0000912057-95-006156.txt : 19950811 0000912057-95-006156.hdr.sgml : 19950811 ACCESSION NUMBER: 0000912057-95-006156 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950629 FILED AS OF DATE: 19950810 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DATA I/O CORP CENTRAL INDEX KEY: 0000351998 STANDARD INDUSTRIAL CLASSIFICATION: INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS [3825] IRS NUMBER: 910864123 STATE OF INCORPORATION: WA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-10394 FILM NUMBER: 95560326 BUSINESS ADDRESS: STREET 1: 10525 WILLOWS RD NE STREET 2: P O BOX 97046 CITY: REDMOND STATE: WA ZIP: 98073-9746 BUSINESS PHONE: 2068816444 10-Q 1 FORM 10-Q ------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended JUNE 29, 1995 Commission File No. 0-10394 DATA I/O CORPORATION (Exact name of registrant as specified in its charter) Washington 91-0864123 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 10525 Willows Road N.E., Redmond, Washington, 98073-9746 (address of principal executive offices, Zip Code) Registrant's telephone number, including area code (206) 881-6444 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 ---- ---- 7,541,417 shares of no par value Common Stock outstanding as of July 25, 1995 Page 1 of 16 Exhibit Index on Page 15 -------------------------------------------------------------------------------- DATA I/O CORPORATION FORM 10-Q FOR THE QUARTER ENDED JUNE 29, 1995 INDEX PART I - FINANCIAL INFORMATION PAGE ---- Item 1. Financial Statements (unaudited) 3 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 PART II - OTHER INFORMATION Item 1. Legal Proceedings 13 Item 2. Changes in Securities 13 Item 3. Defaults Upon Senior Securities 13 Item 4. Submission of Matters to a Vote of Security Holders 13 Item 5. Other Information 13 Item 6. Exhibits and Reports on Form 8-K 13 Signatures 14 Exhibit Index 15 Exhibit 11 16
PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS DATA I/O CORPORATION CONSOLIDATED BALANCE SHEETS ------------------------------------------------------------------------------------------------------------------------------------ June 29, Dec. 29, 1995 1994 ------------------------------------------------------------------------------------------------------------------------------------ (In thousands, except share data) (Unaudited) (Note 1) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 8,546 $ 7,279 Trade accounts receivable, less allowance for doubtful accounts of $293 and $277 12,425 10,145 Inventories 7,893 6,937 Recoverable income taxes 368 453 Deferred income taxes 773 675 Other current assets 674 1,361 ---------- ----------- TOTAL CURRENT ASSETS 30,679 26,850 Land held for sale 2,058 2,006 Property, plant and equipment - net 10,413 10,737 Other assets 3,483 3,894 ---------- ----------- TOTAL ASSETS $46,633 $43,487 ---------- ----------- ---------- ----------- LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 1,923 $ 1,908 Accrued compensation 3,219 3,460 Deferred revenue 5,721 5,331 Other accrued liabilities 2,736 2,786 Accrued costs of business restructuring 1,731 1,890 Income taxes payable 758 997 Notes payable 1,138 440 ---------- ----------- TOTAL CURRENT LIABILITIES 17,226 16,812 LONG TERM DEBT 1,500 1,500 LONG TERM OTHER PAYABLES 426 361 DEFERRED INCOME TAXES 448 471 STOCKHOLDERS' EQUITY: Preferred stock - Authorized, 5,000,000 shares, including 200,000 shares of Series A Junior Participating Issued and outstanding, none Common stock, at stated value - Authorized, 30,000,000 shares Issued and outstanding, 7,537,167 and 7,431,901 shares, respectively 21,120 20,729 Retained earnings 5,516 3,185 Currency translation adjustments 397 429 ---------- ----------- TOTAL STOCKHOLDERS' EQUITY 27,033 24,343 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $46,633 $43,487 ---------- ----------- ---------- -----------
See notes to consolidated financial statements Page 3 DATA I/O CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Quarter Ended Six Months Ended ------------------------------------------------------------------------------------------------------------------------------------ June 29, June 30, June 29, June 30 1995 1994 1995 1994 ------------------------------------------------------------------------------------------------------------------------------------ (in thousands, except per share data) Net sales $16,126 $16,131 $32,334 $30,535 Cost of goods sold 7,323 7,359 14,694 14,747 ------- ------- ------- ------- Gross margin 8,803 8,772 17,640 15,788 Operating expenses: Research and development 2,397 2,246 4,730 4,448 Selling, general and administrative 4,967 5,284 10,072 10,427 ------- ------- ------- ------- Total operating expenses 7,364 7,530 14,802 14,875 ------- ------- ------- ------- Operating income 1,439 1,242 2,838 913 Non-operating (income) expense: Interest income (111) (21) (211) (29) Interest expense 80 68 143 135 Foreign currency exchange (1) 7 1 6 ------- ------- ------- ------- Total non-operating (income) expense (32) 54 (67) 112 ------- ------- ------- ------- Income before taxes 1,471 1,188 2,905 801 Income tax expense 282 400 575 412 ------- ------- ------- ------- Net income $1,189 $788 $2,330 $389 ------- ------- ------- ------- ------- ------- ------- ------- Earnings per share: Net income $0.15 $0.11 $0.30 $0.05 ------- ------- ------- ------- ------- ------- ------- ------- Weighted average shares outstanding 7,930 7,360 7,875 7,347 ------- ------- ------- ------- ------- ------- ------- -------
See notes to consolidated financial statements. Page 4 DATA I/O CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
------------------------------------------------------------------------------------------------------------------------------------ For the six months ended: June 29, June 30, 1995 1994 ------------------------------------------------------------------------------------------------------------------------------------ (In thousands) OPERATING ACTIVITIES: Net income $2,330 $389 Adjustments to reconcile income to net cash provided by operating activities: Depreciation and amortization 2,184 2,439 Deferred income taxes and tax refunds (276) 1,860 Deferred revenue 387 402 Changes in current items other than cash and cash equivalents: Trade accounts receivable (2,290) (962) Inventories (956) 1,459 Other current assets 686 228 Accounts payable and accrued liabilities (211) 787 Business restructure (159) (1,198) ------------- ------------- Cash provided by operating activities 1,695 5,404 INVESTING ACTIVITIES: Additions to property, plant and equipment (1,276) (237) (Additions to)/dispositions of other assets (232) 4 ------------- ------------- Cash used for investing activities (1,508) (233) FINANCING ACTIVITIES: Additions to/(repayment of) notes payable 693 (1,422) Sale of common stock 166 167 Proceeds from exercise of stock options 225 18 ------------- ------------- Cash provided by/(used for) financing activities 1,084 (1,237) ------------- ------------- Increase in cash and cash equivalents 1,271 3,934 Effects of exchange rate changes on cash (4) (24) Cash and cash equivalents - Beginning of period 7,279 1,704 ------------- ------------- Cash and cash equivalents - End of period $8,546 $5,614 ------------- ------------- ------------- ------------- SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest $ 73 $ 77 Income taxes $451 $113
See notes to consolidated financial statements. Page 5 DATA I/O CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 - FINANCIAL STATEMENT PREPARATION The financial statements as of June 29, 1995 and June 30, 1994, have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). These statements are unaudited but, in the opinion of management, include all adjustments (consisting of normal recurring adjustments and accruals) necessary to present fairly the results for the periods presented. The balance sheet at December 29, 1994 has been derived from the audited financial statements at that date. 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 SEC rules and regulations. Operating results for the quarter and six months ended June 29, 1995 are not necessarily indicative of the results that may be expected for the year ending December 28, 1995. These financial statements should be read in conjunction with the annual audited financial statements and the accompanying notes included in the Company's Form 10-K for the year ended December 29, 1994. NOTE 2 - CLASSIFICATIONS Certain prior periods balances have been reclassified to conform to the presentation used in the current period. NOTE 3 - INVENTORIES Inventories consisted of the following components (in thousands):
June 29, Dec. 29, 1995 1994 -------------- --------------- Raw material $3,177 $3,327 Work-in-process 2,779 1,955 Finished goods 1,937 1,655 -------------- --------------- $7,893 $6,937 -------------- --------------- -------------- ---------------
NOTE 4 - PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consisted of the following components (in thousands):
June 29, Dec. 29, 1995 1994 -------------- --------------- Land $ 910 $ 910 Building and improvements 7,533 7,334 Equipment 22,175 21,507 -------------- --------------- 30,618 29,751 Less accumulated depreciation 20,205 19,014 -------------- --------------- $10,413 $10,737 -------------- --------------- -------------- ---------------
Page 6 NOTE 5 - ACCOUNTING FOR INCOME TAXES Statement of Financial Accounting Standards ("SFAS") 109 requires the establishment of deferred tax assets and liabilities for expected future tax consequences of events that have been recognized in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement carrying amounts and the tax basis of assets and liabilities using currently enacted tax rates which are expected to be in effect during the years in which the differences are anticipated to reverse. The Company was able to reverse deferred tax asset valuation allowances for the quarter ended June 29, 1995, due to the Company's profit generated in the current period and utilization of alternative minimum tax credit carryforwards. The valuation allowance for deferred tax assets decreased by approximately $200,000 during the second quarter and $300,000 for the first six months of 1995 to $3.1 million as of June 29, 1995. Page 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL BUSINESS ACQUISITION The Company has signed an agreement in principal to purchase Reel-Tech, Inc. of Indianapolis, Indiana. Reel-Tech designs and manufactures handling equipment primarily for use by semiconductor companies in their manufacturing operations. Revenues for Reel-Tech in 1994, were approximately $2.0 million. For the last year, Reel-Tech has been Data I/O's partner for the development and manufacture of handling equipment for the ProMaster 9500. Data I/O expects to complete due diligence, execute a definitive purchase agreement, and close this transaction in the third quarter of 1995. The transaction will be accounted for using the purchase method with a portion of the purchase price being contingent upon the acquired operation achieving specified performance goals. The Company is currently investigating the potential of a charge to earnings in the third quarter related to this acquisition. The Company expects to fund this acquisition from its existing cash balances and does not believe that the acquisition will have a material impact on its liquidity. RESTRUCTURE PROGRESS During the fourth quarter of 1993, the Company recorded a pretax charge of $6.1 million related to the restructure of its sales and distribution channels, downsizing its operations to a level consistent with anticipated lower sales and product margins, and to consolidate and outsource certain manufacturing processes. The purpose of the restructure was primarily to reduce expenses and significantly lower the Company's break-even point in reaction to the reduced sales and gross margins the Company was experiencing in 1993. Additionally, the Company made several strategic changes to its sales and distribution channels to better align distribution of the Company's current and anticipated future products to their markets and customers. The general downsizing of operations and restructure of the sales and distribution system were substantially completed during the fourth quarter of 1993 and first quarter of 1994. The Company began implementation of the planned changes to its manufacturing processes in the first quarter of 1994 for completion by the end of 1996. Of the total $6.1 million restructuring charge, approximately $1.9 million remained as an accrued liability at December 29, 1994. At June 29, 1995, the remaining accrued liability was approximately $1.7 million. The reduction during the first six months of 1995 related primarily to implementation of changes in manufacturing processes, facility consolidation and office space lease payments. As of June 29, 1995, the Company's restructuring has proceeded as planned. No significant changes were made to the Company's restructuring plans during the second quarter of 1995. The relocation to Redmond, Washington of the Company s Anaheim, California manufacturing operations is scheduled to take place in stages during the next three quarters. The Company has made significant efforts to minimize disruption of production of the Company s automated handling systems, most of which historically have been manufactured in Anaheim. However, there can be no assurance that the transfer of these operations will not cause delays in production and delivery of product or other adverse consequences. RESULTS OF OPERATIONS NET SALES
Second Quarter First Six Months -------------- ---------------- (in thousands) 1995 1994 1995 1994 ------------------------------------------------------------------------------------------------------------------------------------ Net sales $16,126 $16,131 $32,334 $30,535 Change Net Sales 0% 5.9% ------------------------------------------------------------------------------------------------------------------------------------
Net sales in the Company's core IC programmer business were approximately at the same level in the second quarter and first six months of 1995 as in the same periods of 1994. These revenues had declined between 6% and 17% for the two prior years. This stabilization in revenues reflects the growth in the Company's parallel programmer products used in the manufacturing environment and sales growth of the ChipLab product, the Company's lowest priced IC programmer for the Page 8 engineering market. Offsetting this growth is the continued decline in sales of the Company's traditional line of higher-priced IC programmers for the engineering market. The Company believes the increase in sales of the Company's parallel programmer products reflects the expanded use of programmable integrated circuits in the mid- to high-volume manufacturing market which is also driving the increased sales of the Company's automated handling systems. The Company believes the increase in sales of its ChipLab product is indicative of the continuing market shift toward lower-priced IC programmers. The Company believes the market shift to lower-priced IC programmers has been caused in part by advances in semiconductor processing technology that has lowered the barriers to entry in the programmer business over the last several years. This has caused new market entrants to appear regularly, each trying to carve out a niche. New entrants cause downward price pressure, and each cycle of new competitors lowers the acceptable price of a conventional IC programmer in the customer's view. In addition, the Company believes that there has been a shift in the demand for tools by engineering design teams in favor of increased software design tools. These industry changes had, and are continuing to have, an adverse effect on the Company's IC programmer sales and gross margins, especially since the Company's products historically have been oriented toward hardware tools and, within hardware tools, toward higher-priced IC programmers. However, the Company believes these trends are creating and will continue to generate increased sales for its newer products including ChipLab, Synario, PSX and ProMaster. Sales of the Company's ProMaster line of automated handling systems for the manufacturing environment increased by approximately 9% for second quarter and 24% for the first six months of 1995 compared to 1994. For the second quarter and first six months of 1995 automated handling systems accounted for approximately 26% of total revenues, compared with 24% in the second quarter and 22% for the first six months of 1994. A market shift in the ProMaster product mix toward higher priced models also contributed to the sales increase. The Company'shipped the first unit of its newly introduced ProMaster 9500 in the first quarter of 1995. Due to production constraints the Company was unable to ship ProMaster 9500 units during the second quarter. The Company received orders for three more units during the second quarter, bringing the total backlog of these units to four at June 29, 1995 or approximately $2.1 million. The Company is expecting shipments of this product to resume in the third quarter, as production increases. The Company believes that in the electronic manufacturing market, the proliferation of hard-to-handle surface mount packages in a variety of types is causing a worldwide trend toward automation and integration of manufacturing processes. The Company believes its line of automated handling systems is well positioned to capitalize on this trend. Software product sales declined by approximately 11% compared with the second quarter of 1994. Software sales in the first six months of 1995 were approximately equal to the same period of 1994. Revenues for the Company's older design software products, FutureNet, which the Company discontinued selling in 1995, and ABEL, combined declined by 31% for the second quarter and 24% for the first six months of 1995 compared to the same periods in 1994. The Company's Synario software product sales increased by 22% in the second quarter and 64% for the first six months of 1995 compared to the same periods in 1994. International sales were favorably impacted by foreign currency exchange rate changes by approximately $600,000 during the second quarter of 1995 compared to the second quarter of 1994, which was due primarily to rate changes for the Japanese Yen and the German Mark. International sales were 48% of total net sales for the second quarter of 1995 compared to 45% of total net sales in the second quarter of 1994.
GROSS MARGIN Second Quarter First Six Months -------------- ---------------- (in thousands) 1995 1994 1995 1994 ------------------------------------------------------------------------------------------------------------------------------------ Gross Margin $8,803 $8,772 $17,640 $15,788 Percentage of net sales 54.6% 54.4% 54.6% 51.7% ------------------------------------------------------------------------------------------------------------------------------------
Gross margins for the second quarter remained at approximately the levels recorded in 1994 as improvements due to manufacturing labor and overhead reductions, improved service margins, and the positive currency effects of a weaker dollar were offset by lower product margins. The shift in mix of product revenues from software to hardware and from higher-priced and higher margin IC programmers to the lower-priced alternatives have lowered the overall product gross margins. Page 9 For the first six months of 1995 compared to 1994 the increase in gross margin is largely due to the increase in sales volume. In particular, the Company is achieving improved margins on automated handling system products due to higher volume and a market shift toward higher priced models. In addition, gross margin as a percent of net sales increased largely due to the better utilization of fixed manufacturing overhead. This occurred as a result of increased inventory production related to the higher sales volume, as well as reduced costs in manufacturing, service and distribution operations as a result of the Company's restructuring.
RESEARCH AND DEVELOPMENT Second Quarter First Six Months -------------- ---------------- (in thousands) 1995 1994 1995 1994 ------------------------------------------------------------------------------------------------------------------------------------ Research and development $2,397 $2,246 $4,730 $4,448 Percentage of net sales 14.9% 13.9% 14.6% 14.6% ------------------------------------------------------------------------------------------------------------------------------------
The increase in research and development spending compared to the second quarter and the first six months of 1994 is primarily due to additional research and development projects and increased compensation costs. The Company expects to continue its significant investment in research and development. The Company believes it is essential to invest in research and development to support its existing products and to create new products as markets develop and technologies change. The Company is focusing its research and development efforts in its strategic growth markets, namely automated handling systems for the manufacturing environment, Windows-based EDA software design tools and lower-priced IC programmers.
SELLING, GENERAL AND ADMINISTRATIVE Second Quarter First Six Months -------------- ---------------- (in thousands) 1995 1994 1995 1994 ------------------------------------------------------------------------------------------------------------------------------------ Selling, general & administrative $4,967 $5,284 $10,072 $10,427 Percentage of net sales 30.8% 32.8% 31.1% 34.1%
The decrease in selling, general and administrative expenditures during the second quarter and the first six months of 1995 relative to 1994 is due primarily to the restructure efforts which decreased headcount world-wide by approximately 28% and focused on matching cost effective sales channels to the Company's products and markets. Partially offsetting these expense reductions were increased expenses in the Company's foreign offices, due to currency rate changes and increased incentive compensation.
INTEREST Second Quarter First Six Months -------------- ---------------- (in thousands) 1995 1994 1995 1994 ------------------------------------------------------------------------------------------------------------------------------------ Interest income $111 $21 $211 $29 Interest expense $80 $68 $143 $135 ------------------------------------------------------------------------------------------------------------------------------------
Interest income increased during the second quarter and first six months of 1995 compared with 1994, primarily due to an increase in the average level of funds available for investment. Page 10
INCOME TAXES Second Quarter First Six Months -------------- ---------------- (in thousands) 1995 1994 1995 1994 ------------------------------------------------------------------------------------------------------------------------------------ Income taxes $282 $400 $575 $412 Effective tax rate 19% 34% 20% 51% ------------------------------------------------------------------------------------------------------------------------------------
The Company's effective tax rate for the second quarter and the first six months of 1995 differed from the statutory 34% tax rate primarily due to the reversal of tax valuation reserves. The valuation reserves reversed primarily due to the Company utilizing net operating loss and alternative minimum tax credit carryforwards. The Company has valuation reserves of $3.1 million that may continue to reverse as the Company records income. The Company believes these potential reversing valuation reserves may continue to substantially reduce its effective tax rate from the statutory rate during the balance of 1995.
NET INCOME AND EARNINGS PER SHARE Second Quarter First Six Months -------------- ---------------- (in thousands) 1995 1994 1995 1994 ------------------------------------------------------------------------------------------------------------------------------------ Net income $1,189 $788 $2,330 $389 Earnings per share $0.15 $0.11 $0.30 $0.05 ------------------------------------------------------------------------------------------------------------------------------------
The increase in net income and earnings per share compared with the second quarter and first six months of 1994 is primarily due to a combination of increased sales volume, a higher gross margin percentage, reduced costs and operating expenses resulting from the Company's restructure of its operations and reversal of deferred tax valuation reserves. INFLATION AND CHANGES IN FOREIGN CURRENCY EXCHANGE RATES Historically, the Company has been able to offset the impact of inflation through efficiency increases and price adjustments. Increasing price competition, especially in IC programmers, is currently diminishing and may continue to diminish the Company's ability to offset the impacts of inflation in the future. Sales and expenses incurred by foreign subsidiaries are denominated in the subsidiary's local currency and translated into U.S. dollar amounts at average rates of exchange during the year. Exchange rates impact absolute U.S. dollar amounts but do not have a significant impact on the percentage of net sales ratios. Because only approximately one-third of the Company's sales are made by foreign subsidiaries and independent currency fluctuations tend to minimize the effect of any individual currency exchange, fluctuations to date in foreign currency rates have not significantly impacted the Company's overall financial results. FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES June 29, Dec. 29, 1995 Change 1994 ------------------------------------------------------------------------------------------------------------------------------------ Working capital $13,453 $3,415 $10,038 Total debt $2,638 $698 $1,940 ------------------------------------------------------------------------------------------------------------------------------------
Page 11 Working capital increased during the second quarter and first six months of 1995 primarily due to the funds provided by operations. The Company's trade accounts receivable increased by approximately $500,000 in the second quarter and $2.3 million for the first six months of 1995. This increase relates to a higher percentage of international sales which have a longer collection period and a general increase in the collection period related to automated handling products. The Company also increased its inventory level by approximately $300,000 in the second quarter and $1.0 million in the first six months, primarily to support the growth in the automated handling systems volume as well as to provide a level of safety stock during the Anaheim factory relocation. The Company reduced its other current assets by approximately $700,000 primarily due to the collection of former lease deposits. The Company reduced its accounts payable by approximately $900,000 during the second quarter to levels consistent with the end of 1994. Funding for these changes were provided primarily by operations, a net increase in notes payable during the first six months of 1995 of approximately $700,000 and approximately $400,000 in stock sale proceeds, under the Company's employee stock benefit plans, during the first six months of 1995. As of June 29, 1995, the Company had total debt of $2.6 million or approximately 10% of its $27.0 million in equity. Of this debt, $1.5 million is a note payable due in 1998 for the balance of the purchase price of the CAD/CAM Group. The remaining $1.1 million is current debt, consisting entirely of borrowings on the Company's $1.8 million foreign line of credit. No amounts were borrowed on the Company's $8.0 million U.S. line of credit. The U.S. line of credit was renewed in May of 1995 and matures in 1996. The foreign line of credit matures in November 1995. Historically, these credit lines have been structured as short-term and have been renewed on their maturity dates. The Company currently expects to be able to renew these lines of credit on maturity under substantially the same terms as those presently in place. The Company estimates that capital expenditures for property, plant and equipment during the remainder of 1995 will be approximately $1.5 million, which does not include any amount related to the Reel-Tech, Inc. proposed acquisition. Such expenditures are currently expected to be funded from internally generated funds and, if necessary, borrowings under the Company's existing credit lines. Although the Company fully expects that such expenditures will be made, it has purchase commitments for only a small portion of these amounts. At June 29, 1995, the Company's material short-term unused sources of liquidity consisted of approximately $8.5 million in cash and cash equivalents, available borrowings of $8.0 million under its U.S. line of credit and available borrowings of approximately $700,000 under its foreign line of credit. The Company believes that cash, cash flow from operations and borrowings available under its U.S. and foreign lines of credit will be sufficient to fund working capital needs, service existing debt, finance planned capital expenditures, finance the Reel-Tech, Inc. proposed acquisition and fund its remaining restructure accrued liabilities. In addition, if the Company is successful in selling its land held for sale, additional capital will be available. Page 12 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None ITEM 2. CHANGES IN SECURITIES None ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS At the Annual Meeting of Shareholders held on May 16, 1995, there were present in person or by proxy the holders of 6,415,067 shares of the 7,492,042 shares of Common Stock of the Corporation. The following presents matters ratified and the voting results. (a) Election of a Board of Directors consisting of the following four (4) directors: Name Votes For Votes Withheld ---- --------- -------------- William C. Erxleben 5,895,322 519,745 W. Hunter Simpson 5,862,187 552,880 Donald R. Stenquist 5,911,800 503,267 Milton F. Zeutschel 5,904,359 510,708 (b) Approval of an amendment to the Company's 1986 Stock Option Plan whereby the number of shares of the Company's Common Stock reserved for issuance under the Plan was increased by 500,000 shares; a maximum number of options that may be granted to any one individual in any one fiscal year was created; and the term of the Plan was extended until terminated by the Board of Directors for Non-Qualified Stock Options or to December 15, 2006 for Incentive Stock Options. Votes cast were 2,962,299 For, 1,084,111 Against, 155,309 Abstain and 2,213,348 Broker Non-Votes. ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K Page ---- (a) Exhibits 11. Statement Regarding Computation of Earnings Per Share 16 (b) Reports on Form 8-K None Page 13 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. DATA I/O CORPORATION (REGISTRANT) DATED: August 3, 1995 By://S//Steven M. Gordon --------------------- Steven M. Gordon Vice President Finance and Administration Chief Financial Officer Chief Accounting Officer Secretary and Treasurer Page 14
EXHIBIT INDEX Exhibit Number Title Page Number -------------- ------------------------------------------------- ----------- 11 Statement Regarding Computation of Earnings per Share 16
Page 15 EX-11 2 EXHIBIT 11 EXHIBIT 11 DATA I/O CORPORATION COMPUTATION OF EARNINGS PER SHARE Earnings per share reported in Form 10-Q for the quarters ended June 29, 1995, and June 30, 1994 are based on the following (In thousands):
Quarters Ended Six Months Ended -------------- ---------------- June 29, June 30, June 29, June 30, Primary and fully Diluted: 1995 1994 1995 1994 -------------------------- ----------- ------------ ------------ ------------ Weighted Average Shares Outstanding 7,530 7,328 7,502 7,315 Dilutive Effect of Stock Options 400 32 373 32 ----------- ------------ ------------ ------------ Weighted Average Common and Equivalent Shares Outstanding 7,930 7,360 7,875 7,347 ----------- ------------ ------------ ------------ ----------- ------------ ------------ ------------
Page 16 EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS DEC-28-1995 JUN-29-1995 8,546 0 12,718 293 7,893 30,679 30,618 20,205 46,633 17,226 0 21,120 0 0 5,913 27,033 32,334 32,334 14,694 16,778 (210) 24 143 2,905 575 2,330 0 0 0 2,330 .30 .30