-----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, ohE7YuclUN2EpJwbtzfWudLDTTvjYJ9vvuqfav1/f3NWMqeVatDW6MsefbLLmxvC yjexz9dj0aDyJ4jfQMEjvQ== 0000766738-94-000061.txt : 19941128 0000766738-94-000061.hdr.sgml : 19941128 ACCESSION NUMBER: 0000766738-94-000061 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19941002 FILED AS OF DATE: 19941116 SROS: NONE 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: 94560763 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 1Q_VER_B 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 October 2, 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 No As of October 17, 1994, there were 10,637,699 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 - October 2, 1994 and January 2, 1994 3 Consolidated Statements of Income - Three and Nine Months Ended October 2, 1994 and October 3, 1993 4 Consolidated Statements of Cash Flows - Nine Months Ended October 2, 1994 and October 3, 1993 5 Notes to Consolidated Financial Statements 6 - 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 - 11 PART II - Other Information Item 1. Legal Proceedings 12 Item 2. Changes in Securities 12 Item 3. Defaults Upon Senior Securities 12 Item 4. Submission of Matters to a Vote of Security 12 Holders Item 5. Other Information 12 Item 6. Exhibits and Reports on Form 8-K 12 Signatures 13 Index to Exhibits E-1 3 PART I. - FINANCIAL INFORMATION Item 1. Financial Statements GENICOM CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
October 2, January 2, (In thousands, except share data) 1994 1994 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 1,874 $ 1,797 Accounts receivable, less allowance for doubtful accounts of $1,631 and $1,480 36,097 35,932 Other receivables 3,799 7,202 Inventories 46,065 53,831 Prepaid expenses and other assets 1,650 1,594 ------ ------- Total current assets 89,485 100,356 Property, plant and equipment 26,822 24,869 Goodwill 9,513 10,180 Other assets, principally intangibles 4,916 5,754 ------- ------- $ 130,736 $ 141,159 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 1,068 $ 23,263 Accounts payable and accrued expenses 35,624 36,504 Deferred income 8,818 6,947 ------ ------ Total current liabilities 45,510 66,714 Long-term debt, less current portion 52,734 45,757 Other non-current liabilities 5,400 4,113 ------- ------- Total liabilities 103,644 116,584 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 3,863 1,781 Foreign currency translation adjustment (1,531) (1,957) Pension liability adjustment (1,099) (1,099) ------- ------ Total stockholders' equity 27,092 24,575 ------- ------- $ 130,736 $ 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 Nine Months Ended (In thousands, except October October October October per share data) 2, 3, 2, 3, 1994 1993 1994 1993 Revenues, net: Products $ 38,983 $ 43,505 $ 123,957 $ 131,510 Services 18,367 10,468 48,054 34,183 ------ ------ ------- ------- 57,350 53,973 172,011 165,693 Operating costs and expenses: Cost of revenues: Products 28,796 32,565 90,394 94,469 Services 14,896 8,560 37,068 27,367 Selling, general and administrative 9,460 10,001 31,801 32,121 Engineering, research and product development 1,790 2,396 5,822 7,525 ------ ------ ------- ------- 54,942 53,522 165,085 161,482 ------ ------ ------- ------- Operating income 2,408 451 6,926 4,211 Interest expense, net 1,823 2,019 5,731 5,550 Other income 1,635 ----- ----- ----- ----- Income (loss) before income taxes 585 (1,568) 2,830 (1,339) Income tax expense 99 101 748 208 ----- ----- ----- ----- Net income (loss) $ 486 $ (1,669) $ 2,082 $ (1,547) ===== ===== ===== ===== Earnings per common share and common share equivalent: Primary and Fully diluted $ 0.04 $ (0.16) $ 0.18 $ (0.15) Weighted average number of common shares and common share equivalents outstanding: Primary 11,597 10,613 11,256 10,608 Fully diluted 11,597 10,613 11,332 10,608 The accompanying notes are an integral part of these financial statements.
5 GENICOM CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended October 2, October 3, (In thousands) 1994 1993 Cash flows from operating activities: Net income (loss) $ 2,082 $ (1,547) Adjustments to reconcile net income to cash provided by operating activities: Depreciation 6,976 4,952 Amortization 2,326 1,796 Effect of restructuring accrual (3,380) 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 799 675 Inventories 8,273 (1,874) Accounts payable and accrued expenses (39) 1,465 Deferred income 1,744 1,071 Other 1,159 908 ------ ------ Net cash provided by operating activities 21,685 2,866 Cash flows from investing activities: Additions to property, plant and equipment (9,133) (4,478) Proceeds from sale of investment 3,436 Other (764) (1,379) ------ ------ Net cash used in investing activities (6,461) (5,857) Cash flows from financing activities: Borrowings from long-term debt 17,568 21,515 Payments on long-term debt (27,134) (19,745) Purchases of senior subordinated notes (5,059) ------- ------ Net cash (used in) provided by financing activities (14,625) 1,770 Effect of exchange rate changes on cash and cash equivalents (522) 309 ------ ------ Net increase (decrease) in cash and cash equivalents 77 (912) Cash and cash equivalents at beginning of period 1,797 3,001 ------ ------ Cash and cash equivalents at end of period $ 1,874 $ 2,089 ------ ------ The accompanying notes are an integral part of these financial statements
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 October 2, 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 nine months ended October 2, 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:
October 2, January 2, 1994 1994 Raw materials $ 12,160 $ 13,768 Work in process 8,232 8,524 Finished goods 25,673 31,539 ------- ------- $ 46,065 $ 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. Common stock equivalents relating to options represent additional shares which may be issued in connection with their exercise, reduced by the number of shares which could be repurchased with the proceeds at the average market price per share computed on a quarterly basis during the year. The number of shares entering into the earnings per share computation are as follows:
Three Nine Months Months Ended Ended October October October October 2, 3, 2, 3, 1994 1993 1994 1993 Weighted average common shares outstanding 10,631 10,613 10,627 10,608 Common stock equivalents: Options - Primary 966 0 629 0 Options - Fully diluted 0 0 76 0 Shares outstanding - Primary 11,597 10,613 11,256 10,608 Shares outstanding - Fully diluted 11,597 10,613 11,332 10,608
7 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. Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition: Results of Operations
Three Months Ended Nine Months Ended (in millions) 3rd Qtr 3rd Qtr 3rd Qtr 3rd Qtr 1994 Change 1993 1994 Change 1993 Revenues $ 57.4 $ 3.4 $ 54.0 $ 172.0 $ 6.3 $ 165.7 Percentage change 6.3 % 3.8 %
Revenues in the three and nine month periods ending October 2, 1994, increased due to the growth in the Company's Enterprising Service Solutions ("ESS") and Supplies businesses. The gains in these two businesses were partially offset by revenue declines in both our Impact and Laser Printing Solutions businesses. The sales mix shifted as the ESS business increased to 31.7% of total revenues in the third quarter as compared to 19.0% in the year- ago period. Meanwhile, printer revenues declined to 32.5% of total revenues in the third quarter as compared to 48.8% in the year-ago period. Printer revenues decreased 29.3% and 20.0% in the three and nine month periods ended October 2, 1994, respectively, as compared to the year-ago periods. These declines are primarily attributable to the impact printer product lines; particularly the mature serial matrix and band line printers, which declined 56.7% in the third quarter as compared to the year-ago period and the shuttle matrix line printers, which declined 21.6% in the nine month period ended October 2, 1994 as compared to the year-ago period. As expected, due to unusually high sales in the large enterprise account channel in the year-ago period, our Laser Printing Solutions business revenues declined 59.2% in the third quarter when compared to the same period in 1993. Management expects printer product revenues in 1994 to be below 1993 levels. ESS recorded strong third quarter and year-to-date revenue growth of 77.3% and 42.3%, respectively, due to revenues generated from the Canon U.S.A., Motorola Computer Group and Computervision Corporation depot and field service contracts that were announced in the first and second quarters of 1994. On October 25, 1994, the Company announced an expansion of its service relationship with Computervision Corporation. Under the terms of this agreement, GENICOM will provide field hardware maintenance support to Computervision Corporation customers in additional locations across the U.S. This agreement is expected to generate up to $ 8.0 million of revenue in its first year. Management anticipates that 1994 ESS revenue will be above fiscal 1993 levels due to increased depot and field service activities. Supplies revenues increased 15.5% and 19.7% in the three and nine month periods ended October 2, 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. During the quarter the Company expanded activities in the manufacture and distribution of remanufactured laser supplies, both GENICOM and other manufacturers' products. Management anticipates that 1994 Supplies revenues will be above 1993 levels. 8 Spares revenues increased 60.9% and 21.7% in the three and nine month periods ended October 2, 1994, respectively, as compared to the year-ago period. Spares revenues increased in the third quarter due to the continued success of new printhead and print module programs. Management does not expect further 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. Relay revenues decreased 7.9% and 1.4% in the three and nine month periods ended October 2, 1994, respectively, as compared to the year-ago period. Management expects that 1994 relay revenues will be consistent with the level attained in fiscal 1993.
(in millions) 3rd Qtr 4th Qtr 3rd Qtr 1994 1993 1993 Order backlog $ 40.0 $ 34.1 $ 36.2 Change - 3rd Quarter 1994 compared to: Amount 5.9 3.8 Percentage 17.3 % 10.5 %
The order backlog increases compared to the 1993 fourth and third quarter are largely due to increased orders in the Company's ESS business and to a lesser extent the Laser Printing Solutions business. A decline in the backlog from the Company's impact printer product lines partially offsets this increase. 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.
Three Months Ended Nine Months Ended (in millions) 3rd Qtr 3rd Qtr 3rd Qtr 3rd Qtr 1994 Change 1993 1994 Change 1993 Gross margin $ 13.7 $ 0.9 $ 12.8 $ 44.5 $ 0.6 $ 43.9 As a % of revenue 23.8 % 23.8 % 25.9 % 26.5 %
Although gross margin as a percentage of revenue in the three months ending October 2, 1994, was equal to that of the year-ago period, it dropped slightly in the nine months ending October 2, 1994, compared to the similar year-ago period. Margin pressures in the Company's Impact and Laser Printing Solutions businesses, start-up costs incurred in the ESS business pursuant to the new service contracts entered in the 1994 fiscal year and unfavorable production costs in the relay business were primary factors negatively affecting gross margin in 1994. 9
Three Months Ended Nine Months Ended (in millions) 3rd Qtr 3rd Qtr 3rd Qtr 3rd Qtr 1994 Change 1993 1994 Change 1993 Operating expenses: Selling, general and administrative $ 9.5 $ (0.5) $ 10.0 $ 31.8 $ (0.3) $ 32.1 Engineering, research and product development 1.8 (0.6) 2.4 5.8 (1.7) 7.5 ----- ----- ----- ---- ----- ----- Total $ 11.3 $ (1.1) $ 12.4 $ 37.6 $ (2.0) $ 39.6 ===== ===== ===== ==== ===== ===== As a % of revenue 19.6 % 23.0 % 21.9 % 23.9 %
Operating expenses decreased overall and as a percentage of revenue during the three and nine month periods ending October 2, 1994, due to the favorable impact of the Company's January 1994 cost reduction program that included personnel, salary and benefit reductions for the Company's worldwide operations, partially offset by increased costs associated with the growth in ESS operations. Cost reduction savings totaled $ 0.4 million and $ 1.8 million in the three and nine month periods ending October 2, 1994. In addition to the impact from the cost reduction program, engineering, research and product development expenses decreased significantly during both periods due to the completion of the development of our new high speed shuttle matrix line printer and lower software development costs. 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, partially offset by the $ 0.6 million incurred in the third quarter of 1993 to reorganize the Company's sales and marketing, development and administrative operations.
Three Months Ended Nine Months Ended (in millions) 3rd Qtr 3rd Qtr 3rd Qtr 3rd Qtr 1994 Change 1993 1994 Change 1993 Interest expense,net $ 1.8 $ (0.2) $ 2.0 $ 5.7 $ 0.1 $5.6 Percentage change (10.0) % 1.8 %
The decrease in interest expense for three months ended October 2, 1994, resulted from the impact of the Company's repurchase of its 12.5% Senior Subordinated Notes ("Notes") in the second quarter of 1994 and the decrease in the borrowings from its senior credit facility, partially offset by the interest rate increase on the same senior credit facility. The increase in the interest expense for the nine months ending October 2, 1994, as compared to the year-ago period, is due to 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, offset by the effect of the repurchase of the Notes referred to above and a decrease in the borrowings under 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 Notes. During the 1994 first quarter, the Company sold its remaining investment in Xeikon N.V., ("Xeikon") a Belgian printer development and manufacturing company and a pre-tax gain of $ 0.9 million was recognized. 10
Three Months Ended Nine Months Ended (in millions) 3rd Qtr 3rd Qtr 3rd Qtr 3rd Qtr 1994 Change 1993 1994 Change 1993 Income tax expense $ 0.1 $ 0.0 $ 0.1 $ 0.7 $ 0.5 $ 0.2 Effective tax rate 16.9 % -6.4 % 26.4 % -15.5 %
The Company's effective income tax rate for the nine months ended October 2, 1994, was 26.4% as compared to (15.5)% 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. Liquidity and Capital Resources Nine Months Ended (in millions) 3rd Quarter 1994 1993 Cash provided by operations $ 21.7 $ 2.9 Cash used in investing activities (6.5) (5.9) Cash (used in) provided by financing activities (14.6) 1.8
(in millions) 3rd 4th Quarter Quarter 1994 1993 Working capital $ 44.0 $ 33.6 Inventories 46.1 53.8 Debt obligations 53.8 69.0 Debt to equity ratio 2.0 to 1 2.8 to 1
The Company strengthened its financial position in the first nine months of 1994 by reducing its outstanding debt $ 15.2 million, or 22.0% 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 nine months of 1994 was $ 18.8 million greater than the similar year-ago period. The major sources of cash are attributable to profitable operations, inventory management programs, lower spending for restructuring programs and improved days sales outstanding associated with the Company's growing service business. The Company's current ratio was 2.0 to 1 at the end of the third quarter of 1994 as compared to 1.5 to 1 at the end of fiscal year 1993. This increase is primarily attributable to the decrease in debt classified as current under the senior credit facility, partially offset by the purchase of Notes in the second quarter of 1994. 11 Due to the needs of its growing service business, the Company has increased the cash used in investing activities in order to obtain necessary field support spares and equipment. 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 October 2, 1994, the Company had $ 13.7 million outstanding and $ 9.5 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 Printing 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. 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" and 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. Negotiations in Progress - - ------------------------ The Company is currently in negotiations with an undisclosed 3rd party to acquire their desk top printer business. Operations to be acquired involve a non-US manufacturing facility with revenues under $ 100 million. The proposed acquisition is subject to the negotiation of definitive agreements by the various parties, government and shareholder approvals, and other customary and appropriate steps. At this time there is no assurance that any agreement will be reached. 12 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 Number Description ------ ---------------------------- 27.1 Financial Data Schedule (b) Reports on Form 8-K: The Company did not file a Form 8-K during the quarter ended October 2, 1994. 13 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: November 16, 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) 14 GENICOM Corporation and Subsidiaries INDEX TO EXHIBITS TO FORM 10-Q FOR THE QUARTERLY PERIOD ENDED OCTOBER 2, 1994 Exhibit Number Description Page - - ------ ----------------------- ----- 27.1 Financial Data Schedule E-2 E-1 EX-27 2
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q FOR THE QUARTERLY PERIOD ENDED OCTOBER 2, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS 1,000 9-MOS JAN-01-1995 OCT-02-1994 1,874 0 37,717 (1,620) 46,065 89,485 89,108 (62,286) 130,736 45,510 52,734 106 0 0 26,986 130,736 123,957 172,011 90,394 127,462 37,623 0 5,731 2,830 748 2,082 0 0 0 2,082 0.18 0.18
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