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 June 30, 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 $.01 per share, as of June 30, 1995 was 1,361,187.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
DATA MEASUREMENT CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended June 30 Six Months Ended June 30
1995 1994 1995 1994
Sales.........................$ 8,522,309 $6,149,173 $15,022,520 $11,427,285
Costs and expenses:
Cost of sales............... 6,153,824 4,710,919 10,734,735 8,762,452
Selling, general & admin.... 1,511,342 1,120,154 2,868,997 2,065,876
Interest expense............ 174,950 106,106 273,844 201,595
Loss (gain) on foreign exch. (40,848) (10,499) (49,166) 8,713
Costs and expenses............ 7,799,268 5,926,680 13,828,410 11,038,636
Income before provision
for income taxes............ 723,041 222,493 1,194,110 388,649
Provision for income taxes:
Current..................... 160,444 1,540 209,679 11,426
Deferred.................... 53,280 26,205 113,977 73,546
Net income.................... $509,317 $194,748 $870,454 $303,677
Net Income per Share.......
-Primary $0.35 $0.15 $0.61 $0.23
-Fully Diluted $0.32 $0.14 $0.54 $0.22
See accompanying notes to consolidated financial statements.
DATA MEASUREMENT CORPORATION
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
1995 1994
(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents........ $ 994,348 $ 685,384
Accounts Receivable:
Trade, less allowance for
doubtful accounts of $154,000
in 1995 & $180,000 in 1994... 6,100,872 5,238,586
Unbilled accounts receivable... 1,088,674 1,544,737
Retainages..................... 1,954,193 1,521,516
Total Accounts Receivable..... 9,143,739 8,304,839
Inventories:
Work-in-process................ 4,248,287 2,514,722
Material and parts............. 7,143,184 6,695,087
Total inventories............ 11,391,471 9,209,809
Deferred income taxes............ 188,266 188,266
Other............................ 406,505 316,743
Total current assets......... 22,124,329 18,705,041
Property & equipment, at cost:
Land............................. 39,863 39,163
Building......................... 502,781 493,952
Machinery and equipment.......... 1,797,000 1,763,373
Demonstration equipment.......... 1,298,684 1,048,997
Office furniture................. 892,618 803,945
Leasehold improvements........... 215,999 204,644
Total property and equipment. 4,746,945 4,354,074
Less accumulated depreciation
and amortization............... 3,573,690 3,410,849
Net property & equipment..... 1,173,255 943,225
Patents and licenses at cost, less
amortization of $128,441 in 1995
and $102,635 in 1994............. 52,546 53,551
Other, including goodwill.......... 386,896 388,954
TOTAL ASSETS $23,737,026 $20,090,771
See accompanying notes to consolidated financial statements.
DATA MEASUREMENT CORPORATION
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
1995 1994
(Unaudited)
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to bank............ $ 1,696,880 $ 706,108
Accounts payable................. 2,603,299 2,347,210
Advance payments on contracts.... 2,168,193 1,453,509
Accrued compensation............. 931,350 683,753
Accrued warranty expense......... 455,838 354,096
Accrued commission expense....... 687,240 566,311
Accrued interest expense......... 53,001 37,427
Other accrued liabilities........ 608,654 497,265
Current income taxes............. 191,560 197,498
Current portion of long term debt 593,052 569,999
Total current liabilities...... 9,989,067 7,413,176
Deferred income taxes.............. 178,573 65,824
Long term debt..................... 3,327,935 3,568,533
Stockholders' equity:
Common stock, $.01 par value..... 13,612 13,313
Additional paid in capital....... 5,524,495 5,417,248
Retained earnings................ 4,928,514 4,058,060
Currency translation adjustments. (208,370) (428,583)
Treasury stock, 3,000 shares,
at cost........................ (16,800) (16,800)
Total stockholders' equity..... 10,241,451 9,043,238
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $23,737,026 $20,090,771
See accompanying notes to consolidated financial statements.
DATA MEASUREMENT CORPORATION
STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income............................ $ 870,454 $ 303,700
Adjustments to reconcile net earnings
to net cash used in operations:
Depreciation...................... 156,137 263,254
Amortization...................... 16,719 14,221
Changes in assets and liabilities:
Accounts receivable............... (1,965,903) (1,817,684)
Inventories....................... (2,111,608) (187,703)
Other current assets.............. (48,053) 27,079
Patents and licenses.............. (6,094) (19,337)
Accounts payable.................. 238,701 701,157
Advance payments on contracts..... 1,879,817 389,329
Accrued compensation.............. 271,330 69,431
Other accrued liabilities......... 281,838 (142,766)
Current income taxes.............. (14,514) 10,036
Deferred income taxes............. 112,713 72,759
Net cash provided by (or used in)
operating activities: (318,463) (316,524)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment... (371,799) (101,686)
Disposal of property and equipment...... 0 0
Net cash provided by (or used in)
investing activities: (371,799) (101,686)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (repayment) of long term debt.. (187,562) (2,935)
Increase (decrease) in notes payable.. 976,436 348,718
Proceeds from sale of common stock.... 82,546 0
Net cash provided by (or used in)
financing activities: 871,420 345,783
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS: 127,806 28,391
NET INCREASE/(DECREASE) IN CASH: 308,964 (44,036)
CASH, Beginning of period 685,384 738,696
CASH, End of period $ 994,348 $ 694,660
Supplemental cash flow information:
Interest paid......................... $ 183,270 $ 174,097
Income taxes paid..................... $ 215,617 $ 1,540
Capitalization of test equipment...... $ 243,984 -
Capitalized equipment leases.......... - $ 73,030
Conversion of Subordinated Debenture.. $ 25,000 $ 30,000
See accompanying notes to consolidated 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 1,364,187 shares issued and 1,361,187 shares
outstanding and 1,310,818 shares issued and 1,307,818 shares outstanding as
of June 30, 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
1,459,707 and 1,435,354 for the three and six month periods ending June 30,
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 1,658,093 and 1,652,898 for the three and six month periods
ending June 30, 1995.
Item 2. MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Material Changes in Financial Condition:
During the second 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 renewed its working capital facility in the
United States and the United Kingdom and increased those lines by $1,000,000.
At June 30, 1995, the Company had approximately $720,000 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 three and six month periods ending June 30, 1995 were
$8,522,309 and $15,022,520 as compared to $6,149,173 and $11,427,285 in 1994,
respectively. These increases of 38.6% and 31.5% reflect increases in order
input which began late in 1994. Order backlog increased from $14,406,000 at
December 31, 1994 to $19,073,000 at March 31, 1995 and stood at $19,172,000 on
June 30, 1995. The increases in bookings came from all parts of the world.
Gross Margins were $2,368,485 or 27.8% of sales for the second quarter
of 1995 compared with $1,438,254 or 23.4% of sales for the same period in 1994.
First half gross margins were $4,287,785 or 28.5% of sales in 1995 as compared
to $2,664,833 or 23.3% of sales for the same period in 1994. Shipments in 1995
reflect better selling prices that the Company has been able to negotiate
during the cyclic upswing in order input. Spare parts sales, which were strong
during the first half of 1995, amounted to $3,212,000 -- an increase of 37.7%
over the prior year.
Selling, general and administrative expenses were $1,511,342 or 17.7% of
sales for the second quarter of 1995, as compared to $1,120,154 or 18.2% of
sales in the same period in 1994. The absolute increase was the result of
commission payments paid in connection with foreign orders. In the first half
of 1995, SG&A expenses were 19.1% of sales as compared to 18.1% during the
first half of 1994.
Interest Expense was $174,950 or 2.1% of sales in the quarter ended June
30, 1995 as compared to $106,106 or 1.7% of sales for the same period in 1994.
In the 1995 period, the Company recognized $75,000 of interest expense as
result of an adjustment to the fair value of the convertible subordinated
debenture issued to the Federal Deposit Insurance Corporation in connection
with a debt restructuring which was concluded in October 1994. The change in
year to date interest expense also resulted from the same transaction.
The Company recorded a gain on foreign exchange of $40,848 or 0.5% of
sales for the second quarter of 1995 as compared to a gain of $10,499 or 0.2%
of sales for the same period in 1994. The gains in foreign exchange resulted
from the weakening of the U.S. Dollar versus major European currencies.
The Company's effective tax rate was 27.1% for the first half of 1995 as
compared to 21.9% for the same period in 1994. In both 1995 and 1994, the
Company was able to utilize tax credits from certain foreign operations to
reduce its effective tax rate.
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
The shareholders of the Company elected the slate of eight Directors
nominated by the Board at the Company's annual meeting which was held
on May 4, 1995.
Item 5. OTHER INFORMATION
Not applicable.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit Index
Exhibit # Description
(3)(i) Restated Certificate of Incorporation
Filed with this report at page 10
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the second quarter
of 1995.
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:
August 2, 1995 /s/ Frederick S. Rolandi
By: ------------------------
Frederick S. Rolandi
Vice President and Chief
Financial Officer
/s/ Dominique Gignoux
By: ------------------------
D. Gignoux
President and
Chief Executive Officer
RESTATED
CERTIFICATE OF INCORPORATION
OF
DATA MEASUREMENT CORPORATION
1. The name of the corporation is: DATA MEASUREMENT CORPORATION
2. The address of its registered office in the State of Delaware is No. 100
West Tenth Street, in the City of Wilmington, County of New Castle. The name
of its registered agent at such address is The Corporation Trust Company.
3. The nature of the business or purposes to be conducted or promoted is:
To engage in research, development, production, manufacturing, and
marketing of industrial process control products using nuclear, X-ray,
infrared, optical and other techniques for continuous non-contact
measurements and all allied fields.
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
To manufacture, purchase or otherwise acquire, invest in, own, mortgage,
pledge, sell, assign and transfer or otherwise dispose of, trade, deal in and
deal with goods, wares and merchandise and personal property of every class
and description.
To acquire, and pay for in cash, stock or bonds of this corporation or
otherwise, the good will, rights, assets and property, and to undertake or
assume the whole or any part of the obligations or liabilities of any person,
firm, association or corporation.
To acquire, hold, use, sell, assign, lease, grant licenses in respect
of, mortgage or otherwise dispose of letters patent of the United States or
any foreign country, patent rights, licenses and privileges, inventions,
improvements and processes, copyrights, trade-marks and trade names,
relating to or useful in connection with any business of this corporation.
To acquire by purchase, subscription or otherwise, and to receive,
hold, own, guarantee, sell, assign, exchange, transfer, mortgage, pledge or
otherwise dispose of or deal in and with any of the shares of the capital
stock, or any voting trust certificates in respect of the shares of capital
stock, scrip, warrants, rights, bonds, debentures, notes, trust receipts, and
other securities obligations, choses in action and evidences of indebtedness
or interest issued or created by any corporations, joint stock companies,
syndicates, associations, firms, trusts or persons, public or private, or by
the government of the United States of America, or by any foreign government,
or by any state, territory, province, municipality or other political
subdivision or by any governmental agency, and as owner thereof to possess
and exercise all the rights, powers and privileges of ownership, including the
right to execute consents and vote thereon, and to do any and all acts and
things necessary or advisable for the preservation, protection, improvement
and enhancement in value thereof.
To borrow or raise money for any of the purposes of the corporation
and, from time to time without limit as to amount, to draw, make, accept,
endorse, execute and issue promissory notes, drafts, bills of exchange,
warrants bonds, debentures and other negotiable or non-negotiable
instruments and evidences of indebtedness, and to secure the payment of any
thereof and of the interest thereon by mortgage upon or pledge, conveyance
or assignment in trust of the whole or any part of the property of the
corporation, whether at the time owned or thereafter acquired, and to sell,
pledge or otherwise dispose of such bonds or other obligations of the
corporation for its corporate purposes.
To purchase, receive, take by grant, gift, devise, bequest or otherwise,
lease, or otherwise acquire, own, hold, improve, employ, use and otherwise deal
in and with real or personal property, or any interest therein, wherever
situated, and to sell, convey, lease, exchange, transfer or otherwise dispose
of, or mortgage or pledge, all or any of the corporation's property and assets,
or any interest therein, wherever situated.
In general, to possess and exercise all the powers and privileges
granted by the General Corporation Law of Delaware or by any other law of
Delaware or by this certificate of incorporation together with any powers
incidental thereto, so far as such powers and privileges are necessary or
convenient to the conduct, promotion or attainment of the business or
purposes of the corporation.
The business and purposes specified in the foregoing clauses shall,
except where otherwise expressed, be in nowise limited or restricted by
reference to, or inference from, the terms of any other clause in this
certificate of incorporation, but the business and purposes specified in each
of the foregoing clauses of this article shall be regarded as independent
business and purposes.
4. The total number of shares of stock which the corporation shall have
authority to issue is Four Million (4,000,000), and the par value of each of
such shares is One Cent ($.01) amounting in the aggregate to Forty Thousand
Dollars ($40,000.00).
5A. The name and mailing address of each incorporator is as follows:
NAME MAILING ADDRESS
K. L. Husfelt 100 West Tenth Street
Wilmington, Delaware 19801
B. A. Schuman 100 West Tenth Street
Wilmington, Delaware 19801
E. L. Kinsler 100 West Tenth Street
Wilmington, Delaware 19801
5B. The name and mailing address of each person, who is to serve as a
director until the first annual meeting of the stockholders or until a
successor is elected and qualified, is as follows:
NAME MAILING ADDRESS
Dominique Gignoux 5404 Albemarle Street
Bethesda, Maryland 20016
Russell Murray 10601 Graeloch Road
Laurel, Maryland 20810
R. B. Edlow 5903 Anniston Road
Bethesda, Maryland 20034
6. The corporation is to have perpetual existence.
7. In furtherance and not in limitation of the powers conferred by statute,
the board of directors is expressly authorized:
To make, alter or repeal the by-laws of the corporation.
To authorize and cause to be executed mortgages and liens upon the real
and personal property of the corporation.
To set apart out of any of the funds of the corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any
such reserve in the manner in which it was created.
By a majority of the whole board, to designate one or more committees,
each committee to consist of one or more of the directors of the corporation.
The board may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting
of the committee. The by-laws may provide that in the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the
board of directors to act at the meeting in the place of any such absent or
disqualified member. Any such committee, to the extent provided in the
resolution of the board of directors, or in the by-laws of the corporation,
shall have and may exercise all the powers and authority of the board of
directors in the management of the business and affairs of the corporation,
and may authorize the seal of the corporation to be affixed to all papers
which may require it; but no such committee shall have the power or authority
in reference to amending the certificate of incorporation, adopting an
agreement of merger or consolidation, recommending to the stockholders the
sale, lease or exchange of all or substantially all of the corporation's
property and assets, recommending to the stockholders a dissolution of the
corporation or a revocation of a dissolution, or amending the by-laws of the
corporation; and, unless the resolution or by-laws expressly so provide, no
such committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock.
When and as authorized by the stockholders in accordance with statute,
to sell, lease or exchange all or substantially all of the property and assets
of the corporation, including its good will and its corporate franchises, upon
such terms and conditions and for such consideration, which may consist in
whole or in part of money or property including shares of stock in, and/or
other securities of, directors shall deem expedient and for the best interest
of the corporation.
8. (a) No contract or transaction between a corporation and one or more
of its directors or officers, or between a corporation and any other
corporation, partnership, association or other organization in which one or
more of its directors or officers are directors or officers, or have a
financial interest, shall be void or voidable solely for this reason, or solely
because the director or officer is present at or participates in the meeting
of the board or committee thereof which authorizes the contract or
transaction, or solely because his or their votes are counted for such
purpose, if:
(1) The material facts as to his relationship or interest
and as to the contract or transaction are disclosed or are known to the
board of directors or the committee, and the board or committee in good
faith authorizes the contract or transaction by the affirmative votes
of a majority of the disinterested directors, even though the
disinterested directors be less than a quorum; or
(2) The material facts as to his relationship or interest
and as to the contract or transaction are disclosed or are known to the
shareholders entitled to vote thereon, and the contract or transaction
is specifically approved in good faith by vote of the shareholders; or
(3) The contract or transaction is fair as to the
corporation as of the time it is authorized, approved or ratified, by
the board of directors, a committee thereof, or the shareholders.
(b) Common or interested directors may be counted in determining
the presence of a quorum at a meeting of the board of directors or of a
committee which authorizes the contract or transaction.
9. The corporation shall indemnify its officers, directors, employees and
agents to the extent permitted by the General Corporation Law of Delaware.
10. Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws may provide. The books of the corporation may be
kept (subject to any provision contained in the statutes) outside the State
of Delaware at such place or places as may be designated from time to time by
the board of directors or in the by-laws of the corporation. Elections of
directors need not be by written ballot unless the by-laws of the corporation
shall so provide.
Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
the provisions of section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers
appointed for this corporation under the provisions of section 279 of Title
8 of the Delaware Code order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this corporation, as
the case may be, to be summoned in such manner as the said court directs. If
a majority in number representing three-fourths in value of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of
this corporation, as the case may be, agree to any compromise or arrangement
and to any reorganization of this corporation as consequence of such
compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all the stockholders or class of stockholders, of this corporation, as the
case may be, and also on this corporation.
11. The corporation reserves the right to amend, alter, change or repeal
any provision contained in this certificate of incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
WE, THE UNDERSIGNED, being each of the incorporators herein before
named, for the purpose of forming a corporation pursuant to the General
Corporation Law of the State of Delaware, do make this certificate, hereby
declaring and certifying that this is our act and deed and the facts herein
stated are true, and accordingly have hereunto set our hands this 29th day
of June 1981.
K. L. Husfelt
K. L. Husfelt
B. A. Schuman
B. A. Schuman
E. L. Kinsler
E. L. Kinsler