<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE
EXCHANGE ACT
For the transition period from _________ to _________
Commission file number 1-13886
CAM DESIGNS INC.
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(Exact name of small business issuer as specified in its charter)
Delaware 75-2257039
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
Birmingham Road, Allesley Coventry CV59QE
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(Address of principal executive offices)
(011) 44-203-407-700
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(Issuer's telephone number)
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(Former name, former address and former fiscal year, if changed
since last report)
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
----- -----
As of October 15, 1996, there were 2,175,000 shares of Class A Common Stock
issued and outstanding.
TOTAL PAGES IN THIS REPORT: 14 (including cover page & Exhibits)
<PAGE>
CAM DESIGNS, INC.
INDEX
Page No.
--------
PART 1 - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Index) 1
Consolidated Balance Sheet as of
August 31, 1996 2-3
Consolidated Statements of Earnings
for the Three Months ended
August 31, 1996 and 1995 4
Consolidated Statements of Cash Flows
for the Three Months ended
August 31, 1996 and 1995 5
Consolidated Statement of Shareholders'
Equity 6
Notes to Consolidated Financial
Statements 7-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 9-10
PART II - OTHER INFORMATION
Item 3. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
1
<PAGE>
CAM Designs Inc and Subsidiaries
Unaudited Condensed Consolidated Balance Sheet
August 31, 1996 May 31, 1996
$ $
Assets
Current assets
Cash and cash equivalents 3,669,045 4,432,278
Contract billings receivable 3,381,252 5,023,691
Inventories 1,529,611 356,882
Other current assets 448,906 315,049
----------- -----------
Total current assets 9,028,814 10,127,900
Fixed assets
Investments 1,540 1,515
Property and machinery:
Freehold property 303,433 303,433
Leasehold property 481,713 473,893
Plant and machinery 7,475,672 7,139,474
Less accumulated depreciation
and amortisation (4,763,801) (4,592,685)
----------- -----------
Net property, plant and machinery 3,497,017 3,324,115
----------- -----------
12,527,371 13,453,530
=========== ===========
2
<PAGE>
CAM Designs Inc and Subsidiaries
Unaudited Condensed Consolidated Balance Sheet
August 31, 1996 May 31, 1996
$ $
Liabilities
Current liabilities
Current installments of obligations
under bank loan 12,369 18,085
Current installments of
obligations under capital leases 438,951 482,368
Billings in excess of costs and
estimated earnings on
uncompleted contracts -- 361,394
Trade accounts payable 1,974,123 2,523,485
Income taxes payable 1,410,012 1,261,749
Accrual and other expenses 1,943,939 2,006,374
Promissory notes 214,000 214,000
----------- -----------
Total current liabilities 5,993,394 6,867,455
Obligations under capital
leases excluding current installments 893,190 851,353
Obligations under bank Loan excluding
current installments 227,711 240,081
Promissory notes --
Deferred income taxes 11,817 11,817
----------- -----------
Total liabilities 7,126,112 7,970,706
----------- -----------
Stockholders' equity
Class 'A' common stock, $0.001 par value
Authorized 7,000,000 issued 2,250,000 2,250 2,250
Additional paid-in capital 4,229,765 4,229,765
Treasury stock (475,000) --
Retained earnings 1,644,244 1,250,809
----------- -----------
Total stockholders' equity 5,401,259 5,482,824
----------- -----------
12,527,371 13,453,530
=========== ===========
See accompanying notes to unaudited condensed consolidated financial statements.
3
<PAGE>
CAM Designs Inc
Unaudited Condensed Consolidated Statements of Operations
<TABLE>
<CAPTION>
CAM Designs Inc CAM Designs Inc
June 1 to June 1 to June 1 to June 1
August 31, August 31, August 31, August 31
1995 1995 1996 1996
$ $ $ $
<S> <C> <C> <C> <C>
Revenue
Automotive
industry. 1,522,755 1,522,755 3,845,526 3,845,526
Aerospace
industry. 437,453 437,453 512,626 512,626
Placement of
Personnel. 230,998 230,998 935,036 935,036
--------- --------- --------- ---------
2,191,206 2,191,206 5,293,188 5,293,188
--------- --------- --------- ---------
Operating Costs
and expenses.
Selling general
and administrative
expenses. 1,831,479 1,831,479 4,639,374 4,639,374
Depreciation. 64,274 64,274 171,116 171,116
--------- --------- ---------- ---------
1,895,753 1,895,753 4,810,490 4,810,490
--------- --------- --------- ---------
Operating
profit. 295,453 295,453 482,698 482,698
Other income/
expense.
Investment
income. 14,106 14,106 27,473 27,473
Interest
expense. (1,995) (1,995) - -
Gain on sale
of equipment. - - - -
--------- --------- --------- ---------
Income
before taxes. 307,564 307,564 510,171 510,171
--------- --------- --------- ---------
Income taxes.
Provision. 104,742 104,742 167,000 167,000
--------- --------- --------- ---------
Net income. 202,822 202,822 343,171 343,171
--------- --------- --------- ---------
See accompanying notes to unaudited consolidated financial statements
Net Earnings
Per Share of
Common
Stock 0.15 - 0.134 -
Weighted
Average Common
Shares 1,367,971 - 2,883,152 -
</TABLE>
4
<PAGE>
CAM Designs Inc
Unaudited Condensed Consolidated Statements of Cash Flow
<TABLE>
<CAPTION>
CAM Designs Inc. CAM Designs Inc.
June 1 to June 1 to
August 31, 1995 August 31, 1996
$ $
<S> <C> <C>
Cash flows from operating activities:
Net profit 202,822 343,171
Adjustments to reconcile net cash provided
by operating activities:
Depreciation 64,274 171,116
Change in operating assets and liabilities
net of effect of acquisition of subsidiary:
Change in receivables 871,600 1,725,339
Change in Other
Current Assets (161,493) (1,296,445)
Change in accounts payable 82,372 (591,004)
Change in other liabilities 946,552 (335,648)
----------- -----------
Net cash provided
by operating activities 2,006,127 16,529
----------- -----------
Cash flows from investing activities:
Purchases of plant
and equipment (88,110) (289,163)
Purchase of Investment - -
Purchase of subsidiary (1,611,699) -
----------- -----------
Net cash used in investing
activities: (1,699,809) (289,163)
----------- -----------
Dividends Paid - -
Net Proceeds from sale of
common stock 4,503,396 -
Repurchase of Stock - (475,000)
Repayment of borrowings (83,400) (18,383)
Capital element of
finance lease repayments (15,203) (27,551)
Bank Overdraft (11,114) -
----------- -----------
Net cash provided/(used in)
by financing activities 4,393,679 (520,934)
----------- -----------
Net increase in cash
Cash at beginning of period 57,453 4,432,278
Movement in Cash 4,699,997 (793,568)
Exchange gain - 30,335
----------- -----------
Cash at end of period 4,757,450 3,669,045
=========== ===========
</TABLE>
See accompanying notes to unaudited condensed consolidated financial
statements.
5
<PAGE>
CAM Designs Inc
Unaudited Condensed Consolidated Statements of Shareholders' Equity
<TABLE>
<CAPTION>
Additional Total
Treasury Common paid in Retained stock-
Stock Stock capital earnings holders'
equity
$ $ $ $ $
<S> <C> <C> <C> <C> <C>
CAM Designs Inc
Balance at May - 2,250 4,229,765 1,250,809 5,482,824
31, 1996
Profit for the period - - - 343,171 343,171
Dividends declared - - - - -
Shares Repurchased (475,000) - - - (475,000)
Exchange Difference - - - 50,264 50,264
--------- --------- --------- --------- ---------
Balance at August 31, 1996 (475,000) 2,250 4,229,765 1,644,244 5,401,259
--------- --------- --------- --------- ---------
</TABLE>
See accompanying notes to the unaudited consolidated condensed financial
statements.
6
<PAGE>
CAM Designs Inc and Subsidiaries
and MGA Holdings Limited and
Subsidiaries Limited
Notes to unaudited condensed consolidated financial statements
1. Organization
On September 9, 1994, CAM Designs Inc. was incorporated as
MGA Holdings Inc. The company name was changed to CAM Designs
Inc ("CAM") on April 18, 1995. CAM is a holding company and
has not engaged in any commercial operations during the
period since incorporation.
On July 27, 1995 the shareholders of MGA Holdings Limited
("MGA") surrendered 100% of the issued shares of MGA (63,200
cumulative convertible participating preference shares of
(pound)1 each, 54,551 ordinary shares of (pound)1 each) to
CAM. As a result, MGA became a wholly owned subsidiary of
CAM.
7
<PAGE>
CAM Designs Inc and Subsidiaries
and MGA Holdings Limited and
Subsidiaries Limited
Notes to unaudited condensed consolidated financial statements
1. Organization (continued)
The economic environment in which MGA operates is in the
United Kingdom and hence its reporting currency is the UK
pound sterling ((pound)).
2. Basis of presentation
The accompanying unaudited condensed consolidated statements
have been prepared in accordance with generally accepted
accounting principles for interim financial information and
pursuant to the rules and regulations of the Securities and
Exchange Commission. Accordingly, they do not include all of
the information and footnotes required by generally accepted
accounting principles for complete financial statements. For
further information, refer to the financial statements and
footnotes thereto included in the Company's annual report for
the fiscal year ended May 31, 1996.
In the opinion of management, the unaudited condensed
consolidated financial statements contain all adjustments,
consisting only of normal recurring adjustments, considered
necessary to present fairly the Company's financial position
at August 31, 1996, results of operations for the periods
ended August 31, 1996 and 1995 and cash flows for the periods
ended August 31, 1996 and 1995. The results for the period
ended August 31, 1996 are not necessarily indicative of the
results to be expected for the entire fiscal year ending
August 31, 1996.
The effective date of the acquisition of MGA was July 27,
1995. The acquisition has been accounted for under the
purchase method of accounting. Under this method, the results
of MGA Holdings Limited and subsidiaries are included in the
consolidated statement of operations of CAM from the date of
acquisition.
Profit and Loss Accounts in foreign currencies are translated
into US Dollars at average rates for the relevant according
periods. Assets and Liabilities are translated at exchange
rates ruling at the date of the Group Balance Sheet.
8
<PAGE>
Management Discussion and Analysis of Financial Condition and Result of
Operations
On July 27, 1995, both the consummation of the Company's initial public
offering and its reorganization whereby the Company acquired all of the capital
stock of CAM Designs Ltd (formerly MGA Holdings Ltd) took place. For purposes
of permitting a comparison to prior periods, this section utilizes the results
for the first fiscal quarter for comparison with those of the comparable
quarter of the Company's prior fiscal year, and ignores the actual date of
acquisition for accounting comparison purposes.
3 Months ended August 31 1996 as compared to 3 Months ended August 31 1995
Summary of Operations
Sales for CAM Designs Inc. were $5.3 million in the quarter against $6.6
million for the comparable full quarter last year. However, as a result of the
Company's improved operating margins, caused by reduced out-sourcing and
improved productivity, net earnings after taxes have been maintained at
approximately $343,000 as compared with approximately $336,000 for the prior
corresponding period. This reflects one of the Company's strategic aims, which
is to concentrate on high margin work, which is a prime factor of the Company's
target market sector. Gross operating margins of 24% and net pre-tax margins of
9.6% against 6.75% net pre-tax margins for the same quarter last year reflect
the current success of this strategy.
Overheads represented 14% of revenues in this quarter compared with 17% last
year, further confirming the Company's tight cost controls.
Liquidity and Capital Resources
On July 27, 1995, the Company consummated its initial public offering of
securities consisting of 575,000 units (including the underwriter's
over-allotment option). Each unit consisted of two shares of Class A Common
Stock and one Class A Purchase Warrant entitling the holder to purchase one
share of Class A stock at a price of $8.00 per share for a 5 year period.
The Company received net proceeds of approximately $4.5 million from such
offering, after underwriting discounts and commissions and other expenses of
the offering. The Company ultimately utilized approximately $1.9 million of
such proceeds to fund the purchase of a portion of the outstanding securities
and liabilities of its British subsidiary from a principle stockholder, NatWest
Ventures, and has utilized approximately $1.5 million of such proceeds for the
expansion of its facilities and the purchase of additional equipment. The
Company anticipates that the balance of the proceeds of such public offering,
aggregating approximately $1.1 million together with existing funds generated
from operations, will enable it to fund its operating and capital needs through
at least the current fiscal year and May 31, 1998, the end of its next fiscal
year. Should the Company require presently unanticipated further funds,
approximately $1 million of bank and finance credit lines are in place.
9
<PAGE>
As compared to year-end, cash balances have reduced by almost $800,000 due
mainly to the share buy-back transaction completed during the quarter and
increased inventory of approximately $1.2 million due to current long term
contracts.
On longer term contracts the Company normally obtains stage payments against
work completed to date to ensure project funding is maintained at reasonable
levels and uncharged work-in-progress minimized. The level of work-in-progress
has increased over the last fiscal year to the current level of $1,529,611 due
to the advanced stages of two current large contracts, whereby invoices will be
issued upon delivery of finished vehicles. The Company does not envisage any
difficulty in funding these or other projects over the next twelve months.
10
<PAGE>
Exhibit A
CAM Designs Inc
EPS Calculations for period June 1, 1996 to August 31, 1996
Total income as per unaudited consolidated interim accounts 343,171
Add: Net assumed interest income for whole period 42,313
---------
Adjusted net income 385,484
Net income per total weighted average 385,484
---------
2,883,152
= 13.4 cents/share
<PAGE>
Part II
Other Information
Item 6. Exhibits
(a) Exhibits
Calculation of Earnings Per Share.
8-K Reports
(b) No reports on Form 8-K were filed during the quarter
in reference.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report on Form 10- QSB to be signed on its
behalf by the undersigned thereto duly authorized.
Dated: October 17, 1996
CAM DESIGNS, INC.
/s/ John R. Davidson
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John R. Davidson
Chairman of the Board,
President and Chief Executive Officer
(Principal Executive Officer)
/s/ Robert A. Righton
--------------------------------------
Robert A. Righton
Chief Financial Officer and Treasurer
(Principal Financial Officer)
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
consolidated financial statements and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-START> JUN-01-1996
<PERIOD-END> AUG-31-1996
<CASH> 3,669,045
<SECURITIES> 0
<RECEIVABLES> 3,381,252
<ALLOWANCES> 0
<INVENTORY> 1,529,611
<CURRENT-ASSETS> 9,028,814
<PP&E> 8,259,278
<DEPRECIATION> 4,763,801
<TOTAL-ASSETS> 12,527,371
<CURRENT-LIABILITIES> 5,993,394
<BONDS> 0
0
0
<COMMON> 5,401,259
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 12,527,371
<SALES> 5,293,188
<TOTAL-REVENUES> 5,293,188
<CGS> 4,810,490
<TOTAL-COSTS> 4,180,490
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 510,171
<INCOME-TAX> 167,000
<INCOME-CONTINUING> 510,171
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 343,171
<EPS-PRIMARY> .134
<EPS-DILUTED> .134
</TABLE>
