<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 March 31, 1999
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 (IRS Employer
of 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 May 14, 1999, the Registrant had 12,513,114 shares of Common
Stock, $0.01 par value outstanding.
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Daw Technologies, Inc.
TABLE OF CONTENTS
<TABLE>
<S> <C>
PART I FINANCIAL INFORMATION................................................................1
Item 1. Financial Statements
Condensed Balance Sheets - March 31, 1999 and December 31, 1998......................1
Condensed Statements of Operations - Three months ended March 31, 1999 and 1998.....2
Condensed Statements of Cash Flows - Three months ended March 31, 1999 and 1998......3
Notes to Condensed Financial Statements..............................................5
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations................................................................8
PART II OTHER INFORMATION...................................................................14
Item 6. Exhibits and Reports on Form 8-K....................................................14
Signatures..................................................................................14
</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>
March 31, Dec. 31,
1999 1998
------- -------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,041 $ 2,140
Accounts receivable - raw materials, net 9,520 8,904
Costs and estimated earnings in excess
of billings on contracts in progress 9,271 7,546
Inventories, net 1,114 1,233
Deferred income taxes 841 655
Other current assets 2,297 2,391
------- -------
Total current assets 24,084 22,869
PROPERTY AND EQUIPMENT - NET, AT COST 4,503 4,859
DEFERRED INCOME TAXES 1,921 1,921
OTHER ASSETS 1,142 1,192
------- -------
$31,650 $30,841
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 6,907 $ 4,749
Billings in excess of costs and estimated
earnings on contracts in progress 1,626 1,635
Lines of credit 4,375 5,254
Current portion of long-term obligations 534 557
------- -------
Total current liabilities 13,442 12,195
LONG TERM OBLIGATIONS, less current portion 397 519
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 12,479,711
shares at March 31, 1999 and December 31, 1998 125 125
Additional paid-in-capital 16,557 16,557
Retained earnings 1,129 1,445
------- -------
Total shareholders' equity 17,811 18,127
------- -------
$31,650 $30,841
======= =======
</TABLE>
See accompanying notes to condensed financial statements.
1
<PAGE> 4
Daw Technologies, Inc.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except share data)
<TABLE>
<CAPTION>
Three months ended
March 31,
----------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Revenues $ 12,480 $ 11,441
Cost of goods sold 10,903 10,955
------------ ------------
Gross profit 1,577 486
Operating Expenses
Selling, general and administrative 1,788 1,634
Research and development 60 44
Depreciation and amortization 119 106
------------ ------------
1,967 1,784
------------ ------------
Loss from operations (390) (1,298)
Other income (expense)
Interest (101) (69)
Other, net (11) 46
------------ ------------
(112) (23)
------------ ------------
Loss before income taxes (502) (1,321)
Income tax benefit 186 490
------------ ------------
NET LOSS $ (316) $ (831)
============ ============
Loss per common share
Basic $ (0.03) $ (0.07)
Diluted $ (0.03) $ (0.07)
Weighted average common and dilutive
common equivalent shares outstanding
Basic 12,479,711 12,407,977
Dilutive 12,479,711 12,407,977
</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>
Three months ended
March 31,
------------------------
1999 1998
------- -------
<S> <C> <C>
Increase (decrease) in cash and cash equivalents
Cash flows from operating activities
Net loss $ (316) $ (831)
Adjustments to reconcile net loss
to net cash provided by (used in) operating
activities
Depreciation and amortization 393 426
Provision for losses on accounts receivable -- (50)
Deferred income taxes (186) (19)
Changes in assets and liabilities
Accounts receivable (616) 907
Costs and estimated earnings in excess
of billings on contracts in progress (1,725) (2,932)
Inventories 119 (1,161)
Other current assets 94 (525)
Accounts payable and accrued liabilities 2,158 75
Income tax payable -- (21)
Billings in excess of costs and estimated
earnings on contracts in progress (9) (275)
Other assets _50 --
------- -------
Net cash used in
operating activities (38) (4,406)
------- -------
Cash flows from investing activities
Payments for purchase of property
and equipment (37) (52)
------- -------
</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>
Three months ended
March 31,
------------------------
1999 1998
------- -------
<S> <C> <C>
Cash flows from financing activities
Net change in lines of credit (879) 1,368
Payments on obligations under long term
obligations (145) (164)
------- -------
Net cash provided by (used in)
financing activities (1,024) 1,204
------- -------
Net decrease in cash and
cash equivalents (1,099) (3,254)
Cash and cash equivalents at beginning of period 2,140 5,802
------- -------
Cash and cash equivalents at end of period $ 1,041 $ 2,548
======= =======
Supplemental disclosures of cash flow information
- -------------------------------------------------
Cash paid during the period for
Interest $ 101 $ 69
Income taxes -- --
</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 ended March 31, 1999 should be read in conjunction with the
Company's annual report on Form 10-K for the calendar year ended December 31,
1998. The results of operations for the three months ended March 31, 1999 may
not be indicative of the results that may be expected for the year ending
December 31, 1999.
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 869,000 shares of common stock
were not included in the calculation of dilutive weighted shares outstanding for
the three months ended March 31, 1999 because they would have been
anti-dilutive.
3. LINES OF CREDIT
At March 31, 1999, the Company maintained a revolving line of credit
with a domestic bank for the lesser of $6,000 or the available borrowing base.
The interest rate is computed at the bank's prime rate plus 1.0% (8.75% at March
31, 1999) and requires monthly payments of interest. The Company had borrowings
under the line of $4,375 and $5,254 as of March 31, 1999, and December 31, 1998,
respectively. The line of credit, which expired on December 31, 1998, was
extended to March 31, 1999. The line of credit is collateralized by certain
domestic receivables, equipment, 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. At March 31, 1999, the Company was out of compliance on certain
covenants for which they signed a forbearance agreement with the lender where
the lender agreed to forbear exercise of its remedies against the Company. The
Company is currently reviewing several financing alternatives.
5
<PAGE> 8
Daw Technologies, Inc.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(in thousands, except share data)
4. BUSINESS ACQUISITION
On April 22, 1998, in a stock for asset transaction, the Company
acquired the net assets of Intelligent Enclosures Corporation, a leader in high
performance controlled environments and contamination control solutions,
including tool isolation environments, for microelectronic and semiconductor
manufacturers. The transaction has been accounted for as a purchase and is
staged in two closing dates. At the first closing on April 22, 1998, the Company
issued 27,073 shares of common stock. At the second closing, on or before April
22, 2000, the Company will issue additional shares of common stock at the
average per share closing price for the 20 consecutive trading days prior to the
second closing, which, in addition to the shares issued at the first closing,
will equal $1.3 million.
5. SEGMENT INFORMATION
The Company has two reportable segments for the quarter ended March 31,
1999, namely 1) cleanrooms and related products and 2) other manufactured
products. Prior to March 31, 1998, the Company operated in one segment,
cleanrooms and related products. The accounting policies for the segments are
the same as those described in the Company's annual report on form 10-K for the
calendar year ended December 31, 1998. The Company evaluates performance of each
segment based on earnings or loss from operations. The Company's reportable
segments are similar in manufacturing processes and are tracked similarly in the
accounting system. The manufacturing process for each segment uses the same
manufacturing facilities and overhead is allocated similarly to each segment. It
is not practical to determine the total assets per segment and depreciation by
segment because each segment uses the same manufacturing facility. Identifiable
assets by segment are reported below. The Company allocates certain general and
administrative expenses, consisting primarily of facilities expenses, utilities,
and manufacturing overhead.
6
<PAGE> 9
Daw Technologies, Inc.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(in thousands, except share data)
5. SEGMENT INFORMATION (CONTINUED)
Segment information for the cleanrooms and related products and other
manufactured goods are as follows:
<TABLE>
<CAPTION>
Three months ended
March 31,
--------------------------
1999 1998
-------- --------
<S> <C> <C>
Revenues
Cleanrooms and related products $ 9,723 $ 11,441
Other manufactured goods 2,757 --
-------- --------
Totals $ 12,480 $ 11,441
======== ========
Operating profit (loss)
Cleanrooms and related products $ (799) $ (1,298)
Other manufactured goods 409 --
-------- --------
Totals $ (390) $ (1,298)
======== ========
Total assets
Cleanrooms and related products $ 15,503 $ 32,516
Other manufactured goods 1,397 --
Manufacturing and corporate assets 14,750 --
-------- --------
Totals $ 31,650 $ 32,516
======== ========
</TABLE>
7
<PAGE> 10
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 a supplier of ultra-clean manufacturing environments, or
cleanrooms, to the semiconductor industry. The Company also manufactures sleeper
cabs for heavy-duty trucks, air entrance systems for large national retail
chains, and air handling systems used in commercial and industrial applications.
Additionally, the Company has recently entered into various contract
manufacturing agreements whereby the Company manufactures products owned and
marketed by third parties.
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.
Worldwide semiconductor chip sales increased from roughly $50 billion per year
in 1988 to a record high of almost $150 billion by 1995. In order to keep up
with the increased demand for their products, chip manufacturers increased
capital spending on new equipment and fab facilities from approximately $12
billion to approximately $45 billion during the same time period. Since their
peak in 1995, chip sales have decreased to approximately $122 billion in 1998,
causing capital spending for new fab equipment and facilities to plunge over 30%
to less than $30 billion in 1998.
The current industry downturn and lower capital spending by
semiconductor manufacturers during the first quarter of 1999 has significantly
impacted cleanroom revenue generated by the Company. While worldwide chip sales
have been rising steadily since August of 1998 and are estimated to reach $133
billion in 1999 and rise to $182 billion by 2001, semiconductor manufacturers
appear to remain hesitant to build new fab facilities and expand production
capacity. As a result, the Company has continued to see a reduced level of large
fab expansions and new projects by the semiconductor industry.
During the first quarter of 1999, the Company has seen increased bidding
activity for cleanrooms but at significantly lower levels, both in scope and
dollar amount. The Company has been awarded a larger volume of projects during
the first quarter of 1999 compared to the first quarter of 1998, but at lower
average contract amounts. As a result, the Company's backlog has increased
slightly to $15.9 million at March 31, 1999 compared to $15.3 million at March
31, 1998.
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. Excess capacity in the industry is being absorbed
and chip makers are enlarging silicon wafers in order to reduce their costs. It
is estimated that using larger wafers can reduce the cost to make a chip by 15
to 20 percent, because the 300mm diameter wafer produces approximately 2.5 times
as many chips by processing one wafer. With 300mm
8
<PAGE> 11
technology, it is also estimated that capital investment per chip can be
reduced. Delays in the ramp-up of 300mm technology have delayed the expected
construction of the whole series of 300mm fabs worldwide. Due, in part, to the
lack of 300mm process tools, weaker than expected demand, and the current focus
on lowering process geometries from .25m to .18m, the 300mm effort has slowed by
at least 12 to 24 months. In response to the current 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.
In response to the prolonged downturn of the semiconductor industry and
reduced demand for its cleanrooms and related products, the Company has begun an
aggressive diversification effort by utilizing existing design and engineering
resources as well as manufacturing equipment and facilities. By applying its
product and engineering expertise in custom metal fabrication, airflow systems,
and high tech panel production to similar type products used by other businesses
and industries, it is the Company's objective to obtain 40% of its revenues from
non-cleanroom sources.
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). The revenue related to other manufactured goods is
recognized upon shipment of the product.
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
--------------------------
1999 1998
-------- --------
<S> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Revenues ..................... $ 12,480 $ 11,441
Gross profit ................. 1,577 486
Net loss ..................... (316) (831)
</TABLE>
9
<PAGE> 12
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
------- -------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.......................... $1,041 $ 2,140
Working capital ................................... 10,642 10,674
Total assets ...................................... 31,650 30,841
Total liabilities ................................. 13,839 12,714
Total shareholder's equity ........................ 17,811 18,127
</TABLE>
Revenues for the first quarter of 1999 increased by 9.1% to $12.5
million compared to $11.4 million for the first quarter of 1998. This increase
is attributed to the sale of other manufactured products of $2.8 million.
Revenues from other manufactured products were zero for the period ended March
31, 1998. Revenues from cleanroom and related products decreased $1.7 million,
or 15.0%, to $9.7 million for the first quarter of 1999 from $11.4 million
during the first quarter of 1998. The decrease is attributed to the continued
downturn in the semiconductor industry as more fully discussed above. The
downturn has resulted in fewer contracts being worked on during the first
quarter of 1999 compared with the first quarter of 1998.
Gross profit for first quarter of 1999 increased by 224.5% to $1.6
million from $486,000 for the first quarter of 1998 and increased as a
percentage of revenue to 12.6% for the first quarter of 1999 from 4.2% for the
first quarter of 1998. The increased gross profit percentage is due largely to
company-wide cost cutting measures adopted by management and improvements
implemented by the project management team that have a direct positive impact on
gross profit margins.
Selling, general and administrative expenses for the first quarter of
1999 increased 9.4% to $1.8 million, or 14.3% of revenue, compared to $1.6
million, and 14.3% of revenue for the first quarter of 1998. Selling, general,
and administrative expenses increased slightly by $.2 million to support the
additional sales of other manufactured products but remained virtually unchanged
as a percentage of total revenue.
Research and development expenses for the first quarter of 1999
increased 36.4% to $60,000 compared to $44,000 for the first quarter of 1998.
The Company continues to fund research and development to improve existing
products and develop new products in its diversification program.
Interest expense for the first quarter of 1999 increased to $101,000,
compared to $69,000 for the first quarter of 1998. This increase is directly
related to increased borrowings against the Company's credit line during the
first quarter of 1999, compared to borrowings during the first quarter of 1998.
LIQUIDITY AND CAPITAL RESOURCES
Working capital at March 31, 1999 was $10.6 million compared to $10.7 at
December 31, 1998. This includes cash and cash equivalents of $1.0 million at
March 31, 1999 and $2.1 million at December 31, 1998. The Company's operations
used $36,000 of cash during the first quarter of 1999, compared to using $4.4
million of cash from operations during the first
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<PAGE> 13
quarter of 1998. During the first quarter of 1999, the Company experienced a
net increase in receivables of $616,000, an increase in costs and estimated
earnings in excess of billings on contracts in progress of $1.7 million, and an
increase in accounts payables of $2.2 million.
At March 31, 1999, the Company maintained a revolving line of credit
with a domestic bank for the lesser of $6,000 or the available borrowing base.
The interest rate is computed at the bank's prime rate plus 1.0% (8.75% at March
31, 1999) and requires monthly payments of interest. The Company had borrowings
under the line of $4,375 and $5,254 as of March 31, 1999, and December 31, 1998,
respectively. The line of credit, which expired on December 31, 1998, was
extended to March 31, 1999. The line of credit is collateralized by certain
domestic receivables, equipment, 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. At March 31, 1999, the Company was out of compliance on certain
indebtedness covenants for which they signed a forbearance agreement with the
lender where the lender has agreed to forbear exercise of its remedies against
the Company. The Company is currently reviewing several financing alternatives.
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, 1999.
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.
YEAR 2000 ISSUES
The Company has developed a comprehensive plan to address year 2000
issues. The areas of focus are as follows: i) the Company's information
technology systems; ii) the Company's non-information technology systems (i.e.
machinery, equipment and devices which utilize built in or embedded technology);
and iii) third party suppliers and customers. The Company is undertaking its
year 2000 review in the following phases: awareness (education and potential
impact of year 2000 issue), identification (identifying processes or systems
which are exposed to the year 2000 issue), assessment (identifying the potential
impact of year 2000 on the equipment, processes and systems identified during
the previous phase), testing and verification (testing to determine if an item
is compliant or the degree to which it is not), and implementation (carrying out
necessary remedial efforts to address year 2000 readiness, including validation
of upgrades, patches or other year 2000 fixes).
During 1998, the Company completed the installation of Oracle
application software, a comprehensive enterprise-wide business system. This
system affects nearly every aspect of the Company's operations, including:
financial accounting, purchasing and accounts payable, raw material inventory
control, production planning and scheduling, and invoicing and accounts
receivable. All Oracle application software utilized by the Company is year 2000
compliant. In conjunction with the installation of the Oracle software, the
Company installed new HP computer hardware to run the application software.
While the HP hardware is not yet fully year 2000 compliant, the Company believes
it has in its possession the necessary software to make the hardware's operating
systems year 2000
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<PAGE> 14
compliant and intends to implement the software by mid 1999. The Company
expects to test these hardware, operating systems and software applications by
mid 1999 to confirm year 2000 readiness. The Company has identified other
hardware, operating systems and software applications used in its process
control and other information systems and is in the process of obtaining year
2000 compliance information from the providers of such hardware, operating
systems and applications software. The Company expects to work with vendors to
test the year 2000 readiness of such hardware, operating systems and software
applications. The Company has no internally developed software applications.
The Company has substantially completed inventorying its non-information
technology systems and is assessing the year 2000 issues to determine
appropriate testing and remediation. The Company has completed its assessment of
its major non-information technology systems and is currently implementing
patches to make all such systems fully year 2000 compliant.
The Company has significant relationships with various third parties, and the
failure of any of these third parties to achieve year 2000 compliance could have
a material adverse impact on the Company. The Company has commenced efforts to
survey each major third party supplier to confirm their year 2000 readiness.
This review process will continue into the second quarter of 1999.
The Company is in the process of preparing contingency plans for
critical areas to address year 2000 failures if remedial efforts are not fully
successful. The Company's contingency plans are expected to target the Company's
most reasonably likely worst case scenarios. The Company's contingency plans
will be based in part on the results of third-party supplier surveys and thus
are not fully developed at this time. Completion of initial contingency plans is
targeted for the summer of 1999.
No assurance can be given that the Company will not be materially
adversely affected by year 2000 issues. The Company may experience material
unanticipated problems and costs caused by undetected errors or defects in its
information and non-information technology systems. In addition, the failure of
third-parties to timely address their year 2000 issues could have a material
adverse impact on the Company's business, operations, and financial condition.
The installation of the Oracle application software and related hardware
and operating systems was done to improve information processing capabilities
and efficiencies and was done irrespective of the year 2000 issue. The Company
upgrades its computer hardware and software components on a regular basis and
believes it will not incur any additional material expense to modify its systems
due to the year 2000 issue.
The foregoing discussion of the Company's year 2000 readiness includes
forward-looking statements, including estimates of the timeframes and costs for
addressing this issue and is based on management's current estimates which were
derived using numerous assumptions. There can be no assurance that these
estimates will be achieved, and actual events and results could differ
materially from those anticipated. Specific factors that might cause such
material differences include, but are not limited to, the availability of
personnel with required remediation skill, the ability of the Company to
identify and correct or replace all relevant computer code and the success of
third parties with whom the Company does business in addressing their year 2000
issues.
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<PAGE> 15
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.
13
<PAGE> 16
PART II - OTHER INFORMATION
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 March 31, 1999.
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)
Date: May 14, 1999 By: /s/ Michael J. Schifsky
---------------------------------------
It's: Senior Vice President, Chief
Financial Officer (Principal
financial and accounting
officer)
14
<PAGE> 17
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
----------- ----------------------
<S> <C> <C>
Exhibit 27 Financial Data Schedule
</TABLE>
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED BALANCE SHEETS AS OF MARCH 31, 1999 AND DECEMBER 31, 1998, AND THE
CONDENSED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
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