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: July 1, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO 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 0-17541
PRESSTEK, INC.
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(Exact name of registrant as specified in its charter)
Delaware 02-0415170
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
9 Commercial Street, Hudson, New Hampshire 03051-3907
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (603) 595-7000
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(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 [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of Common Stock, as of the latest practicable date: as of August 9, 2000 there
were 32,697,185 shares outstanding of the Registrant's Common Stock, $.01 par
value per share.
<PAGE>
PRESSTEK, INC.
INDEX
PAGE
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
Balance Sheets as of July 1, 2000 (unaudited)
and January 1, 2000 3
Statements of Operations for the three and six
month periods ended July 1, 2000 and July 3,
1999 (unaudited) 4
Statements of Cash Flows for the six month
periods ended July 1, 2000 and July 3, 1999
(unaudited) 5
Notes to Financial Statements (unaudited) 6
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 13
Item 3 Quantitative and Qualitative Disclosures
About Market Risk 19
PART II OTHER INFORMATION 20
Item 1 Legal Proceedings
Item 6 Exhibits and Reports on form 8-K
Signatures 21
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
PRESSTEK, INC.
BALANCE SHEETS
(In thousands, except per share data)
<TABLE>
<CAPTION>
July 1, January 1,
2000 2000
--------- ---------
(unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 16,755 $ 18,653
Accounts receivable, net of allowance for losses
of $2,884 and $3,302 in fiscal 2000 and 1999, respectively 14,089 11,645
Inventories 9,984 7,214
Other current assets 3,165 859
--------- ---------
Total current assets 43,993 38,371
--------- ---------
PROPERTY, PLANT AND EQUIPMENT, NET 53,464 50,990
--------- ---------
OTHER ASSETS:
Patent application costs and license rights, net 5,073 5,126
Other 2,433 146
--------- ---------
Total other assets 7,506 5,272
--------- ---------
TOTAL $ 104,963 $ 94,633
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 1,714 $ 1,024
Accounts payable and accrued expenses 9,136 8,888
Accrued salaries and employee benefits 1,528 1,269
Net current liabilities of discontinued operations 1,732 1,817
--------- ---------
Total current liabilities 14,110 12,998
--------- ---------
LONG-TERM DEBT, NET OF CURRENT PORTION 13,597 8,830
--------- ---------
OTHER LONG-TERM LIABILITIES 22,950 22,950
--------- ---------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; authorized
1,000,000 shares; no shares issued or outstanding -- --
Common stock, $.01 par value; authorized 75,000,000 shares;
issued and outstanding 32,615,397 shares at July 1, 2000;
32,515,651 shares at January 1, 2000 326 325
Additional paid-in capital 72,803 69,312
Retained deficit (18,823) (19,782)
--------- ---------
Stockholders' equity 54,306 49,855
--------- ---------
TOTAL $ 104,963 $ 94,633
========= =========
</TABLE>
See notes to financial statements
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<PAGE>
PRESSTEK, INC.
STATEMENTS OF OPERATIONS
For the three and six months ended
(In thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
July 1, July 3, July 1, July 3,
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
REVENUES:
Product sales $ 18,390 $ 10,736 $ 35,497 $ 20,563
Royalties and fees from licensees 2,826 1,510 4,754 3,219
-------- -------- -------- --------
Total revenues 21,216 12,246 40,251 23,782
-------- -------- -------- --------
COSTS AND EXPENSES:
Cost of products sold 11,089 7,467 21,747 15,522
Research and product development 4,145 4,476 8,704 8,320
Sales and marketing 3,050 1,521 4,715 2,817
General and administrative 2,364 1,832 4,225 3,518
-------- -------- -------- --------
Total costs and expenses 20,648 15,296 39,391 30,177
-------- -------- -------- --------
INCOME (LOSS) FROM OPERATIONS 568 (3,050) 860 (6,395)
-------- -------- -------- --------
OTHER INCOME:
Dividend and interest, net 9 122 108 290
Other, net 56 -- 56 80
-------- -------- -------- --------
Total other income, net 65 122 164 370
-------- -------- -------- --------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 633 (2,928) 1,024 (6,025)
PROVISION FOR INCOME TAXES 65 -- 65 --
-------- -------- -------- --------
INCOME (LOSS) FROM CONTINUING OPERATIONS 568 (2,928) 959 (6,025)
-------- -------- -------- --------
INCOME FROM DISCONTINUED OPERATIONS -- 94 -- 107
-------- -------- -------- --------
NET INCOME (LOSS) $ 568 $ (2,834) $ 959 $ (5,918)
======== ======== ======== ========
EARNINGS (LOSS) PER SHARE - BASIC:
From continuing operations $ 0.02 $ (0.09) $ 0.03 $ (0.19)
======== ======== ======== ========
From discontinued operations $ -- $ -- $ -- $ 0.01
======== ======== ======== ========
EARNINGS (LOSS) PER SHARE - BASIC $ 0.02 $ (0.09) $ 0.03 $ (0.18)
======== ======== ======== ========
EARNINGS (LOSS) PER SHARE - DILUTED:
From continuing operations $ 0.02 $ (0.09) $ 0.03 $ (0.19)
======== ======== ======== ========
From discontinued operations $ -- $ -- $ -- $ 0.01
======== ======== ======== ========
EARNINGS (LOSS) PER SHARE - DILUTED $ 0.02 $ (0.09) $ 0.03 $ (0.18)
======== ======== ======== ========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC 32,601 32,311 32,581 32,305
======== ======== ======== ========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - DILUTED 34,106 32,311 34,153 32,305
======== ======== ======== ========
</TABLE>
See notes to financial statements
- 4 -
<PAGE>
PRESSTEK, INC.
STATEMENTS OF CASH FLOWS
For the six months ended
(In thousands)
(unaudited)
<TABLE>
<CAPTION>
July 1, July 3,
2000 1999
-------- --------
<S> <C> <C>
CASH FLOWS - OPERATING ACTIVITIES:
Income (loss) from continuing operations $ 959 $ (6,025)
Adjustments to reconcile income (loss) from continuing operations to net cash provided
by (used in) operating activities of continuing operations:
Depreciation 2,756 2,486
Amortization 400 294
Provision for warranty and other costs 385 68
Provision for losses on accounts receivable 520 860
Other, net 50 (10)
Changes in operating assets and liabilities, net of effects from acquisitions
Decrease (increase) in accounts receivable (2,964) 10,845
Decrease (increase) in Inventories (2,770) 2,491
Increase in other current assets (2,306) (22)
Decrease in accounts payable and accrued expenses (31) (1,041)
Increase in accrued salaries and employee benefits 259 161
-------- --------
Net cash provided by (used in) operating activities of continuing operations (2,742) 10,107
Net cash used in operating activities of discontinued operations (85) (3,959)
-------- --------
Net cash provided by (used in) operating activities (2,827) 6,148
-------- --------
CASH FLOWS - INVESTING ACTIVITIES:
Purchases of property, plant and equipment (5,229) (6,680)
Increase in other assets (303) (209)
-------- --------
Net cash used in investing activities of continuing operations (5,532) (6,889)
Net cash used in investing activities of discontinued operations -- (95)
-------- --------
Net cash used in investing activities (5,532) (6,984)
-------- --------
CASH FLOWS - FINANCING ACTIVITIES:
Net proceeds from the sale of common stock 1,004 253
Proceeds from long-term debt 5,959 --
Repayments of long-term debt (502) (256)
-------- --------
Net cash provided by (used in) financing activities 6,461 (3)
-------- --------
DECREASE IN CASH AND CASH EQUIVALENTS (1,898) (839)
CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD 18,653 19,057
-------- --------
CASH AND CASH EQUIVALENTS END OF PERIOD $ 16,755 $ 18,218
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 444 $ 226
======== ========
Income taxes $ 55 $ --
======== ========
NON-CASH FINANCING ACTIVITY
Warrants issued in exchange for consulting services to be performed over five
years $ 2,488 $ --
======== ========
</TABLE>
See notes to financial statements
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<PAGE>
PRESSTEK, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
JULY 1, 2000
1. BASIS OF PRESENTATION
Presstek, Inc. ("Presstek" or "the Company") is a leading developer of
digital imaging and printing plate technologies for the printing and graphic
arts industries. Presstek's products and applications incorporate PEARL(R) and
DI(R) digital imaging technologies and utilize PEARL consumables for
computer-to-plate and direct-to-press applications. The Company's patented DI
and PEARL thermal laser diode family of products enables its customers to
produce high quality, full-color lithographic printed materials more quickly and
cost efficiently.
The unaudited financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Rule 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. The financial
information included in the quarterly report should be read in conjunction with
the Company's audited financial statements and related notes thereto for the
fiscal year ended January 1, 2000. The January 1, 2000 information has been
derived directly from the annual financial statements. In the opinion of
management, all adjustments considered necessary for a fair presentation have
been included and all such adjustments were normal and recurring. Operating
results for the three and six months ended July 1, 2000 are not necessarily
indicative of the results that may be expected for the fiscal year ending
December 30, 2000.
In June 2000 the Company formed a subsidiary, LaserTel, Inc. ("LaserTel")
for the purpose of securing its supply of laser diodes. LaserTel is located in
the former Delta V Technologies, Inc. ("Delta V") facility in Tucson, Arizona.
LaserTel will operate as a subsidiary of Presstek, and will be primarily engaged
in the manufacture and development of the Company's high-powered laser diodes.
The results of LaserTel's operations for the three and six month period ending
July 1, 2000 were not material to the Company's results of operations.
In November 1999 the Company acquired 100% of the stock of R/H Consulting,
Inc. ("R/H"). R/H was principally engaged in the research and development of
laser imageable printing plates. R/H was purchased for $500,000 and 142,855
shares of the Company's common stock. The excess purchase price over book value
of net assets acquired of $1.9 million has been allocated to the patents
acquired. The acquisition was accounted for as a purchase and accordingly, the
results of R/H's operations, which are not material, have been included in the
financial statements for the second quarter and first six months ended July 1,
2000. The results of R/H's operations for the comparable periods of fiscal 1999
would not have had a material impact on the Company's results of operations.
The divestiture of the Company's Delta V subsidiary was recorded in the
quarter ended October 2, 1999 and the financial statements for all periods
reflect Delta V as a discontinued operation. All of the following notes, unless
otherwise indicated, refer to the continuing operations of Presstek. See Note 8
of notes to the financial statements.
Certain accounts in the fiscal 1999 financial statements have been
reclassified for comparative purposes to conform to the presentation in the July
1, 2000 financial statements.
The Company operates and reports on a 52/53 week fiscal year ending on the
Saturday closest to December 31. Accordingly, the financial statements include
the thirteen week periods ended July 1, 2000 ("the second quarter of fiscal
2000") and July 3, 1999 ("the second quarter of fiscal 1999"), and the twenty
six week periods ended July 1, 2000 ("the first six months of fiscal 2000") and
July 3, 1999 ("the first six months of fiscal 1999").
- 6 -
<PAGE>
2. INVENTORIES
Inventories are valued at the lower of cost or market, with cost determined
using the first-in, first-out method. Inventories consisted of the following:
July 1, January 1,
2000 2000
-------- --------
(In thousands)
Raw material $ 3,333 $ 1,915
Work in process 2,833 3,055
Finished goods 3,818 2,244
-------- --------
$ 9,984 $ 7,214
======== ========
3. PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment at cost consisted of the following:
July 1, January 1,
2000 2000
-------- --------
(In thousands)
Land and land improvements $ 2,037 $ 2,037
Buildings and leasehold improvements 21,891 20,476
Production equipment and other 35,250 34,452
Construction in progress 11,336 8,341
-------- --------
70,514 65,306
Less accumulated depreciation (17,050) (14,316)
-------- --------
$ 53,464 $ 50,990
======== ========
4. LONG-TERM DEBT AND CREDIT FACILITIES
Long-term debt consisted of the following:
July 1, January 1,
2000 2000
-------- --------
(In thousands)
Mortgage term loan $ 5,652 $ 5,925
Lease line of credit 9,659 3,929
-------- --------
15,311 9,854
Less current portion (1,714) (1,024)
-------- --------
$ 13,597 $ 8,830
======== ========
In June 2000, the Company borrowed the remaining $6.0 million under the
$10.0 million lease line of credit facility from Keybank National Association.
The $10.0 million in borrowings is secured by equipment valued at $13.4 million.
The loan bears a variable rate of interest based upon the prime rate, currently
between 7.5% and 8.5%, with a fixed rate conversion provision. Principal and
interest under the lease line are payable in 84 monthly installments beginning
on July 31, 2000 for the $6.0 million in borrowings. The payments for the
initial $4.0 million borrowed in September 1999 commenced in October 1999.
The Company's credit facilities with Citizens Bank New Hampshire include a
ten-year mortgage term loan and a revolving line of credit loan. The mortgage
term loan, in the amount of $6.9 million, is secured by land and buildings with
a cost of approximately $17.0 million. The loan bears a fixed rate of interest
of 7.12% per year during the first five years and a variable rate of interest at
the LIBOR rate plus 2%, (8.63% at July 1, 2000) for the remaining five years.
Principal and interest payments during the first five years of the loan will be
made in 60 monthly installments of $80,500. During the remaining five years,
principal and interest
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<PAGE>
payments will be made on a monthly basis in the amount of one-sixtieth of the
outstanding principal amount as of the first day of the second five year period,
plus accrued interest through the monthly payment date. All outstanding
principal and accrued and unpaid interest is due and payable on February 6,
2008.
The revolving line of credit loan, under which the Company may borrow $10.0
million, is secured by substantially all of the Company's assets. Interest on
the line of credit is payable at the LIBOR rate plus 1.50% (8.13% at July 1,
2000). The current loan agreement has been extended through September 30, 2000,
at which date, the entire principal and accrued interest is due and payable. The
Company currently has $10.0 million available under the revolving line of credit
loan agreement.
The Company has received a commitment from Citizens to extend the current
credit facilities through September 2002.
Under the terms of the mortgage term loan, the lease line of credit and the
revolving line of credit agreements, the Company is required to meet certain
financial covenants on a quarterly and annual basis. At July 1, 2000 the Company
was in compliance with all financial covenants.
5. OTHER LONG-TERM LIABILITIES
On March 24, 2000, the Company reached a settlement with the plaintiffs in
the class actions, filed in 1996 on behalf of the Company's shareholders against
the Company and certain other defendants, including but not limited to certain
of the Company's officers and directors. These actions were consolidated in the
United States District Court, District of New Hampshire. The Company has also
reached a settlement with the plaintiffs in the related derivative suits filed
on behalf of the Company in the Chancery Court of the State of Delaware and in
the United States District Court, District of New Hampshire. Under the terms of
the settlement, the Company will issue common stock in the amount of $22.9
million. The Company recorded the $22.9 million charge as a long-term liability
in the fourth quarter of fiscal 1999, subject to determining the number of
shares to be issued under the terms of the settlement.
- 8 -
<PAGE>
6. EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share is computed by dividing net income (loss)
by the weighted average number of shares of common stock outstanding during the
period. Diluted earnings (loss) per share is computed giving effect to all
diluted potential common shares that were outstanding during the period. Diluted
potential common shares consist of the incremental common shares issuable upon
exercise of stock options and warrants.
The following represents the calculation of basic and diluted earnings
(loss) per share for the three and six months ended July 1, 2000 and July 3,
1999:
<TABLE>
<CAPTION>
Three months ended Six months ended
July 1, July 3, July 1, July 3,
2000 1999 2000 1999
------------ ---------- ------------ ----------
(In thousands, except per share data)
<S> <C> <C> <C> <C>
Income (loss) from continuing operations $ 568 $ (2,928) $ 959 $ (6,025)
Income from discontinued operations -- 94 -- 107
------------ ---------- ------------ ----------
Net income (loss) $ 568 $ (2,834) $ 959 $ (5,918)
============ ========== ============ ==========
Weighted average common shares outstanding - Basic 32,601 32,311 32,581 32,305
Effect of assumed conversion of stock options 1,505 -- 1,572 --
------------ ---------- ------------ ----------
Weighted average common shares outstanding - Diluted 34,106 32,311 34,153 32,305
============ ========== ============ ==========
Earnings (loss) per share - Basic:
From continuing operations $ 0.02 $ (0.09) $ .03 $ (0.19)
============ ========== ============ ==========
From discontinued operations $ -- $ -- $ -- $ .01
============ ========== ============ ==========
Earnings (loss) per share - Basic $ 0.02 $ (0.09) $ .03 $ (0.18)
============ ========== ============ ==========
Earnings (loss) per share - Diluted
From continuing operations $ 0.02 $ (0.09) $ 0.03 $ (0.19)
============ ========== ============ ==========
From discontinued operations $ -- $ -- $ -- $ 0.01
============ ========== ============ ==========
Earnings (loss) per share - Diluted $ 0.02 $ (0.09) $ 0.03 $ (0.18)
============ ========== ============ ==========
</TABLE>
Options and warrants to purchase 307,250 and 306,750 shares of common stock
at exercise prices ranging from $20.25 to $26.94 per share were outstanding
during a portion of the second quarter and first six months of fiscal 2000,
respectively, but were not included in the computation of diluted earnings per
share, as the exercise prices of the options and warrants were greater than the
average market price of the common shares. These options and warrants, which
expire from February 23, 2002 through May 8, 2010, were all outstanding at July
1, 2000. All stock options outstanding for the second quarter and first six
months of fiscal 1999 are excluded from the calculation of diluted loss per
share, as their effect would be antidilutive.
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<PAGE>
7. INCOME TAXES
The Company did not record a provision for or a charge in lieu of United
States federal income taxes for the three and six months ended July 1, 2000 as a
result of the tax loss prior to deductions related to stock compensation for the
periods. No provision for or charge in lieu of United States federal income
taxes was required for the three and six months ended July 3, 1999, as a result
of the tax loss prior to deductions related to stock compensation for the
periods.
The Company recorded a provision for state income taxes for the three and
six months ended July 1, 2000 in the amount of $65,000. No provision for or
charge in lieu of state income taxes was required for the three and six months
ended July 3, 1999 as a result of the tax loss prior to deductions related to
stock compensation for the periods.
8. DISCONTINUED OPERATIONS
During the third quarter of fiscal 1999 the Company determined to sell or
otherwise discontinue the operations of its Delta V subsidiary to allow the
Company to further focus its efforts on the core business of digital imaging and
plate manufacturing. Located in Tucson, Arizona, Delta V was engaged in the
development, manufacture, and sale of vacuum deposition coating equipment for
vacuum coating applications. The Company discontinued the operations of Delta V
at the end of fiscal 1999.
As a result of the divestiture of Delta V, the Company incurred a $8.5
million loss on disposal of discontinued operations for fiscal year ended
January 1, 2000. This included actual closing costs and operating losses
incurred in the fourth quarter of fiscal 1999 of $2.2 million, a provision for
anticipated closing costs of $1.6 million, $6.1 million related to the write off
of goodwill and other intangibles assets, and a reduction in other asset values
of $1.6 million. These costs were partially offset by proceeds of $3.0 million
received from Minnesota Mining and Manufacturing Co. for the licensing of the
Company's intellectual property relating to vacuum-deposited polymer multilayer
technology.
Delta V is reported separately as a discontinued operation, and prior
periods have been restated in the financial statements and related footnotes.
Revenues and income from discontinued operations for the second quarter and
first six months of fiscal 1999 were as follows:
Three months Six months
July 3, July 3,
1999 1999
------- -------
(In thousands)
Revenues $ 2,633 $ 5,941
Costs and expenses 3,046 6,346
------- -------
Income (loss) from operations (413) (405)
Other income 507 512
------- -------
Net income from discontinued operations $ 94 $ 107
======= =======
9. COMPREHENSIVE INCOME (LOSS)
Comprehensive income (loss) is comprised of net income (loss) and all
changes in stockholder's equity except those due to investments by owners and
distributions to owners, which for the Company includes unrealized gains
(losses) on marketable securities. For the fiscal quarters and first six months
ended July 1, 2000 and July 3, 1999 there were no significant differences
between net income (loss) and comprehensive income (loss).
10. SEGMENT INFORMATION
In the Company's Form 10-K for the fiscal year ended January 2, 1999, two
segments were reported, the Digital Imaging Products segment, and Delta V. As a
result of the decision to discontinue the operations
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<PAGE>
of its Delta V subsidiary in the third quarter of fiscal 1999, the Company's
continuing operations are now reportable as a single business segment.
Revenues generated under the Company's agreements with Heidelberg and its
distributors were $13.0 million and $23.8 million for the second quarter and
first six months of fiscal 2000, an increase of $8.1 million or 165% and $13.9
million or 140%. Revenues for the comparable period of fiscal 1999 were $4.9
million and $9.9 million respectively. Revenues from Heidelberg represented 59%
and 42% of total revenues for the first six months of fiscal 2000 and 1999,
respectively.
11. OTHER INFORMATION
The Company had entered into an agreement with the plaintiffs in several
class actions lawsuits consolidated under the common caption "Bill Berke, et al.
V. Presstek, Inc., et al." in the United States District Court, District of New
Hampshire to settle the class action lawsuit. The Company had also executed a
memorandum of understanding with respect to settlement of the derivatives
lawsuits filed on behalf of the Company, one in the Chancery Court of the State
of Delaware and the other in the United States District Court, District of New
Hampshire. Under the terms of the class action settlement, $22.0 million, in the
form of shares of the Company's common stock, will be paid to the class, with
the number of shares to be issued determined by a formula valuing the stock at
different time periods. The Company has reserved the right to pay the settlement
in cash at the time the settlement becomes effective. In the memorandum of
understanding in the derivative litigation, the Company has agreed to certain
therapeutic improvements to its internal policies, some of which have already
been instituted. The settlement of both the class action and derivative actions
required final approval of the United States District Court, which has now been
obtained. The Company had recorded a charge of $23.2 million in the fourth
quarter of fiscal 1999 related to the settlement.
In August 1999 Creo Products, Inc., ("Creo"), filed an action in the United
States District Court for the District of Delaware against the Company asserting
that Creo has a "reasonable apprehension that it will be sued by Presstek for
infringement" of two of the Company's patents and seeking a declaration that
Creo's products "do not and will not infringe any valid and enforceable claims"
of the patents in question. In September 1999, the Company filed a counterclaim
against Creo for patent infringement. The Company claims that Creo has infringed
two direct imaging patents owned by the Company which were recently the subject
of re-examination by the U.S. Patent and Trademark Office.
Presstek intends to vigorously enforce its patent rights.
In February, 2000 a complaint was filed by PPG, Inc. against Delta V in the
United States District Court for the Western District of Pennsylvania alleging
Delta V sold to the plaintiff certain vacuum coating equipment that did not meet
certain product specifications. In its amended complaint, which now includes the
Company as a defendant, the plaintiff is seeking damages of approximately $7.4
million. The Company intends to vigorously defend this action.
The Company is involved in other litigation arising out of the ordinary
course of business. Management believes that these matters will not have a
material adverse effect on the accompanying financial statements.
12. RECENTLY ISSUED ACCOUNTING STANDARDS
In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial
Statements." SAB No. 101 provides guidance related to revenue recognition in
financial statements. In March 2000, the SEC issued SAB No. 101A, which delayed
the implementation date of SAB No. 101. In June 2000, the SEC issued SAB No.
101B that further delayed the implementation of SAB No. 101 to the fourth
quarter of fiscal 2001. The Company will adopt SAB No. 101, and is currently
evaluating the impact, if any, SAB No. 101 will have on its financial position
or results of operations. The Company does not expect the adoption of SAB No.
101 to have a material impact on its financial position or results of
operations.
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<PAGE>
In March 2000, the Financial Accounting Standards Board ("FASB") issued
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation-an Interpretation of APB No. 25" ("FIN No. 44"). FIN No. 44
clarifies the application of Opinion No. 25 for certain issues including: (a)
the definition of employee for purposes of applying Opinion No. 25, (b) the
criteria for determining whether a plan qualifies as a noncompensatory plan, (c)
the accounting consequence of various modifications to the terms of a previously
fixed stock option or award, and (d) the accounting for an exchange of stock
compensation awards in a business combination. In general, FIN No. 44 is
effective July 1, 2000. The Company does not expect the adoption of FIN No. 44
to have a material impact on its financial position or results of operations.
In June 1998, FASB issued Statement of Financial Accounting Standards No.
133, "Accounting for Derivative Instruments and Hedging Activities." ("SFAS No.
133"), which requires companies to recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. SFAS No. 133 (as amended by SFAS No. 137) is effective for fiscal
years beginning after June 15, 2000. The Company does not presently enter into
any transactions involving derivative financial instruments and, accordingly,
does not anticipate the new standard will have any effect on its financial
statements for the foreseeable future.
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act
of 1995:
Certain statements contained in this Form 10-Q constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve a number of known and unknown
risks, uncertainties and other factors which may cause the actual results,
performance or achievements of the Company to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, but are not limited to, the
risks of uncertainty of patent protection, the risks of uncertainty of strategic
alliances, the risk of obtaining components/supplies for our products,
manufacturing constraints or difficulties, market acceptance of and demand for
the Company's products and resulting revenues, development of technology and
manufacturing capabilities, impact of competitive products and pricing,
litigation and other risks detailed in the Company's other filings with the
Securities and Exchange Commission. The words "looking forward," "believe,"
"demonstrate," "intend," "expect," "estimate," "anticipate," "likely" and
similar expressions identify forward-looking statements. Readers are cautioned
not to place undue reliance on these forward-looking statements, which speak
only as of the date the statement was made.
Background
Presstek, Inc. ("the Company" or "Presstek"), incorporated in Delaware, was
founded in September 1987 as a development company. It was established to find a
new way to produce color offset printing. Heidelberger Druckmaschinen AG
("Heidelberg"), the world's largest printing press manufacturer, and the Company
established a relationship that was formalized in 1991. In 1993 the Company
completed the development of its high resolution, semiconductor based laser
diode imaging and thermal plate technology referred to as PEARL(R). PEARL's
thermal laser imaging technology enables its customers to image various types of
Presstek printing plates either off-press or on-press which may then be used to
produce high-quality, full color lithographic printed materials for the printing
and graphic arts industries. These printed materials typically can be produced
at a lower cost than traditional competitive methods. The PEARL-based GTO-DI was
introduced in late 1993, and in May of 1995, Heidelberg introduced the
Quickmaster DI. The Quickmaster DI design is centered around Presstek's digital
imaging and plate technology, and includes the Company's patented automatic
plate changing cylinder. This unique design feeds plates from inside the
cylinder, eliminating the need to manually change plates between jobs. The
Company began shipment of its PEARL-based Quickmaster direct imaging systems to
Heidelberg in the second quarter of 1995. The Company estimates that as of the
end of fiscal 1999, there were more than 1,100 PEARL-equipped GTO-DI and
Quickmaster DI presses installed utilizing the Company's proprietary consumable
printing plates.
The Company is also engaged in the development of additional PEARL and
DI(R) products that incorporate its patented, proprietary, digital imaging
system and process free thermal ablation printing plate technologies for both
computer-to-plate and direct-to-press applications. During fiscal 1996, the
Company began shipments of its PEARL platesetter, referred to as the
PEARLsetter(TM). The PEARLsetter is a computer-to-plate imaging system that
images both the Company's wet and dry offset plates. Also, in 1996, the Company
began shipments of its direct imaging system for a larger format Adast (19" x
26") multicolor press, the Adast 705C DI series of presses. In fiscal 1998 the
Company began shipments of its PEARLhdp(TM) laser imaging system. The PEARLhdp,
jointly developed with Imation Corp. ("Imation"), is a digital halftone,
proofing device. It can produce true halftone "dot for dot" color press proofs
using the Company's computer-to-plate imaging system specially modified for this
unique application. The Company has entered into a comprehensive agreement
whereby Imation has been granted exclusive rights for sales, marketing and
distribution of the PEARLhdp proofing system.
The Company also has agreements with a number of other companies including
Scitex Corporation Ltd., Nilpeter A/S, Werner Kammann Maschinenfabrik GmbH,
Alcoa Packaging Equipment, Sakurai Graphic Systems Corp., Fuji Photo Film Co.,
Ltd., ("Fuji"), and Akiyama Printing Machinery Manufacturing Corporation. These
agreements typically are for the use of the Company's direct imaging systems,
technology licenses, and/or thermal plate materials. They include a variety of
"direct-to" offset printing applications ranging from high quality label
production and printing on aluminum cans to the production of normal four-color
printing.
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The Company also signed a non-binding agreement with Xerox Corporation
("Xerox') to form a strategic alliance. The potential alliance, if consummated,
is expected to result in the interface of the Xerox Digi Path(TM) workflow with
the Company's digitally based products. There can be no assurance however, that
a formal strategic alliance with Xerox will be achieved.
In June 2000 the Company formed a subsidiary, LaserTel, Inc. ("LaserTel")
for the purpose of securing its supply of laser diodes. LaserTel is located in
the former Delta V Technologies, Inc. ("Delta V") facility in Tucson, Arizona.
LaserTel will operate as a subsidiary of Presstek, and will be primarily engaged
in the manufacture and development of the Company's high-powered laser diodes.
The results of LaserTel's operations for the three and six month period ending
July 1, 2000 were not material to the Company's results of operations.
During the third quarter of fiscal 1999 the Company determined to sell or
otherwise discontinue the operations of its Delta V Technologies, Inc., ("Delta
V") subsidiary to allow the Company to further focus its efforts on the core
business of digital imaging and plate manufacturing. Located in Tucson, Arizona,
Delta V was engaged in the development, manufacture, and sale of vacuum
deposition coating equipment for vacuum coating applications. The Company
discontinued the operations of Delta V as of the end of fiscal 1999.
As a result of the divestiture of Delta V, the Company incurred a $8.5
million loss on disposal of discontinued operations for the fiscal year ended
January 1, 2000. This included actual closing costs and operating losses
incurred in the fourth quarter of fiscal 1999 of $2.2 million, a provision for
anticipated closing costs of $1.6 million, $6.1 million related to the write off
of goodwill and other intangibles assets, and a reduction in other asset values
of $1.6 million. These costs were partially offset by proceeds of $3.0 million
received from Minnesota Mining and Manufacturing Co., for the licensing of the
Company's intellectual property relating to vacuum-deposited polymer multilayer
technology. Delta V is reported separately as a discontinued operation, and
prior periods have been restated in the Company's financial statements, related
footnotes and the management's discussion and analysis to conform to this
presentation.
In November 1999 the Company acquired 100% of the stock of R/H Consulting,
Inc. ("R/H"). R/H was principally engaged in the research and development of
laser imageable printing plates. R/H was purchased for $500,000 and 142,855
shares of the Company's common stock. The excess purchase price over book value
of net assets acquired of $1.9 million has been allocated to the patents
acquired. The acquisition was accounted for as a purchase and accordingly the
results of R/H's operations have been included in the financial statements for
the second quarter and first six months ended July 1, 2000. The results of R/H's
operations for the comparable periods of fiscal 1999 would not have had a
material impact on the Company's results of operations.
The Company operates and reports on a 52/53 week fiscal year, ending on the
Saturday closest to December 31. Accordingly, the financial statements include
the thirteen week periods ended July 1, 2000 ("the second quarter of fiscal
2000") and July 3, 1999 ("the second quarter of fiscal 1999"), and the twenty
six week periods ended July 1, 2000 ("the first six months of fiscal 2000") and
July 3, 1999 ("the first six months of fiscal 1999").
Results of Operations
Revenues
Revenues consist of product sales, royalties, fees and other
reimbursements. Revenues for the second quarter and first six months of fiscal
2000 of $21.2 million and $40.3 million respectively, increased $9.0 million or
74% and $16.5 million or 69% respectively, as compared to $12.2 million and
$23.8 million for the second quarter and first six months of fiscal 1999.
Product sales for the second quarter and first six months of fiscal 2000
were $18.4 million and $35.5 million, respectively, compared to $10.7 million
and $20.6 million for the second quarter and first six months of fiscal 1999, an
increase of $7.7 million and $14.9 million or 72%. The increase was primarily
due to increased shipments to Heidelberg for direct imaging systems used in the
Quickmaster DI, as well as an increase in sales of the Company's proprietary
digital media and consumable products. Revenues generated
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from the sale of the Company's PEARLdry(TM) and other consumable products
included in product sales were $10.7 million and $20.2 million for the second
quarter and first six months of fiscal 2000, an increase of 14% as compared to
$9.4 million and $17.7 million for the comparable periods in fiscal 1999. These
consumable revenues include $7.8 million and $9.0 million for the first six
months of fiscal 2000 and 1999, respectively, sold under the Company's
agreements with Heidelberg.
Royalties and fees from licensees for the second quarter and first six
months of fiscal 2000 of $2.8 million and $4.8 million respectively, increased
$1.3 million or 87% and $1.6 million or 50% as compared to $1.5 million and $3.2
million for the comparable periods in fiscal 1999. Royalties increased $2.2
million and $4.2 million or 100% due to increased shipments to Heidelberg for
direct imaging systems used in the Quickmaster DI. This increase was offset by a
decrease of $924,000 or 61% and $2.6 million or 81% in engineering fees
primarily as a result of concluding the development phase of the Company's
agreement with Fuji.
Revenues generated under the Company's agreements with Heidelberg and its
distributors for the second quarter and first six months of fiscal 2000 were
$13.0 million and $23.8 million respectively, an increase of $8.1 million or
165% and $13.9 million or 140%, as compared to the second quarter and first six
months of fiscal 1999. Revenues from Heidelberg represented 59% and 42% of total
revenues for the first six months of fiscal 2000 and 1999, respectively.
In fiscal 1999, the Company materially reduced production levels of direct
imaging systems used in the Quickmaster DI press, based on requirements from
Heidelberg. The Company subsequently received orders in fiscal 1999 from
Heidelberg in connection with its direct imaging systems used in the Quickmaster
DI. Based on the delivery schedule for these orders, the Company resumed
production with initial low level shipments of its direct imaging systems late
in the third quarter of fiscal 1999. The Company expects to continue shipments
through the end of fiscal 2000. Additionally, the Company believes production
levels through the end of fiscal 2000 will continue in line with the actual rate
of Quickmaster DI's made by Heidelberg.
The Company continues to believe that revenues will increase in fiscal 2000
as compared to fiscal 1999, primarily due to the increased requirements for the
direct imaging systems used in the Quickmaster, and related increases for the
Company's proprietary consumables sold for the Quickmaster DI and other
equipment. There can be no assurance, however that the Company will achieve
these anticipated revenue increases.
Cost of Products Sold
Cost of products sold consists of the costs of material, labor and overhead
as well as future warranty costs associated with product sales. Cost of products
sold for the second quarter and first six months of fiscal 2000 were $11.1
million and $21.7 million, respectively, as compared to $7.5 million and $15.5
million for the comparable periods in fiscal 1999. The gross margin increased to
40% and 39% in the second quarter and first six months of fiscal 2000, from 30%
and 25% for the comparable periods in fiscal 1999. This increase is primarily
attributed to the results of economies related to increased manufacturing
volumes and favorable yields associated with proprietary digital media and
consumable products, and increased manufacturing volumes of the direct imaging
systems sold to Heidelberg for use in the Quickmaster DI.
The Company anticipates that the gross margin on product sales will
approximate first quarter levels through the remainder of fiscal 2000. There can
be no assurance, however, that the actual gross margins will not be lower than
anticipated.
Research and Product Development
Research and product development expenses consist primarily of payroll and
related expenses for personnel, parts and supplies, and fees for contracted
services required to conduct the Company's equipment and consumable product
development efforts.
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Research and product development expenses for the second quarter and first
six months of fiscal 2000 were $4.1 million and $8.7 million or 19% and 22% of
revenues respectively, as compared to $4.5 million and $8.3 million or 37% and
35% of revenues for the comparable periods in fiscal 1999. The decrease of
$400,000 or 9% for the second quarter of fiscal 2000 is primarily attributable
to the conclusion of the development efforts associated with the Company's
contract with Fuji.
The Company expects these expenditures to continue at current levels
through the remainder of fiscal 2000 as it concludes development efforts related
to its recently introduced ProFire integrated imaging system and certain other
development efforts. There can be no assurance however, that these expenses will
not be greater than currently anticipated.
Sales and Marketing Expenses
Sales and marketing expenses consist primarily of payroll and related
expenses for personnel, advertising, promotional and trade show expenses, and
travel costs. Sales and marketing expenses for the second quarter and first six
months of fiscal 2000 were $3.1 million and $4.7 million or 15% and 12% of
revenues respectively, as compared to $1.5 million and $2.8 million or 12% of
revenues for the comparable period in fiscal 1999. The increase of $1.6 million
or 107% and $1.9 million or 69% for the second quarter and first six months of
fiscal 2000, resulted primarily from increased expenditures associated with the
Company's attendance at the Drupa 2000 trade show in May, and increased
expenditures for salaries and professional services related to the continued
expansion of its worldwide sales, distribution and technical support network.
It is expected that these expenditures, after adjusting for the $1.3
million in Drupa related expenses in the second quarter and first six months of
fiscal 2000 will continue to increase through fiscal 2000, as the Company
continues to expand its distribution and customer support network. There can be
no assurance, however, that these expenditures will not be greater than
currently anticipated.
General and Administrative Expenses
General and administrative expenses consist primarily of payroll and
related expenses for personnel, and fees for contracted professional services.
General and administrative expenses for the second quarter and first six months
of fiscal 2000 were $2.4 million and $4.2 million or 11% and 10% of revenues
respectively, as compared to $1.8 million and $3.5 million or 15% of revenues
for comparable periods in fiscal 1999. The increases of $600,000 and $700,000,
for the second quarter and first six months of fiscal 2000 resulted primarily
from increased expenditures for salaries, legal and other professional services
necessary to conduct the executive, finance, information systems, and
administrative functions of the Company.
The Company anticipates that general and administrative costs for fiscal
2000 will continue at current levels, however there can be no assurance that
these expenses will not be greater than anticipated.
Other Income and Expense
Other income net, for the second quarter and first six months of fiscal
2000 was $65,000 and $164,000, respectively, as compared to $122,000 and
$370,000 or 1% and 2% of revenues for the comparable periods in fiscal 1999.
Dividend and interest income for the second quarter and first six months of
fiscal 2000 was $193,000 and $476,000, as compared to dividend and interest
income of $234,000 and $516,000 for the comparable periods in fiscal 1999. The
decrease of $41,000 and $40,000 for the second quarter and first six months of
fiscal 2000 is primarily the result of a decrease in average cash balances
available for investment. Interest expense for the second quarter and first six
months of fiscal 2000 was $188,000 and $367,000 as compared to $112,000 and
$226,000 for the comparable periods of fiscal 1999. The increase of $76,000 and
$141,000 for the second quarter and first six months of fiscal 2000 is primarily
attributed to an increase in interest expense incurred as a result of the
increased borrowings related to the Company's lease line of credit facility with
Keybank National Association.
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The Company anticipates that dividend and interest income will be reduced
for the remainder of fiscal 2000, as the Company's requirement for working
capital increases, and average cash balances available for investment are
reduced.
Provision for Income Taxes
The Company did not record a provision for or a charge in lieu of United
States federal income taxes for the three and six months ended July 1, 2000 as a
result of the tax loss prior to deductions related to stock compensation for the
periods. No provision for or charge in lieu of United States federal income
taxes was required for the three and six months ended July 3, 1999, as a result
of the tax loss prior to deductions related to stock compensation for the
periods.
The Company recorded a provision for state income taxes for the three and
six months ended July 1, 2000 in the amount of $65,000. No provision for or
charge in lieu of state income taxes was required for the three and six months
ended July 3, 1999 as a result of the tax loss prior to deductions related to
stock compensation for the periods.
Income (Loss) from Continuing Operations
As a result of the foregoing, the Company had income from continuing
operations of $568,000 and $959,000 for the second quarter and first six months
of fiscal 2000, as compared to losses of $2.8 million and $6.0 million for the
second quarter and first six months of fiscal 1999.
Income from Discontinuing Operations
The results of operations of Delta V are presented as discontinued
operations. The Company discontinued the operations of Delta V at the end of
fiscal 1999. Income from the discontinued operations of Delta V was $94,000 and
$107,000 for the second quarter and first six months of fiscal 1999,
respectively.
Liquidity and Capital Resources
At July 1, 2000, the Company had cash, cash equivalents of $16.8 million
and working capital of $30.0 million as compared to cash, cash equivalents of
$18.7 million and working capital of $25.4 million at January 1, 2000.
Net cash used in operating activities of continuing operations was $2.7
million for the first six months of fiscal 2000, as a result of increases in
accounts receivable, inventories and other assets of $8.1 million, offset by
income from operations of $959,000, non-cash items of depreciation and
amortization of $3.2 million, provisions for warranty of $385,000 and losses on
accounts receivable of $520,000.
Net cash used in investing activities of continuing operations was $5.5
million for the first six months of fiscal 2000 and consisted primarily of
additions to property, plant and equipment used in the Company's business of
$5.2 million. These additions include $1.8 million for additional plate
manufacturing equipment which is expected to reduce the cost of manufacturing
the Company's proprietary digital media and consumable products and enhance the
Company's development capabilities, as well as $1.9 million related to the
construction of the second phase of its 55 Executive Drive facility.
Net cash provided by financing activities for the first six months of
fiscal 2000 totaled $6.5 million and consisted primarily of the proceeds from
the lease line of credit with Keybank of $6.0 million, as well as the issuance
of common stock incident to the exercise of stock options of $1.0 million,
offset by payments on the mortgage term loan and lease line of credit facility
of $502,000.
In June 2000, the Company borrowed the remaining $6.0 million under the
$10.0 million lease line of credit facility from Keybank National Association.
The $10.0 million in borrowings is secured by equipment valued at $13.4 million.
The loan bears a variable rate of interest based upon the prime rate, currently
between 7.5% and 8.5%, with a fixed rate conversion provision. Principal and
interest under the lease line
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are payable in 84 monthly installments beginning on July 31, 2000 for the $6.0
million in borrowings. The payments for the initial $4.0 million borrowed in
September 1999 commenced in October 1999.
The Company's credit facilities with Citizens Bank New Hampshire include a
ten-year mortgage term loan and a revolving line of credit loan. The mortgage
term loan, in the amount of $6.9 million, is secured by land and buildings with
a cost of approximately $17.0 million. The loan bears a fixed rate of interest
of 7.12% per year during the first five years and a variable rate of interest at
the LIBOR rate plus 2%, (8.63% at July 1, 2000) for the remaining five years.
Principal and interest payments during the first five years of the loan will be
made in 60 monthly installments of $80,500. During the remaining five years,
principal and interest payments will be made on a monthly basis in the amount of
one-sixtieth of the outstanding principal amount as of the first day of the
second five year period, plus accrued interest through the monthly payment date.
All outstanding principal and accrued and unpaid interest is due and payable on
February 6, 2008.
The revolving line of credit loan, under which the Company may borrow $10.0
million, is secured by substantially all of the Company's assets. Interest on
the line of credit is payable at the LIBOR rate plus 1.50% (8.13% at July 1,
2000). The current loan agreement has been extended through September 30, 2000,
at which date, the entire principal and accrued interest is due and payable. The
Company currently has $10.0 million available under the revolving line of credit
loan agreement.
The Company has received a commitment from Citizens to extend the current
credit facilities through September 2002.
Under the terms of the mortgage term loan, the lease line of credit and the
revolving line of credit agreements, the Company is required to meet certain
financial covenants on a quarterly and annual basis. At July 1, 2000 the Company
was in compliance with all financial covenants.
The Company has approved total expenditures for fiscal 2000 of $5.0 million
for the second phase of its facility at 55 Executive Drive. The Company is
funding the construction with existing cash and cash flow from operations. This
additional facility will include the Company's corporate offices, sales and
marketing operations, as well as additional manufacturing facilities, and is
expected to be completed in October 2000. Through the second quarter of fiscal
2000 the Company had expended approximately $1.9 million for this construction.
The Company believes that existing funds, cash flow from operations, and
cash available under its revolving line of credit and lease line of credit
facilities should be sufficient to satisfy working capital requirements and
capital expenditures for the next twelve months.
Effect of Inflation
Inflation has not had, and is not expected to have, a material impact upon
the Company's operations.
Recently Issued Accounting Standards
In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial
Statements." SAB No. 101 provides guidance related to revenue recognition in
financial statements. In March 2000, the SEC issued SAB No. 101A, which delayed
the implementation date of SAB No. 101. In June 2000, the SEC issued SAB No.
101B that further delayed the implementation of SAB No. 101 to the fourth
quarter of fiscal 2001. The Company will adopt SAB No. 101, and is currently
evaluating the impact, if any, SAB No. 101 will have on its financial position
or results of operations. The Company does not expect the adoption of SAB No.
101 to have a material impact on its financial position or results of
operations.
In March 2000, the Financial Accounting Standards Board ("FASB") issued
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation-an Interpretation of APB No. 25" ("FIN No. 44"). FIN No. 44
clarifies the application of Opinion No. 25 for certain issues including: (a)
the definition of employee for purposes of applying Opinion No. 25, (b) the
criteria for determining whether a plan qualifies as a noncompensatory plan, (c)
the accounting consequence of various modifications to the terms of a
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previously fixed stock option or award, and (d) the accounting for an exchange
of stock compensation awards in a business combination. In general, FIN No. 44
is effective July 1, 2000. The Company does not expect the adoption of FIN No.
44 to have a material impact on its financial position or results of operations.
In June 1998, FASB issued Statement of Financial Accounting Standards No.
133, "Accounting for Derivative Instruments and Hedging Activities." ("SFAS No.
133"), which requires companies to recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. SFAS No. 133 (as amended by SFAS No. 137) is effective for fiscal
years beginning after June 15, 2000. The Company does not presently enter into
any transactions involving derivative financial instruments and, accordingly,
does not anticipate the new standard will have any effect on its financial
statements for the foreseeable future.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The Company is exposed to market risk from changes in interest rates
primarily as a result of its borrowing and investing activities. The Company
does not enter into interest rate swap agreements or other speculative or
leverage transactions. The Company currently has no material exposure to
interest rate fluctuations on its short-term investments or variable rate debt
instruments.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
See Part I - Item 3 of the Company's Form 10-K for the fiscal year ended
January 1, 2000 and Note 11 of Notes to the Financial Statements of this Form
10Q for a description of certain legal proceedings pending against the Company
and certain of its officers and directors.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27 Financial Data Schedule (for SEC use only)
27.1 Financial Data Schedule for the six month period ended July 1,
2000
27.2 Restated Financial Data Schedule for the six month period ended
July 3, 1999
(b) No reports on Form 8-K were filed for the quarter for which this
report is filed.
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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.
Dated: August 15, 2000
PRESSTEK, INC.
--------------
(Registrant)
By: /s/ Robert W. Hallman
----------------------------
Robert W. Hallman
Chief Executive Officer
(Duly Authorized Officer)
By: /s/ Neil Rossen
----------------------------
Neil Rossen
Chief Financial Officer
(Principal Financial and
Accounting Officer)
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