<PAGE> 1
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UNITED STATES
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 JUNE 30, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________ TO ____________ .
COMMISSION FILE NUMBER 026240
ALIGN-RITE INTERNATIONAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
CALIFORNIA 95-4528353
(STATE OF OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
2428 ONTARIO ST. BURBANK, CA 91504
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
(818) 843-7220
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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 [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
CLASS OUTSTANDING AT JULY 9, 1999
----- ---------------------------
<S> <C>
Common Stock, $.01 par value 4,547,279 Shares
</TABLE>
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<PAGE> 2
ALIGN-RITE INTERNATIONAL, INC.
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets at June 30, 1999 and March 31,
1999........................................................ 3
Consolidated Statements of Operations for the Three Months
ended June 30, 1999 and 1998................................ 4
Consolidated Statements of Comprehensive Income for the
Three Months ended June 30, 1999 and 1998................... 5
Consolidated Statements of Cash Flows for the Three Months
ended June 30, 1999 and 1998................................ 6
Notes to Consolidated Financial Statements.................. 7
Management's Discussion and Analysis of Results of
Item 2. Operations and Financial Condition.......................... 9
Quantitative and Qualitative Disclosures about Market
Item 3. Risk........................................................ 12
PART II. FINANCIAL INFORMATION
Item 6. Exhibits and Reports on Form 8-K............................ 13
Signatures.................................................. 14
Statement Regarding Computation of Earnings Per Share....... 15
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ALIGN-RITE INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED -- 000'S OMITTED)
ASSETS
<TABLE>
<CAPTION>
AT JUNE 30, AT MARCH 31,
1999 1999
----------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents................................. $ 4,550 $ 6,328
Accounts receivable, net.................................. 8,250 7,171
Inventories, primary raw materials........................ 2,941 2,882
Prepaid and other current assets.......................... 1,403 1,318
------- -------
Total current assets.............................. 17,144 17,699
Property and equipment, net................................. 60,223 61,333
Other assets................................................ 1,508 1,259
------- -------
Total assets...................................... $78,875 $80,291
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable.................................... $ 3,939 $ 4,182
Equipment payables, current portion....................... 2,908 7,636
Accrued expenses and other................................ 2,754 3,328
Taxes payable............................................. 930 423
------- -------
Total current liabilities......................... 10,531 15,569
Equipment payables, long-term portion....................... 10,760 10,008
Long-Term Debt.............................................. 7,200 5,200
Deferred taxes.............................................. 5,355 5,355
Other liabilities........................................... 774 857
Shareholders' equity:
Common stock:
Authorized -- 35,000 shares $.01 par value;
Issued -- 4,548 and 4,540 shares, respectively......... 45 45
Additional paid-in capital.................................. 19,107 19,045
Retained earnings........................................... 25,206 24,098
Accumulated other comprehensive income...................... (103) 114
------- -------
Total shareholders' equity........................ 44,255 43,302
------- -------
Total liabilities and shareholders' equity........ $78,875 $80,291
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE> 4
ALIGN-RITE INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30,
(UNAUDITED -- 000'S OMITTED, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1999 1998
------- -------
<S> <C> <C>
Net sales................................................... $13,361 $13,690
Cost of sales............................................... 9,066 8,552
------- -------
Gross profit.............................................. 4,295 5,138
Selling, general and administrative expenses................ 2,238 2,102
Research and development.................................... 259 202
------- -------
Income from operations.................................... 1,798 2,834
Interest income (expense) and other, net.................... (70) 36
------- -------
Income before provision for income taxes.................... 1,728 2,870
Provision for income taxes.................................. 620 1,085
------- -------
Net income.................................................. $ 1,108 $ 1,785
======= =======
Per share information:
Basic earnings per share.................................. $ .24 $ .40
Shares used in per share computation...................... 4,547 4,468
Diluted earnings per share................................ $ .23 $ .36
Shares used in per share computation...................... 4,882 4,893
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE> 5
ALIGN-RITE INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED JUNE 30,
(UNAUDITED -- 000'S OMITTED)
<TABLE>
<CAPTION>
1999 1998
------ ------
<S> <C> <C>
Net income.................................................. $1,108 $1,785
Other comprehensive income:
Foreign currency translation adjustments.................. (217) 25
------ ------
Comprehensive income........................................ $ 891 $1,810
====== ======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE> 6
ALIGN-RITE INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 30,
(UNAUDITED -- 000'S OMITTED)
<TABLE>
<CAPTION>
1999 1998
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income:................................................. $ 1,108 $ 1,785
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Depreciation and amortization............................. 1,795 1,368
Bad debt expense.......................................... 2 --
Compensation related to stock options granted............. 27 27
Changes in assets and liabilities:
Accounts receivable....................................... (1,107) (560)
Inventories............................................... (68) (21)
Prepaids and other assets................................. (387) 104
Trade accounts payable.................................... (195) 2,202
Equipment Payables........................................ (4,728) --
Accrued expenses and other liabilities.................... (100) (83)
------- -------
Net cash (used in) provided by operating
activities.......................................... (3,653) 4,822
------- -------
Cash flows from investing activities:
Purchase of property and equipment........................ (109) (6,503)
------- -------
Net cash used in investing activities................ (109) (6,503)
Cash flows from financing activities:
Proceeds from line of credit.............................. 2,000 --
Stock options exercised................................... 14 9
------- -------
Net cash provided by financing activities............ 2,014 9
------- -------
Effect of exchange rate on cash............................. (30) 8
Net decrease in cash........................................ (1,778) (1,664)
------- -------
Cash and cash equivalents, beginning of year................ 6,328 5,523
------- -------
Cash and cash equivalents, end of year...................... $ 4,550 $ 3,859
======= =======
Supplemental disclosure of cash flow information:
Cash paid during the three months ended June 30 for:
Income taxes......................................... $ -- $ 275
Non-cash activities:
Equipment purchases to be refinanced under available lines
of credit.............................................. $ 752 $ --
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
6
<PAGE> 7
ALIGN-RITE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 1999
(UNAUDITED)
1. BUSINESS AND BASIS OF CONSOLIDATION
The consolidated financial statements include the accounts of Align-Rite
International, Inc. ("ARII"), a California corporation, incorporated on April
27, 1995, and its wholly-owned subsidiaries, Align-Rite International Limited
("ARI"), Align-Rite Corporation ("ARC"), Align-Rite Limited ("ARL"), Align-Rite
BV ("ARBV"), and Align-Rite GmbH ("ARGMBH"). ARII and its subsidiaries are
collectively referred to as the "Company". All significant intercompany accounts
and transactions have been eliminated.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statement presentation. In the opinion of management, the accompanying
consolidated balance sheets and related interim consolidated statements of
operations and cash flows include all adjustments (consisting only of normal
recurring items) considered necessary for their fair presentation. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenues and expenses.
Actual results could differ from those estimates. The consolidated results of
operations for the three months ended June 30, 1999 are not necessarily
indicative of results to be expected for the year ended March 31, 2000. The
information included in this Form 10-Q should be read in conjunction with the
Company's audited consolidated financial statements and notes thereto as of
March 31, 1999 and 1998 and for the three years in the period ended March 31,
1999 as filed on Form 10K. Certain items shown in the prior financial statements
have been reclassified to conform with the presentation of the current period.
The principal activity of ARII, ARI and ARBV is that of holding companies
into which their respective subsidiaries are consolidated. ARC, ARL and ARGMBH
manufacture and market quality photomasks in the United States and Europe.
Photomasks, which are precision photographic quartz or glass plates, contain
microscopic images of integrated circuits. These are used primarily by
semiconductor manufacturers as master images to transfer circuit patterns onto
silicon wafers during the fabrication of integrated circuits.
The Company maintains a policy and practice of restricting ARC from paying
dividends or making certain other distributions in order to minimize tax
consequences resulting from its current corporate structure.
2. SEGMENT INFORMATION
The Company adopted SFAS No. 131 in fiscal year 1999. The Company has two
reportable business segments: the United States and Europe.
The Company conducts operations worldwide and is managed on a geographical
basis, with those geographic segments being the United States and Europe. The
United States segment, which is based in Burbank, California, covers the U.S.,
Canada and Latin America. The European segment, which is based in Bridgend,
Wales and Heilbronn, Germany, covers all European countries. Sales to Asia
Pacific from both segments are immaterial to the group and therefore, not deemed
a separate segment. The Company's operations are primarily concentrated in the
United States and Europe.
The accounting policies of the geographic segments are the same as those
described in the summary of significant accounting policies. The Company
allocates resources to and evaluates performance of its geographic segments
based on operating income. Transfers between geographic areas have not been
significant and are recorded using internal transfer prices set by the Company.
7
<PAGE> 8
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED JUNE 30, 1999
------------------------------------------
UNITED STATES EUROPE TOTAL
------------- ---------- -----------
<S> <C> <C> <C>
Net revenue from unaffiliated customers.............. $7,748,000 $5,613,000 $13,361,000
========== ========== ===========
Income from operations............................... $ 635,000 $1,163,000 $ 1,798,000
========== ========== ===========
Deprecation and amortization......................... $ 850,000 $ 894,000 $ 1,795,000
========== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED JUNE 30, 1998
------------------------------------------
UNITED STATES EUROPE TOTAL
------------- ---------- -----------
<S> <C> <C> <C>
Net revenue from unaffiliated customers.............. $7,502,000 $6,188,000 $13,690,000
========== ========== ===========
Income from operations............................... $1,135,000 $1,699,000 $ 2,834,000
========== ========== ===========
Deprecation and amortization......................... $ 780,000 $ 588,000 $ 1,368,000
========== ========== ===========
</TABLE>
3. ACQUISITION
On July 2, 1999, the Company completed the acquisition of Harris Imaging
Technology Group (ITG), a photomask manufacturer located in Melbourne, Florida
for approximately $13,250,000. The acquisition will be accounted for as a
purchase and is not material to the financial position or results of operations
of the Company.
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
Net sales for the three months ended June 30, 1999, decreased 2% to
$13,361,000, compared to $13,690,000 in the same period in the prior fiscal
year. The decrease in net sales for the quarter of 2% is primarily due to a
decrease in customer demand as a result of the prevailing lackluster rate of new
design activity throughout the semiconductor industry. The Company continues to
experience strong competitive conditions including product-pricing pressures in
most sectors of the photomask market. Average selling prices have declined
compared to the prior year. However, the Company achieved a 5% sequential
increase as pricing pressures, while not improving dramatically, have stabilized
throughout the industry.
European net sales for the three months ended June 30, 1999 decreased 9% to
$5,613,000, compared with $6,188,000 for the same period in the prior year.
United States net sales for the three months ended June 30, 1999 increased 3% to
$7,748,000, compared with $7,502,000 in the same period of the prior year.
Gross profit as a percentage of net sales for the three months ended June
30, 1999, decreased to 32.1%, compared to 37.5% in the same period in the prior
year. The decrease in gross profit as a percentage of net sales for the three
months ended June 30, 1999 is primarily attributable to higher operating costs,
lower capacity utilization and product pricing pressures. Depreciation expense
for June 30, 1999 increased 28% to $1,744,000, compared to $1,368,000 in the
prior fiscal year. As the Company continues to invest in capital equipment to
keep pace with increased demand, the Company anticipates that its gross profit
will fluctuate slightly based on the timing of equipment purchases and related
increases in depreciation expense.
Selling, general and administrative expenses include salaries of sales
personnel, marketing expense, general and administrative expense and product
distribution expense. Selling, general and administration expenses for the three
months ended June 30, 1999 increased slightly to $2,238,000, compared with
$2,102,000, in the prior fiscal year. Selling general and administrative
expenses as a percentage of net sales increased to 16.8%, compared with 15.4% in
the same period in the prior year. The Company believes selling, general and
administrative, as a percentage of sales will remain at approximately 16%.
Research and development ("R&D") expense is comprised primarily of
personnel costs, material consumption, depreciation and engineering costs. The
Company spent $259,000 for the three months ended June 30, 1999, compared to
$202,000 in the related prior period. The Company believes it will continue to
spend approximately 2% to 3% of sales on R&D related projects. The Company
anticipates that R&D expense will continue to increase in absolute terms and as
a percentage of sales in the future, reflecting its strategy of advancing their
technology.
Interest income was $28,000 for the three months ended June 30, 1999, as
compared to $36,000 for the same period in the prior year. The amounts for
interest income are relatively consistent as the Company maintained a slightly
lower cash balance throughout the quarter as compared to the prior year.
Interest expense for the three months ended June 30, 1999 was effected by
the Company's $7.2 million draw down on its available line-of-credit. Interest
expense associated with this draw down was $92,000 for the quarter and as the
Company draws down further on its line, interest expense will continue to
increase in the future.
For the three months ended June 30, 1999, the Company's effective income
tax rate decreased to 35.9% from 37.8% in the prior year's quarter. The decrease
in the effective income tax rate is attributable to lower state taxes due to
application of available credits from capital expenditure purchases.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents were $4,550,000 at June 30, 1999.
Net cash used in operating activities amounted to $3,653,000 for the three
months ended June 30, 1999, compared to $4,822,000 provided by operations for
the same period in the prior year. Operating cash flows for the three months
ended June 30, 1999 reflect lower net income, increased non-cash charges related
to depreciation and amortization expenses and a significant decrease in
equipment payables primarily related to fixed assets purchased that were paid
down during the three months ended June 30, 1999.
9
<PAGE> 10
For the three months ended June 30, 1999, cash used in investing activities
totaled $109,000, compared to $6,503,000 in the related prior year period. The
Company's investing activities during the three months ended June 30, 1999 were
minimal. Cash from financing activities included a $2,000,000 draw down from its
$25 million lines-of-credit. As of June 30, 1999, the Company had borrowed $7.2
million from its available lines. Equipment payables for which the Company has
the ability and intent to refinance utilizing its available lines-of-credit
during fiscal year 2000 have been classified as long-term at June 30, 1999.
Management believes that funds generated from operations together with its
cash and cash equivalents will be sufficient to meet the Company's normal
operating requirements for the next 12 months. If these funds prove to be
insufficient, or if new opportunities require the Company to supplement its
financial resources, the Company may use established credit lines with its
corporate bankers or pursue other sources of financing; however, there can be no
assurance other sources of financing will be available at commercially viable
terms, if at all.
On July 2, 1999, the Company completed the acquisition of Harris Imaging
Technology Group (ITG), a photomask manufacturer located in Melbourne, Florida.
Under the terms of the asset purchase agreement, the purchase price paid by the
Company was $13,250,000. The Company has borrowed $13,250,000 from its existing
lines-of-credit and has received a commitment from the related bank to increase
the lines-of-credit from $25 million to $35 million.
Readiness for Year 2000
Background. As the year 2000 approaches, a critical issue has emerged
regarding how existing applications software programs, operating systems and
embedded computer chips can accommodate the year 2000 date value. The Company
has a year 2000 project team in place with overall responsibility for the
company's year 2000 compliance programs. In addition, executive management
regularly monitors the status of the Company's year 2000 remediation plans.
Project. The Company has identified potential year 2000 risks in four
categories; Software Information Systems Manufacturing Engineering facilities;
internal business software and information technology systems; systems other
than information technology systems ("Not-IT systems"); and third-party
suppliers to the Company. The Company's year 2000 project includes the following
phases for the first three categories above: (1) identifying year 2000 risks;
(2) assigning priorities to identified risks; (3) testing year 2000 compliance
for risks determined to be material to the Company; (4) correcting problems
determined to be material and not year 2000 compliant; (5) retesting corrections
that have been implemented; and (6) developing contingency plans. With respect
to the Company's third-party suppliers, the Company's year 2000 project consists
of the following phases: (1) contacting critical suppliers for information
concerning their year 2000 readiness; (2) prioritizing suppliers as to relative
importance; (3) validating supplier responses regarding year 2000 compliance.
Assessment. The product that the Company sells to customers consists of no
date related issues; therefore, the Company believes that its current product
offerings are year 2000 compliant.
Internal business software and systems consist primarily of the Company's
business information systems in the United States and Europe. The Company has
completed its initial year 2000 project phases with respect to its business
systems, and is in the process of developing, implementing and testing the
necessary modifications. The Company believes that its internal business
software and systems will be year 2000 compliant. However, if the Company's
business systems are not year 2000 compliant, the Company could experience
interruptions to its production process, development programs and general
business operations. The Company has been advised by the suppliers of its
manufacturing equipment, which consist primarily of microlithography writing
tools, process and inspection tools in the various building the Company
occupies, that such systems are year 2000 compliant.
Third-party suppliers provide raw materials and in some cases,
manufacturing services incorporated by the Company into the products and systems
it sells. The Company is requiring that each of its key suppliers certify
whether they are year 2000 compliant. The Company has also prioritized its
suppliers as critical or non-
10
<PAGE> 11
critical to the Company's business. Based on information received from these
suppliers, the Company estimates that approximately 85% of its critical
suppliers are presently year 2000 compliant. The Company plans to monitor its
critical suppliers and either develop alternate sources or increase inventory
levels prior to the year 2000 for those suppliers considered to be at risk of
not achieving year 2000 compliance. However, there can be no assurance that such
alternate sources will be available or that adequate inventory levels will be
attainable if necessary, and the Company could experience raw materials and or
parts shortages and production interruptions if one or more key third-party
suppliers experience year 2000 problems.
Costs. Incremental costs of the Company's year 2000 project have primarily
consisted of upgrades to the Company's existing manufacturing and inspection
equipment. Such costs in the aggregate have not been material to the Company's
financial position, results of operations or cash flows. The balance of the
effort for the Company's year 2000 project has been by employees of the Company
whose costs for this project are not tracked separately. The Company currently
believes that costs for the remainder of the year 2000 compliance project will
not be material to the Company's financial position, results of operations or
cash flows.
Risks. The Company's results of operations, financial condition and cash
flows could be materially and adversely affected if the Company or any of its
critical suppliers or customers do not achieve year 2000 compliance. Although
the Company's year 2000 compliance project is expected to minimize the Company's
risks of experiencing a year 2000 problem, inherent risks and uncertainties
exist despite the Company's efforts. There can be no assurance that a failure on
the part of the Company, it products, its suppliers or its customers will not be
disruptive to the Company's business. As a result of these uncertainties the
Company is unable to determine at this time whether the consequences of year
2000 failures will have a material effect on the Company's results of
operations, financial condition or cash flows.
Foreign Operations and Inflation
Foreign operations are subject to certain risks inherent to conducting
business abroad, including product prices and currency exchange controls,
fluctuation in the relative value of currencies and restrictive governmental
actions. Changes in the relative value of currencies occur from time to time and
may, in certain instances, have a material adverse effect on the Company's
results of operations and cash flows. The Company does not hedge foreign
currency risks, and the effects of these risks are difficult to predict. The
risks associated with foreign operations have not, to date, had a material
adverse impact on the Company's results of operations and cash flows. There can,
however, be no assurance that such risks will not have a material adverse effect
on the Company's financial position, results of operations and cash flows in the
future.
The effects of inflation are experienced by the Company through increases
in cost of labor, services and raw materials. In general, these costs have been
anticipated and were offset by some degree by periodic increases in the prices
of its products or higher manufacturing capacity utilization rates. The Company
does not believe, however, that inflation has had a material effect on its
results of operations in the past. There can be no assurance that the Company's
financial positions, results of operations and cash flows will not be materially
affected by inflationary trends in the future.
Euro Conversion. A single currency called the euro was introduced in Europe
on January 1, 1999. Eleven of the fifteen member countries of the European Union
("EU") adopted the euro as their common legal currency as of that date. Fixed
conversion rates between these participating countries' existing currencies (the
"legacy currencies") and the euro were established as of that date. The legacy
currencies will remain legal tender as denominations of the euro until at least
2002 (but not later than July 1, 2002). During this transition period, parties
may settle transaction using either the euro or participating country's legal
currency.
The Company is still in the process of evaluating the effect, if any, of
the euro on its pricing of products in the eleven participating countries. The
Company does not expect a material impact on its results of operations from
foreign currency gains or losses as a result of its transition to the euro as
the functional currency for its subsidiaries based in EU countries.
11
<PAGE> 12
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995.
In addition to historical information, this report includes certain
forward-looking statements regarding events and financial and industry trends
which may affect the Company's future operating results and financial position.
Such statements include, but are not limited to, statements as to: (i) the
Company's belief that its gross profit will fluctuate based upon the timing of
equipment purchases; (ii) the Company's belief that selling, general and
administrative costs as a percentage of sales should remain consistent; (iii)
the Company's belief that R&D expenses will continue to increase as a percentage
of sales; (iv) the sufficiency of funds to meet the Company's normal operating
requirements over the next 12 months; and (v) the Company's belief regarding
year 2000 compliance of its internal business software and systems and its
current product offerings. Such statements represent the Company's reasonable
judgment concerning the future and are subject to risks and uncertainties that
could cause the Company's actual operating results and financial position to
differ materially. Such risks and uncertainties include but are not limited to:
adverse economic conditions in the Company's markets which could adversely
affect the level of demand for the Company's products, failure of the Company to
anticipate, respond to or utilize changing technologies used in production of
photomasks; greater than anticipated levels of competition and competitive
pricing, manufacturing difficulties or capacity limitations; shortage of raw
materials; delays in delivery of recently purchased manufacturing equipment to
the Company; greater than anticipated capital investment requirements; and
currency fluctuations or changes in political conditions with respect to the
Company's foreign operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Reference is made to "Quantitative and Qualitative Disclosures about Market
Risk" section of the Company's Annual Report on Form 10-K for the year ended
March 31, 1999.
12
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 6. EXHIBITS AND REPORTS OF FORM 8-K
(a) Exhibits
<TABLE>
<C> <S>
11.1 Statement regarding computation of Net Income per common
share.
27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended June 30, 1999,
however, a report on Form 8-K was filed on July 16, 1999 relating to the
acquisition of certain assets from Harris Corporation on July 2, 1999.
13
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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.
Date: August 13, 1999 Align-Rite International, Inc.
James Mac Donald
Chairman of the Board, President &
Chief Executive Director
Petar Katurich
Vice President of Finance,
Chief Financial Officer & Secretary
14
<PAGE> 1
EXHIBIT 11
STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE
ALIGN-RITE INTERNATIONAL, INC.
The following table provides a reconciliation of the numerator and
denominators of the basic and diluted per-share computations for the three
months ended June 30, 1999 and 1998:
<TABLE>
<CAPTION>
INCOME SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ---------
<S> <C> <C> <C>
For the Three Months Ended June 30, 1999:
Basic EPS............................................ $1,108,000 4,547,000 $0.24
Effect of dilutive securities:
Stock Options..................................... -- 335,000
---------- ---------
Diluted EPS.......................................... $1,108,000 4,882,000 $0.23
========== =========
For the Three Months Ended June 30, 1998:
Basic EPS............................................ $1,785,000 4,468,000 $0.40
Effect of dilutive securities:
Stock Options..................................... -- 425,000
---------- ---------
Diluted EPS.......................................... $1,785,000 4,893,000 $0.36
========== =========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 3-MOS
<FISCAL-YEAR-END> JUN-30-1999 JUN-30-1999
<PERIOD-END> DEC-31-1999 DEC-31-1999
<CASH> 4,550 4,550
<SECURITIES> 0 0
<RECEIVABLES> 8,250 8,250
<ALLOWANCES> 0 0
<INVENTORY> 2,941 2,941
<CURRENT-ASSETS> 17,144 17,144
<PP&E> 60,223 60,223
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 78,875 78,875
<CURRENT-LIABILITIES> 10,531 10,531
<BONDS> 0 0
0 0
0 0
<COMMON> 45 45
<OTHER-SE> 44,255 44,255
<TOTAL-LIABILITY-AND-EQUITY> 78,875 78,875
<SALES> 0 0
<TOTAL-REVENUES> 13,361 13,361
<CGS> 9,066 9,066
<TOTAL-COSTS> 2,497 2,497
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> (70) (70)
<INCOME-PRETAX> 1,728 1,728
<INCOME-TAX> 620 620
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,108 1,108
<EPS-BASIC> 0.24 0
<EPS-DILUTED> 0.23 0
</TABLE>
