<PAGE> 1
U.S. Securities and Exchange Commission
WASHINGTON, D.C. 20549
-------------------
Form 10-Q
-------------------
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the quarterly period ended SEPTEMBER 30, 1996.
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
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Commission file number: 0-23342
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ELTRON INTERNATIONAL, INC.
(Exact name of business issuer as specified in its charter)
California 95-4302537
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
41 Moreland Road
Simi Valley, California 93065
(Address of principal executive offices)
(805) 579-1800
(Issuer's telephone number)
-------------------
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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
--- ---
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APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes No
--- ---
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APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 7,271,876 common shares as of October
31, 1996.
-------------------
Transitional Small Business Disclosure Format (Check one): Yes ; No X
--- ---
<PAGE> 2
ELTRON INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
December 31, September 30,
1995 1996
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash ....................................................................... $ 729,055 $ 1,619,458
Short term investments ..................................................... 15,552,076 7,869,645
Accounts receivable, net of allowance for doubtful accounts of $325,105 and
$367,468, respectively ..................................................... 9,397,603 13,752,766
Inventories ................................................................ 11,506,936 15,897,451
Prepaid expenses and other current assets .................................. 3,037,891 2,318,113
----------- -----------
Total current assets ...................................................... 40,223,561 41,457,433
PROPERTY AND EQUIPMENT, net .................................................... 3,769,436 6,804,846
COST IN EXCESS OF NET ASSETS ACQUIRED, net ..................................... 962,305 1,188,529
OTHER ASSETS ................................................................... 668,923 826,496
----------- -----------
$45,624,225 $50,277,304
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Borrowings under line of credit ............................................ $ 768,000 $ --
Accounts payable ........................................................... 4,091,008 5,468,442
Accounts payable to shareholder ............................................ 1,816,909 11,620
Accrued liabilities ........................................................ 2,011,816 3,360,514
----------- -----------
Total current liabilities .................................................. 8,687,733 8,840,576
LONG TERM OBLIGATION ........................................................... 751,313 811,313
COMMITMENTS .................................................................... -- --
SHAREHOLDERS' EQUITY:
Preferred stock, 10,000,000 shares authorized of which none are outstanding -- --
Common stock, no par value:
Authorized - 30,000,000 shares
Issued and outstanding -- 6,809,966 and 7,260,884 shares, respectively ... 23,990,634 23,684,473
Cumulative translation adjustment .......................................... (13,733) (24,524)
Retained earnings .......................................................... 12,208,278 16,965,466
----------- -----------
Total shareholders' equity ................................................ 36,185,179 40,625,415
----------- -----------
$45,624,225 $50,277,304
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE> 3
ELTRON INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1996 1995 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
SALES ................................. $14,291,529 $24,013,347 $38,246,968 $65,762,040
COST OF SALES ......................... 7,763,162 14,054,850 20,832,090 37,095,291
----------- ----------- ----------- -----------
Gross profit ...................... 6,528,367 9,958,497 17,414,878 28,666,749
OPERATING EXPENSES:
Selling, general and administrative 3,064,826 4,343,390 7,980,276 12,240,885
Research and product development .. 827,980 1,391,068 2,051,683 3,907,622
Write off of acquisition expenses . -- -- -- 3,198,555
INCOME FROM OPERATIONS ................ 2,635,561 4,224,039 7,382,919 9,319,687
OTHER (INCOME) EXPENSE:
Interest, net ..................... (156,661) (62,307) (210,894) (131,897)
Other, net ........................ 57,047 5,396 90,507 13,040
----------- ----------- ----------- -----------
INCOME BEFORE PROVISION
FOR INCOME TAXES .................. 2,735,175 4,280,950 7,503,306 9,438,544
PROVISION FOR INCOME TAXES ............ 976,003 1,605,356 2,619,049 4,681,355
----------- ----------- ----------- -----------
NET INCOME ............................ $ 1,759,172 $ 2,675,594 $ 4,884,257 $ 4,757,189
=========== =========== =========== ===========
NET INCOME PER COMMON SHARE ........... $ 0.23 $ 0.34 $ 0.68 $ 0.61
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING ............. 7,715,117 7,891,702 7,201,444 7,826,934
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE> 4
ELTRON INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTH PERIODS ENDED
SEPTEMBER 30, 1995 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ........................................................... $ 4,884,257 $ 4,757,189
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization ............................................ 377,869 1,054,620
Write off of purchased in-process technology ............................. -- 2,500,000
Changes in assets and liabilities; Net of effect from acquisitions:
Accounts receivable, net .............................................. (2,876,822) (3,623,106)
Inventories ........................................................... (2,271,757) (3,648,564)
Prepaids and other assets ............................................. (633,918) 708,433
Accounts payable ...................................................... 493,123 299,634
Accounts payable to shareholder ....................................... (611,372) (1,805,290)
Accrued liabilities ................................................... (846,211) 922,814
------------ -----------
Net cash provided by (used in) operating activities ......................... (1,484,831) 1,165,730
CASH FROM INVESTING ACTIVITIES:
Purchases of property and equipment ......................................... (1,232,856) (3,700,396)
Cash paid in connection with acquisition of Privilege ....................... -- (3,196,373)
Sale of short term investments, net ......................................... (13,378,192) 7,682,431
------------ -----------
Net cash provided by (used in) investing activities ......................... (14,611,048) 785,662
CASH FROM FINANCING ACTIVITIES:
Net borrowings (repayments) of long term debt ............................... (6,000) (20,037)
Net borrowings (repayments) under line of credit ............................ (973,000) (724,000)
Common stock purchased in connection with merger of RJS ..................... -- (775,581)
Proceeds from sale of stock ................................................. 16,377,339 469,420
------------ -----------
Net cash provided by (used in) financing activities ......................... 15,398,339 (1,050,198)
EFFECT OF EXCHANGE RATE ON CASH ................................................. 29,688 (10,791)
------------ -----------
NET INCREASE (DECREASE) IN CASH ................................................. (667,852) 890,403
CASH BALANCE, beginning of period ............................................... 1,740,905 729,055
------------ -----------
CASH BALANCE, end of period ..................................................... $ 1,073,053 $ 1,619,458
============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE> 5
ELTRON INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
1. BASIS OF PRESENTATION
The financial statements of Eltron International, Inc. (the "Company")
included herein are unaudited; however, they contain all normal recurring
accruals which, in the opinion of management, are necessary to present fairly
the financial position of the Company at September 30, 1996 and the results of
operations and cash flows for the three and nine month periods ended September
30, 1995 and September 30, 1996. It should be understood that accounting
measurements at interim dates inherently involve greater reliance on estimates
than at year end. The results of operations for the three and nine month period
ended September 30, 1996 are not necessarily indicative of the results to be
expected for future quarters or the full year.
The accompanying financial statements do not include footnotes and certain
financial presentations normally required under generally accepted accounting
principles and, therefore, should be read in conjunction with the Company's
financial statements for the year ended December 31, 1995 as filed in the
Company's annual report on Form 10K as amended by Form 10-K-A.
2. BUSINESS COMBINATIONS
Acquisition of Privilege S.A.
At January 1, 1996, the Company purchased all of the outstanding capital
stock of Privilege S.A. ("Privilege"), a French company primarily engaged in the
design, manufacture and distribution of custom color card printers. This
transaction has been accounted for as a purchase for financial reporting
purposes. Acquired in-process technology valued at $2,500,000 was expensed
immediately. The purchase price paid by Eltron was approximately $3.2 million in
cash and the assumption of approximately $1.3 million in trade liabilities and
debt. The assets acquired by Eltron consisted of trade receivables, inventories,
equipment and technology.
The estimated fair values of the assets of Privilege acquired are
summarized as follows:
<TABLE>
<S> <C>
Trade receivables..................................... $ 964,000
Inventories........................................... 370,000
Equipment and other tangible assets................... 328,000
In process research and development projects.......... 2,500,000
Cost in excess of net assets acquired................. 397,000
==========
Total............................... $4,559,000
==========
</TABLE>
The results of operations relating to Privilege are included with those of
the Company from January 1, 1996. Net revenues generated from Privilege
operations totaled approximately $6,791,000 for the period from January 1, 1996
to September 30, 1996. The cost in excess of the net assets of Privilege
acquired is being amortized on a straight-line basis over a five year period.
Merger with RJS, Incorporated
Effective March 1, 1996, the Company acquired RJS, Incorporated ("RJS") in
a business combination accounted for as a pooling of interests. RJS is a
manufacturer of bar code label printers, bar code verifiers and verified
printing systems located in Monrovia, California. In accordance with the terms
of the merger, Eltron paid $776,000 in cash (in lieu of 22,861 shares of Eltron
Common Stock) and issued 322,991 shares of its Common Stock to the shareholders
of RJS as consideration for all of the outstanding capital stock of RJS.
The accompanying financial statements are based on the assumption that the
two companies were combined at the beginning of the year, and all financial
statements for prior periods presented have been restated to give effect to the
combination. Earning per share data reflects the shares issued in the merger for
all periods presented. Prior to February 1996, Eltron and RJS, in the normal
course of business, entered into certain transactions for the purchase and sale
of merchandise. These intercompany transactions have been eliminated in the
accompanying financial statements.
In connection with the merger, RJS changed its fiscal year end from
September 30 to December 31, which conforms to Eltron's year end. During the
three months ended December 31, 1995, RJS reported sales of $3.0 million and a
net loss of $19,000. In order to reflect this change in fiscal year-end,
retained earnings has been decreased by RJS' net loss for the three months ended
December 31, 1995. The consolidated financial statements for all periods prior
to 1996 have not been restated to reflect RJS' change in fiscal year and include
RJS' results of operations on a September 30 fiscal year end basis and Eltron on
a December 31 calendar year basis.
<PAGE> 6
A reconciliation of net sales and net income previously reported to net sales
and net income as adjusted to reflect the merger is as follows:
<TABLE>
<CAPTION>
Period Ended September 30, 1995 Year Ended December 31,
------------------------------- -----------------------
Three Months Nine Months 1995 1994
------------ ----------- ---- ----
<S> <C> <C> <C> <C>
Sales:
As previously reported:
By Eltron $11,165,529 $28,989,968 $42,361,064 $17,530,490
By RJS 3,126,000 9,257,000 12,610,000 11,746,000
----------- ----------- ----------- -----------
As restated $14,291,529 $38,246,968 $54,971,064 $29,276,490
=========== =========== =========== ===========
Net Income:
As previously reported:
By Eltron $ 1,686,172 $ 4,535,257 $ 6,369,701 $ 2,913,204
By RJS 73,000 349,000 750,000 710,000
----------- ----------- ----------- ------------
As restated $ 1,759,172 $ 4,884,257 $ 7,119,701 $ 3,623,204
=========== =========== =========== ============
</TABLE>
3. INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out) or
market. Inventories consist of the following:
<TABLE>
<CAPTION>
December 31, September 30,
1995 1996
----------- -----------
<S> <C> <C>
Subassemblies and raw materials........ $ 8,569,233 $ 9,069,078
Work in process........................ 386,519 2,794,729
Finished goods......................... 2,551,184 4,033,644
----------- -----------
$11,506,936 $15,897,451
=========== ===========
</TABLE>
4. RECLASSIFICATIONS
Certain amounts in the prior period financial statements have been
reclassified to conform to the current period's presentation.
5. SUBSEQUENT EVENTS
On October 15, 1996 the Company entered into a non-binding letter of
intent to merge with Zebra Technologies Corporation ("Zebra"). As contemplated,
the transaction would be structured as a tax-free merger with .84 shares of the
Company's common stock issued in exchange for each outstanding share of Zebra
common stock. The proposed merger is subject to a number of conditions,
including satisfactory completion of due diligence, negotiation of a mutually
satisfactory definitive merger agreement, receipt of fairness opinions from
investment bankers, approval of the transaction by shareholders of both
companies, customary closing conditions, and certain regulatory approvals,
including the applicable Hart-Scott-Rodino review.
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
Eltron designs, manufactures and markets bar code label printers, software,
and related accessories designed for use in Auto ID systems. The Company also
designs, manufactures and markets thermal printers which allow users to create
photo-realistic full color credit cards and drivers licenses on demand. Eltron
manufactures and distributes a full range of supplies designed for use with its
printers. The Company believes that its success to date has resulted from
Eltron's ability to offer, at a lower cost, high-quality printers and related
products with features comparable to or exceeding those of available competing
products.
The Company currently offers a full range of direct thermal and thermal
transfer bar code printers, color card printers and custom print engines for
applications such as airline ticketing. These printers, together with the
Company's software, printer supplies and accessories, are sold by the Company
through multiple distribution channels that include over 400 value added
resellers, systems integrators, original equipment manufacturers and
distributors located through out the world. Industries for which the Company
believes its printers are particularly well-suited include shipping and package
delivery, retail distribution and point-of-sale, health care, manufacturing,
financial services and governmental licensing. The Company currently focuses its
sales efforts in these markets, although it continues to explore the potential
for new markets.
Eltron is currently seeking to expand its line of quality printers and
related accessories to meet the needs of a broad range of end users and to be
positioned as price and value leaders. Management is engaged in efforts to
accomplish this expansion through both internal development efforts and
strategic acquisitions and alliances. In the first quarter of 1996, the Company
enhanced its market position through the acquisition of Privilege S.A.
("Privilege") and RJS, Incorporated ("RJS"). Privilege, located in Varades,
France, is a manufacturer of custom color card printers with 1995 sales in
excess of $3 million. RJS, located in Monrovia, California, is a manufacturer of
high speed thermal bar code printers, bar code verifiers and verified printing
systems with 1995 sales in excess of $12 million.
The acquisition of RJS has been accounted for as a pooling of interests for
financial reporting purposes. The accompanying financial statements are based on
the assumption that the two companies were combined at the beginning of the
year, and all financial statements for prior periods presented have been
restated to give effect to the combination. In connection with the acquisition,
RJS changed its fiscal year end from September 30 to December 31, which conforms
to Eltron's year end. The consolidated financial statements for all periods
prior to 1996 have not been restated to reflect RJS' change in fiscal year, and
include RJS' results of operations on a September 30 fiscal year end basis and
Eltron on a December 31 calendar year basis.
RESULTS OF OPERATIONS
The following table presents certain information derived from the Company's
Statements of Operations for the three and nine month periods ended September
30, 1995 and 1996, expressed as a percentage of sales.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
1995 1996 1995 1996
----- ----- ----- -----
<S> <C> <C> <C> <C>
SALES .................................. 100.0 % 100.0 % 100.0 % 100.0 %
COST OF SALES .......................... 54.3 58.5 54.5 56.4
----- ----- ----- -----
Gross profit ....................... 45.7 41.5 45.5 43.6
OPERATING EXPENSES:
Selling, general and administrative 21.4 18.1 20.9 18.6
Research and product development ... 5.8 5.8 5.4 5.9
Write off of acquisition expenses .. 0.0 0.0 0.0 4.9
----- ----- ----- -----
INCOME FROM OPERATIONS ................. 18.5 17.6 19.2 14.2
OTHER (INCOME) EXPENSE:
Interest, net ...................... (.7) (.2) (.3) (.2)
----- ----- ----- -----
INCOME BEFORE PROVISION FOR INCOME TAXES 19.2 17.8 19.5 14.4
PROVISION FOR INCOME TAXES ............. 6.8 6.7 6.8 7.1
----- ----- ----- -----
NET INCOME ............................. 12.4 % 11.1 % 12.7 % 7.3 %
===== ===== ===== =====
</TABLE>
<PAGE> 8
COMPARISON OF THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996
SALES
Sales for the three months ended September 30, 1996 totaled $24.0 million,
an increase of $9.7 million or 68% over sales for the same period in 1995 which
totaled $14.3 million. Sales for the nine months ended September 30, 1996
totaled $65.8 million, an increase of $27.5 million or 72% over sales for the
same period in 1995 which totaled $38.3 million. This increase in sales can be
attributed to wider market acceptance of the Company's bar code printers,
initial market acceptance of the Company's P-300 color card printers, higher
than anticipated demand from the Company's largest customer, United Parcel
Service ("UPS") as well as increased supply sales. Sales were also bolstered by
the inclusion of operating results for Donner and Privilege, which were acquired
in September 1995 and January 1996, respectively.
Throughout 1996 sales of printers have been enhanced by increased sales to
UPS, which contributed approximately $6.1 million and $8.6 million to sales for
the three month periods ended September 30, 1995 and 1996, respectively. Sales
to UPS contributed approximately $13.4 million and $23.3 million to sales for
the nine month periods ended September 30, 1995 and 1996, respectively. Although
the Company had outstanding orders from UPS in excess of $1.4 million as of
September 30, 1996, there is no obligation on the part of UPS to place any
further orders with Eltron. The Company has derived a significant portion of its
revenues from UPS and may continue to be dependent on UPS, or other significant
customers, in the future, the loss of any one of which could materially and
adversely affect the Company's financial position, results of operations and
cash flows. No customer other than UPS contributed greater than 10% of the
Company's net sales in the first quarter of 1995 or 1996.
GROSS PROFIT
Gross profit for the three months ended September 30, 1996 totaled $10.0
million, an increase of $3.5 million or 54% over gross profit for the same
period in 1995. As a percentage of revenues, gross profit decreased 4% to 42%
for the third quarter of 1996 from 46% in the third quarter of 1995.
Gross profit for the nine months ended September 30, 1996 totaled $28.7
million, an increase of $11.3 million or 65% over gross profit for the same
period in 1995. As a percentage of revenues, gross profit decreased 2% to 44%
for the third quarter of 1996 from 46% in the third quarter of 1995.
Sales to high volume customers or OEMs are typically transacted at a price
which yields a lower than average gross margin, although the incremental selling
costs associated with these transactions are generally less than those
associated with a non-OEM sale. Sales of supplies are typically made at lower
than average gross margins, as a result of general market conditions and the
commodity nature of these products. During the period from September 1995 to
February 1996 the Company completed the acquisition of two companies: Donner and
Privilege. These companies had aggregate 1995 sales of approximately $5 million.
These companies have historically exhibited gross margins which are lower than
Eltron's. Although management is currently seeking to increase the gross margins
of these subsidiaries, there can be no assurance that gross margins similar to
Eltron's will be achieved. As a result, management believes that it is not
reasonable to assume that the 42% gross margin exhibited in the third quarter of
1996 will necessarily be maintained in the future.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses as a percentage of sales were
18% and 21% for the three months ended September 30, 1996 and 1995,
respectively. On an absolute dollar basis, selling, general and administrative
expenses increased $1.3 million or 41.7%. $.5 million of this increase relates
to Donner and Privilege, whose operating results were included in the third
quarter of 1996 and are not included in results for the third quarter of 1995.
Selling, general and administrative expenses as a percentage of sales were
19% and 21% for the nine months ended September 30, 1996 and 1995, respectively.
On an absolute dollar basis, selling, general and administrative expenses
increased $4.2 million or 53%. $1.9 million of this increase relates to Donner
and Privilege, whose operating results were included in the first nine months of
1996 and are not included in results for the first nine months of 1995.
The Company currently anticipates that selling, general and administrative
expense will increase in future quarters but may decrease as a percentage of
sales. The actual amount spent will depend on a variety of factors, including
the Company's level of operations, and the number of new markets the Company
chooses to enter.
<PAGE> 9
RESEARCH AND DEVELOPMENT EXPENSES
Research and development expenses as a percentage of sales remained
consistent at 6% for the three months ended September 30, 1996 and 1995,
respectively. On an absolute dollar basis, research and development expenses
increased $563,000 or 68%. This increase related primarily to increased efforts
to develop new products.
Research and development expenses as a percentage of sales were 6% and 5%
for the nine months ended September 30, 1996 and 1995, respectively. On an
absolute dollar basis, research and development expenses increased $1.9 million
or 90%. This increase related primarily to increased efforts to develop new
products.
The Company currently anticipates that research and product development
expense will increase in future quarters and may increase as a percentage of
sales. The actual amount spent will depend on a variety of factors, including
the Company's level of operations, and the number of product development
projects that it embarks upon.
WRITE OFF OF ACQUIRED IN PROCESS TECHNOLOGY AND OTHER COSTS ASSOCIATED WITH
ACQUISITIONS
In the first quarter of 1996, in-process technology valued at $2.5 million
was purchased in connection with the acquisition of Privilege and expensed
immediately. In addition, costs related to the acquisition of Privilege and RJS
totaling $0.7 million were incurred and expensed during the first quarter of
1996. These costs are not deductible for income tax purposes and are included in
operating results for the six month period ending June 30, 1996.
PROVISION FOR INCOME TAXES
The provision for income taxes for the three months ended September 30,
1996 was $1,605,000 or 37% of pretax income, is based on the Company's expected
tax rate for the full year and reflects the utilization of certain tax credits
and current benefit of the recognition of deferred tax assets under SFAS 109.
The Company's provision for income taxes for the three months ended September
30, 1995 was $976,000 or 36% of pretax income.
The provision for income taxes for the nine months ended September 30, 1996
was $4.7 million, or approximately 50% of pretax income, which reflects the
utilization of certain tax credits and current benefit of deferred tax assets
under SFAS 109 which have been substantially offset by purchased in-process
technology and other acquisition related costs totaling $3.2 million which were
expensed in the first quarter of 1996. The tax effect of these non-deductible
expenses were fully reflected in the first quarter of 1996 and are included in
results of operations for the nine month period ended September 30 ,1996. The
Company's provision for income taxes for the first nine months of 1995 was $2.6
million or 35% of pretax income.
LIQUIDITY AND CAPITAL RESOURCES
Historically, Eltron's primary source of liquidity has been cash flow from
operations, supplemented by borrowings under its revolving bank line of credit
and cash provided by public offerings of its common stock which generated $6.1
million and $16.7 million in 1994 and 1995, respectively.
During the nine months ended September 30, 1996, operating activities
provided cash totaling $1.2 million as compared to using cash of $1.5 million
during the same period in 1995. Significant changes in the first nine months of
1996 included cash used resulting from increases in accounts receivable and
inventory of $3.6 million and $3.6 million, respectively.
During the nine months ended September 30, 1996, investing activities
provided cash totaling $786,000. This was primarily due to the sale of $7.7
million in short term investments. In addition, the Company purchased property
and equipment totaling $3.7 million during the first nine months of 1996 as
compared to $1.2 million of equipment purchased during the first nine months of
1995.
During the nine months ended September 30, 1996, financing activities used
cash totaling $1.1 million as compared to $15.4 million provided during the same
period in 1995. In 1995, cash from financing activities was provided by the sale
of 850,000 shares of the Company's common stock in a follow-on offering which
generated net proceeds of $16.7 million. On May 5, 1996 the Company's line of
credit expired. The Company is currently in negotiation to procure a new bank
line of credit.
The Company believes that its current cash balances and any cash provided
by future operations will be sufficient to meet its cash requirements for the
next twelve months.
The Company did not have any material capital commitments as of September
30, 1996.
<PAGE> 10
Item 4. Submission of Matters to a Vote of Security Holders
On September 6, 1996 the Company held its Annual Meeting of Stockholders
to elect members of the Board of Directors and to adopt and approve the
Company's 1996 Stock Option Plan pursuant to which options for up to 500,000
shares of the Company's Common Stock may be granted.
The following directors were elected and the votes cast were as follows:
<TABLE>
<CAPTION>
Name For Withheld
- ---- --------- --------
<S> <C> <C>
Donald K. Skinner 6,587,496 20,350
George K. Bragg 6,596,646 29,505
Hugh K. Gagnier 6,587,436 20,410
Robert G. Bartizal 6,578,341 29,505
</TABLE>
The votes cast for the approval of the 1996 Stock Option Plan were as
follows:
<TABLE>
<CAPTION>
For Against Abstain Broker Non-Votes
- --- --------- ------- ----------------
<S> <C> <C> <C>
3,537,542 1,189,189 274,376 1,606,739
</TABLE>
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit
- ------- ----------------------
<S> <C>
2.1 Agreement of Merger and Plan of Reorganization dated February 29, 1996 by and among Eltron International, Inc., Eltron
Acquisition Corp., RJS, Incorporated and the shareholders of RJS Incorporated (without exhibits and schedules).(1)
2.2 Stock Purchase Agreement amount Eltron International, Inc. and Donner Media, Incorporated and all of the shareholders of
Donner Media, Incorporated dated September 29, 1995 (without exhibits and schedules). (6)
2.3 Amendment to Merger and Plan or Reorganization dated March 1, 1996 by and among Eltron International, Inc.,
Eltron Acquisition Corp., RJS Incorporated, and the shareholders of RJS.(7)
3.1 Amended and Restated Articles of Incorporation of the Company.(2)
3.2 Bylaws of the Company as amended to date.(2)
3.3 Amendment to Amended and Restated Articles of Incorporation filed January 18, 1994.(4)
3.4 Amendment to Amended and Restated Articles of Incorporation to be filed May 1, 1995 relating to a 2-for-1 stock split.(3)
4.1 Form of Common Stock certificate.(5)
10.1 Agreement and Plan Merger dated as of April 10, 1995, among the Company, Eltron Incorporated by Donald K. Skinner.(3)
10.2 Employment Agreement dated as of January 1, 1995 between Donald K. Skinner and the Company.(3)
11.1 Computation of Earnings Per Share. (Filed herewith)
27.1 Financial Data Schedule. (Filed herewith)
</TABLE>
<PAGE> 11
- ---------------
(1) Previously filed as an exhibit to the Company's Form 8-K filed March 12,
1996. (Date of event: March 1, 1996)
(2) Previously filed with the Securities and Exchange Commission on November
26, 1993 as exhibits to the Company's Registration Statement on Form
SB-2 (33-72200-LA).
(3) Previously filed with the Securities and Exchange Commission as exhibits
to the Company's Registration Statement on Form SB-2 (33-91480).
(4) Previously filed with the Securities and Exchange Commission on January
21, 1994 as exhibits to Amendment No. 1 to the Company's Registration
Statement on Form SB-2 (33-72200-LA).
(5) Previously filed with the Securities and Exchange Commission on February
8, 1994 as exhibits to Amendment No. 2 to the Company's Registration
Statement on Form SB-2 (33-72200-LA).
(6) Previously filed with the Securities and Exchange Commission on March
20, 1996 as exhibits to the Company's Registration Statement on Form S-3
(333-2530).
(7) Previously filed with the Securities and Exchange Commission as an
exhibit to Form 8-K-A filed May 14, 1996 (Date of Event: March 1, 1996).
(b) Reports on Form 8-K
1. Form 8-K filed February 6, 1996 (Date of Event: January 20, 1996)
relating to the acquisition of Privilege S.A.
2. Form 8-K filed March 12, 1996 (Date of Event: March 1, 1996) relating to
the acquisition of RJS, Incorporated,.
3. Form 8-K filed April 19, 1996 (Date of Event: April 15, 1996) relating
to the post merger combined operations for the Company and RJS,
Incorporated.
4. Form 8-K-A filed May 14, 1996 (Date of Event: March 1, 1996) relating to
the amendment of the merger agreement in the acquisition of RJS,
Incorporated.
5. Form 8-K filed June 17, 1996 (Date of Event: June 13, 1996) relating to
the restated pooled financial statements.
6. Form 8-K filed October 18, 1996 (Date of Event: October 16, 1996)
relating to the Company's press release regarding the execution of the
letter of intent as to the proposed merger of the Company and Zebra
Technologies Corporation.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereto duly
authorized.
ELTRON INTERNATIONAL, INC.
Date: November 14, 1996 By:/s/ Daniel C. Toomey, Jr.
---------------------------
Daniel C. Toomey, Jr.
Vice President Finance
and Chief Financial Officer
<PAGE> 1
EXHIBIT 11.1
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
1995 1996 1995 1996
------------------------ ------------------------
<S> <C> <C> <C> <C>
Weighted average shares outstanding for the period 7,388,734 7,243,547 6,890,340 7,207,278
Common equivalent shares 326,383 648,155 311,104 619,656
---------- ----------- ---------- ----------
Shares used in per share calculation 7,715,117 7,891,702 7,201,444 7,826,934
========== ========== ========== ==========
Net income $1,759,172 $2,675,594 $4,884,257 $4,757,189
---------- ---------- ---------- ----------
Net income per Common Share $ 0.23 $ 0.34 $ 0.68 $ 0.61
========== ========== ========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<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> 1,620
<SECURITIES> 7,870
<RECEIVABLES> 14,083
<ALLOWANCES> 330
<INVENTORY> 15,897
<CURRENT-ASSETS> 41,457
<PP&E> 6,805
<DEPRECIATION> 1,055
<TOTAL-ASSETS> 50,277
<CURRENT-LIABILITIES> 8,841
<BONDS> 0
0
0
<COMMON> 23,685
<OTHER-SE> 16,940
<TOTAL-LIABILITY-AND-EQUITY> 50,277
<SALES> 65,762
<TOTAL-REVENUES> 65,762
<CGS> 37,095
<TOTAL-COSTS> 56,443
<OTHER-EXPENSES> 13
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 9,438
<INCOME-TAX> 4,681
<INCOME-CONTINUING> 4,757
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,757
<EPS-PRIMARY> 0
<EPS-DILUTED> .61
</TABLE>
