-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, H9S4h7CXhV9S7B2h8RqvA76ql+8cEwaDHSzCZYmTVYPlNMSLV+xTYypdw5aCSTxz EX75apQJJaNcJ48EaaDBNg== /in/edgar/work/20000811/0000311505-00-000012/0000311505-00-000012.txt : 20000921 0000311505-00-000012.hdr.sgml : 20000921 ACCESSION NUMBER: 0000311505-00-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRINTRONIX INC CENTRAL INDEX KEY: 0000311505 STANDARD INDUSTRIAL CLASSIFICATION: [3577 ] IRS NUMBER: 952903992 STATE OF INCORPORATION: DE FISCAL YEAR END: 0326 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-09321 FILM NUMBER: 694631 BUSINESS ADDRESS: STREET 1: 14600 MYFORD ROAD STREET 2: P O BOX 19559 CITY: IRVINE STATE: CA ZIP: 92606 BUSINESS PHONE: 7143682300 MAIL ADDRESS: STREET 1: 14600 MYFORD ROAD STREET 2: PO BOX 19559 CITY: IRVINE STATE: CA ZIP: 92606 10-Q 1 0001.txt 7 Form 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transaction period from to Commission file number 0-9321 PRINTRONIX, INC. (Exact name of registrant as specified in its charter) Delaware 95-2903992 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 14600 Myford Road Irvine, California 92606 (Address of principal executive (Zip Code) offices) (714) 368-2300 (Registrant's telephone number, including area code) Not Applicable (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, 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. Class of Common Stock Outstanding at July 28, 2000 $0.01 par value 6,170,187 PRINTRONIX, INC. AND SUBSIDIARIES TABLE OF CONTENTS PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets at June 30, 2000 and March 31, 2000 Assets (3) Liabilities and Stockholders' Equity (4) Consolidated Statements of Operations for the Three Months Ended June 30, 2000 and June 25, 1999 (5) Consolidated Statements of Cash Flows for the Three Months Ended June 30, 2000 and June 25, 1999 (6) Condensed Notes to Consolidated Financial Statements (8) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (10) Item 3. Quantitative and Qualitative Disclosure About Market Risk (13) PART II. OTHER INFORMATION Item 1. Legal Proceedings (14) Item 6. Exhibits and Reports on Form 8-K (14) Signatures (15) Index to Exhibits (16) PART I. FINANCIAL INFORMATION Item 1. Financial Statements PRINTRONIX, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Amounts in thousands) June 30, 2000 March 31, 2000 (Unaudited) (Audited) ASSETS: Current assets: Cash and cash equivalents $ 13,462 $ 14,980 Accounts receivable, net of allowance for doubtful accounts of $1,844 and $2,434 as of June 30, 2000 and March 31, 2000, respectively 21,968 21,763 Inventories: Raw materials, subassemblies and work in progress 17,028 15,959 Finished goods 2,248 1,732 19,276 17,691 Prepaid expense 1,627 1,231 Deferred income tax assets 3,767 3,721 Total current assets 60,100 59,386 Property, plant and equipment, at cost: Machinery and equipment 30,033 29,187 Furniture and fixtures 26,117 25,374 Land 8,100 8,100 Buildings and improvements 22,770 22,689 Leasehold improvements 814 1,189 87,834 86,539 Less: accumulated depreciation and amortization (36,967) (35,472) 50,867 51,067 Intangible assets, net 601 663 Other assets 296 305 Total assets $ 111,864 $ 111,421 See accompanying notes to consolidated financial statements PRINTRONIX, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - continued (Amounts in thousands, except share and per share data) June 30, 2000 March 31, 2000 (Unaudited) (Audited) LIABILITIES AND STOCKHOLDERS'EQUITY: Current liabilities: Short-term debt $ 4,700 $ 13,500 Accounts payable 8,938 12,121 Accrued expenses: Payroll and employee benefit 4,382 5,321 Warranty 1,615 1,559 Other 3,842 4,958 Income taxes 697 2,486 Environmental 214 214 Total current liabilities 24,388 40,159 Long-term debt, net of current portion 16,800 - Minority interest in subsidiary 302 317 Commitments and contingencies Stockholders' equity: Common stock, par value $0.01 Authorized 30,000,000 shares, issued and outstanding 6,211,687 and 6,257,417 shares as of June 30, 2000 and March 31, 2000, respectively 62 63 Additional paid-in capital 30,133 30,238 Retained earnings 40,179 40,644 Total stockholders' equity 70,374 70,945 Total liabilities and stockholders' equity $ 111,864 $ 111,421 See accompanying notes to consolidated financial statements PRINTRONIX, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS (Amounts in thousands, except per share data) Three Months Ended June 30, 2000 June 25, 1999 (Unaudited) Net sales $ 39,721 $ 44,885 Cost of sales 28,190 29,964 Gross profit 11,531 14,921 Operating expenses: Engineering and development 4,578 4,647 Sales and marketing 4,553 4,535 General and administrative 1,861 2,392 Total operating expense 10,992 11,574 Income from operations 539 3,347 Other income (expense), net (293) 227 Income before provision for income taxes and minority interest 246 3,574 Provision for income taxes 83 1,180 Minority interest in loss in subsidiary (15) (6) Net income $ 178 $ 2,400 Net income per common share: Basic $ 0.03 $ 0.37 Diluted $ 0.03 $ 0.36 Weighted-average common shares: Basic 6,244,937 6,536,853 Diluted 6,491,307 6,702,957 See accompanying notes to consolidated financial statements PRINTRONIX, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) Three Months Ended June 30, 2000 June 25, 1999 (Unaudited) Cash flows from operating activities: Net income $ 178 $ 2,400 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 2,217 1,865 (Gain) loss on sale of equipment (16) 42 Minority interest in loss of subsidiary (15) (6) Changes in assets and liabilities: Accounts receivable (205) (854) Inventories (1,585) 886 Other assets (437) (25) Accounts payable (3,183) 847 Payroll and employee benefits (939) 1,065 Accrued income taxes (1,789) 1,028 Other liabilities (1,060) (303) Net cash (used in) provided by operating activities (6,834) 6,945 Cash flows from investing activities: Purchase of property and equipment (1,991) (2,060) Construction of new corporate facility - (5,534) Proceeds from disposition of equipment 52 61 Net cash used in investing activities (1,939) (7,533) See accompanying notes to consolidated financial statements PRINTRONIX, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS - continued (Amounts in thousands) Three Months Ended June 30, 2000 June 25, 1999 (Unaudited) Cash flows from financing activities: Proceeds from the issuance of mortgage 17,500 - Payment made on the line of credit (9,500) - Repurchase and retirement of common stock (934) (1,964) Proceeds from the exercise of stock option 189 173 Net cash provided by (used in) financing activities 7,255 (1,791) Net decrease in cash and cash equivalents (1,518) (2,379) Cash and cash equivalents at beginning of period 14,980 11,911 Cash and cash equivalents at end of period $ 13,462 $ 9,532 Supplementary disclosures of cash flow information: Income taxes paid $ 3,100 $ 134 Interest paid $ 268 $ 4 See accompanying notes to consolidated financial statements PRINTRONIX, INC. AND SUBSIDIARIES CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2000 (Unaudited) 1) Basis of Presentation The unaudited consolidated financial statements included herein have been prepared by Printronix, Inc. (the "Company"), pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. In the opinion of management, the consolidated financial statements reflect all adjustments (which include only normal recurring adjustments) considered necessary to present fairly the financial position and results of operations as of and for the periods presented. These consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company's latest Annual Report on Form 10-K for the fiscal year ended March 31, 2000, as filed with the Securities and Exchange Commission. The results of operations for such interim periods are not necessarily indicative of the results for the full year. Certain amounts from the prior year consolidated financial statements have been reclassified to conform to the current year presentation. 2) Bank Borrowings and Debt Arrangements During the quarter, the Company increased its credit facility with a United States bank to $27.5 million from $22.5 million. The $27.5 million consists of a $17.5 million, seven year, mortgage secured by the Company's new Irvine facility and a $10.0 million three year unsecured line of credit. The Company ended the quarter with long-term debt of $16.8 million. Short term debt at the end of the quarter was $4.7 million, which includes borrowings of $4.0 million against the line of credit and $0.7 million mortgage repayment due within the current year. PRINTRONIX, INC. AND SUBSIDIARIES CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2000 (Unaudited) 3) Earnings per Share The number of shares used in computing diluted earnings per share equals the total of the weighted-average number of common shares outstanding during the periods presented plus the dilutive effect of stock options. The dilutive effect of stock options represents additional shares which may be issued in connection with their exercise, reduced by the number of shares which could be repurchased with the proceeds at the average market price per share computed on a quarterly and year to date basis during the year. The reduction in the number of shares outstanding from 1999 to 2000 is due to the Company's authorized share repurchase program (see note 4). The following table shows the calculation for basic and diluted shares outstanding: Three Months Ended June 30, 2000 June 25, 1999 Basic weighted-average common shares outstanding 6,244,937 6,536,853 Effect of dilutive stock options 246,370 166,104 Diluted weighted- average common shares outstanding 6,491,307 6,702,957 4) Common Stock As authorized by the Board of Directors, the Company repurchased and retired 60,432 shares of common stock during the quarter at prices ranging from $13.00 to $17.81 per share, at a cost of $0.9 million. Purchases of an additional 41,500 shares of common stock were made subsequent to the end of the quarter and future purchases of up to 314,462 shares of common stock may be made at the Company's discretion. PART I. FINANCIAL INFORMATION Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PRINTRONIX, INC. AND SUBSIDIARIES FORWARD-LOOKING STATEMENTS Except for historical information, this report may contain "forward- looking statements" about Printronix, within the meaning of the Private Securities Reform Act of 1995. Terms such as "objectives," "believes," "expects," "plans," "intends," "estimates," "anticipates," "forecasts," "projections," and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, including: adverse business conditions and a failure to achieve growth in the computer industry and in the economy in general; the ability of the Company to achieve growth in the Asia Pacific market; adverse political and economic events in the Company's markets; the ability of the Company to hold or increase market share with respect to line matrix printers; the ability of the Company to successfully compete against entrenched competition in the thermal printer market; the ability of the Company to attract and retain key personnel; the ability of the Company's customers to achieve their sales projections, upon which the Company has in part based its sales and marketing plans; and the ability of the Company to continue to develop and market new and innovative products superior to those of the competition and to keep pace with technological change. RESULTS OF OPERATIONS Revenues Consolidated revenues for the first quarter ended June 30, 2000, were $39.7 million, a decrease of 11.5% from the same period last year. Sales to the Americas for the quarter were $24.4 million, down from $25.4 million a year ago, and accounted for 61.4% of total sales versus 56.5% for the same period last year. Americas distribution sales decreased 7.4% to $11.7 million. Americas OEM sales remained flat at $12.0 million. Sales increases to the largest OEM customers were offset by decreases to other OEM customers. EMEA (Europe, Middle East and Africa) sales decreased 24.6% to $12.1 million from the same period last year. This decrease reflected a soft market across nearly all customers and channels, due in part, the Company believes, to projects that were halted as a result of Y2K and have been slow to restart. Asia Pacific sales for the quarter decreased 6.0% to $3.3 million, due to lower sales into the ASEAN countries. Sales into south Asia increased 7.6%, and sales into north Asia increased 3.5%. Sales by RJS were unchanged at $0.8 million. In comparison with the prior quarter, revenue decreased $8.7 million, or 17.9%, which includes a 12.4% decrease in the Americas, a 22.4% decrease in EMEA and a 25.1% decrease in Asia Pacific. Sales by channel were 47.5% OEM and 52.5% distribution, compared with 45.8% OEM and 54.2% distribution for the same period last year. Sales to OEM customers decreased 8.1% to $18.9 million, and distribution sales decreased 14.3% to $20.8 million, compared with the same quarter last year. In the prior quarter, sales by channel were 47.6% OEM and 52.4% distribution. Line matrix sales for the quarter were $31.4 million, a decrease of 14.9% from the same period last year. Line matrix revenue was 79.1% of total revenue for the quarter. Laser sales for the quarter totaled $5.2 million, down 10.3% from the prior year. Laser revenue was 13.0% of total revenue for the quarter. Thermal printer sales for the quarter were $2.4 million, up 78.1% over the same period last year. This increase is due to the new T5000 thermal product line, and includes shipments of the 6 inch and 8 inch thermal printers to IBM which commenced in early June. Thermal sales were 6.0% of total revenue. In the prior quarter, line matrix sales were $39.3 million or 81.2% of revenue, laser sales were $5.6 million or 11.5% of revenue and thermal printer sales were $2.1 million or 4.3% of revenue. Sales to the largest customer, IBM, represented 31.0% of total sales for the quarter, compared with 28.5% a year ago. Sales to the second largest customer represented 7.5% of total sales for the quarter, compared with 8.4% last year. The Company's forecasts, based in part upon customers' projections and on other matters gathered by its sales and marketing departments, suggest that sales in the September quarter may rebound to levels close to year ago sales. The Company anticipates continuing growth in the T5000 thermal printer business in the third and fourth fiscal quarters, augmented in part by IBM marketing the product as an OEM, and looks forward to sales in those quarters comparing favorably with those of the prior year quarters. Gross Profit Gross profit for the quarter ended June 30, 2000, was 29.0% of sales, down from 33.2% a year ago and 32.8% in the previous quarter. The decline is primarily due to volume, product mix, the introduction of the 4 inch thermal printer and the ramp up of the thermal printer production that is based on high cost soft tooling. Operating Expenses, Other Income (Expense) Operating expenses consist of engineering and development, sales and marketing, and general and administrative costs. For the quarter ended June 30, 2000, total operating expenses were $11.0 million compared with $11.6 million for the same period last year. Engineering and development expenses for the quarter were relatively flat at $4.6 million compared with the same period last year. As a percentage of sales, engineering and development expenses were 11.5% for the current quarter and 10.4% for the same quarter last year. Sales and marketing expenses for the quarter were relatively flat at $4.6 million compared with $4.5 million for the same period last year. As a percentage of sales, sales and marketing expenses were 11.5% for the current quarter and 10.1% for the same quarter last year. General and administrative expenses for the quarter were $1.9 million, a decrease of $0.5 million or 22% compared with $2.4 million for the same period last year. The decrease is primarily due to lower labor costs and lower bad debt provision. As a percentage of sales, general and administrative expenses were 4.7% for the current quarter and 5.3% for the same quarter last year. Other expense was $0.3 million for the quarter, compared with other income of $0.2 million in the same quarter last year. The decrease was due to higher interest expense and foreign currency exchange losses. LIQUIDITY AND CAPITAL RESOURCES The Company ended the quarter with cash and cash equivalents of $13.5 million, down $1.5 million from the prior quarter. During the quarter, the Company increased its credit facility with a United States bank to $27.5 million from $22.5 million. The $27.5 million consists of a $17.5 million, seven year, mortgage secured by the Company's new Irvine facility and a $10.0 million three year unsecured line of credit. The Company ended the quarter with long-term debt of $16.8 million. Short term debt at the end of the quarter was $4.7 million, which includes borrowings of $4.0 million against the line of credit and $0.7 million mortgage repayment due within the current year. The current cash position reflects expenditures during the quarter for the purchase and retirement of 60,432 shares of Printronix common stock at an average share price of $15.46, totaling $0.9 million. Capital expenditures for the quarter were $2.0 million. Inventories were $19.3 million, an increase of $1.6 million over the prior quarter. The increase is due to higher thermal product line inventory and the manufacture of Line Matrix ribbons in China. The Company believes that its internally-generated funds, together with available financing, will be adequate in providing its working capital requirements, capital expenditures, and engineering development needs through the current fiscal year. PART I. FINANCIAL INFORMATION Item 3. Quantitative and Qualitative Disclosure About Market Risk PRINTRONIX, INC. AND SUBSIDIARIES MARKET RISK The Company implemented a foreign currency hedging program as of April 2000 in order to mitigate currency rate fluctuation exposure related to foreign currency cash inflows. The Company entered into foreign currency forward exchange contracts with maturities from 30 to 180 days. All contracts are with a major financial institution. As of June 30, 2000, the Company had $5.4 million foreign currency forward exchange contracts outstanding. The Company does not use the contracts for speculative or trading purposes. Gains and losses under these contracts were immaterial for the quarter. PART II. OTHER INFORMATION PRINTRONIX, INC. AND SUBSIDIARIES Item 1. Legal Proceedings See "Item 3. Legal Proceedings" reported in Part I of the Company's Report on Form 10-K for the fiscal year end March 31, 2000. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. Financial Data Schedule (b) Reports. No reports on Form 8-K have been filed by the Registrant for the quarterly period covered by this report. PRINTRONIX, 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. PRINTRONIX, INC. (Registrant) Date: August 10, 2000 By: s/s George L. Harwood George L. Harwood Sr. Vice-President, Finance, Chief Financial Officer and Secretary (Principal Financial Officer and Duly Authorized Officer) PRINTRONIX, INC. AND SUBSIDIARIES Index to Exhibits to Form 10-Q JUNE 30, 2000 EXHIBIT NUMBER DESCRIPTION PAGE 27 Financial Data Schedule Filed only with EDGAR version EX-27 2 0002.txt WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 5 1,000 1,000 3-MOS 3-MOS MAR-30-2001 MAR-31-2000 APR-1-2000 MAR-27-1999 JUN-30-2000 JUN-26-1999 13,462 9,532 0 0 21,968 24,808 1,844 2,372 19,276 14,567 60,100 49,973 87,834 73,152 36,967 33,229 111,864 92,106 24,388 23,202 0 0 0 0 0 0 62 65 70,312 66,995 111,864 92,106 39,721 44,885 39,721 44,885 28,190 29,964 10,992 11,574 278 (233) 0 0 453 0 261 3,580 83 1,180 178 2,400 0 0 0 0 0 0 178 2,400 0.03 0.37 0.03 0.36
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