-----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, SRqhl0H9GTIxOdYqqrTynNamLoP5muvO1XG9D23duTYv3g4BnkfwpIqUJfcncrD/ Bp89EFnKVFDkrWIdo4P2rQ== 0000912057-96-009192.txt : 19960514 0000912057-96-009192.hdr.sgml : 19960514 ACCESSION NUMBER: 0000912057-96-009192 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960328 FILED AS OF DATE: 19960513 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: 96561336 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 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 MARCH 28, 1996 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 ------ ------ 6,981,416 shares of no par value Common Stock outstanding as of May 1, 1996 Page 1 of 16 Exhibit Index on Page 16 DATA I/O CORPORATION FORM 10-Q FOR THE QUARTER ENDED MARCH 28, 1996 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 7 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 16 Exhibit 11 16 Page 2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS DATA I/O CORPORATION CONSOLIDATED BALANCE SHEETS
Mar. 28, Dec. 28, 1996 1995 ----------- --------- (in thousands, except share data) (unaudited) (note 1) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 4,273 $4,496 Trade accounts receivable, less allowance for doubtful accounts of $322 and $311 11,072 13,115 Inventories 9,311 8,539 Deferred income taxes 748 976 Other current assets 829 893 ----------- --------- TOTAL CURRENT ASSETS 26,233 28,019 Land held for sale 2,112 2,095 Property, plant and equipment - net 10,160 10,240 Other assets 4,092 4,422 ----------- --------- TOTAL ASSETS $42,597 $44,776 ----------- --------- ----------- --------- LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 2,340 $ 2,071 Accrued compensation 2,954 3,612 Deferred revenue 5,512 5,436 Other accrued liabilities 2,836 2,672 Accrued costs of business restructuring 546 965 Income taxes payable 201 1,141 Notes payable 113 117 ----------- --------- TOTAL CURRENT LIABILITIES 14,502 16,014 LONG TERM DEBT 1,500 1,500 LONG TERM OTHER PAYABLES 1,130 1,117 DEFERRED INCOME TAXES 447 216 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, 6,970,166 and 7,083,825 shares, respectively 16,566 17,528 Retained earnings 8,008 7,946 Currency translation adjustments 444 455 ----------- --------- TOTAL STOCKHOLDERS' EQUITY 25,018 25,929 ----------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $42,597 $44,776 ----------- --------- ----------- ---------
See notes to consolidated financial statements Page 3 DATA I/O CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Mar. 28, Mar. 30, FOR THE QUARTERS ENDED 1996 1995 --------- -------- (in thousands, except per share data) Net sales $15,656 $16,208 Cost of goods sold 8,105 7,371 --------- -------- Gross margin 7,551 8,837 Operating expenses: Research and development 2,465 2,334 Selling, general and administrative 5,014 5,104 --------- -------- Total operating expenses 7,479 7,438 --------- -------- Operating income 72 1,399 Non-operating (income) expense: Interest income (63) (99) Interest expense 54 62 Foreign currency exchange (2) 2 --------- -------- Total non-operating (income) expense (11) (35) --------- -------- Income before taxes 83 1,434 Income tax expense 21 293 --------- -------- Net income $62 $1,141 --------- -------- --------- -------- Earnings per share: Net income $0.01 $0.15 --------- -------- --------- -------- Weighted average shares outstanding 7,325 7,763 --------- -------- --------- --------
See notes to consolidated financial statements. Page 4 DATA I/O CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Mar. 28, Mar. 30, 1996 1995 ---------- --------- (in thousands) OPERATING ACTIVITIES: Net income $62 $1,141 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 1,018 1,058 Deferred income taxes and tax refunds (480) 365 Deferred revenue 75 293 Changes in current items other than cash and cash equivalents: Trade accounts receivable 2,040 (1,792) Inventories (772) (615) Other current assets 63 56 Accounts payable and accrued liabilities (213) 773 Business restructure (419) (51) ---------- --------- Net cash provided by operating activities 1,374 1,228 INVESTING ACTIVITIES: Additions to property, plant and equipment (629) (673) Additions to other assets (222) ---------- --------- Cash used for investing activities (629) (895) FINANCING ACTIVITIES: Additions to (repayment of) notes payable (4) 758 Sale of common stock 154 166 Repurchase of common stock (1,433) Proceeds from exercise of stock options 317 24 ---------- --------- Cash provided by (used for) financing activities (966) 948 ---------- --------- Increase (decrease) in cash and cash equivalents (221) 1,281 Effects of exchange rate changes on cash (2) (13) Cash and cash equivalents - Beginning of quarter 4,496 7,279 ---------- --------- Cash and cash equivalents - End of quarter $4,273 $8,547 ---------- --------- ---------- --------- SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest $16 $51 Income taxes $434 $11
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 March 28, 1996 and March 30, 1995, 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 28, 1995 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 ended March 28, 1996 are not necessarily indicative of the results that may be expected for the year ending December 26, 1996. 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 28, 1995. NOTE 2 - CLASSIFICATIONS Certain prior period's 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): Mar. 28, Dec. 28, 1996 1995 --------- ---------- Raw material $4,882 $ 4,839 Work-in-process 2,342 2,125 Finished goods 2,087 1,575 --------- ---------- $9,311 $ 8,539 --------- ---------- --------- ---------- NOTE 4 - PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consisted of the following components (in thousands): Mar. 28, Dec. 28, 1996 1995 --------- ---------- Land $ 910 $ 910 Building and improvements 7,545 7,539 Equipment 22,474 22,329 --------- ---------- 30,778 30,929 Less accumulated depreciation 20,769 20,538 --------- ---------- $10,160 $10,240 --------- ---------- --------- ---------- Page 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL AGREEMENT TO PURCHASE MINORITY INTEREST IN BUSINESS On April 25, 1996 the Company announced it has reached an agreement in principle to purchase a substantial minority interest in Needham's Electronics and to enter into a worldwide distribution agreement for Needham's Electronics' programmer products. Completion of the minority investment and creation of the distribution rights are subject to negotiation of definitive agreements and satisfaction of certain conditions, which the Company plans to complete during the second quarter of 1996. SHARE REPURCHASE PROGRAM The Company announced on October 27, 1995 a share repurchase program which authorized the Company to repurchase up to 7.5% (approximately 570,000 shares) of its outstanding shares of common stock. On February 21, 1996 the Company announced an extension of the share repurchase program. The extension authorized the Company to repurchase up to an additional 8% (approximately 570,000 shares) of its outstanding common stock. These purchases may be executed through open market purchases at prevailing market prices, through block purchases or in privately negotiated transactions. Purchases may commence or be discontinued at any time. At May 7, 1996, March 28, 1996 and December 28, 1995 the Company had repurchased 978,700, 760,700 and 562,400 shares at a total cost of approximately $6.9 million, $5.6 million and $4.1 million, respectively. FORWARD-LOOKING STATEMENTS Although most of the information contained in this report is historical, certain of the statements contain forward-looking information. To the extent these statements express or imply, without limitation, product development and introduction plans, the Company's expectations for growth, estimates of future revenue, expenses, profit, cash flow, balance sheet items, sell-through or backlog, forecasts of demand or market trends for the Company's various product categories and for the industries in which the Company operates or any other guidance on future periods, these statements are forward-looking and involve matters which are subject to a number of known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed in such forward-looking statements. Readers of this report should consider, along with other relevant information, the risk factors identified by the Company under the caption "Risk Factors" in Item 1 and elsewhere in the Company's Annual Report on Form 10-K for the year ended December 28, 1995, and other risks identified from time to time in the Company's filings with the Securities and Exchange Commission, press releases and other communications. PROPERTY FOR SALE The Company has listed its entire Redmond headquarters property as available for sale for $14.6 million with long-term lease back provisions on the building. 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 reduced sales and gross margins 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 in 1994. The Company began implementation of the planned changes to its manufacturing processes in 1994 for completion in 1997. The manufacturing consolidation and relocation project was completed in the first quarter of 1996, and the outsourcing of certain manufacturing processes is scheduled to be completed in 1997. Of the original restructuring charge, approximately $965,000 remained as an accrued liability at December 28, 1995. At March 28, 1996, the remaining accrued liability was approximately $546,000. The reduction during the first quarter of 1996 Page 7 related primarily to implementation of changes in manufacturing processes, facility consolidation and abandoned office space lease payments. As of March 28, 1996, the Company's restructuring has proceeded approximately as planned. No significant changes were made to the Company's restructuring plans during the first quarter of 1996. The relocation to Redmond, Washington of the Company's Anaheim, California manufacturing operations was completed during the first quarter. RESULTS OF OPERATIONS NET SALES (in thousands) First Quarter First Quarter 1996 Change 1995 ------------- ------------- ------------- Net sales $15,656 (3.4%) $16,208 ------------- ------------- ------------- Net sales decreased 3.4% in the first quarter of 1996 compared to 1995, with U.S. sales decreasing 11% and international sales increasing 6.3%. Orders in the first quarter of 1996 declined approximately 17% to $14.9 million, compared with $17.9 million in 1995. Sales of the Company's Programming Systems products decreased 11.5% compared to the first quarter of 1995. Partially offsetting this decline was a 14% increase in sales in the Synario Design Automation Division. In addition, the Semiconductor Equipment Division, obtained as part of the Reel-Tech acquisition in August of 1995, contributed incremental sales growth of approximately $1 million. The strengthening U.S. Dollar versus the Japanese Yen and the German Mark also contributed to the decline in sales for the first quarter. During the first quarter of 1996, net sales for the Company's non-automated programming systems declined by $3.8 million or 38% compared to 1995. Orders for non-automated programming systems declined 15% compared to the first quarter of 1995. The Company believes these decreases were primarily due to the slowdown in electronics consumer goods manufacturing capital spending in the United States and Europe which reduced the demand for the Company's programming systems. In addition, the Company believes the declines also reflect the continuing market shift away from the Company's traditional line of higher-priced IC programmers for the engineering market toward lower-priced project specific programmers. The Company believes the market shift toward lower-priced IC programmers has been caused in part by advances in semiconductor processing technology that have 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 technological improvements in personal computers and design software tools have caused a shift in the demand for IC design tools by engineering design teams away from hardware tools 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, 2700 and Synario. Sales of the Company's ProMaster line of automated handling systems for the manufacturing environment increased by approximately 13% for the first quarter of 1996 compared to the first quarter of 1995. A market shift in the ProMaster product mix toward higher-priced models contributed to the sales increase. Automated handling systems accounted for approximately 29% of total revenues during the first quarter compared with 25% for the first quarter of 1995. Orders for the ProMaster line decreased 42% compared to the first quarter of 1995. The Company believes this decrease was primarily due to the slowdown in electronics consumer goods manufacturing capital spending in the United States and Europe during the first quarter, and greater use of in-circuit programming by ATE testers in some very high-volume manufacturing applications. The Company believes the increase in sales of the Company's ProMaster products reflects the expanded use of programmable integrated circuits in the mid- to high-volume manufacturing environment. 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. Although, during the first quarter orders have slowed Page 8 due to what the Company believes is the soft capital spending market, the Company still feels that its line of automated handling systems is well positioned to capitalize on the trend toward automation and integration of manufacturing processes. Sales of the Company's Programming Systems software products decreased by 48% in the first quarter of 1996 compared to 1995. The Company's older software design tool, ABEL, declined due to competitive pricing pressures and product aging. First quarter sales and orders of the Company's Semiconductor Equipment products, acquired as part of the Reel-Tech acquisition, were approximately $1 million. The Company believes the market for semiconductor equipment has experienced strong growth as semiconductor manufacturers have expanded capacity in response to increased demand for ICs. The Company is in the process of expanding its personnel, space and systems to meet expected demand for its semiconductor equipment. The Company believes that if this strong demand continues and the Company executes well in integrating the Reel-Tech acquisition, the Company's Semiconductor Equipment products may provide a significant revenue growth opportunity. Due to the cyclical nature of demand for ICs, the activities of competitors and other factors, there can be no assurance that strong demand for this equipment will continue. Partially offsetting the increase in international sales was the negative impact of foreign currency exchange rate changes. These changes reduced sales by approximately $360,000 during the first quarter of 1996 compared to 1995, which was due primarily to rate changes for the German Mark and the Japanese Yen. International sales were 48% of total net sales for the first quarter of 1996 compared to 44% of total net sales in the first quarter of 1995. GROSS MARGIN (in thousands) First Quarter First Quarter 1996 Change 1995 ------------- ------------- ------------- Gross Margin $7,551 (14.5%) $8,837 Percentage of net sales 48.2% 54.5% ------------- ------------- ------------- Gross margin for the first quarter of 1996 decreased compared to the first quarter of 1995 due primarily to lower volumes, lower product margins and increases in inventory reserves. The relatively high fixed component of cost of goods sold causes any swing in total volume to have a significant impact on gross margin. The shift in mix of product revenues from software to hardware and from higher-priced and higher-margin non-automated programming systems to the lower-priced alternatives has lowered the overall product gross margins. In addition, the gross margin on the ProMaster 9500 was below that of the Company's traditional handlers due to higher material and labor costs. The Company expects these costs to decline in future periods due to anticipated improvements in the proficiency of manufacturing and service personnel in building and servicing the ProMaster 9500 as a result of the Reel-Tech acquisition in August 1995. Additionally, the Company completed the relocation of its Anaheim manufacturing facility to its Redmond headquarters and expects labor and overhead costs to decline in future quarters as a result of this consolidation. RESEARCH AND DEVELOPMENT (in thousands) First Quarter First Quarter 1996 Change 1995 ------------- ------------- ------------- Research and development $2,465 5.6% $2,334 Percentage of net sales 15.7% 14.4% ------------- ------------- ------------- The increase in research and development spending compared to the first quarter of 1995 is primarily due to increased compensation and personnel costs, as well as the addition of the Semiconductor Equipment division obtained as part of the Reel-Tech acquisition in August 1995. The Company expects to continue its significant investment in research and development activities. 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 Page 9 strategic growth markets, namely automated handling systems for the manufacturing environment, Windows-based EDA software design tools, lower-priced IC programmers and semiconductor equipment. SELLING, GENERAL AND ADMINISTRATIVE (in thousands) First Quarter First Quarter 1996 Change 1995 ------------- ------------- ------------- Selling, general & administrative $5,014 (1.8%) $5,104 Percentage of net sales 32.0% 31.5% ------------- ------------- ------------- The decrease in selling, general and administrative expenditures in the first quarter of 1996 is due primarily to lower sales commissions due to the lower volume of sales during the quarter and lower performance bonuses and incentive compensation. In addition, the increased value of the U.S. Dollar versus the Japanese Yen and German Mark also contributed to the decrease in expenditures during the quarter. These reductions were partially offset by increased personnel costs and increased marketing and promotion expenditures. INTEREST (in thousands) First Quarter First Quarter 1996 Change 1995 ------------- ------------- ------------- Interest income $63 (36.4%) $99 Interest expense $54 (12.9%) $62 ------------- ------------- ------------- Net interest income decreased during the first quarter of 1996 compared with 1995, primarily due to a decrease in the average level of funds available for investment as a result of the Company's share repurchase program. Interest rates were also slightly lower during the first quarter of 1996 compared to 1995. INCOME TAXES (in thousands) First Quarter First Quarter 1996 Change 1995 ------------- ------------- ------------- Income taxes $21 (92.8%) $293 Effective tax rate 25.3% 20.4% ------------- ------------- ------------- The Company's effective tax rate for the first quarter of 1996 differed from the statutory 34% tax rate primarily due to the benefits related to the foreign sales corporation. Tax valuation reserves increased by approximately $100,000 during the quarter. The Company has valuation reserves of $2.7 million that may reverse as the Company records income. The Company believes the potential reversal of these valuation reserves may substantially reduce its effective tax rate from the statutory rate during the balance of 1996. Page 10 NET INCOME AND EARNINGS PER SHARE (in thousands) First Quarter First Quarter 1996 Change 1995 ------------- ------------- ------------- Net income $62 (94.6%) $1,141 Earnings per share $0.01 (93.3%) $0.15 ------------- ------------- ------------- The decrease in net income and earnings per share compared with the first quarter of 1995 is primarily due to decreased sales volume, a lower gross margin percentage, and increased research and development expenses. 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. To date the foreign currency rate changes have not significantly impacted the Company's profitability. This is because approximately only 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, and the effect of individual rate changes on sales and expenses tend to offset each other. Additionally, the Company hedges its foreign currency exposure on the sales of inventory and certain loans to its foreign subsidiaries through the use of foreign exchange contracts. FINANCIAL CONDITION LIQUIDITY AND CAPITAL RESOURCES March 28, Dec. 28, 1996 Change 1995 ------------- ------------- ------------- Working capital $11,731 ($274) $12,005 Total debt $1,613 ($4) $1,617 ------------- ------------- ------------- Working capital decreased during the first quarter of 1996 primarily due to funds used to repurchase common stock as discussed above. This decrease was partially offset by funds provided by operations. The Company's trade accounts receivable decreased by approximately $2 million during the first quarter. This decrease was primarily due to decreased sales volume during the first quarter of 1996. The Company increased its inventory level by approximately $772,000 during the first quarter. This increase was primarily to support anticipated growth in the Semiconductor Equipment products as well as to provide a level of safety stock during the Anaheim factory relocation which was completed in March 1996. The Company reduced its accrued expenses primarily due to payments of approximately $419,000 of restructure related accruals and payments of 1995 incentive compensation, contributions to the Company's employee retirement savings plan and payments of 1995 income taxes. Funding for these changes was provided primarily by operations and approximately $471,000 in stock sale proceeds under the Company's employee stock benefit plans. As of March 28, 1996, the Company had total debt of $1.6 million or approximately 6% of its $25 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 $113,000 is current debt, consisting entirely of borrowings on the Company's $1.5 million foreign line of credit. No borrowings were outstanding under the Company's $8.0 million U.S. line of credit. Page 11 The U.S. line of credit matures May 31, 1996. The foreign line of credit matures in August 1996. 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 1996 will be approximately $1.5 million. 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 this amount. At March 28, 1996, the Company's material short-term unused sources of liquidity consisted of approximately $4.3 million in cash and cash equivalents, available borrowings of $8.0 million under its U.S. line of credit and available borrowings of approximately $1.4 million 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, fund the Company's share repurchase program, fund its remaining restructure accrued liabilities, fund the minority investment in Needham's Electronics and fund the Reel-Tech contingent payment obligations. In addition, if the Company is successful in selling its property 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 None 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: May 7, 1996 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 Title Page Number Number - ------- ----------------------------------------------------- ----------- 11 Statement Regarding Computation of Earnings per Share 16 Page 15 EXHIBIT 11 DATA I/O CORPORATION COMPUTATION OF EARNINGS PER SHARE Earnings per share reported in Form 10-Q for the quarters ended March 28, 1996, and March 30, 1995 are based on the following (in thousands): Mar. 28, Mar. 30, 1996 1995 -------- -------- Primary and fully diluted: Weighted Average Shares Outstanding 7,053 7,473 Dilutive Effect of Stock Options 272 290 -------- -------- Weighted Average Common and Equivalent Shares Outstanding 7,325 7,763 -------- -------- -------- -------- Page 16 EX-27 2 EXHIBIT 27
5 1,000 3-MOS DEC-26-1996 DEC-29-1995 MAR-28-1996 4273 0 11394 322 9311 26233 30929 20769 42597 14502 0 0 0 16566 8452 42597 15656 15656 8105 7467 (65) 12 54 83 21 62 0 0 0 62 .01 .01
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