<PAGE>
UNITED STATES
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 August 31, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE
EXCHANGE ACT
For the transition period from _____ to _____
Commission file number 1-13886
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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 1, 1997, there were 2,175,000 shares of Class A Common Stock
issued and outstanding.
TOTAL PAGES IN THIS REPORT: 14 (including cover page & Exhibits)
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CAM DESIGNS, INC.
INDEX
Page No.
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PART 1 - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Index) 1
Consolidated Balance Sheet as of
August 31, 1997 2-3
Consolidated Statements of Earnings for the
Three Months Ended August 31, 1996 and 1996 4
Consolidated Statements of Cash Flows for
the Three Months ended August 31, 1997 and 1996 5
Consolidated Statement of Shareholder's 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, 1997 May 31, 1997
$ $
Assets
Current assets
Cash and cash equivalents 125,062 545,515
Contract billings receivable 4,425,520 4,289,450
Inventories 550,075 562,401
Other current assets 900,736 736,359
----------- -----------
Total current assets 6,001,343 6,133,725
Fixed assets
Investments 1,721 1,721
Property and machinery:
Freehold property 323,262 328,218
Leasehold property 530,683 538,822
Plant and machinery 9,365,660 9,392,186
Less accumulated depreciation (5,979,132) (5,881,455)
----------- -----------
Net property, plant and machinery 4,240,473 4,377,771
----------- -----------
Goodwill, less accumulated
amortisation 74,462 74,488
Deferred tax asset 203,778 205,501
----------- -----------
10,521,827 10,793,206
=========== ===========
2
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CAM Designs Inc and Subsidiaries
Unaudited Condensed Consolidated Balance Sheet
August 31, 1997 May 31, 1997
$ $
Liabilities
Current liabilities
Bank overdraft 2,300,116 350,606
Current instalments of obligations
under bank loan 19,171 19,465
Current instalments of
obligations under capital leases 638,561 648,353
Current instalment of obligations
under loan 98,025 147,656
Billings in excess of costs and
estimated earnings on
uncompleted contracts -- 510,072
Trade accounts payable 2,609,467 3,229,899
Income taxes payable -- --
Accrual and other expenses 2,793,695 3,007,975
Promissory notes -- 214,000
----------- -----------
Total current liabilities 8,459,035 8,128,026
Obligations under capital
leases excluding current instalments 394,292 468,833
Obligations under bank Loan excluding
current instalments 220,851 228,981
----------- -----------
Total liabilities 9,074,178 8,825,840
=========== ===========
Stockholders' equity
Class 'A' common stock, $0.001 par value
Authorised 7,000,000 issued 2,250,000 2,250 2,250
Additional paid-in capital 4,229,765 4,229,765
Currency translation adjustment (2,826) 171,222
Treasury stock (475,000) (475,000)
Retained earnings (2,306,540) (1,960,871)
----------- -----------
Total stockholders' equity 1,447,649 1,967,366
----------- -----------
10,521,827 10,793,206
=========== ===========
See accompanying notes to unaudited condensed consolidated financial statements.
3
<PAGE>
CAM Designs Inc and subsidiaries
Unaudited Condensed Consolidated Statements of Operations
Three Months Three Months
ended ended
August 31, August 31,
1996 1997
$ $
Revenue.
Automotive
industry. 3,845,526 4,892,912
Aerospace
industry. 512,626 605,320
Placement of
Personnel. 935,036 1,674,374
---------- ----------
5,293,188 7,172,606
---------- ----------
Operating Costs
and expenses.
Selling general
and
administrative
expenses. 4,639,374 7,716,490
Depreciation. 171,116 186,504
---------- ----------
4,810,490 7,902,994
---------- ----------
Operating
profit.
Other income/
expense. 482,698 (730,388)
Investment
income. 27,473 23,097
Interest
expense. -- (29,600)
Gain on sale
of equipment. -- --
---------- ----------
Income
before taxes. 510,171 (736,891)
---------- ----------
Income taxes
Provision. 167,000 (220,000)
---------- ----------
Net income. 343,171 343,171 (516,891) (516,891)
---------- ---------- ---------- ----------
See accompanying notes to unaudited consolidated financial statements
Net Earnings
Per Share of
Common Stock
and Common
Stock Equivalent 0.134 -- -- --
Net loss per
Share of Common
Stock -- -- (0.24) --
Weighted
Average Common
Shares and
Common Stock
equivalents 2,641,051 -- 2,524,538 --
Weighted
Average Common
Shares -- -- 2,175,000 --
4
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CAM Designs Inc
Unaudited Condensed Consolidated Statements of Cash Flow
CAM CAM
Designs Designs
Inc Inc
June 1 to June 1 to
August 31, August 31,
1996 1997
$ $
Cash flows from
operating activities:
Net profit/(loss) 343,171 (516,890)
Adjustments to reconcile
net cash provided by
operating activities:
Depreciation 171,116 186,504
Change in operating
assets and liabilities:
Change in receivables 1,725,339 (196,978)
Change in Other
Current Assets (1,296,445) (151,722)
Change in accounts
payable (591,004) (574,637)
Change in other
liabilities (335,648) (680,960)
---------- --------
Net cash provided
by operating activities 16,529 (1,934,684)
---------- ----------
Cash flows from investing
activities:
Purchases of plant
and equipment (289,163) (115,263)
---------- ----------
Net cash used in investing
activities: (289,163) (115,263)
---------- ----------
5
<PAGE>
Cash flows from financing
activities:
Repurchase of Stock (475,000) --
Repayment of promissory
note -- (214,000)
Repayment of
borrowings (18,383) (52,074)
Capital element of
finance lease
repayments (27,551) (67,460)
Bank Overdraft -- 1,954,806
---------- ----------
Net cash provided/(used in)
by financing activities (520,934) 1,621,271
---------- ----------
Net increase/(decrease) in
cash and cash equivalents
Cash and cash equivalents
at beginning of period 4,432,278 545,515
Movement in Cash (793,568) (428,675)
Exchange gain 30,335 8,222
---------- ----------
Cash and cash equivalents
at end of period 3,669,045 125,062
========== ==========
See accompanying notes to unaudited condensed consolidated financial
statements
6
<PAGE>
CAM Designs Inc
Unaudited Condensed Consolidated Statements of Shareholders' Equity
<TABLE>
<CAPTION>
Total
Additional stock-
Treasury Common paid in Retained holders'
Stock Stock capital earnings equity
<S> <C> <C> <C> <C> <C>
$ $ $ $ $
CAM Designs Inc
Balance at May
31, 1997 (475,000) 2,250 4,229,7655 (1,789,649) 1,967,366
Loss for the
period - - - (516,891) (516,891)
Exchange Difference - - - (2,826) (2,826)
---------- ---------- ---------- ---------- ---------
Balance at August
31, 1997 (475,000) 2,250 4,229,765 (2,309,366) 1,447,649
---------- ---------- ---------- ---------- ---------
</TABLE>
See accompanying notes to the unaudited consolidated condensed financial
statements
7
<PAGE>
CAM Designs Inc and Subsidiaries
Notes to unaudited condensed consolidated financial statements
1. Organisation
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 (pounds)1 each, 54,551
ordinary shares of (pounds)1 each) to CAM. As a result, MGA became a
wholly owned subsidiary of CAM.
The economic environment in which MGA operates is in the United Kingdom
and hence its operating currency is the UK pound sterling ((pounds)).
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, 1997.
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 30, 1997, results of operations
for the periods ended August 30, 1997 and 1996 and cash flows for the
periods ended August 30, 1997 and 1996. The results for the period
ended August 30, 1997 are not necessarily indicative of the results to
be expected for the entire fiscal year ending May 31, 1998.
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>
Managements 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 reorganisation 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 Company's fiscal quarters 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, 1997 as compared to 3 Months ended August 31, 1997
Summary of Operations
Sales for the quarter totalled $7.1 million, an increase over 35% on the same
period last year, due to the Ruecker acquisition and increased engineering
sales.
Before realignment costs of $0.5 million an operating loss of $0.2 million was
incurred. This due to a reduced output as a result of labor negotiations
continuing with the unions to complete the realignment of the Groups activities.
These were completed in October and will result in a reduction in the Groups
fixed cost base of circa $1.5 million per year and overall costs of
approximately $2 million if reduced variable costs are achieved as well.
Realignment costs of $0.5 relate to costs associated with the closure of the
Groups Sheetmetal division and a reduction in Manufacturing capacity. This
activity has been closed as a result of a strategic decision to concentrate on
the Groups high value added activities. We will establish trading relationships
with suppliers to enable us to outsource sheetmetal services as an integral
part of the Company's turnkey capabilities.
Aerospace sales of $0.6 million were 18% higher than the same period last year,
due to increased activity and recent significant opportunities could result in
sales increases in the future.
Automotive and placement sales were $6.5 million, an increase of 35% on last
years sales of $4.8 million, due to the acquisition of Ruecker and should also
be improved in future quarters as recently announced contracts are invoiced.
Liquidity and Capital Resources
Liquidity has been severely affected as 96/97 losses have been converted into
cash losses. Group bankborrowings totalled $2.2 million as at the end of
the period. Although we currently have banking facilities totalling $2.25
million, liquidity is tight and discussions are on-going with various banks
to secure an additional loan facility for approximately $1 million and we are
exploring other sources of financing. Management expects these facilities will
be secured during Quarter 2, and together with the reduced costbase will ensure
the Group has sufficient cash liquidity for its future trading operations.
9
<PAGE>
Forward looking Statements
This report contains certain forward looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act, which are
intended to be covered by the safe harbours created thereby. Although the
Company believes that the assumptions underlying the forward looking statements
contained herein are reasonable, any of the assumptions could be inaccurate, and
therefore, there can be no assurance that the forward looking statements
contained in this report will prove to be accurate. Factors that could cause
actual results to differ from the results specifically discussed in the forward
looking statements included, but are not limited to, the absence of anticipated
contracts or higher than historical costs incurred in performance of contracts.
10
<PAGE>
Part II
Other Information
Item 6. Exhibits
(a) Exhibits
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(i) Calculation of Earnings Per Share - Exhibit 11.
(ii) Edgar-Financial Data Schedule - Exhibit 27.
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-Q to be signed on its behalf
by the undersigned thereto duly authorized.
Dated: October 17, 1997
CAM DESIGNS, INC.
/S/ John R. Davidson
-------------------------------------
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)
<PAGE>
Exhibit A
CAM Designs Inc
- ---------------
EPS Calculations for period June 1, 1997 to August 31, 1997
- -----------------------------------------------------------
Total loss as per unaudited consolidated interim accounts
Add: Net assumed interest income for whole period (516,890)
--------
Adjusted net loss (516,890)
Net loss per total weighted average (516,890)
--------
=$0.24 cents/share
EPS Calculations for period June 1, 1997 to August 31, 1997
- -----------------------------------------------------------
Total income as per unaudited consolidated interim accounts
Add: Net assumed interest income for whole period (516,890)
--------
Adjusted net income (516,890)
Net Loss per total weighted average (516,890)
--------
=$0.24 cents/shares
<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>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-START> JUN-01-1997
<PERIOD-END> AUG-31-1997
<CASH> 125,062
<SECURITIES> 0
<RECEIVABLES> 4,425,520
<ALLOWANCES> 0
<INVENTORY> 900,736
<CURRENT-ASSETS> 6,001,393
<PP&E> 10,219,605
<DEPRECIATION> 5,979,132
<TOTAL-ASSETS> 10,521,827
<CURRENT-LIABILITIES> 8,459,035
<BONDS> 0
<COMMON> 1,447,649
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 10,521,827
<SALES> 7,172,606
<TOTAL-REVENUES> 7,172,606
<CGS> 7,902,994
<TOTAL-COSTS> 7,902,994
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29,600
<INCOME-PRETAX> (736,891)
<INCOME-TAX> 220,000
<INCOME-CONTINUING> (736,891)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (516,891)
<EPS-PRIMARY> (0.24)
<EPS-DILUTED> (0.24)
</TABLE>
