<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
--- OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1997
OR
--- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ________________
Commission File Number 0-19453
HOLOPAK TECHNOLOGIES, INC.
Exact name of registrant as specified in its charter
<TABLE>
<S> <C>
Delaware 51-0323272
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
9 COTTERS LANE, EAST BRUNSWICK, NEW JERSEY 08816
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (908) 238-2883
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.
<TABLE>
<CAPTION>
CLASS OUTSTANDING AT 8/4/97
----- ---------------------
<S> <C>
Common Stock, $ .01 Par Value 2,796,403
Class A Common Stock, $ .01 Par Value 753,086
</TABLE>
<PAGE> 2
HOLOPAK TECHNOLOGIES, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page Number
-----------
<S> <C> <C>
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 1997
(Unaudited) and March 31, 1997 1
Consolidated Statements of Operations (Unaudited) for the Three
Months ended June 30, 1997 and 1996 2
Consolidated Statements of Cash Flows (Unaudited) for the Three
Months Ended June 30, 1997 and 1996 3
Notes to Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
PART II: OTHER INFORMATION 8
SIGNATURES 9
EXHIBIT 10
</TABLE>
<PAGE> 3
HoloPak Technologies, Inc. and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30, March 31,
1997 1997
(UNAUDITED) (AUDITED)
============== =============
<S> <C> <C>
Assets
Current Assets:
Cash and Cash Equivalents ............................................................ $ 3,413,472 $ 3,004,356
Accounts Receivable, less allowance
for doubtful accounts of $198,861 as of June 30, 1997 and ......................... 5,768,787 5,548,899
$174,838 as of March 31, 1997
Inventories (Note 2) ................................................................. 7,300,733 7,665,210
Prepaid Expenses ..................................................................... 234,645 348,538
Due From Related Parties ............................................................. 10,793 20,793
Prepaid Income Taxes ................................................................. 351,439 329,713
Deferred Income Taxes ................................................................ 134,554 124,944
Other Current Assets ................................................................. 107,231 119,400
------------ ------------
Total Current Assets ..................................................................... 17,321,654 17,161,853
Property and Equipment, less accumulated depreciation and amortization of $12,756,326
as of June 30, 1997 and $12,120,857 as of March 31, 1997 ........................... 9,385,146 9,827,042
Excess of Cost over Fair Value of Net Assets Acquired, less accumulated
amortization of $1,611,342 as of June 30, 1997
and $1,561,260 as of March 31, 1997 ................................................. 6,749,473 6,799,555
Other Assets ............................................................................. 171,349 177,155
------------ ------------
Total Assets ............................................................................ $ 33,627,622 $ 33,965,605
============ ============
Liabilities and Stockholders' Equity
Current Liabilities:
Current Maturities of Long-Term Debt (Note 3) ......................................... $ 1,449,375 $ 1,752,500
Accounts Payable and Accrued Liabilities .............................................. 3,925,404 3,849,267
------------ ------------
Total Current Liabilities ................................................................ 5,374,779 5,601,767
Long-Term Debt (Note 3) ................................................................. 945,000 1,080,000
Deferred Income Taxes .................................................................... 1,266,978 1,272,247
------------ ------------
Total Liabilities ........................................................................ 7,586,757 7,954,014
------------ ------------
Stockholders' Equity
Preferred Stock: $.01 par value: 10,000,000 shares authorized; none issued ........... -- --
Common Stock; $.01 par value; 10,000,000 shares authorized; 2,796,403 shares issued . 27,964 27,964
Class A Common Stock; nonvoting; $.01 par value: 2,000,000 shares authorized;
753,086 shares convertible to Common Stock at any time at the stockholder's option 7,531 7,531
Class B Common Stock, $.01 par value; 700,000 shares authorized; none issued ......... -- --
Additional Paid-in Capital ........................................................... 22,228,094 22,228,094
Retained Earnings .................................................................... 5,573,741 5,566,451
Cumulative Translation Adjustment .................................................... (524,980) (546,964)
------------ ------------
27,312,350 27,283,076
Less: Common Stock (201,800 shares) Held In the Treasury , at cost .................. (1,271,485) (1,271,485)
------------ ------------
Total Stockholders' Equity ............................................................... 26,040,865 26,011,591
------------ ------------
Total Liabilities and Stockholders' Equity ............................................... $ 33,627,622 $ 33,965,605
============ ============
</TABLE>
See notes to consolidated financial statements.
1
<PAGE> 4
HoloPak Technologies, Inc. and Subsidiaries
Consolidated Statements of Operations
<TABLE>
<CAPTION>
Three Months Ended
June 30,
1996 1997
(Unaudited) (Unaudited)
============ ============
<S> <C> <C>
Net Revenues ........................................ $9,641,341 $11,864,154
Cost of Sales ....................................... 7,635,590 9,557,984
---------- -----------
Gross Profit ........................................ 2,005,751 2,306,170
Selling, General and Administrative Expenses ........ 1,974,322 1,972,807
---------- -----------
Operating Income .................................... 31,429 333,363
Interest Income ..................................... 28,080 22,153
Interest Expense .................................... 45,775 76,791
---------- -----------
Income From Continuing Operations Before Income Taxes 13,734 278,725
Provision for Income Taxes .......................... 6,444 31,930
---------- -----------
Net Income .......................................... $ 7,290 $ 246,795
========== ===========
Earnings per common share and common
share equivalents
Net Income ...................................... $ 0.00 $ 0.07
========== ===========
Weighted average number of common shares
and common share equivalents outstanding ........ 3,347,689 3,372,732
========== ===========
</TABLE>
See notes to consolidated financial statements.
2
<PAGE> 5
HoloPak Technologies, Inc. and Subsidiaries
Consolidated Statements of Cash Flow
<TABLE>
<CAPTION>
Three Months Ended
June 30,
1996 1997
(Unaudited) (Unaudited)
=========== ===========
<S> <C> <C>
Operating Activities
Net Income ............................................................ $ 7,290 $ 246,795
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation ..................................................... 636,695 629,193
Amortization ..................................................... 50,082 49,741
(Increase) in accounts receivable ................................ (209,901) (1,390,516)
Decrease (Increase) in inventories ............................... 373,769 (155,898)
Decrease (Increase) in prepaid expenses .......................... 114,400 (61,399)
Decrease (Increase) in due from related parties .................. 10,000 (26,789)
(Increase) in prepaid income taxes ............................... (20,122) (41,317)
Decrease in other current assets ................................. 12,169 389
Decrease in other assets ......................................... 5,806 --
Increase in accounts payable and accrued liabilities ............. 70,599 355,018
(Decrease) in deferred income taxes .............................. (17,192) (49,628)
----------- -----------
Net cash provided by (used in) operating activities ........... 1,033,595 (444,411)
----------- -----------
Cash Flows From Investing Activities
Capital expenditures .............................................. (183,380) (570,082)
----------- -----------
Net cash (used in) investing activities ...................... (183,380) (570,082)
----------- -----------
Cash Flow From Financing Activities
Net increase from short-term borrowings ........................... -- 400,000
Repayment of long-term borrowings ................................. (438,125) (438,125)
----------- -----------
Net cash (used in) financing activities ....................... (438,125) (38,125)
----------- -----------
Effect of exchange rate changes on cash and cash equivalents .......... (2,974) (1,663)
----------- -----------
Net increase (decrease) in cash and cash equivalents ................. 409,116 (1,054,281)
Cash and Cash Equivalents, Beginning of Period ....................... 3,004,356 1,999,609
----------- -----------
Cash and Cash Equivalents, End of Period .............................. $ 3,413,472 $ 945,328
=========== ===========
</TABLE>
See notes to consolidated financial statements
3
<PAGE> 6
HOLOPAK TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited consolidated financial statements have been
prepared by HoloPak Technologies, Inc. ("HoloPak" or the "Company") pursuant to
the rules and regulations of the Securities and Exchange Commission. In the
opinion of management, all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation have been included.
Operating results for the three months ended June 30, 1997 are not necessarily
indicative of the results that may be expected for the year ending March 31,
1998. The Company's financial statements do not include certain information and
footnotes required by generally accepted accounting principles and accordingly,
should be read in conjunction with the financial statements and the notes
thereto included in HoloPak's Annual Report on Form 10-K for the year ended
March 31, 1997.
2. INVENTORIES
The components of inventories were as follows:
<TABLE>
<CAPTION>
JUNE 30, 1997 MARCH 31, 1997
------------- --------------
<S> <C> <C>
FINISHED GOODS $4,091,887 $4,248,769
WORK IN PROCESS 788,734 768,927
RAW MATERIALS 2,420,112 2,647,514
---------- ----------
TOTAL $7,300,733 $7,665,210
========== ==========
</TABLE>
3. NOTE PAYABLE & LONG-TERM DEBT
The Company has available through August 1997 a secured revolving line
of credit in the amount of $3,000,000 to be used for general corporate purposes.
The Company has remaining availability under this general facility of $3,000,000
at June 30 ,1997 and March 31, 1996, respectively. The Company is currently
renegotiating its line of credit. In addition, the Company had a line of credit
for capital expenditures which converted into a five year term loan in March
1995. This loan requires equal quarterly payments of $135,000, which began on
June 17, 1995, with a final maturity of March 17, 2000. Outstanding borrowings
on this Capital Expenditures Loan at June 30, 1997 and March 31, 1997 were
$1,485,000 and $1,620,000 respectively. Both facilities bear interest at the
three month London Interbank Offered Rate ("LIBOR") plus 150 basis points. The
interest rates in effect at June 30, 1997 and March 31, 1997 were 6.8% and 6.4%
respectively.
4
<PAGE> 7
On March 17, 1993, the Company acquired all of the outstanding stock of Alubec
and borrowed $4,850,000 in long-term debt to partially finance the acquisition.
The long-term debt is payable in equal quarterly installments of $303,125
through 1998 and bears interest at 5.9%. The balance outstanding on this term
loan at June 30,1997 and March 31, 1997 was $909,375 and $1,212,500,
respectively.
The conditions of the Company's bank borrowings and long-term debt call for the
Company to maintain certain financial ratios regarding debt service coverage. At
June 30, 1997, the Company was in compliance with these ratios.
Annual maturities of long-term debt are as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD ENDED
JUNE 30, PAYMENTS
-------------------- --------
<S> <C>
1997 $1,449,375
1998 540,000
1999 405,000
TOTAL $2,394,375
</TABLE>
5
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1997 COMPARED TO THE THREE MONTHS ENDED JUNE 30,
1996
NET REVENUES:
During the three months ended June 30, 1997, net revenues were $9.6 million
compared to $11.9 million for the same period last year, a decrease of 18.7%.
The decrease is attributable to weak sales of metalized papers, which declined
from $3.7 million to $2.3 million, and hot stamping foils, which declined from
$6.2 million to $5.1 million. Offsetting these declines was an improvement in
sales of holographic products, which improved from $1.8 million to $2.2 million,
an increase of 22%.
The decline in metallized paper is attributable to a decline in orders from
trading card customers and orders for liquor packaging. The trading card orders
received in the first quarter of 1997 from one-custom were not
expected to be repeated this year, while orders for liquor packaging spiked last
year in the first quarter.
The decline in hot stamping foil sales is attributable to slow metallic foils in
the packaging and greeting cards markets.
The increase in holographic products was attributable to increased demand for
both security and decorative holographic items.
COST OF SALES AND GROSS PROFITS:
Gross Profits were $2.0 million, compared to $2.3 million in the year earlier
period. The decline was primarily attributable to the sales decline in
metallized papers. However, this was offset by an improvement in margins from
hot-stamping foils resulting from lower raw material costs, and an improvement
in margins in holography resulting from increased sales.
OPERATING EXPENSES:
Selling, general, and administrative expenses of $2.0 million were unchanged
from the prior year. Increases in advertising and marketing expenses were offset
by lower administrative expenses.
OPERATING PROFIT:
Operating Profit for the quarter was $31,000 compared to $333,000 a year ago.
The decline was attributable to the decline in sales and gross profits.
6
<PAGE> 9
INTEREST EXPENSE, NET:
Net interest expense for the quarter was $18,000 compared to $55,000 a year ago.
Lower debt and higher average cash balances were responsible for the decline.
INCOME TAXES:
The effective income tax rate for the period was 46.9%, compared to 11.5% in
prior year. This increase was attributable to a below normal effective tax rate
in the prior year. This was due to a higher percentage of the Company's earnings
derived from Canadian operations, a tax loss benefit in the United States, and
the reversal of certain timing differences under the effect of FASB 109.
NET INCOME AND EARNINGS PER SHARE:
Net Income was $7,000 compared to $247,000 one year ago. Lower operating profits
were responsible for the decline. Earnings per share were $0.00 compared to
$0.07 in the year earlier period.
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES:
As of June 30, 1997, the Company had cash of $3.4 million and working capital of
$11.9 million, compared to cash of $3.0 million and working capital of $11.6
million. The increase in cash and working capital is attributable to cash
generated from operations and low capital investment during the quarter.
Depreciation and amortization for the quarter were $686,000 while capital
investment was $183,000.
The Company has available a general purpose credit line of $3,000,000, against
which no amounts were outstanding as of June 30, 1997.
STOCKHOLDER's Equity:
Stockholder's equity increased by $29,000. The increase was comprised of net
income plus a slight decrease in the cumulative translation adjustment.
7
<PAGE> 10
PART II
OTHER INFORMATION
<TABLE>
<S> <C> <C>
Item 1. Legal Proceedings None
Item 2. Change in Securities None
Item 3. Defaults Upon Senior Securities None
Item 4. Submission of Matters to Vote of Security Holders None
Item 5. Other Information None
Item 6. Exhibits and Reports on Form 8-K
Exhibit 11 Computation of Earnings Per Share
b. Report on Form 8-K None
</TABLE>
8
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this to be signed on its behalf by the undersigned
thereunto duly authorized.
HOLOPAK TECHNOLOGIES, INC.
<TABLE>
<S> <C>
/s/ ROBERT E. COGHAN Dated: August 8, 1997
---------------- --------------
Robert E. Coghan,
Chief Executive Officer
/s/ DAVID W. JAFFIN Dated: August 8, 1997
--------------- --------------
David W. Jaffin,
Chief Financial Officer
</TABLE>
9
<PAGE> 12
EXHIBIT INDEX
Exhibit 11 Computation of Earnings Per Share
<PAGE> 1
EXHIBIT 11
HOLOPAK TECHNOLOGIES, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED JUNE 30,
1997 1996
---- ----
<S> <C> <C>
Weighted Average Number of
Common Shares Outstanding 3,347,689 3,347,689
Common Share Equivalents Based
Upon the Treasury Stock Method
-- 25,043
Total Common Shares and
Common Share Equivalents
Outstanding 3,347,689 3,372,732
--------- ----------
Earnings Per Common Share and
Common Share Equivalents:
Net Income $ 0.00 ($ 0.07)
========= ==========
</TABLE>
10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 3,413,472
<SECURITIES> 0
<RECEIVABLES> 5,768,787
<ALLOWANCES> 198,861
<INVENTORY> 7,300,733
<CURRENT-ASSETS> 17,321,654
<PP&E> 9,385,146
<DEPRECIATION> 12,756,326
<TOTAL-ASSETS> 33,627,622
<CURRENT-LIABILITIES> 5,374,779
<BONDS> 945,000
0
0
<COMMON> 27,964
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 33,627,622
<SALES> 9,641,341
<TOTAL-REVENUES> 9,641,341
<CGS> 7,635,590
<TOTAL-COSTS> 7,635,590
<OTHER-EXPENSES> 1,974,322
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 45,775
<INCOME-PRETAX> 13,734
<INCOME-TAX> 6,444
<INCOME-CONTINUING> 7,290
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,290
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
