-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RK+NXn3p4/Bbep7P2vt8N1apoIVR938dRa1Om+a1IlJXwWFzZlnQTwsaohv6mMMX XoSDWiTEKcte5GBXiuHTwA== 0000910647-96-000121.txt : 19960813 0000910647-96-000121.hdr.sgml : 19960813 ACCESSION NUMBER: 0000910647-96-000121 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960628 FILED AS OF DATE: 19960812 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DATAMARINE INTERNATIONAL INC CENTRAL INDEX KEY: 0000027075 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 042454559 STATE OF INCORPORATION: MA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-08936 FILM NUMBER: 96608403 BUSINESS ADDRESS: STREET 1: 7030 220 TH SW CITY: MOUNTLAKE TERRACE STATE: WA ZIP: 98043 BUSINESS PHONE: 2067712182 MAIL ADDRESS: STREET 1: 53 PORTSIDE DR CITY: POCASSET STATE: MA ZIP: 02559-1900 10-Q 1 BODY OF 10-Q FOR 3RD QUARTER UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 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 June 28, 1996 Commission File Number 0-8936 DATAMARINE INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) Massachusetts 04-2454559 (State of Incorporation) (I.R.S. Employer Identification Number) 7030 220th SW, Mountlake Terrace, Washington 98043 (Address of principal executive offices) (206) 771-2182 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to filing requirements for the past 90 days. Yes [X] No [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at June 28, 1996 Common Stock, .01 Par Value 1,302,627 1 DATAMARINE INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Nine Months Ended ------------------------ -------------------------- June 28, July 1, June 28, July 1, 1996 1995 1996 1995 ---------- ---------- ----------- ----------- Net sales $4,393,041 $3,754,201 $12,353,616 $10,951,387 Cost of product sold 2,630,688 2,442,050 7,106,594 6,582,035 ------------------------------------------------------- Gross profit 1,762,353 1,312,151 5,247,022 4,369,352 Operating expenses 1,347,056 1,312,433 4,089,633 4,276,364 Restructuring charge (credit) -- (78,000) -- 1,109,885 ------------------------------------------------------- Operating income (loss) 415,297 77,718 1,157,389 (1,016,897) Other expense 112,961 39,631 224,570 121,554 ------------------------------------------------------- Income (loss) before income taxes 302,336 38,087 932,819 (1,138,451) Provision (benefit) for income taxes 118,039 12,948 342,446 (1,187,605) ------------------------------------------------------- Net income $ 184,297 $ 25,139 $ 590,373 $ 49,154 ======================================================= Income Per Share $ 0.12 $ 0.02 $ 0.40 $ 0.04 ======================================================= Average shares outstanding 1,565,925 1,273,909 1,475,932 1,273,909
2 DATAMARINE INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
June 28, September 30, July 1, 1996 1995 1995 ----------- ------------- ---------- ASSETS Current assets: Cash and cash equivalents $ 87,591 $ 252,843 $ 198,838 Accounts receivable 3,304,281 2,337,607 2,422,381 Inventories 5,511,275 3,371,976 3,481,495 Prepaid expenses and other current assets 221,613 242,148 595,045 Deferred income taxes, current 200,000 340,000 1,187,604 ------------------------------------------ Total current assets 9,324,760 6,544,574 7,885,363 Property, plant and equipment 4,886,543 4,210,085 5,411,675 Less accumulated depreciation 2,780,637 2,472,871 4,205,402 ------------------------------------------ Property, plant and equipment, net 2,105,906 1,737,214 1,206,273 Deferred income taxes, noncurrent 583,069 785,992 -- Other assets 521,135 255,801 23,342 ------------------------------------------ $12,534,870 $9,323,581 $9,114,978 ========================================== LIABILITIES AND STOCKHOLDERS' EQUITY: Current liabilities: Notes payable to banks $ 1,406,392 $1,468,750 $1,492,019 Notes payable, other -- 30,000 -- Accounts payable 1,254,378 814,437 893,978 Accrued expenses 1,566,556 1,312,600 1,621,588 Current maturities of long-term debt 129,894 209,881 154,125 ------------------------------------------ Total current liabilities 4,357,220 3,835,668 4,161,710 Long-term debt, less current maturities 1,835,319 289,522 263,985 Redeemable preferred stock, $1 par value, issued, none -- -- -- Stockholders' equity: Convertible preferred stock, $1 par value, Authorized 1,000,000 shares; including redeemable preferred shares, issued, none -- -- -- Common stock, $.01 par value, Authorized 3,000,000 shares; 1,302,627 shares issued and outstanding 13,026 12,967 12,739 Capital in excess of par value 3,611,954 3,078,182 2,829,387 Unearned compensation (13,640) (33,376) (25,740) Retained earnings 2,730,991 2,140,618 1,872,897 ------------------------------------------ Total stockholders' equity 6,342,331 5,198,391 4,689,283 ------------------------------------------ $12,534,870 $9,323,581 $9,114,978 ==========================================
3 DATAMARINE INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended ------------------------ June 28, July 1, 1996 1995 ---------- ---------- OPERATING ACTIVITIES Net income $ 590,373 $ 49,154 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 307,766 306,742 Non-cash portion of loss from restructuring charge -- 809,597 Provision for losses on accounts receivable 59,104 1,299 Employee investment plan expense 19,537 35,045 Amortization of unearned compensation 19,736 29,524 Amortization of bond discount and issue costs 59,749 -- Deferred tax provision 342,923 (1,187,605) Changes in operating assets and liabilities: Accounts receivable (1,025,778) (105,315) Inventories and prepaid expenses (2,118,764) (537,496) Accounts payable and accrued expenses 693,897 219,420 ------------------------ Net cash (used in) operating activities (1,051,457) (379,635) INVESTING ACTIVITIES Purchases of property, plant and equipment, including self-constructed equipment (676,458) (455,176) (Increase) in other assets (285,083) (66,501) ------------------------ Net cash (used in) investing activities (961,541) (521,677) FINANCING ACTIVITIES Proceeds from sale of common stock 34,294 244,267 Proceeds from bank borrowings 1,300,000 885,000 Proceeds from other borrowings 2,000,000 -- Principal payments on other borrowings (30,000) -- Principal payments on revolving line of credit and long-term debt (1,456,548) (210,043) ------------------------ Net cash provided by financing activities 1,847,746 919,224 Increase (decrease) in cash and equivalents during period (165,252) 17,912 Cash and equivalents at beginning of period 252,843 180,926 ------------------------ Cash and equivalents at end of period $ 87,591 $ 198,838 ========================
4 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note A - Basis of Presentation The accompanying unaudited, consolidated, condensed financial statements have been prepared in accordance with instructions to FORM 10-Q and, therefore, do not include all information and footnotes normally included in financial statements prepared in conformity with Generally Accepted Accounting Principles. In the opinion of management, they fairly represent the operating results of the Company for the periods presented. All accruals necessary for a fair presentation of the operating results of the period have been included. Accounting policies used in FY96 are consistent with those used in FY95. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on FORM 10-K for the year ended September 30, 1995. The results shown are not necessarily indicative of the results that may be expected in succeeding quarters. Note B - Inventory Components Inventories consisted of the following at:
June 28, 1996 September 30, 1995 July 1, 1995 ------------- ------------------ ------------ Finished Goods $1,939,829 $1,319,509 $1,407,833 Raw Material 3,571,446 2,052,467 2,073,662 ----------------------------------------------- $5,511,275 $3,371,976 $3,481,495 ===============================================
Note C - Reclassifications Certain reclassifications have been made to the July 1, 1995 financial statements in order to conform to the September 30, 1995 and June 28, 1996 presentations. Note D - Income Taxes Management has determined, based on the restructuring of its unprofitable operation and its expectations for the future, that operating income of the Company will more likely than not be sufficient to recognize fully its deferred tax assets. 5 MANAGEMENT'S DISCUSSION AND ANALYSIS QUARTER ENDED JUNE 28, 1996 The following table sets forth the components of sales and gross profit by product line for the Quarter Ended June 28, 1996 and the comparable quarter in the prior fiscal year.
Sales Gross Profit - ------------------------ ------------------------ June 28, July 1, June 28, July 1, 1996 1995 1996 1995 - ---------- ---------- -------------------------- ---------- ---------- $2,500,745 $1,527,344 Land Mobile Communications $ 924,361 $ 600,513 1,290,363 1,251,966 Marine Communications 548,977 330,327 601,933 974,891 Marine Instrumentation 289,015 381,311 $4,393,041 $3,754,201 Total $1,762,353 $1,312,151
Sales order backlogs were as follows: Land Mobile Communications $5,216,000, Marine Communications $158,000 and Marine Instrumentation $15,000. Land Mobile Communications backlogs are volatile, based upon the customers' ability to obtain F.C.C. approval for site locations. The Company has reduced the land mobile backlog because it does not believe all customers will be able to take delivery prior to the building deadline.
Income and expense items as Percentage a percentage of net sales increase (decrease) - --------------------------- ------------------- 1995 1994 June 28, July 1, to to 1996 1995 1996 1995 -------- ------- ---------------------- ---- ---- 100% 100% Net sales 17 5 60 65 Cost of products sold 8 19 40 35 Gross profit 34 (14) 31 35 Operating expenses 3 (2) 0 (2) Restructuring (credit) n.m. -- 9 2 Operating income 434 (57) 2 (1) Other expense 185 n.m. 7 1 Income before taxes 694 (82) 3 -- Provision for taxes 812 n.m. 4% 1% Net income 633 (88)
Net sales increased by $638,840 or 17% compared to the same quarter in the prior fiscal year. Net sales of the Company's land mobile products increased by $973,401 or 64% compared to the same quarter in the prior fiscal year. Net sales of the Company's marine communications systems increased by $38,397 or 3%. Net sales of the Company's marine instrumentation systems decreased by $372,958 or 38%. 6 MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued QUARTER ENDED JUNE 28, 1996 Gross profit was $1,762,353 (40% of net sales), as compared to $1,312,151 (35% of net sales) in the prior year, an increase of $450,202 or 34%. The gross profit on land mobile products was $924,361 (37% of such sales), as compared to $600,513 (39% of such sales) in the prior year, an increase of $323,848 or 54%. The gross profit on marine communications systems was $548,977 (43% of such sales), as compared to $330,327 (26% of such sales) in the prior year, an increase of $218,650 or 66%. The gross profit on marine instrumentation systems was $289,015 (48% of such sales), as compared to $381,311 (39% of such sales) in the prior year, a decrease of $92,296 or 24%. The overall gross profit margin was greater than last year's third quarter. Slightly lower gross profit margins in land mobile products were offset by higher gross profit margins in marine communication and marine instrumentation products. Land mobile margins vary depending upon the sales mix across the product line, and base station equipment typically has a higher gross margin than mobile products. During the quarter, the sales mix in land mobile products was similar to that of the prior year. Profit margins on marine communication products were higher than last year's third quarter which included pricing incentives and lower margins on third party private label products. Profit margins on marine instrumentation products continued to improve due to lower manufacturing costs as a result of consolidating production at the Mountlake Terrace, Washington location. Operating expenses were $1,347,056 (31% of net sales), as compared to $1,312,433 (35% of net sales) last year, an increase of $34,623 or 3%. Operating cost reductions realized from the restructuring in FY95 were offset by increased selling costs related to higher sales. Other expenses increased to $112,961 as compared to $39,631 last year. The increase is due primarily to additional interest expense, and the amortization of discount and direct costs related to the convertible debenture issued December 19, 1995. On June 28, 1996, the Company's principal sources of liquidity consisted of $87,591 in cash and equivalents and $1,200,000 in the unused portion of bank working capital credit lines. 7 DATAMARINE INTERNATIONAL, INC. AND SUBSIDIARIES QUARTER ENDED JUNE 28, 1996 PART II - OTHER INFORMATION Items 1,2,3,4, and 5 There were no reportable events or matters under these captions during the quarter ended June 28, 1996. Item 6 (b) There was one report on FORM 8-K filed April 12, 1996 related to the resignation of a director. 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. Datamarine International, Inc. (Registrant) Date: August 9, 1996 /s/ DAVID C. THOMPSON ------------------- ---------------------------------- Principal Financial and Accounting Officer 8 EX-27 2 ARTICLE 5 FDS FOR 3RD QUARTER 10-Q
5 1 9-MOS SEP-28-1996 JUN-28-1996 87,591 0 3,513,106 208,825 5,511,275 9,324,760 4,886,543 2,780,637 12,534,870 4,357,220 1,835,319 0 0 13,026 6,329,305 12,534,870 4,393,041 4,393,041 2,630,688 2,630,688 1,460,017 22,818 79,398 302,336 118,039 184,297 0 0 0 184,297 0.12 0.12
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