-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, V6AkbyqZCKEf3P0t7dWyNJclfFj6aWa45Eo+OnDNJ4BbNyLOmJ4Vf1R8EfkkVjRb GGNXNyUS7lb1YZOp4/EmNw== 0000950149-99-000987.txt : 19990518 0000950149-99-000987.hdr.sgml : 19990518 ACCESSION NUMBER: 0000950149-99-000987 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DAW TECHNOLOGIES INC /UT CENTRAL INDEX KEY: 0000882159 STANDARD INDUSTRIAL CLASSIFICATION: GENERAL BUILDING CONTRACTORS - NONRESIDENTIAL BUILDINGS [1540] IRS NUMBER: 870464280 STATE OF INCORPORATION: UT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-21818 FILM NUMBER: 99627408 BUSINESS ADDRESS: STREET 1: 2700 S 900 W CITY: SALT LAKE CITY STATE: UT ZIP: 84119 BUSINESS PHONE: 8019773100 MAIL ADDRESS: STREET 2: 2700 SOUTH 900 WEST CITY: SALT LAKE CITY STATE: UT ZIP: 84119 FORMER COMPANY: FORMER CONFORMED NAME: PRIMA ACQUISITIONS INC DATE OF NAME CHANGE: 19600201 10-Q 1 FORM 10-Q FOR PERIOD DATED 3-31-1999 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (X) Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended March 31, 1999 or ( ) Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. 0-21818 (Commission File No.) DAW TECHNOLOGIES, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) UTAH 87-0464280 - --------------------------------- ------------------- (State or other jurisdiction (IRS Employer of incorporation or organization) Identification No.) 2700 SOUTH 900 WEST SALT LAKE CITY, UTAH 84119 ----------------------------------------------------------- (Address of principal executive offices, including zip code) Registrant's telephone number, including area code: (801) 977-3100 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 ( ) As of May 14, 1999, the Registrant had 12,513,114 shares of Common Stock, $0.01 par value outstanding. ================================================================================ 2 Daw Technologies, Inc. TABLE OF CONTENTS PART I FINANCIAL INFORMATION................................................................1 Item 1. Financial Statements Condensed Balance Sheets - March 31, 1999 and December 31, 1998......................1 Condensed Statements of Operations - Three months ended March 31, 1999 and 1998.....2 Condensed Statements of Cash Flows - Three months ended March 31, 1999 and 1998......3 Notes to Condensed Financial Statements..............................................5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................................................................8 PART II OTHER INFORMATION...................................................................14 Item 6. Exhibits and Reports on Form 8-K....................................................14 Signatures..................................................................................14
3 PART I - FINANCIAL INFORMATION Item 1. Financial Statements Daw Technologies, Inc. CONDENSED BALANCE SHEETS (Unaudited) (in thousands, except share data)
March 31, Dec. 31, 1999 1998 ------- ------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 1,041 $ 2,140 Accounts receivable - raw materials, net 9,520 8,904 Costs and estimated earnings in excess of billings on contracts in progress 9,271 7,546 Inventories, net 1,114 1,233 Deferred income taxes 841 655 Other current assets 2,297 2,391 ------- ------- Total current assets 24,084 22,869 PROPERTY AND EQUIPMENT - NET, AT COST 4,503 4,859 DEFERRED INCOME TAXES 1,921 1,921 OTHER ASSETS 1,142 1,192 ------- ------- $31,650 $30,841 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and accrued liabilities $ 6,907 $ 4,749 Billings in excess of costs and estimated earnings on contracts in progress 1,626 1,635 Lines of credit 4,375 5,254 Current portion of long-term obligations 534 557 ------- ------- Total current liabilities 13,442 12,195 LONG TERM OBLIGATIONS, less current portion 397 519 COMMITMENTS AND CONTINGENCIES -- -- SHAREHOLDERS' EQUITY Preferred stock, authorized 10,000,000 shares of $.01 par value; none issued and outstanding -- -- Common stock, authorized 50,000,000 shares of $.01 par value; issued and outstanding 12,479,711 shares at March 31, 1999 and December 31, 1998 125 125 Additional paid-in-capital 16,557 16,557 Retained earnings 1,129 1,445 ------- ------- Total shareholders' equity 17,811 18,127 ------- ------- $31,650 $30,841 ======= =======
See accompanying notes to condensed financial statements. 1 4 Daw Technologies, Inc. CONDENSED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except share data)
Three months ended March 31, ---------------------------------- 1999 1998 ------------ ------------ Revenues $ 12,480 $ 11,441 Cost of goods sold 10,903 10,955 ------------ ------------ Gross profit 1,577 486 Operating Expenses Selling, general and administrative 1,788 1,634 Research and development 60 44 Depreciation and amortization 119 106 ------------ ------------ 1,967 1,784 ------------ ------------ Loss from operations (390) (1,298) Other income (expense) Interest (101) (69) Other, net (11) 46 ------------ ------------ (112) (23) ------------ ------------ Loss before income taxes (502) (1,321) Income tax benefit 186 490 ------------ ------------ NET LOSS $ (316) $ (831) ============ ============ Loss per common share Basic $ (0.03) $ (0.07) Diluted $ (0.03) $ (0.07) Weighted average common and dilutive common equivalent shares outstanding Basic 12,479,711 12,407,977 Dilutive 12,479,711 12,407,977
See accompanying notes to condensed financial statements. 2 5 Daw Technologies, Inc. CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands, except share data)
Three months ended March 31, ------------------------ 1999 1998 ------- ------- Increase (decrease) in cash and cash equivalents Cash flows from operating activities Net loss $ (316) $ (831) Adjustments to reconcile net loss to net cash provided by (used in) operating activities Depreciation and amortization 393 426 Provision for losses on accounts receivable -- (50) Deferred income taxes (186) (19) Changes in assets and liabilities Accounts receivable (616) 907 Costs and estimated earnings in excess of billings on contracts in progress (1,725) (2,932) Inventories 119 (1,161) Other current assets 94 (525) Accounts payable and accrued liabilities 2,158 75 Income tax payable -- (21) Billings in excess of costs and estimated earnings on contracts in progress (9) (275) Other assets _50 -- ------- ------- Net cash used in operating activities (38) (4,406) ------- ------- Cash flows from investing activities Payments for purchase of property and equipment (37) (52) ------- -------
(continued) See accompanying notes to condensed financial statements. 3 6 Daw Technologies, Inc. CONDENSED STATEMENTS OF CASH FLOWS - CONTINUED (Unaudited) (in thousands, except share data)
Three months ended March 31, ------------------------ 1999 1998 ------- ------- Cash flows from financing activities Net change in lines of credit (879) 1,368 Payments on obligations under long term obligations (145) (164) ------- ------- Net cash provided by (used in) financing activities (1,024) 1,204 ------- ------- Net decrease in cash and cash equivalents (1,099) (3,254) Cash and cash equivalents at beginning of period 2,140 5,802 ------- ------- Cash and cash equivalents at end of period $ 1,041 $ 2,548 ======= ======= Supplemental disclosures of cash flow information - ------------------------------------------------- Cash paid during the period for Interest $ 101 $ 69 Income taxes -- --
See accompanying notes to condensed financial statements. 4 7 Daw Technologies, Inc. NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) (in thousands, except share data) 1. INTERIM CONDENSED FINANCIAL STATEMENTS The accompanying unaudited condensed financial statements have been prepared by Daw Technologies, Inc. (the "Company" or "Daw") in accordance with generally accepted accounting principles for interim financial reporting and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared under generally accepted accounting principles have been condensed or omitted pursuant to such regulations. In the opinion of management, all adjustments considered necessary for a fair presentation of the Company's financial position, results of operations and cash flows have been included. All such adjustments are of a normal recurring nature. This report on Form 10-Q for the three months ended March 31, 1999 should be read in conjunction with the Company's annual report on Form 10-K for the calendar year ended December 31, 1998. The results of operations for the three months ended March 31, 1999 may not be indicative of the results that may be expected for the year ending December 31, 1999. 2. EARNINGS PER SHARE In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard (SFAS) No. 128, "Earnings per Share". The statement is effective for financial statements for periods ending after December 15, 1997, and changes the method in which earnings per share will be determined. Adoption of this statement by the Company did not have a material impact on earnings per share. Options to acquire 869,000 shares of common stock were not included in the calculation of dilutive weighted shares outstanding for the three months ended March 31, 1999 because they would have been anti-dilutive. 3. LINES OF CREDIT At March 31, 1999, the Company maintained a revolving line of credit with a domestic bank for the lesser of $6,000 or the available borrowing base. The interest rate is computed at the bank's prime rate plus 1.0% (8.75% at March 31, 1999) and requires monthly payments of interest. The Company had borrowings under the line of $4,375 and $5,254 as of March 31, 1999, and December 31, 1998, respectively. The line of credit, which expired on December 31, 1998, was extended to March 31, 1999. The line of credit is collateralized by certain domestic receivables, equipment, and inventories. The line of credit agreement contains restrictive covenants imposing limitations on payments of cash dividends, purchases or redemptions of capital stock, indebtedness and other matters. At March 31, 1999, the Company was out of compliance on certain covenants for which they signed a forbearance agreement with the lender where the lender agreed to forbear exercise of its remedies against the Company. The Company is currently reviewing several financing alternatives. 5 8 Daw Technologies, Inc. NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) (in thousands, except share data) 4. BUSINESS ACQUISITION On April 22, 1998, in a stock for asset transaction, the Company acquired the net assets of Intelligent Enclosures Corporation, a leader in high performance controlled environments and contamination control solutions, including tool isolation environments, for microelectronic and semiconductor manufacturers. The transaction has been accounted for as a purchase and is staged in two closing dates. At the first closing on April 22, 1998, the Company issued 27,073 shares of common stock. At the second closing, on or before April 22, 2000, the Company will issue additional shares of common stock at the average per share closing price for the 20 consecutive trading days prior to the second closing, which, in addition to the shares issued at the first closing, will equal $1.3 million. 5. SEGMENT INFORMATION The Company has two reportable segments for the quarter ended March 31, 1999, namely 1) cleanrooms and related products and 2) other manufactured products. Prior to March 31, 1998, the Company operated in one segment, cleanrooms and related products. The accounting policies for the segments are the same as those described in the Company's annual report on form 10-K for the calendar year ended December 31, 1998. The Company evaluates performance of each segment based on earnings or loss from operations. The Company's reportable segments are similar in manufacturing processes and are tracked similarly in the accounting system. The manufacturing process for each segment uses the same manufacturing facilities and overhead is allocated similarly to each segment. It is not practical to determine the total assets per segment and depreciation by segment because each segment uses the same manufacturing facility. Identifiable assets by segment are reported below. The Company allocates certain general and administrative expenses, consisting primarily of facilities expenses, utilities, and manufacturing overhead. 6 9 Daw Technologies, Inc. NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) (in thousands, except share data) 5. SEGMENT INFORMATION (CONTINUED) Segment information for the cleanrooms and related products and other manufactured goods are as follows:
Three months ended March 31, -------------------------- 1999 1998 -------- -------- Revenues Cleanrooms and related products $ 9,723 $ 11,441 Other manufactured goods 2,757 -- -------- -------- Totals $ 12,480 $ 11,441 ======== ======== Operating profit (loss) Cleanrooms and related products $ (799) $ (1,298) Other manufactured goods 409 -- -------- -------- Totals $ (390) $ (1,298) ======== ======== Total assets Cleanrooms and related products $ 15,503 $ 32,516 Other manufactured goods 1,397 -- Manufacturing and corporate assets 14,750 -- -------- -------- Totals $ 31,650 $ 32,516 ======== ========
7 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. General The following discussion should be read in conjunction with the financial statements and notes thereto included elsewhere herein. All data in the tables are in thousands, except for percentages and per-share data. The Company is a supplier of ultra-clean manufacturing environments, or cleanrooms, to the semiconductor industry. The Company also manufactures sleeper cabs for heavy-duty trucks, air entrance systems for large national retail chains, and air handling systems used in commercial and industrial applications. Additionally, the Company has recently entered into various contract manufacturing agreements whereby the Company manufactures products owned and marketed by third parties. In recent years, the Company has typically had one to three significant customers, each of which accounted for more than 10% of the Company's annual revenues; these customers do not necessarily remain significant in subsequent years. The semiconductor industry has been historically cyclical in nature and continues to be adversely affected by a cyclical downturn that began in 1996. Worldwide semiconductor chip sales increased from roughly $50 billion per year in 1988 to a record high of almost $150 billion by 1995. In order to keep up with the increased demand for their products, chip manufacturers increased capital spending on new equipment and fab facilities from approximately $12 billion to approximately $45 billion during the same time period. Since their peak in 1995, chip sales have decreased to approximately $122 billion in 1998, causing capital spending for new fab equipment and facilities to plunge over 30% to less than $30 billion in 1998. The current industry downturn and lower capital spending by semiconductor manufacturers during the first quarter of 1999 has significantly impacted cleanroom revenue generated by the Company. While worldwide chip sales have been rising steadily since August of 1998 and are estimated to reach $133 billion in 1999 and rise to $182 billion by 2001, semiconductor manufacturers appear to remain hesitant to build new fab facilities and expand production capacity. As a result, the Company has continued to see a reduced level of large fab expansions and new projects by the semiconductor industry. During the first quarter of 1999, the Company has seen increased bidding activity for cleanrooms but at significantly lower levels, both in scope and dollar amount. The Company has been awarded a larger volume of projects during the first quarter of 1999 compared to the first quarter of 1998, but at lower average contract amounts. As a result, the Company's backlog has increased slightly to $15.9 million at March 31, 1999 compared to $15.3 million at March 31, 1998. Although there is uncertainty surrounding the timing of a recovery in the semiconductor industry, management continues to believe that changes taking place in the industry should result in expanded semiconductor industry capital expenditures in the long-term. Excess capacity in the industry is being absorbed and chip makers are enlarging silicon wafers in order to reduce their costs. It is estimated that using larger wafers can reduce the cost to make a chip by 15 to 20 percent, because the 300mm diameter wafer produces approximately 2.5 times as many chips by processing one wafer. With 300mm 8 11 technology, it is also estimated that capital investment per chip can be reduced. Delays in the ramp-up of 300mm technology have delayed the expected construction of the whole series of 300mm fabs worldwide. Due, in part, to the lack of 300mm process tools, weaker than expected demand, and the current focus on lowering process geometries from .25m to .18m, the 300mm effort has slowed by at least 12 to 24 months. In response to the current downturn, management will monitor the Company's cost structure and take appropriate actions as considered necessary, but continue to develop state of the art cleanroom technology and provide world-class support to the Company's customers. In response to the prolonged downturn of the semiconductor industry and reduced demand for its cleanrooms and related products, the Company has begun an aggressive diversification effort by utilizing existing design and engineering resources as well as manufacturing equipment and facilities. By applying its product and engineering expertise in custom metal fabrication, airflow systems, and high tech panel production to similar type products used by other businesses and industries, it is the Company's objective to obtain 40% of its revenues from non-cleanroom sources. The Company's contract revenue and operating results fluctuate substantially from quarter to quarter depending on such factors as the timing of significant customer orders, the timing of revenue and cost recognition, variations in contract mix, changes in customer buying patterns, fluctuations in the semiconductor equipment market, utilization of capacity, manufacturing productivity and efficiency, availability of key components and trends in the economies of the geographical regions in which the Company operates. The Company uses the percentage-of-completion method of accounting for its long-term contracts. The Company recognizes revenue in proportion to the costs incurred to date in relation to the total anticipated costs. Revenue recognized may not be the same as progress billings to the customer. Underbillings are reflected in an asset account (costs and estimated earnings in excess of billings on contracts in progress), and overbillings are reflected in a liability account (billings in excess of costs and estimated earnings on contracts in progress). The revenue related to other manufactured goods is recognized upon shipment of the product. RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, -------------------------- 1999 1998 -------- -------- STATEMENTS OF OPERATIONS DATA: Revenues ..................... $ 12,480 $ 11,441 Gross profit ................. 1,577 486 Net loss ..................... (316) (831)
9 12
MARCH 31, DECEMBER 31, 1999 1998 ------- ------- BALANCE SHEET DATA: Cash and cash equivalents.......................... $1,041 $ 2,140 Working capital ................................... 10,642 10,674 Total assets ...................................... 31,650 30,841 Total liabilities ................................. 13,839 12,714 Total shareholder's equity ........................ 17,811 18,127
Revenues for the first quarter of 1999 increased by 9.1% to $12.5 million compared to $11.4 million for the first quarter of 1998. This increase is attributed to the sale of other manufactured products of $2.8 million. Revenues from other manufactured products were zero for the period ended March 31, 1998. Revenues from cleanroom and related products decreased $1.7 million, or 15.0%, to $9.7 million for the first quarter of 1999 from $11.4 million during the first quarter of 1998. The decrease is attributed to the continued downturn in the semiconductor industry as more fully discussed above. The downturn has resulted in fewer contracts being worked on during the first quarter of 1999 compared with the first quarter of 1998. Gross profit for first quarter of 1999 increased by 224.5% to $1.6 million from $486,000 for the first quarter of 1998 and increased as a percentage of revenue to 12.6% for the first quarter of 1999 from 4.2% for the first quarter of 1998. The increased gross profit percentage is due largely to company-wide cost cutting measures adopted by management and improvements implemented by the project management team that have a direct positive impact on gross profit margins. Selling, general and administrative expenses for the first quarter of 1999 increased 9.4% to $1.8 million, or 14.3% of revenue, compared to $1.6 million, and 14.3% of revenue for the first quarter of 1998. Selling, general, and administrative expenses increased slightly by $.2 million to support the additional sales of other manufactured products but remained virtually unchanged as a percentage of total revenue. Research and development expenses for the first quarter of 1999 increased 36.4% to $60,000 compared to $44,000 for the first quarter of 1998. The Company continues to fund research and development to improve existing products and develop new products in its diversification program. Interest expense for the first quarter of 1999 increased to $101,000, compared to $69,000 for the first quarter of 1998. This increase is directly related to increased borrowings against the Company's credit line during the first quarter of 1999, compared to borrowings during the first quarter of 1998. LIQUIDITY AND CAPITAL RESOURCES Working capital at March 31, 1999 was $10.6 million compared to $10.7 at December 31, 1998. This includes cash and cash equivalents of $1.0 million at March 31, 1999 and $2.1 million at December 31, 1998. The Company's operations used $36,000 of cash during the first quarter of 1999, compared to using $4.4 million of cash from operations during the first 10 13 quarter of 1998. During the first quarter of 1999, the Company experienced a net increase in receivables of $616,000, an increase in costs and estimated earnings in excess of billings on contracts in progress of $1.7 million, and an increase in accounts payables of $2.2 million. At March 31, 1999, the Company maintained a revolving line of credit with a domestic bank for the lesser of $6,000 or the available borrowing base. The interest rate is computed at the bank's prime rate plus 1.0% (8.75% at March 31, 1999) and requires monthly payments of interest. The Company had borrowings under the line of $4,375 and $5,254 as of March 31, 1999, and December 31, 1998, respectively. The line of credit, which expired on December 31, 1998, was extended to March 31, 1999. The line of credit is collateralized by certain domestic receivables, equipment, and inventories. The line of credit agreement contains restrictive covenants imposing limitations on payments of cash dividends, purchases or redemptions of capital stock, indebtedness and other matters. At March 31, 1999, the Company was out of compliance on certain indebtedness covenants for which they signed a forbearance agreement with the lender where the lender has agreed to forbear exercise of its remedies against the Company. The Company is currently reviewing several financing alternatives. Management believes that existing cash balances, borrowings available under the line of credit, and cash generated from operations will be adequate to meet the Company's anticipated cash requirements through December 31, 1999. However, in the event the Company experiences adverse operating performance or above-anticipated capital expenditure requirements, additional financing may be required. There can be no assurance that such additional financing, if required, would be available on favorable terms. YEAR 2000 ISSUES The Company has developed a comprehensive plan to address year 2000 issues. The areas of focus are as follows: i) the Company's information technology systems; ii) the Company's non-information technology systems (i.e. machinery, equipment and devices which utilize built in or embedded technology); and iii) third party suppliers and customers. The Company is undertaking its year 2000 review in the following phases: awareness (education and potential impact of year 2000 issue), identification (identifying processes or systems which are exposed to the year 2000 issue), assessment (identifying the potential impact of year 2000 on the equipment, processes and systems identified during the previous phase), testing and verification (testing to determine if an item is compliant or the degree to which it is not), and implementation (carrying out necessary remedial efforts to address year 2000 readiness, including validation of upgrades, patches or other year 2000 fixes). During 1998, the Company completed the installation of Oracle application software, a comprehensive enterprise-wide business system. This system affects nearly every aspect of the Company's operations, including: financial accounting, purchasing and accounts payable, raw material inventory control, production planning and scheduling, and invoicing and accounts receivable. All Oracle application software utilized by the Company is year 2000 compliant. In conjunction with the installation of the Oracle software, the Company installed new HP computer hardware to run the application software. While the HP hardware is not yet fully year 2000 compliant, the Company believes it has in its possession the necessary software to make the hardware's operating systems year 2000 11 14 compliant and intends to implement the software by mid 1999. The Company expects to test these hardware, operating systems and software applications by mid 1999 to confirm year 2000 readiness. The Company has identified other hardware, operating systems and software applications used in its process control and other information systems and is in the process of obtaining year 2000 compliance information from the providers of such hardware, operating systems and applications software. The Company expects to work with vendors to test the year 2000 readiness of such hardware, operating systems and software applications. The Company has no internally developed software applications. The Company has substantially completed inventorying its non-information technology systems and is assessing the year 2000 issues to determine appropriate testing and remediation. The Company has completed its assessment of its major non-information technology systems and is currently implementing patches to make all such systems fully year 2000 compliant. The Company has significant relationships with various third parties, and the failure of any of these third parties to achieve year 2000 compliance could have a material adverse impact on the Company. The Company has commenced efforts to survey each major third party supplier to confirm their year 2000 readiness. This review process will continue into the second quarter of 1999. The Company is in the process of preparing contingency plans for critical areas to address year 2000 failures if remedial efforts are not fully successful. The Company's contingency plans are expected to target the Company's most reasonably likely worst case scenarios. The Company's contingency plans will be based in part on the results of third-party supplier surveys and thus are not fully developed at this time. Completion of initial contingency plans is targeted for the summer of 1999. No assurance can be given that the Company will not be materially adversely affected by year 2000 issues. The Company may experience material unanticipated problems and costs caused by undetected errors or defects in its information and non-information technology systems. In addition, the failure of third-parties to timely address their year 2000 issues could have a material adverse impact on the Company's business, operations, and financial condition. The installation of the Oracle application software and related hardware and operating systems was done to improve information processing capabilities and efficiencies and was done irrespective of the year 2000 issue. The Company upgrades its computer hardware and software components on a regular basis and believes it will not incur any additional material expense to modify its systems due to the year 2000 issue. The foregoing discussion of the Company's year 2000 readiness includes forward-looking statements, including estimates of the timeframes and costs for addressing this issue and is based on management's current estimates which were derived using numerous assumptions. There can be no assurance that these estimates will be achieved, and actual events and results could differ materially from those anticipated. Specific factors that might cause such material differences include, but are not limited to, the availability of personnel with required remediation skill, the ability of the Company to identify and correct or replace all relevant computer code and the success of third parties with whom the Company does business in addressing their year 2000 issues. 12 15 FACTORS AFFECTING FUTURE RESULTS The Company's future operations will be impacted by, among other factors, the length and severity of the current economic downturn in the semiconductor industry as more fully discussed above. The length and severity of the current economic downturn in the semiconductor industry remains subject to a high degree of uncertainty. The Company's operations are also subject to additional risks and uncertainties that could result in actual operating results differing materially from anticipated operating results and past operating results and trends. These risks and uncertainties include pricing pressures, cancellations of existing contracts, timing of significant customer orders, increased competition, and changes in semiconductor and cleanroom technology. Information contained in this Report contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, which can be identified by the use of forward-looking terminology such as "may," "will," "should," "expect," "anticipate," "estimate," or "continue," or the negative thereof or other variations thereon or comparable terminology. These forward-looking statements are subject to risks and uncertainties that include, but are not limited to, those identified in this report, described from time to time in the Company's other Securities and Exchange Commission filings, or discussed in the Company's press releases. Actual results may vary materially from expectations. 13 16 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits
Regulation S-K Exhibit No. Description ----------- ----------- 27 Financial Data Schedule
(b) Reports on Form 8-K - There were no reports on Form 8-K filed for the three months ended March 31, 1999. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. DAW TECHNOLOGIES, INC. (Registrant) Date: May 14, 1999 By: /s/ Michael J. Schifsky --------------------------------------- It's: Senior Vice President, Chief Financial Officer (Principal financial and accounting officer) 14 17 EXHIBIT INDEX
Exhibit No. Description of Exhibit ----------- ---------------------- Exhibit 27 Financial Data Schedule
15 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED BALANCE SHEETS AS OF MARCH 31, 1999 AND DECEMBER 31, 1998, AND THE CONDENSED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 1,041 0 10,135 (615) 1,114 24,084 13,983 (9,480) 31,650 13,442 0 0 0 125 17,686 31,650 12,480 12,480 10,903 12,820 112 0 101 (502) (186) (316) 0 0 0 (316) (0.03) (0.03)
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