-----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, AJ70O5v7XLFP5fBuYuiEgikRSUF061yGBuUUW6zXN4ceXgbgmXSlZy0CH4E0ZAaz CwsoUPAFJV7k0RneXwuFYA== 0001005477-98-001591.txt : 19980515 0001005477-98-001591.hdr.sgml : 19980515 ACCESSION NUMBER: 0001005477-98-001591 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980514 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRIDEX CORP CENTRAL INDEX KEY: 0000047254 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER PERIPHERAL EQUIPMENT, NEC [3577] IRS NUMBER: 060682273 STATE OF INCORPORATION: CT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-05513 FILM NUMBER: 98621203 BUSINESS ADDRESS: STREET 1: 61 WILTON RD CITY: WESTPORT STATE: CT ZIP: 06880-3121 BUSINESS PHONE: 2032261144 MAIL ADDRESS: STREET 1: 61 WILTON ROAD CITY: WESTPORT STATE: CT ZIP: 06880-3121 FORMER COMPANY: FORMER CONFORMED NAME: HI G INC DATE OF NAME CHANGE: 19840829 10-Q 1 FORM 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: March 31, 1998 -------------------------------------------- OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from: to: --------------------- ---------------------- Commission file number: ------------------------------------------------ TRIDEX CORPORATION - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Connecticut 06-0682273 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 61 Wilton Road, Westport CT 06880 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (203) 226-1144 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Former address: - -------------------------------------------------------------------------------- (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 |_| APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDING DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. YES |_| NO |_| APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding May 13, 1998 - --------------- ------------------------ Common stock, no par value 6,351,124 ------------------- TRIDEX CORPORATION AND SUBSIDIARIES INDEX Page No. -------- PART I. Financial Information: Item 1. Financial Statements Consolidated Condensed Balance Sheets March 31, 1998 and December 31, 1997 3 Consolidated Condensed Statements of Operations for the Quarters Ended March 31, 1998 and March 29, 1997 4 Consolidated Condensed Statements of Cash Flows for the Quarters Ended March 31, 1998 and March 29, 1997 5 Notes to Consolidated Condensed Financial Statements 6 Item 2. Management's Discussion and Analysis of the Results of Operations and Financial Condition 7 PART II. Other Information: Item 6. Exhibits and Reports on Form 8-K 9 Signatures 9 EXHIBIT INDEX Exhibit 11 Computation of Per Share Earnings 10 2 TRIDEX CORPORATION AND SUBSIDIARIES Consolidated Condensed Balance Sheets (Dollars in Thousands) (Unaudited) ---------------------------------- March 31, 1998 December 31, 1997 ASSETS Current assets: Cash and cash equivalents $ 16,708 $ 11,839 Short term investments 4,403 Receivables 3,445 3,043 Inventories 3,839 2,987 Deferred tax assets 659 659 Other current assets 158 343 ---------------------------------- Total current assets 24,809 23,274 ---------------------------------- Plant and equipment 2,511 2,436 Less accumulated depreciation (1,299) (1,195) ---------------------------------- 1,212 1,241 ---------------------------------- Excess of cost over fair value of net assets acquired 2,392 2,517 Other assets 506 366 Investment in net assets of discontinued operations 605 ---------------------------------- $ 28,919 $ 28,003 ================================== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 2,302 $ 1,820 Accrued liabilities 2,207 1,806 Income taxes payable 129 158 ---------------------------------- Total current liabilities 4,638 3,784 ---------------------------------- Shareholders' equity: Common stock no par value 1,377 1,377 Additional paid-in capital 25,273 25,273 Retained deficit (626) (673) Receivable from sale of stock (801) (816) Common shares held in treasury, at cost (942) (942) ---------------------------------- 24,281 24,219 ---------------------------------- $ 28,919 $ 28,003 ================================== See notes to consolidated condensed financial statements. 3 TRIDEX CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations (Dollars in Thousands except Per Share Amounts) (Unaudited) Quarters Ended -------------------------------- March 31, 1998 March 29, 1997 Net sales $ 6,212 $ 5,546 Operating costs and expenses: Cost of sales 4,775 4,340 Engineering, design and product development costs 308 160 Selling, administrative and general expenses 1,263 1,605 -------------------------------- 6,346 6,105 -------------------------------- Operating loss (134) (559) Other income (expense): Interest income, net 226 9 Other, net 1 (2) -------------------------------- 227 7 -------------------------------- Income (loss) from continuing operations before income taxes 93 (552) Provision (benefit) for income taxes 46 (377) -------------------------------- Income (loss) from continuing operations 47 (175) Income from discontinued operations (Note 2) 813 -------------------------------- Net income $ 47 $ 638 ================================ Earnings (loss) per share - basic: Income (loss) from continuing operations $ 0.01 $ (0.05) Income from discontinued operations 0.19 -------------------------------- Net income $ 0.01 $ 0.14 ================================ Earnings (loss) per share - diluted: Income (loss) from continuing operations $ 0.01 $ (0.04) Income from discontinued operations 0.17 -------------------------------- Net income $ 0.01 $ 0.13 ================================ Weighted average common shares outstanding: Basic 5,351,000 4,528,000 ================================ Diluted 5,592,000 4,822,000 ================================ See notes to consolidated condensed financial statements. 4 TRIDEX CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows (Dollars in Thousands) (Unaudited)
Quarters Ended --------------------------------- March 31, 1998 March 29, 1997 Cash flows from operating activities: Net income $ 47 $ 638 Adjustments to reconcile net income to net cash provided by operating activities: Income from discontinued operations (813) Stock incentive compensation expense 404 Depreciation and amortization 229 216 Changes in operating assets and liabilities: Receivables (402) (148) Inventory (852) 607 Other current assets (65) (63) Other assets (59) 13 Accounts payable, accrued liabilities and income taxes payable 854 (1,017) --------------------------------- Net cash used in operating activities (248) (163) --------------------------------- Cash flows from investing activities: Purchases of plant and equipment (75) (129) Proceeds from sale of assets 855 Receipt of principal of note receivable from TransAct 1,000 Deferred acquisition costs (81) --------------------------------- Net cash provided by investing activities 699 871 --------------------------------- Cash flows from financing activities: Proceeds from exercise of stock options and warrants 15 5,503 Net decrease in short term investments 4,403 Net transactions with discontinued operations (26) --------------------------------- Net cash provided by financing activities 4,418 5,477 --------------------------------- Increase in cash and cash equivalents 4,869 6,185 Cash and cash equivalents at beginning of period 11,839 2,787 --------------------------------- Cash and cash equivalents at end of period $ 16,708 $ 8,972 ================================= Supplemental cash flow information: Interest paid $ 1 $ 67 Income taxes paid 76 86 Supplemental non-cash investing and financing activities: Conversion of convertible debentures to common stock $ 3,710
See notes to consolidated condensed financial statements. 5 TRIDEX CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) 1. General: In the opinion of Tridex Corporation ("Tridex" or the "Company"), the accompanying unaudited consolidated condensed financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to present fairly its financial position as of March 31, 1998, the results of its operations for the quarters ended March 31, 1998 and March 29, 1997 and changes in its cash flows for the quarters ended March 31, 1998 and March 29, 1997. The December 31, 1997 consolidated condensed balance sheet has been derived from the Company's audited financial statements at that date. These interim financial statements should be read in conjunction with the financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 1997. The results of operations for the quarters ended March 31, 1998 and March 29, 1997 are not necessarily indicative of the results to be expected for the full year. 2. Discontinued operations: Discontinued operations consist of the Company's former subsidiaries TransAct Technologies Incorporated ("TransAct") and Cash Bases GB Limited ("Cash Bases"). The stock of TransAct owned by the Company was distributed to Tridex shareholders in March 1997. The Company's investment in Cash Bases was sold in May 1997. The final proceeds of the sale of Cash Bases were received in March 1998. The consolidated financial statements have been restated to present the results of operations of TransAct and Cash Bases as discontinued operations. 3. Earnings (loss) per common share: Basic earnings (loss) per common share is based on the weighted average number of common shares outstanding during the period. Diluted earnings per common share assumes the exercise of options and warrants and the conversion of dilutive securities, when the result is dilutive. 4. Inventories: Components of inventory are: March 31, 1998 December 31, 1997 ------------------------------------ (Dollars in Thousands) Raw materials and component parts $2,606 $2,097 Work-in-process 70 75 Finished goods 1,163 815 ==================================== $3,839 $2,987 ==================================== 5. Commitments and contingencies: The Company is involved in an environmental matter discussed in Note 8 to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 1997. As of March 31, 1998 and to the date of this report, there has been no material development in the resolution of this matter. 6. Subsequent events: On April 17, 1998, the Company purchased all of the issued and outstanding shares of privately-held Progressive Software, Inc. ("Progressive"), a point-of-sale ("POS") software and systems provider for the restaurant and specialty retail industries. Progressive's 1997 sales were approximately $34 million. The purchase price was approximately $48.5 million, comprised of $33.9 million in cash, $5.0 million in Tridex common stock and assumption of $9.6 million of Progressive's debt. The purchase price is subject to post closing adjustment based upon an audited closing date balance sheet. Financing of the transaction consisted of a $12.0 million Senior Term Loan from Fleet National Bank ("Fleet"), the purchase by Massachusetts Mutual Life Insurance Company, MassMutual Corporate Investors, MassMutual Participation 6 Investors and MassMutual Corporate Value Partners Limited (the "MassMutual Investors"), of $11.0 million Senior Subordinated Notes and $2.0 million in shares of Tridex common stock, a $2.2 million borrowing from a new $8.0 million Revolving Credit Facility with Fleet, and $16.3 million in cash from Tridex. Additionally, Tridex agreed to seek shareholder approval of the issuance to the MassMutual Investors of a warrant to purchase 350,931 shares of Tridex common stock at $7.00 per share. If the shareholders vote to approve the warrants, the interest rate on the senior subordinated notes will be reduced from 19% to 12%. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Certain statements included in this report, including, but not limited to, statements in this Management's Discussion and Analysis of Financial Condition and Results of Operations, which are not historical facts may be deemed to contain forward looking statements with respect to events the occurrence of which involves risks and uncertainties, including, but not limited to, the Company's expectations regarding net sales, gross profit, operating income and financial condition. Results of Operations As described in Note 2 of the Notes to Consolidated Financial Statements, the Company completed the spin-off of TransAct in March 1997 and the sale of Cash Bases in May 1997. The Selected Financial Data are derived from the Company's Consolidated Financial Statements, which have been restated from historical financial statements to present the results of operations of TransAct and Cash Bases as discontinued operations for all periods presented. The Consolidated Financial Statements may not necessarily reflect what the results of operations or the financial position of the Company would have been if TransAct and Cash Bases had been separate entities during the periods presented. The discussion and analysis set forth below is based upon continuing operations only. Quarter Ended March 31, 1998 Compared to Quarter Ended March 29, 1997 Consolidated net sales for the quarter ended March 31, 1998 increased $666,000 (12%) to $6,212,000 from $5,546,000 in the comparable quarter of the prior year. The increase reflects greater volume of shipments of certain point-of-sale ("POS") component products, particularly complete POS terminal systems. Consolidated gross profit increased $231,000 (19.2%) to $1,437,000 from $1,206,000 in the prior year's quarter, primarily as a result of the greater volume of sales. Consolidated gross profit margin increased to 23.1% of sales from 21.7% of sales in the prior year's quarter as a result of sales mix to a higher proportion of POS terminal systems. Consolidated engineering, design and product development costs increased $148,000 (93%) to $308,000 from $160,000 in the prior year's quarter. The increase is primarily the result of the cost of developing new POS terminal products and, to a lesser degree, enhancing existing products. Consolidated selling, administrative and general expenses decreased $342,000 (21%) to $1,263,000 from $1,605,000 in the prior year's quarter. Selling expenses increased primarily due to the result of more intensive efforts in selling POS terminal systems, including increased advertising and sales support personnel. The prior year's quarter included a non-cash expense of $404,000 related to a stock incentive compensation agreement with the principal officers of the Company's wholly-owned subsidiary, Ultimate Technology Corporation. Consolidated operating loss for the current quarter was $134,000 compared to a loss of $559,000 in the prior year's quarter. The decrease in the operating loss was the result of the increase in gross profit and the absence of the non-cash stock incentive compensation expense, offset by increases in engineering, design and product development expense and selling expense. Consolidated operating loss as a percentage of sales was a 2% loss compared to a 10% loss in the prior year's quarter. Net interest income for the quarter was $226,000 compared to a net interest income of $9,000 in the prior year's quarter. Interest income consists of interest earned on temporary cash investments. The Company had no debt outstanding during the quarter. Provision for income taxes in the current quarter reflects an estimated effective tax rate for 1998. 7 Income from continuing operations was $47,000 (or $0.01 per share) compared to a loss from continuing operations of $175,000 (or $0.05 per share) in the prior year's quarter. Net income for the current quarter was $47,000 (or $0.01 per share) as compared to $638,000 (or $0.14 per share) in the prior year's quarter, which include income from discontinued operations of $813,000 (or $0.19 per share). Discontinued operations reflect the Company's equity in the income of TransAct and Cash Bases. The average number of common shares outstanding increased to 5,351,000 shares from 4,528,000 shares in the prior year's quarter. Liquidity and Capital Resources The Company's working capital at March 31, 1998 was $20,171,000 compared with $19,490,000 at December 31, 1997. The current ratio was 5.3 : 1.0 at March 31, 1998 and 6.2 : 1.0 at December 31, 1997. At March 31, 1998, the Company had a $2.0 million Working Capital Facility (the "Working Capital Facility") with Fleet. Under this facility, the Company was required to comply with certain financial covenants, including a minimum tangible net worth, a maximum leverage ratio, a minimum interest coverage ratio and a minimum current ratio, otherwise Fleet may withdraw its commitment. The Company was in compliance with these covenants at March 31, 1998 and on April 17, 1998 when the Working Capital Facility was replaced. At March 31, 1998, the Company had availability of $2.0 million under the Working Capital Facility and no material commitment for capital expenditures. On April 17, 1998, the Company entered into a new Credit Agreement with Fleet which provides for a $12.0 million term loan facility and an $8.0 million working capital revolving credit facility. This credit agreement supercedes the Fleet $2.0 million Working Capital Facility. Under the new Credit Agreement, the Company is required to comply with certain financial covenants, including a minimum tangible capital base, a maximum leverage ratio, a minimum interest coverage ratio, and a minimum fixed coverage ratio. The Company used the entire term loan facility and $2.2 million of the working capital revolving credit facility to finance the purchase of Progressive. Also on April 17, 1998, the MassMutual Investors purchased at par $11.0 million of the Company's 19% Senior Subordinated Notes and 284,714 shares of its common stock at a purchase price of $7.00 per share. The Company agreed to issue to the MassMutual Investors warrants to purchase 350,931 shares of its common stock at $7.00 a share, subject to stockholder approval. If the shareholders vote to approve the warrants, the interest rate on the senior subordinated notes will be reduced from 19% to 12%. The vote is scheduled for the annual meeting of shareholders on May 27, 1998. Under the securities purchase agreement, the Company is required to comply with certain financial covenants, including a minimum consolidated net worth, a minimum fixed charges coverage ratio, and a maximum leverage ratio. The Company used the entire proceeds from the sale of notes and stock to finance the purchase of Progressive. As part of the purchase price for Progressive, the Company issued to the sole shareholder of Progressive 714,000 shares of the Company's common stock at a price of $7.00 per share. The Company believes that funds generated from operations and borrowings under the working capital revolving credit facility of the new Credit Agreement, if necessary, will continue to satisfy its working capital needs, support a certain level of growth and meet scheduled debt retirements. 8 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K a. Exhibits Exhibit 11. Computation of Per Share Earnings b. Reports on Form 8-K The Company filed a Current Report on Form 8-K on May 1, 1998 to report that on April 17, 1998 it completed the acquisition of Progressive Software, Inc. 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. TRIDEX CORPORATION (Registrant) May 14, 1998 /s/Seth M. Lukash ------------------------- Seth M. Lukash Chairman of the Board, President, Chief Executive Officer, and Chief Operating Officer May 14, 1998 /s/Daniel A. Bergeron ------------------------- Daniel A. Bergeron Vice President and Chief Financial Officer May 14, 1998 /s/George T. Crandall ------------------------- George T. Crandall Vice President and Treasurer 9 EX-11 2 STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS TRIDEX CORPORATION AND SUBSIDIARIES Exhibit 11 Computation of Per Share Earnings (Dollars in Thousands) (Unaudited) Quarters Ended ------------------------------- March 31, 1998 March 29, 1997 BASIC: EARNINGS: Income (loss) from continuing operations $ 47 $ (175) Income from discontinued operations 813 ------------------------------- Net income available to common stockholders $ 47 $ 638 =============================== SHARES: Weighted average common shares outstanding 5,351,000 4,528,000 =============================== EARNINGS PER SHARE - BASIC: Income (loss) from continuing operations $ 0.01 $ (0.05) Income from discontinued operations 0.00 0.19 ------------------------------- Net income $ 0.01 $ 0.14 =============================== DILUTED: EARNINGS: Income (loss) from continuing operations $ 47 $ (175) Income from discontinued operations 813 ------------------------------- Net income available to common stockholders $ 47 $ 638 =============================== SHARES: Weighted average common shares outstanding 5,351,000 4,528,000 Dilutive effect of outstanding options and warrants as determined by the treasury stock method 241,000 294,000 ------------------------------- 5,592,000 4,822,000 =============================== EARNINGS PER SHARE - DILUTED: Income (loss) from continuing operations $ 0.01 $ (0.04) Income from discontinued operations 0.00 0.17 ------------------------------- Net income $ 0.01 $ 0.13 =============================== 10 EX-27 3 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from (A) Tridex Corporation Quarterly Report on Form 10-Q for the Quarter Ended March 31, 1998 and is qualified in its entirety by reference to such financial statements. 1,000 3-MOS MAR-31-1998 JAN-01-1998 DEC-31-1998 16,708 0 3,465 20 3,839 24,809 2,511 1,299 28,919 4,638 0 1,377 0 0 22,904 28,919 6,212 6,512 4,775 6,346 (1) 0 (226) 93 46 47 0 0 0 47 0.01 0.01
-----END PRIVACY-ENHANCED MESSAGE-----