-----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, D1Jjlk+s0C5Aq8/55nwVTQ4O+yxR6TAw524aix9SUVSY85zjowIPl6PZPhr3pUTS zpJ2nfPP+YoKlACwyfgtIg== 0000950130-96-003230.txt : 19960816 0000950130-96-003230.hdr.sgml : 19960816 ACCESSION NUMBER: 0000950130-96-003230 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960702 FILED AS OF DATE: 19960815 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERNATIONAL IMAGING MATERIALS INC /DE/ CENTRAL INDEX KEY: 0000904009 STANDARD INDUSTRIAL CLASSIFICATION: PENS, PENCILS & OTHER ARTISTS' MATERIALS [3950] IRS NUMBER: 133179629 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-21726 FILM NUMBER: 96615755 BUSINESS ADDRESS: STREET 1: 310 COMMERCE DR CITY: AMHERST STATE: NY ZIP: 14228 BUSINESS PHONE: 7166916333 MAIL ADDRESS: STREET 1: 310 COMMERCE DRIVE CITY: AMHERST STATE: NY ZIP: 14228 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q [MARK ONE] [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 2, 1996 [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission File No. 0-21726 INTERNATIONAL IMAGING MATERIALS, INC. ------------------------------------- (Exact Name of Registrant as Specified in its Charter) Delaware 13-3179629 -------- ---------- (State or Other Jurisdiction (I.R.S. Employer of Incorporation or Organization) Identification No.) 310 Commerce Drive, Amherst, New York 14228 ------------------------------------------- (Address of Principal Executive Offices) (Zip Code) (716) 691-6333 -------------- (Registrant's Telephone Number, Including Area Code) 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 ---------------- ---------------- At August 5, 1996, 8,661,291 shares of Common Stock of the Registrant were outstanding. INTERNATIONAL IMAGING MATERIALS, INC. INDEX TO FORM 10-Q PAGE ---- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets as of July 2, 1996 (unaudited) and March 31, 1996 3 Consolidated Statements of Income (unaudited) for the three months ended July 2, 1996 and July 4, 1995 4 Consolidated Statements of Cash Flows (unaudited) for the three months ended July 2, 1996 and July 4, 1995 5 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 9 SIGNATURES 10 EXHIBIT INDEX 11 2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS INTERNATIONAL IMAGING MATERIALS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED)
JULY 2, MARCH 31, 1996 1996 ------- --------- (IN THOUSANDS, EXCEPT SHARE AND ASSETS PER SHARE AMOUNTS) ------ Current assets: Cash and cash equivalents $ 335 $ 570 Trade receivables 13,826 16,157 Inventories: Raw materials 7,015 9,397 Work in process 3,246 3,627 Finished goods 5,349 4,839 -------- -------- Total inventories 15,610 17,863 -------- -------- Prepaid expenses 824 635 Deferred income taxes 1,490 1,467 -------- -------- Total current assets 32,085 36,692 -------- -------- Property, plant and equipment, at cost: Land 1,170 1,163 Buildings and improvements 10,924 10,924 Equipment 65,566 64,362 Construction in progress 21,552 17,194 -------- -------- 99,212 93,643 Less accumulated depreciation 23,290 21,826 -------- -------- Net property, plant and equipment 75,922 71,817 -------- -------- Other assets 8,008 6,952 -------- -------- $116,015 $115,461 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current liabilities: Notes payable to banks 16,397 16,292 Current installments of long-term debt 1,529 1,674 Trade accounts payable 3,200 8,126 Accrued compensation and benefits 611 338 Payable to Fujicopian Co., Ltd., a related party 1,855 1,184 Other accrued liabilities 1,367 1,132 Income taxes payable 226 --- -------- -------- Total current liabilities 25,185 28,746 Long-term debt, excluding current installments 1,844 2,259 Deferred income taxes 6,733 6,336 -------- -------- Total liabilities 33,762 37,341 -------- -------- Stockholders' equity: Preferred stock; $.01 par value; 5,000,000 shares authorized; none issued --- --- Common stock; $.01 par value; 30,000,000 shares authorized; 8,839,587 and 8,855,301 shares issued as of July 2, 1996 and March 31, 1996, respectively 88 89 Additional paid-in capital 51,852 53,037 Unearned compensation - restricted stock award (604) (692) Notes receivable from exercise of stock options and warrants (1,138) (1,219) Retained earnings 35,225 32,394 Treasury stock, 179,221 and 310,400 shares, at cost as of July 2, 1996 and March 31, 1996, respectively (3,170) (5,489) -------- -------- Total stockholders' equity 82,253 78,120 -------- -------- $116,015 $115,461 ======== ========
See accompanying notes to consolidated financial statements 3 INTERNATIONAL IMAGING MATERIALS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED -------------------------- JULY 2, JULY 4, 1996 1995 --------- -------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Revenues $25,003 $19,001 Cost of goods sold 17,479 13,584 ------- ------- Gross profit 7,524 5,417 ------- ------- Operating expenses: Research and development 848 690 Selling 1,136 898 General and administrative 1,055 925 ------- ------- Total operating expenses 3,039 2,513 ------- ------- Operating income 4,485 2,904 Other expense 130 42 ------- ------- Income before income taxes 4,355 2,862 Income taxes 1,524 1,031 ------- ------- Net income $ 2,831 $ 1,831 ======= ======= Net income per share of common stock $0.32 $0.20 ======= ======= Weighted average common shares outstanding 8,942 9,321 ======= =======
See accompanying notes to consolidated financial statements 4 INTERNATIONAL IMAGING MATERIALS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED -------------------- JULY 2, JULY 4, 1996 1995 --------- --------- (IN THOUSANDS) Cash flows from operating activities: Net income $ 2,831 $ 1,831 ------- ------- Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation and amortization 1,881 1,312 Deferred income taxes 626 399 Other noncash provisions 97 70 Reduction in income tax payable from the exercise of options and warrants 393 564 Cash provided (used) by changes in: Trade receivables 2,322 (1,073) Inventories 2,253 (802) Prepaid expenses (189) (83) Other assets (303) 10 Trade accounts payable (2,876) (2,078) Accrued compensation and benefits 273 (553) Payable to Fujicopian Co., Ltd. 701 (298) Other accrued liabilities 235 (332) Income taxes payable 226 (1,273) ------- ------- Total adjustments 5,639 (4,137) ------- ------- Net cash provided (used) by operating activities 8,470 (2,306) ------- ------- Cash flows provided (used) by investing activities: Capital expenditures (7,670) (4,098) Maturities of securities --- 3,468 ------- ------- Net cash used in investing activities (7,670) (630) ------- ------- Cash flows provided (used) by financing activities: Proceeds from sale of common stock 24 30 Exercise of stock options and warrants: Proceeds 545 18 Notes received from officers and director (1,149) (1,873) Proceeds from note payable 105 2,506 Repayments of long-term debt (560) (571) ------- ------- Net cash provided (used) by financing activities (1,035) 110 ------- ------- Net decrease in cash and cash equivalents (235) (2,826) Cash and cash equivalents at beginning of period 570 3,559 ------- ------- Cash and cash equivalents at end of period $ 335 $ 733 ======= ======= Supplemental disclosure of cash flow information: Cash paid during the period for: Interest, net of amount capitalized 102 77 Income taxes $ 31 $ 1,341 ======= ======= Supplemental disclosure of noncash investing and financing activities: Decrease in liabilities incurred in connection with capital expenditures (2,080) (589) Notes received from exercise of stock options and warrants --- 273 Common stock surrendered $ 240 $ 671 ======= =======
See accompanying notes to consolidated financial statements 5 INTERNATIONAL IMAGING MATERIALS, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) ADJUSTMENTS In the opinion of the Company's management, the accompanying unaudited consolidated financial statements contain all normal recurring adjustments necessary for a fair presentation of the Company's consolidated financial position as of July 2, 1996 and consolidated results of operations for the three month periods ended July 2, 1996 and July 4, 1995 and consolidated cash flows for the three month periods ended July 2, 1996 and July 4, 1995. Consolidated results of operations for the three month periods ended July 2, 1996 are not necessarily indicative of results to be expected for the full year ending March 31, 1997. 6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations - --------------------- COMPARISON OF THE QUARTER ENDED JULY 2, 1996 WITH THE QUARTER ENDED JULY 4, 1995 Revenues in the three months ended July 2, 1996 were $25.0 million, an increase of 31.6% from $19.0 million in the three months ended July 4, 1995. The Company sells its ribbons primarily to printer original equipment manufacturers, which in turn sell the ribbons under their own brand names to end-users, either directly or through distributors and value-added resellers. Revenues from OEM customers in the three months ended July 2, 1996 were $17.9 million, comprised 71.5% of total revenues, and increased 19.6% from $14.9 million in the three months ended July 4, 1995. This increase primarily reflects the transfer from Fujicopian to the Company of ribbon production for a significant color ribbon program and new product lines introduced by the Company to existing tag and label customers. The Company also sells its ribbons directly to distributors and dealers where such sales do not adversely affect the Company's OEM customers. Revenues from domestic distributors in the three months ended July 2, 1996 were $6.3 million, comprised 25.3% of total revenues, and increased 63.3% from $3.9 million in the three months ended July 4, 1995. In September 1995, the Company acquired the thermal transfer supplies business from one of its OEM customers, QMS Inc., and began selling ribbons and other thermal transfer supplies under the QMS brand name directly to distributors, dealers and end-users. The higher selling prices for ribbons and other items included in the QMS supplies business, the addition of several new significant tag and label customers, and end-user migration towards this distributor channel from the OEM channel as the market for tag and label ribbons matures contributed to this growth. Revenues from international distributors in the three months ended July 2, 1996 were $813,000, comprised 3.3% of total revenues, and increased 330.2% from $189,000 in the three months ended July 4, 1995. The rapid expansion of the market for tag and label printing in South America, and the Company's marketing programs targeting these opportunities, were principally responsible for the addition of several new customers and the corresponding sales increase. Gross margin was 30.1% of revenues in the three months ended July 2, 1996 as compared to 28.5% in the three months ended July 4, 1995. This improvement primarily resulted from increased leverage of fixed overhead costs and production efficiencies from the higher sales volume, higher margins on the QMS thermal transfer supplies business and the stronger U.S. dollar for product purchased from Japan. Operating expenses were $3.0 million in the three months ended July 2, 1996, an increase of $526,000 from $2.5 million in the three months ended July 4, 1995. Personnel additions in research and development and sales and marketing as investments in future revenue growth, as well as the creation of a telemarketing capability for QMS thermal transfer supplies, contributed to this expense increase. Other expense was $130,000 in the three months ended July 2, 1996, an increase of $88,000 from $42,000 in the three months ended July 4, 1995. This increase reflects the expensing of current interest charges on the Company's lines of credit subsequent to the completion of construction of the Company's new manufacturing facility in April 1996. Interest charges incurred on the Company's lines of credit in the three months ended July 4, 1995 were capitalized as part of the cost of the facility. Weighted average common shares outstanding in the three months ended July 2, 1996 were 8.9 million shares, a decrease of 379,000 shares from 9.3 million shares in the three months ended July 4, 1995. This decrease primarily resulted from the repurchase of 315,400 share on the open market during February and March 1996. 7 Liquidity and Capital Resources - ------------------------------- The Company's financial condition remained strong, with long-term debt comprising only 2.2% of total capitalization at July 2, 1996. During the three months ended July 2, 1996, $8.5 million of cash provided by operating activities was used to fund $7.7 million of capital expenditures primarily related to the construction and purchase of equipment for the Company's new 100,000 square foot manufacturing facility. The Company also loaned officers $1.1 million for their income taxes related to the exercise of non-qualified stock options. Trade accounts payable decreased $4.9 million in the three months ended July 2, 1996 due primarily to payments for capital expenditures and reductions in raw material purchases in order to reduce inventory levels. The Company expects to spend approximately $6.5 million on capital expenditures during the remainder of fiscal 1997. The Company had available borrowing capacity under lines of credit with two banks of $13.6 million at July 2, 1996. The Company anticipates funding its capital expenditures program and its working capital requirements, in addition to repaying approximately $12.0 million of the $16.4 million balance on its lines of credit, with cash generated by operating activities in fiscal 1997. The Company believes that internally generated cash will be more than sufficient to fully repay the lines of credit and fund working capital, capital expenditures and debt service requirements in fiscal 1998. 8 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K: (a) Exhibits 11 Statement re: Calculation of Net Income Per Share of Common Stock. 27 Financial Data Schedule (b) No reports on Form 8-K were filed during the quarter ended July 2, 1996. 9 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. INTERNATIONAL IMAGING MATERIALS, INC. Date: 8/12/96 /s/ JOHN W. O'LEARY ---------- ------------------- John W. O'Leary President and Chief Executive Officer Date: 8/12/96 /s/ MICHAEL J. DRENNAN ---------- ---------------------- Michael J. Drennan Vice President - Finance, Treasurer, Secretary and Chief Financial Officer 10 EXHIBIT INDEX Exhibit Number Description Page -------------- ----------- ---- 11 Calculation of Net Income per Share of Common Stock 12 27 Financial Data Schedule 13 11 EX-11 2 CALCULATION OF NET INCOME PER SHARE - COMMON STOCK EXHIBIT 11 CALCULATION OF NET INCOME PER SHARE OF COMMON STOCK (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Three Months Ended -------------------- July 2, July 4, 1996 1995 ------- ------- (Unaudited) Net income $2,831 $1,831 ------ ------ Weighted average common shares 8,543 8,705 outstanding Common stock equivalents for restricted stock, stock options and warrants 399 616 ------ ------ Weighted average common shares outstanding as adjusted 8,942 9,321 ------ ------ Net income per share of common stock $ .32 $ .20 ====== ======
12 EX-27 3 ARTICLE 5 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS MAR-31-1997 APR-01-1996 JUL-02-1996 335 0 13,826 0 15,610 32,085 99,212 23,290 116,015 25,185 1,844 0 0 88 82,165 116,015 25,003 25,003 17,479 17,479 3,039 0 130 4,355 1,524 2,831 0 0 0 2,831 .32 .32
-----END PRIVACY-ENHANCED MESSAGE-----