-----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, Qj9TjL71eza99owrz6ij3GnC4WjMLjROZCaPDIoaED6ss9bfB1nx4uU/Lpim5e54 FCians0AD28mHXJnGQsYfg== 0000891618-96-001958.txt : 19960906 0000891618-96-001958.hdr.sgml : 19960906 ACCESSION NUMBER: 0000891618-96-001958 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960731 FILED AS OF DATE: 19960905 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: TELEVIDEO SYSTEMS INC CENTRAL INDEX KEY: 0000353779 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER TERMINALS [3575] IRS NUMBER: 942383795 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-11552 FILM NUMBER: 96626130 BUSINESS ADDRESS: STREET 1: 550 E BROKAW RD STREET 2: PO BOX 49048 CITY: SAN JOSE STATE: CA ZIP: 95161 BUSINESS PHONE: 4089548333 10-Q 1 FORM 10-Q FOR THE PERIOD ENDED JULY 31.1996 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: July 31, 1996 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: 0-11552 TELEVIDEO SYSTEMS, INC. (Exact name of registrant as specified in its charter) DELAWARE 94-2383795 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2345 Harris Way, San Jose, California 95131 (Address of principal executive offices) (Zip Code) (408) 954-8333 (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 (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 --- --- The number of shares outstanding of registrant's Common Stock, as of July 31, 1996 is: 45,402,245 . 2 TELEVIDEO SYSTEMS, INC. FORM 10-Q FOR THE QUARTER ENDED JULY 31, 1996 INDEX
PAGE NO. PART I. Financial Information 3 ITEM 1. FINANCIAL STATEMENTS Condensed Consolidated Financial Statements Condensed Consolidated Balance Sheets - July 31, 1996 and October 31, 1995 4 Condensed Consolidated Statements of Operations - Three Months Ended July 31, 1996, and July 31, 1995 5 Condensed Consolidated Statements of Operations - Nine Months Ended July 31, 1996, and July 31, 1995 6 Condensed Consolidated Statements of Cash Flows - Nine Months Ended July 31, 1996, and July 31, 1995 7 Notes to Condensed Consolidated Financial Statements - July 31, 1996 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 13 PART II. Other Information 17 ITEM 1. LEGAL PROCEEDINGS 17 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 17 SIGNATURES 18
2 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. TELEVIDEO SYSTEMS, INC. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1996 AND 1995 QUARTERLY DATA The condensed consolidated financial statements included herein have been prepared by the management of TeleVideo Systems, Inc. (the "Company"), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. 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 such rules and regulations, although the Company believes the disclosures which are made are adequate to make the information presented not misleading. Further, the condensed consolidated financial statements reflect, in the opinion of management, all adjustments (which included only normal recurring adjustments) necessary to present fairly the financial position and results of operations as of and for the periods indicated. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and the notes thereto included in the Company's Report on Form 10-K for the fiscal year ended October 31, 1995. The results of operations for the three and nine-month period ended July 31, 1996, are not necessarily indicative of the results to be expected for the entire fiscal year ending October 31, 1996. [The remainder of this page is intentionally left blank] 3 4 TELEVIDEO SYSTEMS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)
July 31, October 31, 1996 1995 -------- -------- ASSETS Current Assets: Cash and cash equivalents $ 5,595 $ 5,145 (including restricted cash of $2,430 in 1996 and $3,500 in 1995) Marketable securities 0 40 Accounts receivable, net 4,596 3,593 Receivables from related parties, net of allowance of $384 in 1996 and $363 in 1995 (Note 6) 92 1,441 Inventories 4,220 5,735 Prepayments and other 5,118 336 -------- ------ Total current assets 19,621 16,290 -------- ------ Property, plant and equipment: Property, plant and equipment 5,965 5,961 Less accumulated depreciation (2,896) (2,705) -------- ------- Net property, plant and equipment 3,069 3,256 -------- ------ Investment in affiliates (Note 2) 234 54 Other assets 0 5,000 -------- ------ Total assets $22,924 $24,600 ======== ======= LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 899 $ 1,662 Accrued liabilities 867 982 Income taxes 611 611 --------- ------- Total current liabilities 2,377 3,255 --------- ------- Stockholders' equity: Common stock 454 451 Additional paid in capital 95,634 95,560 Unrealized loss on marketable securities 0 (39) Accumulated deficit (75,541) (74,627) --------- ------- Total stockholders' equity 20,547 21,345 --------- -------- Total liabilities & stockholders' equity $ 22,924 $24,600 ========= =========
4 5 TELEVIDEO SYSTEMS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED JULY 31, 1996 AND JULY 31, 1995 (In thousands, except per share amounts)
1996 1995 ---------- -------- Net sales $ 5,369 $ 5,475 Cost of sales 4,871 4,462 -------- ------- Gross profit 498 1,013 -------- ------- Operating expenses: Marketing 484 823 Research and development 236 441 General and administrative 334 318 -------- ------- Total operating expenses 1,054 1,582 -------- ------- Loss from operations (556) (569) -------- -------- Interest income 191 202 Other income (193) (146) -------- -------- Net income (loss) before income tax (558) (513) Income taxes (2) (5) -------- -------- Net income (loss) after income tax $ (560) $ (518) ======== ======== Net income (loss) per share $ (0.01) $ (0.01) ======== ======== Average shares outstanding 45,391 44,948 ======== ========
5 6 TELEVIDEO SYSTEMS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED JULY 31, 1996 AND JULY 31, 1995 (In thousands, except per share amounts)
1996 1995 ---------- -------- Net sales $13,994 $12,096 Cost of sales 12,830 9,598 -------- ------- Gross profit 1,164 2,498 -------- ------- Operating expenses: Marketing 1,902 2,320 Research and development 868 1,405 General and administrative 960 833 -------- ------- Total operating expenses 3,730 4,558 -------- ------- Loss from operations (2,566) (2,060) -------- -------- Interest income 529 615 Other income 1,133 1,948 -------- ------- Net income (loss) before income tax (904) 503 Income taxes (9) (6) -------- -------- Net income (loss) after income tax $ (913) $ 497 ======== ======== Net income (loss) per share $ (0.02) $ 0.01 ======== ======== Average shares outstanding 45,304 44,804 ======== ========
6 7 TELEVIDEO SYSTEMS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED JULY 31, 1996 AND JULY 31, 1995 (In thousands)
1996 1995 ----------- ------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ (913) $ 496 Charges (credits) to operations not affecting cash: Depreciation 203 237 Changes in certain current assets and liab.: Accounts receivable (1,003) (1,162) Inventories 1,515 (410) Prepayments and other 218 215 Accounts payable (763) (623) Accrued liabilities (115) (268) Income taxes - - -------- ------- Net cash provided by (used in) operating activities (858) (1,515) -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Net retirements of (additions to) property, plant & equipment (16) 5,986 Decrease (Increase) in other assets - (5,000) Investment in marketable securities 79 22 Investment in affiliate (180) 403 Loan to affiliate - (777) Payment received on notes receivable 1,349 3,434 Proceeds from investment gain - - -------- ------- Net cash provided by (used in) investing activities 1,232 4,068 -------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock 76 80 Equity adjustment from foreign currency translation - - -------- ------- Net cash provided by (used in) financing activities 76 80 -------- ------- Increase (decrease) in cash and cash equivalents 450 2,633 -------- ------- Cash and cash equivalents at the beginning of the period 5,145 2,131 -------- ------- Cash and cash equivalents at the end of the period $ 5,595 $ 4,764 ======= =======
7 8 TELEVIDEO SYSTEMS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS July 31, 1996 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Consolidation The condensed consolidated financial statements include the accounts of the Company and its majority owned subsidiaries, after elimination of intercompany accounts and transactions. Translation The Company applies Statement of Financial Accounting Standards No. 52 for purposes of translating foreign currency financial statements of its foreign subsidiaries. Translation gains and losses resulting from the translation of foreign currency financial statements are deferred and classified as adjustments to stockholders' equity. Cash and Cash Equivalents For purposes of the condensed consolidated statements of cash flows, the Company considers all highly liquid investments with a maturity of three months or less to be cash equivalents. Approximately $2,430,000, invested in short term certificates of deposit, are pledged as security under a letter of credit agreement. Marketable Securities Marketable securities were carried at the lower of aggregate cost or quoted market value. The marketable securities of approximately $80,483 was sold in July 1996 and a loss of $44,283 was recognized. Inventories Inventories are stated at the lower of cost or market. Costs are computed on a currently adjusted standard basis (which approximates average cost) for both finished goods and work-in-progress and includes material, labor and manufacturing overhead costs. The components of inventory consist of the following (in thousands): 8 9
July 31, October 31, 1996 1995 ----------- ----------- Purchased parts $ 2,713 $ 3,390 Work-in-process 809 1,170 Finished goods 698 1,175 ----------- ----------- $ 4,220 $ 5,735 =========== ===========
Property, Plant & Equipment Depreciation and amortization are provided over the estimated useful lives of the assets using both straight-line and accelerated methods. Estimated useful lives are as follows:
Buildings 40 years Production equipment 1-10 years Office furniture 1-10 years Leasehold improvements Terms of lease
Net Income (Loss) Per Share Net income and loss per share is based on the weighted average number of shares of Common Stock outstanding during the period. 2. ACQUISITIONS AND DIVESTITURES: Kabil Electronics Company, Ltd. The Company owned a 35% interest in Kabil Electronics Company, Ltd. of South Korea and the total investments were approximately $3.3 million. Since Kabil continued to sustain losses from operations, the Company wrote off its investments in Kabil in fiscal 1990 and fiscal 1993. In December 1994, the Company sold its 35% interest in Kabil to the majority owners for $1.4 million, less expenses, which were paid in installments over the 1995 and 1996 fiscal year. Approximately $552,848 was received in fiscal 1995. An additional $866,652 was received in January 1996. 9 10 AdMOS Technologies Inc. During fiscal 1991, the Company acquired through its wholly owned subsidiary, Silicon Logic, Inc., a 20% equity interest in a chip engineering firm (AdMOS Technologies Inc.) in exchange for certain assets and a nominal cash payment, the total value of which was $145,000. The acquisition of this interest had been accounted for on the cost method. This investment was written off in fiscal 1992 due to the continued economic difficulties experienced by AdMOS. In fiscal 1991 and 1992, the Company loaned AdMOS a total of $470,000, which has been partially repaid. The outstanding balance at July 31, 1996 was $104,000. The repayment of a portion of this loan is personally guaranteed by the President and controlling shareholders of AdMOS. Due to the economic difficulties AdMOS is currently experiencing, the principal and interest balances due on this note have been fully reserved. In February 1995, TeleVideo further loaned AdMOS $384,000 at an interest rate of 10% per annum. Approximately $104,000 was repaid to the Company in August 1995. In November 1995, the Company received another $100,000 from AdMOS. The Company has fully reserved the unpaid balance of $180,000 plus accrued interest as of July 31, 1996. Indigo, International During the first quarter of fiscal 1994, the Company acquired a 40% interest in Indigo, International in exchange for a cash investment of $25,000. The investment was carried at cost. Indigo had incurred only minor operations in fiscal 1994 and 1995. The investment was written off in the second quarter of fiscal 1996. Three H In fiscal 1992, the Company acquired a 50% joint venture interest in "Three H" in exchange for the contribution of cash of approximately $16,000. In July 1996, the Company further invested $60,000 in the joint venture. In February 1993, the Company loaned the Three H Joint Venture $1.0 million as working capital for the purpose of conducting short term commodities trading. The loan is unsecured and bears interest at 20% per annum. In fiscal 1994, a total amount of $800,000 was repaid to the Company. The Company received another $170,000 from "Three H" in November 1995. The remaining balance of $30,000 plus accrued interest of approximately $62,000 will be repaid to the Company in fiscal 1996. 10 11 InterTerminal In April 1994, TeleVideo acquired a 51% ownership of the "InterTerminal" joint venture in exchange for a $5,100 cash investment and a commitment to fund a $3.65 million loan, 20% interest rate, to the venture. The main purpose of the "InterTerminal" joint venture was the construction of a truck terminal (approximately 100,000 square feet) approximately 25 miles outside of Moscow, and the construction was complete in early 1995. TeleVideo sold its 51% ownership in May 1995. The $3.65 million loan was repaid to the Company in fiscal 1995. An additional $1,369,500 was received and recognized as a gain in the first and second quarters of fiscal 1996. TeleVideo-RUS In January 1996, TeleVideo set up a company called "TeleVideo- RUS" in the Commonwealth of Independent States with an initial investment of $150,000. The main purpose of this company is to act as a liaison between TeleVideo and the authorities in the CIS. One of the projects that the Company is anticipating will be the construction of truck terminals similar to the "InterTerminal" joint venture. At the indicated dates the Company had the following investments in affiliates and joint ventures (in thousands):
July 31, October 31, 1996 1995 TeleVideo-RUS $ 150 $ 0 Three H Joint Venture 76 16 Pan Asian Bank 8 8 InterTerminal 0 5 Indigo 0 25 ----------- ----------- Total $ 234 $ 54 =========== ===========
3. RESTRICTED CASH: The Company has a letter of credit agreement with a bank whereby the bank will issue up to $2,430,000 of standby and sight letters of credit. This agreement is contingent upon the Company maintaining cash deposits at the bank as collateral in an amount no less than the outstanding borrowings. These funds are held in three month certificates of deposits and earn interest at the rate of approximately 5.205% per annum. At July 31, 1996, the Company had letters of credit outstanding of approximately $1,180,000 which were secured by an equivalent amount of cash deposits. 11 12 4. INCOME TAXES: The Company adopted, effective November 1, 1993, Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes," issued in February 1992. Under the liability method specified by SFAS 109, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities as measured by the enacted tax rates which will be in effect when these differences reverse. Deferred tax expense is the result of changes in deferred tax assets and liabilities. The change from the deferred method to the liability method of accounting for income taxes had no material impact on the financial position or results of operations of the Company for the quarter ended July 31, 1996. As of July 31, 1996, the only tax issues pending are the Massachusetts State Tax audit and the California Franchise Tax exposure resulting from the previous Federal Income Tax audits. The Company believes that its maximum exposure, collectively, will not exceed $600,000. The Company has accrued this full amount at July 31, 1996. 5. LITIGATION: The Company has been named, along with dozens of other manufacturers, designers, and distributors of computer equipment, as a defendant in several lawsuits regarding product liability in connection with the alleged defective design of computer terminal keyboards and the size of the computer monitor screens. The first issue alleges that the various plaintiffs have suffered some form of severe wrist injury from the use of said keyboards. The second issue alleges that there was false advertising which claimed that the video screens were 17 inches in size, when in reality they were only 15 inches. The Company's attorneys have prepared a defense for these cases and the Company's insurance carriers are informed of the plaintiff's claims. The Company intends to vigorously defend against the allegations of these suits. Management believes that the ultimate outcome of these lawsuits will not have a material adverse effect on the Company's financial position. 6. RELATED PARTY TRANSACTIONS: The Company's outstanding receivables from related parties are summarized below (in thousands): 12 13
July 31, October 31, Notes Receivable: 1996 1995 - ----------------- ----------- -------- Three H Joint Venture $ 30 $ 200 InterTerminal 0 213 Kabil 0 866 AdMOS 104 (1) 104 (1) AdMOS 180 (1) 280 (2) Interest Receivable: Three H Joint Venture 62 62 AdMOS 63 (1) 55 (1) AdMOS 37 (1) 24 (1) ----------- ----------- Total $ 476 $ 1,804 =========== ===========
- ------------------------ (1) Amounts are fully reserved. (2) Approximately $180,000 was reserved. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Results of Operations Operating loss for the three months ended July 31, 1996 of approximately $556,000 was approximately 2.3% lower as comparing with the same period in fiscal 1995 which totaled approximately $569,000. Operating loss for the nine months ended July 31, 1996 of approximately $2.57 million was approximately 24.6% higher comparing with the same period in fiscal 1995 which totaled approximately $2.06 million, primarily the results of low profit margin of the multimedia products. The net loss for the third quarter of fiscal 1996 totaled approximately $560,000, or $0.01 per share, compared to a net loss of $518,000, or $0.01 per share, a year ago for the same three month period. The net loss for the nine months ended July 31, 1996 totaled approximately $913,000, or $0.02 per share, compared to a net income of $497,000, or $0.01 per share, for the same period a year ago. The net loss in fiscal 1996 was lower than the operating loss in fiscal 1996, due primarily to the gain of approximately $1,369,500 from the sale of the InterTerminal joint venture. The net income for the fiscal year of 1995 was due to: (a) a gain of $1.3 million from the sale of the Company's headquarters located at Brokaw Road, San Jose, California in December 1994; (b) a gain of $290,000 from the sale of the Kabil business in February 1995; and (c) a gain of $1.0 million 13 14 from the sale of the Ordynka building in April 1995 but partially offset by a loss of $346,000 from the sale of the SMS product line in March 1995. Net loss per share for the third quarter of fiscal 1996 was $0.01 per share based on 45,391,000 weighted average shares outstanding, compared to a net loss of $0.01 per share based on 44,948,000 weighted average shares outstanding in the third quarter of fiscal 1995. Net sales for the third quarter of fiscal 1996 of approximately $5.4 million were approximately 1.9% below the same quarter a year ago which totaled approximately $5.5 million. Net sales for the nine months ended July 31, 1996 of approximately $14.0 million were approximately 15.7% above the same period of time a year ago which totaled approximately $12.1 million. The increase in net sales during the first nine months of fiscal 1996 was principally attributable to the increase in the sales volume of multimedia products but partially offset by the severe price competition, the decline in the sales of the SMS and older terminal products, and the increase of cost of the older terminal products. Cost of sales were approximately $4.9 million in the third quarter of fiscal 1996, or 9.2% higher than the approximately $4.5 million reported in the third quarter of fiscal 1995. Cost of sales in the third quarter of fiscal 1996 compared to the same period a year ago increased as a percentage of sales from approximately 81.5% (in fiscal 1995) to approximately 90.7% in fiscal 1996. The increase in cost of sales percentage and the corresponding decrease in gross margin percentage for the three month period ended July 31, 1996 (a decrease from approximately 18.5% to 9.3%) were primarily the results of severe price competition and lower profit margin of the multimedia products. The price of certain multimedia products had dropped below cost. Cost of sales were appproximately $12.8 million for the nine months ended July 31, 1996, or 33.7% higher than the approximately $9.6 million reported in the same period a year ago. Cost of sales also increased as a percentage of sales from approximately 79.3% (in fiscal 1995) to approximately 91.7% in fiscal 1995. Marketing expense decreased as a percentage of sales in the third quarter of fiscal 1996 from approximately 15.0% in fiscal 1995 to 9.0% in fiscal 1996 on a comparative quarter-to-quarter basis, while actual marketing expenses decreased approximately 41.2% over this same three month period. On a nine month basis, marketing expense decreased as a percentage of sales from approximately 19.2% in fiscal 1995 to 13.6% in fiscal 1996, while actual marketing expenses decreased approximately 18.0%. The decrease in marketing expense percentage and actual marketing expense was due primarily to the decrease in marketing and sales staffing levels and decrease in purchased services and advertising expenses on multimedia products. 14 15 Research and development expense decreased as a percentage of sales in the third quarter of fiscal 1996 from approximately 8.1% in fiscal 1995 to 4.4% in fiscal 1996, while actual research and development expense decreased approximately 46.5% over this same three month period. On a nine month basis, research and development expense decreased as a percentage of sales from approximately 11.6% in fiscal 1995 to 6.2% in fiscal 1996, while actual expense decreased approximately 38.2%. The decrease in percentage and actual research and development expenses for the three and nine months ended July 31, 1996 compared to the same period last year was due primarily to the decrease in engineering staffing levels. General and administrative expense increased as a percentage of sales in the third quarter of fiscal 1996 from approximately 5.8% in fiscal 1995 to 6.2% in fiscal 1996, while actual expenses increased approximately 5.0% over this same three month period. On a nine month basis, general and administrative expense as a percentage of sales of appproximately 6.9% in fiscal 1996 was about the same as in fiscal 1995, while actual expense increased approximately 15.2% over this same nine month period. The increase in expense levels for the three and nine months ended July 31, 1996 was due primarily to the increase in administrative staffing levels. Interest income earned in the three months ended July 31, 1996 decreased approximately 5.4% over the same time period a year ago. This decrease was due to the lower volume of funds loaned to related parties which provide significantly high interest rates but partially offset by higher cash levels. The Company sold its 51% ownership in "InterTerminal" joint venture in fiscal 1995 for approximately $1.3 million and the full amount was received and recognized as a gain in the first and second quarters of fiscal 1996. No income taxes were provided for in the quarter ended July 31, 1996, as the Company believes that it has adequate net operating loss and credit carryovers to offset any current corporate income tax liability. LIQUIDITY AND CAPITAL RESOURCES Cash and cash equivalents totaled approximately $5.6 million at July 31, 1996, up $450,000 (approximately 8.7%) from fiscal 1995 year-end levels of $5.1 million. The increase in the cash and cash equivalent position for the nine month period ended July 31, 1996 resulted primarily from: (a) the sale of the InterTerminal joint venture provided $1.3 million in cash; (b) the loan repayment of $405,000, $170,000 and $100,000 from InterTerminal, Three H and AdMOS, respectively; and (c) the final payment of approximately $866,000 from the sale of the Kabil business, but partially offset by an operating 15 16 loss of $2.6 million and the investments of $150,000 and $60,000 in TeleVideo-RUS and Three H, respectively. Approximately $2,430,000 in certificates of deposit were pledged as collateral for comparable amounts of stand-by and sight letters of credit under a letter of credit agreement as of the end of the third quarter of 1996. At July 31, 1996, the Company had approximately $1,180,000 in outstanding letters of credit which were secured by the pledged deposits under this agreement. Net accounts receivable of $4.6 million at the end of the third quarter of fiscal 1996 were up approximately 27.9% from 1995 year-end level of $3.6 million. Days sales outstanding in accounts receivable increased in 1996 from 78 days to 94 days. Trade accounts payable of $899,000 at the end of the third quarter of fiscal 1996 were down approximately 45.9% from the 1995 year-end level of $1.7 million. Net inventories of approximately $4.2 million at the end of the third quarter of fiscal 1996 were down approximately 26.4% from the 1995 year-end level of $5.7 million. Inventory level was decreased due primarily to the sale of the multimedia products which accounted for approximately $6.2 million, or 43.7% of the total sales, during the first nine months of fiscal 1996. Working capital at the end of the third quarter of fiscal 1996 was $17.2 million, up approximately 32.3% from fiscal 1995 year-end level of $13.0 million. The Company expects to generate cash in 1996 from the $5.0 million note receivable from the sale of its real property. At the current consumption rate, the Company's cash balance of approximately $5.6 million (which includes $2,430,000 pledged as security for stand-by and sight letters of credit) at July 31, 1996, together with anticipated revenues from operations and other non-operating cash receipts, are anticipated to be adequate to fund the Company's fiscal 1996 operations at projected levels. 16 17 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. See Note 5 of "Notes to Condensed Consolidated Financial Statements." ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibit(s). Exhibit 27.0 Financial Data Schedules (b) Reports on Form 8-K. None. [The remainder of this page is intentionally left blank] 17 18 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. TELEVIDEO SYSTEMS, INC. September 4, 1996 /s/ K. Philip Hwang ------------------- Dr. K. Philip Hwang, Chairman of the Board and, Chief Executive Officer /s/ David Kim ------------------- David Kim, Chief Financial Officer 18 EX-27.0 2 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS OCT-31-1996 NOV-01-1995 JUL-31-1996 5,595 0 4,805 209 4,220 19,621 5,965 2,896 22,924 2,377 0 0 0 454 20,093 22,924 13,994 13,994 12,830 12,830 3,730 0 0 (904) 9 (913) 0 0 0 (913) (0.02) (0.02)
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