<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, 1998
or
( ) Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
0-21818
----------------------------------------
(Commission File No.)
DAW TECHNOLOGIES, INC.
-----------------------------------------------------------
(Exact name of registrant as specified in its charter)
UTAH 87-0464280
- ------------------------------- --------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
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 August 14, 1998, the Registrant had 12,450,607 shares of Common
Stock, $0.01 par value outstanding.
================================================================================
<PAGE> 2
Daw Technologies, Inc.
TABLE OF CONTENTS
<TABLE>
<S> <C>
PART I FINANCIAL INFORMATION................................................................................. 1
Item 1. Financial Statements
Condensed Balance Sheets - June 30, 1998 and December 31, 1997........................................ 1
Condensed Statements of Operations - Three months and six months ended June 30, 1998 and 1997......... 2
Condensed Statements of Cash Flows - Six months ended June 30, 1998 and 1997......................... 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...................................................................................... 11
Item 4. Submission of Matters to a Vote of Security Holders................................................... 11
Item 5. Other Information..................................................................................... 11
Item 6. Exhibits and Reports on Form 8-K...................................................................... 11
Signatures...................................................................................................... 12
</TABLE>
<PAGE> 3
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Daw Technologies, Inc.
CONDENSED BALANCE SHEETS
(Unaudited)
(in thousands, except share data)
<TABLE>
<CAPTION>
June 30, Dec. 31,
1998 1997
------- -------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 3,083 $ 5,802
Contracts receivable, net 12,119 12,472
Costs and estimated earnings in excess
of billings on contracts in progress 5,728 3,702
Inventories 3,778 1,363
Deferred income taxes 356 352
Other current assets 2,688 2,144
------- -------
Total current assets 27,752 25,835
PROPERTY AND EQUIPMENT - NET, AT COST 5,580 6,304
DEFERRED INCOME TAXES 1,887 135
OTHER ASSETS, net 1,296 90
------- -------
$36,515 $32,364
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 8,246 $ 5,700
Billings in excess of costs and estimated
earnings on contracts in progress 2,762 3,005
Lines of credit 5,316 1,230
Current portion of long-term obligations 591 652
------- -------
Total current liabilities 16,915 10,587
LONG TERM OBLIGATIONS, less current portion 807 1,077
DEFERRED INCOME TAXES -- --
COMMITMENTS AND CONTINGENCIES -- --
SHAREHOLDERS' EQUITY
Preferred stock, authorized 10,000,000 shares of
$0.01 par value; none issued and outstanding -- --
Common stock, authorized 50,000,000 shares of $0.01 par
value; issued and outstanding 12,450,607 shares at
June 30, 1998 and 12,407,977 at December 31, 1997 124 124
Additional paid-in-capital 16,536 15,209
Retained earnings 2,133 5,367
------- -------
Total shareholders' equity 18,793 20,700
------- -------
$36,515 $32,364
======= =======
</TABLE>
See accompanying notes to condensed financial statements.
1
<PAGE> 4
Daw Technologies, Inc.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- ---------------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Contract revenue $ 12,888 $ 16,463 $ 24,329 $ 33,258
Cost of contracts 14,656 14,065 25,610 28,277
------------ ------------ ------------ ------------
Gross profit (loss) (1,768) 2,398 (1,281) 4,981
------------ ------------ ------------ ------------
Operating expenses
Selling, general and administrative 1,719 2,118 3,353 4,193
Research and development 78 75 122 149
Depreciation and amortization 154 108 261 214
------------ ------------ ------------ ------------
1,951 2,301 3,736 4,556
------------ ------------ ------------ ------------
Earnings (loss) from operations (3,719) 97 (5,017) 425
Other income (expense)
Interest (121) (98) (190) (211)
Other income, net 10 25 57 100
------------ ------------ ------------ ------------
(111) (73) (133) (111)
------------ ------------ ------------ ------------
Earnings (loss) before income taxes (3,830) 24 (5,150) 314
Income taxes (benefit) (1,427) 9 (1,916) 117
------------ ------------ ------------ ------------
NET EARNINGS (LOSS) $ (2,403) $ 15 $ (3,234) $ 197
============ ============ ============ ============
Earnings (loss) per common share
Basic $ (0.19) $ 0.00 $ (0.26) $ 0.02
Diluted $ (0.19) $ 0.00 $ (0.26) $ 0.02
Weighted average common and
dilutive common equivalent
shares outstanding
Basic 12,439,226 12,411,968 12,423,688 12,404,348
Dilutive 12,439,226 12,411,968 12,423,688 12,404,348
</TABLE>
See accompanying notes to condensed financial statements.
2
<PAGE> 5
Daw Technologies, Inc.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands, except share data)
<TABLE>
<CAPTION>
Six months ended
June 30,
-----------------------
1998 1997
------- -------
<S> <C> <C>
Increase (decrease) in cash and cash equivalents
Cash flows from operating activities
Net earnings (loss) $(3,234) $ 197
Adjustments to reconcile net earnings (loss)
to net cash provided by (used in) operating
activities
Depreciation and amortization 896 856
Provision for losses on contracts receivable 13 84
Deferred income taxes (benefit) (1,756) 99
Changes in assets and liabilities
Contracts receivable 340 4,992
Costs and estimated earnings in excess
of billings on contracts in progress (2,026) 2,696
Inventories (2,415) 297
Other current assets (544) 215
Accounts payable and accrued liabilities 2,546 (2,097)
Income taxes payable -- (349)
Billings in excess of costs and estimated
earnings on contracts in progress (243) (1,805)
Other assets (1,255) (240)
------- -------
Net cash provided by (used in)
operating activities (7,678) 4,945
------- -------
Cash flows from investing activities
Payments for purchase of property
and equipment (123) (273)
------- -------
</TABLE>
(continued)
See accompanying notes to condensed financial statements.
3
<PAGE> 6
Daw Technologies, Inc.
CONDENSED STATEMENTS OF CASH FLOWS - CONTINUED
(Unaudited)
(in thousands, except share data)
<TABLE>
<CAPTION>
Six months ended
June 30,
-----------------------
1998 1997
------- -------
<S> <C> <C>
Cash flows from financing activities
Net change in lines of credit 4,086 (5,001)
Proceeds from issuance of common stock 69 48
Obligations to issue common stock 1,258 --
Payments on long-term obligations (331) (306)
------- -------
Net cash provided by (used in)
financing activities 5,082 (5,259)
------- -------
Net decrease in cash and cash equivalents (2,719) (587)
Cash and cash equivalents at beginning of period 5,802 3,258
------- -------
Cash and cash equivalents at end of period $ 3,083 $ 2,671
======= =======
Supplemental disclosures of cash flow information
Cash paid during the period for
Interest $ 190 $ 211
Income taxes -- 368
</TABLE>
See accompanying notes to condensed financial statements.
4
<PAGE> 7
Daw Technologies, Inc.
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 months and six months ended June 30, 1998 and 1997 should be read in
conjunction with the Company's annual report on Form 10-K for the calendar year
ended December 31, 1997. The results of operations for the three months and six
months ended June 30, 1998 may not be indicative of the results that may be
expected for the year ending December 31, 1998.
2. EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard (SFAS) No. 128, "Earnings per Share".
The statement is effective for financial statements for periods ending after
December 15, 1997, and changes the method in which earnings per share will be
determined. Adoption of this statement by the Company did not have a material
impact on earnings per share. Options to acquire 683,000 shares of common stock
were not included in the calculation of dilutive weighted shares outstanding for
the six months ended June 30, 1998 because they were not yet exercisable.
Options and warrants to purchase 743,100 shares of common stock at $2.50 to
$3.50 a share were outstanding for the six months ended June 30, 1997. They were
not included in the computation of earnings per share because the option's
exercise prices were greater than the average market price of the common shares.
3. RECLASSIFICATIONS
Certain reclassifications have been made to the financial statements
for the three months and six months ended June 30, 1997, to conform to the 1998
presentation.
4. LINES OF CREDIT
At June 30, 1998, the Company maintained a revolving line of credit
with a domestic bank for the lesser of $8,000 or the available borrowing base.
The interest rate is computed at the bank's prime rate (8.50% at June 30, 1998)
and requires monthly payments of interest. The Company had borrowings under the
line of $5,316 and $1,230 as of June 30, 1998, and December 31, 1997,
respectively. The line of credit is collateralized by certain domestic
receivables and inventories. The line of credit agreement contains restrictive
covenants imposing limitations on payments of cash dividends, purchases or
redemptions of capital stock, indebtedness and other matters.
5
<PAGE> 8
Daw Technologies, Inc.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(in thousands, except share data)
4. LINES OF CREDIT - CONTINUED
Also, at June 30, 1998, the Company maintained a guidance line of
credit with a domestic bank used to facilitate the issuance of letters of
credit. The facility allows for letters of credit to be issued up to the lesser
of $3,000 or the available borrowing base. In addition, the facility maintains
the same restrictive covenants and collateral requirements as the above
mentioned revolving line of credit. No letters of credit were open under this
facility at June 30, 1998. The Company is currently negotiating the renewal of
the credit line and the guidance line of credit facilities.
5. BUSINESS ACQUISITION
On April 22, 1998, the Company acquired the net assets of Intelligent
Enclosures Corporation from Intelligent Systems Corporation in exchange for
27,023 shares of the Company's common stock with a fair value of approximately
$41 and a commitment to deliver on or before April 21, 2000, additional common
stock of the Company having a value equal to $1,300 less the market value on
that date of the initial 27,023 shares. Intelligent Enclosures Corporation is a
leader in high performance controlled environments and contamination control
solutions, including tool isolation environments, for microelectronic and
semiconductor manufacturers.
The acquisition was accounted for as a purchase and recorded at the
value of the guaranteed $1,300 purchase price. Various intangible assets valued
at approximately $1,200 were recorded in Other Assets and are being amortized on
a straight line basis from 2 to 15 years.
The results of operations of Intelligent Enclosures Corporation are
included in the accompanying financial statements from the date of acquisition
and did not have a significant impact on the Company's financial position and
results of operations.
6. LEGAL PROCEEDINGS AND CLAIMS
A lawsuit was filed in the United States District Court of Oregon in
May of 1998 alleging patent infringement with respect to technology used by the
Company in its ceiling system products was brought against Huntair, Inc.,
Clestra Cleanrooms, Inc., Gordon Grid, Inc. and Daw Technologies, Inc. by
CLEANPAK International, Inc. The plaintiff seeks compensation for any damages
claimed including direct and consequential damages. The Company has retained
patent counsel who has reviewed the complaint and the patent mentioned in the
lawsuit. As a result of this review, the Company and legal counsel believe that
the allegations in the complaint are without merit and the Company intends to
vigorously defend its position in the lawsuit.
7. INVENTORIES
Raw material inventory at June 30, 1998 was $1,312 compared to $1,363
at December 31, 1997. Work-in-process inventory at June 30, 1998 was $2,466
compared to zero work-in-process inventory at December 31, 1997.
6
<PAGE> 9
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 has typically had one to three significant customers, each of which
accounted for more than 10% 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 and continues to be adversely
affected by a cyclical downturn that began in 1996.
The current industry downturn has resulted in continued lower capital
spending by semiconductor and micro-electronic manufacturers during the first
and second quarters of 1998. Current industry analysts believe the downturn will
continue through the first and possibly the second quarters of 1999. Although
the industry downturn has resulted in fewer contracts available to bid, the
Company has been successful during the second quarter of 1998 in securing
numerous new contracts. As a result, the Company's backlog has increased to
$37.1 million at June 30, 1998 compared to $14.2 million at June 30, 1997.
Although the Company has experienced an increase in contract awards during the
second quarter of 1998 compared to the second quarter of 1997, management
believes that the industry downturn adversely affected its revenues and results
of operations for the first and second quarters of 1998 and anticipates it will
continue to adversely affect its revenues and profitability through the first
and possibly the second quarters of 1999.
Although there is uncertainty surrounding the timing of a recovery in
the semiconductor industry, management continues to believe that changes taking
place in the industry should result in expanded semiconductor industry capital
expenditures in the long-term. In response to the current downturn, management
will continue to 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 Company's contract revenue and operating results fluctuate
substantially from quarter to quarter depending on such factors as 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 long-term 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).
7
<PAGE> 10
RESULTS OF OPERATIONS (Data in the tables are in thousands)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
------------------------- -------------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Contract revenue .................. $ 12,888 $ 16,463 $ 24,329 $ 33,258
Gross profit (loss) ............... (1,768) 2,398 (1,281) 4,981
Selling, general and
administrative expenses ....... 1,719 2,118 3,353 4,193
Research and development .......... 78 75 122 149
Net earnings (loss) ............... (2,403) 15 (3,234) 197
</TABLE>
<TABLE>
<CAPTION>
-------------------------
JUNE 30, DECEMBER 31,
1998 1997
------- -----------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents ......... $ 3,083 $ 5,802
Working capital ................... 10,837 15,248
Total assets ...................... 36,515 32,364
Total liabilities ................. 17,722 11,664
Total shareholders' equity ........ 18,793 20,700
</TABLE>
Contract revenue for the second quarter of 1998 decreased by 21.7% to
$12.9 million compared to $16.5 million for the second quarter of 1997. Contract
revenue for the six months ended June 30, 1998 decreased by 26.8% to $24.3
million compared to $33.3 million for the six months ended June 30, 1997. This
decrease is attributed to the downturn in the semiconductor industry as more
fully discussed above. The downturn has resulted in fewer contracts being worked
on during the first two quarters of 1998 compared with the first two quarters of
1997.
Gross profit for the second quarter of 1998 decreased by 173.7% to a
loss of $1.8 million from a gross profit of $2.4 million for the second quarter
of 1997 and decreased as a percentage of contract revenue to a negative 13.7%
for the second quarter of 1998 from 14.6% for the second quarter of 1997. Gross
profit for the six months ended June 30, 1998 decreased by 125.7% to a loss of
$1.3 million from a gross profit of $5.0 million for the six months ended June
30, 1997 and decreased as a percentage of contract revenue to a negative 5.3%
for the six months ended June 30, 1998 from 15.0% for the six months ended June
30, 1997. The decrease in gross profit is the result of the combination of lower
margins realized on contracts in process, manufacturing inefficiencies related
to lower volume of work in certain product divisions and production start-up
costs related to the manufacture of panels for truck sleeper cabs by the
Company's new manufacturing division for this product.
The semiconductor industry downturn has resulted in a price competitive
bidding environment. Contracts in process during the first and second quarters
of 1998 were awarded at margins significantly less than contracts in process
during the first and second quarters of 1997. In addition, the downturn has
resulted in a decrease in the volume of certain manufactured products. Revenue
from these products during the second quarter of 1998 was not sufficient to
cover manufacturing overhead for the related product lines, resulting in
negative margins.
8
<PAGE> 11
The second quarter of 1998 was the ramp-up to full production of panels
for truck sleeper cabs by the Company's new manufacturing division for this
product. During this ramp-up the Company incurred manufacturing startup costs
that had a significant impact on the gross profit of the Company for the second
quarter of 1998.
Selling, general and administrative expenses for the second quarter of
1998 decreased by 18.8% to $1.7 million compared to $2.1 million for the second
quarter of 1997, but increased as a percentage of contract revenue to 13.3% for
the second quarter of 1998 from 12.9% for the second quarter of 1997. For the
six months ended June 30, 1998, selling, general and administrative decreased by
20.0% to $3.4 million compared to $4.2 million for the six months ended June 30,
1997, but increased as a percentage of contract revenue to 13.8% for the six
months ended June 30, 1998 from 12.6% for the six months ended June 30, 1997.
The decrease in actual dollars spent is a result primarily of a reduction in
general and administrative headcount completed during the second quarter of
1998.
Research and development expense for the second quarter of 1998
increased 4.0% to $78,000 compared to $75,000 for the second quarter of 1997.
Research and development expense for the six months ended June 30, 1998
decreased 18.1% to $122,000 compared to $149,000 for the six months ended June
30, 1997. During 1997 the Company was involved with certain research and
development projects related to value engineering of existing products. These
projects were completed prior to the second quarter of 1998, resulting in lower
research and development expense for the six months ended June 30, 1998 compared
to the same period in 1997.
Depreciation and amortization expense for the second quarter of 1998
increased 42.6% to $154,000 compared to $108,000 for the second quarter of 1997.
Depreciation and amortization expense for the six months ended June 30, 1998
increased 22.0% to $261,000 compared to $214,000 for the six months ended June
30, 1997. The majority of the increase is the result of amortization of
intangible assets recorded in connection with the acquisition of Intelligent
Enclosures (see Note 5 of the Financial Statements).
Interest expense for the second quarter of 1998 increased 23.5% to
$121,000 compared to $98,000 for the second quarter of 1997. Interest expense
for the six months ended June 30, 1998 decreased 10.0% to $190,000 compared to
$211,000 for the six months ended June 30, 1997. The decrease in interest
expense during the six months ended June 30, 1998 compared to the six months
ended June 30, 1997 is the result of a decrease in borrowings against the
Company's line of credit through June 30, 1998 compared with borrowings through
the same period during 1997. However, borrowings were higher during the second
quarter of 1998 compared to the second quarter of 1997 resulting in higher
interest expense during the second quarter of 1998 compared to the second
quarter of 1997.
LIQUIDITY AND CAPITAL RESOURCES
Working capital at June 30, 1998 was $10.8 million compared to $15.2 at
December 31, 1997. This includes cash and cash equivalents of $3.1 million at
June 30, 1998 and $5.8 million at December 31, 1997. The Company's operations
used $7.7 million of cash during the six months ended June 30, 1998, compared to
$4.9 million of cash generated from operations during the six months ended June
30, 1997. During the six months ended June 30, 1998, the Company experienced
increases in costs and estimated earnings in excess of billings on contracts in
progress, inventories, deferred income taxes and other assets. The increase in
inventories was due to an increase in work in process inventory, while the
9
<PAGE> 12
increase in other assets was the result of the recording of intangibles in
connection with the acquisition of Intelligent Enclosures (see Note 5 of the
Financial Statements). In addition, the Company experienced an increase in
accounts payables and accrued liabilities, and lines of credit as a result of
raw material purchases associated with recently awarded contracts, and
experienced a decrease in billings in excess of costs and estimated earnings on
contracts in progress during the six months ended June 30, 1998.
At June 30, 1998, the Company had a line of credit totaling the lesser
of $8.0 million or the available borrowing base. Amounts drawn under the line
bear interest at the bank's prime rate (8.50% at June 30, 1998). The line is
secured by certain domestic receivables and inventories. The Company had $5,316
and $1,230 in borrowings against the line as of June 30, 1998, and December 31,
1997, respectively. In addition, at June 30, 1998, the Company maintained a
guidance line of credit with a domestic bank used to facilitate the issuance of
letters of credit. The facility allows for letters of credit to be issued up to
the lesser of $3.0 million or the available borrowing base. No letters of credit
were open under this facility at June 30, 1998. The lines of credit agreements
contain restrictive covenants imposing limitations on payments on cash
dividends, purchases or redemptions of capital stock, indebtedness and other
matters. The Company is currently negotiating the renewal of the credit line and
the guidance line of credit facilities.
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 December 31, 1998.
However, in the event the Company experiences adverse operating performance,
above-anticipated capital expenditure requirements, or is unable to negotiate
a renewal of its current credit lines, additional financing may be required.
There can be no assurance that such additional financing, if required, would be
available on favorable terms.
FACTORS AFFECTING FUTURE RESULTS
The Company's future operations will be impacted by, among other
factors, the length and severity of the current economic downturn in the
semiconductor industry as more fully discussed above. The length and severity of
the current economic downturn in the semiconductor industry remains subject to a
high degree of uncertainty. The Company's operations are also subject to
additional risks and uncertainties that could result in actual operating results
differing materially from anticipated operating results and past operating
results and trends. These risks and uncertainties include pricing pressures,
cancellations of existing contracts, timing of significant customer orders,
increased competition, and changes in semiconductor and cleanroom technology.
Information contained in this Report contains "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995,
which can be identified by the use of forward-looking terminology such as "may,"
"will," "should," "expect," "anticipate," "estimate," or "continue," or the
negative thereof or other variations thereon or comparable terminology. These
forward-looking statements are subject to risks and uncertainties that include,
but are not limited to, those identified in this report, described from time to
time in the Company's other Securities and Exchange Commission filings, or
discussed in the Company's press releases. Actual results may vary materially
from expectations.
10
<PAGE> 13
PART II - OTHER INFORMATION
Item 4: Submission of Matters to a Vote of Security Holders
The registrant held its Annual Meeting of Shareholders on May 27, 1998. The
shareholders elected the following Board of Directors to serve for one year:
<TABLE>
<CAPTION>
Shares
Name Voted For
---- ---------
<S> <C>
Ronald W. Daw 9,187,310
Charles L. Bates, Jr. 9,191,810
Robert G. Chamberlain 9,192,310
James S. Jardine 9,190,540
Robert J. Frankenberg 9,187,754
</TABLE>
The shareholders also ratified the appointment of Grant Thornton LLP as
independent auditors for fiscal year 1998 by a vote of 10,073,753 for, 48,095
against and 16,320 abstained.
Item 5. Other Information
If a shareholder desiring to raise a proposal at the next annual meeting of
shareholders does not seek inclusion of the proposal in the Company's proxy
statement and fails to notify the Company at least 45 days prior to the month
and day of mailing of the prior year's proxy statement, management proxies will
be allowed to use their discretionary voting authority when the proposal is
raised at the annual meeting, without any discussion of the proposal in the
proxy statement.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Regulation S-K
Exhibit No. Description
-------------- -----------------------------
<S> <C>
27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K - There were no reports on Form
8-K filed for the three months ended June 30, 1998.
11
<PAGE> 14
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, on August 14, 1998.
DAW TECHNOLOGIES, INC.
----------------------
(Registrant)
By: /s/ David R. Grow
---------------------------------------
It's: Executive Vice President, Chief
Operating Officer, Chief Financial
Officer
(Principal financial and accounting
officer)
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED BALANCE SHEET AS OF JUNE 30, 1998 AND DECEMBER 31, 1997, AND THE
CONDENSED STATEMENT OF OPERATIONS FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE
30, 1998 AND 1997.
</LEGEND>
<CIK> 0000882159
<NAME> DAW TECHNOLOGIES, INC.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 3,083
<SECURITIES> 0
<RECEIVABLES> 12,534
<ALLOWANCES> (415)
<INVENTORY> 3,778
<CURRENT-ASSETS> 27,752
<PP&E> 13,850
<DEPRECIATION> (8,270)
<TOTAL-ASSETS> 36,515
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0
0
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</TABLE>
