<PAGE>
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
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 September 30, 1996
or
( ) Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
DAW TECHNOLOGIES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
UTAH 0-21818 87-0464280
- ---------------------------- --------------------- -------------------
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation or Identification No.)
organization)
2700 SOUTH 900 WEST
SALT LAKE CITY, UTAH 84119
------------------------------------------------------------
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (801) 977-3100
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes (X) No ( )
As of November 15, 1996, the Registrant had 12,379,543 shares of Common
Stock, $0.01 par value outstanding.
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
<PAGE>
DAW TECHNOLOGIES, INC.
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION .......................................... 1
Item 1. Financial Statements
Condensed Balance Sheets - September 30, 1996 and December 31,
1995........................................................... 1
Condensed Statements of Operations - Three months and nine
months ended September 30, 1996 and 1995....................... 2
Condensed Statements of Cash Flows - Nine months ended
September 30, 1996 and 1995 ................................... 3
Notes to Condensed Financial Statements......................... 5
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.......................................... 7
PART II OTHER INFORMATION .............................................. 12
Item 6. Exhibits and Reports on Form 8-K................................ 12
Signatures................................................................ 12
<PAGE>
DAW TECHNOLOGIES, INC.
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
DAW TECHNOLOGIES, INC.
CONDENSED BALANCE SHEETS
(Unaudited)
(in thousands, except share data)
September 30, December 31,
1996 1995
------------- ------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 3,162 $ 5,885
Contracts receivable, net 26,903 14,714
Costs and estimated earnings in excess
of billings on contracts in progress 10,032 10,930
Inventories - raw materials 2,723 1,478
Other current assets 1,042 545
-------- --------
Total current assets 43,862 33,552
PROPERTY AND EQUIPMENT, NET 7,728 6,438
OTHER ASSETS 105 82
-------- --------
$ 51,695 $ 40,072
-------- --------
-------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 14,659 $ 12,272
Billings in excess of costs and estimated
earnings on contracts in progress 7,589 3,699
Line of credit 4,985 1,500
Current portion of long-term obligations 520 650
-------- --------
Total current liabilities 27,753 18,121
LONG TERM OBLIGATIONS, less current portion 1,996 2,390
DEFERRED INCOME TAX LIABILITY 170 152
COMMITMENTS AND CONTINGENCIES - -
SHAREHOLDERS' EQUITY
Preferred stock, authorized 10,000,000 shares
of $.01 par value; none issued and outstanding - -
Common stock, authorized 50,000,000 shares of
$.01 par value; issued and outstanding
12,356,654 shares at September 30, 1996
and 12,330,254 shares at December 31, 1995 124 123
Additional paid-in-capital 15,050 14,970
Retained earnings 6,602 4,316
-------- --------
Total shareholders' equity 21,776 19,409
-------- --------
$ 51,695 $ 40,072
-------- --------
-------- --------
See accompanying notes to condensed financial statements.
1
<PAGE>
DAW TECHNOLOGIES, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except share data)
<TABLE>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Contract revenue $ 30,009 $ 17,398 $ 80,441 $ 48,149
Cost of contracts 25,531 14,909 69,380 43,377
---------- ---------- ---------- ----------
Gross profit 4,478 2,489 11,061 4,772
---------- ---------- ---------- ----------
Selling, general and administrative expenses 2,664 2,024 7,498 5,219
Depreciation and amortization 101 97 289 271
---------- ---------- ---------- ----------
Operating expenses 2,765 2,121 7,787 5,490
---------- ---------- ---------- ----------
Earnings (loss) from operations 1,713 368 3,274 (718)
Other income (expense)
Interest expense (163) (20) (466) (42)
Other income 45 42 854 262
---------- ---------- ---------- ----------
(118) 22 388 220
---------- ---------- ---------- ----------
Earnings (loss) before income taxes 1,595 390 3,662 (498)
Income (taxes) benefit (580) (148) (1,376) 190
---------- ---------- ---------- ----------
NET EARNINGS (LOSS) $ 1,015 $ 242 $ 2,286 $ (308)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net earnings (loss) per share
Primary $ 0.08 $ 0.02 $ 0.18 $ (0.03)
Fully diluted $ 0.08 $ 0.02 $ 0.18 $ (0.03)
Weighted average common and dilutive
common equivalent shares outstanding
Primary 12,350,550 12,299,830 12,339,598 12,192,223
Fully diluted 12,350,550 12,299,830 12,339,598 12,203,117
</TABLE>
See accompanying notes to condensed financial statements.
2
<PAGE>
DAW TECHNOLOGIES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands, except share data)
Nine Months Ended
September 30,
---------------------
1996 1995
-------- -------
Increase (decrease) in cash
Cash flows from operating activities
Net earnings (loss) $ 2,286 $ (308)
Adjustments to reconcile net earnings (loss)
to net cash used in operating activities
Depreciation and amortization 1,186 541
Provision for losses on contracts receivable 228 --
Changes in assets and liabilities
Contracts and other receivables (12,904) 3,106
Costs and estimated earnings in excess
of billings on contracts in progress 898 (7,920)
Inventories (1,245) (682)
Prepaid expenses and other current assets (10) 108
Accounts payable, other liabilities
and accrued expenses 1,486 2,588
Income taxes payable 919 (377)
Billings in excess of costs and estimated
earnings on contracts in progress 3,890 24
Other assets (23) (261)
-------- -------
Net cash used in operating activities (3,289) (3,181)
-------- -------
Cash flows from investing activities
Payments for purchase of property and equipment (2,476) (1,817)
-------- -------
Net cash used in investing activities (2,476) (1,817)
-------- -------
(continued)
See accompanying notes to condensed financial statements.
3
<PAGE>
DAW TECHNOLOGIES, INC.
CONDENSED STATEMENTS OF CASH FLOWS - CONTINUED
(Unaudited)
(in thousands, except share data)
Nine Months Ended
September 30,
---------------------
1996 1995
-------- -------
Cash flows from financing activities
Net change in line of credit 3,485 --
Payments of long-term debt (68) (64)
Proceeds from exercise of warrants and options 81 2,631
Payments of obligations under capital leases (456) (112)
-------- -------
Net cash provided by financing activities 3,042 2,455
-------- -------
Net decrease in cash and cash equivalents (2,723) (2,543)
Cash and cash equivalents at beginning of period 5,885 2,711
-------- -------
Cash and cash equivalents at end of period $ 3,162 $ 168
-------- -------
-------- -------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
CASH PAID DURING THE PERIOD FOR
Interest $ 466 $ 42
Income taxes 423 167
See accompanying notes to condensed financial statements.
4
<PAGE>
DAW TECHNOLOGIES
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(in thousands, except share data)
1. INTERIM CONDENSED FINANCIAL STATEMENTS
The accompanying unaudited, condensed financial statements have been
prepared by Daw Technologies, Inc. (the "Company" or "Daw") in accordance with
generally accepted accounting principles for interim financial reporting and the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly,
certain information and footnote disclosures normally included in financial
statements prepared under generally accepted accounting principles have been
condensed or omitted pursuant to such regulations. In the opinion of
management, all adjustments considered necessary for a fair presentation of the
Company's financial position, results of operations and cash flows have been
included. All such adjustments are of a normal recurring nature. This report
on Form 10-Q for the three and nine months ended September 30, 1996 and 1995
should be read in conjunction with the Company's annual report on Form 10-K for
the calendar year ended December 31, 1995. The results of operations for the
three and nine months ended September 30, 1996 may not be indicative of the
results that may be expected for the year ending December 31, 1996.
2. LINE OF CREDIT
On January 2, 1996 the Company replaced its former revolving line of
credit with a new line of credit with a bank for $8,000. The interest rate is
computed at the bank's variable index rate (8.25% at September 30, 1996). The
Company had borrowings under the line of credit of $4,985 and $1,500 as of
September 30, 1996, and December 31, 1995, respectively. The line is
collateralized by certain receivables and inventories.
3. STOCK PURCHASE PLAN
During the nine months ended September 30, 1996, the Board of Directors and
the shareholders approved the Company's 1996 Employee Stock Purchase Plan
("Purchase Plan"). The Purchase Plan provides for a series of six-month
offerings to employees on May 1 and November 1 of each calendar year during the
term of the Purchase Plan. The first six-month offering commenced on May 1,
1996 and the last six-month offering will commence on November 1, 2000. An
eligible employee may elect to participate in an offering under the Purchase
Plan by authorizing the Company to make payroll deductions during the offering
period. The maximum number of shares of common stock which may be issued under
the Purchase Plan is 750,000. The price per share to be paid by the participant
under the Purchase Plan shall be the lessor of 85% of the fair market value of
the common stock on the applicable offering commencement date or 85% of the fair
market value of the common stock on the applicable offering termination date. No
employee is permitted to purchase in excess of $25,000 of common stock per
calendar year under the Purchase Plan.
5
<PAGE>
DAW TECHNOLOGIES
4. AMENDMENT TO STOCK OPTION PLAN
During the nine months ended September 30, 1996, the Board of Directors and
shareholders approved an amendment to the 1993 Stock Option Plan ("Option
Plan"). The amendment eliminates the 250,000 share annual limitation, increases
the maximum number of shares available for issuance under the Option Plan to
1,250,000 and limits the number of shares for which options may be granted to an
employee in a single calendar year to 100,000 shares.
6
<PAGE>
DAW TECHNOLOGIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
GENERAL
The following discussion should be read in conjunction with the financial
statements and notes thereto included elsewhere herein. All data in the tables
are in thousands, except for percentages and per-share data.
The Company is an integrated systems solution provider of cleanrooms and
cleanroom component systems for the semiconductor industry. In recent years,
the Company typically has had one to five significant customers, each of which
accounted for more than ten percent of the Company's annual revenues; these
customers do not necessarily remain significant in subsequent years. The
semiconductor industry has been historically cyclical in nature. During the
nine months ended September 30, 1996, the industry has been in a cyclical
downturn that has resulted in reduced capital spending by semiconductor
companies and the reduction or delay of new cleanroom facilities, which could
have a material adverse effect on the Company's future operations. Industry
analysts attribute the current downturn to overcapacity in the DRAM market,
created by extensive capital spending from 1994 through the first part of 1996.
The downturn is expected to be shorter than normal because of the continued
robust forecast for personal computer unit growth through the end of the decade.
Management believes that the current downturn will result in lower projected
capital spending by the semiconductor companies over the next three quarters
compared with the same periods in the previous year. This will result in fewer
contracts available to bid and a significant increase in price competition on
contracts that are awarded. If the Company is not successful in securing these
contracts at reasonable gross profit margins it will have a significant impact
on the Company's operations during 1997. The Company experienced one contract
reduction during the first quarter of 1996 and one reduction during the third
quarter of 1996. These contract changes have not had a material impact on the
Company's financial condition for the nine months ended September 30, 1996.
However, if the Company experiences additional contract reductions or delays, or
the industry downturn continues longer than current expectations, these events
could have a material adverse effect on the Company's operating results for the
remainder of 1996 and 1997.
Although there is uncertainty surrounding the length and severity of this
current downturn in the semiconductor industry, management believes that changes
taking place in the industry should result in expanded capital expenditures in
the longer-term. In response to the current downturn, management has taken
steps to reduce the Company's cost structure including a reduction in the
Company's workforce of approximately five percent. This reduction in force was
implemented in late September 1996. During the remainder of the downturn,
management will monitor the Company's cost structure and take appropriate
actions as considered necessary, but continue to develop state of the art
cleanroom technology and provide world-class support to the Company's customers.
The information discussed in the previous paragraphs contains forward
looking statements that are subject to risks and uncertainties that could result
in actual results differing materially from those projected. These risks and
uncertainties could include, but
7
<PAGE>
DAW TECHNOLOGIES
are not limited to, the semiconductor industry downturn being more severe than
currently projected, the timing of significant customer orders, product pricing
pressures, changes in technology, challenges from competitors, cancellation of
existing contracts, customer acceptance of new products, decline in demand for
semiconductors and insufficient cost reduction programs.
The Company's contract revenue and operating results fluctuate
substantially from quarter to quarter depending on the timing of significant
customer orders, the timing of revenue and cost recognition, variations in
contract mix, changes in customer buying patterns, fluctuations in the
semiconductor equipment market, utilization of capacity, manufacturing
productivity and efficiency, availability of key components, and trends in the
economies of the geographical regions in which the Company operates.
The Company uses the percentage-of-completion method of accounting for its
contracts. The Company recognizes revenue in proportion to the costs incurred
to date in relation to the total anticipated costs. Revenue recognized may not
be the same as progress billings to the customer. Underbillings are reflected
in an asset account (costs and estimated earnings in excess of billings on
contracts in progress), and overbillings are reflected in a liability account
(billings in excess of costs and estimated earnings on contracts in progress).
Engineering and development costs for new products to be supplied for identified
projects are considered a cost of that project.
The Company generates revenue in three geographic regions: North America,
Asia/Pacific Rim, and Europe. Contracts in the Asia/Pacific Rim region are
generally denominated in United States dollars. Although risk of fluctuations
in currency value does not affect such dollar-denominated contracts, changes in
the relative value of the dollar could make the Company less competitive in this
region. Contracts to be performed in Europe may be denominated in local
currency, and the Company bears the risk of changes in the relative value of the
dollar and the local currencies. The Company has in the past and may in the
future attempt to hedge against currency fluctuations on contracts denominated
in local currencies. There can be no assurance, however, that such hedging will
fully insulate the Company from fluctuations or will not expose the Company to
additional risks of loss.
The Company's business and operations have not been materially affected by
inflation during the periods for which financial information is presented.
8
<PAGE>
DAW TECHNOLOGIES, INC.
RESULTS OF OPERATIONS (in thousands, except share data)
<TABLE>
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
--------------------- ---------------------
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Contract revenue . . . . . . . . . . . . $30,009 $17,398 $80,441 $48,149
Cost of contracts . . . . . . . . . . . . 25,531 14,909 69,380 43,377
------- ------- ------- -------
Gross profit . . . . . . . . . . . . . . 4,478 2,489 11,061 4,772
------- ------- ------- -------
Selling, general and
administrative expenses. . . . . . . . . 2,664 2,024 7,498 5,219
Depreciation and
amortization . . . . . . . . . . . . . . 101 97 289 271
------- ------- ------- -------
2,765 2,121 7,787 5,490
------- ------- ------- -------
Earnings (loss) from operations . . . . 1,713 368 3,274 (718)
Other income (expense), net . . . . . . (118) 22 388 220
------- ------- ------- -------
Earnings (loss) before income taxes . . . 1,595 390 3,662 (498)
Income (taxes) benefit . . . . . . . . . (580) (148) (1,376) 190
------- ------- ------- -------
Net earnings (loss) . . . . . . . . . . . $ 1,015 $ 242 $ 2,286 $ (308)
------- ------- ------- -------
------- ------- ------- -------
Net earnings (loss) per share
Primary . . . . . . . . . . . . . . . . $ 0.08 $ 0.02 $ 0.18 $ (0.03)
Fully diluted . . . . . . . . . . . . . $ 0.08 $ 0.02 $ 0.18 $ (0.03)
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------- ------------
BALANCE SHEET DATA:
Cash and cash equivalents . . . . . . . . $ 3,162 $ 5,885
Working capital.. . . . . . . . . . . . . 16,109 15,431
Total assets. . . . . . . . . . . . . . . 51,695 40,072
Total liabilities . . . . . . . . . . . . 29,919 20,663
Total shareholders equity.. . . . . . . . 21,776 19,409
</TABLE>
Contract revenue for the third quarter of 1996 increased by 72.5% to $30.0
million compared to $17.4 million for the third quarter of 1995. Contract
revenue for the nine months ended September 30, 1996 increased by 67.1% to $80.4
million compared to $48.1 million for the nine months ended September 30, 1995.
This increase is attributed to an increase in the number of contracts in process
during the third quarter and nine months ended September 30, 1996 and an
increase in the average size of the contracts. The Company's ability to increase
the number and size of its contracts has been enhanced by an increase in the
manufacturing capacity of the Company's facilities which has resulted in a
higher production of cleanroom component parts during the first three quarters
of 1996 compared to the first three quarters of 1995. During the third quarter
of 1996 the Company's backlog decreased from $78.0 million at June 30, 1996 to
$41.9 million at September 30, 1996. This decrease is the result of one
contract cancellation, fewer contracts available to bid during the third quarter
of 1996 and the general downturn in the semiconductor industry. As a result of
these factors, it may be difficult for the Company to continue to maintain
9
<PAGE>
DAW TECHNOLOGIES, INC.
revenue over the next few quarters equal to revenue reported during the third
quarter of 1996.
Gross profit for the third quarter of 1996 increased by 79.9% to $4.5
million from $2.5 million for the third quarter of 1995 and increased as a
percentage of contract revenue to 14.9% for the third quarter of 1996 from 14.3%
for the third quarter of 1995. Gross profit for the nine months ended September
30, 1996 increased by 131.8% to $11.1 million from $4.8 million for the nine
months ended September 30, 1995 and increased as a percentage of contract
revenue to 13.8% for the nine months ended September 30, 1996 from 9.9% for the
nine months ended September 30, 1995. Gross profit for the nine months ended
September 30, 1995 was negatively impacted by a product failure at a single
contract site during the second quarter of 1995. This event and significant
manufacturing inefficiencies resulted in contract cost overruns during the
second quarter of 1995, and contributed to a substantially lower gross profit
for the nine months ended September 30, 1995, compared to the same period during
1996. Consistent with the Company's strategy of establishing a presence and
gaining market share in the Asia/Pacific region, which management believes is
important to the Company's continued growth, the Company has responded to
difficult competitive conditions in the region by accepting and completing
contracts on terms that would otherwise not be acceptable. This strategy and
the general condition of the semiconductor industry, which resulted will result
in increased competitive conditions throughout the world, could have a negative
impact on the Company's gross margins over the next several quarters.
Selling, general and administrative expenses for the third quarter of 1996
increased by 31.6% to $2.7 million compared to $2.0 million for the third
quarter of 1995, but decreased as a percentage of contract revenue to 8.9% for
the third quarter of 1996 from 11.6% for the third quarter of 1995. Selling,
general and administrative expenses for the nine months ended September 30, 1996
increased by 43.7% to $7.5 million compared to $5.2 million for the nine months
ended September 30, 1995, but decreased as a percentage of contract revenue to
9.3% for the nine months ended September 30, 1996 from 10.8% for the nine months
ended September 30, 1995. The increase in actual selling, general and
administrative expenses is related to greater selling and marketing activities
required to improve the number and size of contracts awarded during the nine
months ended September 30, 1996 as compared to the same period in 1995. The
Company also increased its general and administrative headcount to meet the
requirements of increased revenue.
Other income for the third quarter of 1996 increased to $45,000 compared to
$42,000 for the third quarter of 1995. Other income for the nine months ended
September 30, 1996 increased to $854,000 compared to $262,000 for the nine
months ended September 30, 1995. This increase is the result of a settlement of
litigation filed by the Company against a vendor seeking reimbursement of costs
related to the product failure reported in the second quarter of 1995. Other
income was offset by an increase in interest expense directly related to the
increased borrowings against the Company's credit line during the nine months
ended September 30, 1996.
LIQUIDITY AND CAPITAL RESOURCES
Working capital at September 30, 1996 was $16.1 million compared to $15.4
at December 31, 1995. This includes cash and cash equivalents of $3.2 million
at September 30,
10
<PAGE>
DAW TECHNOLOGIES, INC.
1996 and $5.9 million at December 31, 1995, respectively. The Company's
operations provided $1.0 million of cash during the third quarter of 1996,
compared to $3.7 million of cash used by operations during the third quarter of
1995. During the third quarter of 1996, the Company experienced an increase in
contracts receivable, costs and estimated earnings in excess of billings on
contracts in progress, and inventories as a result of growth in the size and
number of contracts.
At December 31, 1995, the Company had lines of credit totaling $6.0
million. During the first quarter of 1996, the Company negotiated a new line of
credit totaling $8.0 million which replaced the two previous lines. Amounts
drawn under the new line bear interest at a commercial loan variable rate index
(8.5% as of September 30, 1996). The Company has renewed this line of credit
through June 30, 1997. The line is secured by all domestic accounts receivable
and inventory. At September 30, 1996, the Company had approximately $5.0
million outstanding against the line of credit.
Management believes that existing cash balances, borrowings available
under the line of credit, and cash generated from operations will be adequate to
meet the Company's anticipated cash requirements through September 30, 1997.
However, in the event the Company experiences adverse operating performance or
above-anticipated capital expenditure requirements, additional financing may be
required. There can be no assurance that such additional financing, if
required, would be available on favorable terms if at all.
This quarterly report on Form 10-Q may be deemed to contain certain
forward-looking statements. These statements are subject to known and unknown
risks and uncertainties, including the length and severity of the semiconductor
industry downturn, decreases in capital expenditures by semiconductor
manufacturers, cancellation or delays in existing contracts, increased
competition in the industry and such other risks as are identified and discussed
herein and in the Company's filings with the Securities and Exchange Commission.
These known and unknown risks and uncertainties could cause the Company's actual
results in future periods to be materially different from any future performance
suggested herein.
11
<PAGE>
DAW TECHNOLOGIES, INC.
PART II - OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Regulation S-K
Exhibit No. Description
-------------- -----------
10.1 Amendment to 1993 Stock Option Plan
11.1 and 11.2 Earnings Per Share Calculation
27 Financial Data Schedule
(b) Reports on Form 8-K - There were no reports on Form 8-K filed for
the three months ended September 30, 1996.
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.
DAW TECHNOLOGIES, INC.
(Registrant)
By: /s/ David R. Grow
-----------------------------------
David R. Grow
Executive Vice President, Chief
Financial Officer, Secretary
and Treasurer
12
<PAGE>
EXHIBIT 11.1
DAW TECHNOLOGIES, INC.
EARNINGS PER SHARE CALCULATION
Three Months ended September 30,
<TABLE>
1996 1995
------------------------------- ----------------------------
PRIMARY FULLY DILUTED PRIMARY FULLY DILUTED
---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Average number of common shares
outstanding during the period
Common shares outstanding
during the entire period 12,342,254 12,342,254 12,208,390 12,208,390
Weighted average common shares
issued during the period 8,296 8,296 91,440 91,440
---------- ---------- ---------- ----------
Weighted average number of
common shares outstanding 12,350,550 12,350,550 12,299,830 12,299,830
Dilutive effect of common stock
equivalents under stock warrants
and options* - - - -
---------- ---------- ---------- ----------
Weighted average common and
dilutive common equivalent
shares outstanding 12,350,550 12,350,550 12,299,830 12,299,830
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net earnings applicable to
common stock $1,015,000 $1,015,000 $ 242,000 $ 242,000
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net earnings per common and
dilutive common equivalent
shares outstanding $ 0.08 $ 0.08 $ 0.02 $ 0.02
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
*Not included in this earnings per share calculation, since the total
dilutive effect of all common stock equivalents calculated under the Treasury
Stock Method is less than 3% for the three months ended September 30, 1996
and 1995.
<PAGE>
EXHIBIT 11.2
DAW TECHNOLOGIES, INC.
EARNINGS PER SHARE CALCULATION
Nine Months ended September 30,
<TABLE>
1996 1995
------------------------------- ----------------------------
PRIMARY FULLY DILUTED PRIMARY FULLY DILUTED
---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Average number of common shares
outstanding during the period
Common shares outstanding
during the entire period 12,330,254 12,330,254 11,741,254 11,741,254
Weighted average common shares
issued during the period 9,344 9,344 450,969 461,863
---------- ---------- ---------- ----------
Weighted average number of
common shares outstanding 12,339,598 12,339,598 12,192,223 12,203,117
Dilutive effect of common stock
equivalents under stock
warrants and options* - - - -
---------- ---------- ---------- ----------
Weighted average common and
dilutive common equivalent
shares outstanding 12,339,598 12,339,598 12,192,223 12,203,117
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net earnings (loss) applicable to
common stock $2,286,000 $2,286,000 $ (308,000) $ (308,000)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net earnings (loss) per common
and dilutive common equivalent
shares outstanding $ 0.18 $ 0.18 $ (0.03) $ (0.03)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
*Not included in this earnings per share calculation, since the total
dilutive effect of all common stock equivalents calculated under the Treasury
Stock Method is less than 3% for the six months ended September 30, 1996 and
1995.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF SEPTEMBER 30, 1996, AND THE STATEMENT OF OPERATIONS FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 3,162
<SECURITIES> 0
<RECEIVABLES> 27,272
<ALLOWANCES> (369)
<INVENTORY> 2,723
<CURRENT-ASSETS> 43,862
<PP&E> 13,021
<DEPRECIATION> (5,293)
<TOTAL-ASSETS> 51,695
<CURRENT-LIABILITIES> 27,753
<BONDS> 0
0
0
<COMMON> 124
<OTHER-SE> 21,652
<TOTAL-LIABILITY-AND-EQUITY> 51,695
<SALES> 80,441
<TOTAL-REVENUES> 80,441
<CGS> 69,380
<TOTAL-COSTS> 76,939
<OTHER-EXPENSES> (854)
<LOSS-PROVISION> 228
<INTEREST-EXPENSE> 466
<INCOME-PRETAX> 3,662
<INCOME-TAX> 1,376
<INCOME-CONTINUING> 2,286
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,286
<EPS-PRIMARY> 0.18
<EPS-DILUTED> 0.18
</TABLE>
