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PSC Inc. readies stock offering, aims to pay down debt

As workers settle into their new digs, PSC Inc. is planning a second stock offering that in part will pay for the multimillion-dollar facility in Webster.
The company likely will make an offering of some 2 million common shares next week, said Gray Glass, a financial consultant with Wheat First Securities Inc. of Richmond, Va.
The brokerage firms of Hambrecht & Quist Inc. in San Francisco and Robinson-Humphrey Co. Inc. in Atlanta are underwriting the offering.
The timing of PSC’s stock offering makes sense, analysts say, as the maker of scanning equipment looks to pay down part of its swelling debt. Last year, the firm’s long-term liabilities ballooned to $15.1 million from $1.5 million in 1993.
Much of that debt stems from construction of PSC’s 132,000-square-foot headquarters and manufacturing plant. The firm’s 424 employees completed their move to the new facility last month.
Proceeds from the stock offering will be used to repay an $8.3 million mortgage, PSC controller Scott Deverell said.
Deverell said another $6.8 million expected to be raised will repay a loan that helped bankroll PSC’s latest acquisition, LazerData Corp. In December, PSC bought the Orlando-based maker of fixed-position bar-code scanners for roughly $9 million.
At midweek, PSC stock was trading on the NASDAQ exchange in the $12.50 range, down from a 1994 close of $14 a share. Over the past 12 months, the stock has fluctuated from a high of $15.50 to a low of $7.
PSC is extremely well-positioned in the market, Glass said, with a solid track record of growth. The firm reported record revenues of $60.4 million in fiscal 1994, up 55 percent over sales of $38.9 million the previous year and jumping 68 percent from $35.9 million in 1992.
Net income dipped, however, down from $1.9 million in 1993 to $600,000 last year. That drop reflected a $3 million pretax restructuring charge and a fourth-quarter write-off of $3.9 million for research and development projects.
Glass also pointed to PSC’s strong management, most notably President and CEO Michael Hone, who is spearheading the firm’s push into international markets. Exports to Europe, the Pacific Rim and other regions grew from $6.8 million in 1993 to $11.2 million last year.
Yet some analysts believe PSC needs to build a strong management team beyond the top gun. Indeed, the company’s stock offering prospectus cites one of its risk factors as dependence on Hone and Executive Vice President Jay Eastman, who developed PSC’s core technology and who directs the firm’s advanced product development.
Eastman’s contract with PSC expires at year’s end.
“I’d like to see a greater depth of management,” said a vice president of a local brokerage who asked to remain anonymous because of company policy.
Still, he noted that many successful firms are driven by key personalities like Hone.
“Tom Golisano is like that–so is Bill Gates, for that matter,” he said.
The bar-code industry is sizzling, analysts say, and growing markets present opportunities for many players. Bar codes now are used in a variety of applications, from checkout scanners and baggage handling to inventory control, labeling and warehousing.
The industry Goliath–Symbol Technologies Inc., based in Bohemia, N.Y.–saw sales soar from $232 million in 1990 to $465 million last year. Venture Development Corp., a market research firm, estimated the U.S. market for automated data collection at $631 million in 1993, and projected that market would experience continued growth.


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