FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 1, 1995
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( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
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Commission File Number: O-13715
VITRONICS CORPORATION
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(Exact name of registrant as specified in its charter)
COMMONWEALTH OF
MASSACHUSETTS O4-2726873
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1 Forbes Road, Newmarket, NH 03857
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (603) 659-6550
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NONE
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(Former name, former address and former fiscal year,
if changed since last report)
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
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Number of shares outstanding of each of the registrant's classes
of common stock as of May 4, 1995:
Common Stock, $.01 par value: 7,553,638 shares
VITRONICS CORPORATION AND SUBSIDIARIES
INDEX
Page
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Part I - Financial Information:
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Item 1 - Financial Statements:
Condensed Consolidated Balance Sheets -
April 1, 1995 (unaudited)
and December 31, 1994 ................................... 3
Condensed Consolidated Statements of Operations (unaudited) -
Three Months Ended April 1, 1995
and April 2, 1994 ...................................... 4
Condensed Consolidated Statements of
Cash Flows (unaudited) - Three Months
Ended April 1, 1995 and April 2, 1994 .................. 5
Notes to Condensed Consolidated Financial Statements
(unaudited).............................................. 6
Calculation of Net Income Per Share........................ 7
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations.................. 8
Part II - Other Information:
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Items 1 through 6.......................................... 10
Signatures................................................. 11
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VITRONICS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(000's omitted)
April 1, December 31,
1995 1994
(Unaudited) (*)
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ASSETS
- - - - ------
Current assets:
Cash and cash equivalents $ 947 $ 671
Accounts receivable, net 2,006 2,723
Inventories 2,717 2,094
Other current assets 179 189
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Total current assets 5,849 5,677
Property and equipment, net 204 223
Other assets 152 152
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$ 6,205 $ 6,052
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LIABILITIES AND STOCKHOLDERS' EQUITY
- - - - ------------------------------------
Current liabilities:
Accounts payable $ 1,602 $ 1,751
Other current liabilities 1,016 945
Current maturities of long-term liabilities 315 305
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Total current liabilities 2,933 3,001
Long-term liabilities - net of current maturities 1,283 1,323
Stockholders' Equity:
Common Stock, $.01 par value 76 76
Additional paid-in capital 5,405 5,401
Foreign currency translation adjustment (151) (184)
Accumulated deficit (3,341) (3,565)
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1,989 1,728
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$ 6,205 $ 6,052
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*Condensed from audited financial statements
The accompanying notes are an integral part
of these condensed financial statements.
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VITRONICS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(000's omitted except per share amounts)
Three Months Ended
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April 1, April 2,
1995 1994
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Net sales $4,853 $3,584
Cost of goods sold 2,982 2,358
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Gross profit 1,871 1,226
Selling, general and
administrative expenses 1,215 857
Research and development costs 303 260
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1,518 1,117
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Income from operations 353 109
Non-operating expense - net (126) (97)
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Income before taxes 227 12
Income taxes 3 -
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Net income $ 224 $ 12
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Net earnings per common share:
Primary $ .03 $ .00
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Fully diluted $ .02 $ .00
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Weighted average number of
common and common equivalent
shares used in calculation
of earnings per common share:
Primary 8,169 7,522
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Fully diluted 10,572 9,922
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The accompanying notes are an integral part
of these condensed financial statements.
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VITRONICS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(000's omitted)
Three Months Ended
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April 1, April 2,
1995 1994
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 224 $ 12
Adjustments to reconcile net income to net
cash flows provided by (used for)
operating activities:
Depreciation and amortization 54 47
Provision for excess and obsolescence 54 30
Changes in current assets and liabilities:
Accounts receivable 717 (178)
Inventories (677) 241
Other current assets 10 55
Accounts payable (149) 15
Income taxes - 20
Other current liabilities 71 (163)
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Total adjustments 80 67
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Net cash provided by operating activities 304 79
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (17) (9)
Additions to other assets (18) (6)
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Net cash used for
investing activities (35) (15)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of long-term debt (30) (81)
Issuance of common stock 4 -
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Net cash used for financing activities (26) (81)
Foreign currency translation adjustment 33 (4)
CASH:
Net increase (decrease) 276 (21)
Balance, beginning of period 671 172
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Balance, end of period $ 947 $ 151
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SUPPLEMENTAL DISCLOSURE OF NON-CASH
FINANCING ACTIVITIES:
Conversion of debt to equity - $71
The accompanying notes are an integral part
of these condensed financial statements
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VITRONICS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
A. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and pursuant to the rules and regulations
of the Securities and Exchange Commission. Accordingly, they do not include
all of the information and footnotes required by generally accepted
accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of only normal
recurring adjustments) considered necessary for a fair presentation have
been included. Operating results for the three month period ended April 1,
1995 are not necessarily indicative of the results that may be expected for
the year ended December 31, 1995. For further information, refer to the
Company's consolidated financial statements and notes thereto contained in
the Company's Form 10-K for the year ended December 31, 1994 filed with the
Securities and Exchange Commission (File #0-13715) on March 22, 1995.
B. Inventories
Inventories valued at the lower of cost (determined using the first-in,
first-out method) or market, were as follows (in thousands):
April 1, December 31,
1995 1994
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Finished goods $ 339 $ 224
Work in process 773 369
Raw materials 1,605 1,501
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$2,717 $2,094
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EXHIBIT 11.1
VITRONICS CORPORATION AND SUBSIDIARIES
CALCULATION OF NET EARNINGS PER COMMON SHARE
FOR THE THREE MONTHS ENDED APRIL 1, 1995 AND APRIL 2, 1994
April 1, 1995
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Fully
Primary Diluted
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Net income $ 224 $ 254
Weighted average shares outstanding:
Common stock 7,551,583 7,551,583
Convertible debentures 2,400,000
Warrants 220,270 220,960
Stock options 397,139 399,722
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Weighted averaged shares
outstanding 8,168,992 10,572,265
Earnings per share $ 0.03 $ 0.02
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April 2, 1994
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Fully
Primary Diluted
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Net income $ 12 $ 42
Weighted average shares outstanding:
Common stock 7,387,799 7,387,799
Convertible debentures 2,400,000
Warrants 107,449 107,449
Stock options 27,055 27,055
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Weighted averaged shares
outstanding 7,522,303 9,922,303
Earnings per share $ 0.00 $ 0.00
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VITRONICS CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operation
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Sales for the quarter ended April 1, 1995 increased 35% to $4,853,000 from
$3,584,000 for the same period in 1994. Bookings for the three months ended
April 1, 1995 were $5,333,000 versus $3,628,000 for the same period in 1994, an
increase of 47%. The increase in bookings and revenues were a result of
increased demand for IsothermTM, UnithermR and Unitherm II products, along with
recapture of market share lost in 1991-1993. The Company does not anticipate
that the percentage increase in net revenues and bookings for the three months
ended April 1, 1995 is necessarily indicative of the percentage increase in net
revenues to be expected for the entire fiscal year. Backlog as of April 1, 1995
was $3,068,000 versus $2,589,000 at December 31, 1994 and $2,177,000 as of April
2, 1994.
Gross margin for the three months ended April 1, 1995 increased to 39% from
34% for the same period in 1994. The increased margin is due to a significantly
higher volume of sales, reduced overhead spending and reduced material costs.
Operating expenses for the three months ended April 1, 1995 were $1,518,000
versus $1,117,000 for the same period of 1994, an increase of 36%. Operating
expenses as a percentage of sales for such periods were 31% and 31%,
respectively. The increase in actual spending is partially the result of the
increased sales which resulted in increased staffing levels, commission and
marketing expenses.
For the first quarter of 1995, selling, general and administrative expenses
as a percentage of sales were 25% versus 24% in 1994. This increase is the
result of the increased sales volume which resulted in higher commission and
marketing expenses. Research and development expenses as a percentage of sales
for such periods were 6% in 1995 versus 7% in 1994.
The Company had non-operating expenses of $126,000 for the three months
ended April 1, 1995 compared with $97,000 for the comparable period in 1994. The
non-operating expenses for the first quarter of 1995 include patent defense
costs of $75,000 and interest expense, net $32,000. During the first quarter of
1994, patent defense costs were $31,000 and interest expense, net was $42,000.
Patent defense costs are continuing to increase as the suit approaches trial
which is expected to occur in June 1995.
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Net income for the first quarter of 1995 was $224,000 compared to $12,000 for
the comparable period of 1994. For the first quarter of 1995, net income was
$.03 per primary share, and $.02 per fully diluted share. For the comparable
1994 period, net income per share was $.00.
Liquidity and Capital Resources
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The Company continues to monitor its operational spending levels very
closely with the goal of cash conservation. During the quarter ended April 1,
1995, cash increased $276,000 to $847,000.
During March 1995, the Company obtained a $500,000 revolving line of credit
with First National Bank of Portsmouth. The Company believes this funding
source, combined with its existing cash balances and anticipated cash flow from
operations, will be adequate to meet its working capital requirements for the
remainder of the year.
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VITRONICS CORPORATION AND SUBSIDIARIES
PART II
OTHER INFORMATION
Items 1 through 4: Not applicable
Item 5: Other Information
On April 25, 1995, the Company filed a Registration Statement on Form S-3
with the Securities and Exchange Commission covering 2,888,225 shares of its
common stock which includes 2,400,000 shares reserved for issuance upon
conversion of the Company's outstanding $1.2 million subordinated convertible
debenture dated October 1, 1993, 346,225 shares issuable upon exercise of
outstanding warrants held by the underwriter for the Company's 1992 Right's
Offering and 142,000 shares sold to a vendor of the Company in 1992. The Company
filed the Registration Statement due to the exercise of registration rights
previously granted to the holders of the Company's underwriter warrants and
subordinated convertible debenture. The Company will incur the cost of the
registration. However, the Company will not receive any proceeds from the sale
of the stock by the selling stockholders.
Item 6:
(a). Exhibits
10.33 Business Loan Agreement between the Company and First National
Bank of Portsmouth dated March 22, 1995
10.34 Promissory Note of the Company to First National Bank of
Porstmouth dated March 22, 1995
10.35 Commercial Security Agreement between the Company and First
National Bank of Portsmouth dated March 22, 1995
27 Financial Data Schedule.
(b). Reports on Form 8-K
None
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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.
VITRONICS CORPORATION
Date: May 8, 1995 By:/s/ James J. Manfield, Jr.
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James J. Manfield, Jr.
Chairman of the Board,
Chief Executive Officer,
Chief Financial Officer,
and Treasurer
Date: May 8, 1995 /s/ Ronald W. Lawler
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Ronald W. Lawler,
President and
Chief Operating Officer
Date: May 8, 1995 By:/s/ Daniel J. Sullivan
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Daniel J. Sullivan,
Controller and
Principal Accounting Officer
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