0000950110-95-000589.txt : 19950815 0000950110-95-000589.hdr.sgml : 19950815 ACCESSION NUMBER: 0000950110-95-000589 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950814 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: DIAGNOSTIC RETRIEVAL SYSTEMS INC CENTRAL INDEX KEY: 0000028630 STANDARD INDUSTRIAL CLASSIFICATION: SEARCH, DETECTION, NAVIGATION, GUIDANCE, AERONAUTICAL SYS [3812] IRS NUMBER: 132632319 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08533 FILM NUMBER: 95563482 BUSINESS ADDRESS: STREET 1: 16 THORNTON RD CITY: OAKLAND STATE: NJ ZIP: 07436 BUSINESS PHONE: 2013373800 MAIL ADDRESS: STREET 1: 16 THORNTON RD CITY: OAKLAND STATE: NJ ZIP: 07436 10-Q 1 QUARTERLY REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1995 ------------- OR [ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________________ to _____________________ Commission file number 1-8533 ------ DIAGNOSTIC/RETRIEVAL SYSTEMS, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 13-2632319 ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 5 Sylvan Way, Parsippany, New Jersey 07054 ---------------------------------------- ----------- (Address of principal executive offices) (Zip Code) 201-898-1500 -------------------------------------------------- (Registrant's telephone number, including area code) None --------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report.) 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. The number of shares of Class A Common Stock, $.01 par value, and Class B Common Stock, $.01 par value, outstanding as of August 7, 1995 was 3,307,324 and 2,168,134, respectively (exclusive of 432,639 shares of Class A Common Stock and 21,619 shares of Class B Common Stock held in the treasury). DIAGNOSTIC/RETRIEVAL SYSTEMS, INC. AND SUBSIDIARIES INDEX PART 1. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheets--June 30, 1995 and March 31, 1995............................................ 3 Condensed Consolidated Statements of Earnings--Three Months Ended June 30, 1995 and 1994.............................. 4 Condensed Consolidated Statements of Cash Flows--Three Months Ended June 30, 1995 and 1994....................... 5 Notes to Condensed Consolidated Financial Statements........ 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................................... 7-9 PART 2. OTHER INFORMATION Item 1. Not Applicable Item 2. Not Applicable Item 3. Not Applicable Item 4. Submission of Matters to a Vote of Security Holders......... 10 Item 5. Not Applicable Item 6. Exhibits and Reports on Form 8-K............................ 10 SIGNATURES ................................................................ 11 2 DIAGNOSTIC/RETRIEVAL SYSTEMS, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (Unaudited)
Assets June 30, 1995 March 31, 1995 ------ ------------- -------------- Current Assets: Cash and cash equivalents ....................................... $ 9,105,000 $ 11,197,000 Accounts receivable ............................................. 18,299,000 17,432,000 Inventories, net of progress payments ........................... 9,040,000 11,724,000 Other current assets ............................................ 2,142,000 2,445,000 -------------- ------------- Total current assets ....................................... 38,586,000 42,798,000 Property, plant and equipment, less accumulated depreciation and amortization of $24,256,000 and $23,812,000 at June 30, 1995 and March 31, 1995, respectively .................................... 10,457,000 9,849,000 Intangible assets, less accumulated amortization of $3,598,000 and $3,457,000 at June 30, 1995 and March 31, 1995, respectively ................................ 8,779,000 8,920,000 Other assets ...................................................... 3,468,000 3,023,000 -------------- ------------- $ 61,290,000 $ 64,590,000 ============== ============= Liabilities and Stockholders' Equity ------------------------------------ Current liabilities: Accounts payable and other ...................................... $ 18,193,000 $ 22,481,000 -------------- ------------- Total current liabilities .................................. 18,193,000 22,481,000 -------------- ------------- Long-term debt, excluding current installments .................... 11,861,000 11,732,000 Deferred income taxes ............................................. 4,605,000 4,605,000 Other liabilities ................................................. 3,287,000 3,263,000 -------------- ------------- Total liabilities .......................................... 37,946,000 42,081,000 Stockholders' equity: Class A Common Stock, $.01 par value per share Authorized 10,000,000 shares; issued 3,739,963 and 3,699,963 shares at June 30, 1995 and March 31, 1995, respectively ............. .................................... 37,000 37,000 Class B Common Stock, $.01 par value per share Authorized 20,000,000 shares; issued 2,187,753 and 2,163,253 shares at June 30, 1995 and March 31, 1995, respectively ............. .................................... 22,000 22,000 Additional paid-in capital ........................................ 13,594,000 13,435,000 Retained earnings ................................................. 11,575,000 10,919,000 -------------- ------------- 25,228,000 24,413,000 Treasury Stock, at cost; 432,639 shares of Class A Common Stock and 21,619 shares of Class B Common Stock ........................... (1,617,000) (1,617,000) Unamortized restricted stock compensation ......................... (267,000) (287,000) -------------- ------------- Net stockholders' equity ........................................ 23,344,000 22,509,000 -------------- ------------- $ 61,290,000 $ 64,590,000 ============== =============
See accompanying notes to condensed consolidated financial statements. 3 DIAGNOSTIC/RETRIEVAL SYSTEMS, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Earnings (Unaudited) Three Months Ended June 30, ----------------------------- 1995 1994 ----------- ------------ Revenues ....................................... $17,279,000 $16,012,000 Costs and expenses ............................. 15,965,000 14,936,000 ----------- ------------ Operating income .......................... 1,314,000 1,076,000 Interest and related expenses .................. (325,000) (342,000) Other income, net .............................. 87,000 156,000 ----------- ------------ Earnings before income taxes .............. 1,076,000 890,000 Income taxes ................................... 420,000 382,000 ----------- ------------ Net earnings .............................. $ 656,000 $ 508,000 =========== ============ Earnings per share of Class A and Class B Common Stock ................................. $ .12 $ .10 =========== ============ Weighted average number of shares of Class A and Class B Common Stock outstanding ............. 5,605,867 5,337,688 =========== ============ See accompanying notes to condensed consolidated financial statements. 4 DIAGNOSTIC/RETRIEVAL SYSTEMS, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended June 30, --------------------------- 1995 1994 ----------- ------------ Cash flows from operating activities Net earnings ........................................ $ 656,000 $ 508,000 Adjustments to reconcile net earnings to cash flows from operating activities: Depreciation and amortization ......................... 626,000 638,000 Other, net ............................................ 164,000 (3,000) Changes in assets and liabilities: (Increase) decrease in accounts receivable ............. (867,000) 1,107,000 (Increase) decrease in inventories ..................... 2,684,000 (1,685,000) Decrease in other current assets ...................... 303,000 381,000 (Decrease) in accounts payable and other ............... (4,282,000) (2,158,000) Other, net ............................................ 186,000 2,000 ----------- ----------- Net cash used in operating activities .............. (530,000) (1,210,000) . ------------ ------------ Cash flows from investing activities Capital expenditures .................................. (1,057,000) (392,000) Other, net ............................................ (630,000) (9,000) ----------- ------------ Net cash used in investing activities ............... (1,687,000) (401,000) ----------- ------------ Cash flows from financing activities Payments on long-term debt ............................ (20,000) (18,000) Repurchases of convertible subordinated debentures .... (61,000) (2,406,000) Other borrowings ...................................... 206,000 -- ----------- ----------- Net cash provided by (used in) financing activities.. 125,000 (2,424,000) ----------- ----------- Net decrease in cash ...................................... (2,092,000) (4,035,000) Cash and cash equivalents, beginning of period ............ 11,197,000 15,465,000 ----------- ----------- Cash and cash equivalents, end of period .................. $ 9,105,000 $11,430,000 =========== =========== See accompanying notes to condensed consolidated financial statements. 5
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) 1) In the opinion of Management, the accompanying unaudited condensed consolidated financial statements of Diagnostic/Retrieval Systems, Inc. and subsidiaries (the Company) contain all adjustments (consisting of only normal and recurring adjustments) necessary for the fair presentation of the Company's consolidated financial position as of June 30, 1995, the statements of earnings for the three months ended June 30, 1995 and 1994 and cash flows for the three months ended June 30, 1995 and 1994. 2) The results of operations for the three months ended June 30, 1995 are not necessarily indicative of the results to be expected for the full year. 3) Earnings per share of common stock is computed by dividing net earnings by the weighted average number of shares of Class A and Class B Common Stock outstanding during each period. For the three months ended June 30, 1995, the computation of earnings per share included approximately 172,000 shares from the assumed exercise of dilutive stock options computed using the treasury stock method. Options outstanding to purchase shares of common stock were not included in the computation of earnings per share for the three months ended June 30, 1994, because their effect was not material. Furthermore, additional shares assumed to be outstanding applicable to the Company's convertible subordinated debentures also were not included for any of the periods presented, because their effect on earnings per share was antidilutive. 6 Item 2. Management's Discussion and Analysis of Financial Condition ----------------------------------------------------------- and Results of Operations ------------------------- Results of Operations The following table sets forth items in the Condensed Consolidated Statements of Earnings as a percent of revenues and the percentage increase or decrease of those items as compared to the prior period. Percent of Percent Revenues Changes ------------------- ------------- Three months ended June 30, 1995 1994 1995 vs. 1994 --------------------------- ------ ------ ------------- Revenues ......................... 100.0% 100.0% 7.9% Costs and expenses ............... 92.4 93.3 6.9 ----- ----- Operating income ................. 7.6 6.7 22.1 Interest and related expenses .... (1.9) (2.1) (5.0) Other income, net ................ .5 1.0 (44.2) ----- ----- Earnings before income taxes ..... 6.2 5.6 20.9 Income taxes ..................... 2.4 2.4 9.9 ----- ----- Net earnings ..................... 3.8% 3.2% 29.1% ===== ===== Revenues for the three months ended June 30, 1995 were $17.3 million, an increase of 7.9% over revenues for the same period a year ago. The revenue growth was attributable to shipments relating to the Company's data storage system and display workstation product lines, as well as to increases in manufacturing services and commercial product sales, the latter reflecting the impact of an acquisition last year. Operating income for the three-month period ended June 30, 1995 was $1.3 million or 22% higher than operating income of $1.1 million during the first quarter of the prior year. The improvement during the current year was mainly attributable to the increase in revenues for the quarter and higher operating margins generated by the Company's display, data storage and electro-optical systems product lines. Interest and related expenses was $.3 million for the first quarter of fiscal 1996 and fiscal 1995. 7 Other income, net was $.1 million for the three months ended June 30, 1995, a decrease of approximately $.1 million from other income, net for the same three-month period of the prior year. The decrease is due primarily to the reduced cash balance. The Company's effective tax rate during the three-month period ended June 30, 1995 and 1994 was 39% and 40%, respectively. The Company records income tax expense based on an estimated full year effective income tax rate. The effective income tax rate and the components of income tax expense for the first quarter of fiscal 1996 did not significantly change from those for the year ended March 31, 1995. The provision for income taxes includes all estimated income taxes payable to federal and state governments as applicable. Financial Condition and Liquidity Cash and Cash Flow: Cash and cash equivalents at June 30, 1995 and March 31, 1995 represented approximately 15% and 17%, respectively, of total assets. During the three-month period ended June 30, 1995, cash decreased $2.1 million. This decrease was primarily the result of capital expenditures during the quarter of approximately $1.1 million and by cash utilized by operations of approximately $.5 million. Capital expenditures are expected to approximate $2.4 million for the fiscal year. The majority of these expenditures will be for computer and laboratory-related equipment. The Company has obtained a $5.0 million unsecured line of credit from NatWest Bank which will be used to supplement working capital needs. Accounts Receivable and Inventories: Accounts receivable increased approximately $.9 million during the three months ended June 30, 1995 as a result of shipments made during the quarter. Generally, there are no contract provisions for retainage, and all accounts receivable are expected to be collected within one year. The decrease in inventories of $2.7 million during the first quarter of fiscal 1996 was primarily due to the net effect of the build-up in costs to be billed upon delivery and final acceptance of products and an increase in progress billings based on contractual provisions. June 30, 1995 March 31, 1995 ------------- -------------- Quick ratio ............................ 1.5 1.3 Current ratio .......................... 2.1 1.9 Liabilities-to-equity ratio ............ 1.6 1.9 Long-term debt, excluding current installments, to capitalization ...... 33.7% 34.3% 8 Backlog: At June 30, 1995, the Company's backlog of orders was $118 million as compared to $126 million at March 31, 1995. The decrease in backlog for the first quarter was due to the net effect of revenues for the period which were partially offset by bookings. New contract awards during the three months ended June 30, 1995 totalled $8.8 million. Acquisition On July 5, 1995, Photronics Corp., a wholly-owned subsidiary of the Company, acquired, through its wholly-owned subsidiary (Photronics), substantially all of the assets of Opto Mechanik, Inc. (OMI), pursuant to an Agreement for Acquisition of Assets dated May 24, 1995, as amended July 5, 1995 (the Agreement). Under the terms of the Agreement, Photronics paid, on the date of acquisition, approximately $5,450,000 for the net assets of OMI. OMI, located in Melbourne, Florida, designs and manufactures electro-optical sighting and targeting systems used primarily in military fire control devices and in various weapons systems. 9 PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders --------------------------------------------------- None Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibits 27. Financial Data Schedule (b) Reports on Form 8-K None 10 DIAGNOSTIC/RETRIEVAL SYSTEMS, INC. AND SUBSIDIARIES 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. DIAGNOSTIC/RETRIEVAL SYSTEMS, INC. ---------------------------------- Registrant /s/ NANCY R. PITEK Date: August 11, 1995 ---------------------------------- Nancy R. Pitek Controller and Treasurer 11 EX-27 2 3-MOS ENDED JUNE 30, 1995
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM DIAGNOSTIC/RETRIEVAL SYSTEMS, INC. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS MAR-31-1996 APR-01-1995 JUN-30-1995 9,105,000 0 18,299,000 0 9,040,000 38,586,000 34,713,000 24,256,000 61,290,000 18,193,000 11,861,000 59,000 0 0 23,285,000 61,290,000 17,279,000 17,279,000 15,965,000 15,965,000 0 0 325,000 1,076,000 420,000 0 0 0 0 656,000 0.12 0