UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 20, 2003
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NEMATRON CORPORATION
(Exact name of registrant as specified in its charter)
Michigan 0-21142 38-2483796
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
5840 Interface Drive, Ann Arbor, Michigan 48103
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (734) 214-2000
(Former name or former address, if changed since last report)
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Item 5 - Other Events
On November 20, 2003, Nematron Corporation issued the following press release
concerning its operations for its third quarter ending September 30, 2003.
Nematron Announces 3rd Quarter 2003 Results
Ann Arbor, MI, November 20, 2003 -- Nematron Corporation (Amex: NMN), a leading
developer of embedded and open architecture control solutions, reported today
its operating results for the three- and nine-month periods ended September 30,
2003. Net losses were $707,000 and $2,177,000 for its three- and nine-month
periods ended September 30, 2003, respectively, compared to losses of $837,000
and $1,991,000 for the year earlier periods. The loss in the third quarter is
15.6% less than the year earlier period while the nine-month loss increased 9.3%
from the 2002 period. Losses per share were $0.04 and $0.14, respectively, for
the current periods compared to year earlier losses per share of $0.05 and
$0.13, respectively.
Operating results for each period include non-cash charges for
depreciation, amortization of intangible assets and non-cash interest expense
relating to the issuance of warrants to purchasers of subordinated debt.
Non-cash charges totaled $212,000 and $548,000, respectively, for the current
three- and nine-month periods compared to $262,000 and $896,000, respectively,
for the year earlier periods.
Revenues decreased to $3,347,000 and $9,770,000 for the current three-
and nine-month periods, respectively, compared to $3,450,000 and $11,586,000 for
the comparable year earlier periods. These decreases, 3.0% and 15.7%,
respectively, resulted primarily from the effects of customers' capital spending
reductions affecting most areas of the business except for sales of bundled
Industrial Control Computers and from charges for application services, both of
which increased in the current quarter. Additionally, the nine-month period in
2002 included significant sales of plant-wide software license to one customer
and revenue from application services to another customer, both of which were
unique to the 2002 period.
Gross profit margins were 24.3% and 22.7% in the current three- and
nine-month periods, respectively, compared to 23.8% and 26.2%, respectively, in
the year earlier periods. The 1.6% margin increase in the current quarter
results primarily from the positive effects of lower material, software
amortization and fixed costs compared to the year earlier period, while the 3.6%
decrease in margin in the current nine-month period results primarily from
decreases in software license revenue and application services revenue as
discussed above.
Operating expenses decreased by $200,000 (14.1%) and $693,000 (16.0%)
for the current three- and nine-month periods, respectively, resulting primarily
from the positive effects of cost reductions implemented over the last two
years.
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Interest and other expense increased by $61,000 and $52,000 in the
current three- and nine-month periods, respectively, resulting primarily from
higher borrowing levels.
"Our customers' capital spending continues at low levels as we have
noted since early 2002, and that cautiousness continues to be reflected in our
revenue levels", said President Jeff Crowell. "We have continued to reduce
expenditures during this extended market downturn, but at the same time we have
focused our efforts in developing lower-cost products and redirecting resources
to improve our sales results. We believe that our resulting new products will
allow us to supply our distributors with more choices to best satisfy the
customers' needs. Although we have made considerable progress in the cost
reduction arena , as evidenced by the 16% reduction in operating expenses this
year, we will continue to seek additional reductions as required to better match
costs with revenue."
Addressing the Company's long-term strategies, Mr. Crowell stated, "Our
product development efforts and our product portfolio expansion remain critical
to our long-term revenue growth. Having the right products at the right price
points should result in the revenue growth as the market improves."
The discussion in this news release includes forward-looking statements
based on current management expectations. Factors that could cause future
results to differ from these expectations include: a change in general economic
conditions, competitive factors, reductions in product demand, changes in
customer requirements, component price increases, product introduction delays,
latent deficiencies in new products, the availability of financing and
additional factors described in the Company's reports filed with the SEC.
Nematron has been setting the standard in PC-based control and Operator
Interface since the birth of the industry. Nematron introduced the first
industrial control computers, the first Windows NT/2000 based real-time control
software and holds numerous patents on advanced control and information system
components. As the only company that manufactures a full line of embedded or
open architecture control solution, Nematron continues to prosper by satisfying
customers in nearly every automated industry. For additional information about
Nematron products and our world-class customer service visit
http://www.nematron.com.
more
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Operations Data:
(Dollars in thousands)
Three Months Ended Sept. 30, Nine Months Ended Sept. 30,
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2003 2002 % Change 2003 2002 % Change
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Net revenues $3,347 $3,450 (3.0)% $9,770 $11,586 (15.7)%
Cost of revenues 2,535 2,629 (3.6) 7,555 8,545 (11.6)
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Gross profit 812 821 (1.1) 2,215 3,041 (27.2)
Gross profit margin 24.3% 23.8% 22.7% 26.2%
Operating expenses 1,220 1,420 (14.1) 3,629 4,321 (16.0)
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Operating loss (408) (599) (31.8) (1,414) (1,280) 10.4
Interest and other, net (299) (238) 25.2 (763) (711) 7.4
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Net loss $(707) $(837) (15.6) $(2,177) $(1,991) 9.3
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Loss per share:
Basic and diluted $(0.04) $(0.05) $(0.13) $(0.22)
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Weighted average
shares O/S:
Basic and diluted 15,744 15,744 15,744 15,096
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Financial Position:
(Dollars in thousands)
9-30-03 12-31-02 9-30-03 12-31-02
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Cash and cash equivalents $124 $104 Current liabilities $10,228 $8,077
Other current assets 4,492 4,169 Long term obligations 2,383 2,523
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Total current assets 4,616 4,273 Total liabilities 12,611 10,600
Property and equipment,
net 1,647 1,850 Stockholders' deficit (2,683) (576)
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Goodwill 2,922 2,922
Other intangible
assets, net 743 979
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Total assets $9,928 $10,024 Total liabilities & equity $9,928 $10,024
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