-----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, NBH2KGiU9N4S9koG+y/Y9/66DYR42XUelNykhMhPRwBu9rJ9nLjtvMR6hDRFjGak gWUHNNBS2MebTkC+iWijrw== 0000926236-99-000048.txt : 19990514 0000926236-99-000048.hdr.sgml : 19990514 ACCESSION NUMBER: 0000926236-99-000048 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990513 FILER: COMPANY DATA: COMPANY CONFORMED NAME: STEVENS INTERNATIONAL INC CENTRAL INDEX KEY: 0000817644 STANDARD INDUSTRIAL CLASSIFICATION: PRINTING TRADES MACHINERY & EQUIPMENT [3555] IRS NUMBER: 752159407 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-09603 FILM NUMBER: 99619380 BUSINESS ADDRESS: STREET 1: 5500 AIRPORT FRWY CITY: FORT WORTH STATE: TX ZIP: 76117 BUSINESS PHONE: 8178313911 MAIL ADDRESS: STREET 1: PO BOX 3330 CITY: FORT WORTH STATE: TX ZIP: 76113 FORMER COMPANY: FORMER CONFORMED NAME: STEVENS GRAPHICS CORP DATE OF NAME CHANGE: 19920703 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q (Mark One) XX QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1999 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 1-9603 STEVENS INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) Delaware 75-2159407 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 5500 Airport Freeway, Fort Worth, Texas 76117 (Address of principal executive offices) (zip code) 817/831-3911 (Registrant's telephone number, including area code) __________________________________________ (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 XX 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. Title of Each Class Outstanding at May 6, 1999 Series A Stock, $0.10 Par Value 7,443,174 Series B Stock, $0.10 Par Value 2,058,959 TABLE OF CONTENTS Part I. FINANCIAL INFORMATION PAGE NUMBER Item 1. Financial Statements Consolidated Condensed Balance Sheets 3 December 31, 1998 and March 31, 1999 (unaudited) Consolidated Condensed Statements of Operations 4 Three months ended March 31, 1999 and 1998 (unaudited) Consolidated Condensed Statements of 5 Stockholders' Equity December 31, 1998 and Three months ended March 31, 1999 (unaudited) Consolidated Condensed Statements of Cash Flows 6 Three months ended March 31, 1999 and 1998 (unaudited) Notes to Consolidated Condensed Financial 7 Statements (unaudited) Item 2. Management's Discussion and Analysis of 9 Financial Condition and Results of Operations Part II. OTHER INFORMATION Item 1. Legal Proceedings 13 Item 6. Exhibits and Reports on Form 8-K 13 STEVENS INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (Amounts in thousands, except share data)
March 31, 1999 December 31, 1998 -------------- ----------------- (unaudited) ASSETS Current assets: Cash $ 25 $ 164 Trade accounts receivable, less allowance for losses of $509 and $138 in 1999 and 1998, respectively 1,444 1,711 Costs and estimated earnings in excess of billings on long term contracts 686 665 Inventory (Note 3). 5,784 6,146 Other current assets 890 1,076 Assets held for sale (Note 6) 988 988 ------ ------ Total current assets 9,817 10,750 Property, plant and equipment 2,454 2,600 Other assets, net 1,435 1,301 ------ ------ $13,706 $14,651 ====== ====== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Trade accounts payable $ 2,174 $ 3,035 Billings in excess of costs and estimated earnings on long-term contracts -- -- Other current liabilities 3,205 3,780 Customer deposits 476 310 Advances from stockholder 1,700 1,645 Current portion of long-term debt (Note 4) 13 15 ------ ------ Total current liabilities 7,568 8,785 Long-term debt 2,676 2,294 Note payable - stockholder 2,950 2,950 Accrued pension costs 3,577 3,577 Commitments and contingencies -- -- Stockholders' equity: Preferred stock, $0.10 par value, 2,000,000 shares authorized, none issued and outstanding -- -- Series A common stock, $0.10 par value, 20,000,000 shares authorized, 7,443,000 and 7,418,000 shares issued and outstanding at March 31, 1999 and December 31, 1998, respectively 743 741 Series B common stock, $0.10 par value, 6,000,000 shares authorized, 2,060,000 and 2,085,000 shares issued and outstanding at March 31, 1999 and December 31, 1998, respectively 207 209 Additional paid-in-capital 39,961 39,961 Accumulated other comprehensive (loss) (4,303) (4,150) Retained (deficit) (39,673) (39,716) ------ ------ Total stockholders' equity (deficit) (3,065) (2,955) ------ ------ $13,706 $14,651 ====== ====== See notes to consolidated condensed financial statements.
STEVENS INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) (Amounts in thousands, except per share data) Three Months Ended March 31, 1999 1998 ------ ------ Net sales $ 3,314 $ 9,697 Cost of sales (1,911) (6,912) ------ ------ Gross profit 1,403 2,785 Selling, general and administrative expenses (1,133) (2,228) ------ ------ Operating income (loss) 270 557 Other income (expense): Interest expense (176) (825) Other, net (48) (148) ------ ------ (224) (973) ------ ------ Income (loss) before income taxes 46 (416) Income tax (expense) (Note 7) (3) -- ------ ------ Net income (loss) $ 43 $ (416) ====== ====== Net income (loss) per common share - basic $ 0.005 $ (0.04) ====== ====== Net loss per common share - diluted $ 0.005 $ (0.04) ====== ====== Weighted average number of shares of common and common stock equivalents outstanding during the periods - basic 9,492 9,488 ====== ====== Weighted average number of shares of common and common stock equivalents outstanding during the periods - diluted 9,492 9,488 ====== ====== See notes to consolidated condensed financial statements.
STEVENS INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited) (Amounts in thousands) Accumulated Additional Other Series A Stock Series B Stock Paid-In Retained Comprehensive Shares Amount Shares Amount Capital (Deficit) Loss Total ----- ---- ----- ---- ------ ------- ------ ------ Balance, January 1, 1999 7,418 $741 2,085 $209 $39,961 $(39,716) $(4,150) $(2,955) Net income -- -- -- -- -- 43 -- 43 Foreign currency translation adjustment -- -- -- -- -- -- (153) (153) Excess pension liability adjustment -- -- -- -- -- -- -- -- ------ Comprehensive loss (110) ------ Conversion of Series B stock to Series A stock 25 2 (25) 2 -- -- -- -- ----- ---- ----- ---- ------ ------- ------ ------ Balance, March 31, 1999 7,443 $743 2,060 $207 $39,961 $(39,673) $(4,303) $(3,065) ===== ==== ===== ==== ====== ======= ====== ====== See notes to consolidated condensed financial statements.
STEVENS INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (Amounts in thousands) Three Months Ended March 31, ------------------- 1999 1998 ----- ------ Cash provided by operations: Net income (loss) $ 43 $ ( 416) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 215 453 Other (152) (217) Changes in operating assets and liabilities: Trade accounts receivable 267 1,544 Contract costs in excess of billings (21) (1,356) Inventory 362 110 Other assets (31) 1,191 Trade accounts payable (861) 193 Other liabilities (408) (683) ----- ------ Total cash (used in) provided by operating activities (586) 819 ----- ------ Cash provided by (used in) investing activities: Additions to property, plant and equipment (10) (160) Decreases to property, plant and equipment 24 -- ----- ------ Total cash provided by (used in) investing activities 14 (160) ----- ------ Cash provided by (used in) financing activities: Net proceeds from (repayments of) long- term debt 433 (171) ----- ------ Total cash provided by (used in) financing activities 433 (171) ----- ------ Increase (decrease) in cash and temporary investments (139) 488 Cash and temporary investments at beginning of period 164 211 ----- ------ Cash and temporary investments at end ofperiod $ 25 $ 699 ===== ====== Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ 60 $ 285 Income taxes 5 -- See notes to consolidated condensed financial statements.
STEVENS INTERNATIONAL, INC. AND SUBSIDIARIES Notes to Consolidated Condensed Financial Statements (Unaudited) 1. The consolidated condensed balance sheet as of March 31, 1999, the consolidated condensed statement of stockholders' equity for the period ended March 31, 1999, the consolidated condensed statements of operations for the three months ended March 31, 1999 and 1998, and the consolidated condensed statements of cash flows for the three month periods then ended have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position as of March 31, 1999 and the results of operations for the three months ended March 31, 1999 and 1998 and the cash flows for the three months ended March 31, 1999 and 1998 have been made. The December 31, 1998 consolidated condensed balance sheet is derived from the audited consolidated balance sheet as of that date. Complete financial statements for December 31, 1998 and related notes thereto are included in the Company's Annual Report on Form 10-K for the year ended December 31, 1998 (the "1998 Form 10-K"). The above financial statements have been prepared in accordance with the instructions to Form 10-Q and therefore do not include all information included in the 1998 Form 10-K. The results of operations for the three months ended March 31, 1999 and 1998 are not necessarily indicative of the results to be expected for the full year. 2. The Company designs, manufactures, markets and services web-fed packaging and printing systems and related equipment for its customers in the packaging industry and in the specialty/commercial and banknote and securities segments of the printing industry. The Company also markets and manufactures high-speed digital image processing systems primarily for use in the banknote and security printing industry. The Company combines various types of equipment capable of converting and printing, among other items, food and beverage containers, liquid container cartons, banknotes, postage stamps, lottery tickets, direct mail inserts, personal checks and business forms. The Company's technological and engineering capabilities allow it to combine any of the four major printing technologies (offset, flexography, rotogravure and intaglio) in its systems. Complete press systems are capable of multiple color and multiple size printing and perform such related functions as numbering, punching, perforating, slitting, cutting, creasing, folding and stacking. The presses can be custom engineered for non- standard form size and special auxiliary functions. 3. Inventories consist of the following: March 31, December 31, 1999 1998 ------- ------- (Amounts in thousands) Finished product $ 1,118 $ 630 Work in progress 1,180 1,458 Raw materials 3,486 4,058 ------- ------- $ 5,784 $ 6,146 ======= ======= 4. For a description of the status of the bank credit facility at March 31, 1999, see "Liquidity and Capital Resources". Substantially all assets of the Company continue to be pledged as collateral on the Company's credit facilities. 5. The Company is subject to various claims, including product liability claims, which arise in the ordinary course of business, and is a party to various legal proceedings that constitute ordinary routine litigation incidental to the Company's business. A successful product liability claim brought against the Company in excess of its product liability coverage could have a material adverse effect upon the Company's business, operating results and financial condition. In management's opinion, the Company has adequate legal defense and/or insurance coverage in respect to each of these legal actions and does not believe that such actions, if they occur either individually or in the aggregate, will materially affect the Company's operations or financial position. See "Legal Proceedings" herein and in the 1998 Form 10-K. 6. A description of the Company's divestitures in 1999 and 1998 follow: Proposed Sale of Hamilton Production Facility In the second quarter of 1999, the Company anticipates that it will conclude the sale of the real property at its Hamilton, Ohio production facility for an aggregate consideration of $725,000. The transaction should result in no gain or loss since the property was written down to its estimated ultimate realizable value at December 31, 1998. Proceeds of the transaction will be used to repay certain expenses of the sale, certain property taxes and repay a portion of the $2.5 million loan from Paul I. Stevens, the Company's chairman and chief executive officer, which was partially collateralized by a lien on this production facility. Sale of Hamilton Machining Center in July 1998 On July 28, 1998 the Company sold the real and personal property at its Hamilton, Ohio machining center ("HMC") and the major portion of its machinery and equipment at its assembly facility in Hamilton, Ohio for an aggregate consideration of approximately $4.33 million. This transaction resulted in a second quarter 1998 loss on sale of assets of approximately $0.8 million and an additional loss of $0.5 million in the third quarter of 1998 as a result of HMC inventory and other inventory that was abandoned by the Company and included in the sale. Proceeds of the transaction were used to repay the $4 million secured bridge term loan from the Company's new bank lender (the "Bridge Loan") which was loaned to the Company on June 30, 1998. HMC had outside sales of $1.2 million and operating losses of $0.35 million in 1997. The Company has replaced certain of the capabilities of its machining center with a group of new and traditional suppliers. Sale of Assets of Zerand Division in April 1998 On April 27, 1998, the Company sold substantially all the assets of the Zerand division to Valumaco Incorporated, a new company formed for the asset purchase. In addition, Valumaco Incorporated assumed certain liabilities of the Zerand division. The assets sold included the real property, platen die cutter systems, and other original Zerand products such as delivery equipment, wide-web rotogravure printing systems, stack flexographic printing systems, unwind and butt splicer systems, and related spare parts, accounts payable, and other assumed liabilities. Excluded from the proposed transaction were the System 2000 flexographic printing systems and the System 9000 narrow-web rotogravure printing systems produced at the Zerand division and related accounts receivable, inventory and engineering drawings. The sale price was approximately $13.7 million, which consisted of cash proceeds of $10.1 million, a one- year $1 million escrow "holdback", and the purchaser's assumption of approximately $2.6 million of certain liabilities of Zerand, including the accounts payable. This transaction resulted in an approximate $10 million reduction of the Company's senior debt. The Company realized an approximate $3.6 million gain on the sale of Zerand assets in the second quarter of 1998. 7. The Company's effective tax rate was 6.5% in 1999 and 0.0% in 1998. Due to accumulated losses, there were no recoverable income taxes for the three months ended March 31, 1998. 8. Basic EPS excludes dilution and is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. Since the Series A and Series B stock have identical dividend and participation rights in the Company's earnings, they have been considered to be comparable in the calculation. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Year 2000 Compliance Disclosure The Company's main computer system and software are not currently year 2000 compliant. The Year 2000 issue is the result of computer programs being written using two digits rather than four to define the applicable year. Any of the Company's computer programs that have date sensitive software may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in a system failure or miscalculations causing disruptions of operations, including, but not limited to, a temporary inability to process transactions, invoices, or other similar normal business activities. Based on a recent assessment, the Company has determined that it will need to modify a significant portion of its software so that its computer system will properly utilize data beyond December 31, 1999. The Company is working on its Year 2000 modifications, and plans to complete such modifications by the end of the second quarter of 1999 utilizing certain software upgrades and consultant and internal resources for all program changes. The Company anticipates costs of $50,000 to $75,000 will be incurred to complete its Year 2000 program modifications. There can be no assurance that this time frame will be achieved and actual results could differ materially from these plans. Specific factors that might cause such material differences include, but are not limited to, the availability and cost of personnel trained in this area, the ability to locate and correct all relevant computer codes and similar uncertainties. As a contingency, the Company's consultant, who developed the software used by the Company, is capable of backup processing on its own compatible computer system that is already Year 2000 compliant. RESULTS OF OPERATIONS Comparison of Three Months Ended March 31, 1999 and 1998 Sales The Company's sales for the three months ended March 31, 1999 decreased by $6.4 million (or 65.8%) compared to sales in the same period in 1998 due primarily to decreases in packaging systems products ($2.8 million) and to decreased sales resulting from the sale of the Zerand division in April 1998, which contributed $3.6 million in sales in the first quarter of 1998. Gross Profit The Company's gross profit for the three months ended March 31, 1999 decreased by $1.4 million compared to gross profit in the same period in 1998 due primarily to decreased sales volume for packaging systems net of reduced depreciation and product development costs in 1999. In addition, the Company evaluated its last-in first out ("LIFO") inventory reserve in conjunction with the sale of its production facility in Ohio including certain inventory, and other inventory usage in 1999. The financial impact of the decrement in the LIFO inventory for the three months ended March 31, 1998 was $0.27 million. Accordingly, the gross profit for the three months was increased $0.27 million ($0.03 per share) and the LIFO reserve was reduced $0.27 million. Gross profit margin for 1999 increased to 42.3% of sales as compared to 28.7% for 1998. This increase in gross profit margin in 1999 was due primarily to normal margins on standard products in 1999, the benefit of the reduction of the LIFO reserve, and an adjustment in the recording of revenues on the ACE project due to favorable exchange rates ($0.2 million) in 1999, as well as reduced depreciation charges due to assets sold in 1998. Selling, General and Administrative Expenses The Company's selling, general, and administrative expenses decreased by $1.1 million (or 49.1%) for the three months ended March 31, 1999 compared to the same period in 1998 due to continuing cost reduction efforts, and the 1998 sale of the Zerand and Hamilton Machining Center (HMC) divisions. Selling, general and administrative expenses for the three months ended March 31, 1999 were 34.2% of sales compared to 23% of sales for the same period in 1998 due to the large decrease in sales in 1999. The reduction in expenses was not proportionate to the reduction in sales discussed above. Other Income (Expense) The Company's interest expense decreased by $0.6 million for the three months ended March 31, 1999 compared to the same period in 1998 due to the reduced borrowing in 1999. The approximate $20 million in debt reduction since March 31, 1998 resulted from the sale of Zerand and HMC and the June 30, 1998 debt restructuring discussed in "LIQUIDITY AND CAPITAL RESOURCES." TAX MATTERS The Company's effective state and federal income tax rate ("effective tax rate") was 6.5% for the three months ended March 31, 1999, due to the alternative minimum tax imposed on corporations, and 0% for the three months ended March 31, 1998. Due to continuing losses in 1998, there were no recoverable tax benefits for the three months ended March 31, 1998. LIQUIDITY AND CAPITAL RESOURCES Liquidity and Capital Resources The Company requires capital primarily to fund its ongoing operations, to service its existing debt and to pursue its strategic objectives including new product development and penetration of international markets. The Company's working capital needs typically increase because of a number of factors, including the duration of the manufacturing process and the relatively large size of most orders. Historically, the Company has funded its capital requirements with cash provided by operating activities, borrowings under credit facilities, issuances of long-term debt and the sale and private placement of common stock. Net cash provided by (used in) operating activities (before working capital requirement) was $0.1 million and $(0.2) million for the three months ended March 31, 1999 and 1988, respectively. Working capital provided (used) cash of $(0.7) million and $1.0 million for the three months ended March 31, 1999 and 1998, respectively. The Company's working capital needs increase during periods of sales growth because of a number of factors, including the duration of the manufacturing process and the relatively large size of most orders. During periods of sales decline such as 1999 and 1998, the Company's working capital generally provides cash as receivables are collected and inventory is utilized. However, in 1999 the Company concentrated on reducing its trade payables and other liabilities. The Company's capital expenditures for the first quarter of 1999 and 1998 were $0.01 million and $0.16 million, respectively, and were used primarily for certain machinery and equipment modernization. On June 30, 1998 the Company refinanced a major portion of its secured indebtedness ("the Debt Restructuring") as part of its plan to reduce its debt. Through a combination of new secured bank borrowings of approximately $6 million, and loans from its Chairman, CEO and principal shareholder, Paul I. Stevens, aggregating $4.5 million, the Company paid off principal amounts due its senior secured bank lender and its secured senior subordinated noteholders, aggregating approximately $19.5 million. Repayment of the secured Senior Subordinated Notes resulted in an extraordinary gain on early extinguishment of debt of approximately $11.2 million in the second quarter of 1998. Under its credit facility, the Company's maximum borrowings are limited to a borrowing base formula, which cannot exceed $7.5 million in the form of direct borrowings and letters of credit. As of March 31, 1999 there were $2.67 million in direct borrowings and no standby letters of credit outstanding under the bank credit facility, with no additional availability for such borrowings. The Company's bank credit facilities have first liens on certain assets of the Company, principally inventory, accounts receivable, and the Company's Texas real estate. Paul I. Stevens' loans aggregating $4.65 million at March 31, 1999 have first liens on certain assets of the Company, principally certain Ohio assets that are being held for sale, the remaining $0.5 million escrow hold back on the sale of the Zerand division, the assets of a foreign subsidiary, and certain accounts receivable for new customer equipment. The Company was paid $500,000 of the Zerand escrow hold back funds net of amounts owed to the purchaser on November 6, 1998. Because these hold back funds collateralize certain Paul I. Stevens advances, the $500,000 was paid to him to reduce his secured loans to the Company. Interest on the bank facility is 1.25% over prime with a two-year maturity on the revolving credit facility. The amount borrowed on the revolving credit facility was approximately $2.67 million on March 31, 1999. The Company paid in full a $4.0 million bank Bridge Loan on July 28, 1998 from the sale of HMC and the major portion of its machinery and equipment at its assembly facility in Hamilton, Ohio. The secured loans from Paul I. Stevens are due June 30, 2000 and bear interest at rates that vary up to 2% over bank prime. The borrowings under the bank credit facility are subject to various restrictive covenants related to financial ratios as well as limitations on capital expenditures and additional indebtedness. The Company is not allowed to pay dividends. The Company's pension plans have 1999 minimum payments due of approximately $0.5 million payable on or before September 15, 1999. With the expected May 1999 sale of the Hamilton, Ohio manufacturing facility, and assuming that one of several strategic financial alternatives, principally the return of normalized order flow rates and the additional sale of assets, among others presently being pursued by the Company is consummated, management believes that cash flow from operations will be adequate to fund its existing operations and repay scheduled indebtedness over the next 12 months. In addition, the Company may incur, from time to time, additional short- and long-term bank indebtedness (under its existing credit facility or otherwise) and may issue, in public or private transactions, its equity and debt securities to provide additional funds necessary for the continued pursuit of the Company's operational strategies. The availability and terms of any such sources of financing will depend on market and other conditions. There can be no assurance that such additional financing will be available or, if available, will be on terms and conditions acceptable to the Company. Through March 31, 1999, the Company's Chairman and Chief Executive Officer has loaned the Company $1.7 million for its short-term cash requirements. As of March 31, 1999, this amount has not been repaid. The success of the Company's plans will continue to be impacted by its ability to achieve a satisfactory level of orders for printing systems, timely deliveries, the degree of international orders (which generally have less favorable cash flow terms and require letters of credit that reduce credit availability), and improved terms of domestic orders. While the Company believes it is making progress in these areas, there can be no assurance that the Company will be successful in these endeavors. Backlog and Orders The Company's backlog of unfilled orders at March 31, 1999 was approximately $4.1 million compared to $2.5 million at December 31, 1998 . The backlog of packaging systems at March 31, 1999 increased $1.9 million as compared to year-end 1998, offset by small changes in the Company's other product lines. The backlog at March 31 in each of the preceding five years has ranged from a low of $8.1 million in 1998 to a high of $68.0 million in 1995. Orders for the three months ended March 31, 1999 were $4.9 million compared to $1.6 million for the comparable period in 1998, an increase of $3.3 million while shipments decreased $2.7 million, excluding Zerand in 1998. The Company believes the above noted increased order flow is the result of normal fluctuations in the flow of major printing and packaging system orders. When sales are recorded under the completed contract method of accounting, the Company normally experiences a six to nine month lag between the time new orders are booked and the time they are reflected in sales and results of operations. Larger orders, which are accounted for using the percentage of completion method of accounting, are reflected in sales and results of operations as the project progresses through the manufacturing cycle. PART II OTHER INFORMATION Item 1. Legal Proceedings The Company is subject to various claims, including product liability claims, which arise in the ordinary course of business, and is a party to various legal proceedings that constitute ordinary routine litigation incidental to the Company's business. No assurance can be given regarding the outcome of any case; however a negative outcome in excess of insurance coverage could have a material adverse effect on the Company's business, operating results and financial condition. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: Exhibit Number Description of Exhibit ------- ----------------------------- 3.1 Second Amended and Restated Certificate of Incorporation of the Company.(1) 3.2 Bylaws of the Company, as amended.(2) 4.1 Specimen of Series A Common Stock Certificate.(3) 4.2 Specimen of Series B Common Stock Certificate.(4) 10.1 Asset Contract to Purchase Real Estate dated February 8, 1999 by and between the Company and Production Manufacturing, Inc. (5) 11.1 Computation of Net Income per Common Share.(*) 27.1 Financial Data Schedule.(*) * Filed herewith. (1) Previously filed as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1990 and incorporated herein by reference. (2) Previously filed as an exhibit to the Company's Registration Statement on Form S-1 (No. 33-15279) and incorporated herein by reference. (3) Previously filed as an exhibit to the Company's Registration Statement on Form S-1 (No. 33-24486) and incorporated herein by reference. (4) Previously filed as an exhibit to the Company's report on Form 8-A filed August 19, 1988 and incorporated herein by reference. (5) Previously filed as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1998 and incorporated herein by reference. (b) Reports on Form 8-K. None. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, Stevens International, Inc. has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. STEVENS INTERNATIONAL, INC. Date: May 12, 1999 By: /s/ Paul I. Stevens ------------------------ Paul I. Stevens Chief Executive Officer and Acting Chief Financial Officer
EX-11.1 2 EXHIBIT 11.1 STEVENS INTERNATIONAL, INC. AND SUBSIDIARIES COMPUTATIONS OF NET INCOME (LOSS) PER COMMON SHARE (UNAUDITED) (Amounts in thousands, except per share data) Three Months Ended March 31, 1999 1998 ----- ----- Basic and diluted: Weighted average shares outstanding - basic 9,492 9,488 Assumed exercise of Series A and B stock options (Treasury stock method) -- -- ----- ----- Total common share equivalents - diluted 9,492 9,488 ===== ===== Net income (loss) $ 43 $ (416) ===== ===== Per share amounts -- Basic and fully diluted: Net income (loss) - basic $0.005 $(0.04) ===== ===== Net income (loss) - diluted $0.005 $(0.04) ===== =====
EX-27.1 3
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS OF STEVENS INTERNATIONAL, INC. AND SUBSIDIARIES AS OF MARCH 31, 1999 AND FOR THE THREE MONTHS THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1999 MAR-31-1999 25 0 1,953 509 5,784 9,817 6,839 4,385 13,706 7,568 5,626 0 0 950 (4,015) 13,706 3,314 3,314 1,911 1,911 1,133 0 176 46 3 43 0 0 0 43 0.005 0.005
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