-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, mp7E6rJ7DdRsUYFdzlkx6lYsMZNnxgTXG/G9neADui0QgDE5ZWRq/MNn3i5w2so2 xF0atuZrEm5n7Td1KGu+kw== 0000950134-94-000104.txt : 19940214 0000950134-94-000104.hdr.sgml : 19940214 ACCESSION NUMBER: 0000950134-94-000104 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19931231 FILED AS OF DATE: 19940211 FILER: COMPANY DATA: COMPANY CONFORMED NAME: QMS INC CENTRAL INDEX KEY: 0000710983 STANDARD INDUSTRIAL CLASSIFICATION: 3577 IRS NUMBER: 630737870 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 34 SEC FILE NUMBER: 001-09348 FILM NUMBER: 94506629 BUSINESS ADDRESS: STREET 1: ONE MAGNUM PASS CITY: MOBILE STATE: AL ZIP: 36618 BUSINESS PHONE: 2056334300 FORMER COMPANY: FORMER CONFORMED NAME: QUALITY MICRO SYSTEMS INC DATE OF NAME CHANGE: 19840816 10-Q 1 QMS, INC. FORM 10-Q FOR 12/31/93 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _______________ FORM 10-Q (MARK ONE) {X} QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended DECEMBER 31, 1993 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 1-9348 QMS, INC. (Exact name of registrant as specified in its charter) DELAWARE 63-0737870 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) ONE MAGNUM PASS, MOBILE, AL 36618 (Address of principal executive offices) (Zip Code) (Registrant's telephone number, including area code) (205) 633-4300 NOT APPLICABLE (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (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 CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date 10,707,755 AT JANUARY 28, 1994. 2 QMS, INC. AND SUBSIDIARIES INDEX PART I - FINANCIAL INFORMATION PAGE NUMBER ----------- Item 1. Financial Statements Condensed Consolidated Balance Sheets (unaudited) as of December 31, 1993 and October 1, 1993 3 - 4 Condensed Consolidated Statements of Operations (unaudited) for the three months ended December 31, 1993 and January 1, 1993 5 Condensed Consolidated Statements of Cash Flows (unaudited) for the three months ended December 31, 1993 and January 1, 1993 6 Notes to Condensed Consolidated Financial Statements (unaudited) for the three months ended December 31, 1993 and January 1, 1993 7 Computation of Earnings Per Common Share 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 - 10 PART II - OTHER INFORMATION 11 Item 1. Legal Proceedings Item 2. Changes in Securities Item 3. Defaults upon Securities Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. (a) Exhibits (b) Reports on Form 8 - K SIGNATURES 12 2 3 QMS, INC. AND SUBSIDIARIES PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CONDENSED CONSOLIDATED BALANCE SHEETS as of December 31, 1993 and October 1, 1993 (Unaudited)
DECEMBER 31, OCTOBER 1, in thousands 1993 1993 ------------ ------------ ---------- ASSETS CURRENT ASSETS Cash and Cash Equivalents $5,883 $3,582 Trade Receivables (less allowance for doubtful accounts of $520 in December 1993 and $580 in October 1993) 41,768 39,471 Inventories (Note 3) 67,550 70,461 Other, Net 8,595 7,806 -------- -------- Total Current Assets 123,796 121,320 -------- -------- PROPERTY, PLANT AND EQUIPMENT 67,447 66,440 Less Accumulated Depreciation 36,031 33,774 -------- -------- Property, Plant and Equipment, Net 31,416 32,666 -------- -------- OTHER ASSETS, NET 15,981 16,231 -------- -------- TOTAL ASSETS $171,193 $170,217 ======== ========
See Notes to Condensed Consolidated Financial Statements 3 4 QMS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS as of December 31, 1993 and October 1, 1993 (Unaudited)
DECEMBER 31, OCTOBER 1, in thousands 1993 1993 ------------ ------------ ---------- LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts and Notes Payable $16,904 $11,060 Other 30,395 31,901 -------- -------- Total Current Liabilities 47,299 42,961 -------- -------- LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS 38,918 41,527 COMMITMENTS AND CONTINGENCIES (Note 4) --- --- STOCKHOLDERS' EQUITY 84,976 85,729 -------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $171,193 $170,217 ======== ========
See Notes to Condensed Consolidated Financial Statements 4 5 QMS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31, 1993 AND JANUARY 1, 1993 (Unaudited) THREE MONTHS ENDED -------------------------- DECEMBER 31, JANUARY 1, in thousands, except per share amounts 1993 1993 -------------------------------------- ------------ ---------- NET SALES $70,654 $77,273 COST OF GOOD SOLD 46,822 51,306 -------- -------- GROSS PROFIT 23,832 25,967 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 22,673 23,282 -------- -------- OPERATING INCOME 1,159 2,685 OTHER INCOME (EXPENSE) Interest Income 17 118 Interest Expense (872) (818) Miscellaneous (834) 43 -------- -------- Total Other Income (Expense) (1,689) (657) INCOME (LOSS) BEFORE INCOME TAXES (530) 2,028 PROVISION FOR INCOME TAXES (164) 669 -------- -------- NET INCOME (LOSS) ($366) $1,359 ======== ======== EARNINGS (LOSS) PER COMMON SHARE (Note 2) Primary ($0.03) $0.13 Fully Diluted ($0.03) $0.13 SHARES USED IN PER SHARE COMPUTATION (Note 2) Primary 10,706 10,714 Fully Diluted 10,706 10,819 See Notes to Condensed Consolidated Financial Statements 5 6 QMS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED DECEMBER 31, 1993 AND JANUARY 1, 1993 (Unaudited)
DECEMBER 31, JANUARY 1, in thousands 1993 1993 ------------ ------------ ---------- Cash Flows from Operating Activities: Net Income (Loss) ($366) $1,359 Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by (Used in) Operating Activities: Depreciation of Property, Plant and Equipment 2,363 2,218 Amortization of Capitalized and Deferred Software & Other 3,580 2,114 Provision for Losses on Inventory (663) (178) Other (60) 324 Changes in Assets and Liabilities Trade Receivables (2,237) (4,245) Inventories 3,574 3,621 Accounts Payable 5,844 (585) Income Tax Payable 0 168 Other (3,552) (3,986) -------- -------- Net Cash Provided by Operating Activities 8,483 810 Cash Flows from Investing Activities: Purchase of Property, Plant and Equipment (1,220) (1,502) Additions to Capitalized and Deferred Software Costs (1,842) (2,036) Proceeds from Sales of Short-Term Investments 0 0 Other 0 (121) -------- -------- Net Cash Used in Investing Activities (3,062) (3,659) Cash Flows from Financing Activities: Proceeds from Long-Term Debt 0 4,300 Payments of Long-Term Debt, including Current Maturities (2,347) (632) Purchase of Treasury Stock 0 (151) Proceeds from Stock Options Exercised 9 64 Other (244) (289) -------- -------- Net Cash (Used in) Provided by Financing Activities (2,582) 3,292 -------- -------- Effect of Exchange Rate Changes on Cash (538) (606) -------- -------- Net Change in Cash and Cash Equivalents 2,301 (163) Cash and Cash Equivalents at Beginning of Period 3,582 8,086 -------- -------- Cash and Cash Equivalents at End of Period $5,883 $7,923 ======== ========
See Notes to Condensed Consolidated Financial Statements 6 7 QMS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED DECEMBER 31, 1993 AND JANUARY 1, 1993 ________________________________________________________________________________ (Unaudited) 1. MANAGEMENT OPINION In the opinion of management, the condensed consolidated financial statements reflect all adjustments necessary to present fairly the financial position of the Company as of December 31, 1993 and October 1, 1993 and the results of operations and changes in cash flows for the three months ended December 31, 1993 and January 1, 1993. The results of operations for the three months ended December 31, 1993 are not necessarily indicative of the results to be expected for the fiscal year ending September 30, 1994. 2. EARNINGS (LOSS) PER COMMON SHARE The computation of earnings (loss) per common share is based on the weighted average number of common shares outstanding during the period. Shares issuable upon exercise of stock options have been excluded in the per share computation because there was a loss for the quarter. 3. INVENTORIES Inventories at December 31, 1993 and October 1, 1993 are summarized as follows (in thousands): DECEMBER 31, October 1, 1993 1993 ----------- ---------- Raw materials $ 23,568 $ 26,104 Work in process 4,577 4,052 Finished goods 45,046 46,609 Inventory reserve (5,641) (6,304) ----------- ---------- TOTAL $ 67,550 $ 70,461 =========== ========== 4. COMMITMENTS AND CONTINGENCIES At October 1, 1993, the Company had a commitment of approximately $31,000,000 under contracts to purchase print engines. As of December 31, 1993 the Company had a commitment of approximately $17,000,000 to purchase print engines under these contracts. The Company was contingently liable for approximately $1,319,000 as of December 31, 1993. This was principally the result of letters of credit issued in the normal course of business for the purchase of inventory. 7 8 QMS, INC. AND SUBSIDIARIES COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE (Unaudited) THREE MONTHS ENDED ------------------------- DECEMBER 31, JANUARY 1, in thousands, except per share amounts 1993 1993 -------------------------------------- ------------ ---------- Net Income (Loss) ($366) $1,359 Shares used in this computation: Weighted average common shares outstanding 10,706 10,669 Shares applicable to stock options, net of shares assumed to be purchased from proceeds at average market 0 45 -------- -------- Total shares for earnings per common share computation (primary) 10,706 10,714 Shares applicable to stock options in addition to those used in primary computation due to the use of period- end market price when higher than average 0 105 -------- -------- Total fully diluted shares 10,706 10,819 ======== ======== Earnings (loss) per common share - primary ($0.03) $0.13 ======== ======== Earnings (loss) per common share - fully diluted ($0.03) $0.013 ======== ======== 8 9 QMS, INC. AND SUBSIDIARIES PART I. FINANCIAL INFORMATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ________________________________________________________________________________ RESULTS OF OPERATIONS Net sales in the first quarter of fiscal 1994 (the three months ended December 31, 1993) were $70,654,000, down 8.5% from the $77,273,000 achieved in the first quarter of fiscal 1993 (the three months ended January 1,1993). In the United States, the net sales generated through resellers was $6 million and 33% less in the quarterly year-to-year comparison. The reseller channel is the Company's primary method of distribution in the United States for 4-page per minute and 8-page per minute monochrome laser printers and color thermal transfer printers. New competition in this product class was the primary cause for the lower revenue. Sales through QMS Europe BV, a wholly owned subsidiary with headquarters in The Netherlands, had $3 million less in net sales in the same comparison, approximately 14% less. QMS Europe markets the entire line of QMS non-impact printers. Poor economic conditions in Germany and Great Britain along with new competitive pressures were the principal causes of the shortfall. Net sales were up significantly, $3.4 million and 182%, in QMS Japan Inc., the Company's wholly owned Japanese subsidiary. These increases were primarily attributable to new products made available during the quarter which support the special Japanese language requirements. Gross profit dollars were down in the first quarter of fiscal 1994 by $2.1 million when compared to the first quarter of fiscal 1993, substantially all of which was due to the revenue shortfall. The gross profit as a percentage of sales was 33.7% in the fiscal 1994 first quarter compared to 33.6% in the first quarter of fiscal 1993. Operating expenses were 2.6% lower in the first quarter of fiscal 1994 compared to the first quarter of fiscal 1993. Compared to the fourth quarter of fiscal 1993, operating expenses were 15% lower in the first quarter of fiscal 1994. The Company implemented cost reduction measures in the fourth quarter of fiscal 1993 that resulted in a one-time charge to operating expenses of approximately $3 million and included a reduction in the labor force of about 200 people. The Company intends to continue to closely monitor and manage the expense structure. The other income (expense) was impacted by foreign exchange translation. The negative impacts came from the translation of balance sheet elements that were denominated in foreign currencies, primarily European currencies. Interest expense was greater in the first quarter of fiscal 1994 due to greater borrowings on the Company's revolving credit agreement. The Company's effective tax rate was 31% in the first quarter of fiscal 1994 compared to 33% in the first quarter of fiscal 1993. The effective tax rate for the full fiscal year 1993 was 31%. 9 10 LIQUIDITY AND CAPITAL RESOURCES During the first quarter of fiscal 1994 the Company's financing came principally from operations, credit line borrowings and capital leases. The Company's net working capital was $76.5 million at December 31,1993, down from $78.4 million at October 1,1993. The current ratio was 2.62 at the end of the first fiscal quarter, down from 2.82 at the end of the 1993 fiscal year. The Company was not in compliance with certain of its revolving credit agreement covenants at the end of the first quarter of fiscal 1994, and has received a waiver of the non-compliance. Despite losses in four of the last six quarters, the Company has been able to maintain balance sheet strength. Management believes that the Company's continuing working capital and capital expenditure needs will be met by cash flow from operations and by the secured revolving credit agreement. However, unless the Company is able to restore profitability, further waivers from its bank lenders may be necessary to continue to borrow under the Company's revolving credit agreement. Although management believes the Company's relationship with its lenders is good, future waivers from the lenders, if necessary, will depend on the Company's performance. 10 11 QMS, INC. AND SUBSIDIARIES 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 a) Exhibits - None b) Reports - None 11 12 QMS, INC. AND SUBSIDIARIES SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. QMS, INC. (Registrant) Date: February 10, 1993 /s/ CHARLES D. DALEY _________________________________________ CHARLES D. DALEY Executive Vice President - Finance and Administration, Chief Financial Officer (Mr. Daley is the Principal Financial Officer and has been duly authorized to sign on behalf of the registrant.) 12 -----END PRIVACY-ENHANCED MESSAGE-----