-----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, QdLARQJ+DFzaWEql0Au0f0Wswb2ls3rvUbZZlL9ZvxK3EVvJYo7nwt3WHQlbIMkz OyIKEiKl5MOMSAf3+4T5Rw== 0000766738-94-000057.txt : 19940815 0000766738-94-000057.hdr.sgml : 19940815 ACCESSION NUMBER: 0000766738-94-000057 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940703 FILED AS OF DATE: 19940808 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENICOM CORP CENTRAL INDEX KEY: 0000766738 STANDARD INDUSTRIAL CLASSIFICATION: 3577 IRS NUMBER: 510271821 STATE OF INCORPORATION: DE FISCAL YEAR END: 1230 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14685 FILM NUMBER: 94542320 BUSINESS ADDRESS: STREET 1: 14800 CONFERENCE CENTER DRIVE STREET 2: STE 400 WESTFIELDS CITY: CHANTILLY STATE: VA ZIP: 22021-3806 BUSINESS PHONE: 7038029200 10-Q 1 10QAFJAJCOMMENT 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 3, 1994 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from to Commission File No.: 0-14685 GENICOM CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 51-0271821 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 14800 Conference Center Drive Suite 400, Westfields Chantilly, Virginia 22021-3806 (Address of principal executive (Zip Code) offices) Registrant's telephone number, including area code: (703) 802-9200 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 and (2) has been subject to such filing requirements for the past 90 days. Yes x No As of July 18, 1994, there were 10,630,699 shares of Common Stock of the Registrant outstanding. 2 GENICOM Corporation and Subsidiaries Form 10-Q Index PART I - Financial Information Item 1. Financial Statements Consolidated Balance Sheets - July 3, 1994 and 3 January 2, 1994 Consolidated Statements of Income - Three and Six Months Ended July 3, 1994 and July 4, 1993 4 Consolidated Statements of Cash Flows - Six Months Ended July 3, 1994 and July 4, 1993 5 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7-11 PART II - Other Information Item 1. Legal Proceedings 11 Item 2. Changes in Securities 11 Item 3. Defaults Upon Senior Securities 11 Item 4. Submission of Matters to a Vote of Security 11 Holders Item 5. Other Information 11 Item 6. Exhibits and Reports on Form 8-K 11 Signatures 12 Index to Exhibits E-1 3 PART I. - FINANCIAL INFORMATION Item 1. Financial Statements GENICOM CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
July 3, January 2, (In thousands, except share data) 1994 1994 (Unaudited) ----------- --------- < < C C > > ASSETS Current assets: Cash and cash equivalents $ 759 $ 1,797 Accounts receivable, less allowance for doubtful accounts of $1,631 and 35,804 35,932 $1,480 Other receivables 4,236 7,202 Inventories 50,117 53,831 Prepaid expenses and other assets 1,511 1,594 ------ ------- Total current assets 92,427 100,356 Property, plant and equipment 27,473 24,869 Goodwill 9,721 10,180 Other assets, principally intangibles 5,262 5,754 ------- ------- $ 134,883 $ 141,159 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 1,029 $ 23,263 Accounts payable and accrued 38,026 36,504 expenses Deferred income 8,491 6,947 ------ ------ Total current liabilities 47,546 66,714 Long-term debt, less current portion 55,443 45,757 Other non-current liabilities 5,463 4,113 ------- ------- Total liabilities 108,452 116,584 Stockholders' equity: Common stock, $0.01 par value; 15,000,000 shares authorized, 10,630,699 and 10,621,699 shares issued 106 106 Additional paid-in capital 25,753 25,744 Retained earnings 3,377 1,781 Foreign currency translation (1,706) (1,957) adjustment Pension liability adjustment (1,099) (1,099) ------ ------ Total stockholders' equity 26,431 24,575 ------- ------- $ 134,883 $ 141,159 ======= ======= The accompanying notes are an integral part of these financial statements.
4 GENICOM CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three months ended Six months ended (In thousands, except July 3, July 4, July 3, July 4, per share data) 1994 1993 1994 1993 ------ ------ ------ ------ < < < < C C C C > > > > Revenues, net: Products $ 41,490 $ 43,610 $ 84,974 $ 88,005 Services 17,835 11,433 29,687 23,715 ------ ------ ------- ------- 59,325 55,043 114,661 111,720 Operating costs and expenses: Cost of revenues: Products 29,238 30,343 61,598 61,904 Services 13,807 9,156 22,172 18,807 Selling, general and administration 10,966 10,783 22,341 22,120 Engineering, research and product development 2,118 2,570 4,032 5,129 ------ ------ ------- ------- 56,129 52,852 110,143 107,960 Operating income 3,196 2,191 4,518 3,760 Interest expense, net 1,928 2,103 3,908 3,531 Other income 734 1,635 ----- ----- ----- ----- Income before income 2,002 88 2,245 229 taxes Income tax expense 500 49 649 107 ----- ----- ----- ----- Net income $ 1,502 $ 39 $ 1,596 $ 122 ===== ===== ===== ===== Earnings per common share and common share equivalent: Primary and Fully Diluted $ 0.13 $ 0.00 $ 0.14 $ 0.01 Weighted average number of common shares and common share equivalents outstanding: Primary 11,252 11,271 11,086 11,643 Fully Diluted 11,480 11,271 11,200 11,644 The accompanying notes are an integral part of these financial statements.
5 GENICOM CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended July 3, July 4, (In thousands) 1994 1993 ------- ------- < < C C > > Cash flows from operating activities: Net income $ 1,596 $ 122 Adjustments to reconcile net income to cash provided by operating activities: Depreciation 4,513 3,330 Amortization 1,507 1,214 Effect of restructuring accrual (2,868) Effect of investment gains (901) Effect of gain on early extinguishment of bonds (734) Effect of environmental recovery from G.E. (1,200) Changes in assets and liabilities: Accounts receivable 756 17 Inventories 4,070 (3,394) Accounts payable and accrued expenses 2,539 3,468 Deferred income 1,472 1,054 Other 786 846 ------ ------ Net cash provided by operating activities 15,604 2,589 Cash flows from investing activities: Additions to property, plant and equipment (7,288) (3,163) Proceeds from sale of investment 3,436 Other (560) (894) ------- ------- Net cash used in investing activities (4,412) (4,057) Cash flows from financing activities: Borrowings from long-term debt 11,749 15,014 Payments on long-term debt (18,548) (15,146) Purchases of senior subordinated notes (5,059) -------- -------- Net cash used in financing activities (11,858) (132) -------- -------- Effect of exchange rate changes on cash and cash equivalents (372) 177 -------- -------- Net decrease in cash and cash equivalents (1,038) (1,423) Cash and cash equivalents at beginning of year 1,797 3,001 ------ ----- Cash and cash equivalents at end of year $ 759 $ 1,578 ====== =====
6 GENICOM CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. In the opinion of management, the accompanying unaudited consolidated financial statements of GENICOM Corporation and subsidiaries (the "Company" or "GENICOM") contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the Company's consolidated financial position as of July 3, 1994, and the results of operations and cash flows for the periods indicated. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company's January 2, 1994, Annual Report. The results of operations for the six months ended July 3, 1994, are not necessarily indicative of the operating results to be expected for the full year. Certain reclassifications have been made to the 1993 condensed financial statements in order to conform to the 1994 presentation. 2. Inventories are stated at the lower of cost, determined on the first-in, first-out method, or market. Inventories consist of, in thousands:
< < C C > > Raw Materials $ 11,174 $ 13,768 Work in process 9,276 8,524 Finished goods 29,667 31,539 ------ ------ $ 50,117 $ 53,831
3. Earnings per share are based upon the weighted average number of common shares and dilutive common share equivalents (using the treasury stock method) outstanding during the period. 4. During the first quarter ended April 3, 1994, the Company adopted the provisions of Statement of Financial Accounting Standards ("SFAS") No. 112 and No. 115, "Employers' Accounting for Postemployment Benefits" and "Accounting for Certain Investments in Debt and Equity Securities", respectively. The implementation of SFAS No. 112 and No. 115 did not have a material effect on the Company's financial condition or results of operations. 7 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition: Results of Operations
Three months ended Six months ended (in millions) 2nd Qtr 2nd Qtr 2nd Qtr 2nd qtr 1994 Change 1993 1994 Change 1993 < < < < < < C C C C C C > > > > > > Revenues $ 59.3 $ 4.3 $ 55.0 $ 114.7 $ 3.0 $ 111.7 Percentage change 7.8 % 2.7 %
In comparing the second quarter and first half of fiscal years 1994 and 1993, revenues were favorably impacted by growth in the Company's Enterprising Service Solutions, Supplies and Laser Printing Solutions businesses. Meanwhile declines in the Company's impact printer business and unfavorable movements in foreign currencies adversely impacted revenue in the same periods. GENICOM's most demanding business challenge has been to grow revenues and profits while responding to the declining market of impact printing, historically the Company's principal business. The Company's focus has been to invest in the strategic growth businesses of Laser Printing Solutions, Enterprising Service Solutions, Supplies and to introduce new impact products to increase market share. Printer revenues decreased $ 5.9 million and $ 8.1 million in the three and six month periods ended July 3, 1994, respectively, as compared to the year-ago period. The revenue decline is attributable to the Company's impact printer product lines, especially the shuttle matrix line printers, which experienced year-to-year revenue declines of 32.0% and 21.5% in the second quarter and first six months, respectively. The Company's sales of laser printers increased 23.9% and 17.9% in the second quarter and first six months, respectively, on a year-to-year comparison. Management expects revenues in the second half of 1994 from its impact printer product lines and Laser Printing Solutions Business to be below 1993 second half levels. Enterprising Service Solutions ("ESS") revenues increased 58.8% and 26.8 % in the three and six month periods ended July 3, 1994, respectively, as compared to the year-ago period, primarily due to the Company's recent strategic partnership relationship with Computervision Corporation. As previously reported, on March 15, 1994 and April 11, 1994, the Company announced a multi-year services agreement for logistics and depot repair services and field support services, respectively, with Computervision Corporation. Management anticipates that 1994 ESS revenue will be above fiscal 1993 levels due to increased multivendor service activities. Supplies revenues increased 19.5% and 21.8% in the three and six month periods ended July 3, 1994, respectively, as compared to the year-ago period. Supplies revenue growth is attributable to increased market share achieved by increasing the number of product offerings, including laser printer supplies, and aggressive marketing in established markets. Management anticipates that Supplies revenues will continue to be above 1993 levels. Spares revenues increased 23.7% and 6.7% in the three and six month periods ended July 3, 1994, respectively, as compared to the year-ago period. Spares revenues increased in the second quarter due to the success of new printhead and print module programs. Management does not expect further significant increases in spares revenues as new product designs have increased reliability and resulted in fewer replaceable parts, and declines in sales of mature serial matrix and band line printers will reduce the demand for such spare parts. Relays revenues increased 2.0% and 2.1% in the three and six month periods ended July 3, 1994, respectively, as compared to the year-ago period. Management expects that 1994 relay revenues will approximate those of fiscal 1993. 8
(in millions) 2nd Qtr 4th Qtr 2nd Qtr 1994 1993 1993 < < < C C C > > > Order backlog $ 37.7 $ 34.1 $ 38.6 Change - 2nd Quarter 1994 compared to: Amount 3.6 (0.9) Percentage 10.6 % (2.3) %
The order backlog increase compared to the 1993 fourth quarter is due to increased orders in the Company's ESS business, partially offset by a decline in the backlog from the Company's printer and spares businesses. The order backlog decrease compared to the 1993 second quarter is due to the decline in the backlog from the Company's printer and spares businesses, partially offset by the increased orders in the Company's ESS business. As a result of the growth in the ESS backlog, the Company's backlog includes a higher percentage of orders for which a delivery date to a specific customer exceeds six months. The Company's backlog as of any particular date should not be the sole measurement used in determining sales for any future period.
(in millions) Three Months Ended Six Months Ended 2nd Qtr 2nd Qtr 2nd Qtr 2nd Qtr 1994 Change 1993 1994 Change 1993 < < < < < < C C C C C C > > > > > > Gross margin $ 16.3 $ 0.8 $ 15.5 $ 30.9 $ (0.1) $ 31.0 As a % of revenue 27.4 % 28.2 % 26.9 % 27.8 %
Gross margin, as a percentage of revenue, declined in the three and six month periods ending July 3, 1994, as compared to the year-ago periods. This decrease is attributable to margin pressures in the Company's equipment business, partially offset by increased sales associated with the Company's higher margin business activities, such as ESS and supplies.
(in millions) Three Months Ended Six Months Ended 2nd Qtr 2nd Qtr 2nd Qtr 2nd Qtr 1994 Change 1993 1994 Change 1993 < < < < < C C C C C > > > > > Operating expenses: Selling, general and administrative $ 11.0 $ 0.2 $ 10.8 $ 22.3 $ 0.2 $ 22.1 Engineering, research and product development 2.1 (0.5) 2.6 4.0 (1.1) 5.1 Total $ 13.1 $ (0.3) $ 13.4 $ 26.3 $ (0.9) $ 27.2 As a % of revenue 22.1 % 24.3 % 23.0 % 24.4 %
Operating expenses decreased overall and as a percentage of revenue during the three and six month periods ending July 3, 1994, due to the favorable impact of the Company's January 1994 cost reduction program which included personnel, salary and benefit reductions for the Company's worldwide operations, partially offset by the costs necessary to support the increase in ESS operations. 1993 results reflect the favorable impact of the 1993 second quarter recognition of the recovery of $ 1.2 million due from the General Electric Company relating to prior costs for environmental matters at the Company's Waynesboro, Virginia facility. 9 The January 1994, cost reduction program was implemented in response to the Company's business challenges discussed above, and the program, net of severance costs, favorably impacted the three and six month periods ending July 3, 1994, by $ 0.9 million and $ 1.4 million, respectively.
(in millions) Three Months Ended Six Months Ended 2nd Qtr 2nd Qtr 2nd Qtr 2nd Qtr 1994 Change 1993 1994 Change 1993 < < < < < < C C C C C C > > > > > > Interest expense, $ 1.9 $ (0.2) $ 2.1 $ 3.9 $ 0.4 $ 3.5 net Percentage change (9.5) % 11.4 % Other income $ 0.7 $ 0.7 $ 0.0 $ 1.6 $ 1.6 $ 0.0 Percentage change N/A N/A
The decrease in interest expense for three months ended July 3, 1994, is a result of the decrease in the Company's borrowings from its senior credit facility, partially offset by the increase in the Company's interest rate on its senior credit facility. The increase in the interest expense for the six months ending July 3, 1994, as compared to the year-ago period, is due to an increase in the interest rate paid on the senior credit facility and an interest payment received in January 1993 from the Internal Revenue Service of $ 0.6 million related to the settlement of prior period tax matters partially offset by the decrease in the borrowings from the senior credit facility in 1994. During the 1994 second quarter, the Company recognized a pre-tax gain of $ 0.7 million from the purchase of the Notes described above. During the 1994 first quarter, the Company sold its remaining investment in Xeikon N.V., a Belgian printer development and manufacturing company and a pre-tax gain of $ 0.9 million was recognized.
(in millions) Three Months Ended Six Months Ended 2nd Qtr 2nd Qtr 2nd Qtr 2nd Qtr 1994 Change 1993 1994 Change 1993 < < < < < < C C C C C C > > > > > > Income tax expense $ 0.5 $ 0.5 $ 0.0 $ 0.6 $ 0.5 $ 0.1 Effective tax rate 25.0 % 55.7 % 28.9 % 46.7%
The Company's effective income tax rate for the six months ended July 3, 1994 was 28.9% as compared to 46.7% for the year-ago period. These rates are significantly affected by foreign income taxes, the utilization of net operating losses and alternative minimum income taxes. 10 Liquidity and Capital Resources
(in millions) Six Months Ended Six Months Ended 2nd Qtr 2nd Qtr 1994 1993 Cash provided by operations $ 15.6 $ 2.6 Cash used in investing activities (4.4) (4.1) Cash used in financing activities (11.9) (0.1)
(in millions) 2nd Qtr 4th Qtr 1994 1993 Working capital $ 44.9 $ 33.6 Inventories 50.1 53.8 Debt obligations 56.5 69.0 Debt to equity ratio 2.1 to 1 2.8 to 1
The Company strengthened its financial position in the first six months of 1994 by reducing its outstanding debt $ 12.5 million, or 18.2% by using cash provided by operating activities and the collection of the proceeds from the sale of the Xeikon N.V. investment. Net cash provided by operations in the first six months of 1994 increased $ 13.0 million compared to the year-ago period. Profitable operations, improved inventory management and the lower spending for restructuring programs provided the major sources of cash. The Company's current ratio rebounded to 1.9 to 1 at the end of the second quarter of 1994 as compared to 1.5 to 1 at the end of fiscal year 1993. This increase is attributable primarily to the decrease in debt classified as current for the senior credit facility, partially offset by the purchase of the Notes in the second quarter of 1994. The Company does not have any material commitments of funds for capital expenditures other than to support the current level of operations. During the second quarter of 1994, the Company purchased $ 5.8 million of its Notes in the open market at favorable terms, thus realizing a gain of $ 0.5 million, net of taxes. The purchased Notes together with the $ 3.3 million of the Notes held in treasury from prior period purchases satisfy the Company's 1995 sinking fund requirement. In the first quarter of 1994, the Company retired $ 9.0 million principal amount of its previously purchased Notes in fulfillment of its annual sinking fund requirement. As of July 3, 1994, the Company had $ 16.4 million outstanding and $ 8.0 million available for borrowing under its senior credit facility. On June 9, 1994, the Company and its senior creditor amended the Company's senior credit facility by extending its term to fiscal 1997, changing the rate of interest to prime plus 3.0% and providing for early termination of the facility by the Company under certain circumstances. The Company has maintained cash flow through strict controls over working capital and discretionary spending. As discussed previously, management initiated a number of programs to improve the financial performance of the Company. Management has also continued to strive for continued revenue growth by investing in its strategic growth areas of ESS, Laser Printer Solutions and Supplies. Nevertheless, there is no assurance that the Company's initiatives will continue to be successful or that sales volume will not materially decline. Management believes that a material decline in sales volume could have a material adverse impact on its operations. 11 As described in further detail in the Company's 1993 Annual Report, the Company is required to adopt SFAS No. 107 "Disclosures about Fair Value of Financial Instruments" on or before fiscal year 1996, SFAS No. 114 "Accounting by Creditors for Impairment of a Loan" on or before fiscal year 1995. Management believes such standards will not have a material effect on the Company's financial condition or results of operations. Part II. - OTHER INFORMATION Item 1. Legal Proceedings: Not applicable. Item 2. Changes in Securities: Not applicable. Item. 3 Defaults Upon Senior Securities: Not applicable. Item 4. Submission of Matters to a Vote of Security Holders: Not applicable. Item 5. Other Information: Not applicable. Item 6. Exhibits and Reports on Form 8-K: (a) Exhibits Exhibit included in Response to Item 601 of Regulation S-K Number Description ----- -------------------------------------------- 11.1 Statement regarding the Company's computation of earnings per share (b) Reports on Form 8-K: The Company filed a report on Form 8-K on March 15, 1994, which reported that it had signed two lease agreements pursuant to the signing of the multi-year services agreement with Computervision Corporation. A copy of the lease agreements were included as Exhibits 10.1 and 10.2 to the Form. The Company filed a report on Form 8-K/A on June 9, 1994, which reported that it had published a press release that announced that it had extended its senior credit facility and had acquired $ 5.8 million of its Notes. Copies of the credit facility extension agreement and the press release were included as Exhibits 10.1 and Exhibit 99.1, respectively, to the Form. 12 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. GENICOM Corporation ----------------------- Registrant Date: August 8, 1994 James C. Gale ---------------------- Signature James C. Gale Senior Vice President Finance and Chief Financial Officer (Mr. Gale is the Chief Financial Officer and has been duly authorized to sign on behalf of the Registrant) EX-11 2 GENICOM Corporation and Subsidiaries INDEX TO EXHIBITS TO FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JULY 3, 1994
Exhibit Number Description Page - - ------- --------------------------------- ----- 11.1 Statement regarding the Company's E - 2 computation of earnings per share.
E - 1 Exhibit 11.1 GENICOM Corporation and Subsidiaries STATEMENT REGARDING THE COMPANY'S COMPUTATION OF EARNINGS PER SHARE
Three Six Months Ended Months Ended July 3, July 4, July 3, July 4, 1994 1993 1994 1993 Shares used in this computation: Weighted average common shares outstanding 10,627 10,606 10,625 10,606 Shares applicable to stock options, net of shares assumed to be purchased from proceeds at average market 625 665 461 1,037 ------ ------ ------ ------ Total shares for earnings per common share and common share equivalents (primary) 11,252 11,271 11,086 11,643 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 228 0 114 1 ------ ------ ------ ------ Total fully diluted shares 11,480 11,271 11,200 11,644 ====== ====== ====== ======
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