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 ANN ARBOR, Mich., Aug. 16 /PRNewswire/ -- Nematron Corporation (OTC Bulletin Board: NEMA.U) today reported third-quarter revenues of $3,271,066, a 1.4-percent improvement versus the second quarter of fiscal 1993, and a 9.0-percent improvement versus the first quarter of fiscal 1993. These results continue to reverse a trend of declining sales during the past several years. Compared to the same quarter of fiscal 1992, sales were down 1.5 percent from $3,324,127, reflecting the continuing effects of a very slow economic recovery, increased competition, and corporate uncertainty that preceded the company's spin-off on Feb. 26, 1993, from its former parent, Interface Systems, Inc.
 The company's loss for the quarter was $206,230, versus the loss of $65,375 for the similar quarter in the previous year. Significant factors contributing to the increased loss included lower gross margins that reduced gross profits by approximately $200,000, partially offset by decreased operating expenses of about $100,000. Contributing in part to the recent reduction in margins has been the company's program of using turnkey suppliers for some of its circuit board assemblies. This program is expected to cause slightly higher material costs, but with a long-term reduction in manufacturing overhead and a significant reduction in inventory. This program to date has reduced inventories by over $500,000, which in turn reduces the company's external financing requirements. The lowered operating expenses are predominantly the result of significant manufacturing and cost reductions implemented by the company's staff during 1993 to better align expenses with recent and anticipated levels of revenues. In addition, the strengthening of the U.S. dollar against the Dutch guilder contributed to recognition of a foreign currency loss of $33,495.
 Paul Horst, president of Nematron, said, "During the past two years, a combination of factors including the recession, increased competition, sales channel concerns, and other uncertainty during the period when Nematron's parent was considering the disposition of Nematron, caused sales to decline after several previous years of high growth. We continue to be pleased with the recent stabilization if not reversal of the sales decline. We expect that with a strengthening economic recovery and resulting demand for the company's products, a return to profitability is possible within the next few quarters. At the same time, in order to achieve significant growth and profits, the company must focus on competing key product development projects that had been delayed prior to the spin-off. The company expects to reinvest any improved gross profits during the balance of the year in modest increases in marketing, sales efforts and product development, in order to be better positioned for income and sales growth in fiscal 1994 and 1995."
 Nematron pioneered the industrial workstation market segment of factory automation in 1983 with the introduction of products combining ruggedized electronic displays, keyboards, computer technology and software, which provide operator-machine interfaces. Over 50,000 Nematron industrial workstations are installed around the world, with support provided by an international network of distributors, private- label OEM customers including GE Fanuc and Honeywell, and the company's wholly owned subsidiary in the Netherlands, Nematron Europa, BV.
 (In thousands, except per-share data)
 Operating Results 3 Months Ended June 30 6 Months Ended June 30
 1993 1992 1993 1992
 Revenues $3,271 $3,324 $9,499 $10,650
 Cost of Revenues(a) 2,340 2,187 7,020 7,087
 Gross Profit 931 1,137 2,478 3,563
 Operating Expenses 1,080 1,182 3,234 3,634
 Loss from Operations (149) (45) (755) (71)
 Other Expenses(b) (80) (51) (334) (162)
 Net Loss after tax
 benefits (206) (65) (786) (157)
 Net Loss Per Share(c) (0.15) (0.05) (0.57) (0.11)
 Financial Position June 30, 1993 Sept. 30, 1992
 Current Assets $6,347 $7,489
 Property and Equipment 3,193 3,227
 Other Assets,
 Primarily Software 816 940
 Total Assets $10,356 $11,656
 Current Liabilities $2,664 $2,879
 Long-Term Debt 1,400 1,555
 Deferred Income Taxes 28 172
 Total Liabilities $4,091 $4,606
 Stockholders' Equity 6,264 7,050
 Total Liabilities &
 Stockholders' Equity $10,356 $11,656
 Stockholders' Equity
 Per Share(c) $4.55 $5.11
 (a) - Includes $424,002 in additional charges in the second quarter for amortization, depreciation and reserve for obsolete material.
 (b) - Includes $108,681 in the first six months relating to spin-off costs.
 (c) - Based upon 1,377,773 shares outstanding at the end of the quarter.
 -0- 8/16/93
 /CONTACT: G. Paul Horst, president of Nematron, 313-994-0591, Ext. 241/

CO: Nematron Corporation ST: Michigan IN: CPR SU: ERN

DD -- DE013 -- 3001 08/16/93 10:56 EDT
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Publication:PR Newswire
Date:Aug 16, 1993

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