-----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, Iqlm3SnECovkzeQk9T6jAdQrufCJcghA5EZpx4xXCb4UUR1kACAJRWD79GuXen0l wINKUiSJb0niL7AO6dCu1g== 0000912057-00-012015.txt : 20000317 0000912057-00-012015.hdr.sgml : 20000317 ACCESSION NUMBER: 0000912057-00-012015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000131 FILED AS OF DATE: 20000316 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TELEVIDEO 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: SEC FILE NUMBER: 000-11552 FILM NUMBER: 571656 BUSINESS ADDRESS: STREET 1: 2345 HARRIS WAY CITY: SAN JOSE STATE: CA ZIP: 95131 BUSINESS PHONE: 4089548333 FORMER COMPANY: FORMER CONFORMED NAME: TELEVIDEO SYSTEMS INC DATE OF NAME CHANGE: 19920703 10-Q 1 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 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: January 31, 2000 ---------------- 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, Inc. ----------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 94-2383795 - ------------------------------- ---------------------------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 2345 Harris Way, San Jose, California 95131 ------------------------------------------- (Address of principal executive offices) Registrant's telephone number, including area code: (408) 954-8333 -------------------------- ---------------------------- 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 March 1, 2000 is: 11,309,085. ----------- DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q for TeleVideo Inc. (the "Company") for the first quarter ended January 31, 2000, includes certain statements that may be deemed to be "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. All statements, other than statements of historical facts, included in this report that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future, including, but not limited to, such matters as future product development, business development, marketing arrangements, future revenues from contracts, business strategies, expansion and growth of the Company's operations and other such matters are forward-looking statements. These statements are based on certain assumptions and analyses made by the Company in light of its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. Such statements are subject to a number of assumptions, risks and uncertainties, including the risk factors discussed below, general economic and business conditions, the business opportunities (or lack thereof) that may be presented to and pursued by the Company, changes in law or regulations and other factors, many of which are beyond control of the Company. Prospective investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements. PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. [The remainder of this page is intentionally left blank.] TELEVIDEO, INC. INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
January 31, October 31, ASSETS 2000 1999 ----------- ----------- (Unaudited) (Audited) CURRENT ASSETS: Cash and cash equivalents $ 3,961 $ 4,487 Accounts receivable, net 1,284 1,523 Inventories, net 1,888 1,464 Prepayments and other 451 987 Notes receivable - current 67 67 ----------- ----------- Total current assets 7,651 8,528 ----------- ----------- PROPERTY, PLANT AND EQUIPMENT: Production equipment 624 624 Office furniture and equipment 1,158 1,152 Leased property under capital lease 6,270 6,270 ----------- ----------- 8,052 8,046 Less accumulated depreciation and amortization 2,123 2,010 ----------- ----------- Property, plant and equipment, net 5,929 6,036 ----------- ----------- INVESTMENTS IN AFFILIATES 1,117 1,117 NOTE RECEIVABLE, LESS CURRENT PORTION 2,614 2,636 ----------- ----------- Total assets $ 17,311 $ 18,317 ----------- ----------- ----------- ----------- LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES: Obligation under capital lease - current $ 270 $ 270 Accounts payable 1,013 964 Accrued liabilities 1,207 1,160 Income taxes 30 0 Deferred gain on sale of land and building - current 538 538 --------- --------- Total current liabilities 3,058 2,932 --------- --------- Obligation under capital lease - long-term 5,751 5,812 Deferred gain on sale of land and building - long-term 6,927 7,069 --------- --------- Total liabilities 15,736 15,813 --------- --------- STOCKHOLDERS' EQUITY: Common stock, $.01 par value: Authorized--75,000,000 shares Outstanding--11,309,085 shares at January 31,2000 and 11,271,085 shares at October 31, 1999 (net of 120,000 treasury shares) 453 453 Additional paid-in capital 95,735 95,703 Accumulated deficit (94,613) (93,652) --------- --------- Total stockholders' equity 1,575 2,504 --------- --------- Total liabilities and stockholders' equity $ 17,311 $ 18,317 --------- --------- --------- ---------
The accompanying notes are an integral part of these financial statements. TELEVIDEO, INC. INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED JANUARY 31, 2000 AND JANUARY 31, 1999 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (Unaudited)
Three Months Ended January 31, ----------------------------- 2000 1999 --------- --------- NET SALES $ 1,521 $ 1,787 COST OF SALES 1,403 1,592 --------- --------- GROSS PROFIT 118 195 OPERATING EXPENSES: Sales and marketing 653 498 Research and development 221 64 General and administration 463 310 --------- --------- Total operating expenses 1,337 872 --------- --------- Loss from operations (1,219) (677) INTEREST INCOME, net 134 32 OTHER INCOME, net 124 7 --------- --------- Net loss $ (961) $ (638) --------- --------- --------- --------- Net loss per share, basic and diluted $ (.09) $ (.06) --------- --------- --------- --------- Weighted average shares outstanding 11,278 11,271 --------- --------- --------- ---------
The accompanying notes are an integral part of these financial statements. TELEVIDEO, INC. INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED JANUARY 31, 2000 AND JANUARY 31, 1999 (IN THOUSANDS) (Unaudited)
Three Months Ended January 31, ----------------------------- 2000 1999 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net cash used in operating activities $ (512) $ (1,698) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Net proceeds from sale of land and building -- 7,859 Net additions to property, plant and equipment (6) -- Note receivable 22 (164) --------- --------- Net cash provided by investing activities 16 7,695 --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock 32 0 Payments on lease obligations (62) (21) --------- --------- Net cash used in financing activities (30) (21) --------- --------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (526) 5,976 CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD 4,487 1,640 --------- --------- CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD $ 3,961 $ 7,616 --------- --------- --------- ---------
Non cash investing/financing activities: In December 1998, the Company sold its main facility (land and building) for approximately $11.0 million and concurrently leased back this facility over a 15 year lease term expiring in December 2013. The land component has been recorded as an operating leaseback. The building element has been accounted for as a capital lease, whereby a leased building asset and capital lease obligation were recorded at the fair value of approximately $6.27 million. As a result of the sale for $11.0 million (which includes a $2.75 million note receivable) a deferred gain of approximately $8.0 million was recorded. The deferred gain attributable to the land element, which approximates $3.44 million, is being amortized over the 15 year lease life on a straight line method. The deferred gain attributable to the building element, which approximates $4.56 million, is being amortized over leased building asset life, which has been determined to be the 15 year lease term, on a straight line method. The $2.75 million note receivable bears interest at 7.25% per annum. Principal and accrued interest is payable in equal monthly installments of $21,735 each on the first day of each month commencing on January 1, 1999. If not earlier paid in full, any unpaid principal and all accrued interest is due and payable to TeleVideo, Inc. on December 1, 2013. The accompanying notes are an integral part of these financial statements. TELEVIDEO, INC. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JANUARY 31, 2000 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. The information at January 31, 2000 and for the three months ended January 31, 2000 and 1999 include all adjustments that the management of the Company believes are necessary for fair presentation for the results of the periods presented. Results for any interim period are not necessarily indicative of results for any future interim period or for the entire year. The accompanying financial statements and notes thereto should be read in conjunction with the financial statements and notes thereto included in the Company's annual report on Form 10-K. PRINCIPLES OF CONSOLIDATION The condensed consolidated financial statements include the accounts of the Company and its majority owned subsidiaries, after elimination of inter- company accounts and transactions. All of the Company's unconsolidated affiliates are accounted for using the equity or the cost method. USE OF ESTIMATES In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as revenues and expenses during the reporting period. Actual results could differ from those estimates. CASH AND CASH EQUIVALENTS The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. 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-process and includes material, labor and manufacturing overhead costs. The cost of purchased parts is determined on a first-in, first-out basis. Amounts shown are net of reserves for obsolescence of $1.0 million at both January 31, 2000 and October 31, 1999, respectively:
January 31, October 31, 2000 1999 ----------- ----------- Purchased parts and subassemblies $ 236 $ 216 Work-in-process 619 313 Finished goods 1,033 935 ----------- ----------- $ 1,888 $ 1,464 ----------- ----------- ----------- -----------
PROPERTY, PLANT AND EQUIPMENT Depreciation and amortization are provided over the estimated useful lives of the assets using both straight line and accelerated methods. Production equipment 1-10 years Office furniture 1-10 years Leased property 15 years LOSS PER SHARE Loss per share is based on the weighted average number of shares of common stock outstanding during each period. Diluted earnings per share is computed using the weighted average number of common and common equivalent shares outstanding during the period. 287,250 shares outstanding under various Incentive Stock option plans have been excluded from the computation as their effect is antidiultive. RECLASSIFICATIONS Certain reclassifications have been made to conform to the 2000 presentation. None of such reclassifications are material to the financial statements taken as a whole. 2. ACQUISITIONS AND DIVESTITURES MYSIMON, INC. In September 1998, the Company invested in the online comparison shopping Internet company, mySimon, Inc., receiving convertible preferred stock. This investment represented an ownership interest of between 3% and 4% of mySimon, Inc. as of January 31, 2000. KORAM, INC. In February 1998, the Company purchased a 50% interest in Koram, Inc, a Korean restaurant venture. This investment is accounted for under the equity method of accounting. APPLIED PHOTONICS TECHNOLOGY, INC. On April 16, 1997, the Company entered into a Common Stock Purchase Agreement with Applied Photonics Technology, Inc. (APT), a California corporation, whereby the Company purchased a 30% interest in APT for $3.0 million. Founded in October 1996, APT is a developmental stage enterprise specializing in the development of electronics display technology. The anticipated markets for APT's outdoor media display system include the billboard and illuminated sign markets, sports stadiums and arenas, transportation terminals, volume retailers and malls, and safety/public information displays. The Company accounts for its investment in APT using the equity method of accounting. During the fiscal year ended October 31, 1998, the Company wrote off its equity investment, related goodwill, and note receivable of approximately $4.1 million. In December 1998, the Company loaned APT $176,000. This note bears interest at the rate of 10% per annum and was due on December 1, 1999. In September 1999, the Company loaned APT an additional $125,000. The $125,000 note bears interest at the rate of 6% per annum and was due on December 1, 1999. In September 1999, the Company entered into a consulting agreement with APT in which APT agreed to undertake two engineering development projects for the Company. The Company made an advance payment of $125,000 under the agreement, which is the entire amount of the Company's obligation. The Company wrote off the $426,000 in loans and advances to APT as of October 31, 1999. The Company has not guaranteed any obligations of APT and has made no commitments to provide additional financial support to APT. As of March 14, 2000, the Company has not yet received payment on the $426,000 in notes and loans written off at October 31, 1999, nor has APT received their expected financing. 3. LETTER OF CREDIT AGREEMENT The Company has one letter of credit agreement with its bank whereby the bank will issue up to a total of $1.0 million of standby and sight letters of credits. This agreement is contingent upon the Company maintaining time deposits at the bank as collateral in a total amount no less than the outstanding borrowings. At January 31, 2000, the Company had no letters of credit outstanding. 4. SALE AND LEASEBACK OF BUILDING In December 1998, the Company sold its main facility (land and building) for approximately $11.0 million and concurrently leased back this facility over a 15 year lease term expiring in December 2013. The land component has been recorded as an operating leaseback. The building element has been accounted for as a capital lease, whereby a leased building asset and capital lease obligation were recorded at the fair value of approximately $6.27 million. As a result of the sale for $11.0 million (which includes a $2.75 million note receivable) a deferred gain of approximately $8.0 million was recorded. The deferred gain attributable to the land element, which approximates $3.44 million, is being amortized over the 15 year lease life on a straight line method. The deferred gain attributable to the building element, which approximates $4.56 million, is being amortized over leased building asset life, which has been determined to be the 15 year lease term, on a straight line method. The $2.75 million note receivable bears interest at 7.25% per annum. Principal and accrued interest is payable in equal monthly installments of $21,735 each on the first day of each month commencing on January 1, 1999. If not earlier paid in full, any unpaid principal and all accrued interest is due and payable to TeleVideo, Inc. on December 1, 2013. 5. SUBSEQUENT EVENTS MYSIMON, INC. In September 1998, the Company invested in the online comparison shopping Internet company, mySimon, Inc., receiving convertible preferred stock. This investment represented an ownership interest of between 3% and 4% ' of mySimon, Inc. On February 29, 2000, CNET Networks, Inc. (formerly, CNET, Inc.) completed the acquisition of mySimon, Inc. As a result of this acquisition, the Company expects to receive approximately 375,000 shares of common stock of CNET in exchange for 100% of its interest in mySimon. The Company is currently restricted from selling any of its interest in CNET until at least three days after the release of earnings for CNET for the quarter ended March 31, 2000. MULIX, INC. On February 28, 2000, the Company purchased for $1 million in cash an aggregate of 14,269,230 shares of unregistered Series A Convertible Preferred Stock of Mulix, Inc., a Delaware corporation. The Company's investment in Mulix represents a 35% interest in this privately-held corporation. The cash investment will be accounted for on the equity method of accounting. The purchase price and other terms of the investment were arrived at by negotiation between the Company and Mulix, with the per share price determined by the Mulix Board of Directors in good faith based on financial and business information and other relevant factors currently known to and considered by the Mulix board members. The purchase price was paid for out of the Company's working capital. Each share of Series A Preferred Stock is convertible into one share of Mulix Common Stock, at the option of the Company. The Series A Preferred Stock is automatically convertible into Common Stock under certain circumstances, including a firm commitment underwritten public offering of Mulix Common Stock with proceeds, net of underwriter's fees, of not less than $15,000,000. Prior to conversion, the Series A Preferred Stock is entitled to one vote per share. In connection with the investment, the Company entered into a Voting Agreement with the founders of Mulix regarding board size and membership. Dr. K. Philip Hwang, the Company's Chairman and Chief Executive Officer, has accepted an appointment to the Mulix Board of Directors, in accordance with the Voting Agreement. The three founders of Mulix constitute the remainder of the board. The Company has the right of first offer on future sales of Mulix equity securities, subject to certain exceptions such as issuances of stock or options under employee option plans. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. RESULTS OF OPERATIONS Net sales for the first quarter of fiscal 2000 were $1.5 million, compared with $1.8 million in the first quarter of fiscal 1999, a decrease of $0.3 million, or 20%. The decrease in net sales reflects a decrease in sales of monitors of $0.5 million from the year ago quarter, offset partially by sales of TeleCLIENT products, which the Company introduced in the second quarter of fiscal 1999. Cost of sales was $1.4 million in the first quarter of fiscal 2000, compared with $1.6 million in the first quarter of fiscal 1999, a decrease of $0.2 million, or 13%. As a percentage of net sales, gross margin was 7.8% in the first quarter of fiscal 2000, compared with 10.9% in the first quarter of fiscal 1999. The decrease, as a percentage of sales, primarily reflects royalty expenses incurred by the Company in the first quarter of fiscal 2000 under the licensing agreement for the operating system software used in the Company's TeleCLIENT products. In the first quarter of fiscal 2000, the Company accrued $192,000 in royalty expenses. In the first quarter of fiscal 1999, the Company did not incur any charge for royalty expenses. Sales and marketing expenses were $0.7 million in the first quarter of fiscal 2000, compared with $0.5 million in the first quarter of fiscal 1999. As a percentage of net sales, sales and marketing expenses increased to 47% in the first quarter of fiscal 2000 compared with 27% in the first quarter of fiscal 1999. The increase reflects the additional costs incurred in support of the Company's launch of its TeleCLIENT product line, which occurred in April 1999. Research and development expenses were $0.2 million in the first quarter of fiscal 2000, compared with $0.1 million in the first quarter of fiscal 1999, an increase of $0.1 million. As a percentage of net sales, research and development expenses increased to 13% in the first quarter of fiscal 2000 compared with 6% in the first quarter of fiscal 1999. The increase represents increased costs associated with the continued development of the Company's TeleCLIENT product line. General and administrative expenses were $0.5 million in the first quarter of fiscal 2000, compared with $0.3 million in the first quarter of fiscal 1999. As a percentage of net sales, general and administrative expenses increased to 33% in the first quarter of fiscal 2000 compared with 17% in the first quarter of fiscal 1999. The increase is due primarily to lease expenses that the Company began making in fiscal 1999 in accordance with the sale and leaseback of the Company's headquarters facility. Additional details about the sale and leaseback transaction are contained in "Liquidity and Capital Resources." The Company's loss from operations was approximately $1.2 million in the first quarter of fiscal 2000 compared with approximately $0.7 million in the first quarter of fiscal 1999. Interest income, net of interest expense, was $134,000 in the first quarter of fiscal 2000, compared with $32,000 in the first quarter of fiscal 1999, an increase of $102,000. The increase reflects interest income resulting from the $2.75 million, 7.25% promissory note that the Company received pursuant to the sale of its building in December 1998, as well as to additional cash that the Company had during the quarter due to the building sale. Other income was $124,000 in the first quarter of fiscal 2000, compared with $7,000 in the first quarter of fiscal 1999, an increase of $117,000. The increase was due primarily to the amortization of the deferred gain on the sale of the Company's building. Net loss for the first quarter of fiscal 2000 was $1.0 million compared with a net loss of $0.6 million in the first quarter of fiscal 1999. LIQUIDITY AND CAPITAL RESOURCES At January 31, 2000, the Company had $4.0 million in cash and cash equivalents, a decrease of approximately $0.5 million over the same balances at the end of fiscal 1999 of approximately $4.5 million. Net cash used in operating activities improved from $1.7 million used in the three months ended January 31, 1999 to $0.5 million used for the same period in fiscal 2000. In the first quarter of fiscal 2000, the Company generated more cash from the conversion of working capital items as compared with the first quarter of fiscal 1999. In December 1998, the Company sold its 69,360 square foot headquarters building in San Jose, California, including land and improvements, to TVCA, LLC, an unaffiliated Delaware limited liability company ("TVCA") for $11.0 million. The nature of the consideration was $8.25 million in cash and a $2.75 million promissory note. The note bears interest at 7.25% per annum. Principal and accrued interest are payable in equal monthly installments of $21,735 on the first day of each month, commencing January 1, 1999. If not earlier paid in full, any unpaid principal and all accrued interest shall be due and payable to TeleVideo, Inc. on December 1, 2013. In December 1998, the Company leased back this facility over a 15 year lease term expiring in December 2013. The land component has been accounted for as a capital lease, whereby a leased building asset and capital lease obligation were recorded at the fair value of approximately $6.27 million. As a result of the sale for $11.0 million, a deferred gain of approximately $8.0 million was recorded. The deferred gain attributable to the land element, which approximates $3.44 million, is being amortized over the 15 year lease life on a straight line method. The deferred gain attributable to the building element, which approximates $4.56 million, is being amortized on a straight line basis over the leased building asset life, which has been determined to be the 15 year lease term. Net accounts receivable were $1.3 million at January 31, 2000, compared with $1.5 million at October 31, 1999, a decrease of $0.2 million, or 13%, while net inventories were $1.9 million at January 31, 2000, as compared with $1.5 million at October 31, 1999, an increase of $0.4 million. The decrease in accounts receivable reflects large collections in the first quarter of fiscal 2000 from three of the Company's largest customers. The increase in inventory reflects the purchase of additional terminal and TeleCLIENT products during the quarter. Working capital at the end of the first quarter of fiscal 2000 was approximately $4.6 million, a decrease of 16% from the fiscal 1999 year-end level of approximately $5.5 million. The Company believes that, with respect to its current operations, the Company's cash balance of approximately $4.0 million at January 31, 2000, which includes its $1.0 million certificate of deposit, plus revenues from operations and other non-operating cash receipts, will be sufficient to meet the Company's working capital and capital expenditure needs for the next twelve months. FACTORS THAT MAY AFFECT FUTURE RESULTS COMPETITIVE MARKETS The terminal market is intensely competitive. The principal elements of competition are pricing, product quality and reliability, price/performance characteristics, compatibility, marketing and distribution capability, service and support, and reputation of the manufacturer. TeleVideo competes with a large number of manufacturers, most of which have significantly greater financial, marketing and technological resources than TeleVideo. There can be no assurance that the Company will be able to continue to compete effectively. PRODUCT DEVELOPMENT The computer market is characterized by rapid technological change and product obsolescence, often resulting in short product life cycles and rapid price declines. The Company's success will continue to depend primarily on its ability to continue to reduce costs through manufacturing efficiencies and price negotiation with suppliers, the continued market acceptance of its existing products and its ability to develop and introduce new products. There can be no assurance that TeleVideo will successfully develop new products or that the new products it develops will be introduced in a timely manner and receive substantial market acceptance. There can also be no assurance that product transitions will be managed in such a way to minimize inventory levels and product obsolescence of discontinued products. The Company's operating results could be adversely affected if TeleVideo is unable to manage all aspects of product transitions successfully. SINGLE SOURCED PRODUCTS The Company generally utilizes standard parts and components available from multiple suppliers. However, certain parts and components used in the Company's products are available from a single source. If, contrary to its expectations, the Company is unable to obtain sufficient quantities of any single-sourced components, the Company will experience delays in product shipments. RELIANCE ON FORECASTS The Company offers its products through various channels of distribution. Changes in the financial condition of, or in the Company's relationship with, its distributors could cause actual operating results to vary from those expected. Also, the Company's customers generally order products on an as-needed basis. Therefore, virtually all product shipments in a given fiscal quarter result from orders received in that quarter. The Company anticipates that the rate of new orders will vary significantly from month to month. The Company's manufacturing plans and expenditure levels are based primarily on sales forecasts. Consequently, if anticipated sales and shipments in any quarter do not occur when expected, expenditure and inventory levels could be disproportionately high and the Company's operating results for that quarter, and potentially future quarters, would be adversely affected. FACTORS THAT COULD AFFECT STOCK PRICE The market price of TeleVideo's common stock could be subject to fluctuations in response to quarter to quarter variations in operating results, changes in analysts' earnings estimates, market conditions in the computer technology industry, as well as general economic conditions and other factors external to the Company. FOREIGN CURRENCY AND POLITICAL RISK The Company markets its products worldwide. In addition, a large portion of the Company's part and component manufacturing, along with key suppliers, are located outside the United States. Accordingly, the Company's future results could be adversely affected by a variety of factors, including without limitation, fluctuation in foreign currency exchange rates, changes in a specific country's or region's political or economic conditions, trade protection measures, import or export licensing requirements, unexpected changes in regulatory requirements and natural disasters. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. As of January 31, 2000, the Company had a long-term note receivable (the "Note") of $2.7 million. The Company received the Note, which bears interest at a fixed rate of 7.25% per annum, as partial consideration for the sale of the Company's headquarters facility in December 1998. The interest rate on the Note is fixed over the life of the Note, with principal and interest payable in equal monthly installments of $21,735 each on the first day of each month commencing on January 1, 1999. If not earlier paid in full, any unpaid principal and all accrued interest shall be due and payable to TeleVideo, Inc. on December 1, 2013. Because the interest rate on the Note is fixed for the term of the Note, any change in interest rates would not affect the Company's earnings or cash flows if it chose to hold onto the note, although a change in interest rates could affect the market value of the Note if the Company chose to sell the note prior to maturity. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. None. ITEM 6. EXHIBIT AND REPORTS ON FORM 8-K. (a) EXHIBIT(S). Exhibit 27.0 Financial Data Schedule (b) REPORTS ON FORM 8-K. None SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this amended report to be signed on its behalf by the undersigned, thereunto duly authorized. TELEVIDEO, INC. ------------------------------ (REGISTRANT) DATE: MARCH 16, 2000 BY: /s/ JAMES WHEAT ------------------------------ JAMES WHEAT CHIEF FINANCIAL OFFICER (PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER) EX-27 2 EXHIBIT 27
5 1,000 3-MOS OCT-31-2000 NOV-01-1999 JAN-31-2000 3,961 0 1,434 150 1,888 7,651 8,052 2,123 17,311 3,058 0 0 0 453 1,122 17,311 1,521 1,521 1,403 1,336 124 0 134 (961) 0 (961) 0 0 0 (961) (0.09) (0.09)
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