0000050842-95-000004.txt : 19950915 0000050842-95-000004.hdr.sgml : 19950915 ACCESSION NUMBER: 0000050842-95-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950731 FILED AS OF DATE: 19950914 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERPOINT CORP /NEW/ CENTRAL INDEX KEY: 0000050842 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 910850556 STATE OF INCORPORATION: WA FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-11069 FILM NUMBER: 95573902 BUSINESS ADDRESS: STREET 1: 10301 WILLOWS RD STREET 2: PO BOX 97005 CITY: REDMOND STATE: WA ZIP: 98073-9705 BUSINESS PHONE: 2068823100 MAIL ADDRESS: STREET 1: 10301 WILLOWS ROAD STREET 2: PO BOX 97005 CITY: REDMOND STATE: WA ZIP: 98073-9705 FORMER COMPANY: FORMER CONFORMED NAME: INTEGRATED CIRCUITS INC DATE OF NAME CHANGE: 19890321 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ________________ FORM 10-Q ________________ [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 31, 1995 [ ] 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 0-11069 INTERPOINT CORPORATION Incorporated under the laws I.R.S. Identification of the State of Washington No. 91-0850556 10301 Willows Road P.O. Box 97005 Redmond, Washington 98073-9705 (206) 882-3100 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. [ X ] Yes [ ] No The total shares of common stock without par value outstanding at the end of the quarter reported is 3,825,185. PART I - FINANCIAL INFORMATION Item 1. Financial statements CONSOLIDATED BALANCE SHEETS July 31, 1995 and October 31, 1994
July 31, 1995 October 31, 1994 (Unaudited) ----------------- ---------------- ASSETS Current assets: Cash $ 166,618 $ 541,805 Trade accounts receivable, less allowance for doubtful accounts of $132,000 in 1995 and $108,000 in 1994 14,419,055 12,095,295 Inventories 16,671,318 14,453,920 Prepaid expenses and other 453,524 399,206 Deferred income taxes 461,400 467,830 ---------- ---------- Total current assets 32,171,915 27,958,056 Property, plant and equipment, at cost: Land 1,324,988 1,324,988 Buildings and improvements 4,879,732 4,890,474 Machinery and equipment 12,710,610 11,946,535 Office equipment 2,809,574 2,620,412 Leasehold improvements 509,802 405,929 ---------- ---------- 22,234,706 21,188,338 Less accumulated depreciation and amortization 13,349,192 11,950,335 ---------- ---------- Net property, plant and equipment 8,885,514 9,238,003 Investment in common stock 1,473,103 1,331,669 Other assets 637,019 611,593 ---------- ---------- $ 43,167,551 $ 39,139,321 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Loans payable $ 8,015,111 $ 6,253,840 Accounts payable 4,631,507 4,584,858 Income taxes payable 740,148 230,409 Accrued wages and commissions 2,881,296 2,484,036 Other current liabilities 557,158 564,131 Long-term debt, current portion 1,384,955 1,504,502 ---------- ---------- Total current liabilities 18,210,175 15,621,776 Long-term debt 3,364,386 4,029,172 Accrued retirement benefits 572,260 518,451 Other liabilities 93,520 112,870 Deferred income taxes 831,446 834,387 Commitments: Stockholders' equity: Preferred stock, 500,000 shares authorized, none issued -- -- Common stock, 10,000,000 shares authorized, 3,825,185 shares issued and outstanding, (3,802,272 in 1994) 504,856 shares reserved 4,656,361 4,561,859 Retained earnings 14,945,801 13,125,229 Cumulative translation adjustments 493,602 335,577 ---------- ---------- Total stockholders' equity 20,095,764 18,022,665 ---------- ---------- $ 43,167,551 $ 39,139,321 ========== ========== See accompanying notes.
CONSOLIDATED STATEMENTS OF INCOME Three months and nine months ended July 31, 1995 and 1994 (Unaudited)
Three months ended Nine months ended July 31, July 31, ---------------------- --------------------- 1995 1994 1995 1994 ---------- ---------- ---------- ---------- Net sales $18,889,634 $14,307,243 $48,472,739 $38,093,642 Cost of sales 12,869,726 9,625,300 33,136,411 26,743,019 ---------- ---------- ---------- ---------- Gross profit 6,019,908 4,681,943 15,336,328 11,350,623 Selling and administrative 3,780,121 2,777,318 10,782,410 7,801,880 Research and development 560,168 406,882 1,420,660 1,290,510 Acquisition expenses -- -- -- 728,743 ---------- ---------- ---------- ---------- Operating profit 1,679,619 1,497,743 3,133,258 1,529,490 Other expenses (net) 228,685 210,613 691,148 568,421 Equity in net income of an affiliate 101,569 22,559 141,434 61,600 ---------- ---------- ---------- ---------- Income before provision for income taxes 1,552,503 1,309,689 2,583,544 1,022,669 Provision for income taxes 458,815 399,000 762,972 364,000 ---------- ---------- ---------- ---------- Net income $ 1,093,688 $ 910,689 $ 1,820,572 $ 658,669 ========== ========== ========== ========== Average number of common and common equivalent shares outstanding 4,013,866 3,984,341 3,988,567 3,997,111 ========== ========== ========== ========== Net income per share $ .27 $ .23 $ .46 $ .16 ========== ========== ========== ========== See accompanying notes.
CONSOLIDATED STATEMENTS OF CASH FLOWS Nine months ended July 31, 1995 and 1994 (Unaudited)
1995 1994 ---------- ---------- Operating activities: Net income $ 1,820,572 $ 658,669 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 1,498,382 1,334,982 Deferred income tax -- (123,802) Equity in net income of an affiliate (141,434 (61,600) Net book value of assets retired 3,627 11,917 Foreign currency translation of intercompany debt (45,984) -- Change in assets and liabilities: Receivables (2,151,332) (2,388,667) Inventories (2,155,830) (1,030,763) Prepaid expenses and other (46,576) 130,818 Other assets (71,521) 10,853 Accounts payable 5,871 1,231,498 Income taxes payable 513,219 (19,824) Accrued liabilities 353,323 154,196 Accrued retirement benefits 56,622 53,253 Other liabilities (19,350) (7,604) ---------- ---------- Net cash used in operating activities (380,411) (46,074) Investing activities: Purchases of property, plant and equipment (1,080,004) (825,520) Acquisition of ADIC Europe SARL -- (540,014) ---------- ---------- Net cash used in investing activities (1,080,004) (1,365,534) Financing activities: Net proceeds from loans payable 1,761,271 2,064,870 Proceeds from long-term borrowings 312,045 154,807 Repayment of long-term debt (1,096,378) (1,987,919) Proceeds from issuance of common stock for stock options 94,501 81,614 ---------- ---------- Net cash provided by financing activities 1,071,439 313,372 Effect of exchange rate changes on cash 13,789 402 ---------- ---------- Net decrease in cash (375,187) (1,097,834) Cash at beginning of period 541,805 1,396,618 ---------- ---------- Cash at end of period $ 166,618 $ 298,784 ========== ========== See accompanying notes.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS July 31, 1995 (Unaudited) Note 1. Basis of presentation - The accompanying condensed financial statements are unaudited and should be read in conjunction with the Interpoint financial statements included in the Company's fiscal 1994 Annual Report on Form 10-K. Operating results for the nine-month period ended July 31, 1995, are not necessarily indicative of the results that may be expected for the full year. In the opinion of management, all adjustments necessary for a fair presentation of interim operating results are reflected herein. Note 2. Per share calculations - Per-share calculations are determined on the weighted average number of common and common equivalent shares outstanding during each period. Note 3. Merger agreement with Advanced Digital Information Corporation. On February 11, 1994, Interpoint Corporation acquired Advanced Digital Information Corporation (ADIC) pursuant to an Agreement and Plan of Merger dated October 29, 1993, in which ADIC was merged into a wholly-owned subsidiary of Interpoint. Pursuant to the terms of the merger agreement, each outstanding share of Common Stock of ADIC was converted into .55 shares of Interpoint Common Stock. A total of 1,340,255 shares of Common Stock of Interpoint were issued to ADIC shareholders. The acquisition was accounted for as a pooling-of-interests in accordance with Accounting Principles Board Opinion No. 16 "Business Combinations." All amounts are presented as if Interpoint and ADIC had been combined as of the beginning of the period presented. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS Net sales increased 32 percent from the third quarter of fiscal 1994 to the comparable quarter of 1995, primarily on the strength of ADIC sales. ADIC Europe, which was formerly a reseller of ADIC products, was acquired in June 1994 and accounts for a substantial portion of this increase. The 1995 quarter shows strong growth both in library systems and in other complementary tape storage products. Sales for the Microelectronics Group also increased for the period, with growth in both the Power Products and Custom Microelectronics divisions, although the Power Products Division showed lower growth than expected due to the rescheduling of certain large orders. Fiscal year bookings have been strong, resulting in a microelectronics backlog of $42 million. Continued comparative growth is expected over the next few quarters with sales increases anticipated from both the Microelectronics divisions and from ADIC. Gross margin for the quarter is 32 percent, down from 33 percent in the comparable 1994 quarter. This drop results from a change in the overall mix of products sold by the Company. Because of the significant growth in ADIC sales, these sales comprise a larger percentage of total sales in 1995 than in 1994, while power products are decreasing as a percentage of total sales. The shift away from higher margin power products to lower margin ADIC products resulted in a reduction of gross margin which was partially offset by improved Microelectronics Group gross margin. Microelectronics Group gross margin percentage increased due both to greater volumes and a continuing trend to produce more of the power products in the Kaohsiung, Taiwan facility. Sales and administrative costs increased by $1 million in 1995 over the comparable quarter but remained at 20 percent of net sales. Costs for ADIC Europe, which were included for only part of the 1994 period, comprised the largest portion of the increase. Increased sales and marketing costs for both the Power Products Division and ADIC U.S. operations were significant as well. Research and development costs have increased in both the ADIC and Power Products divisions and relate to new products being introduced in the fourth quarter. Other expenses are comprised primarily of interest expense and have increased as a result of higher short-term borrowings and higher interest rates. Interest expense related to long-term debt has decreased as these loans are paid down. LIQUIDITY AND CAPITAL RESOURCES In fiscal 1995, the primary source of cash was short-term borrowings on bank lines of credit. The domestic line of $8.5 million bears interest at the bank's prime rate or adjusted LIBOR rate. The line is subject to certain restrictive covenants, however, the Company is well within these limits. In addition to the working line of credit, the Company has a financing line with which to purchase capital equipment. At July 31, 1995, Interpoint had approximately $400 thousand of capital expenditures to be reimbursed under this line. Significant increases can be seen in trade accounts receivable and inventories for the fiscal year to date. The increase in receivables is attributable to the increase in quarterly sales, much of which shipped in July. Inventories have increased in both the ADIC and microelectronics segments. As expected, inventory growth has stabilized somewhat in the third quarter, although balances remain at higher than desirable levels. The rescheduling of certain power product orders contributed to inventory growth for the period. The Company continues to expect stable inventory throughout the remainder of the year, and anticipates that the Company will generate cash from operations for the year as a whole. The Company believes that it has sufficient liquidity to meet its cash requirements for the next twelve months. 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. None. 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. INTERPOINT CORPORATION Dated: September 14, 1995 /s/ Peter H. van Oppen ----------------------- Peter H. van Oppen Chairman Chief Executive Officer Dated: September 14, 1995 /s/ Leslie S. Rock ------------------------- Leslie S. Rock Vice President, Treasurer Chief Accounting Officer EX-27 2 FDS FOR 3RD QUARTER 10-Q
5 The schedule contains summary financial information extracted from the third quarter 10-Q and is qualified in its entirety by reference to such financial statements. 1,000 9-MOS OCT-31-1995 JUL-31-1995 167 0 14,419 132 16,671 32,172 22,235 13,349 43,168 18,210 3,364 4,656 0 0 14,946 43,168 48,473 48,473 33,136 33,136 0 0 691 2,584 763 1,821 0 0 0 1,821 .46 .46