<PAGE> 1.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File number 0-20078
THE PEAK TECHNOLOGIES GROUP, INC.
- ----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 22-3028807
- -------------------------------- -------------------------------
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
600 Madison Avenue, 26th Floor, New York, New York 10022
- --------------------------------------------------- ---------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 212-832-2833
-----------------
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 preceeding 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
----- -----
The number of shares outstanding of the issuer's Common Stock, $.01 par
value, was 9,261,575 as of July 31, 1996.
<PAGE> 2.
THE PEAK TECHNOLOGIES GROUP, INC.
INDEX TO FORM 10-Q
PART I. FINANCIAL INFORMATION PAGE
- -------------------------------- ----
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at
June 30, 1996 and December 31, 1995 3
Condensed Consolidated Statements of Operations for the
Three and Six Months ended June 30, 1996 and 1995 4
Condensed Consolidated Statements of Cash Flows for
the Six Months ended June 30, 1996 and 1995 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operation 7
PART II. OTHER INFORMATION
- --------------------------------
Item 4. Submission to Matters to a Vote of Security Holders 9
Item 6. Exhibits and Reports on Form 8-K 9
SIGNATURES 10
<PAGE> 3.
THE PEAK TECHNOLOGIES GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
----------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
- ------------------------------------
Current assets:
Cash $ 1,142 $ 311
Accounts receivable, less
allowances for doubtful
accounts and sales returns of
$1,442 in 1996 and $1,014 in 1995 49,827 38,949
Inventories 29,302 23,583
Deferred tax asset 2,448 2,791
Prepaid expenses and other
current assets 4,045 1,892
----------- ------------
Total current assets 86,764 67,526
Furniture, equipment and
leasehold improvements 10,938 8,205
Less accumulated depreciation 3,994 2,942
----------- ------------
6,944 5,263
Customer list, less accumulated
amortization of $1,637 in 1996
and $1,533 in 1995 1,287 590
Non-competition agreements, less
accumulated amortization of
$579 in 1996 and $397 in 1995 2,121 517
Cost in excess of fair value of
net assets acquired, less
accumulated amortization of
$3,567 in 1996 and $3,112 in 1995 45,939 28,817
Deferred tax asset 1,792 535
Other assets 1,125 529
----------- ------------
$145,972 $103,777
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable $ 27,221 $ 17,057
Other accrued liabilities 8,343 6,984
Income taxes payable 1,029 934
Deferred income - maint. contracts 10,004 8,159
----------- ------------
Total current liabilities 46,597 33,134
Long-term debt 19,100 2,476
Other liabilities 3,339 1,534
Commitments and contingencies - -
Stockholders' equity
Preferred stock, $.01 par value;
authorized 2,000,000 shares; none
issued and outstanding - -
Common stock, $.01 par value;
authorized 15,000,000 shares; issued
and outstanding shares of 9,261,575
in 1996 and 8,966,288 in 1995 93 90
Capital in excess of par 65,765 59,623
Retained earnings 11,078 6,920
----------- ------------
Total stockholders' equity 76,936 66,633
----------- ------------
$145,972 $103,777
=========== ============
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE> 4.
THE PEAK TECHNOLOGIES GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
For the three months For the six months
ended June 30, ended June 30,
-------------------------- -----------------------
1996 1995 1996 1995
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
Sales:
Equipment and Systems $ 50,699 $ 37,984 $ 91,557 $ 74,070
Maintenance 8,872 8,087 17,246 15,405
------------ ------------ ----------- -----------
59,571 46,071 108,803 89,475
Cost of Sales:
Equipment and Systems 33,763 26,476 61,133 52,317
Maintenance 4,489 4,080 8,798 7,733
------------ ------------ ----------- -----------
38,252 30,556 69,931 60,050
Gross Profits 21,319 15,515 38,872 29,425
Selling, general, engineering
and administrative expenses 16,266 11,604 30,367 22,521
Amortization of intangibles 444 228 744 479
Merger and integration charges - - - 470
------------ ------------ ----------- -----------
Income from operations 4,609 3,683 7,761 5,955
Other expenses:
Interest expense, net 316 331 426 818
Amortization of debt
issuance costs 12 24 25 50
------------ ------------ ----------- -----------
328 355 451 868
------------ ------------ ----------- -----------
Income before income taxes 4,281 3,328 7,310 5,087
Provision for income taxes 1,758 1,261 2,986 2,069
------------ ------------ ----------- -----------
Net income $ 2,523 $ 2,067 $ 4,324 $ 3,018
============ ============ =========== ===========
Per share data:
Net income $ 0.27 $ 0.25 $ 0.46 $ 0.38
============ ============ =========== ===========
Average common
shares outstanding 9,450 8,132 9,334 7,874
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE> 5.
THE PEAK TECHNOLOGIES GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the six months ended June 30,
--------------------------------
1996 1995
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $4,324 $3,018
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities:
Depreciation and amortization 1,560 929
Accounts receivable (5,892) (5,757)
Inventories (2,762) (827)
Income taxes (1,948) 413
Accounts payable and accrued liabilities 2,696 (2,666)
Prepaid expenses and other current assets (859) (653)
Deferred income - maintenance contracts 545 160
Other assets and liabilities 49 (1,712)
-------- --------
Net cash used in operating activities (2,287) (7,095)
Cash flows from investing activities:
Capital expenditures (1,581) (1,317)
Purchase of business (12,620) (366)
-------- --------
Net cash used in investing activities (14,201) (1,683)
Cash flows from financiang activities:
Borrowing under revolving loans, net 16,216 (10,562)
Repayments of long term debt - (4,244)
Capital contribution and issuance of stock 1,103 26,167
-------- --------
Net cash provided by financing activities 17,319 11,361
Net increase in cash 831 2,583
Cash at beginning of the period 311 2,132
-------- --------
Cash at end of the period $1,142 $4,715
======== ========
Supplemental disclosure of cash flow information:
Cash paid during period for:
Income taxes $2,922 $1,966
======== ========
Interest $ 276 $ 682
======== ========
</TABLE>
See notes to consolidated financial statements.
<PAGE> 6.
THE PEAK TECHNOLOGIES GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of management, the accompanying unaudited condensed
consolidated financial statements include all adjustments (which consist of
only normal, recurring adjustments) necessary for a fair presentation of the
financial position and results of operations as of and for the periods
presented.
Accuscan and Dytec were both merged with the Company during 1995 in
transactions that were accounted for as pooling-of-interests. As a result of
the December 6, 1995 merger with Dytec, Peak's financial position and results
of operations, for all prior periods, have been restated to give effect to the
merger. As a result of the September 30, 1995 merger with Accuscan, Accuscan's
results of operations since January 1, 1995 have been included with the
Company's, however, due to immateriality prior period financial statements
have not been restated.
2. Primary earnings per share are computed by using the weighted average
number of common stock and dilutive common share equivalents outstanding
in the application of the treasury stock method. Primary and fully-diluted
earnings per share are identical.
3. Inventories are stated primarily at the lower of cost (first-in, first-out)
or market and consist of the following:
<TABLE>
<CAPTION>
June 30, 1996 December 31, 1995
----------------- -----------------
<S> <C> <C>
(In thousands)
Equipment:
Components $ 6,502 $ 4,499
Finished goods 12,243 9,869
Maintenance Parts 10,557 9,215
----------------- -----------------
$29,302 $23,583
</TABLE>
4. On January 6, 1995, IPPC merged with the Company in a transaction
accounted for as a pooling-of-interests. In connection with the IPPC merger,
the Company incurred merger and integration charges in the first quarter of
1995 totaling approximately $470,000 ($326,000 after-taxes or $.04 per share).
Of these charges, approximately $250,000 are related to professional fees and
the remaining $220,000 are provisions for the costs of combining operations
of the previously separate companies.
<PAGE> 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following table sets forth certain income statement data expressed as a
percentage of net sales and the percentage change of such item compared
to the corresponding prior period. Accuscan and Dytec were both merged with
the Company during 1995 in transactions that were accounted for as
pooling-of-interests. As a result of the December 6, 1995 merger with Dytec,
Peak's financial position and results of operations, for all prior periods,
have been restated to give effect to the merger. As a result of the September
30, 1995 merger with Accuscan, Accuscan's results of operations since January
1, 1995 have been included with the Company's, however, due to immateriality
prior period financial statements have not been restated. Comparability of
the data is also impacted by acquisitions occurring throughout the periods
presented. Reference is made to the Company's 1995 10-K, for detailed
discussion and analysis of the Company's financial condition and results of
operations for the periods covered by that report.
<TABLE>
<CAPTION>
% Increase/
% of Net Sales (Decrease)
----------------------------- -------------
Three Months Six Months Three Six
Ended June 30, Ended June 30, Months Months
-------------- -------------- ---------------
1995 to 1995 to
1996 1995 1996 1995 1996 1996
------ ------ ------ ------ ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net Sales 100.0% 100.0% 100.0% 100.0% 29.3% 21.6%
Cost of Sales 64.2 66.3 64.3 67.1 25.2 16.5
------ ------ ------ ------
Gross Profit 35.8 33.7 35.7 32.9 37.4 32.1
Selling, General, Engineering
and Administrative Expenses 27.3 25.2 27.9 25.2 40.2 34.8
Amortization of Intangibles 0.7 0.5 0.7 0.5 94.7 55.3
Merger and Integration Charges - - - 0.5 N/M N/M
------ ------ ------ ------
Income from Operations 7.8 8.0 7.1 6.7 25.1 30.3
Interest and Other Expenses, net 0.6 0.8 0.4 1.0 (7.6) (48.0)
------ ------ ------ ------
Income before Income Taxes 7.2 7.2 6.7 5.7 28.6 43.7
====== ====== ====== ======
<FN>
N/M - Not Meaningful
</TABLE>
Results of Operations
June 30, 1996 Compared to June 30, 1995
Nets sales for the three months ended June 30, 1996 increased $13,500,000
or 29.3%, over the second quarter of 1995, to $59,571,000. Equipment and
system sales increased by 33.5% to $50,699,000 and maintenance service
sales increased 9.7% to $8,872,000 during the second quarter of 1996
compared to the second quarter of 1995. Net sales increased $19,328,000 or
21.6% to $108,803,000 for the first six months of 1996 compared to the same
period of 1995. Equipment and system sales increased by 23.6% to $91,557,000
and maintenance service sales increased 12.0% to $17,246,000 for the six
months ended June 30, 1996 compared to the same period of 1995. Sales and
results of operations of the 1995 acquisitions of ISF, Datapen, Mandata and
Numeric Arts, as well as, the 1996 acquisitions of Combitrading, Syntest,
Acquidata, Barcode Systeme, and SASS Computer are included with the Company's
from the date of acquisition. Exclusive of the sales impact from these
acquisitions, net sales increased 14.0% and 10.7% for the three and six
months ended June 30, 1996 over the comparable periods of 1995, due primarily
to increased unit sales.
<PAGE> 8.
The Company's gross profit margins for the three and six months ended
June 30, 1996, were 35.8% and 35.7% compared to 33.7% and 32.9%
for the same periods of 1995. For the three and six months ended June 30,
1996, equipment and system margins increased to 33.4% and 33.2% compared
to 30.3% and 29.4% for the same periods of 1995, resulting primarily from a
continuing focus on the sale of bar code systems which incorporate Peak's
proprietary software and professional services with related hardware, that
generally generate higher gross profit margins. Maintenance service margins
were 49.4% and 49.0% for the three and six months ended June 30, 1996
compared to 49.5% and 49.8% in the three and six month periods ended
June 30, 1995.
Selling, general, engineering, and administrative ("SGE&A") expense were
27.3% and 27.9% of net sales in the three and six months ended June 30, 1996
compared to 25.2% for both the second quarter and the first six months of
1995. The increases result primarily from additional technical personnel and
related costs required to provide an increasing level of value added bar code
solutions to the Company's customers, thereby increasing gross profit margins,
as well as, increased operating costs associated with the Company's European
expansion, where the Company experiences higher SGE&A costs relative to sales,
which are offset by higher gross profit margin rates.
In connection with the IPPC merger, the Company incurred merger and
integration charges in the first quarter of 1995 totaling approximately
$470,000 ($326,000 after-taxes or $.04 per share). Of these charges,
approximately $250,000 were related to professional fees and the remaining
$220,000 were provisions for the costs of combining operations of the
previously separate companies.
Interest and other expenses were reduced primarily as a result of proceeds
from the Company's May 1995 public offering.
Income before income taxes increased to $4,281,000 in the second quarter
of 1996 and $7,310,000 year to date 1996 compared to $3,328,000 and
$5,087,000 for the same periods of 1995. Exclusive of the merger and
integration charges, income before income taxes increased 31.6% for the
six months ended June 30, 1996 over the first half of 1995.
Liquidity and Capital Resources
The Company's current ratio was 1.9 to 1 at June 30, 1996 versus 2.0
to 1 at December 31, 1995. As of June 30, 1996 working capital was
$40,167,000. As of March 31, 1996 the Company's long-term
revolving loan facility with a bank had an outstanding balance of
$19,100,000 with an available borrowing of approximately $5,900,000.
Amounts available under the Company's $25,000,000 loan facilities
and funds generated from operations have been the Company's primary
source of liquidity, which the Company believes will be sufficient to
fund present cash needs.
The Company issued a total of 1,382,819 shares of Peak common stock
through a public stock offering in May 1995. As a result of the offering,
the Company received net proceeds of approximately $25,500,000 which
were used to pay off all then existing debt with the remaining net proceeds
available for general corporate purposes.
During the first quarter of 1995, the Company issued 144,306 shares of
Peak common stock to retire $2,000,000 of subordinated debt, which
arose in connection with the acquisition of Peak Technologies, Inc. in
January 1990.
<PAGE> 9.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Peak Technologies Group, Inc. held its Annual Meetings of
Stockholders' on June 3, 1996. At which time, the following items were
voted on:
1. Management's nominees were elected as directors. The number of
shares voted for each nominee were:
For Withheld
----------- -----------
Nicholas R.H. Toms 6,934,666 55,535
John R. Coutts 6,934,366 55,835
Edward A. Stevens 6,914,666 75,535
Gregory N. Thomas 6,934,666 55,535
Herbert W. Marache 6,934,666 55,535
2. A proposal for the appointment of the accounting firm
Ernst & Young as independent public accountants for Peak for
the fiscal year ending December 31, 1996. In a vote to approve
the proposal, the following number of shares of Common Stock
were voted.
For Against Abstain
------------ ----------- ------------
6,981,828 537 7,836
3. A proposal to amend the Peak Non-Qualified Stock Option
Plan by increasing the number of shares available by 500,000.
In a vote to approve the proposal, the following number of shares
of Common Stock were voted.
For Against Abstain Non-vote
- -------------- ------------ ------------ ----------
4,880,060 288,833 322,293 1,499,015
Item 6. Exhibits and Reports on Form 8-K
(a) The exhibit filed as part of this report is as follows:
Exhibit 27 - June 30, 1996 Financial Data Schedule
<PAGE> 10.
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.
THE PEAK TECHNOLOGIES GROUP, INC.
- ----------------------------------
(Registrant)
DATED: August 13, 1996 By: /s/ Edward A. Stevens
-------------------------
EDWARD A. STEVENS
Executive Vice President,
Chief Financial Officer
<PAGE> 11.
EXHIBIT INDEX
-------------
EXHIBIT DESCRIPTION
- ------- -----------
27 June 30, 1996 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
JUNE 30, 1996 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,142
<SECURITIES> 0
<RECEIVABLES> 51,269
<ALLOWANCES> 1,442
<INVENTORY> 29,302
<CURRENT-ASSETS> 86,764
<PP&E> 10,938
<DEPRECIATION> 3,944
<TOTAL-ASSETS> 145,972
<CURRENT-LIABILITIES> 46,597
<BONDS> 19,100
0
0
<COMMON> 93
<OTHER-SE> 76,843
<TOTAL-LIABILITY-AND-EQUITY> 145,972
<SALES> 108,803
<TOTAL-REVENUES> 108,803
<CGS> 69,931
<TOTAL-COSTS> 69,931
<OTHER-EXPENSES> 31,136
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 426
<INCOME-PRETAX> 7,310
<INCOME-TAX> 2,986
<INCOME-CONTINUING> 4,324
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,324
<EPS-PRIMARY> 0.46
<EPS-DILUTED> 0.46
</TABLE>
