-----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, kW3TGJzaD4gIyfaMl+5/tWk4LR5v5c1l6x7yK9/kHLBxy2tBiYBnLdsISjXhxKP7 zW+VvHRcETarDEvbIHcnvQ== 0000950005-94-000038.txt : 19940513 0000950005-94-000038.hdr.sgml : 19940513 ACCESSION NUMBER: 0000950005-94-000038 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940401 FILED AS OF DATE: 19940428 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WATKINS JOHNSON CO CENTRAL INDEX KEY: 0000105006 STANDARD INDUSTRIAL CLASSIFICATION: 3812 IRS NUMBER: 941402710 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05631 FILM NUMBER: 94525006 BUSINESS ADDRESS: STREET 1: 3333 HILLVIEW AVE CITY: PALO ALTO STATE: CA ZIP: 94304 BUSINESS PHONE: 4154934141 MAIL ADDRESS: STREET 1: 3333 HILLVIEW AVENUE CITY: PALO ALTO STATE: CA ZIP: 94304-1223 10-Q 1 FORM 10Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________ /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 1, 1994 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to ______________ Commission file number 1-5631 WATKINS-JOHNSON COMPANY ------------------------------------------------------ (Exact name of registrant as specified in its charter) CALIFORNIA 94-1402710 - - ------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 3333 Hillview Avenue, Palo Alto, California 94304-1223 - - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (415) 493-4141 --------------------------------------------------- (Registrant's telephone number, including area code) 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, and (2) has been subject to such filing requirements for the past 90 days. Yes X . No . ------ ----- Common stock, no par value, outstanding as of April 1, 1994 7,192,384 shares PART I - FINANCIAL INFORMATION Item 1. Financial Statements The interim financial statements are unaudited; however, the company believes that all adjustments necessary to a fair statement of results for such interim periods have been included. The results for the three months ended April 1, 1994, are not necessarily indicative of the results for the full year 1994. Supplementary information to the financial statements: A dividend of twelve cents per share was declared and paid during the first quarter of 1994 and 1993. Net income per share is computed based on the weighted average number of common and common equivalent shares (dilutive stock options) outstanding during the period. The difference between fully diluted earnings per share and primary earnings per share is not significant, see Exhibit 11. The consolidated financial statements required by Rule 10-01 of Regulation S-X are included in this report beginning on the next page. WATKINS-JOHNSON COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS* For the Periods Ended April 1, 1994 and April 2, 1993 Three Months Ended - - ------------------------------------------------------------------------------- (Dollars in thousands, except per share amounts) 1994 1993 - - ------------------------------------------------------------------------------- Sales $81,058 $67,083 - - ------------------------------------------------------------------------------- Costs and expenses: Cost of goods sold 51,448 44,936 Selling and administrative 15,553 14,001 Research and development 8,824 6,041 - - ------------------------------------------------------------------------------- 75,825 64,978 - - ------------------------------------------------------------------------------- Income from operations 5,233 2,105 Interest and other income (expenses) -- net: 393 187 Interest expense (297) (306) - - ------------------------------------------------------------------------------- Income before Federal and foreign income taxes 5,329 1,986 Federal and foreign income taxes (1,705) (616) - - ------------------------------------------------------------------------------- Net income $3,624 $1,370 =============================================================================== Net income per share $.45 $ . 18 - - ------------------------------------------------------------------------------- (Average common and equivalent shares: 1994-7,980,000 shares, 1993-7,555,000) *Unaudited WATKINS-JOHNSON COMPANY AND SUBSIDIARIES As of April 1, 1994 and December 31, 1993 CONSOLIDATED BALANCE SHEETS (Thousands of dollars) 1994* 1993 ASSETS ------------ --------- Current assets: Cash and equivalents $ 35,252 $ 49,081 Receivables 71,302 55,562 Inventories: Raw materials and parts 9,859 6,029 Work in process 31,661 29,290 Finished goods 1,580 2,172 Other 12,516 11,109 ----------------------------------------------------------------- Total current assets 162,170 153,243 ----------------------------------------------------------------- Property, plant and equipment 167,185 163,019 Accumulated depreciation and amortization(120,935) (115,908) ----------------------------------------------------------------- Property, plant and equipment - net 46,250 47,111 ----------------------------------------------------------------- Other assets 5,005 5,736 ----------------------------------------------------------------- $213,425 $206,090 ================================================================= LIABILITIES AND SHAREOWNERS' EQUITY Current liabilities: Payables $ 15,938 $ 10,950 Accrued liabilities 46,484 41,441 ----------------------------------------------------------------- Total current liabilities 62,422 52,391 ----------------------------------------------------------------- Long-term obligations 25,305 28,644 - - ------------------------------------------------------------------------- Shareowners' equity: Common stock, no par value 10,989 7,839 Retained earnings 114,709 117,216 ----------------------------------------------------------------- Total shareowners' equity 125,698 125,055 ----------------------------------------------------------------- $213,425 $206,090 ================================================================= *Unaudited WATKINS-JOHNSON COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS* For the Periods Ended April 1, 1994 and April 2, 1993 Three Months Ended - - -------------------------------------------------------------------------------- (Dollars in thousands) 1994 1993 - - -------------------------------------------------------------------------------- OPERATING ACTIVITIES: Net income $3,624 $1,370 Reconciliation of net income to cash flows: Depreciation and amortization 2,334 2,586 Net changes in: Receivables 2,668 (10,795) Inventories (5,954) (2,147) Other assets 100 385 Accruals and payables 1,396 3,857 - - -------------------------------------------------------------------------------- Net cash provided (used) by operating activities 4,168 (4,744) - - -------------------------------------------------------------------------------- INVESTING ACTIVITIES: Additions of property, plant and equipment (1,789) (1,506) Other 56 - - -------------------------------------------------------------------------------- Net cash used in investing activities (1,733) (1,506) FINANCING ACTIVITIES: Proceeds from issuance of common stock 2,855 Repurchase of common stock (13,805) Dividends paid (864) (907) Other (409) (172) - - -------------------------------------------------------------------------------- Net cash used by financing activities (12,223) (1,079) - - -------------------------------------------------------------------------------- Net decrease in cash and equivalents (9,788) (7,329) Cash and equivalents at beginning of period 45,040 49,081 - - -------------------------------------------------------------------------------- Cash and equivalents at end of period $35,252 $41,752 ================================================================================ *Unaudited PART I - FINANCIAL INFORMATION Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Financial Condition: The company's financial condition continued to be healthy. Cash and equivalents decreased $9.8 million from $45,040 million to $35,252 million mostly due to stock repurchases and increased working capital needs. For the balance of 1994, the company expects its operations to generate sufficient cash to fund its anticipated growth, product development, and stock repurchase program. In addition, the company has the ability to augment its cash needs with readily available external financing. Stock Repurchase: During the first quarter, the company repurchased more than 500,000 shares of stock and completed the 1.5-million-share repurchase program approved by the board of directors in 1987 and amended in 1990. On April 4, 1994, the board authorized the repurchase of up to one million additional shares of the company's common stock. Current Operations: Orders, especially for semiconductor-production equipment, are exceeding expectations. The Semiconductor Equipment Group is increasing manufacturing capacity to keep pace with demand for new 8-inch wafer processing systems. The group also initiated R&D in advanced high-density plasma for late-1990s deposition requirements. The company anticipates that revenue from chemical-vapor-deposition systems will grow by 50% again in 1994. The Electronics Group is achieving planned performance. Watkins-Johnson and two partners were awarded an $11 million Advanced Research Projects Agency contract under the federal Technology Reinvestment Project. First Quarter 1994 Compared to First Quarter 1993: Electronics sales were up 5% while semiconductor-equipment sales jumped more than 80% from the 1993 levels resulting in the overall company sales increase of approximately 21%. Gross margin increased to 36.5% from prior year's quarter mostly due to improved profitability in Electronics Group and higher volume in the Semiconductor Equipment Group. Selling and administrative expenses increased 11% and within planned levels. Research and development expenses increased as expected and included certain nonrecurring charges associated with the company's initiative in advancing high-density plasma technology. Estimated effective tax rate increased slightly to 32% as a result of the 1993 Omnibus Budget Reconciliation Act. Due to the above factors, first quarter 1994 net income jumped more than 160% compared to the same period in 1993. PART II - OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders At the annual meeting of shareholders held April 9, 1994, shareowners voted on the following: Item 1: Election of Directors: Nominee For Withheld -------------------- --------- -------- Dean A. Watkins 6,696,047 105,397 H. Richard Johnson 6,696,347 105,097 W. Keith Kennedy 6,784,850 16,594 John J. Hartmann 6,785,087 16,357 Rita Ricardo-Campbell 6,784,927 16,517 Jack L. Shepard 6,785,572 15,872 Von R. Eshleman 6,785,947 15,497 Raymond F. O'Brien 6,694,787 106,657 William R. Graham 6,786,347 15,097 Item 2: Proposal to ratify the appointment of Deloitte & Touche as the independent auditors of the company for accounting year ending December 31, 1994. For 6,779,940 Against 7,492 Withheld 14,012 ---------- ----- ------ Item 6. Exhibits and Reports on Form 8-K a) A list of the exhibits required to be filed as part of this report is set forth in the Exhibit Index, which immediately precedes such exhibits. The exhibits are numbered according to Item 601 of Regulation S-K. b) No reports on Form 8-K were required to be filed during the quarter. 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. WATKINS-JOHNSON COMPANY ----------------------- (Registrant) Date April 28, 1994 By /s/ W. Keith Kennedy, Jr. --------------------------- ---------------------------------- W. Keith Kennedy, Jr. President and Chief Executive Officer Date April 28, 1994 By /s/ Scott G. Buchanan --------------------------- ------------------------------------- Scott G. Buchanan Vice President, Chief Financial Officer EXHIBIT INDEX The Exhibits below are numbered according to Item 601 of Regulation S-K. Exhibit Number Exhibit ------- --------- 11 Statement re Computation of Per Share Earnings. WATKINS-JOHNSON COMPANY AND SUBSIDIARIES COMPUTATION OF NET INCOME PER COMMON SHARE For Three Months Ended ------------------------------------- April 1, 1994 April 2, 1993 -------------- -------------- For primary net income per share: Weighted average shares outstanding 7,355,647 7,554,865 Equivalent shares -- dilutive stock options -- based on treasury stock method using average market price 571,466 167,225 --------- --------- Total 7,927,113 7,722,090 ========= ========= For fully diluted net income per share: Weighted average shares outstanding 7,355,647 7,554,865 Equivalent shares -- dilutive stock options -- based on treasury stock method using greater of closing market price or average price 624,629 167,225 --------- --------- Total 7,980,276 7,722,090 ========= ========= Net Income $3,624,000 $1,370,000 ========== ========== Primary net income per share $.45 $.18 ==== ==== Fully diluted net income per share $.45 $.18 ==== ==== This calculation is submitted in accordance with Regulation S-K, Item 601(b)(11). -----END PRIVACY-ENHANCED MESSAGE-----