-----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, FpjseBweRfYnjstCQktVW5juq/VyYbbQhdfSocIZFXilv/VvdLA+eGTAk5jW87cT wUVCqHglzgQ/jhE8nHyznQ== 0000950134-97-005938.txt : 19970813 0000950134-97-005938.hdr.sgml : 19970813 ACCESSION NUMBER: 0000950134-97-005938 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970629 FILED AS OF DATE: 19970812 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DALLAS SEMICONDUCTOR CORP CENTRAL INDEX KEY: 0000749420 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 751935715 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10464 FILM NUMBER: 97656235 BUSINESS ADDRESS: STREET 1: 4401 S BELTWOOD PKWY CITY: DALLAS STATE: TX ZIP: 75244-3292 BUSINESS PHONE: 2144500400 MAIL ADDRESS: STREET 2: 4401 S BELTWOOD PKWY CITY: DALLAS STATE: TX ZIP: 75244-3292 10-Q 1 FORM 10-Q FOR QUARTER ENDED JUNE 29, 1997 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 June 29, 1997 ------------- 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 1-10464 ------- DALLAS SEMICONDUCTOR CORPORATION ------------------------------------------------------ (Exact name of registrant as specified in its charter) DELAWARE 75-1935715 -------- ---------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 4401 SOUTH BELTWOOD PARKWAY, DALLAS, TEXAS 75244-3292 ------------------------------------------------------ (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (972) 371-4000 ------------------- 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 ----- ----- Number of shares outstanding of the registrant's Common Stock as of August 3, 1997: 27,316,637. ----------- 2 DALLAS SEMICONDUCTOR CORPORATION INDEX TO FORM 10-Q PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS PAGE NO. -------- Condensed Consolidated Statements of Income (Unaudited) Three months and six months ended June 29, 1997 and June 30, 1996 ... 3 Condensed Consolidated Balance Sheets June 29, 1997 (Unaudited) and December 29, 1996 ..................... 4 Condensed Consolidated Statements of Cash Flows (Unaudited) Six months ended June 29, 1997 and June 30, 1996 .................... 5 Notes to Condensed Consolidated Financial Statements ................. 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ......... 7 - 9 PART II. OTHER INFORMATION ITEMS 1. THROUGH 3. .................................................. 10 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS .......... 10 ITEMS 5. THROUGH 6. ................................................. 10 SIGNATURE ............................................................. 11 EXHIBIT 27. ART. 5 FDS 2ND QUARTER 10-Q ............................... 12
- 2 - 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS DALLAS SEMICONDUCTOR CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three months Six months ended ended ----------------- ------------------ Jun. 29, Jun. 30, Jun. 29, Jun. 30, (Thousands except per share amounts) 1997 1996 1997 1996 - ------------------------------------ ------- ------- -------- -------- Net sales $91,040 $70,362 $179,744 $135,946 Operating costs and expenses: Cost of sales 44,627 37,263 89,394 70,960 Research and development 11,471 8,409 22,373 16,284 Selling, general, and administrative 13,451 10,427 26,184 20,221 ------- ------- -------- -------- Total costs and expenses 69,549 56,099 137,951 107,465 ------- ------- -------- -------- Operating income 21,491 14,263 41,793 28,481 Interest income, net 1,125 748 2,039 1,548 ------- ------- -------- -------- Income before income taxes 22,616 15,011 43,832 30,029 Provision for income taxes 7,294 4,954 14,136 9,910 ------- ------- -------- -------- Net income $15,322 $10,057 $ 29,696 $ 20,119 ======= ======= ======== ======== Net income per share $ 0.52 $ 0.36 $ 1.02 $ 0.72 ======= ======= ======== ======== Weighted average common and common equivalent shares outstanding 29,482 27,951 29,120 27,955 ======= ======= ======== ======== Dividends declared per share $ 0.035 $ 0.03 $ 0.07 $ 0.06 ======= ======= ======== ========
See accompanying notes. - 3 - 4 DALLAS SEMICONDUCTOR CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS
Jun. 29, Dec. 29, (Thousands except share amounts) 1997 1996 - -------------------------------------------- -------- -------- (Unaudited) Assets Current assets: Cash and short-term investments $ 98,027 $ 70,274 Accounts receivable, net 47,658 42,812 Inventories 55,098 49,629 Deferred tax assets 4,793 3,457 Other current assets 4,396 3,791 -------- -------- Total current assets 209,972 169,963 Property, plant and equipment, at cost: Land 7,779 7,429 Building and improvements 44,787 43,145 Machinery and equipment 239,164 223,439 -------- -------- 291,730 274,013 Less accumulated depreciation (151,705) (135,114) -------- -------- Property, plant and equipment, net 140,025 138,899 Other assets 5,438 5,001 -------- -------- $355,435 $313,863 ======== ======== Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 16,541 $ 22,475 Accrued salaries and benefits 16,192 8,641 Accrued taxes other than income 2,240 831 Other accrued liabilities 8,260 5,824 Income taxes payable (722) 3,354 -------- -------- Total current liabilities 42,511 41,125 Stockholders' equity: Preferred stock, $0.10 par value; 5,000,000 shares authorized; no shares issued and outstanding --- --- Common stock, $0.02 par value; 40,000,000 shares authorized; issued: 27,394,614 shares at June 29, 1997, and 26,696,807 shares at December 29, 1996 548 534 Additional paid-in capital 100,972 88,601 Retained earnings 213,022 185,221 Treasury stock, shares at cost: 91,525 shares at June 29, 1997 and 91,525 shares at December 29, 1996 (1,618) (1,618) -------- -------- Total stockholders' equity 312,924 272,738 -------- -------- $355,435 $313,863 ======== ========
See accompanying notes. - 4 - 5 DALLAS SEMICONDUCTOR CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended -------------------- Jun. 29, Jun. 30, (Thousands) 1997 1996 - -------------------------------------------- -------- -------- Cash flows from operating activities: Net income $ 29,696 $ 20,119 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 17,042 13,143 Deferred tax (benefit)/expense (1,336) 1,814 Increase in receivables (4,846) (3,209) Increase in inventories (5,469) (8,779) Increase in other current assets (605) (4) (Decrease) increase in accounts payable (5,934) 3,264 Increase (decrease) in accrued salaries and benefits 7,551 (2,815) Increase (decrease) in accrued taxes other than income 1,409 (803) Increase (decrease) in other accrued liabilities 2,436 (98) Increase in income taxes payable 878 618 -------- -------- Net cash provided by operating activities 40,822 23,250 -------- -------- Cash flows from investing activities: Additions to property, plant and equipment (18,168) (34,153) Increase in other assets (437) (806) -------- -------- Net cash used in investing activities (18,605) (34,959) -------- -------- Cash flows from financing activities: Proceeds from issuance of stock upon exercise of stock options 7,431 792 Purchase of treasury stock 0 (137) Dividend paid to shareholders (1,895) (1,584) -------- -------- Net cash provided by or used in financing activities 5,536 (929) -------- -------- Net change in cash and short-term investments 27,753 (12,638) Cash and short-term investments at beginning of period 70,274 69,304 -------- -------- Cash and short-term investments at end of period $ 98,027 $ 56,666 ======== ======== Cash payments for income taxes $ 14,594 $ 7,477 Supplementary schedule of non-cash financing activities: Reduction of income tax payable and increase in paid-in capital resulting from the tax benefit of stock option exercises $ 4,954 $ 329 Disposition of Assets $ 542 $ --
See accompanying notes. - 5 - 6 DALLAS SEMICONDUCTOR CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. INTERIM ACCOUNTING POLICY The accompanying condensed consolidated financial statements have not been audited by independent auditors, except for the balance sheet as of December 29, 1996. In the opinion of the Company's management, the accompanying financial statements reflect all adjustments (consisting only of normal recurring accruals) necessary to present fairly the Company's financial position at June 29, 1997 and December 29, 1996, and results of operations and cash flows for the periods presented. Certain footnote information has been condensed or omitted from these financial statements. Therefore, these financial statements should be read in conjunction with the financial statements and related notes included in the Company's Annual Report on Form 10-K for the year ended December 29, 1996. Results of operations for the three and six month periods ended June 29, 1997 are not necessarily indicative of results to be expected for the full year. The difference between primary and fully diluted net income per share was not material in any period presented as historically calculated under APB No. 15. In February 1997, the Financial Accounting Standards Review Board issued Statement No. 128 (FASB 128), Earnings Per Share, which is effective for both interim and annual periods ending after December 15, 1997. FASB 128 changes the calculation of primary and fully diluted earnings per share. Primary earnings per share excludes the dilutive effect of stock options and is expected to increase reported primary earnings per share for the quarters ended June 29, 1997 and June 30, 1996 by $0.04 and $0.02 per share, respectively. Fully diluted earnings per share includes the dilutive effect of stock options and is equivalent to our historically reported earnings per share amounts. 2. INVENTORIES (Thousands)
Jun. 29, Dec. 29, 1997 1996 -------- --------- Raw materials $ 9,546 $ 6,688 Work-in-process 31,460 32,309 Finished goods 14,092 10,632 -------- -------- $ 55,098 $ 49,629 ======== ========
Inventories are stated at the lower of standard cost, which approximates actual cost (first-in, first-out), or market. 3. INCOME TAXES The provision for income taxes includes estimated federal and state income taxes at statutory rates and a deferred tax benefit for the three and six month periods ended June 29, 1997 of $1,824,000 and $1,336,000, respectively. The Company's effective tax rate decreased to 32.3% in the second quarter and first six months of 1997 from 33.0% for the same periods in 1996. This decrease was a result of the reinstatement and modification of the federal research and development tax credit by the Small Business Jobs Protection Act of 1996 and anticipated differences between income for financial statement purposes and taxable income for the two periods. - 6 - 7 DALLAS SEMICONDUCTOR CORPORATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Actual results could differ materially from those projected in the forward-looking statements as a result of the factors set forth elsewhere in this report. Although the Company believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, there can be no assurance that such expectations will be achieved. RESULTS OF OPERATIONS Net sales for the second quarter of 1997 were $91,040,000 an increase of 29% over the second quarter of 1996. The Company's revenue growth is supported by increased unit sales of new and existing products in several product families as shown in the table below: NET SALES (Millions)
- ------------------------------------------------------------------------------ Growth Product Family Q296 Q396 Q496 Q197 Q297 Q297 - Q296 - ------------------------------------------------------------------------------ Telecom $11.3 $13.3 $15.0 $20.0 $20.0 77% System Extension 8.3 9.6 12.5 14.6 14.6 76% Commercial Timekeeping 9.7 7.7 9.3 10.1 14.0 44% NV SRAMs 9.5 8.9 9.5 12.3 13.0 37% Other Families 8.2 6.9 8.1 8.9 9.6 17% Auto Information 5.0 5.1 5.3 7.0 8.6 72% Microcontrollers 8.4 7.6 5.9 7.7 6.1 -27% Computer Timekeeping 10.0 12.9 14.8 8.1 5.1 -49% - ------------------------------------------------------------------------------ Company Total $70.4 $72.0 $80.4 $88.7 $91.0 29% - ------------------------------------------------------------------------------
Gross margins increased for the first six months of 1997 to 50% from 48% during the same period in 1996. Gross margins increased in the second quarter of 1997 to 51% from 47% in the second quarter of 1996. The gross margin increase for both periods was caused primarily by increased efficiency in factory operations and a sales-mix shift toward higher margin products. Research and development ("R&D") expenses for the second quarter of 1997 increased 36% from the second quarter of 1996. R&D expenses increased 37% for the first six months of 1997 over the same period in 1996. The increase resulted primarily from increased personnel costs due to increased headcount. R&D expenses as a percent of sales increased to 13% from 12% for the second quarter of 1997 and 1996, respectively. R&D expenses as a percent of sales remained constant at 12% for the six month periods ended June 29, 1997 and June 30, 1996, respectively. - 7 - 8 DALLAS SEMICONDUCTOR CORPORATION RESULTS OF OPERATIONS (CONTINUED) Selling, general, and administrative ("SG&A") expenses increased 29% for the three and six month periods ended June 29, 1997 over the same periods ended June 30, 1996. The increase in SG&A expenses resulted primarily from increased sales commission amounts due to higher net sales and increased personnel costs. SG&A expenses as a percent of net sales remained constant at 15% for the three and six month periods ended June 29, 1997 and June 30, 1996, respectively. Operating income increased 51% and 47% for the second quarter of 1997 and the first six months of 1997 over the same periods in 1996, respectively. The increase for both periods was due primarily to higher gross profit margins. Operating income as a percent of sales increased to 23% from 21% for the first six months of 1997 and 1996, respectively. Net interest income for the second quarter of 1997 increased by $377,000 or 50% over the second quarter of 1996. Net interest income increased by $491,000 or 32% for the first six months of 1997 over the same period in 1996. The changes in net interest income are due primarily to changes in the average cash balances for the three and six month periods. Changes in interest rates will continue to effect net interest income as well as any substantial change in the Company's cash and short-term investments or any substantial change in borrowings. The provision for income taxes includes estimated federal and state income taxes at statutory rates and a deferred tax benefit for the three and six month periods ended June 29, 1997 of $1,824,000 and $1,336,000, respectively. The Company's effective tax rate decreased to 32.3% in the second quarter and first six months of 1997 from 33.0% for the same periods in 1996. This decrease was a result of the reinstatement and modification of the federal research and development tax credit by the Small Business Jobs Protection Act of 1996, and anticipated differences between income for financial statement purposes and taxable income for the two periods. A number of uncertainties exist that may influence the Company's future operating results, including general economic conditions, changes in conditions affecting original equipment manufacturers, competition, alternative technologies, the Company's success in developing new products and process technologies, market acceptance of the Company's new products, distributor and sales representative performance, the ability of the Company to continue diversifying its product line, manufacturing performance, subcontractor performance, availability and price fluctuations of raw materials, and other factors. Any of these uncertainties could cause a severe near-term impact on the Company's order growth, net sales growth, or results of operations. FINANCIAL CONDITION Cash and short-term investments were $98.0 million at the end of the second quarter of 1997, compared with $70.3 million at the end of fiscal year 1996. The increase in cash and short-term investments were primarily the result of net cash provided from operations during the first six months of 1997 of $40.8 million offset by investments in property, plant and equipment of $18.6 million. The Company continues to invest in financial instruments having maturities in excess of one year in order to obtain yields higher than those available in the short-term market. - 8 - 9 DALLAS SEMICONDUCTOR CORPORATION FINANCIAL CONDITION (CONTINUED) Capital additions were $9 million in the second quarter of 1997, compared to $14 million for the same period of 1996. Capital expenditures for the second quarter of 1997 related primarily to wafer fabrication and test equipment. Capital expenditures for 1997 are estimated to total approximately $55 million and will be used primarily for wafer fabrication, manufacturing and test equipment, and computer hardware and software. In 1994 the board of directors authorized the purchase from time-to-time, depending on market conditions, up to 500,000 shares of the Company's common stock. As of June 29, 1997, a total of 215,900 shares, totaling $3,446,000 have been purchased pursuant to this stock repurchase program. On June 2, 1997, a $0.035 dividend was paid on each outstanding share of common stock, to shareholders of record on May 15, 1997. On July 22, 1997, a $0.035 dividend was declared on each outstanding share of common stock, payable on September 2, 1997, to shareholders of record on August 15, 1997. The Company had no long-term debt at the end of the second quarter of 1997 or at the end of fiscal 1996. - 9 - 10 DALLAS SEMICONDUCTOR CORPORATION PART II. OTHER INFORMATION ITEMS 1.- 3. Not applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (a) The Company's annual meeting of stockholders was held on April 22, 1997. (b) (c) (d) The following items were presented to the stockholders with the following results.
Election of Directors: Votes Votes For Withheld ---------- -------- C.V. Prothro 24,539,003 383,929 Chao C. Mai 24,538,907 384,025 Michael L. Bolan 24,539,363 383,569 Richard L. King 24,530,291 392,641 M.D. Sampels 24,532,311 390,621 Carmelo J. Santoro 24,532,001 390,931 E.R. Zumwalt, Jr. 24,491,770 431,162
Votes Broker Votes For Against Abstentions Non-Votes ---------- --------- ----------- --------- Selection of Ernst & Young LLP as independent auditors for the 1997 fiscal year 24,811,110 94,495 17,327 --
Votes Broker Votes For Against Abstentions Non-Votes --------- ----------- ----------- --------- Stockholder proposal that the shareholders assembled in person and by proxy, recommend 1.) that all future non-employee directors not be granted any company paid or financed pension benefits and 2.) current non-employee directors relinquish their pension benefits. 1,947,554 18,996,397 261,928 3,717,053
ITEM 5. OTHER INFORMATION Not Applicable ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBIT 27 - FINANCIAL DATA SCHEDULE (b) Reports on Form 8-K ------------------- No Reports on Form 8-K were filed during the period for which this report is filed. - 10 - 11 DALLAS SEMICONDUCTOR CORPORATION 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. DALLAS SEMICONDUCTOR CORPORATION By: /s/ Alan P. Hale ------------------------- Alan P. Hale Vice President, Finance Date: August 8, 1997 -------------- - 11 - 12 INDEX TO EXHIBITS
EXHIBIT NUMBER ITEM - ------ ---- 27 ARTICLE 5 FINANCIAL DATA SCHEDULE SECOND QUARTER 10-Q
EX-27 2 ART. 5 FDS 2ND QUARTER 10-Q
5 1,000 6-MOS DEC-28-1997 JUN-29-1997 98,027 0 47,658 0 55,098 209,972 291,730 151,705 355,435 42,511 0 0 0 548 312,924 355,435 91,040 91,040 44,627 69,549 0 0 0 22,616 7,294 0 0 0 0 15,322 .52 0
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