-----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, WpLhCtzf5zf6I4Xp31ypZ1xvlWTWfRGoDkTYaA1Lb7s07O31SitRLx6LvZzIcRSX sxRpDSgE/hiAKLlCDfbNVQ== 0000912057-95-004539.txt : 19950629 0000912057-95-004539.hdr.sgml : 19950629 ACCESSION NUMBER: 0000912057-95-004539 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950430 FILED AS OF DATE: 19950612 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERPHASE CORP CENTRAL INDEX KEY: 0000728249 STANDARD INDUSTRIAL CLASSIFICATION: 3577 IRS NUMBER: 751549797 STATE OF INCORPORATION: TX FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-13071 FILM NUMBER: 95546504 BUSINESS ADDRESS: STREET 1: 13800 SENLAC DR CITY: DALLAS STATE: TX ZIP: 75234 BUSINESS PHONE: 2149199000 MAIL ADDRESS: STREET 2: 13800 SENLAC DR CITY: DALLAS STATE: TX ZIP: 75234 10-Q 1 10-Q - - - ------------------------------------------------------------------------------- - - - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTIONS 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1034 For the Quarter Ended April 30, 1995 Commission File Number 0-13071 INTERPHASE CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) TEXAS 75-1549797 (STATE OF INCORPORATION) (IRS EMPLOYER IDENTIFICATION NO.) 13800 SENLAC, DALLAS, TEXAS 75234 (Address of principal executive offices) (214)-919-9000 (Registrant's telephone number, including area code) - - - ------------------------------------------------------------------------------- Indicate by check mark whether the registrant (1) has filed all reports required 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 -- - - - ------------------------------------------------------------------------------- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at June 5, 1995 ----- --------------------------- Common Stock, No par value 4,541,950 - - - ------------------------------------------------------------------------------- - - - ------------------------------------------------------------------------------- 1 INTERPHASE CORPORATION INDEX PART I -FINANCIAL INFORMATION Item 1. Consolidated Interim Financial Statements Consolidated Balance Sheets as of April 30, 1995 and October 31, 1994 3 Consolidated Statements of Operations for the three months and six months ended April 30, 1995 and 1994 4 Consolidated Statements of Cash Flows for the six months ended April 30, 1995 and 1994 5 Notes to Consolidated Interim Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II- OTHER INFORMATION Item 4. Submission of Matters to a Vote of the Security Holders 9 Signature 10 2 INTERPHASE CORPORATION CONSOLIDATED BALANCE SHEETS (in thousands, except number of shares)
ASSETS April 30, October 31, - - - ------ 1995 1994 ----------- ------------ (Unaudited) Cash and cash equivalents $ 5,049 $ 3,814 Marketable securities 7,804 7,720 Trade accounts receivable, less allowances for uncollectible accounts of $243 and $240, respectively 5,803 5,658 Inventories, net 8,305 6,577 Refundable income taxes 0 219 Prepaid expenses and other current assets 662 733 Deferred income taxes, net 579 1,019 ----------- ------------ Total current assets 28,202 25,740 Machinery and equipment 9,026 10,801 Leasehold improvements 2,728 2,763 Furniture and fixtures 690 648 ----------- ------------ 12,444 14,212 Less-accumulated depreciation and amortization (7,679) (8,918) ----------- ------------ Total property and equipment, net 4,765 5,294 Capitalized software, net of accumulated amortization 578 804 Deferred income taxes, net 46 46 Other assets 158 59 ----------- ------------ Total assets $33,749 $31,943 ----------- ------------ ----------- ------------ LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable and accrued liabilities $ 3,164 $ 3,501 Accrued compensation 1,796 1,463 Income taxes payable 336 0 ----------- ------------ Total current liabilities 5,296 4,964 Deferred lease obligations 128 130 ----------- ------------ Total liabilities 5,424 5,094 Common stock, no par value; 100,000,000 shares authorized; 4,538,450 and 4,513,230 shares outstanding 23,621 23,493 Retained earnings 4,755 3,504 Unrealized holding period loss (51) (148) ----------- ------------ Total shareholders' equity 28,325 26,849 ----------- ------------ Total liabilities and shareholders' equity $33,749 $31,943 ----------- ------------ ----------- ------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 3 INTERPHASE CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands except per share amounts) (Unaudited)
Three Months Ended April 30, Six Months Ended April 30, -------------------------------- -------------------------------- 1995 1994 1995 1994 ---------- --------- --------- ---------- $11,473 $9,735 Revenues $22,495 $19,030 5,702 4,972 Cost of sales 11,304 9,807 ---------- --------- --------- ---------- 5,771 4,763 Gross profit 11,191 9,223 1,875 1,812 Research and development 3,575 4,243 2,061 1,702 Sales and marketing 3,889 3,648 1,004 968 General and administrative 2,071 2,179 -- -- Provision for strategic realignment -- 1,148 ---------- --------- --------- ---------- 4,940 4,482 Total operating expenses 9,535 11,218 ---------- --------- --------- ---------- 831 281 Operating income (loss) 1,656 (1,995) 144 60 Interest income 256 118 30 (8) Other, net 41 0 ---------- --------- --------- ---------- 1,005 333 Income (loss) before income taxes 1,953 (1,877) 360 114 Provision (benefit) for income taxes 702 (601) ---------- --------- --------- ---------- $645 $219 Net income (loss) $1,251 ($1,276) ---------- --------- --------- ---------- ---------- --------- --------- ---------- Net income (loss) per common and $0.13 $0.05 common equivalent share $0.25 ($0.29) ---------- --------- --------- ---------- ---------- --------- --------- ---------- Weighted average common and common 4,973 4,576 equivalent shares 4,968 4,477 ---------- --------- --------- ---------- ---------- --------- --------- ----------
4 INTERPHASE CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited)
Six Months Ended April 30 --------------------------- 1995 1994 ------------ ------------ Cash flow from operating activities: Net income (loss) $ 1,251 $ (1,276) Adjustment to reconcile net income (loss) to net cash provided (used) by operating activities: Provision for strategic realignment - 1,148 Depreciation and amortization 1,381 1,688 Change in assets and liabilities, excluding effect from provision for strategic realignment: Trade accounts receivable (145) 581 Inventories (1,728) (27) Refundable income taxes 219 (604) Prepaid expenses and other current assets 71 (23) Accounts payable and accrued liabilities (117) (1,630) Accrued compensation 333 5 Income taxes payable 336 10 Deferred income taxes payable 440 - Deferred lease obligations (2) (48) ----------- ----------- Net adjustments 788 1,100 ----------- ----------- Net cash provided (used) by operating activities 2,039 (176) Cash flows from investing activities: Additions to property, equipment and leasehold improvements (737) (822) Additions to capitalized software (109) (169) Increase in other assets (99) (8) Decrease (Increase) in marketable securities (84) 1,034 Change in unrealized holding period loss on marketable securities 97 - ----------- ----------- Net cash provided (used) by investing activities (932) 35 Cash flows from financing activities: Increase in common stock 128 (46) ----------- ----------- Net cash provided (used) by financing activities 128 (46) ----------- ----------- Net increase (decrease) in cash and cash equivalents 1,235 (187) Cash and cash equivalents at beginning of year 3,814 2,703 ----------- ----------- Cash and cash equivalents at end of period $5,049 $2,516 ----------- ----------- ----------- ----------- Supplemental Disclosure of Cash Flow Information: Interest paid - 5 Taxes refunded 237 -
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 5 INTERPHASE CORPORATION NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION The accompanying consolidated interim financial statements include the accounts of Interphase Corporation and its wholly owned subsidiary. Significant intercompany accounts and transactions have been eliminated. While the accompanying interim financial statements are unaudited, they have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of the Company, all material adjustments and disclosures necessary to fairly present the results of such periods have been made. 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 the rules and regulations of the Securities and Exchange Commission. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended October 31, 1994. 2. NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE Net income per common and common equivalent share is computed using the weighted average number of outstanding shares and common equivalent shares. The dilutive impact of outstanding stock options have been considered under the treasury stock method using the greater of the average bid price or closing bid price for the period. In 1994, the impact of outstanding stock options and warrants was antidilutive and therefore, has been excluded from the computation of net loss per share in 1994. Weighted average common and common equivalent shares:
Three Months Ended Six Months Ended April 30, April 30, -------------------------------------- (IN THOUSANDS) 1995 1994 1995 1994 -------------- ---- ---- ---- ---- Outstanding 4,535 4,576 4,529 4.477 Stock options 438 ---- 439 ---- ----- ----- ------ ------ Total 4,973 4,576 4,968 4,477
6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Revenues for the three months ended April 30, 1995 increased $1,738,000 or approximately 18% to $11,473,000 as compared to $9,735,000 for the same period in 1994. The 21% growth in networking products revenues included 53% growth in FDDI product revenues, partially offset by a 34% decline in older ethernet product revenues. Asynchronous Transfer Mode ("ATM") products represent the fastest growing product line for the Company, although they comprised only approximately 4% of total revenues for the second quarter of 1995. The company recorded its first ATM product revenues during the second quarter of 1994. FDDI revenues approximated 48% of total revenues in the second quarter of 1995. Networking products in total comprised 64% of total revenue for the second quarter of 1995, a slight increase over the same period in 1994. Mass storage product revenues increased approximately 5% in the second quarter of 1995 compared to 1994. The growth in the mass storage product revenues is attributable to the resurgence in SCSI adapter cards revenues, which increased approximately 23%, and more than offset the decline in older storage product revenues during the same period. Mass storage product revenues comprised approximately 30% of total revenues in the second quarter of 1995 compared to 34% of total revenues in the second quarter of 1994. Geographically, domestic revenues comprised 87% of consolidated revenues. European revenues comprised 9% of consolidated revenues in the second quarter of 1995 compared to 16% in the second quarter of 1994. Revenues for the six months ended April 30, 1995 increased $3,465,000 or 18% to $22,495,000 as compared to $19,030,000 for the same period in fiscal 1994. Revenues from networking products comprised 58% of consolidated revenue for the six month ended April 30, 1995, as compared to 59% of consolidated revenues for the same period in fiscal 1994. Revenue from mass storage products were unchanged, comprising 37% for the six month ending April 30, 1995 and comprising 37% for the same period in fiscal 1994. The gross margin percentage for the three months ended April 30, 1995 was approximately 50% as compared to approximately 49% during the same period in 1994. The gross margin percentage for the six months ended April 30, 1995 was approximately 50% as compared to approximately 48% during the same period in 1994. The improvement in gross margins are primarily attributable to higher production volumes. Operating expenses for the three months ended April 30, 1995 were $4,940,000, representing approximately 43% of consolidated revenue, as compared to 46% for the same period in 1994. Operating expenses increased 10% over the same period in 1994, due primarily to additional volume related selling expenses. Operating expenses for the six months ended April 30, 1995 were $9,535,000, representing approximately 42% of consolidated revenue and decreased $535,000 from the same period in 1994, excluding the provision for strategic realignment recorded in the first quarter 1994. As a percentage of revenues operating expenses for the six months ended April 30, 1995 decreased from 53% in 1994 to 42% in 1995. The decreased spending is primarily the result of cost reduction actions initiated in early 1994. 7 The company reported a net income of $645,000 for the three months ended April 30, 1995 as compared to $219,000 for the same period in fiscal 1994. The company reported a net income of $1,251,000 for the six months ended April 30, 1995 as compared to a net loss of ($1,276,000) for this same period in fiscal 1994. The increase in profitability in 1995 compared to 1994 is primarily due to higher sales volumes, improved gross margins and lower operating expenses relative to revenue levels. In addition, the six month ended April 30, 1994 included a before tax provision for strategic realignment of $1,148,000. LIQUIDITY AND CAPITAL RESOURCES The Company's cash , cash equivalents and marketable securities aggregated $12,853,000 at April 30, 1995, $11,534,000 at October 31, 1994 and $6,977,000 at April 30, 1994. The improvement in cash position from April 30, 1994 to April 30, 1995 is primarily the result of increased revenues and profitability since the second quarter of 1994. 8 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On March 22, 1995, The Annual Meeting of Shareholders of Interphase Corporation was held at the Company's office in Dallas, Texas. The following three matters were voted upon and approved at the meeting. MATTER 1 An election of directors of the Company to serve until the next annual meeting for the Company was held. The following seven individuals were elected as Directors of the Company: Votes Cast Votes For Withheld Michael E. Cope 3,680,123 252,291 Dale Crane 3,682,223 250,191 Paul N. Hug 3,682,223 250,191 Robert H. Lyon 3,648,773 283,641 R. Stephen Polley 3,681,523 250,891 David H. Segrest 3,682,223 250,191 S. Thomas Thawley 3,682,123 250,291 To be elected a director each individual must have received a plurality of all votes cast at the meeting of election of directors. MATTER 2 Also approved at the meeting by the following vote was a proposal to amend and restate the Company's incentive stock option plan to (i) increase the maximum term for which options, other than incentive options granted to employees who own in excess of 10% of the combined voting power of all classes of the Company's stock, may be granted under the plan to ten years, (ii) allow the grant of nonqualified stock options under the plan, (iii) change the termination date of the plan to November 8, 2004, and (iv) change the name of the plan to Interphase Corporation Amended and Restated Stock Option Plan. Votes Cast Votes Cast Brocker For Against Abstentions Non-Votes 3,437,113 445,352 7,600 42,349 Approval of the plan required the affirmative vote of the holders of a majority of the outstanding shares of Common Stock present in person or by proxy at the meeting. MATTER 3 Also approved at the meeting by the following vote was a proposal to adapt a directors stock option plan for the granting of stock options for up to 500,000 shares of Interphase Common Stock to the Board of Directors of the Company. Votes Cast Votes Cast Brocker For Against Abstentions Non-Votes --------- ---------- ------------ --------- 2,608,544 465,452 8,100 850,318 Approval of the plan required the affirmative vote of the holders of a majority of the outstanding shares of Common Stock present in person or by proxy at the meeting. 9 SIGNATURE 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. INTERPHASE CORPORATION (Registrant) Date: June 9, 1995 /s/ Robert L. Drury Robert L. Drury Chief Financial Officer and Vice President Finance (Principal Financial and Accounting Officer) 10 EX-27 2 EXHIBIT 27
5 0000728249 INTERPHASE 1,000 3-MOS OCT-31-1995 APR-30-1995 5,049 7,804 6,046 (243) 8,305 28,202 12,444 (7,679) 33,749 5,296 0 23,621 0 0 4,704 33,749 11,473 11,473 5,702 5,702 4,940 0 174 1,005 360 645 0 0 0 645 0 .13
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