UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Quarter ended March 31, 1995
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 Number 0-15011
Data Measurement Corporation
(Exact name of registrant as specified in its charter)
Delaware 06-0774266
(State or other jurisdiction of (I.R.S. Employer Identification)
incorporation or organization.)
15884 Gaither Drive, Gaithersburg, Maryland 20877
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (301) 948-2450
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 $.01 per share, as of March 31, 1995 was 1,336,486.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
DATA MEASUREMENT CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended March 31,
1995 1994
Sales......................... $6,500,211 $5,278,112
Costs and expenses:
Cost of sales............... 4,580,911 4,051,533
Selling, general & administrative.... 1,357,655 945,722
Interest expense............ 98,894 95,489
(Gain)/Loss on foreign exchange........ (8,318) 19,212
Costs and expenses............ 6,029,142 5,111,956
Income before provision
for income taxes................ 471,069 166,156
Provision for income taxes:
Current..................... 49,235 9,886
Deferred.................... 60,697 47,341
Net Income ................... $361,137 $108,929
Net Income per Share..........
-Primary $0.26 $0.08
-Fully Diluted $0.23 $0.08
See accompanying notes to consolidated unaudited financial statements.
2
DATA MEASUREMENT CORPORATION
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
1995 1994
(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents........ $751,478 $583,384
Restricted Cash.................. 164,000 102,000
Accounts Receivable:
Trade, less allowance for
doubtful accounts of $169,000
in 1995 & $180,000 in 1994... 4,373,796 5,238,586
Unbilled accounts receivable... 1,720,483 1,544,737
Retainages..................... 1,802,104 1,521,516
Total Accounts Receivable..... 7,896,383 8,304,839
Inventories:
Work-in-process................ 2,690,451 2,514,722
Material and parts............. 7,177,367 6,695,087
Total inventories............ 9,867,818 9,209,809
Deferred income taxes............ 188,266 188,266
Other............................ 391,624 316,74
Total current assets......... 19,259,569 18,705,041
Property & equipment, at cost:
Land............................. 40,525 39,163
Building......................... 511,137 493,952
Machinery and equipment.......... 1,797,371 1,763,373
Demonstration equipment.......... 1,302,364 1,048,997
Office furniture................. 834,893 803,945
Leasehold improvements........... 205,133 204,644
Total property and equipment. 4,691,423 4,354,074
Less accumulated depreciation
and amortization............... 3,515,560 3,410,849
Net property & equipment..... 1,175,863 943,225
Patents at cost, less
amortization of $123,145 in 1995
and $102,635 in 1994............. 50,271 53,551
Goodwill, less accumulated amortization
of $146,374 in 1995 and $143,974
in 1994.......................... 392,310 388,954
TOTAL ASSETS $20,878,013 $20,090,771
See accompanying notes to consolidated unaudited financial statements.
3
DATA MEASUREMENT CORPORATION
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
1995 1994
Unaudited)
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to bank............ $1,195,124 $706,108
Accounts payable................. 1,445,059 2,347,210
Advance payments on contracts... 1,803,366 1,453,509
Accrued compensation............. 833,177 683,753
Accrued warranty expense......... 364,554 354,096
Accrued commission expense....... 509,987 566,311
Accrued interest expense......... 47,780 37,427
Other accrued liabilities........ 699,193 497,265
Current income taxes............. 174,216 197,498
Current portion of long term debt 568,767 569,999
Total current liabilities...... 7,641,223 7,413,176
Deferred income taxes.............. 126,521 65,824
Long term debt..................... 3,435,697 3,568,533
Stockholders' equity:
Common stock, $.01 par value..... 13,395 13,313
Additional paid in capital....... 5,438,666 5,417,248
Retained earnings................ 4,419,197 4,058,060
Currency translation adjustments. (179,886) (428,583)
Treasury stock, 3,000 shares,
at cost........................ (16,800) (16,800)
Total stockholders' equity..... 9,674,572 9,043,238
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $20,878,013 $20,090,771
See accompanying notes to consolidated unaudited financial statements.
4
DATA MEASUREMENT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March 31,
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income............................ $361,137 $108,929
Adjustments to reconcile net earning
to net cash used in operations:
Depreciation...................... 56,594 106,355
Amortization...................... 12,309 6,260
Changes in assets and liabilities:
Accounts receivable............... (49,702) (1,011,425)
Inventories....................... (803,990) (114,965)
Other current assets.............. (23,855) (32,895)
Patents and licenses.............. (3,950) (4,673)
Accounts payable.................. (931,783) 294,789
Advance payments on contracts..... 864,117 164,433
Accrued compensation.............. 142,370 (97,490
Other accrued liabilities......... 105,250 47,17
Current income taxes.............. (27,600) 9,886
Deferred income taxes............. 60,697 46,642
Net cash provided by (used in)
operating activities: (238,406) (476,984)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment... (19,730) (29,346)
Change in restricted cash............. (62,000) -
Net cash (used in) investing activities: (81,730) (29,346)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (repayment) of long term debt.. (148,556) 12,466
Increase (decrease) in notes payable........... 489,275 304,462
Proceeds from sale of common stock...... 21,500 -
Net cash provided by (used in
financing activities............ 362,219 316,928
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS: 126,011 (16,700)
NET (DECREASE) IN CASH
AND CASH EQUIVALENTS: 168,094 (206,102)
Cash and cash equivalents, Beginning of period 583,384 738,696
Cash and cash equivalents, End of period $751,478 $532,594
Supplemental cash flow information:
Interest paid........................ $96,656 $91,110
Income taxes paid.................... $77,600 -
Conversion of debentures to commmon stock - $30,000
Capitalization of test equipment........ $243,984 -
See accompanying notes to consolidated unaudited financial statements.
DATA MEASUREMENT CORPORATION
NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
The consolidated unaudited financial statements contained herein have
been prepared from the books and records of the Company. In the opinion of
management, all adjustments, consisting of normal recurring accruals,
necessary for a fair presentation of the results of operations for the
interim periods presented have been reflected herein. The results of
operations for interim periods are not necessarily indicative of the results
to be expected for the entire year.
The Company has 4,000,000 authorized shares of $.01 par value common
stock of which there were 1,339,486 shares issued and 1,336,486 shares
outstanding and 1,310,818 shares issued and 1,307,818 shares outstanding as
of March 31, 1995 and 1994, respectively.
(2) NET INCOME PER SHARE CALCULATION
Primary income per share is based on the weighted average number of
common shares outstanding including common stock equivalents from dilutive
stock options and warrants. Common equivalent shares were computed using
the treasury stock method. The Company's convertible subordinated
debentures are not common stock equivalents. However, stock options having
an exercise price below the average market price of common stock during the
period are common stock equivalents and are assumed to have been exercised.
Additionally, the method assumes that the exercise proceeds are used by the
Company to repurchase common shares at the average market price. Under this
method, the average shares used in calculating primary earnings per share are
1,394,801 for the three month period ending March 31, 1995.
Fully diluted earnings per share have also been calculated using the
treasury stock method; in addition, however, the conversion of the
convertible subordinated debentures issued by the Company is also assumed.
Average shares used in calculating fully diluted earnings per share,
therefore, are 1,608,899 for the three month period ending March 31, 1995.
Item 2. MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
Material Changes in Financial Condition:
During the first quarter of 1995, the Company financed its operations
from internally generated cash flow and by use of its working capital facility.
During the quarter, the Company negotiated an increase in its working capital
line of $500,000. At March 31, 1995, the Company had approximately $860,000
of unused credit facilities available. The Company expects that the funds
provided by its operations and by its current working capital facilities will
enable it to finance its future operations.
Material Changes in Results of Operations:
Sales for the first three months of 1995 were $6,500,211 as compared to
$5,278,112 in 1994. This increase of 23.2% reflects shipments of orders
received during the second half of 1994. Order backlog during the quarter
increased from $14,406,000 at December 31, 1994 to $19,073,000 at March 31,
1995 -- an increase of 32.4%. The increase in bookings came from all parts of
the world.
Gross Margin was $1,919,300 or 29.5% of sales for the first three months
of 1995 compared with $1,226,579 or 23.2% of sales for the same period in 1994.
In 1995, the Company shipped several orders for hot strip steel mills which
were sold at attractive prices. Additionally, sales of spare parts increased
20.4% to $1,173,000 from the prior year period.
Selling, general and administrative expenses were $1,357,655 or 20.9%
of sales for the first three months of 1995, as compared to $945,722 or 17.9%
of sales in the same period in 1994. The increase was the result of commission
payments paid in connection with foreign orders.
Interest Expense was $98,894 or 1.5% of sales for the first three months
of 1994 as compared to $95,489 or 1.8% of sales for the same period in 1994.
This percentage decrease is a result of higher sales volume.
The Company recorded a gain on foreign exchange of $8,318 or 0.1% of
sales for the first three months of 1995 as compared to a loss of $19,212 or
0.4% of sales for the same period in 1994. The gain in foreign exchange results
from the weakening of the U.S. Dollar versus major European currencies.
The Company's effective tax rate was 23.3% for the first three months
of 1995 as compared to 34.4% for the same period in 1994. In 1995 the Company
was able to utilize tax credits from certain foreign operations to reduce its
effective tax rate.
7
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
Not applicable.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the first quarter
of 1994.
8
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.
DATA MEASUREMENT CORPORATION
(Registrant)
Dated
May 4, 1995 /s/ Frederick S. Rolandi
By: -----------------------
Frederick S. Rolandi
Vice President and Chief
Financial Officer
/s/ Dominique Gignoux
By: ----------------------
Dominique. Gignoux
President and
Chief Executive Officer
9