-----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, R1leI/pXNsW3ASJkx1cHn4J27ISK226N5b7MFj3/O2LOwVElE8ZmGH0O8y2mHaIQ T/10TFjN90hV1HTVhPVw6g== /in/edgar/work/20000811/0000950130-00-004383/0000950130-00-004383.txt : 20000921 0000950130-00-004383.hdr.sgml : 20000921 ACCESSION NUMBER: 0000950130-00-004383 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: REFAC CENTRAL INDEX KEY: 0000082788 STANDARD INDUSTRIAL CLASSIFICATION: [6794 ] IRS NUMBER: 131681234 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12776 FILM NUMBER: 692567 BUSINESS ADDRESS: STREET 1: 115 RIVER ROAD CITY: EDGEWATER STATE: NJ ZIP: 07020-1099 BUSINESS PHONE: 2019434400 MAIL ADDRESS: STREET 2: 122 EAST 42ND ST STE 4000 CITY: NEW YORK STATE: NY ZIP: 10168 FORMER COMPANY: FORMER CONFORMED NAME: REFAC TECHNOLOGY DEVELOPMENT CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: RESOURCES & FACILITIES CORP DATE OF NAME CHANGE: 19740509 FORMER COMPANY: FORMER CONFORMED NAME: REFAC INC DATE OF NAME CHANGE: 19720628 10-Q 1 0001.txt QUARTERLY REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 -------------------------------------- For the Quarter Ended June 30, 2000 Commission File Number 0-7704 REFAC ----- (Exact name of registrant as specified in its charter) Delaware 13-1681234 --------------------------------------- -------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) The Hudson River Pier --------------------- 115 River Road, Edgewater, New Jersey 07020-1099 ------------------------------------------------ (Address of principal executive offices)(Zip Code) Registrant's telephone number, including area code: (201) 943-4400 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 --- --- The number of shares outstanding of the Registrant's Common Stock, par value $.10 per share, as of August 1, 2000 was 3,795,261. REFAC INDEX -----
Page ---- Part I. Financial Information Condensed Consolidated Balance Sheets June 30, 2000 (unaudited) and December 31, 1999 3 Condensed Consolidated Statements of Operations Six and three months ended June 30, 2000 and 1999 (unaudited) 4 Condensed Consolidated Statements of Cash Flows Six months ended June 30, 2000 and 1999 (unaudited) 5 Notes to Condensed Consolidated Financial Statements (unaudited) 6-10 Management's Discussion and Analysis of Financial Conditions and Results of Operations 11-14 Part II. Other Information 15-16
Page 2 REFAC CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, DECEMBER 31, 2000 1999 ------------------- -------------------- (UNAUDITED) ASSETS - ------ Current Assets Cash and cash equivalents $5,760,000 $5,158,000 Royalties receivable 1,066,000 1,153,000 Accounts receivable, net 1,911,000 1,425,000 Prepaid expenses 632,000 521,000 Inventory 449,000 - ------------------- -------------------- Total current assets 9,818,000 8,257,000 ------------------- -------------------- Property and equipment, net 2,546,000 2,232,000 Licensing-related securities 4,052,000 7,145,000 Investments being held to maturity 2,725,000 3,331,000 Other assets 641,000 583,000 Goodwill, net 6,174,000 6,299,000 -------------------- ------------------- $25,956,000 $27,847,000 =================== ==================== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $456,000 $674,000 Accrued expenses 612,000 439,000 Amounts payable under service agreements 501,000 417,000 Income taxes payable - 716,000 ------------------- -------------------- Total current liabilities 1,569,000 2,246,000 ------------------- -------------------- Deferred income taxes 1,183,000 2,365,000 Other liabilities-deferred compensation 445,000 445,000 Stockholders' Equity Common stock, $.10 par value 545,000 545,000 Additional paid-in capital 9,984,000 9,984,000 Retained earnings 24,125,000 22,299,000 Accumulated other comprehensive income 2,354,000 4,212,000 Treasury stock, at cost (13,874,000) (13,874,000) Receivable from issuance of common stock and warrants (375,000) (375,000) ------------------- -------------------- Total stockholders' equity 22,759,000 22,791,000 ------------------- -------------------- $25,956,000 $27,847,000 =================== ====================
See accompanying notes to the unaudited condensed consolidated financial statements Page 3 REFAC CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
SIX MONTHS THREE MONTHS ENDED JUNE 30, ENDED JUNE 30, ------------------------------------------------------------------------ 2000 1999 2000 1999 ------------------------------------------------------------------------ Revenues Licensing-related activities $2,040,000 $1,929,000 $978,000 $965,000 Creative consulting fees 3,602,000 1,326,000 1,752,000 545,000 Consumer product sales 712,000 - 5,000 - Realized gains and dividends on licensing-related securities 2,606,000 3,257,000 1,296,000 1,680,000 Dividend and interest income 245,000 190,000 111,000 97,000 ------------------------------------------------------------------------ Total Revenues 9,205,000 6,702,000 4,142,000 3,287,000 ------------------------------------------------------------------------ Costs and Expenses Licensing-related activities 781,000 1,052,000 348,000 529,000 Creative consulting expenses 2,265,000 1,228,000 1,069,000 565,000 Consumer product sales costs 476,000 - 2,000 - Selling, general and administrative expenses 2,959,000 1,675,000 1,365,000 940,000 ------------------------------------------------------------------------ Total costs and expenses 6,481,000 3,955,000 2,784,000 2,034,000 ------------------------------------------------------------------------ Income before provision for taxes on income 2,724,000 2,747,000 1,358,000 1,253,000 Provision for taxes on income 898,000 875,000 451,000 389,000 ------------------------------------------------------------------------ Net income $1,826,000 $1,872,000 $907,000 $864,000 ======================================================================== ------------------------------------------------------------------------ Diluted earnings per share $0.48 $0.49 $0.24 $0.23 ======================================================================== Basic earnings per share $0.48 $0.49 $0.24 $0.23 ======================================================================== ------------------------------------------------------------------------ Diluted weighted average shares outstanding 3,799,961 3,811,865 3,795,261 3,807,202 ======================================================================== ------------------------------------------------------------------------ Basic weighted average shares outstanding 3,795,261 3,795,261 3,795,261 3,795,261 ========================================================================
See accompanying notes to the unaudited condensed consolidated financial statements Page 4 REFAC CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED JUNE 30, --------------------------------------- 2000 1999 --------------------------------------- Cash Flows from Operating Activities Net income $1,826,000 $1,872,000 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 380,000 222,000 Realized gains on sale of licensing-related securities (2,466,000) (3,044,000) Deferred income taxes (223,000) (177,000) (Increase) decrease in assets: Royalties receivable 87,000 (189,000) Accounts receivable (486,000) 279,000 Prepaid expenses (111,000) (188,000) Other assets (61,000) 122,000 Inventory (449,000) -- Other 3,000 -- Increase (decrease) in liabilities: Accounts payable and accrued expenses (45,000) 12,000 Amounts payable under service agreements 84,000 (39,000) Income taxes payable (716,000) 119,000 --------------------------------------- Net cash used in operating activities (2,177,000) (1,011,000) --------------------------------------- Cash Flows from Investing Activities Proceeds from sales of investments being held to maturity 1,000,000 1,043,000 Proceeds from sales of licensing-related securities 2,742,000 3,288,000 Purchase of investments being held to maturity (394,000) (1,000,000) Purchase of property and equipment (569,000) (1,700,000) --------------------------------------- Net cash provided by investing activities 2,779,000 1,631,000 --------------------------------------- Net increase in cash and cash equivalents 602,000 620,000 Cash and cash equivalents at beginning of period 5,158,000 2,973,000 --------------------------------------- Cash and cash equivalents at end of period $5,760,000 $3,593,000 =======================================
See accompanying notes to the unaudited condensed consolidated financial statements Page 5 REFAC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (all of which were normal recurring adjustments) necessary to present fairly the consolidated financial position of Refac (the "Company") at June 30, 2000 and December 31, 1999, and the results of its operations, its cash flows and comprehensive income for the six month interim period presented. The accounting policies followed by the Company are set forth in Note l to the Company's consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 1999, which is incorporated herein by reference. 2. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year. 3. The following table reconciles the numerators and denominators of the basic and diluted earnings per share computations.
Six Months Ended Three Months Ended June 30, June 30, - -------------------------------------------------- --------------------------------- --------------------------------- Description 2000 1999 2000 1999 - -------------------------------------------------- ---------------- ---------------- --------------- ---------------- Basic shares 3,795,261 3,795,261 3,795,261 3,795,261 Dilution: Stock Options and Warrants 4,700 16,604 -- 11,941 Diluted Shares 3,799,961 3,811,865 3,795,261 3,807,202 Income available to common shareholders $1,826,000 $1,872,000 $907,000 $864,000 Basic earnings per share $0.48 $0.49 $0.24 $0.23 Diluted earnings per share $0.48 $0.49 $0.24 $0.23
4. During the six months ended June 30, 1999, the Company operated principally in two industry segments - - - "Licensing of Intellectual Property Rights" and "Creative Consulting Services". In September 1999, the formed Refac Consumer Products, Inc. for the purchase and manufacture of consumer products and now operates in three industry segments. The accounting policies used to develop segment information correspond to those described in the summary of significant accounting policies (See Note 1 of the 1999 Annual Report). Segment profit or loss is based on profit or loss from operations before the provision or benefit for income taxes. The reportable segments are distinct business units operating in different industries and are separately managed. As of June 30, 2000, the Company has allocated dividend and interest income Page 6 REFAC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) to each segment. The prior period presentations have been reclassified to conform to the current period presentation. The following information about the business segments are for the six month period ended June 30, 2000.
Manufacture and Licensing of Creative Marketing of Intellectual Consulting Consumer Description Property Rights Services Products Total - -------------------------- ---------------------- ---------------- ------------------- ------------------ Total revenues $4,684,000 $3,777,000 $744,000 $9,205,000 Segment profit (loss) $3,051,000 $220,000 ($547,000) $2,724,000 Segment assets $14,575,000 $10,359,000 $1,022,000 $25,956,000
The following information about the business segments are for the six month period ended June 30, 1999.
Manufacture Licensing of Creative and Marketing Intellectual Consulting of Consumer Description Property Rights Services Products* Total - -------------------------- ---------------------- ---------------- ------------------- ----------------- Total revenues $5,376,000 $1,326,000 N/A $6,702,000 Segment profit (loss) $3,371,000 ($624,000) N/A $2,747,000 Segment assets $22,169,000 $7,431,000 N/A $29,600,000
* Segment commenced in September 1999. Page 7 REFAC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The following information about the business segments are for the three month period ended June 30, 2000.
Manufacture and Licensing of Creative Marketing of Intellectual Consulting Consumer Description Property Rights Services Products Total - -------------------------- ---------------------- ---------------- ------------------- ----------------- Total revenues $2,292,000 $1,831,000 $19,000 $4,142,000 Segment profit (loss) $1,502,000 $222,000 ($366,000) $1,358,000
The following information about the business segments are for the three month period ended June 30, 1999.
Manufacture Licensing of Creative and Marketing Intellectual Consulting of Consumer Description Property Rights Services Products * Total - -------------------------- ---------------------- ---------------- ------------------- ---------------- Total revenues $2,742,000 $545,000 N/A $3,287,000 Segment profit (loss) $1,712,000 ($459,000) N/A $1,253,000
* Segment commenced in September 1999. A reconciliation of combined segment profit to consolidated net income is as follows:
Six Months End Six Months Ended Description June 30, 2000 June 30, 1999 - --------------------------------------- ---------------------- ------------------------ Total profit for reportable segments $2,724,000 $2,747,000 Income tax expense (898,000) (875,000) Net income $1,826,000 $1,872,000
Page 8 REFAC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Three Months Three Months End June 30, Ended June 30, Description 2000 1999 - --------------------------------------- ---------------------- ------------------------ Total profit for reportable segments $1,358,000 $1,253,000 Income tax expense (451,000) (389,000) Net income $907,000 $864,000
5. Comprehensive income consists of net income or loss for the current period as well as income, expenses, gains, and losses arising during the period that are included in separate components of equity. It includes the unrealized gains and losses on the Company's licensing-related securities, net of taxes and foreign currency translation adjustments. The components of comprehensive income (loss), net of related tax, for the six months ended June 30, 2000 are as follows:
Description 2000 - ------------------------------------------------------------------- ------------------ Net income $1,826,000 Less: Comprehensive losses, net of tax Unrealized holding losses arising during the period on licensing- related securities (231,000) Reclassification adjustment for gain included currently in net income ($1,627,000) Comprehensive loss ($32,000)
The components of accumulated other comprehensive income, net of related tax, at June 30, 2000, consist of unrealized gains on licensing-related securities, net of tax, and amounted to $2,354,000. 6. At June 30, 2000, the Company had open letters of credit to purchase goods for $762,000. 7. On December 31, 1995, an action was commenced in the United States District Court for the Eastern District of New Jersey against the Company by the executrix of the estate of a former officer of the Company for compensation allegedly due the deceased officer under an employment arrangement. The Company believes that the claim is without any merit. Page 9 REFAC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) On December 20, 1999, a claim was brought against the Company, as a nominal defendant, and certain of its directors in the Supreme Court of the State of New York, New York County, by a shareholder alleging claims against the Company and certain members of the Company's Board of Directors for breach of fiduciary duty and waste arising out of a Stock Repurchase Agreement and a Retirement Agreement entered into between the Company and its then Chairman and Chief Executive Officer, Eugene Lang. On February 29, 2000, the Company, together with all other defendants, filed a motion to dismiss the Complaint in its entirety on the grounds that plaintiff's claims are time barred by the statute of limitations and that the Complaint fails to state a claim upon which relief may be granted. The defendants' motion to dismiss has been fully briefed and the parties are awaiting a decision on the motion or instructions from the court regarding oral argument. The Company believes that the claims against the Company and its directors are without merit. 8. Certain prior period amounts have been reclassified to conform to the current period presentation. 9. Inventories are stated at the lower of cost or market; cost is determined using the first-in, first out method. Inventory consists of finished goods for $154,000 and raw materials for $295,000. 10. Effect of Recently Issued Accounting Pronouncements. Accounting for Derivative Instruments and Hedging Activities. In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", which requires all entities to recognize all derivative instruments on their balance sheet as either assets or liabilities measured at fair value. SFAS No. 133 also specifies new methods of accounting for hedging transactions, prescribes the items and transactions that my be hedged, and specifies detailed criteria to be met to qualify for hedge accounting. SFAS No. 133, as amended by SFAS No. 137, is effective for fiscal years beginning after June 15, 2000. This standard is not expected to have a material effect on the Company's financial statements. Page 10 REFAC MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS - --------------------- REVENUES for the six months ended June 30, 2000 were $9,205,000 as compared to $6,702,000 for the comparable period in 1999. The increase of $2,503,000, or 37%, is principally due to increases in revenues from creative consulting services ($2,276,000), licensing-related activities ($111,000), sales of consumer products ($712,000) and dividend and interest income ($55,000) offset by a decrease of $651,000 in gains on the sale of licensing-related securities and dividends. Revenues for the three months ended June 30, 2000 were $4,142,000 as compared to $3,287,000 for the comparable period in 1999. The increase of $855,000, or 26% is principally due to increases in revenues from creative consulting services ($1,207,000), licensing-related activities ($13,000), sales of consumer products ($5,000) and dividend and interest income ($14,000) offset by a decrease of $384,000 in gains on the sale of licensing-related securities and dividends. Revenues for the six and three months are summarized as follows:
For the Six For the Three Months Ended Months Ended June 30, June 30, Description 2000 1999 2000 1999 ----------- ---- ---- ---- ---- Revenues from licensing-related activities 22% 29% 24% 29% Realized gains on sales and dividends from licensing- 28% 49% 31% 51% related securities Creative consulting services 39% 20% 42% 17% Consumer product sales (commenced in September, 1999) 8% 0% 0% 0% Dividends and interest 3% 2% 3% 3% Total 100% 100% 100% 100%
Revenues from Licensing-Related Activities consist of recurring royalty payments for the use of licensed patents and trademarks, non-recurring, lump sum license payments, agency fees and service fees. Recurring patent licensing income and trademark agency fees increased $354,000, or 25%, for the six months ended June 30, 2000 as compared to the same period of 1999. The increase of recurring patent licensing income and trademark agency fees for the six months ended June 30, 2000 is attributable to the increase in (i) trademark agency fees of $224,000 and (ii) patent licensing Page 11 REFAC MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS income of $183,000 offset by (iii) a decrease in patent enforcement fees of $53,000. Revenues from non-recurring agreements vary from period to period depending upon the nature of the licensing programs pursued for various technologies in a particular year and the timing of successful completion of licensing agreements. Non-recurring license fees decreased by $243,000 for the six months ended June 30, 2000 as compared to the same period of 1999. Recurring patent licensing income and trademark agency fees increased $109,000 for the three months ended June 30, 2000 as compared to the same period of 1999. The increase of recurring patent licensing income and trademark agency fees for the three months ended June 30, 2000 is attributable to the increase in (i) trademark agency fees of $26,000 and (ii) patent licensing income of $111,000 offset by (iii) a decrease in patent enforcement fees of $28,000. Revenues from non-recurring agreements vary from period to period depending upon the nature of the licensing programs pursued for various technologies in a particular year and the timing of successful completion of licensing agreements. Non-recurring license fees decreased by $96,000 for the three months ended June 30, 2000 as compared as compared to the same period of 1999. Expenses from Licensing-Related Activities consist principally of amounts paid to licensors at contractually stipulated percentages of the Company's specific licensing revenues and, in addition, includes expenses related to the investigation, marketing, administration, enforcement, maintenance and prosecution of patents, trademarks and license rights. Licensing-related expenses decreased by $271,000 for the six months ended June 30, 2000, as compared to the same period of 1999. As a percentage of licensing revenues, these expenses were 38% and 55% for the six months ended June 30, 2000 and 1999, respectively. The decrease is principally due to a recoupment of expenses associated with one of the Company's patent licensing projects. Licensing-related expenses decreased $181,000 for the three months ended June 30, 2000, as compared to the same period of 1999. As a percentage of licensing revenues, these expenses were 36% and 55% for the three months ended June 30, 2000 and 1999, respectively. The decrease is principally due to a recoupment of expenses associated with one of the Company's patent licensing projects. Income from Licensing-Related Securities consist of gains on sales and dividends received on securities acquired by the Company in connection with its licensing activities. As of June 30, 2000, licensing-related securities consisted of 175,000 shares of KeyCorp common stock. The Company intends to sell an additional 100,000 of such shares during the remaining six months of 2000, and as of June 30, 2000, held two successive quarterly put options (at $27.4262 per share) and had sold two successive quarterly call options (at prices ranging from $38.7015 to $39.3720 per share), each of which covers 50,000 shares. Page 12 REFAC MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Creative Consulting Services - ---------------------------- Creative Consulting Fees consist of product development and graphic design services. Total creative consulting fees increased by $2,276,000 for the six months ended June 30, 2000 versus the comparable period in 1999. This increase includes $1,127,000 in graphic design fees billed by Refac David Morris Creative, which the Company acquired in November 1999. Total creative consulting fees increased by $1,207,000 for the three months ended June 30, 2000 versus the comparable period in 1999. This percentage decrease increase includes $516,000 in graphic design fees billed by Refac David Morris Creative, which the Company acquired in November, 1999. Expenses increased by $1,037,000 for the six month period ended June 30, 2000, as compared to 1999. This increase is principally due to the inclusion of the expenses incurred by Refac David Morris Creative, which was acquired in November 1999. As a percentage of creative consulting fees, the cost of providing such services were 63% and 93% for the six months ended June 30, 2000 and 1999, respectively. Expenses increased by $504,000 for the three month period ended June 30, 2000, as compared to 1999. This increase is principally due to the inclusion of the expenses incurred by Refac David Morris Creative, which was acquired in November 1999. As a percentage of creative consulting fees, the cost of providing such services were 61% and 104% for the six months ended June 30, 2000 and 1999, respectively. Manufacturing and Marketing of Consumer Products - ------------------------------------------------ The Company formed Refac Consumer Products, Inc. ("RCP") in September 1999. Sales of $712,000 during the six months ended June 30, 2000 principally consist of sales of imported consumer electronics sourced by RCP for a retailer. RCP introduced its proprietary product line at the 2000 International Consumer Electronics Show in Las Vegas, Nevada. Due to delays that the Company has experienced in manufacturing these products, it expects only nominal sales in 2000. Selling, General and Administrative Expenses increased by $1,284,000 in the six month period ended June 30, 2000 as compared to the previous year. The increase is principally attributable to RCP ($463,000), the acquisition of Refac David Morris Creative ($79,000), salaries ($378,000), rent ($145,000) and professional fees ($104,000). Income Tax Provision. The Company's income tax provision of $898,000 for the six months ended June 30, 2000 reflects an effective tax rate of 34% (the Federal statutory corporate Page 13 REFAC MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS income tax rate), reduced by the statutory dividends received exclusion to arrive at a net effective tax rate of 33%. The net effective tax rate for the six months ended June 30, 1999 was 32%. Inflation. The Company's income from licensing operations has not in the past been materially affected by inflation. Likewise, while currency fluctuations can influence licensing-related revenues, the diversity of foreign income sources tends to offset individual changes in currency valuations. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- Cash, cash equivalents, corporate bonds and U.S. Treasury Notes decreased $4,000 from $8,489,000 at December 31, 1999 to $8,485,000 at June 30, 2000. The Company believes its liquidity position is adequate to meet all current and projected financial needs. As of June 30, 2000, the Company had open letters of credit to purchase goods for $762,000. The Company has commitments under leases covering its facilities and under a Retirement Agreement with its founder and former Chief Executive Officer (which has been provided for in the financial statements). FORWARD LOOKING STATEMENTS - -------------------------- Statements about the Company's future expectations and all other statements in this document other than historical facts are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and as that term is defined in the Private Securities Litigation Reform Act of 1995. The Company intends that the "forward-looking statements" contained herein be subject to the above-mentioned statutory safe harbors. Since these statements involve risk and uncertainties and are subject to change at any time, and the Company's actual results could therefore differ materially from expected or inferred results. Page 14 Part II. Other Information Item 6. Exhibit and Reports on Form 8-K - ----------------------------------------- (a) See Exhibit Index attached hereto. (b) Reports on Form 8-K filed during the quarter: None Signatures ---------- Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. REFAC August 11, 2000 /s/ Robert L. Tuchman ----------------------------------- Robert L. Tuchman, President and Chief Executive Officer August 11, 2000 /s/ David Capodanno ----------------------------------- David Capodanno, Controller (Principal Financial Officer) Page 15 EXHIBIT INDEX Exhibit Page No. No. - ------- --- 27 Note 1 to the Company's Consolidated financial statements contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999 is incorporated herein by reference. Page 16 EX-27 2 0002.txt FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM JUNE 30, 2000 FORM 10Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS DEC-31-2000 JAN-01-2000 JUN-30-2000 5,760,000 4,052,000 1,911,000 0 449,000 9,818,000 3,580,000 1,034,000 25,956,000 1,569,000 0 0 0 545,000 22,214,000 25,956,000 9,205,000 9,205,000 0 6,481,000 0 0 0 2,724,000 898,000 0 0 0 0 1,826,000 .48 .48
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