UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the quarterly period ended March 31, 1996.
Commission File Number: 0-12661
Exact Name of Registrant as Specified in its Charter: IMTEC, Inc.
State of Incorporation: Delaware
IRS Employer Identification Number: 03-0283466
Address of Principal Executive Offices: One Imtec Lane
Bellows Falls, VT 05101
Registrant's Telephone Number: 802-463-9502
Indicate by check mark whether the registrant (1) has filled 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 shorted period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. [X] YES [ ] 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.
Common shares outstanding as of May 1, 1996, 1,545,088
IMTEC, INC.
INDEX
Page #
Part I Financial Information
Condensed Balance Sheets -
March 31, 1996 and June 30, 1995 3 - 4
Condensed Statements of Income -
Three Months and Nine Months Ended
March 31, 1996 and 1995 5
Condensed Statements of Cash Flows
Three Months and Nine Months Ended
March 31, 1996 and 1995 6
Notes to Condensed Financial Statements 7 - 8
Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
Part II Other Information
Item 4 Submission of Matters to a Vote of
Security Holders 11
Item 6 Exhibits and Reports on Form 8-K 11
Signatures 12
PART I - FINANCIAL INFORMATION
IMTEC, INC.
CONDENSED BALANCE SHEETS
March 31, June 30,
1996 1995 .
(Unaudited) *
ASSETS
Current Assets:
Cash $ 562,138 $ 285,727
Marketable Securities 300,000 400,000
Accounts and notes receivable: Trade, less allowance for doubtful accounts:
March 31, 1996 - $102,728
June 30, 1995 - $101,042 1,358,160 1,640,008
Inventories 1,232,991 1,241,964
Prepaid expenses and deferred charges 142,307 78,683
Deferred income tax 148,489 148,489
Total Current Assets 3,744,085 3,794,871
Plant and equipment 3,547,073 3,266,232
Less: Accumulated depreciation 2,500,349 2,237,151
1,046,724 1,029,081
Other Assets:
Deposits 13,267 28,205
Computer software less accumulated amortization
of $372,525 in 1996 and $317,718 in 1995, 122,572 161,160
Other intangibles less accumulated amortization of,
$429,120 in 1996 and $362,535 in 1995 219,227 254,859
355,066 444,224
$ 5,145,875 $ 5,268,176
========= =========
* From audited financial statements.
The accompanying notes are an integral part of these
condensed financial statements.
PART I - FINANCIAL INFORMATION
IMTEC, INC.
CONDENSED BALANCE SHEETS (CONTINUED)
March 31, June 30,
1996 1995 .
(Unaudited) *
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities
Notes payable - bank $ 0 $ 0
Current installments of long term debt 0 0
Current capital lease obligations 0 0
Accounts payable 334,276 636,721
Income tax payable 21,595 4,161
Accrued liabilities
Salaries and wages 84,681 358,750
Commissions 167,150 67,113
Other 336,681 801,872
Total Current Liabilities 944,383 1,868,617
Long term debt less current installments - -
Long term capital lease obligations - -
944,383 1,868,617
Stockholder's equity:
Common stock - $.01 par value;
authorized 5,000,000 shares, issued and outstanding:
1,575,088 shares March 31, 1996
1,470,138 shares June 30, 1995 15,451 14,701
Additional paid-in capital 2,375,903 2,199,689
Retained Earnings 1,810,138 1,185,169
Total Stockholder's Equity 4,201,492 3,399,559
$ 5,145,875 $ 5,268,176
======== ========
* From audited financial statements.
The accompanying notes are an integral part of these
condensed financial statements.
IMTEC, INC.
CONDENSED STATEMENTS OF INCOME
(Unaudited)
Nine Months Ended Three Months Ended
March 31, March 31,
1996 1995 1996 1995
Net Sales $7,072,244 $7,839,741 $2,307,861 $3,724,778
Cost of Sales 3,862,624 4,473,703 1,176,841 2,175,528
Gross Profit 3,209,620 3,366,038 1,131,020 1,549,250
Selling, general and
administrative expenses 1,705,678 2,001,693 615,666 964,262
Research and development
expenses 484,131 503,756 178,176 247,054
Operating Profit 1,019,811 860,589 337,178 337,934
Other Income (Expenses):
Miscellaneous income
and other expenses 16,047 30,968 3,228 4,068
Interest Expense (33,835) (10,275)
Income Before
Income Taxes 1,035,858 857,722 340,406 331,727
Income Tax Expense 410,889 316,323 135,039 124,496
Net Income $ 624,969 $ 541,399 $ 205,367 $ 207,231
======= ======= ======= =======
Weighted average number of
common shares and common
shares equivalents outstanding 1,570,144 1,472,069 1,583,623 1,479,986
Earnings per common share and
common share equivalents $ .40 $ .37 $ .13 $ .14
====== ====== ======= ======
The accompanying notes are an integral part of these
condensed financial statements.
IMTEC, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended Three Months Ended
March 31, March 31,
1996 1995 1996 1995
Cash flows from operating activities:
Net Earnings $624,969 $333,453 $205,367 $191,165
Adjust, to reconcile net earnings to,
net cash provided by operating activities:
Depreciation & amortization of
property plant, equipment
and other assets 384,590 239,666 128,954 117,608
Decrease(inc.) in accounts receivable 281,848 (585,490) (217,580) (181,642)
Decrease(inc.) income tax refundable 163,576 50,890
Decrease (inc.) in inventory 8,973 (469,809) 86,977 (422,561)
Decrease (inc.) in prepaid expenses
and other assets (48,686) (25,895) (20,577) (10,223)
Increase (dec.) in accounts payable (302,445) 330,545 20,970 315,715
Increase (dec.) in income tax payable 17,434 30,144 48,028 30,144
Increase (dec.) in accrued liabilities (639,223) 367,290 (148,524) 265,823
Net cash from by operating activities 327,460 383,480 103,615 356,955
Cash flows from (used in) investment activities:
Expenditures for property & equipment,
computer software and other
intangible assets (328,013) (173,536) (42,834) (98,789)
Net cash used in invest. activities (328,013) (173,536) (42,834) (98,789)
Cash flows from (used in) financing activities:
Principal notes payable to bank (149,224) (253,454)
Proceeds from new long term debt
Principal payments on long term debt (51,019) (16,641)
Principal payments under capital
lease obligations (6,171) (3,694))
Proceeds from issuance of stock 176,964 4,751 149,463 2,748
Net cash provided by finance
activities 176,964 (201,663) 149,463 (271,041)
Net increase (decrease) in cash 176,411 8,281 210,244 (12,875)
Cash at the beginning of period 685,727 3,627 651,894 24,783
Cash at the end of period 862,138 $ 11,908 $ 862,138 $ 11,908
======= ======= ======= =======
Supplemental Information Disclosures:
Interest paid $ 23,561 $ 13,077
Income tax paid $ 394,344 $ 256,913 $ 87,900 $ 255,535
,The accompanying notes are an integral part of these condensed financial statements.
IMTEC, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1 - Basis of Presentation
The financial information included herein is unaudited: however, such
information reflects all adjustments (consisting solely of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
statement of results for the interim periods.
The results of operations for the nine month period ended March 31,
1996 are not necessarily indicative of the results to be expected for the full
year.
2 - Inventories
Inventories consist of:
March 31, June 30,
1996 1995
Finished Products $ 24,041 $ 27,375
Work in Process 80,773 67,360
Purchased Components 1,128,177 811,020
$ 1,232,991 $ 905,755
======== ========
Inventory cost consisted of the cost of purchased components and
supplies, manufacturing labor and manufacturing overhead.
3 - Liability for Estimated Product Warranty
On March 31, 1996 and June 30, 1995, the Company had provided $122,874
and $99,911 respectively, against future product warranties based on its
experience with customer claims. Warranty expenses charged to income amounted to
approximately $63,899 for the nine month period ended March 31, 1996 and $29,944
for the nine month period ended March 31, 1995.
4 - Earnings (Loss) per Common Share
Primary earnings per share were computed by dividing net earnings
(loss) by the weighted average number of shares of common stock equivalents
outstanding during the year, if dilutive. Common stock equivalents (stock
options and warrants) are assumed to be exercised when they are issued and the
proceeds used to repurchase outstanding shares of the Company's common stock at
the average price during the period.
The fully-diluted computation is performed using the same method as for
the primary computation, except that the proceeds from exercised stock options
and warrants are assumed to be used to repurchase outstanding shares of the
Company's common stock at the higher of the average or March 31, market price.
The average number of common share and common share equivalents
entering into the calculation of primary and fully-diluted earnings per share
are as follows:
Nine months ended March 31,
1996 1995
Common shares 1,497,766 1,358,750
Options 72,378 79,959
Warrants 0 28,556
Total for primary calculation 1,570,144 1,464,265
Options 0 6,599
Warrants 0 1,205
Total for fully-diluted calculation 1,570,144 1,472,069
======= =======
Three months ended March 31,
1996 1995
Common shares 1,539,513 1,409,098
Options 44,110 66,887
Warrants 0 0
Total for primary calculation 1,583,623 1,475,985
Options 0 4,001
Warrants 0 0
Total for fully-diluted calculation 1,583,623 1,479.986
======= =======
IMTEC, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Three Months and Nine Months Ended March 31, 1996
as compared to Three Months and Nine Months Ended March 31, 1995
Revenues for the three months and nine months ended March 31, 1996
decreased approximately 38.0% and 9.8% respectively over the corresponding
periods in 1995.
Revenues from the sales of Industrial Equipment were $978,382 and
$3,327,486 for the three and nine month periods ended March 31, 1996 compared to
$2,326,489 and $4,105,272 for the same periods in 1995. Industrial Equipment
sales represented 42.4% and 47.0% of total revenue for the three month and nine
month periods ended March 31, 1996 compared to 62.5% and 52.4% respectively for
the same periods last year. It should be noted that approximately $1,115,752 for
the nine months ended March 31, 1996 represented sales to a single customer
compared to approximately $1,540,080 and $2,267,517 respectively for the three
month and nine month periods last year to the same customer. The contract with
the above mentioned customer was completed in July, 1995 and, at this time, is
not anticipated to be renewed. If these sales to the single customer were
removed from both the current and previous years revenue figures, then,
remaining revenues would show an increase of 24.4% for the three month period
and a 20.3% increase for the nine month period over the corresponding periods of
the previous year. Management believes that the upward trend in Industrial
Equipment sales will continue due to a maturing sales force and new sales
management direction. Equipment backlog, exclusive of the single customer
mentioned above, was $289,348 at March 31, 1996 compared to $305,722 at March
31, 1995. While this represents a decrease in equipment backlog, it should be
noted that production time for the majority of machines has decreased from 45 to
60 days in Fiscal 1995 to 15 to 30 days in the current year.
Revenues from labels and printing supplies were $1,329,479 and
$3,744,758 for the three month and nine month periods ended March 31, 1996
compared to $1,398,288 and $3,734,468 respectively for the same periods last
year. Labels and printing supplies represented 57.6% and 53.0% of total revenue
for the three month and nine month periods ended March 31, 1996 compared to
37.5% and 47.6% respectively for the same periods last year. Management believes
that the decrease in sales of labels and printing supplies is attributable to an
economic down turn in the businesses of the Company's primary customers.
Cost of sales for the three months and nine months ended March 31, 1996
were 51.0% and 54.6% respectively, compared to 58.4% and 57.1% for the same
periods in 1995. This reduction was achieved as the result of margin improvement
and cost efficiencies applied to production that results in a decrease in the
cost of material from 41.5% last year to 31.5% of sales for the three month
period and from 38.6% last year to 35.0% of sales for the nine month period
ended March 31, 1996.
Selling, general and administrative expenses were $615,666 for the
quarter ended March 31, 1996 and $1,705,678 for the nine months ended March 31,
1996, as compared to $964,262 and $2,001,693 respectively for the corresponding
periods ended March 31, 1995. This decrease is primarily attributed to a
decrease in compensation expense. Another cause in the decrease of the nine
month expense was discussed in the December 31, 1995 10-Q, regarding the Vermont
Supreme Court's ruling in favor of the Company, reversing a lower court's
earlier ruling in favor of the plaintiff, in the amount of $175,000 plus
interest.
Total backlog, for all products, as of March 31, 1996 was approximately
$1,212,000, all of which is shipable by June 30, 1996, compared to $2,500,000 as
of March 31, 1995, about half of which was shipable by June 30, 1995. The March,
1995 backlog includes $1,318,616 for a single customer, of which $202,864 was
shipable by June 30, 1995.
Development and engineering expenses for the three months and nine
months ended March 31, 1996 were $178,176 (7.7% of sales) and $484,131 (6.8% of
sales) compared to $247,054 (6.6% of sales) and $503,756 (6.4% of sales),
respectively, for the same periods last year.
Income tax expense is a direct result of the Company's net income or
loss before taxes. However, the tax expense for the previous year was affected
by a $90,000 loss carry forward, There is no such carry forward for the current
fiscal year.
Net income for the three months and nine months ended March 31, 1996
was $205,367 and $624,969, respectively, compared to $207,231 and $541,399,
respectively, for the same periods ended March 31, 1995.
As of March 31, 1996, the Company's principal available sources of
liquidity were, respectively, from operations and a $700,000 bank line of
credit, all of which was available as of March 31, 1996.
Accounts receivable decreased by $281,848, from $1,640,008 at June 30,
1995 to $1,358,160 at March 31, 1996, a direct result of the decrease in
revenues from $2,433,105 for the quarter ended June 30, 1995 to $2,307,861 for
the quarter ended March 31, 1996, and increased efficiencies in collections.
Current liabilities have dropped from $1,868,617 at June 30, 1995 to
$944,383 at March 31, 1996. This decrease is the result of a reversal by the
Vermont Supreme Court of a judgment against the Company of approximately
$210,000 discussed in the December 31, 1995 10-Q, recognition of a prepaid
deposit of approximately $329,000 that was released when product shipped to the
above mentioned single customer and early payment discounts offered by the
Company's vendors.
The Company's capital commitments for fiscal 1996 are expected to be at
the same level as fiscal 1995.
The Company believes that it will be able to offset the effects of
inflation by selected price increases in its products, although it can give no
assurances in this regard.
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
None
Item 2 - Changes in Securities
Not applicable
Item 3 - Defaults Upon Senior Securities
None
Item 4 - Submission if Matters to a Vote of Security Holders
A. December 4, 1995 - Annual Meeting of Stockholders
B. Election of Directors - all nominees elected
C. Proposal to Ratify Election of KPMG Peat Marwick LLP as
Independent Certified Public Accountants for the Company's
fiscal year ending June 30, 1996.
Item 5 - Information
None
Item 6 - Exhibits and Reports on Form 8-K
None
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 hereunto duly authorized.
IMTEC, INC.
BY:_______/s/ Richard L. Kalich___________
Richard L. Kalich
President & Chief Executive Officer
BY:______/s/ George S. Norfleet III________
George S. Norfleet III
Secretary / Treasurer