-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, hufyRz+iC/ThFUgzJDpGSGPfU0jYTb4+4IPN5Bt5g1kwDv6xh6RAUjEPZ0PbFEng 5dEUZRYSBF8zioP2NDox0A== 0000892569-95-000312.txt : 199506290000892569-95-000312.hdr.sgml : 19950629 ACCESSION NUMBER: 0000892569-95-000312 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950628 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRINTRONIX INC CENTRAL INDEX KEY: 0000311505 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER PERIPHERAL EQUIPMENT, NEC [3577] IRS NUMBER: 952903992 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-09321 FILM NUMBER: 95549713 BUSINESS ADDRESS: STREET 1: 17500 CARTWRIGHT RD STREET 2: P O BOX 19559 CITY: IRVINE STATE: CA ZIP: 92713 BUSINESS PHONE: 7148631900 MAIL ADDRESS: STREET 1: ATTN GENERAL ACCOUNTING STREET 2: PO BOX 19559 CITY: IRVINE STATE: CA ZIP: 92713 10-K 1 FORM 10-K 1 =============================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) /X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended March 31, 1995 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from _____ to _____ Commission File Number 0-9321 PRINTRONIX, INC. (Exact Name of Registrant as Specified in its Charter) DELAWARE 95-2903992 (State or Other Jurisdiction of (I.R.S.Employer Identification No.) Incorporation or Organization) 17500 CARTWRIGHT ROAD 92713 P.O. BOX 19559, IRVINE, CALIFORNIA (Zip Code) (Address of Principal Executive Offices) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (714) 863-1900 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: COMMON STOCK, PAR VALUE $.01, INCLUDING COMMON SHARE PURCHASE RIGHTS 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 --- --- Indicate by check mark(X) if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. /X/ On May 12, 1995, there were 5,016,710 shares of the Registrant's Common Stock outstanding. The aggregate market value of the Common Stock (based upon the closing price of $ 23.13 per share in the over-the-counter market on May 12, 1995) held by non-affiliates of the Registrant was approximately $88,329,654. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Registrant's Annual Report to Stockholders for the fiscal year ended March 31, 1995 are incorporated by reference into Parts I, II and IV of this report. Portions of the Registrant's Proxy Statement for the Annual Meeting of Stockholders to be held on August 15, 1995 are incorporated by reference into Part III of this report. =============================================================================== 2 PART I ITEM 1. BUSINESS Certain geographic information for Item 1 is contained in the Company's 1995 Annual Report to Stockholders on page 16, which information is incorporated herein by reference (and except for that page, the Company's Annual Report to Stockholders for the fiscal year ended March 31, 1995 is not deemed filed as part of this report). GENERAL Printronix, Inc. designs, manufactures, and markets medium and high speed printers which support a wide range of computer systems and software platforms. Printronix printers produce "hard copy" through the application of impact printing and non-impact printing technologies. The Company's product line is designed primarily for business and industrial applications, quickly and reliably producing every type of printed computer output, from reports and graphics to bar code labels. The Company also produces and markets the Intelligent Graphics Printing which resides in the printer, enabling it to produce bar codes, forms, and logos. Printronix, Inc. was incorporated in California in 1974 and was reincorporated in Delaware in December 1986. Unless the context otherwise requires, the terms "Company" and "Printronix" refer to Printronix, Inc. and its consolidated subsidiaries. COMPUTER PRINTERS Computer printers are output devices that use electromechanical techniques to convert digitized information sent from a host computer to printed form. The printed output produced can then be read by humans and/or machines, depending upon the format of the output. Such devices can print on paper and other substances, such as card stock or mylar, by means of impact or non-impact technologies. Impact printers are generally classified as being either text or graphics printers and as either serial or line printers. Text printers generally print a predetermined set of fully formed characters. Graphics printers, also referred to as All Points Addressable (APA), can place dots anywhere on the paper and are used for text and graphics applications. Serial printers print one character at a time and line printers print one line at a time. Most serial printers produced today are serial matrix printers, which use serial graphics technology to print text one character at a time. Higher speed line printers, that also print fully formed characters, use high speed mechanical devices, such as metal bands, upon which alphanumeric characters are embossed. With these devices, a hammer presses the paper and ribbon against the proper character when the band moves past the appropriate print location. Band printers and line matrix printers are examples of line printers. Matrix printers form characters by printing dots in combinations of patterns. Most manufacturers who use the matrix technique produce serial matrix printers, which create characters one at a time in horizontal sweeps across the page. Printronix manufactures line matrix printers. The Company's line matrix printers print a complete line of dots at a time, thus combining the flexibility of the matrix technique with the reliability and durability of a line printer. Non-impact printers print on paper by means of thermal, electrostatic, inkjet, laser, LED, and other techniques that deliver high resolution printed output for letter quality and graphics applications. TECHNOLOGY The current Printronix product line encompasses impact line matrix printers, and three non-impact printer technologies: laser printers, LED printers, and thermal printers. The Company's line matrix printers are designed for heavy duty cycle, medium and high speed printing and plotting; Printronix laser, LED and thermal printers offer medium speed, high quality text and graphics printing. Printronix line matrix printers electromechanically create an image on paper in a manner similar to the "raster scan" method by which a television creates a picture on its screen. The printers utilize small leaf-spring ham- -2- 3 mers and electromagnetic coils combined in a row or "bank" of hammers. When at rest, the hammers are held retracted by a permanent magnet; this "stored energy" is selectively released by electrical pulses passing through the coils. Printronix line matrix printer models operate between 200 and 1200 lines per minute as summarized below. Printing is accomplished as the hammer bank shuttles a small distance back and forth, enabling the hammers to place dots anywhere along a row across the paper. Successive dot rows are produced by the paper advancing while the hammer bank reverses for printing the next dot row. Dots overlap horizontally and vertically to produce graphics as well as alphanumeric characters.
Model Speed (LPM) Hammers Hammer Speed (Impacts per Second) - ---------------------------------------------------------------------- MVP Series 200 22 1350 - ---------------------------------------------------------------------- P3000 Series 400 34 1292 - ---------------------------------------------------------------------- P6040/P6240 400 44 1000 - ---------------------------------------------------------------------- P6080/P6280 800 66 1400 - ---------------------------------------------------------------------- P4000 Series 800 47 2700 - ---------------------------------------------------------------------- P9000 Series 1200 88 1800 - ----------------------------------------------------------------------
The dot placement of Printronix line matrix printers is very precise, permitting accurate character alignment. The combination of precise dot placement anywhere on the page and the use of overlapping dots rather than fully formed characters enables Printronix printers, under computer control, to produce graphic output. Another key feature of the line matrix technology is that hammer energy is optimized to print dots only, resulting in improved print quality on multi-part forms. The Company's non-impact page printers create images on paper electrographically. Laser printers direct a laser beam onto a drum by means of a rotating mirror; LED array printers use fixed, light emitting diodes (LEDs) to image each dot position onto a belt. Both processes are facilitated by an electronic controller which provides intelligence to the printer by converting data sent from the host computer system into a raster image. The image is subsequently fixed to the paper with toner in the same manner as copiers. The intelligent controllers that are designed by the Company are integrated with print engines purchased from outside suppliers.
MODEL PAPER TECHNOLOGY SPEED (PAGES PER MINUTE) - ---------------------------------------------------------------------------- L1016 A-Size Continuous Form Laser 16 PPM - ---------------------------------------------------------------------------- L1024 A-Size Continuous Form Laser 24 PPM - ---------------------------------------------------------------------------- T1006 6.3 Inch Label Thermal 6 inches per second - ---------------------------------------------------------------------------- L5031 13.6 Inch Continuous LED 31 PPM Form and B-Size Cut Sheet - ----------------------------------------------------------------------------
The Company's thermal printer creates an image on paper by heating thermal sensitive media. The image is created either by heating an ink based ribbon which transfers its ink to the paper label material or by heating paper label material in which the thermally sensitive ink is already impregnated. This type of printer is especially useful in "on-demand" label applications. As in the case of the Company's other non-impact printers, this process is facilitated by an electronic controller which provides intelligence to the printer by converting data sent from the host computer system into a raster image. The same intelligent controllers, designed by the Company and also used on its page printers, are integrated with a print engine purchased from an outside supplier. -3- 4 PRODUCTS Line matrix printer models include the P4000 Series with speeds up to 800 lines per minute; the P9000 Series with speeds up to 1200 lines per minute; the P6000L Series with speeds up to 800 lines per minute; the P3000 Series with speeds up to 400 lines per minute; and the MVP Series with speeds up to 200 lines per minute. Applications for line matrix printers include reports, multi-part forms, electronic forms generation, bar code labels and program listings. The L5031 Multifunction Page Printer is an LED Printer that prints continuous forms at 31 pages per minute, A-Size, and cut sheet applications at 25 pages per minute. The L5031 has a unique Xenon flash fusing process which produces output of exceptionally high quality. It can handle continuous forms up to 12" x 16" and cut sheet stock up to 11" x 17" and has a duty cycle of 200,000 pages per month. The LED array imaging of the L5031 provides precise 300x300 dot-per-inch resolution. Both 400x400 or 240x240 dot-per-inch resolutions are available as options. The L1016 Continuous Form Laser Printer combines 300 x 300 dot-per-inch resolution with the convenience and data integrity of continuous form operation. Printing at 16 pages per minute, the L1016 supports a variety of emulations, including bar code label, text and forms applications. A built-in disk drive makes it easy to load emulations, fonts, and upgrades. The L1024 is a 24 page per minute version. The T1006 Thermal Printer operates at a speed of 6 inches per second, has a resolution of 203 dots-per-inch, and has a wide throat design to accommodate media up to 6.7 inches wide. Supporting both direct thermal and thermal transfer printing, the T1006 can print in either batch or on-demand mode. The T1006 serves a wide variety of label printing needs. A built-in disk drive makes it easy to load emulations, fonts, and upgrades. All of the Company's printers are supported by the Intelligent Graphics Printing (IGP trademark) Series. This graphics productivity tool enables users to generate on-line forms, bar codes, logos, expanded/compressed text, and reversed and rotated print. IGPs are available with either Printronix Graphics Language or QMS Code V trademark protocols. MARKETING AND CUSTOMERS The market for the Company's products is related to the market for computer systems. Printronix printers are marketed worldwide directly to original equipment manufacturers (OEMs) and to end users through a network of full-service distributors and resellers. The Company's 10 largest customers accounted for an aggregate of approximately 66, 57, and 51 percent of net sales during the fiscal years ended March 1995, 1994, and 1993, respectively. During fiscal 1995, the Company sold its products to OEMs and full-service distributors/resellers, which accounted for approximately 47 percent and 48 percent of net sales, respectively. In addition, the Company sold consumables to end users, accounting for approximately 5 percent of fiscal 1995 net sales. In fiscal 1995, the Company had two customers which individually represented greater than 10 percent of consolidated net sales. Sales to the largest customer, IBM, represented 28.8 percent and 10.7 percent of net sales for fiscal years 1995 and 1994, respectively. No sales were made to the largest customer in fiscal 1993. On a geographic basis, fiscal 1995 sales to the largest customer represented 30.2 percent of domestic net sales and 26.6 percent of international net sales. A significant decline in sales to our largest customer could have an adverse effect on the Company's operations. Sales to the second largest customer represented 10.5 percent, 14.6 percent and 13.7 percent of consolidated net sales for fiscal years 1995, 1994, and 1993, respectively. -4- 5 COMPETITION The Company has a wide range of printers that compete in the overall market for medium and high speed computer printers. The overall market includes serial, line matrix, band and non-impact printers. This overall market includes a large captive market which consists of computer systems manufacturers that produce their own printers and in the past have not bought from independent printer manufacturers. Due to the increasing competitive nature and the level of investment now required for ongoing printer development, more of these OEMs are now either buying or considering buying from independent manufacturers. The Company competes on a direct basis with several companies of varying sizes, including some of the largest businesses in the United States and Japan, in the non-captive market. Competing products include high end serial printers, medium and high speed line printers, laser printers, thermal printers, and other non-impact technologies. Competitive factors in the Company's markets include reliability, durability, price, print quality, versatility of special performance features, and after sales support. The Company believes that its printers are highly competitive with regard to price/performance and cost of ownership, and that the Company rates highly in after sales support. The Company has periodically evaluated other printing technologies and intends to continue to do so. Introduction of products with superior performance or substantially lower prices could adversely affect the Company's business. ORDER BACKLOG The Company's order backlog at March 31, 1995 was approximately $17,559,000, compared with approximately $18,533,000 at March 25, 1994 and $11,258,000 at March 24, 1993. During fiscal 1995, the Company's improved product availability, achieved through reductions in the required time to build printers and faster response time on customer orders, resulted in a decline in the customers' lead time on product orders. The order backlog represents orders for which a delivery date within six months has been specified by the customer and the Company expects to ship within six months. RAW MATERIALS The Company purchases basic mechanical and standard electronic components from numerous outside vendors. Most of those components used in the Company's impact printers are immediately available from alternate sources. The Company also purchases certain components from sole sources and has no reason to believe that it will be unable to obtain those components. However, if the Company were to lose any sole source for a component there could be a delay in shipment of printers using those components until an alternate source begins production. The Company's non-impact printer products are designed to use specific print engines manufactured by outside vendors. The Company has entered into written purchase agreements for each of the printer engines and has no reason to believe that it will be unable to obtain the engines it requires. ENGINEERING AND DEVELOPMENT The Company operates in an industry which is subject to rapid technological change, and its ability to compete successfully depends upon, among other things, its ability to react to change. Accordingly, the Company is committed to the development of new products. During fiscal 1995, 1994, and 1993, its engineering and development expenditures incurred were approximately $12,666,000, $10,201,000, and $10,186,000, respectively. Substantially all expenditures were Company sponsored. A substantial portion of engineering and development expenditures were associated with the continued development of lower cost line matrix printers, software and hardware development of the Printronix System Architecture for both non-impact printers and line matrix printers. New products under development in fiscal 1995 included the following: (1) higher performance and lower cost fourth generation (P4200) line matrix printers with twinax, coax, and IPDS emulation capabilities; (2) customized versions of standard model printers for major OEM customers; and (3) non-impact printers including the L1024 and the L5031 with IBM, IPDS, IGP, and HP PCL 5 emulation capabilities. -5- 6 PATENTS AND LICENSES The Company has been issued 40 United States patents, and related foreign patents (primarily in Canada, the United Kingdom, France and Germany) associated with various aspects of its printers. None of these patents will expire before 1996. The Company believes that its patented line dot matrix printing technology has competitive value and intends to continue its practice of enforcing its patent rights against potential infringers where it deems appropriate. Although there can be no assurance that the Company will be successful in defending its rights to any of its patents, the Company believes that its patents are valid. The Company has no material licenses from others pertaining to the manufacture of its products, including those under development, and believes that none are currently required. The Company believes that, based on industry practice, any such licenses as might be required in the future could be obtained on terms which would not have a material effect on it. However, the Company does have licenses for the use of IPDS, POSTSCRIPT and PCL5 graphic languages. The Company previously entered into a limited number of agreements granting others certain rights to manufacture printers using one or more of the Company's patents. The final agreement expired in March 1993 and the Company did not earn any royalty income in fiscal 1995 or 1994. IGP is a trademark of Printronix, Inc. PCL 5 is a trademark of Hewlett-Packard Corporation. IPDS is a registered trademark of International Business Machines Corporation. Code V is a trademark of QMS, Inc. EMPLOYEES The Company had approximately 880 employees as of March 31, 1995 including 486 in the United States, 342 in Singapore and 52 in Europe. None of the Company's employees in North America or Singapore is subject to a collective bargaining agreement. Printronix Nederland BV is a member of the Employers Union F.M.E., and some of its 41 employees have elected to become members of an employee union. This employee union is not government sponsored and is supported by contributions from its members. The Company believes that its relationship with its employees is good. FOREIGN OPERATIONS The Company has manufacturing facilities in Singapore, wherein line matrix printer products and some printed circuit board assemblies are produced. In The Netherlands, the Company has a facility that provides assembly of selected models of impact and non-impact printers, product support and customer service, and product distribution. Foreign sales, including exports from the United States, represented approximately 38 percent, 38 percent, and 35 percent of the Company's total sales in fiscal years 1995, 1994, and 1993, respectively. The Company has sales offices within Germany, France, the United Kingdom and Singapore. The Company is not aware of any significant risks with respect to its foreign business other than those inherent in the competitive nature of the business and fluctuations in foreign currency exchange rates. Selected financial information regarding foreign and export sales by geographic area is set forth in Note 4 of Notes to Consolidated Financial Statements. ITEM 2. PROPERTIES The Company's executive, manufacturing, engineering, administrative and marketing offices are located in a total of approximately 169,000 square feet of leased facilities in Irvine, California. The Company's foreign operations are located in The Netherlands and Singapore in leased facilities of 41,000 and 79,000 square feet, respectively. The Company also leases several small offices, generally on short-term leases, throughout the United States and Europe for sales or service. The Company has certain idle facilities of approximately 7,500 square feet in The Netherlands. See Note 2 of Notes to Consolidated Financial Statements for a summary of the expiration dates and lease or rental commitments. -6- 7 ITEM 3. LEGAL PROCEEDINGS ENVIRONMENTAL ASSESSMENT In January 1994, the Company was notified by the California Regional Water Quality Control Board - Santa Ana Region (the "Board") that groundwater monitoring reports indicate that the groundwater under one of the Company's former production plants is contaminated with various chlorinated volatile organic compounds (VOCs). Evidence adduced from site studies undertaken to date indicate that compounds containing the VOCs were not used by the Company during its tenancy, but were used by the prior tenant during its long-term occupancy of the site. The tests also indicate that the composition of the soil is such that off-site migration of contamination is very slow and contamination is most likely confined to the site. Accordingly, the Board is presently devoting its attention to the predecessor occupant of the site. Investigation indicates that the prior occupant is a well established business enterprise which has substantial assets and is affiliated with a publicly traded company. Because of the focus of the Board's investigation, there are no further orders outstanding against the Company. Therefore, there are no recurring costs, capital expenditures or other mandated expenditures. As of March 31, 1995, the Company has reserved $214,000 which is expected to be more than adequate to cover further legal fees or any additional expenses related to environmental tests, which could be requested by the Board, at the site. To date, the Company has incurred only minimal expense in its initial response to the Board's request for information and for environmental testing. However, the Company could be subject to charges related to remediation of the site. These charges on a preliminary (and very general) basis, could be estimated as follows: Remediation involves a two-step procedure. The first step would include the installation of a soil vapor extraction system. The cost of installation could range from $50,000 to $100,000. There would also be annual operating costs of up to $50,000 for a period of several years. The second step would be the installation of a pump and water treatment system to cleanse the groundwater. The cost of installation would range from $100,000 to $200,000. The annual operating costs would range up to $100,000 for a period which cannot now be ascertained. The Company is convinced that it bears no responsibility for any contamination at the site and intends to vigorously defend any action which might be brought against it in respect thereto. Furthermore, the Company believes it has adequately accrued for any future expenditures in connection with further legal fees or additional environmental tests that could be requested by the Board at the site, and that such expenditures will not have a materially adverse effect on its financial condition or results of operations. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Company did not submit any matter during the fourth quarter of the fiscal year covered by this report to a vote of security holders, through the solicitation of proxies or otherwise. -7- 8 EXECUTIVE OFFICERS OF THE REGISTRANT The executive officers of the Company and their ages as of May 12, 1995 are as follows: Robert A. Kleist 66 President, Chief Executive Officer and Director J. Edward Belt, Ph.D. 61 Senior Vice President, Engineering, Chief Technical Officer, and Assistant Corporate Secretary George L. Harwood 50 Senior Vice President, Finance and Management Information Systems, Chief Financial Officer, and Corporate Secretary C. Victor Fitzsimmons 47 Senior Vice President, Worldwide Manufacturing Richard A. Steele 50 Senior Vice President, Sales and Marketing
Officers are appointed by and hold office at the pleasure of the Board of Directors. Mr. Kleist is one of the founders of the Company and has served as a director and its President and Chief Executive Officer since its formation in 1974. In addition, Mr. Kleist served as Chief Financial Officer from February 1987 to October 1988, a position he also held from August 1985 until January 1986. Mr. Kleist is a director of Seagate Technology, a manufacturer of computer memory disk drives. Dr. Belt joined the Company in December 1985 as Vice President, Engineering, Line Matrix Division. In February 1987, he was appointed Senior Vice President, Engineering and Chief Technical Officer. Dr. Belt was appointed to the additional position of Assistant Corporate Secretary in August 1989. From October 1984 to December 1985, Dr. Belt was Manager of Engineering, Large Communication Systems Division of Rolm Corp. From December 1979 to October 1984, he was Manager of Engineering, Schlumberger Sentry. In prior years, Dr. Belt has held engineering management positions at General Electric Co. and Pertec Computer Corp. He was also a founder and Engineering Vice President of Courier Terminal Systems in 1969. Mr. Harwood joined the Company in October 1988 as Senior Vice President, Finance and Chief Financial Officer. Mr. Harwood was appointed to the additional office of Corporate Secretary in January 1989. In October 1994, Mr. Harwood assumed responsibility for the Company's Management Information Systems. From December 1984 to October 1988, Mr. Harwood was Chief Financial Officer and Vice President, Finance at Qume Corporation. From December 1982 to December 1984, Mr. Harwood was Group Controller of ITT Automotive Products, Worldwide. In prior years, Mr. Harwood has held various senior financial positions at ITT in Brussels, London and Zambia. Mr. Harwood is a Fellow of the Institute of Chartered Accountants in England and has had seven years of public accounting experience, primarily at Price Waterhouse. Mr. Fitzsimmons joined the Company in September 1985 as Director of Management Information Systems. In December 1988, he was appointed Vice President, Management Information Systems. In May 1990, Mr. Fitzsimmons assumed responsibility for Printronix B.V., the Company's Netherlands subsidiary. Mr. Fitzsimmons was appointed to the additional office of Vice President, Irvine Manufacturing in October 1990. In July 1991, he assumed responsibility for Printronix A.G., the Company's Singapore subsidiary. From May 1992 to October 1994 Mr. Fitzsimmons was Senior Vice President, Manufacturing and Management Information Systems. In October 1994, he was appointed Senior Vice President, Worldwide Manufacturing. From September 1979 to September 1985, Mr. Fitzsimmons held various senior MIS positions at Magnavox Government and Industrial Electronics Company. Mr. Steele joined the Company in July 1991 as Senior Vice President, Sales and Marketing. From May 1990 to June 1991, Mr. Steele was Senior Vice President, Sales and Marketing at DataWare. From May 1989 to May 1990, Mr. Steele was Vice President, Sales and Marketing at Talaris. From April 1972 to January 1987, Mr. Steele held various positions including District Sales Manager, National Sales Manager and Vice President, Sales and Marketing -8- 9 at Datagraphix. In January 1987, Datagraphix became Anacomp, Inc. and Mr. Steele was appointed Senior Vice President, Sales and Marketing, a position he held until October 1988. In prior years, Mr. Steele held various positions in sales management and systems engineering at IBM. PART II Information for Items 5, 6, 7 and 8 is contained in the Company's 1995 Annual Report to Stockholders on the following pages, which information is incorporated herein by reference (and except for these pages, the Company's Annual Report to Stockholders for the fiscal year ended March 31, 1995 is not deemed filed as part of this report):
ANNUAL REPORT TO STOCKHOLDERS ITEM NO. TITLE PAGE REFERENCE - -------- ----- -------------- Item 5. Market for Registrant's Common Equity 15, 20 and Related Stockholder Matters Item 6. Selected Financial Data 1 Item 7. Management's Discussion and Analysis 9-10 of Financial Condition and Results of Operations Item 8. Financial Statements and Supplementary Data 11-21
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE NONE PART III Information required under Item 10 "Directors and Executive Officers of the Registrant" (except for certain information concerning the Executive Officers provided in Part I of this report), Item 11 "Executive Compensation," Item 12 "Security Ownership of Certain Beneficial Owners and Management," and Item 13 "Certain Relationships and Related Transactions" has been omitted from this report. Such information is hereby incorporated by reference from Printronix' Proxy Statement for its Annual Meeting of Stockholders to be held on August 15, 1995, which the Company intends to file with the Securities and Exchange Commission not later than July 11 , 1995. -9- 10 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) Index to Financial Statements
*Page in Annual Report ------------- 1. Financial Statements included in Part II of this report: Report of Independent Public Accountants 20 Consolidated Balance Sheets as of March 31, 1995 and March 25, 1994 11 Consolidated Statements of Operations for Each of the Three Years in the Period Ended March 31, 1995 12 Consolidated Statements of Stockholders' Equity for Each of the Three Years in the Period Ended March 31, 1995 12 Consolidated Statements of Cash Flows for Each of the Three Years in the Period Ended March 31, 1995 13 Notes to Consolidated Financial Statements 14-19 * Incorporated by reference from the indicated pages of the Company's Annual Report to Stockholders for the fiscal year ended March 31, 1995 (and except for these pages, the Company's Annual Report to Stockholders for the fiscal year ended March 31, 1995, is not deemed filed as part of this report). 2. Schedules Supporting the Consolidated Financial Statements: Page in This Report ----------- Report of Independent Public Accountants on Schedules 11 Schedule II - Valuation and Qualifying Accounts 13
All schedules except Schedule II have been omitted for the reason that the required information is shown in financial statements or notes thereto, the amounts involved are not significant or the schedules are not applicable. (b) Reports on Form 8-K None (c) Exhibits Reference is made to the Index of Exhibits beginning at page 14 of this report, which index is incorporated herein by reference. (d) Other Financial Statements There are no financial statements required to be filed by Regulation S-X which are excluded from the annual report to stockholders by Rule 14a-3(b)(1). -10- 11 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Printronix, Inc.: We have audited in accordance with generally accepted auditing standards, the financial statements included in Printronix, Inc.'s annual report to stockholders incorporated by reference in this Form 10-K, and have issued our report thereon dated April 26, 1995. Our audit was made for the purpose of forming an opinion on those statements taken as a whole. The schedule listed in the index is presented for purposes of complying with the Securities and Exchange Commission rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. ARTHUR ANDERSEN LLP Orange County, California April 26, 1995 12 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. Dated: June 28, 1995 PRINTRONIX, INC. BY ROBERT A. KLEIST ------------------------ Robert A. Kleist, President Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE ROBERT A. KLEIST President, Chief Executive June 28, 1995 Robert A. Kleist Officer and Director (Principal Executive Officer) GEORGE L. HARWOOD Senior Vice President, June 28, 1995 George L. Harwood Finance, Chief Financial Officer and Corporate Secretary (Principal Accounting and Financial Officer) BRUCE T. COLEMAN Director June 28, 1995 Bruce T. Coleman JOHN R. DOUGERY Director June 28, 1995 John R. Dougery RALPH GABAI Director June 28, 1995 Ralph Gabai ERWIN A. KELEN Director June 28, 1995 Erwin A. Kelen
-12- 13 PRINTRONIX, INC. AND SUBSIDIARIES -------------- SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED MARCH 31, 1995
ADDITIONS -------------------- BALANCE AT CHARGED TO CHARGED BALANCE BEGINNING COST AND TO OTHER AT END DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS OF PERIOD - --------------------------------------------------------------------------------------- YEAR ENDED MARCH 31, 1995 Allowance for product warranty $769,000 $1,458,000 $- $1,091,000 A $1,136,000 ======== ========== == ========== ========== Allowance for doubtful accounts $677,000 $ 330,000 $- $ 99,000 B $ 908,000 ======== ========== == ========== ========== YEAR ENDED MARCH 25, 1994 Allowance for product warranty $769,000 $1,046,000 $- $1,046,000 A $ 769,000 ======== ========== == ========== ========== Allowance for doubtful accounts $922,000 $ 120,000 $- $ 365,000 B $ 677,000 ======== ========== == ========== ========== YEAR ENDED MARCH 26, 1993 Allowance for product warranty $797,000 $ 745,000 $- $ 773,000 A $ 769,000 ======== ========== == ========== ========== Allowance for doubtful accounts $738,000 $ 220,000 $- $ 36,000 B $ 922,000 ======== ========== == ========== ==========
DESCRIPTIONS OF OTHER ADDITIONS AND DEDUCTIONS: A - Expenses incurred in providing warranty services B - Write-off of bad debt 14 INDEX OF EXHIBITS EXHIBIT NUMBER DESCRIPTION - -------------- ----------- 3.1 Certificate of Incorporation of Printronix, Inc. (incorporated by reference to Exhibit 3.1 to the Company's Report on Form 10-K for the fiscal year ended March 27, 1987). 3.2 By-laws of Printronix, Inc. currently in effect (incorporated by reference to Exhibit 3.2 to the Company's Report on Form 10-K for fiscal year ended March 31, 1989). 4.1 Copies of certain instruments, which in accordance with paragraph (b)(4)(iii) of Item 601 of Regulation S-K are not required to be filed as exhibits to Form 10-K, have not been filed by Printronix. Printronix agrees to furnish a copy of any such instrument to the Securities and Exchange Commission upon request. 4.2 Common Shares Rights Agreement dated as of March 17, 1989 between Printronix, Inc. and Chemical Trust Company of California, including the form of Rights Certificate and the Summary of Rights attached thereto as Exhibits A and B, respectively (incorporated by reference to Exhibit 1 to the Company's Registration Statement on Form 8-A filed on or about March 17, 1989). 4.3 Corporate Guarantee for Tat Lee Bank Limited dated April 12, 1995. 10.1 Printronix, Inc. 1980 Employee Stock Purchase Plan, as amended (incorporated by reference to Exhibits 4.1 and 4.2 to Post-Effective Amendment No. 5 to Registration Statement No. 2-70035 on Form S-8). 10.2 Printronix, Inc. 1984 Stock Incentive Plan, as amended (incorporated by reference to Exhibits 4.3 and 4.4 to Registration Statement No. 33-14288 on Form S-8). 10.3 Form of Indemnification Agreement between Printronix, Inc. and its directors (incorporated by reference to Exhibit 10.4 to the Company's Report on Form 10-K for the fiscal year ended March 27, 1987). 10.4 Printronix, Inc. Executive Health Insurance Plan (incorporated by reference to Exhibit 10.5 to the Company's Report on Form 10-K for the fiscal year ended March 29, 1985). 10.5 Restricted Stock Purchase Agreement dated July 6, 1990 between the Company and Robert A. Kleist (incorporated by reference to Exhibit 10.7 to the Company's Report on Form 10-K for the fiscal year ended March 29, 1991). 10.6 Restricted Stock Purchase Agreement dated July 6, 1990 between the Company and J. Edward Belt (incorporated by reference to Exhibit 10.8 to the Company's Report on Form 10-K for the fiscal year ended March 29, 1991). 10.7 Restricted Stock Purchase Agreement dated July 6, 1990 between the Company and George L. Harwood (incorporated by reference to Exhibit 10.9 to the Company's Report on Form 10-K for the fiscal year ended March 29, 1991). 10.8 Restricted Stock Purchase Agreement dated May 7, 1992 between the Company and C. Victor Fitzsimmons (incorporated by reference to Exhibit 10.10 to the Company's Report on Form 10-K for the fiscal year ended March 27, 1992). -14- 15 INDEX OF EXHIBITS (continued) EXHIBIT NUMBER DESCRIPTION - -------------- ----------- 10.9 Restricted Stock Purchase Agreement dated May 7, 1992 between the Company and Richard A. Steele (incorporated by reference to Exhibit 10.11 to the Company's Report on Form 10-K for the fiscal year ended March 27, 1992). 10.10 Printronix, Inc. 1994 Stock Incentive Plan (incorporated by reference to Exhibit 10.10 to the Company's Report on Form 10-K for the fiscal year ended March 25, 1994). 13 The Company's Annual Report to Stockholders for the fiscal year ended March 25, 1994, (with the exception of the information incorporated by reference into Items 5, 6, 7 and 8 of this report, the Annual Report to Stockholders is not deemed to be filed as part of this report). 21 List of Printronix' subsidiaries. 23 Consent of Independent Public Accountants, Arthur Andersen LLP, to the incorporation of their reports herein to Registration Statement Nos. 2-70035, 33-14288 and 33-83156. 27 Financial Data Schedule ("This schedule contains summary financial information extracted from the Company's Annual Report for the fiscal year ended March 31, 1995 and is qualified in its entirety by reference to such financial statements.") -15- EX-4.3 2 CORPORATE GUARANTEE FOR TAT LEE BANK 1 EXHIBIT 4.3 CORPORATE GUARANTEE 1. In consideration of TAT LEE BANK LIMITED a Company incorporated in the Republic of Singapore and having its registered office at 63 MARKET STREET #09-06/10, TAT LEE BANK BUILDING, SINGAPORE 0104 (hereinafter called "the Bank" which expression shall where the context so admits includes the Bank's assigns and successors) making or continuing to make at our request advances loans credit and other banking facilities for so long as the Bank may think fit to PRINTRONIX AG a Company incorporated in Fribourg, Switzerland and having its registered office at 512 CHAI CHEE LANE #02-15, BEDOK INDUSTRIAL ESTATE, SINGAPORE 1646 (hereinafter called "the Company" which expression shall include the Company's assigns and successors) We, PRINTRONIX, INC a Company incorporated in Delaware, USA having its registered office at 17500 CARTWRIGHT, POBOX 19559, IRVINE CA 92713, USA (hereinafter called "the Guarantor") HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREE as a continuing obligation to pay and satisfy to the Bank on first written demand all sums of money which are now or shall at any time be owing to the Bank any where on any account whatsoever whether from the Company solely or from the Company jointly with any other person or persons including the amount of notes drafts or bills (whether negotiable or non-negotiable) discounted or paid and other loans credit or advances made to or for the accommodation or at the request either of the Company solely or jointly with any other person or persons or for any monies for which the Company may be liable as surety or in any other way whatsoever together with in all cases as aforesaid interest thereon at the Bank's rate or rates for the time being in relation to such accounts calculated on a daily basis, with monthly rests or such other periodic rests that the Bank may determine from time to time, notwithstanding the relationship of banker and customer may have ceased, discount and other banker's charges including legal charges occasioned by or incidental to this or any other security held by or offered to the Bank for the same indebtedness and all costs charges and expenses which the Bank may incur in enforcing or seeking to obtain payment of all or any part of the monies hereby guaranteed until full payment is received by the Bank both after as well as before judgment shall have been obtained in respect thereof. 2. This Guarantee shall not be considered as satisfied by any intermediate payment or satisfaction of the whole or any part of any sum or sums of money owing as aforesaid but shall be a continuing security and shall extend to cover all or any sum or sums of money which shall for the time being constitute the balance due or owing from the Company to the Bank upon any account or otherwise as hereinbefore mentioned. 2 -2- 3. (1) Although the liability of the Guarantor under this Guarantee shall be up to the limit or extent of the principal sum only of Singapore Dollars Three Millions Only (SIN$3,000,000/-) this Guarantee shall be a continuing guarantee for the purpose of securing securing not merely an equivalent amount but (subject always to the said principal limit of SIN$3,000,000/-) the whole of the monies or general balance mentioned in Clause 1 hereof. (2) In addition to the said principal limit the Guarantor shall be liable for interest on all the monies guaranteed hereunder on daily balances at such rate or rates as the Bank may from time to time stipulate with monthly rests or such other periodic rests as the Bank may determine. (3) Subject to the provisions next hereinafter appearing the interest on any principal sum for the time being owing including capitalised interest shall at the end of each calendar month be capitalised and added for all purposes to the principal sum then owing and shall thenceforth bear interest at such rate or rates as the Bank may from time to time stipulate with monthly rests or such other periodic rests as the Bank may determine and be secured and payable accordingly and all the covenants and conditions contained in or implied by this Guarantee and all powers and remedies conferred on the Bank by law or by this Guarantee and all rules of law or equity in relation to the principal sum and interest shall equally apply to such capitalised arrears of interest and to interest on such arrears. (4) For the purpose of ascertaining whether the limit of the principal sum intended to be hereby secured has been exceeded or not all accumulated and capitalised interest shall be deemed to be interest and not principal moneys. (5) When the payment of any monies hereby secured or intended so to be shall be further secured to the Bank by any bill of exchange promissory note draft receipt or other instrument reserving a higher rate of interest to be paid in respect thereof than that hereinbefore covenanted to be paid such higher rate of interest shall be payable in respect of such moneys and nothing contained in or to be implied from these presents shall affect the right of the Bank to enforce and recover payment of such higher rate of interest or as the case may be the difference between such higher rate and the rate which shall have been paid hereunder. 3 -3- 4. The Bank shall be at liberty at any time and without thereby affecting its rights against the Guarantor hereunder to determine enlarge or vary any credit to the Company, to vary exchange abstain from perfecting or releasing any other securities held or to be held by the Bank for or on account of the monies intended to be hereby secured or guaranteed or any part thereof to open a fresh account or accounts and/or continue with any account or accounts current or otherwise with or for the Company, to renew bills and promissory notes in any manner and to compound with, give time for payment, to accept compositions from, and make any other arrangements with the Company or any obligants on bills notes or other securities held or to be held by the Bank for and on behalf of the Company. 5. This Guarantee shall be in addition to and shall not be in any way prejudiced or affected by any collateral or other security now or hereafter held by the Bank for all or any part of the monies hereby guaranteed, nor shall such collateral or other security or any lien to which the Bank may be otherwise entitled or the liability of any person or persons not parties hereto for all or any part of the monies hereby secured or guaranteed be in any way prejudiced or affected by this Guarantee. The Bank shall have full power at its discretion to give time for payment to or make any other arrangement with any such other person or persons without prejudice to this Guarantee or any liability hereunder. All monies received by the Bank from the Guarantor or the Company or any person or persons liable to pay the same may be applied by the Bank to any account or the item of account or to any transaction to which the same may be applicable. 6. No disposition assurance security or payment which may be or may become avoided under any provision or provisions of the Companies Act (Cap. 50) or its equivalent in USA or any statutory modification thereof and no release settlement or discharge which may have been given or made on the faith of any such disposition assurance security or payment shall prejudice or affect the Bank's right to recover from the Guarantor monies to the full extent of this Guarantee, as if such disposition assurance security payment release settlement or discharge (as the case may be) had never been made given or granted. 7. Notwithstanding any defect informality or insufficiency in the borrowing powers or the liquidation winding up or insolvency of the Company the liability of the Guarantor hereunder shall continue in full force and effect until the Bank shall have been paid in full all monies owing to the Bank from the Company. 4 -4- 8. All dividends compositions and monies received by the Bank from the Company or from any other company person or estate capable of being applied by the Bank in reduction of the indebtedness of the Company shall be regarded for all purposes as payments in gross and should the Company be wound-up or liquidated the Bank shall be entitled to prove in the winding-up or liquidation of the Company in respect of the whole of the Company's indebtedness to the Bank and without any right of the Guarantor to be subrogated to the Bank in respect of any such proof until the Bank shall have received in the liquidation of the Company or from other sources one hundred (100) cents in the dollar. 9. The Bank shall be at liberty (but not bound to do) to resort for the Bank's own benefit to any other means of payment at any time and in any order the Bank may think fit without thereby diminishing the liability of the Guarantor hereunder and the Bank may exercise its rights under this Guarantee in force either for the payment of the ultimate balance after resorting to other means of payment or for the balance due notwithstanding that other means of payment have not been resorted to and in the latter case without entitling the Guarantor to any benefit from such other means of payment so long as any monies guaranteed hereunder remain owing and unpaid by the Company and in addition the Bank shall be at liberty to require payment by the Guarantor of any monies owing to it without taking any proceedings first to enforce such payment by the Company. 10. If any monies shall be paid by the Guarantor to the Bank under this Guarantee, The Guarantor shall not in respect of the amount so paid by the Guarantor seek to enforce repayment or to exercise any other rights or legal remedies of whatsoever kind which may accrue however to the Guarantor in respect of the amount so paid until all monies guaranteed hereunder and owing from the Company to the Bank have been fully paid to the Bank. The Guarantor will not prove in competition with the Bank for any monies owing by the Company to the Guarantor on any account whatsoever and/or in respect of any monies due or owing from the Company to the Bank but will give to the Bank the benefit of any proof which the Guarantor may be able to make in the liquidation of the Company or in any arrangement or composition with creditors until the Bank shall have received all monies outstanding and remaining unpaid by the Company to the Bank. 11. Any indebtedness of the Company now or hereafter held by the Guarantor shall be subordinated to the indebtedness of the Company to the Bank and such indebtedness of the Company to the Guarantor if the Bank so requires shall 5 -5- be collected enforced and received by the Guarantor as trustee for the Bank and shall be paid over to the Bank on account of the indebtedness of the Company to the Bank but without reducing or affecting in any manner the liability of the Guarantor under this Guarantee until all monies guaranteed hereunder have been fully paid to the Bank. 12. The obligations of the Guarantor hereunder shall not be impaired by any forbearance or concession given by the Bank to the Company or any assertion of or failure to assert any right or remedy on the part of the Bank against the Company. Nothing done or omitted by the Bank in pursuance of any authority or permission contained in this Guarantee shall affect or discharge the liability of the Guarantor hereunder. 13. This Guarantee may be enforced by the Bank at any time notwithstanding that any bills or other instruments covered by it may be in circulation or outstanding and the Bank may include the amount of the same or any of them in the general balance or not at the Bank's option and this Guarantee shall not be determinable by the Guarantor except on terms of the Guarantor making fullprovision for any other outstanding liabilities or obligations to the Bank of the Company's account guaranteed hereunder. 14. Though as between the Guarantor and the Company the Guarantor is surety only for the Company yet as between the Guarantor and the Bank the Guarantor shall be deemed to be principal debtor for all the monies the payment of which is hereby guaranteed and accordingly shall not be discharged nor shall the Guarantor's liability be affected in any way by any act thing omission means whatever whereby the Guarantor's liability would not have been discharged if the Guarantor had been the principal debtor. 15. The Guarantor hereby declares that the Guarantor has not taken and undertakes not to take directly or indirectly from the Company in respect of the Guarantor's liability and obligation hereunder any security of any nature whatsoever whereby the Guarantor or any person claiming under the Guarantor might in the Company's winding-up increase the proofs in such winding-up or diminish the property available for distribution to the Bank's detriment. In the event any security is or may hereafter be held by the Guarantor from the Company in respect of the Guarantor's liability hereunder the same shall be held in trust for the Bank and as security for the Guarantor's liability hereunder. 6 -6- 16. (1) For the consideration aforesaid and as a separate and independent stipulation:- (a) the Guarantor hereby agrees that all sums of money which may not be recoverable from the Guarantor on the footing of a guarantee whether by reason of any legal limitation disability or incapacity on or of the Company or any other fact or circumstance and whether known to the Bank or not shall nevertheless be recoverable from the Guarantor on demand as though the Guarantor were the sole and principal debtor; (b) the Guarantor hereby irrevocably and unconditionally undertakes to indemnify the Bank in full and keep the Bank fully indemnified against all loss damage liabilities costs and expenses whatsoever which the Bank may sustain or incur as a result of or arising from the Bank's advances credit or financial accommodation to the Company as well as all legal costs as between solicitors and clients on full indemnity basis and other costs and disbursements incurred for or in connection with demanding and enforcing payment of all monies guaranteed hereunder or otherwise howsoever in enforcing this Guarantee and/or any of the covenants undertakings stipulations terms conditions or provisions of this Guarantee; and (c) The Guarantor hereby agrees to furnish and provide the Bank with and permit the Bank to obtain all such statements information explanation and data as the Bank may reasonably require regarding the financial affairs of the Guarantor. (2) As a separate, additional and continuing obligation the Guarantor unconditionally and irrevocably undertakes with the Bank that should the moneys guaranteed hereunder not be recoverable from the Guarantor under clause (1) hereof for any reason whatsoever (including but without prejudice to the generality of the foregoing, by reason of any provision of the loan agreement with the Company being or becoming void, unenforceable or otherwise invalid under any applicable law) then notwithstanding that may have been known to the Bank the Guarantor will as sole, original and independent obligor upon first written demand by the Bank under clause (1) make payment of the moneys guaranteed hereunder by way of a full indemnity and that the Guarantor will indemnify the Bank against all losses costs claims charges and expenses to which it may be subject or which it may incur whilst acting in good faith under or in connection with the loan agreement or this Guarantee. 7 -7- 17. A statement or certificate signed by the Vice President Accountant or other officer of the Bank as to the monies and liabilities for the time being due to or incurred by the Bank shall subject only to computation and/or clerical mistakes be final and conclusive and be binding on the Guarantor. 18. This Guarantee shall bind and continue to bind the Guarantor notwithstanding the occurrence at any time whether before on/or after the execution of this Guarantee of:- (a) any change by amalgamation reconstruction or otherwise which may be made in the constitution of the Company by which the business of the Bank may for the time being be carried on and shall be available to the Company carrying on the business of the Bank for the time being; or (b) any winding-up (whether voluntary or compulsory) amalgamation or reconstruction or otherwise of or affecting the Company; or (c) any winding-up (whether voluntary or compulsory) amalgamation or reconstruction or otherwise or affecting the Guarantor. 19a. Any demand for payment of monies or any other demand or notice under this Guarantee may be made by any Vice President, First Vice President, Secretary or other officer for the time being of the Bank or by any person or firm for the time being acting as solicitor or solicitors for the Bank by letter fax or otherwise in writing. Each communication or document to be delivered to either party under this Guarantee shall be sent to that party at the fax number, or address from time designated by that party for the purpose of this Guarantee. The initial fax number and address (if any) so designated are set out hereunder :- The Guarantor The Bank Telefax Number : (714) 6608682 Telefax Number : 5345827 Telex Number : (910) 5952535 Telex Number : Rs 26767 Address : 17500 Cartwright Address : 63 Market street POBOX 19559 Singapore 0104 Irvine CA 92713 U.S.A. b. Any communication from the Guarantor to the Bank shall not be effective until received by the Bank. Any communication from the Bank to the Guarantor shall be deemed to be received by the Guarantor (if sent by fax) on the next working day in the place to which it is sent or within seven days after being sent by prepaid post by airmail addressed to it at the aforesaid address or the Guarantor's last known address. 8 -8- 20. This Guarantee shall not be revocable by the Guarantor but shall continue and remain in full force and effect until all monies hereby guaranteed are paid to the Bank in full and shall be binding on the successors and assigns of the Guarantor. 21. The Guarantor further covenants with the Bank that:- (1) the Guarantor will furnish and provide the Bank with and permit the Bank to obtain all such statements information explanation and data, except information of a proprietary nature, as the Bank may reasonably require regarding the affairs operations administration financial or other state or condition whatsoever of the Guarantor or any of the matters in this clause mentioned; (2) the Guarantor will deliver to the Bank every year immediately after their issue or in any case not later than six (6) months after the close of its financial year audited balance sheet and profit and loss accounts together with Director's reports; (3) the Guarantor shall immediately upon the occurrence of the following events notify the Bank of:- (a) the giving of notice by the Guarantor to convene its general meeting for passing any resolution to wind up the Guarantor; (b) the filing of any application for placing the Guarantor under judicial management; or (c) the filing of any petition for winding up the Guarantor. Where any such notification as aforesaid is given verbally by the Guarantor to the Bank, the Guarantor shall confirm it in writing within twenty-four (24) hours thereof. 9 -9- (4) (a) payments under this Guarantee shall be made in SINGAPORE DOLLARS or such other currency as the Bank may approve in writing. All payments made under this Guarantee shall be made free and clear of any restrictions, conditions or set-off and without any deduction or withholding on account of tax or otherwise (except to the extent required by the laws). If any such withholding is required to be made by the law, the amount payable under this Guarantee shall be increased to the extent necessary to ensure that, after the making of that deduction, withholding or payment, the Bank receives on the due date and retains a net sum equal to what it would have received and retained had no such deduction, withholding or payment been required or made. The Guarantor shall furnish to the Bank within the period of payment permitted by applicable law, all official receipt of the relevant taxation or other authorities involved for all amounts deducted or withheld as aforesaid. (b) Any amount received or recovered in a currency other than SINGAPORE DOLLARS (whether as a result of, or the enforcement of, a judgment or order of a court of any jurisdiction, or in the dissolution of the Company or the Guarantor or otherwise) by the Bank in respect of any sum expressed to be due to it from the Guarantor under this Guarantee shall only constitute a discharge to the Guarantor to the extent of the SINGAPORE DOLLARS amount which the Bank is able, in accordance with its usual practice, to purchase with the amount so received or recovered in that other currency on the date of that receipt or recovery (or, if its is not practicable to make that purchase on that date, on the first date on which it is practicable to do so). (c) If the SINGAPORE DOLLARS amount purchased is less than the SINGAPORE DOLLARS amount expressed to be due to the Bank under this Guarantee, the Guarantor shall indemnify the Bank against any loss sustained by it as a result thereof. In any event, the Guarantor shall indemnify the Bank against the cost of making any such purchase referred to in (4) (b) above. (d) The indemnity herein shall constitute a separate and independent obligation from the other obligations in this Guarantee, shall give rise to a separate and independent cause of action, shall apply irrespective of any indulgence granted by the Bank and shall continue in full force and effect despite any judgment, order, claim or proof for a liquidated amount in respect of any sum due under this Guarantee. 10 -10- 22. The Guarantor hereby agrees and acknowledges that the obligations and liabilities of the Guarantor hereunder shall be absolute and unconditional and in addition to the other provisions hereof, shall not be abrogated, prejudiced, affected or discharged:- (a) by the Bank granting explicitly or by conduct or otherwise, whether directly or indirectly, to the Company or any other person of any time forbearance, concession, credit compounding, compromise, waiver, variation, renewal, release, discharge or other advantage or indulgence; (b) by the Bank failing or neglecting to or deciding not to recover the monies hereby guaranteed or any part thereof by the realisation of any collateral or other security or in any manner otherwise or, in the event of the enforcement by the Bank of any collateral or other security or any other remedy whatsoever, by any act, omission, negligence or other conduct or failure on the part of the Bank or any other person in connection therewith; (c) by any laches, acquiescence, delay, acts, omissions, mistakes on the part of the Bank or any other person; (d) by reason of any agreement, deed mortgage, charge, debenture, guarantee, indemnity or security held or taken at any time by the Bank or by reason of the same being void, voidable or unenforceable; (e) by any moratorium or other period staying or suspending by statute or the order of any court or other authority all or any of the Bank's rights, remedies or recourse against the Company or any other person; (f) by the Bank entering into any arrangement with the Company or with any other person which but for the provision of this clause could or might operate to affect or discharge all or any part of the obligations and liabilities of the Guarantor hereunder or could or might otherwise provide a defence to the Guarantor. (g) by reason of any other dealing, matter or thing which, but for the provisions of this Clause, could or might operate to affect or discharge all or any part of the obligations and liabilities of the Guarantor hereunder or could or might otherwise provide a defence to the Guarantor. 11 -11- 23. In addition to any lien right of set-off or other right which the Bank may have the Bank shall be entitled at any time and without notice to the Company or the Guarantor to combine or consolidate all or any of the accounts and liabilities of the Company or the Guarantor or either of them with or to the Bank anywhere whether in the Republic of Singapore or outside the Republic of Singapore or set-off or transfer any sums standing to the credit of one or more of such accounts in or towards satisfaction of any of the liabilities of the Company or the Guarantor or either of them to the Bank on any other account or accounts whether in the Republic of Singapore or outside the Republic of Singapore or in any other respect whether such liabilities be actual or contingent primary or collateral several or joint notwithstanding that the credit balances on such accounts and the liabilities on any other accounts may not be addressed in the same currency and the Bank is hereby authorised to effect any necessary conversions at the Bank's own rate of exchange then prevailing. 24. In the events that any goods and services tax or any other taxes levies or charges whatsoever are now or hereafter required by law to be paid on or in respect of any sums whatsoever payable by the Guarantor or any other matters whatsoever under or relating to the banking facilities provided for and/or secured hereunder the same shall (except to the extent prohibited by law) be borne by the Guarantor and the Guarantor shall indemnify the Bank (to such extent as shall not be prohibited by law) against all such goods and services tax or other taxes levies or charges whatsoever and shall from time to time on demand pay to the Bank the amount verified by the Bank to be necessary to indemnify the Bank. 25. The Guarantor represents and warrants to and for the benefit of the Bank as follows:- (1) Status: It is a company duly incorporated and validly existing under the laws of USA and has the power and authority to own its assets and to conduct the business which it conducts and/or proposes to conduct; (2) Powers: it has the power to enter into, exercise its rights and perform and comply with its obligations under this Guarantee; (3) Authorisation and Consents: all action, conditions and things required to be taken, fulfilled and done (including the obtaining of any necessary consents) in order (a) (i) to enable it lawfully to enter into, exercise its rights and perform and comply with its obligations under this Guarantee and (ii) to ensure that those obligations are valid, legally binding and enforceable, b(i) to enable the Company lawfully to 12 -12- enter into, exercise its rights and perform and comply with its obligations under the facility letters dated 23rd October 1993 and 28th September 1994 and any other facility letter from time to time issued by the Bank and accepted by the Company (hereinafter called the "Facility Letter") and (ii) to ensure that those obligations are valid, legally binding and enforceable and (c) to make this Guarantee and the Facility Letter admissible in evidence in the courts of Singapore have been taken, fulfilled and done; (4) Non-Violation of Laws: (a) its entry into, exercise of its rights and/or performance of or compliance with its obligations under this Guarantee do not and will not violate, or exceed any power or restriction granted or imposed by, (i) any law to which it is subject or (ii) its Memorandum or Articles of Association; (5) Obligations Binding: its obligations under this Guarantee are legal, valid, binding and enforceable; (6) Non-Violation of Other Agreements: (a) its entry into, exercise of its rights and/or performance of or compliance with its obligations under this Guarantee do not and will not (i) violate any agreement to which it is a party, or (ii) result in the existence of, or oblige it to create, any security over its assets; (7) Existing Security: no security exists on or over any of its assets; (8) Accounts: (a) its audited accounts and consolidated accounts (if any) as at 26th March 1993 and for the financial year then ended and as delivered to the Bank (with copies of the reports and approvals referred to in (i) below);- (i) include such financial statements as are required by the laws of USA and, save as stated in the notes thereto, were prepared, audited, examined, reported on and approved in accordance with accounting principles and practices generally accepted in USA and consistently applied and in accordance with the laws of USA and its constitutive documents; (ii) together with the notes thereto give a true and fair view of its state of affairs and financial condition and operations (or, in the case of consolidated accounts, the consolidated state of affairs and 13 -13- financial condition and operations of the Guarantor and its subsidiaries) as at that date and for the financial year then ended; and (iii) together with the notes thereto and to the extent required by accounting principles, standards and practices generally accepted in USA, disclose or reserve against all liabilities (contingent or otherwise) of the relevant person(s) as at that date and all material unrealised or anticipated losses from any commitment entered into by the relevant person(s) and which existed on that date; (9) No Material Adverse Change: there has been no material adverse change in its financial condition or operations since 26th March 1993 nor in the consolidated financial condition or operations of it and its subsidiaries since that date; (10) Litigation: no litigation, arbitration or administrative proceeding is current or pending or, so far as it is aware, threatened to restrain the entry into, exercise of its rights under and/or performance or enforcement of or compliance with its obligations under this Guarantee or which could or might materially and adversely affect its financial condition or operations or impair its ability to carry on its business substantially as now conducted; (11) Winding-up of Guarantor: no meeting has been convened for its winding-up or for the appointment of a receiver, trustee, judicial manager or similar officer of it, its assets or any of them, no such step is intended by it and, so far as it is aware, no petition, application or the like is outstanding for its winding-up or for the appointment of a receiver, trustee, judicial manager or similar officer of it, its assets or any of them; (12) No Immunity: neither it nor any of its assets is entitled to immunity from suit, execution, attachment or other legal process, and its entry into this Guarantee constitutes, and the exercise of its rights and performance of and compliance with its obligations under this Guarantee will constitute, private and commercial acts done and performed for private and commercial purposes; (13) Repetition: each of the representations and warranties herein will be correct and complied with in all material respects so long as any sum remains to be lent or remains payable under this Guarantee. 14 -14- 26. For the purpose of Section 47(4)(a) of the Banking Act (Cap19) (as the same may be varied or re-enacted from time to time), the Guarantor for themselves hereby irrevocably (so long as any moneys or liabilities shall remain owing to the Bank hereunder or any Banking facility or service is extended by the Bank to the Company) permits the Bank and all persons to whom Section 47(3) of that Act applies, to give divulge or reveal, in any manner howsoever, any information whatsoever regarding the money and other relevant particulars of any account or accounts which the Guarantor now has or may hereafter have with the Bank or of any matters or transactions in relation to the banking facilities provided for and/or secured hereunder, for any such commercial, banking or business purposes as the Bank at its discretion thinks fit and, without prejudice to the foregoing, for purposes in connection with any enforcement or assignment of or any funding or operational arrangement concerning any right and benefit of the Bank hereunder or in relation to the banking facilities provided for and/or secured hereunder. 27. GOVERNING LAW AND JURISDICTION (A) GOVERNING LAW: This Guarantee shall be governed by, and construed in accordance with the laws of Singapore. (B) SINGAPORE COURTS: For the benefit of the Bank, the Guarantor irrevocably agrees that the courts of Singapore are to have jurisdiction to settle any disputes which may arise out of or in connection with this Guarantee and that, accordingly, any legal action or proceedings arising out of or in connection with this Guarantee ("Proceedings") may be brought in those courts and the Guarantor irrevocably submits to the jurisdiction of those courts. (C) OTHER COMPETENT JURISDICTION: Nothing in this clause shall limit the right of the Bank to take proceedings against the Guarantor in any other court of competent jurisdiction nor shall the taking of Proceeding in one or more jurisdictions preclude the Bank from taking Proceedings in any other jurisdiction, whether concurrently or not. (D) VENUE: The Guarantor irrevocably waives any objection which it may at any time have to the laying of the venue of any Proceedings in any court referred to in this Clause and any claim that any such Proceedings have been brought in an inconvenient forum. 15 -15- (E) SERVICE OF PROCESS: (1). The Guarantor irrevocably appoints Printronix Ag (now of) 512 Chai Chee Lane #02-15, Bedok Industrial Estate, Singapore 1646 to receive, for it and on its behalf, service of process in any Proceedings in Singapore. Such service shall be deemed completed on delivery to the process agent (whether or not it is forwarded to and received by the Guarantor). If for any reason the process agent ceases to be able to act as such or no longer has an address in Singapore, the Guarantor irrevocably agrees to appoint a substitute process agent acceptable to the Bank, and to deliver to the Bank a copy of the new agent's acceptance of that appointment, within 30 days. (2). The Guarantor irrevocably consents to any process in any Proceedings anywhere being served by mailing a copy by registered prepaid airmail post to it in accordance with Clause 18. Such service shall become effective 14 days after mailing. (3). Nothing shall affect the right to serve process in any other manner permitted by law. (F) PRIVY COUNCIL APPEAL: In relation to any Proceedings, the Guarantor irrevocably agrees that an appeal from a decision of the appellate court in Singapore in Proceedings in Singapore may be brought before the Judicial Committee of the Privy Council and further irrevocably agree to be bound by an appeal to, and decision of, the Judicial Committee of the Privy Council in such Proceedings. (G) CONSENT TO ENFORCEMENT, ETC: The Guarantor irrevocably and unconditionally consents in respect of any proceedings anywhere to the giving of any relief or the issue of any process in connection with those proceedings including, without limitation, the making, enforcement or execution against any assets whatsoever (irrespective of their use or intended use) of any order or judgment which may be made or given in those proceedings. (H) WAIVER OF IMMUNITY: The Guarantor irrevocably agrees that, should the Bank take any proceedings anywhere (whether for any injunction, specific performance, damages or otherwise), no immunity (to the extent that it may at any time exists, whether on the grounds of sovereignty or otherwise) from those proceedings, from attachment (whether in aid of execution, before judgment or otherwise) of its assets or from execution, of judgment shall be claimed by it or on its behalf or with respect to its assets, any such immunity being irrevocably waived. The Guarantor irrevocably agrees that it and its assets are, and shall be, subject to such proceedings, attachment or execution in respect of its obligations under this Guarantee. 16 -16- 28. The illegality, invalidity or unenforceability of any provision of this Guarantee under the law of any jurisdiction shall not affect its legality, validity or enforceability under the law of any other jurisdiction nor the legality, validity or enforceability of any other provision. 29. In this Guarantee where the context so admits:- (a) words importing the singular number include the plural number and vice versa; (b) words importing the masculine gender include the feminine or neuter gender; (c) the expression "the Guarantor" includes the successors and assigns of the Guarantor; (d) the word "person" includes any company or association or body of persons, corporate or inincorporate. IN WITNESS WHEREOF the Guarantor has hereunto affixed its common seal. Dated the .......12th...... day of.... April.... 1995 The Common Seal of PRINTRONIX, INC was hereunto affixed in the presence of DIRECTOR /s/ ROBERT A. KLEIST ---------------------- Robert A. Kleist DIRECTOR/SECRETARY /s/ GEORGE L. HARWOOD ---------------------- George L. Harwood Before me- Signature of Notary Public: /s/ SALLY R. HAMILTON State of California) ---------------------- ) ss Name of Notary Public: Sally R. Hamilton County of Orange ) On April 12, 1995 before me, Sally R. Hamilton, Notary Public, personally appeared Robert A. Kleist and George L. Harwood, personally known to me to be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the persons, or the entity upon behalf of which the persons acted, executed the instrument. EX-13 3 COMPANY ANNUAL REPORT 1 EXHIBIT 13 SELECTED FINANCIAL DATA ($ in thousands, except share data) (For the fiscal years ended March)
RESULTS OF OPERATIONS 1995 1994 1993 1992 1991 - ------------------------------------------------------------------------------------------------------------------------------------ NET SALES $ 146,589 $ 107,419 $ 93,864 $ 88,555 $ 106,894 GROSS PROFIT 37,968 26,380 22,742 20,321 27,781 OPERATING EXPENSES 29,988 24,078 26,769 28,998 31,185 INCOME (LOSS) FROM OPERATIONS 7,980 2,302 (4,027) (8,677) (3,404) NET INCOME (LOSS) $ 7,160 $ 1,869 $ (2,340) $ (8,412) $ (1,801) EARNINGS (LOSS) PER SHARE PRIMARY $ 1.34 $ 0.39 $ (0.50) $ (1.84) $ $(0.35) FULLY DILUTED $ 1.33 $ 0.38 $ (0.50) $ (1.84) $ $(0.35) WEIGHTED AVG. SHARES OUTSTANDING PRIMARY 5,324,784 4,848,261 4,636,920 4,570,578 5,180,708 FULLY DILUTED 5,382,388 4,971,722 4,636,920 4,570,578 5,180,708 SELECTED BALANCE SHEET DATA - ------------------------------------------------------------------------------------------------------------------------------------ CURRENT ASSETS $ 50,463 $ 40,639 $ 37,367 $ 39,283 $ 45,989 CURRENT LIABILITIES 18,648 17,700 15,619 14,200 11,775 WORKING CAPITAL 31,815 22,939 21,748 25,083 34,214 LONG-TERM LIABILITIES 1,485 1,850 2,214 1,596 2,232 TOTAL ASSETS 61,675 51,916 48,276 50,668 57,289 STOCKHOLDERSO EQUITY $ 41,542 $ 32,366 $ 30,443 $ 34,872 $ 43,282
2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION - -------------------------------------------------------------------------------- RESULTS OF OPERATIONS NET SALES Fiscal 1995 revenue of $146.6 million was up $39.2 million or 36% over fiscal 1994 sales of $107.4 million. This compares with prior year growth of $13.6 million or 14% over 1993 revenue of $93.9 million. Year-to-year revenue growth has come from both line matrix and non-impact product families. Line matrix product sales grew 41% over the prior year driven primarily by higher sales of the P4280 and P9212 printers to the Company's major OEM customers. Printronix has been able to increase sales to these OEMs primarily by penetrating new markets such as the management information systems applications segment. Higher revenue levels were also achieved through the Company's continued commitment to the laser and thermal printer markets, which combined with greater sales of the Company's Genuine Printronix Supplies business, led to non-impact revenue growth of 15% over the prior year. Foreign sales, including export sales from the United States, grew to $56.4 million in fiscal 1995, a $15.5 million or 38% increase compared to fiscal 1994 sales of $40.9 million. This increase in foreign sales compares to growth of $7.6 million or 23% in fiscal 1994. The higher revenues resulted primarily from increased sales to our major OEM customers with operations located outside the United States (see note 4). The Company's aggressive emphasis on productivity improvements caused sales per employee to increase 31% to $168,000 compared with $128,000 in the prior year. GROSS PROFIT Gross profit, as a percentage of sales, grew to 25.9% in fiscal 1995 compared with 24.6% in fiscal 1994 and 24.2% in fiscal 1993. The improving gross profit percentage reflects the Company's focus on identifying and implementing manufacturing improvements that result in higher quality, lower cost products that can be manufactured more quickly. Production efficiencies realized in fiscal 1995 included: 1) lower overhead expenses resulting from the consolidation of multiple factory operations in Irvine into a single production facility during the prior fiscal year, 2) reduced inventory costs driven by improved Just-In-Time inventory processes and 3) production volume efficiencies associated with the 36% increase in sales over the prior year. Cost reductions were partially offset by the continued shift in product mix from the Company's higher margin mature line matrix products to lower margin consumables and OEM products. OPERATING EXPENSES In fiscal 1995 the Company spent $12.7 million on engineering and development compared with $10.2 million in both fiscal 1994 and 1993. The growth in engineering and development spending reflects the Company's belief that, to meet or exceed customer expectations, and gain additional market share in the line matrix and non-impact printer markets, we must continue to deliver new products that provide a higher level of functionality and reliability with features that lead the industry. The 24% increase in engineering spending over fiscal 1994 resulted partly from higher OEM customization requirements, and partly from further development of the latest generation of new line matrix products that began shipping to current OEM customers in the fourth quarter of fiscal 1995. Fiscal 1994 spending remained flat with fiscal 1993 due to higher spending required to support new OEM customers, offset primarily by lower support costs on mature products. The Company expects to hold engineering expense to a decreasing percentage of total sales. Percentage spending has decreased to 8.6% in fiscal 1995 compared to 9.5% and 10.9% in fiscal years 1994 and 1993, respectively. Selling, general and administrative expense, as a percentage of sales, fell to 11.8% in fiscal 1995 compared with 12.9% and 14.9% in fiscal 1994 and 1993, respectively. Total dollar spending in fiscal 1995 compared with fiscal 1994 increased $3.4 million, or 24.8%, while fiscal 1994 compared with fiscal 1993 remained essentially flat. The growth in spending, over the prior year, resulted primarily from increased sales and marketing costs associated with higher sales volume and the introduction of new products. Fiscal 1994 expenses were maintained at fiscal 1993 levels through lower labor and administrative costs primarily due to the benefit of the Company's worldwide restructuring, implemented beginning fiscal 1993, along with management's commitment to control discretionary spending as the Company returned to profitability. During fiscal 1993, the Company incurred restructuring charges of $2.6 million to reorganize worldwide operations, reduce personnel throughout the Company, and realign manufacturing and administrative facilities in both Irvine and Singapore. At March 31, 1995, only $0.1 million of the original restructuring reserve remained for future payment obligations on building leases terminated at the time of the restructuring. This compares with the March 25, 1994 restructuring reserve balance of $0.7 million. This amount related to remaining facility consolidation costs, future payment obligations on terminated building leases and an environmental issue associated with the closing down of the Company's Irvine hammerbank facility in fiscal 1994. During fiscal 1995, the amount associated with the environmental issue was reclassified from the restructuring reserve to a separate line item on the Company's consolidated balance sheet. [GRAPH 1, PAGE 9, 1995 ANNUAL REPORT ($ IN MILLIONS) 1995 1994 1993 NET SALES $146.6 $107.4 $93.9] [GRAPH 2, PAGE 9, 1995 ANNUAL REPORT ($ IN MILLIONS) 1995 1994 1993 SALES PER EMPLOYEE $168 $128 $109.5] [GRAPH 3, PAGE 9, 1995 ANNUAL REPORT ($ IN MILLIONS) 1995 1994 1993 NET INCOME $7.2 $1.9 $(2.3)] 9 3 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION - -------------------------------------------------------------------------------- OPERATING EXPENSES (CONTINUED) At March 31,1995, this environmental reserve was $0.2 million (see note 2). The Company estimates that total cost savings from all restructuring activities approximate $5.0 million per year from reductions in labor, utilities, rent and other overhead costs. OTHER INCOME AND EXPENSE Interest expense in fiscal 1995 decreased $0.2 million compared with fiscal 1994 due primarily to lower average debt requirements. Fiscal 1994 interest expense increased $0.1 million compared with fiscal 1993 as a result of a $2.1 million short-term loan issued during fiscal 1994. Interest income grew $0.1 million in both fiscal 1995 and fiscal 1994, compared with the prior fiscal year, due to higher average cash balances. Other income in fiscal 1995 grew $0.1 million over the prior year basically from a significant increase in handling fees to expedite orders for certain customers. Other income in fiscal 1994 declined by $0.5 million over fiscal 1993 primarily due to the Company's remaining royalty agreement expiring in fiscal 1993. Accordingly, there were no royalty payments earned in fiscal years 1995 or 1994. Foreign currency exchange loss totaled $0.7 million in fiscal 1995 compared with a loss of $0.1 million in fiscal 1994 and a gain of $1.4 million in fiscal 1993. The increase in foreign currency exchange loss over the prior year resulted from a greater weakening of the United States dollar against international currencies in fiscal 1995 compared with fiscal 1994. The gain in fiscal 1993 compared with the loss in fiscal 1994 resulted primarily from a cumulative foreign currency translation gain of $2.0 million in fiscal 1993 (see note 1). INCOME TAXES The Company currently has available a net operating loss carryforward of approximately $29.6 million for Federal income tax purposes. However, improved profitability in United States operations in fiscal 1995 has resulted in some alternative minimum tax liability for both Federal and California income taxes. No Federal tax provision was booked for either fiscal 1994 or 1993. Other tax provisions have been booked for certain state and foreign income taxes. In fiscal 1996, the Company expects its tax liability to increase slightly as the Singapore pioneer tax status will expire in August 1995. The Company has recently filed for, and believes it will receive, either pioneer status on the manufacturing of new line matrix products or post-pioneer status on the manufacturing of current products. The granting of either pioneer status will result in a foreign tax liability at below the maximum statutory rate. SUPPLEMENTAL INFORMATION Fiscal 1995 utilized a fifty-three week year compared with a fifty-two week period for fiscal 1994 and 1993. This week was added to the fiscal year's fourth quarter. In December 1994, the Company completed a stock split effected in the form of a fifty percent (50%) stock dividend. Retroactive effect has been given to the stock split in stockholders' equity accounts as of March 31,1995, and in all share, price, and per share data presented. The Company believes that the effects of inflation on its operations and financial condition are minimal. LIQUIDITY AND CAPITAL RESOURCES The Company's financial position remains solid with cash flow from operations increasing $8.2 million to $11.6 million in fiscal 1995 compared to $3.4 million in fiscal 1994 and $0.9 million in fiscal 1993. The improved cash position was due primarily to increased profitability. However, improved collections on accounts receivable prior to fiscal year-end and greater inventory turns from the increased utilization of the Just-In-Time inventory processes, contributed to the improved cash flow. Purchases of property and equipment totaled $5.3 million in fiscal 1995 compared with $5.0 million in fiscal 1994. Capital expenditures consisted primarily of investment in manufacturing equipment for the production of new line matrix and non-impact products. In addition, the Company continued to upgrade its personal computer hardware infrastructure to better serve its customers by increasing employee productivity and improving the Company's internal processes. Unsecured lines of credit available at March 31, 1995, totaled $10.7 million of which $8.9 million was available for borrowing (see note 6). The Company also has $0.3 million of outstanding borrowing related to equipment financing, which are collateralized by certain of the Company's fixed assets. In addition, during fiscal 1995 the Company paid off a $2.1 million short-term loan issued during fiscal 1994. The Company believes that its internally-generated funds, together with available bank credit agreements, will adequately provide for working capital requirements, capital expenditures and engineering and development needs through fiscal 1996. [GRAPH 4, PAGE 10, 1995 ANNUAL REPORT 1995 1994 1993 OPERATING EXPENSE% 20.5% 22.4% 28.5%] [GRAPH 5, PAGE 10, 1995 ANNUAL REPORT 1995 1994 1993 INVENTORY TURNS 6.1 4.6 3.9] [GRAPH 6, PAGE 10, 1995 ANNUAL REPORT 1995 1994 1993 DAYS SALES OUTSTANDING 49 58 56] 10 4 CONSOLIDATED BALANCE SHEETS As of March 31, 1995 and March 25, 1994 ($ in thousands, except share data)
ASSETS 1995 1994 - ------------------------------------------------------------------------------------------------------------------------------------ Current Assets Cash and cash equivalents (Note 1) $ 8,345 $ 3,604 Accounts receivable, net of allowance for doubtful accounts of $908 in 1995 and $677 in 1994 22,305 19,303 Inventories (Note 1) Raw materials, subassemblies and work in process 16,139 14,202 Finished goods 2,959 2,302 ----------------------------- 19,098 16,504 Prepaid expenses 715 1,228 ----------------------------- Total Current Assets 50,463 40,639 ----------------------------- Property and Equipment, at cost (Note 1) Machinery and equipment 26,809 24,643 Furniture and fixtures 12,037 11,582 Leasehold improvements 3,311 3,173 ----------------------------- 42,157 39,398 Less: Accumulated Depreciation and Amortization (31,215) (28,395) ----------------------------- 10,942 11,003 Other Assets 270 274 ----------------------------- Total Assets $ 61,675 $ 51,916 ==================================================================================================================================== LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------------------------------------------------------------------------------------------------------ CURRENT LIABILITIES Loans payable (Note 6) $ -- $ 543 Current portion of long-term debt (Note 6) 257 2,458 Accounts payable 11,192 9,476 Accrued expenses Payroll and employee benefits 3,758 2,700 Warranty 1,136 769 Environmental 214 250 Restructuring 93 482 Other 1,619 821 Accrued income taxes 379 201 ----------------------------- Total Current Liabilities 18,648 17,700 ----------------------------- Long-Term Debt (Note 6) -- 256 ----------------------------- Other Long-Term Liabilities (Note 2) 1,485 1,594 ----------------------------- Stockholders' Equity (Notes 1& 5) Common stock, $0.01 par value (Authorized 18,000,000 shares; issued and outstanding 4,972,561 shares in 1995 and 4,647,656 shares in 1994) 50 47 Additional paid-in capital 27,393 25,380 Retained earnings 14,099 6,939 ----------------------------- Total Stockholders' Equity 41,542 32,366 ----------------------------- Total Liabilities and Stockholders' Equity $ 61,675 $ 51,916 ====================================================================================================================================
The accompanying notes are an integral part of these consolidated balance sheets. 11 5 CONSOLIDATED STATEMENTS OF OPERATIONS For each of the three years in the period ended March 31, 1995 ($ in thousands, except share data) - --------------------------------------------------------------------------------
March 31 March 25 March 26 1995 % 1994 % 1993 % - --------------------------------------------------------------------------------------------------------------------------- Net sales (Notes 1 & 4) $ 146,589 $ 107,419 $ 93,864 Cost of sales 108,621 81,039 71,122 ------------------------------------------------------------------- Gross profit 37,968 25.9% 26,380 24.6% 22,742 24.2% ------------------------------------------------------------------- Operating expenses Engineering and development (Note 1) 12,666 8.6% 10,201 9.5% 10,186 10.9% Selling, general & administrative 17,322 11.8% 13,877 12.9% 13,959 14.9% Restructuring expenses -- -- 2,624 ------------------------------------------------------------------- 29,988 20.5% 24,078 22.4% 26,769 28.5% ------------------------------------------------------------------- Income (loss) from operations 7,980 5.4% 2,302 2.1% (4,027) (4.3%) Foreign currency remeasurement (loss) gain (Note 1) (723) (68) 1,440 Interest income (expense) net 113 (186) (87) Other income, net 85 6 522 ------------------------------------------------------------------- Income (loss) before taxes 7,455 5.1% 2,054 1.9% (2,152) (2.3%) Provision for taxes (Notes 1 & 7) 295 185 188 ------------------------------------------------------------------- Net income (loss) $ 7,160 4.9% $ 1,869 1.7% $ (2,340) (2.5%) =================================================================== Net Income (loss) per share (Note 1) Primary $ 1.34 $ 0.39 $ (0.50) Fully diluted $ 1.33 $ 0.38 $ (0.50) Weighted average common shares & common stock equivalents outstanding (Note 1) Primary 5,324,784 4,848,261 4,636,920 Fully diluted 5,382,388 4,971,722 4,636,920
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY For each of the three years in the period ended March 31, 1995 ($ in thousands, except share data) - --------------------------------------------------------------------------------
Cumulative Foreign COMMON STOCK Currency Number of Additional Retained Translation Shares Amount Paid-in Capital Earnings Adjustments - -------------------------------------------------------------------------------------------------------------------------------- BALANCE, MARCH 27, 1992 4,570,578 $45 $ 25,414 $ 7,410 $ 2,003 Issuance of restricted stock 75,000 - 225 - - Value of restricted stock not vested - - (225) - - Net loss - - - (2,340) - Foreign currency translation adjustment - - - - (2,003) Repurchase and retirement of common stock (15,145) - (86) - - - ------------------------------------------------------------------------------------------------------------------------------- BALANCE, MARCH 26, 1993 4,630,433 45 25,328 5,070 - Issuance of common stock 21,723 2 76 - - Repurchase and retirement of common stock (4,500) - (24) - - Net income - - - 1,869 - - ------------------------------------------------------------------------------------------------------------------------------- BALANCE, MARCH 25, 1994 4,647,656 47 25,380 6,939 - Issuance of common stock 324,973 3 1,196 - - Compensation expense for stock options and restricted stock - - 736 - - Purchase price of vested portion of restricted stock - - 83 - - Redemption and retirement of fractional common shares (68) - (2) - - Net income - - - 7,160 - - ------------------------------------------------------------------------------------------------------------------------------- BALANCE, MARCH 31, 1995 4,972,561 $50 $ 27,393 $ 14,099 $ - ===============================================================================================================================
The accompanying notes are an integral part of these consolidated financial statements. 12 6 CONSOLIDATED STATEMENTS OF CASH FLOWS For each of the three years in the period ended March 31, 1995 ($ in thousands) - --------------------------------------------------------------------------------
March 31 March 25 March 26 1995 1994 1993 ------------------------------------------- Cash flows from operating activities : Net income (loss) $ 7,160 $ 1,869 $ (2,340) Adjustments to reconcile net income (loss) to net cash provided by operating activities : Depreciation and amortization 4,952 4,462 4,492 Loss on sale of property and equipment 55 36 49 Compensation expense for stock options & restricted stock 736 - - Foreign currency translation adjustment - - (2,003) Changes in assets and liabilities : Accounts receivable (2,939) (5,052) (240) Inventories (2,458) 1,875 (103) Accounts payable 1,716 2,166 61 Accrued income taxes 178 (98) (381) Accrued restructuring expenses (389) (1,420) 1,902 Accrued environmental expenses (36) 250 - Accrued warranty expenses 367 - 28 Other current assets and liabilities, net 2,369 (632) (606) Other, net (105) (52) 62 ------------------------------------------- Net cash provided by operating activities 11,606 3,404 921 ------------------------------------------- Cash flows from investing activities : Purchase of property and equipment (5,262) (4,995) (3,982) (Purchase) sale of building - 766 (2,286) Proceeds from disposition of property and equipment 180 182 208 ------------------------------------------- Net cash used in investing activities (5,082) (4,047) (6,060) ------------------------------------------- Cash flows from financing activities : Borrowings (payments) under credit facility, net (543) (634) 1,177 Proceeds from debt borrowing - - 1,043 Payments against debt borrowing (357) (328) (101) Issuance (payment) of short term loan (2,100) 2,100 - Proceeds from issuance of common stock 1,219 78 - Repurchase and retirement of common stock (2) (24) (86) ------------------------------------------- Net cash provided by (used in) financing activities (1,783) 1,192 2,033 ------------------------------------------- Increase (decrease) in cash and cash equivalents 4,741 549 (3,106) Cash and cash equivalents at beginning of year 3,604 3,055 6,161 ------------------------------------------- Cash and cash equivalents at end of year $ 8,345 $ 3,604 $ 3,055 ------------------------------------------- Supplementary disclosures of cash flow information : Interest paid $ 105 $ 164 $ 80 Taxes paid $ 112 $ 176 $ 141
The accompanying notes are an integral part of these consolidated financial statements. 13 7 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As of March 31, 1995 and March 25, 1994 and for each of the three years in the period ended March 31, 1995 ($ in thousands) - -------------------------------------------------------------------------------- NOTE 1 . SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - BASIS OF CONSOLIDATION - The consolidated financial statements include the accounts of the Company, Printronix, Inc. and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated. ACCOUNTING PERIOD - The Company utilizes a fifty-two, fifty-three week fiscal year ending on the last Friday of March. The Company is reporting a fifty-three week fiscal year for the period ended March 31, 1995, compared to a fifty-two week fiscal year for the periods ended March 25, 1994 and March 26, 1993. CASH EQUIVALENTS - For cash flow reporting purposes, the Company considers all highly liquid temporary cash investments with maturities of three months or less at the time of purchase to be cash equivalents. The effect of exchange rate changes on cash balances held in foreign currencies was not material for the periods presented. INVENTORIES - Inventories are valued at the lower of cost (first-in, first-out method) or market. PROPERTY AND EQUIPMENT - Depreciation and amortization of property and equipment are provided using the straight-line method over the following estimated useful lives : Machinery and equipment 3 to 5 years Furniture and fixtures 3 to 7 years Leasehold improvements Term of lease Maintenance, repairs and minor renewals are charged directly to expense as incurred. Additions and betterments to property and equipment are capitalized. When assets are disposed of, the applicable costs and accumulated depreciation and amortization thereon are removed from the accounts and any resulting gain or loss is included in operations. SALES RECOGNITION - Sales are recorded as of the date shipments are made to customers. The Company's products are sold primarily to customers in the computer industry. Accordingly, the majority of the Company's accounts receivable are concentrated among such customers within the computer industry. Sales returns and allowances are reflected as a reduction in sales and reflected in inventory at cost or expected net realizable value, whichever is lower. Every six months the Company allows domestic distributors a stock rotation, whereby 2% of the prior six months sales can be returned, subject to various limitations, in exchange for other products. The Company has not experienced sales returns of a material amount, as they are limited to the utilized portion of the 2% stock rotation for domestic distributor revenue. Products that are defective upon arrival are handled under the Company's warranty policy. INCOME ON MAINTENANCE CONTRACTS - The Company generates income on extended maintenance contracts through the sale of the service obligation to a third party provider. The third party provider is responsible for the performance of all maintenance services for the contract period. The income on such contracts is recognized fully in the period the contract is sold to the third party provider as the Company assumes no further material obligation after the date of sale. Revenue generated from maintenance contracts was less than 3% of total sales in fiscal years 1995, 1994, and 1993. WARRANTY COSTS- The Company's financial statements reflect accruals for potential warranty claims based on the Company's claim experience. Estimated product warranty costs are accrued at the time products are sold. FOREIGN CURRENCY REMEASUREMENT AND TRANSLATION - The United States dollar is the functional currency for all of the Company's foreign subsidiaries. For these subsidiaries, the assets and liabilities have been remeasured at the end of the period exchange rates, except inventories and property which have been remeasured at historical rates. The statements of operations have been remeasured at average rates of exchange for the period, except cost of sales and depreciation which have been remeasured at historical rates. Losses from remeasurement recognized currently in income totaled $723, $68 and $161 for fiscal years 1995, 1994 and 1993, respectively. A cumulative foreign currency translation gain of $2,003 and a foreign currency exchange loss on a building held for sale of $402 were also recognized in fiscal 1993. Prior to fiscal 1991, certain of the Company's foreign subsidiaries utilized a functional currency other than the United States dollar. Accounts were translated at current exchange rates with any differences reflected in the cumulative foreign currency translation adjustment in the accompanying consolidated balance sheets. In fiscal 1993, the Company had substantially liquidated its investments in this related foreign subsidiary. Accordingly, under the provisions of SFAS No. 52 "Foreign Currency Translation," the cumulative foreign currency translation adjustment was recognized as a gain in the statement of operations during fiscal 1993. INCOME TAXES - Provisions are made for the amount of income taxes on the reported operations of each year. Tax credits are treated as reductions of the applicable Federal income tax provisions in the years earned. On a quarterly basis, the Company provides for state and foreign income taxes based on an estimate of the effective rate for the entire year. On March 27, 1993, the Company adopted, prospectively, SFAS No. 109. The adoption of this statement had no material effect on the financial statements. SFAS No. 109 requires the use of the asset and liability method for financial accounting and reporting for income taxes, and further prescribes that current and deferred tax balances be determined based on the difference between the financial statement and tax basis of assets and liabilities using tax rates in effect for the year in which the differences are expected to reverse. ENGINEERING AND DEVELOPMENT - Company-funded engineering and development costs are expensed as incurred. A substantial portion of the engineering and development expense is related to developing new products and making significant improvements to existing products or processes. 14 8 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As of March 31, 1995 and March 25, 1994 and for each of the three years in the period ended March 31, 1995 ($ in thousands) - -------------------------------------------------------------------------------- DIVIDENDS - The Company has not paid cash dividends on its stock. However, in 1989, the Company declared a dividend of one common share purchase right per share of common stock (see Note 5 (c)). EARNINGS AND LOSS PER COMMON SHARE - Earnings and loss per common share are calculated using the weighted average number of shares outstanding and the dilutive effects of stock options, using the treasury stock method. CAPITAL STOCK - During fiscal 1995, the Board of Directors declared a stock split effected in the form of a fifty percent (50%) stock dividend of the Company's common stock. The stock dividend resulted in a distribution of 1,652,500 common shares on December 21, 1994. An amount equal to the stated value of the common shares issued was transferred from additional paid in capital to the common stock account. Retroactive effect has been given to the dividend in stockholders' equity as of March 31, 1995, and in all share, price, and per share data in the accompanying financial statements. RECLASSIFICATIONS - Certain amounts for previous fiscal years have been reclassified to conform with the fiscal 1995 presentation. NOTE 2 . COMMITMENTS AND CONTINGENCIES - OPERATING LEASES - The Company conducts its operations using leased facilities under non-cancelable operating leases which expire at various dates from fiscal years 1996 through 2000. The following is a summary of rental expense of non-cancelable building and equipment operating leases incurred for each of the three years in the period ended March 31, 1995:
1995 1994 1993 - ------------------------------------------------------------------------------- Gross rental expenses $ 3,343 $ 3,279 $ 3,917 Less-Sublease rental income (76) (38) (201) - ------------------------------------------------------------------------------- Net rental expense $ 3,267 $ 3,241 $ 3,716
The minimum rental commitments required under existing non-cancelable operating leases for each fiscal year are as follows:
1996 1997 1998 1999 2000 Thereafter Total - -------------------------------------------------------------------------------- $3,204 $1,942 $573 $147 $22 - $5,888
OTHER LONG-TERM LIABILITIES - Other long-term liabilities consist of potential liabilities related to ongoing tax issues. ENVIRONMENTAL ASSESSMENT - In January 1994, the Company was notified by the California Regional Water Quality Control Board - Santa Ana Region (the "Board") that groundwater monitoring reports indicate that the groundwater under one of the Company's former production plants is contaminated with various chlorinated volatile organic compounds (VOCs). Evidence adduced from site studies undertaken to date indicate that compounds containing the VOCs were not used by the Company during its tenancy, but were used by the prior tenant during its long-term occupancy of the site. The tests also indicate that the composition of the soil is such that off-site migration of contamination is very slow and contamination is most likely confined to the site. Accordingly, the Board is presently devoting its attention to the predecessor occupant of the site. Investigation indicates that the prior occupant is a well-established business enterprise which has substantial assets and is affiliated with a publicly traded company. Because of the current focus of the Board's investigation, there are no further orders outstanding against the Company. Therefore, there are no recurring costs, capital expenditures or other mandated expenditures. As of March 31, 1995, the Company has reserved $214 which is expected to be more than adequate to cover further legal fees or any additional expenses related to environmental tests which could be requested by the Board at the site. To date, the Company has incurred only minimal expense in its initial response to the Board's request for information and for environmental testing. The Company is convinced that it bears no responsibility for any contamination at the site and intends to vigorously defend any action which might be brought against it in respect thereto. Furthermore, the Company believes that it has adequately accrued for any future expenditures in connection with environmental matters and that such expenditures will not have a materially adverse effect on its financial condition or results of operations. NOTE 3. 401(K) SAVINGS AND PROFIT SHARING PLANS - Effective January 1, 1985, the Company adopted a 401(k) Savings and Investment Plan (the "401(k) Plan"), for all employees working a minimum of 1,000 hours per year, which is designed to be tax deferred in accordance with the provisions of Section 401(k) of the Internal Revenue Code. All United States employees (including officers but not outside directors) may contribute from 1% to 17% of compensation per week (subject to certain limitations) on a tax-free basis through a "salary reduction" arrangement. Employee contributions are always 100% vested. The Company matches employee contributions up to a maximum of 2% of salary or one thousand dollars per year, whichever is less. All Company contributions become fully vested after four full years of employment. Company contributions to the 401(k) plan were $286, $282, and $206 for fiscal years 1995, 1994, and 1993, respectively. The Company also maintains a discretionary worldwide profit-sharing plan for qualified employees. Employees who have been with the Company for 90 days of continuous service are eligible to participate in the profit sharing plan. The Company allocates a percentage of pre-tax profits to a profit sharing pool which is then distributed to employees pro rata based on quarterly salary. In addition, certain executives are eligible to participate in a bonus plan which is subject to achieving specific operating performance targets established by the Board of Directors. Company contributions to these plans were $2,604 , $612, and $399 for fiscal years 1995, 1994, and 1993, respectively. 15 9 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As of March 31, 1995 and March 25, 1994 and for each of the three years in the period ended March 31, 1995 ($ in thousands) - -------------------------------------------------------------------------------- NOTE 4 . SEGMENT DATA AND EXPORT SALES - Printronix operates in one industry segment - the design, manufacture and marketing of medium and high speed printers which support a wide range of computer systems and software platforms. Regional segment data is as follows:
NORTH 1995 AMERICA EUROPE ASIA ELIMINATIONS CONSOLIDATED - ------------------------------------------------------------------------------------------------------------------------------------ REVENUES : Net sales $ 113,417 $ 27,414 $ 5,758 $ -- $ 146,589 Transfers between geographic locations 11,038 446 40,392 (51,876) -- ----------------------------------------------------------------------------- 124,455 27,860 46,150 (51,876) 146,589 Income from operations $ 3,620 $ 3,515 $ 845 $ -- $ 7,980 Identifiable assets $ 40,899 $ 8,836 $ 11,940 $ $ 61,675 1994 - ------------------------------------------------------------------------------------------------------------------------------------ REVENUES : Net sales $ 80,717 $ 21,174 $ 5,528 $ -- $ 107,419 Transfers between geographic locations 11,366 220 26,667 (38,253) -- ----------------------------------------------------------------------------- 92,083 21,394 32,195 (38,253) 107,419 Income from operations $ 94 $ 1,800 $ 408 $ -- $ 2,302 Identifiable assets $ 33,665 $ 8,064 $ 10,187 $ -- $ 51,916 1993 - ------------------------------------------------------------------------------------------------------------------------------------ REVENUES : Net sales $ 68,134 $ 21,286 $ 4,444 $ -- $ 93,864 Transfers between geographic locations 8,079 220 30,378 (38,677) -- ----------------------------------------------------------------------------- 76,213 21,506 34,822 (38,677) 93,864 Income (loss) from operations $ (5,175) $ 1,203 $ (55) $ -- $ (4,027) Identifiable assets $ 30,474 $ 8,652 $ 9,150 $ -- $ 48,276
Geographic information is based upon principal location of the Company's operations and not necessarily on the location of the customers. Transfers between geographic locations are billed at manufacturing costs plus a margin representing a reasonable rate of return for activities performed. Certain operating expenses have been redistributed among geographic regions to reflect a reasonable allocation of operating expenses which support worldwide operations. North America sales included export sales of approximately $23,261, $14,202 and $7,560 for fiscal years 1995, 1994, and 1993, respectively. Export sales are principally to Europe, Canada, and Asia. Increases in export sales during fiscal 1995 and 1994 were due to higher shipments of product to major OEMs with operations located outside the United States. In fiscal 1995, the Company had two customers each of which represented more than 10% of consolidated net sales. Sales to the largest customer, IBM, represented 28.8 percent and 10.7 percent of net sales for fiscal years 1995 and 1994, respectively. No sales were made to this customer in fiscal 1993. On a geographic basis, fiscal 1995 sales to IBM represented 30.2 percent of domestic and 26.6 percent of international net sales. A significant decline in sales to this customer could have an adverse effect on the CompanyOs operations. Sales to the second largest customer represented 10.5 percent, 14.6 percent, and 13.7 percent of net sales for fiscal years 1995, 1994, and 1993, respectively. 16 10 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As of March 31, 1995 and March 25, 1994 and for each of the three years in the period ended March 31, 1995 ($ in thousands, except share data) - -------------------------------------------------------------------------------- NOTE 5. STOCK OPTION PLANS AND COMMON SHARE PURCHASE RIGHTS - (A) STOCK OPTIONS - The Company has one stock option plan under which options may be granted to purchase shares of its common stock. A total of 750,000 shares is authorized for issuance under this plan. An additional plan which expired April 30, 1994 has options outstanding, but no further options may be granted under this plan. Options under the plans are granted at prices not less than the fair market value of the common stock on the date of grant and can become exercisable in installments at dates ranging from one to ten years from the date of grant, as determined by the Stock Option Committee of the Board of Directors. Generally, outstanding options become exercisable at the rate of 25 percent per year, and expire five years from the date of grant. Grants of restricted stock can be made at any price. The following is a summary of the transactions, including restricted stock, relating to the plans for the year ended March 31, 1995 :
COMMON STOCK OPTIONS SHARES PRICE - ---------------------------------------------------------------- Beginning, outstanding 813,557 $ 2.92 - $ 5.33 Granted 147,400 5.50 - 19.67 Exercised (324,973) 3.00 - 5.33 Cancelled (22,425) 3.00 - 6.42 - ---------------------------------------------------------------- Ending, outstanding 613,559 $ 2.92 - $ 19.67
As of March 31, 1995, options to acquire 206,536 shares were exercisable, and options to acquire 587,487 shares remained available to grant. (B) RESTRICTED STOCK - Under the 1984 Stock Incentive Plan the Company has sold restricted stock to certain officers and key employees. The shares issued under the plan are subject to repurchase agreements which lapse over an extended period not exceeding 7 years if certain Company performance measures are met. In fiscal 1991, 172,500 shares were issued under the plan and an additional 75,000 shares were issued in fiscal 1993. The excess of the fair market value on the date of vesting over the purchase price is charged to operations as the restrictions lapse. In fiscal 1995, 61,875 or 25% of the issued shares vested, and $681 was charged to operations. There were no charges to operations in fiscal years 1994 and 1993 as the required performance objectives were not met. (C) COMMON SHARE PURCHASE RIGHTS - On March 16, 1989, the Company declared a dividend payable on April 4, 1989, of 6,874,402 Common Share Purchase Rights. Each right, when exercisable, entitles a stockholder to buy one share of the Company's common stock at an exercise price of $23.33, subject to adjustment. The rights become exercisable ten days after certain persons or groups announce acquisition of 20 percent or more, or announce an offer for 30 percent or more, of the Company's common stock. The rights are nonvoting, expire in ten years and may be redeemed prior to becoming exercisable. In the event that the Company was acquired in a merger or other business combination, each outstanding right would entitle a holder to purchase, at the then current exercise price, that number of shares of common stock of the surviving company having a market value equal to two times the exercise price of the right. The foregoing is a general description only and is subject to the detailed terms and conditions set forth in the Common Share Rights Agreement, dated as of March 17, 1989, between the Company and Chemical Trust Company of California. NOTE 6. BANK BORROWING AND DEBT ARRANGEMENTS - The Company maintains an unsecured line of credit of $7,500 with a United States bank. The credit agreement generally provides for interest at the prime rate plus 1/4 percent, contains certain standard financial and non-financial restrictions, provides for an annual commitment fee of 1/2 percent of the unused portion of the line, and is renewable in September 1995. At the end of fiscal 1995, 1994, and 1993, there were no cash borrowings against this line of credit. At March 31, 1995, one of the Company's foreign subsidiaries maintained unsecured lines of credit with foreign banks of $3,200 which includes a standby Letter of Credit of $1,300, and additional restrictions on the available credit balance of $507 relating to import letters of credit and bank guarantees for building leases and utilities in Singapore. These credit facilities are subject to parent guarantees, require payment of certain loan fees, and provide for interest at approximately 3/4 to 1 percent above the bank's cost of raising capital. At March 31, 1995, there were no cash borrowings against this line of credit. During fiscal 1993, the Company arranged equipment financing for $1,043 with interest rates ranging between 9.25 percent and 10.4 percent. Outstanding borrowings related to this were $257, $614 and $942 at March 31, 1995, March 25, 1994, and March 26, 1993, respectively. The borrowings are due and payable in equal installments through fiscal year 1996 and are collateralized by certain of the Company's fixed assets. All remaining principal of $257 will be paid during fiscal year 1996. 17 11 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As of March 31, 1995 and March 25, 1994 and for each of the three years in the period ended March 31, 1995 ($ in thousands) - -------------------------------------------------------------------------------- NOTE 7 . INCOME TAXES -
TAX PROVISION 1995 1994 1993 - ------------------------------------------------------------------------------ Current Federal $ 100 $ - $ - State 158 36 35 Foreign 37 149 153 - ------------------------------------------------------------------------------ Total $ 295 $ 185 $ 188 COMPONENTS OF INCOME (LOSS) BEFORE TAXES 1995 1994 1993 - ------------------------------------------------------------------------------ United States $ 2,363 $ 2,591 $ (7,853) Foreign 5,092 (537) 5,701 - ------------------------------------------------------------------------------ Total $ 7,455 $ 2,054 $ (2,152)
Amounts for tax provision and components of income (loss) before taxes shown in the two preceding tables are classified based on location of the taxing authority and not on geographic region.
DEFERRED INCOME TAX PROVISION 1995 1994 1993 - ---------------------------------------------------------------------------------------- Tax depreciation over (under) depreciation for financial reporting purposes $ (72) $ (174) $ 120 Inventory costs (capitalized) expensed on tax return and (expensed) capitalized for financial reporting (50) 133 (97) Decrease (increase) in liability reserves (95) 1,261 (839) Net operating income (loss) 1,352 (800) (2,280) Valuation reserve (1,135) (420) 3,096 - ---------------------------------------------------------------------------------------- Total $ -- $ -- $ --
Deferred income taxes are not provided on the undistributed earnings (which totaled approximately $37,646 as of March 31, 1995) of the Company's foreign subsidiaries as the Company intends to reinvest these earnings indefinitely outside of the United States. Deferred income taxes result from differences in the timing of reporting income and expenses for financial statement and income tax reporting purposes. 18 12 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As of March 31, 1995 and March 25, 1994 and for each of the three years in the period ended March 31, 1995 ($ in thousands, except share data) - --------------------------------------------------------------------------------
DEFERRED INCOME TAX ASSET 1995 1994 - -------------------------------------------------------------------------------- Tax depreciation over depreciation for financial reporting purposes $ 145 $ 217 Inventory costs capitalized on tax return and expensed for financial reporting (540) (490) Liability reserves (1,721) (1,626) Net operating loss (10,064) (11,416) Foreign tax credit (2,700) (2,700) Gross deferred tax asset (14,880) (16,015) Valuation reserve 14,880 16,015 - -------------------------------------------------------------------------------- Total $ -- $ --
At March 31, 1995, the Company had available net operating loss carryforwards for Federal income tax purposes of approximately $29,600 expiring in 2002 to 2009. Additionally, at March 31, 1995, the Company had foreign tax credit carryforwards of approximately $2,700 expiring in 1997.
RECONCILIATION OF EFFECTIVE TAX RATE TO STATUTORY 1995 1994 1993 FEDERAL TAX RATE OF 34% AMOUNT % AMOUNT % AMOUNT % - ---------------------------------------------------------------------------------------------------------------------------------- Provision (credit) computed at statutory rates $ $ 2,534 34.0 $ 699 34.0 $ (731) (34.0) State income taxes, net of Federal tax benefit 126 1.7 36 1.8 35 1.6 Book (income) loss from which Federal benefit is not available (utilized) (672) (9.0) 857 41.7 2,063 95.9 Rate reductions due to foreign operations (including carryback) (1,693) (22.7) (1,407) (68.5) (1,179) (54.8) - ---------------------------------------------------------------------------------------------------------------------------------- Total $ 295 4.0 $ 185 9.0 $ 188 (8.7)
The Company has been granted pioneer status in Singapore through mid-1995, and is exempt from tax liability for earnings generated there, until that time. The aggregate dollar effect of the pioneer status was to reduce foreign taxes by $1,032, $620, and $1,080 for the fiscal years 1995, 1994, and 1993, respectively. The primary and fully diluted income per share effects of this pioneer status would be 19 cents, 12 cents, and 23 cents for fiscal years 1995, 1994, and 1993, respectively. The Company has recently filed for, and believes it will receive, either pioneer status on the manufacturing of new line matrix products or post-pioneer status on the manufacturing of current products. The granting of either pioneer status will result in a foreign tax liability at below the maximum statutory rate beginning in fiscal 1996. 19 13 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS - -------------------------------------------------------------------------------- TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF PRINTRONIX, INC. : We have audited the accompanying consolidated balance sheets of Printronix, Inc. (a Delaware Corporation) and subsidiaries as of March 31, 1995 and March 25, 1994, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the three years in the period ended March 31, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Printronix, Inc. and subsidiaries as of March 31, 1995 and March 25, 1994, and the results of their operations and their cash flows for each of the three years in the period ended March 31, 1995, in conformity with generally accepted accounting principles. /s/ Arthur Andersen LLP - ----------------------- ARTHUR ANDERSEN LLP Orange County, California April 26, 1995 QUARTERLY DATA (DERIVED FROM AUDITED FINANCIAL STATEMENTS, EXCEPT STOCK PRICE INFORMATION) ($ in thousands, except share data) - --------------------------------------------------------------------------------
QUARTER ---------------------------------------------- FISCAL 1995 First Second Third Fourth - -------------------------------------------------------------------------------- Net sales $33,465 $34,301 $37,645 $41,178 Gross profit 8,654 8,845 9,847 10,622 Net income 1,400 1,527 1,902 2,331 Earnings per share - primary & fully diluted $ 0.28 $ 0.29 $ 0.35 $ 0.43 Stock Price high $ 6.50 $ 13.50 $ 27.75 $ 28.25 low $ 5.17 $ 5.83 $ 10.67 $ 16.50 QUARTER ---------------------------------------------- FISCAL 1994 First Second Third Fourth - -------------------------------------------------------------------------------- Net sales $24,190 $24,499 $28,234 $30,496 Gross profit 6,558 5,961 6,561 7,300 Net income 531 96 325 917 Earnings per share - primary $ 0.11 $ 0.02 $ 0.07 $ 0.19 - fully diluted $ 0.11 $ 0.02 $ 0.07 $ 0.18 Stock Price high $ 5.00 $ 5.08 $ 5.33 $ 6.33 low $ 4.33 $ 4.33 $ 4.67 $ 4.67
20 14 CORPORATE INFORMATION BOARD OF DIRECTORS ROBERT A. KLEIST *RALPH GABAI President and Chief Executive Officer, President, Bi-Coastal Consulting Ltd. Printronix, Inc. (Business consulting to venture capital financed companies) BRUCE T. COLEMAN *ERWIN A. KELEN Chief Executive Officer, El Salto Advisors President, Kelen Ventures (Advice and interim CEO services) (Venture Investments) *JOHN R. DOUGERY General Partner, Dougery & Wilder (Venture capital investments) * Member of the Audit Committee
CORPORATE OFFICERS ROBERT A. KLEIST RICHARD A. STEELE JULI A. MATHEWS President and Chief Executive Officer Senior Vice President, Vice President, Human Resources Sales and Marketing J. EDWARD BELT PH.D. GORDON B. BARRUS BRUCE E. MENN Senior Vice President, Engineering, Vice President, Advanced Development Vice President, Product Development Chief Technical Officer and Asst. Corporate Secretary GEORGE L. HARWOOD STEVEN M. EGOL Senior Vice President, Finance & MIS, Vice President, International Sales Chief Financial Officer and Corporate Secretary & Marketing C. VICTOR FITZSIMMONS NORM E. FARB PH.D. Senior Vice President, Worldwide Manufacturing Vice President, Strategic Technology PHILIP F. LOW Vice President, Singapore Manufacturing
CORPORATE DIRECTORY PRINTRONIX CORPORATE OFFICES ANNUAL MEETING 17500 Cartwright Road, P.O. Box 19559, Annual meeting will be held at 2:00 p.m., Irvine, California 92713 August 15, 1995, at Printronix Corporate Offices, Telephone: (714) 863-1900 located at 17500 Cartwright Road, Irvine, California Facsimile: (714) 660-8682 PRINTRONIX COMMON STOCK LEGAL COUNSEL Traded OTC, NASDAQ, National Market System, Kirshman & Harris Stock Symbol : PTNX A Professional Corporation, General Counsel 11500 Olympic Blvd., Suite 605 STOCKHOLDERS Los Angeles, California 90064 As of March 31, 1995, there were 343 record holders of the Company's Telephone: (310) 312-4544 Common Stock. INDEPENDENT AUDITORS CORPORATE AND INVESTOR INFORMATION Arthur Andersen LLP A copy of Printronix' annual report on Form 10-K filed with the Securities and 18500 Von Karman Ave., Suite 1100 Exchange Commission (SEC) will be furnished without charge to any stockholder. Irvine, California 92715 To obtain a copy, please write to: Telephone: (714) 757-3100 Investor Relations Department, Printronix, Inc. REGISTRAR AND TRANSFER AGENT 17500 Cartwright Road, P.O.Box 19559 Chemical Mellon Shareholder Services Irvine, California 92713, Telephone: (714) 863-1900 300 S. Grand Avenue Los Angeles, California 90071
EX-21 4 LIST OF SUBSIDIARIES 1 LIST OF SUBSIDIARIES STATE OR OTHER JURISDICTION OF NAME INCORPORATION ---- --------------- Printronix Nederland B.V. The Netherlands Printronix Latinoamericana, S.A. de C.V. Mexico Printronix Foreign Sales Corporation B.V. The Netherlands Printronix GmbH West Germany Printronix A.G. Switzerland Printronix Ltd. United Kingdom EXHIBIT 21 EX-23 5 CONSENT OF ARTHUR ANDERSON 1 ARTHUR ANDERSEN LLP CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our reports incorporated by reference in this Form 10-K, into the Company's previously filed Registration Statement File Nos. 2-70035, 33-14288 and 33-83156. [ARTHUR ANDERSEN LLP SIG] ARTHUR ANDERSEN LLP Orange County, California June 27, 1995 Exhibit 23 EX-27 6 FINANCIAL DATA SCHEDULE
5 "This schedule contains summary financial information extracted from the Company's Annual Report for the fiscal year ended March 31, 1995 and is qualified in its entirety by reference to such financial statements." 1,000 YEAR MAR-31-1995 MAR-31-1995 8345 0 22305 908 19098 50463 42157 31215 61675 18648 0 50 0 0 41492 61675 146589 146589 108621 138609 525 0 70 7455 295 0 0 0 0 7160 1.34 1.33
-----END PRIVACY-ENHANCED MESSAGE-----