152,800 47,200
Unearned service fees 6,488,100 8,213,500 1,861,700
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Total current liabilities 9,252,100 10,651,300 4,423,500
Long-term debt 5,250,000 5,500,000 5,600,000
Employee stock purchase plan 4,600 11,800
Deferred income tax credits 759,000 532,100 633,100
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Total liabilities 15,261,100 16,688,000 10,668,400
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Shareholders' equity
Common stock, par value $.05 per share
Authorized - 6,000,000 shares
Issued and outstanding - 2,384,707, 2,376,647
and 2,382,747 shares, respectively 119,300 118,800 119,100
Capital in excess of par value 3,499,800 3,460,600 3,487,700
Retained earnings 3,277,100 3,055,800 2,998,800
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Total shareholders' equity 6,896,200 6,635,200 6,605,600
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Total liabilities and shareholders' equity $22,157,300 $23,323,200 $17,274,000
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</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
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GRIFFIN TECHNOLOGY INCORPORATED
STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
For the three months
ended September 30,
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1995 1994
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<S> <C> <C>
Revenues:
Service fees $2,662,000 $3,308,900
Net sales 3,853,200 1,603,900
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Total revenues 6,515,200 4,912,800
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Costs and expenses:
Cost of sales 2,521,700 878,500
Service of electronic systems 1,174,700 1,196,500
Amortization of electronic systems 498,700 532,500
Amortization of software costs 96,600 77,400
Selling, general and administrative 949,100 1,123,400
Research and development 717,100 640,900
Interest 148,100 135,700
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Total costs and expenses 6,106,000 4,584,900
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Income before income taxes 409,200 327,900
Income tax expense 130,900 108,200
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Net income $ 278,300 $ 219,700
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Earnings per common and
common equivalent share $.12 $.09
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Dividends per share -0- -0-
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Weighted average number of common and
common equivalent shares outstanding 2,392,334 2,383,638
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</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
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GRIFFIN TECHNOLOGY INCORPORATED
STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
For the three months
ended September 30,
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1995 1994
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<S> <C> <C>
Cash flows from operating activities:
Net income for the period $ 278,300 $ 219,700
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation of property and equipment 68,900 74,400
Amortization of electronic systems 498,700 532,500
Amortization of software development costs 96,600 77,400
Benefit from deferred taxes 125,900
Increase in unearned service fees 4,626,400 5,812,700
(Increase) in accounts receivable (5,970,600) (5,958,900)
Decrease(increase) in inventories 415,800 (224,600)
(Increase) in prepaid expenses (21,100) (47,400)
(Increase) in deferred software costs (69,000) (52,000)
Increase(decrease) in liabilities excluding borrowings 202,200 (16,300)
Other items, net (108,900) (5,600)
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Total adjustments (135,100) 192,200
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Net cash provided by operating activities 143,200 411,900
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Cash flows from financing activities:
Provided from employee stock option
and stock purchase plans 500 42,500
Revolving credit and term loan agreement
Borrowings 500,000 1,000,000
Repayments (850,000) (1,000,000)
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Net cash (used in) provided by financing activities (349,500) 42,500
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Cash flows from investing activities:
Additions to electronic system equipment (404,300)
Additions to property, plant and equipment (128,900) (16,200)
Sale of electronic systems 416,600
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Cash provided by (used in) investing activities 287,700 (420,500)
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Increase in cash 81,400 33,900
Cash at beginning of period 119,200 60,500
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Cash at end of period $ 200,600 $ 94,400
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Interest paid $ 147,200 $ 129,400
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Income taxes paid $ 3,900 $ 6,000
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</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
FINANCIAL CONDITION AND LIQUIDITY:
Operating activities for the quarter ended September 30, 1995, provided
$143,200 of cash flow compared to $411,900 for the first quarter one year ago.
Factors other than the normal seasonal nature and cyclical pattern of the
college and university market continued to have a material effect on the current
quarter's cash flow. In fiscal year ended June 30, 1995, Griffin deviated from
the past business practice of lease agreements for its installed electronic
systems. New policies related to sales of card reading terminals and electronic
systems/software resulted in a significant change to certain accounts on the
Balance Sheet and impacted cash flow. Inventories and unearned service fees at
September 30, 1995, are down $730,800 and $1,725,400, respectively; accounts
receivable are up $567,300; and working capital is $5,003,200 compared to
$3,676,500 one year ago.
As previously reported, Griffin's operations during Fiscal 1995 rendered
the Company unable to comply with certain covenant requirements contained in the
Fifth Amended and Restated Revolving Credit and Term Loan Agreement negotiated
with a bank November 3, 1994. The situation continued into the current quarter,
and the bank granted waivers for the specific events of default existing at
June 30 and September 30, 1995. As of November 10, 1995, the monies borrowed
under this agreement were $5,100,000 compared to $5,900,000 on the same date in
1994. Management is reviewing the agreement with the bank and believes that
sufficient funds will be available to meet Griffin's operating cash requirements
during the foreseeable future.
RESULTS OF OPERATIONS:
Total revenues for the quarter ended September 30, 1995, amounted to
$6,515,200, a net increase of 33%, or $1,602,400, over 1994. As a result of the
change in business policy mentioned above, there was a significant shift in the
current quarter of types of revenue generated. Service fees related to system
lease agreements decreased $646,900 while net sales of electronic
systems/software and peripheral equipment increased $2,249,300. The backlog of
system/software sales is currently in excess of $500,000.
Costs and expenses during the three months ended September 30, 1995,
increased $1,521,100 over the same 1994 period. The material cost of products
sold accounts for almost all of this increase.
Elimination of staff positions by realigning sales and marketing
functions, electronic system service, and housing information system functions
accounted for cost savings in these areas.
Earnings for the first quarter of the current year were $278,300, or
$.12 per share, compared with earnings for the same period one year ago of
$219,700, or $.09 per share. The effective annual income tax rate is
approximately the same for the first quarter in each fiscal year.
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NOTES TO FINANCIAL STATEMENTS
Results for the period ended September 30 are not necessarily indicative
of results to be expected for the year because Griffin's sales historically
reach seasonal highs during the months of July through September and again
during the months of April through June.
Information furnished reflects all adjustments which are, in the opinion
of management, necessary to a fair statement of results for interim periods
presented. All such adjustments are of a normal recurring nature.
Net income per share was computed on the basis of the weighted average
number of common and common equivalent shares outstanding during each period.
The common equivalent shares represent shares contingently issuable under
Griffin's stock option plan.
PART II. OTHER INFORMATION
Item 5. Other Information
On October 23, 1995, Griffin Technology Incorporated (the
"Company") announced that it had entered into an Agreement and
Plan of Merger ("Agreement") with Diebold, Incorporated,
("Parent"), pursuant to which D-GT Acquisition, Incorporated
("Purchaser"), a New York corporation and a wholly-owned
subsidiary of Parent, agreed to offer to purchase all of the
issued and outstanding shares of the Company's Common Stock at a
price of $7.75 net per share payable in cash through a tender
offer to the stockholders of the Company (the "Offer"). The
Agreement provides for a subsequent merger of Purchaser into the
Company at the same price per share paid pursuant to the Offer.
The Board of Directors of the Company unanimously recommended
that stockholders of the Company tender their shares pursuant to
the Offer after the Board gave careful consideration to a number
of factors, which are described in the Company's Schedule 14D-9,
as amended, filed with the Securities and Exchange Commission.
The Annual Meeting of Griffin scheduled for November 16, 1995,
will be in adjournment until further notice in view of the
transactions contemplated by the above Agreement.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
None
b. No reports on Form 8-K were filed for the quarter ended September 30,
1995.
SIGNATURE
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 to sign on its behalf and as the
registrant's principal financial and accounting officer.
GRIFFIN TECHNOLOGY INCORPORATED
BY: s/Joseph A. Murrer
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Joseph A. Murrer
Vice President - Finance and Administration
Treasurer and Secretary
Date: November 14, 1995
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 200,600
<SECURITIES> 0
<RECEIVABLES> 9,917,400
<ALLOWANCES> 0
<INVENTORY> 3,488,100
<CURRENT-ASSETS> 14,255,300
<PP&E> 22,167,400
<DEPRECIATION> 15,736,600
<TOTAL-ASSETS> 22,157,300
<CURRENT-LIABILITIES> 9,252,100
<BONDS> 0
<COMMON> 119,300
0
0
<OTHER-SE> 3,499,800
<TOTAL-LIABILITY-AND-EQUITY> 22,157,300
<SALES> 3,853,200
<TOTAL-REVENUES> 6,515,200
<CGS> 2,521,700
<TOTAL-COSTS> 6,106,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 148,100
<INCOME-PRETAX> 409,200
<INCOME-TAX> 130,900
<INCOME-CONTINUING> 278,300
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 278,300
<EPS-PRIMARY> .12
<EPS-DILUTED> .12
</TABLE>
