-----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, Jhzdcu6wt1VRt6v6tu1U8RwuwLzyALOZqsP+sc1ZksROqAURMjHMqJ7iCRkepIcw N7Do4c4aKhfXvfPvk8EZKA== 0000930661-96-001574.txt : 19961115 0000930661-96-001574.hdr.sgml : 19961115 ACCESSION NUMBER: 0000930661-96-001574 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961113 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MIZAR INC \DE\ CENTRAL INDEX KEY: 0000949587 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPUTERS [3571] IRS NUMBER: 411425902 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-26858 FILM NUMBER: 96661366 BUSINESS ADDRESS: STREET 1: 2410 LUNA RD STREET 2: STE 132 CITY: CARROLLTON STATE: TX ZIP: 75006 BUSINESS PHONE: 2142774600 MAIL ADDRESS: STREET 1: 2410 LUNA RD STREET 2: STE 132 CITY: CARROLLTON STATE: TX ZIP: 75006 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 ------------------------------------- FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended September 30, 1996 Commission File Number 0-26858 MIZAR, INC. (Exact name of registrant as specified in its charter) Delaware 41-1425902 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 2410 Luna Road 75006 Carrollton, Texas (Zip Code) (Address of principal executive offices) (972) 277-4600 (Registrant's telephone number) 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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Outstanding at Class November 12,1996 ----- ---------------- Common Stock, par value $0.01 per share 4,965,692 MIZAR, INC. Form 10-Q For the Quarter Ended September 30, 1996 INDEX Page No. -------- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Balance Sheets September 30, 1996 and June 30, 1996 3 Statements of Income for the three months ended September 30, 1996 and 1995 4 Statements of Cash Flows for the three months ended September 30, 1996 and 1995 5 Notes to Financial Statements 6-7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8-9 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 10 SIGNATURES 11 2 Mizar, Inc. Balance Sheets (in thousands, except number of shares)
September 30, June 30, 1996 1996 ------- ------- ASSETS ------ Current assets: Cash and cash equivalents $ 2,013 $ 1,550 Marketable securities, at fair value 8,638 10,127 Interest receivable on marketable securities 158 159 Accounts receivable, net of allowances of $128 and $123, respectively 2,584 1,319 Inventories, net 1,799 1,456 Prepaids and other 148 167 Deferred tax asset 812 790 ------- ------- Total current assets 16,152 15,568 ------- ------- Certificate of deposit 101 100 Plant and equipment: Machinery and equipment 1,602 1,376 Furniture and fixtures 229 175 ------- ------- 1,831 1,551 Less accumulated depreciation (1,260) (1,170) ------- ------- Plant and equipment, net 571 381 ------- ------- Other assets 38 46 ------- ------- Total assets $16,862 $16,095 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current liabilities: Accounts payable $ 778 $ 584 Accrued compensation 203 191 Other current liabilities 732 636 Current maturities of capital lease obligations 9 13 ------- ------- Total current liabilities 1,722 1,424 ------- ------- Capital lease obligations - 2 ------- ------- Total liabilities 1,722 1,426 ------- ------- Stockholders' equity: Preferred stock, $.01 par value; 1,000,000 shares authorized; no shares issued and outstanding at September 30 and June 30, 1996, respectively - - Common stock, $.01 par value; 25,000,000 shares authorized; 5,468,063 and 5,472,242 issued at September 30 and June 30, 1996, respectively, and 4,965,692 and 4,968,009 shares outstanding at September 30 and June 30, 1996, respectively 55 55 Additional paid-in capital 13,667 13,656 Net unrealized loss on marketable securities (42) (66) Retained earnings 2,049 1,610 ------- ------- 15,729 15,255 ------- ------- Less -- treasury stock, at cost (589) (586) ------- ------- Total stockholders' equity 15,140 14,669 ------- ------- Total liabilities and stockholders' equity $16,862 $16,095 ======= =======
The accompanying notes are an integral part of these financial statements. 3 Mizar, Inc. Statements of Income (in thousands, except per share amounts)
Three Months Ended September 30, 1996 1995 -------- ------- Net sales $ 3,025 $ 4,458 Cost of sales 1,380 1,876 ------- ------- Gross margin 1,645 2,582 Operating expenses: Sales and marketing 464 664 Product development and engineering 474 394 General and administrative 351 232 ------- ------- Total operating expenses 1,289 1,290 ------- ------- Operating income 356 1,292 ------- ------- Other income (expense): Interest income 135 55 Interest expense and other - (81) ------- ------- Total other income (expense) 135 (26) ------- ------- Income before provision for income taxes 491 1,266 ------- ------- Provision for income taxes 52 133 Net income $ 439 $1,133 ======= ====== Primary net income per share $ 0.08 $ 0.26 ======= ====== Fully diluted net income per share $ 0.08 $ 0.22 ======= ====== Weighted average common shares outstanding: Primary 5,579 4,388 ======= ====== Fully diluted 5,579 5,259 ======= ======
The accompanying notes are an integral part of these financial statements. 4 Mizar, Inc. Statements of Cash Flows (in thousands)
Three Months Ended September 30, 1996 1995 ------- ------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 439 $ 1,133 Adjustments to reconcile net income to net cash provided by (used in) operating activities - Depreciation 90 65 Amortization of deferred loan costs - 3 Prepaid rent (4) (4) ------- ------- 525 1,197 Changes in assets and liabilities - Accounts receivable, net (1,265) (1,001) Interest receivable on marketable securities 1 - Inventories, net (343) (253) Prepaid expenses (16) (28) Other assets 12 10 Accounts payable 194 93 Accrued liabilities 108 464 ------- ------- Net cash provided by (used in) operating activities (784) 482 ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of machinery and equipment (280) (62) Proceeds from dispositions of machinery and equipment - - Net sales (purchases) of marketable securities 1,525 (96) ------- ------- Net cash provided by (used in) investing activities 1,245 (158) ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Sale of common stock (net) - 6,797 Receivable from IPO proceeds - (7,197) Exercise of stock warrants and options (net of employee loans) 11 183 Purchase of treasury stock (3) - Net payments on long-term debt, capital lease obligations, and subordinated debentures (6) (6) ------- ------- Net cash provided by (used in) financing activities 2 (223) ------- ------- NET INCREASE IN CASH AND CASH EQUIVALENTS 463 101 CASH AND CASH EQUIVALENTS, beginning of year 1,550 3,710 ------- ------- CASH AND CASH EQUIVALENTS, end of year $ 2,013 $ 3,811 ======= ======= SUPPLEMENTAL CASH FLOW DISCLOSURES: Cash paid for interest $ - $ 27 Cash paid for income taxes 16 21 Common stock issued in conversion of convertible debentures - 1,048
The accompanying notes are an integral part of these financial statements. 5 MIZAR, INC. Notes to Interim Financial Statements 1. Basis of Presentation While the accompanying interim financial statements are unaudited, they have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of the Company, all material adjustments and disclosures necessary to fairly present the results of such periods have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. These financial statements should be read in conjunction with the financial statements and notes thereto for the year ended June 30, 1996. Certain previously reported amounts have been reclassified to conform with the current year presentation. The results of operations for the period ended September 30, 1996, are not necessarily indicative of results to be expected for the year ending June 30, 1997. 2. Marketable Securities The Company has invested a portion of its available cash balances in marketable securities with original maturities not exceeding three years. In accordance with SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, the Company has determined that all marketable securities should be classified as available for sale securities. Accordingly, these securities are reported at their respective market values and are classified as current assets. The Company's results from operations will include earnings from such securities as calculated on a yield-to-maturity basis. Unrealized gains and losses from the changes in fair value are excluded from income and are reported as an adjustment to stockholders' equity, net of the deferred tax effect. The Company's marketable securities consist of federal government securities, commercial paper, certificates of deposit, and corporate bonds. 3. Inventories Net inventories at September 30, 1996 and June 30, 1996, consisted of the following (in thousands):
September 30, 1996 June 30, 1996 ------------------- -------------- Raw materials $1,076 $ 749 Work-in-process 753 688 Finished goods 274 278 ------ ------ 2,103 1,715 Less--allowance for excess and obsolete (304) (259) inventory ------ ------ Net inventory $1,799 $1,456 ====== ======
4. Income Taxes The Company's effective income tax rate as reflected in the accompanying income statement for the three months ended September 30, 1996, has been significantly impacted by the utilization of net operating loss carryforwards. During the three months ended September 30, 1996, the impact of accounting for net operating loss carryforwards yielded an effective tax rate of approximately 11%. During fiscal year 1996, the Company's accounting for income taxes was further impacted by the recognition of a deferred tax asset of $790,000. The Company believes that it is more likely than not that it will be able to realize this asset, which is also associated with a net operating loss carryforward. In accordance with SFAS No. 109, Accounting for Income Taxes, a valuation allowance associated with the net operating loss carryforward was reduced and the $790,000 asset was recognized. 6 MIZAR, INC. Notes to Interim Financial Statements 5. Income Per Share Primary and fully diluted income per share were computed by dividing net income, as adjusted in the FY96 fully diluted calculation for interest expense on the subordinated debentures, by the weighted average number of shares of common stock and common stock equivalents outstanding during the periods presented. Common stock equivalents included in both primary and fully diluted income per share are stock options using the treasury stock method. For the quarter ended September 30, 1996, both primary income per share and fully diluted income per share were computed using the average fair market price, which was higher than the ending market price. Shares used in primary and fully diluted income per share calculations are presented below.
Primary Fully Diluted ------------------ ------------------ Three Months Ended Three Months Ended September 30, September 30, 1996 1995 1996 1995 -------- -------- --------- ------- Weighted average common stock outstanding during the period 4,966 3,360 4,966 3,360 Common stock equivalents of employee stock programs 613 1,028 613 1,037 Common stock equivalents of N/A N/A N/A 862 convertible debt ----- ----- ------ ----- Shares used in net income per share calculation 5,579 4,388 5,579 5,259 ===== ===== ===== =====
6. Recently Adopted Accounting Pronouncements Recently, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 121, Accounting for the Impairment of Long- Lived Assets and for Long-Lived Assets to be Disposed Of. The adoption of this standard is required for financial statements for fiscal years beginning after December 15, 1995. The Company has adopted this standard for fiscal 1997, and does not believe the impact of the adoption will be material. Recently, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation. This standard, which establishes a fair value method of accounting for stock- based compensation plans, also permits an election to continue following the requirements of APB Opinion No. 25, Accounting for Stock Issued to Employees, with disclosure of pro forma net income and net income per share under SFAS No. 123. SFAS No. 123 is effective for years beginning after December 15, 1995. The Company has elected to continue to follow the requirements of APB Opinion No. 25, with the pro forma disclosure requirements promulgated by SFAS No. 123 for fiscal year 1997. The Company does not believe the impact of the adoption will be material. 7 MIZAR, INC. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations - --------------------- During the quarter ended September 30, 1996, the Company reported net sales of $3,025,000, a 32% decrease over the same period in the prior year. The decline is due to a number of customers which have delayed projects or programs, which in part was due to the ongoing federal budget negotiations. In addition, other customers have experienced development and product deployment delays which have negatively impacted the Company's short-term revenue performance. DSP-based product sales comprised approximately 78% and 63% of net sales during the quarters ended September 30, 1996 and 1995, respectively. Gross margin percent for the quarter ended September 30, 1996 was 54%, as compared to 58% for the same period in the prior year. Gross margins in the quarter ended September 30, 1995, were positively impacted by relatively high production volumes experienced in the quarter and the resultant positive impact of fixed production costs being spread over more units of production. The Company's historical gross margin percentage has varied by quarter in both a positive and negative fashion due to volume related efficiencies and changes in customer and specific product mix. Such changes in customer and specific product mix will continue to impact gross margin percentages in a similar fashion during future reporting periods as DSP products comprise a larger percentage of sales, but presumably will develop more consistency as the DSP market matures. During the three months ended September 30, 1996, operating expenses were $1,289,000, or 43% of net sales, as compared to $1,290,000, or 29% of net sales, during the same period in the prior year. Expressed in absolute dollars, total operating expenses were relatively flat when compared to the prior year. Absolute spending levels for sales and marketing decreased on a comparative basis primarily as a result of reduced levels of marketing expenditures. Engineering project related expenses increased on a comparative basis as did general and administrative expenses due primarily to headcount additions. Interest income for the quarter ended September 30, 1996 was $135,000, as compared to $55,000 for the same period in the prior year. The increase in interest income is primarily the result of earnings from marketable securities purchased with the net proceeds of the Company's IPO. The Company reported net income of $439,000 for the quarter ended September 30, 1996, as compared to $1,133,000 during the same period in the prior year. The decrease in the three months ended September 30, 1996, as compared to the same period in the prior year, is primarily due to the decrease in net sales. Liquidity and Capital Resources - ------------------------------- Net working capital at September 30, 1996 was $14,430,000, an increase of $286,000 from June 30, 1996. A large portion of the Company's net sales in the quarter ended September 30, 1996, occurred in the month of September which 1)resulted in relatively large trade receivable balances in relation to historical levels and, 2) negatively impacted the Company's cash flows during the quarter. The Company believes that its near-term liquidity requirements will be met with cash flow from operations and existing cash and short-term investments. 8 MIZAR, INC. Management's Discussion and Analysis of Financial Condition and Results of Operations Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995: Certain matters discussed or incorporated by reference in this Form 10-Q are forward-looking statements that involve risks and uncertainties. These risk factors include, but are not limited to, technological change, defense industry and federal government customer concentration, relationship with Texas Instruments Defense Systems and Electronics Group, commercial market uncertainties, dependence upon suppliers and subcontractors, dependence on key personnel, competition, quarterly fluctuations, and other risks indicated in filings with the Securities and Exchange Commission. These risk factors could materially affect the Company's operations and cause actual results to differ materially from those contained in forward-looking statements. For a more complete explanation of risk factors, please see Mizar's Form 10-K for the fiscal year ended June 30, 1996. 9 MIZAR, INC. Part II. Other Information Item 6. Exhibits and Reports on Form 8-K (a) Exhibits (exhibit reference numbers refer to Item 601 of Regulation S-K) 11(a) Computation of Per Share Income for the three month period ending September 30, 1996. 27 Financial Data Schedule (filed electronically only) (b) Reports on Form 8-K No reports on Form 8-K were filed during the period. 10 MIZAR, INC. 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. Mizar, Inc. Date: November 12, 1996 By /s/ Charles D. Brockenbush ------------------------------------------- Charles D. Brockenbush Vice President, Finance and Chief Financial Officer (Principal Financial and Accounting Officer) 11 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION - -------- ---------------------------- 11 (a) Computation of Per Share Income 27 Financial Data Schedule (filed electronically only) EX-11.A 2 COMPUTATION OF PER SHARE INCOME Exhibit 11(a) Mizar, Inc. Computation of Per Share Income (in thousands, except per share amounts)
Three Months Ended September 30, 1996 1995 ------ ------ Primary Income Per Share: Net income $ 439 $1,133 ====== ====== Weighted average shares outstanding 4,966 3,360 Effect of common stock equivalents: Options granted 777 920 Weighted average exercised options outstanding for portion of period, net of equivalent shares purchased at average fair market value - 200 Effect of using option proceeds to repurchase common stock at average fair market value (164) (92) ------ ------ 613 1,028 ------ ------ Total common stock equivalents 5,579 4,388 ------ ------ Primary income per share $0.08 $0.26 ====== ====== Fully Diluted Income Per Share: Total weighted average shares from above 5,579 4,388 Effect of using ending vs. average market price for stock option calculations - 9 Effect of conversion of subordinated debentures - 862 ------ ------ Total common stock equivalents 5,579 5,259 ------ ------ Net income 439 1,133 Adjustment to net income for interest on subordinated debentures - 46 ------ ------ Net income, as adjusted $ 439 $1,179 ------ ------ Fully diluted income per share $ 0.08 $ 0.22 ====== ======
EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF MIZAR , INC. AS OF SEPTEMBER 30, 1996, AND FOR THE THREE MONTHS THEN ENDED, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS JUN-30-1997 JUL-01-1996 SEP-30-1996 2,013 8,638 2,712 128 1,799 16,152 1,831 1,260 16,862 1,722 0 0 0 55 15,085 16,862 3,025 3,025 1,380 1,380 1,289 0 0 491 52 439 0 0 0 439 .08 .08
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