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 the quarterly period ended March 31, 1995
Or
( )Transition report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934 for the transition period from
__________________________________
to____________________________.
Commission file number 0-14800
X-RITE, INCORPORATED
(Exact name of registrant as specified in its charter)
Michigan 38-1737300
(State or other jurisdiction of I.R.S. Employer Indentification No.
incorporation or organization)
3100 44th St. SW
Grandville, Michigan 49418
(Address of principal executive (Zip Code)
offices)
616-534-7663
(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
The number of shares outstanding of registrant's common stock, par value $0.10
per share, at May 2, 1995 was 20,996,204 shares.
EXHIBIT INDEX is on page 10
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
X-RITE, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
ASSETS March 31, December 31,
1995 1994
CURRENT ASSETS:
Cash and cash equivalents $1,695,000 $1,171,000
Short-term investments 2,060,000 13,762,000
Accounts receivable, less allowances
of 325,000 in 1995 and 251,000
in 1994 13,317,000 10,211,000
Inventories 13,416,000 12,858,000
Deferred tax assets 557,000 557,000
Prepaids and other 378,000 862,000
31,423,000 39,421,000
PROPERTY, PLANT AND EQUIPMENT, at cost 22,474,000 18,254,000
Less - Accumulated depreciation (8,315,000) ( 6,553,000)
14,159,000 11,701,000
OTHER ASSETS 13,573,000 3,436,000
$ 59,155,000 $ 54,558,000
(See accompanying notes to the consolidated condensed financial statements.)
X-RITE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
LIABILITIES AND
SHAREHOLDERS' EQUITY March 31, December 31,
1995 1994
CURRENT LIABILITIES:
Accounts payable $ 1,437,000 $1,419,000
Other current liabilities 3,033,000 1,429,000
4,470,000 2,848,000
DEFERRED INCOME TAXES 637,000 578,000
SHAREHOLDERS' EQUITY:
Preferred stock, $.10 par value,
5,000,000 shares authorized; none
issued. - -
Common stock, $.10 par value, 25,000,000
authorized; 20,996,204 and 20,992,783
shares issued and outstanding respectively 2,100,000 2,099,000
Additional paid-capital 6,122,000 6,075,000
Retained earnings 45,788,000 43,010,000
Cumulative translation adjustment 38,000 (52,000)
54,048,000 51,132,000
$ 59,155,000 $ 54,558,000
(See accompanying notes to the consolidated condensed financial statements.)
X-RITE, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
Three Months Ended
March 31,
1995 1994
NET SALES $17,946,000 $ 12,353,000
COSTS AND EXPENSES:
Cost of sales 5,431,000 3,852,000
Selling, general and administrative 6,660,000 4,030,000
Research and development 1,052,000 720,000
Other (income) (90,000) (127,000)
13,053,000 8,475,000
Income before provision for income taxes 4,893,000 3,878,000
PROVISION FOR INCOME TAXES 1,590,000 1,300,000
NET INCOME $ 3,303,000 $ 2,578,000
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING AND
COMMON STOCK EQUIVALENTS 21,156,113 21,046,260
EARNINGS PER SHARE $ .16 .12
CASH DIVIDENDS PER SHARE $ .025 .02
(See accompanying notes to the consolidated condensed financial statements.)
X-RITE, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
Three Months Ended
March 31,
1995 1994
Cash flows from operating activities $ 1,572,000 $ 2,413,000
Cash flows from investing activities:
Acquisition of Labsphere, Inc. (11,500,000)
Short term investments 11,723,000 -
Capital expenditures (823,000) (615,000)
(600,000) (615,000)
Cash flows from financing activities:
Dividends paid (525,000) (419,000)
Issuance of common stock under
Employee Benefit Plans 48,000 58,000
(477,000) (361,000)
Effect of exchange rate changes on
cash and cash equivalents 29,000 (17,000)
Net increase in cash and cash equivalents 524,000 1,420,000
Cash and cash equivalents, beginning of period 1,171,000 2,544,000
Cash and cash equivalents, end of period $ 1,695,000 $ 3,964,000
(See accompanying notes to the consolidated condensed financial statements.)
X-RITE, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(1) GENERAL INFORMATION
The consolidated condensed financial statements included herein have been
prepared by the Registrant, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed
or omitted pursuant to such rules and regulations. Although the Registrant
believes that the disclosures are adequate to make information presented not
misleading, it is suggested that these consolidated condensed financial
statements be read in conjunction with the consolidated financial statements
and notes thereto included in the Registrant's 1994 Annual Report on Form 10-K.
In the opinion of management, the accompanying unaudited consolidated condensed
financial statements contain all adjustments, consisting of only a normal and
recurring nature, necessary to present fairly the financial position of the
Registrant as of March 31, 1995 and December 31, 1994, and the results of
operations and cash flows for the three months ended March 31, 1995 and 1994.
(2) INVENTORIES
Inventories consisted of the following:
March 31, December 31,
1995 1994
Raw materials $ 3,748,000 $ 3,294,000
Work in process 4,708,000 5,044,000
Finished goods 4,960,000 4,520,000
$ 13,416,000 $ 12,858,000
(3) During February 1995, the Company completed the acquisition of Labsphere,
Inc. ("Labsphere") by acquiring 100% of its outstanding stock for
$11,500,000. Labsphere, with 1994 sales of over $6,900,000, manufactures
products which measure color and light through transmission and reflectance
technology. The acquisition, which was accounted for under the purchase
method, was financed out of short-term investments.
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
RESULTS OF OPERATIONS
First quarter 1995 results include sales of $1,213,000 attributable to
Labsphere, Inc. a subsidiary company acquired during the quarter. The effect
on earnings was not material.
Net sales of $17,946,000 for the three months ended March 31, 1995 increased
45.3 percent compared with sales of $12,353,000 for the same period of 1994.
Increased sales are a result of increased unit volume, rather than price
increases, to all the markets served by the Company.
For the three months ended March 31, 1995, gross margin of 69.7 percent
increased over the 68.8 percent for the same period of 1994. Product mix,
volume, as well as manufacturing efficiencies, contributed to this increase.
Comparative consolidated total selling, research and development, and general
and administrative expenses, as a percentage of sales, are as follows:
Total % of
Expenses Sales
Quarter ended March 31, 1995 $7,712,000 42.9%
Quarter ended March 31, 1994 $4,750,000 38.5%
Expense increased $2,962,000 for the first three months of 1995, compared with
the same period of 1994. This increase is a result of additional marketing
staffing and promotional costs associated with new product introductions.
Other income of $90,000 decreased from the prior year level of $127,000
primarily as a result of a reduction in funds available for investment.
Net income of $3,303,000 increased 28.1 percent over net income of $2,578,000
for first quarter 1994 as a result of increased sales and gross profit.
Earnings per share of 16 cents increased 33.3 percent over the 12 cents for the
same period last year, based on 21,156,000 and 21,046,000 average common shares
and common stock equivalents outstanding, respectively.
FINANCIAL CONDITION AND LIQUIDITY
Working capital at March 31, 1995, was $26,953,000 compared with $36,573,000 at
December 31, 1994. This decrease is a result of a reduction in cash and
short-term investments used for the acquisition of Labsphere, Inc.
The Company expects to spend approximately $6,000,000 for fixed assets in 1995.
Approximately $823,000 has been spent for the three months ended March 31,
1995. Capital expenditures will be funded from operations and working capital.
The Company has available a $20,000,000 line of credit with a local bank,
providing for borrowings with interest at 1.5 percent of the "Effective Federal
Funds Rate." The borrowings are unsecured and no compensating balances are
required by the agreement. There were no borrowings under this agreement in
the three months ended March 31, 1995.
ITEM 6. Exhibits and Reports on Form 8-K
(a) See Exhibit Index on Page 10.
(b) A report on Form 8K was filed by the Company on March 3, 1995
reporting the acquisition of Labsphere, Inc. (see note 3 to the
consolidated condensed financial statements).
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.
X-RITE, INCORPORATED
Date: May 5, 1995 By: /s/ Ted Thompson
Ted Thompson
Chairman - Chief Executive Officer
Date: May 5, 1995 By: /s/ Duane Kluting
Duane Kluting
Vice President - Chief Financial Officer
EXHIBITS
Exhibit No. Description
3(a) Registrant's Restated Articles of Incorporation were
filed as Exhibit 3(a) to a Registration Statement on
Form S-18 (Registration No. 33-3954C) which became effective
April 10, 1986, and a Certificate of Amendment was
filed as Exhibit 3(a)(1) to a report on Form 10-Q filed in
August of 1987, both of which are hereby incorporated
by reference.
3(b) Registrant's Amended and Restated By-laws were
filed as Exhibit 3(b) on Form 10K filed by Registrant in
March of 1995 and the same is hereby incorporated herein
by reference.
4 A specimen form of stock certificate for the Registrant's
common stock par value $.10 per share was filed as
Exhibit No. 4 to a report on Form 10-Q filed by the
Registrant in August of 1986 and the same is hereby
incorporated herein by reference.
10(a)(1) An Indemnification Contract between Registrant and Director
Ted Thompson, was filed as Exhibit 10(a)(1) to a report on
Form 10-Q filed in August of 1987, and the same is hereby
incorporated herein by reference.
10(a)(2) An Indemnification Contract between Registrant and
Director Marvin G. DeVries, was filed as Exhibit 10(a)(2)
to a report on Form 10-Q filed in August of 1987, and
the same is hereby incorporated herein by reference.
10(a)(3) An Indemnification Contract between Registrant and
Director Charles VanNamen, was filed as Exhibit 10(a)(3)
to a report on Form 10-Q filed in August of 1987, and the
same is hereby incorporated herein by reference.
10(a)(4) An Indemnification Contract between Registrant and Director
Quinten E. Ward, was filed as Exhibit 10(a)(4) to a report
on Form 10-Q filed in August of 1987, and the same hereby
incorporated herein by reference.
10(a)(5) An Indemnification Contract between Registrant and Director
Glenn M. Walters, was filed as Exhibit 10(a)(5) to a report
on Form 10-Q filed in August of 1987, and the same is hereby
incorporated herein by reference.
10(a)(6) An Indemnification Contract between Registrant and
Director Rufus S. Teesdale, was filed as Exhibit 10(a)(6)
to a report on Form 10-Q filed in August of 1987, and the
same is hereby incorporated herein by reference.
10(a)(7) An Indemnification Contract between Registrant and
Director Lawrence E. Fleming, was filed as Exhibit 10(a)(7)
to a report on Form 10-Q filed in August of 1987, and the
same is hereby incorporated herein by reference.
10(a)(8) An Indemnification Contract between Registrant and
Director Leonard C. Blanding, was filed as Exhibit 10(a)(8)
to a report on Form 10-Q filed in August of 1987, and the
same is hereby incorporated herein by reference.
10(a)(9) An Indemnification Contract between Registrant and
Director Ronald A. VandenBerg, was filed as Exhibit 10(a)(9)
to a report on Form 10-K filed in March of 1990, and the
same is hereby incorporated herein by reference.
10(b) Registrant's 1993 Outside Director Stock Option Plan was
filed as Exhibit No. 99 to a Registration Statement on
Form S-8 in July of 1994, and the same is hereby
incorporated herein by reference.
10(c) Registrant's 1993 Employee Stock Option Plan was filed
as Exhibit No. 99 to a Registration Statement on Form
S-8 in July of 1994, and the same is hereby
incorporated herein by reference.
10(d) Exchange Agreement between the Registrant and
Ronald L. Sisson for the exchange of certain real estate
was filed as Exhibit 10(d) on Form 10K filed by Registrant
in March of 1995 and the same is hereby incorporated by
Reference.