-----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, A2h5NmjXTRN5iMP9z9P/dVOoItbK5jn9eVPiJQryTa92+kA0lYpqUEkgO2zG05nB DNNmm+7zkCKXpW/MGs4DxA== 0000912057-95-011215.txt : 19951218 0000912057-95-011215.hdr.sgml : 19951218 ACCESSION NUMBER: 0000912057-95-011215 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951031 FILED AS OF DATE: 19951215 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DSP TECHNOLOGY INC CENTRAL INDEX KEY: 0000773720 STANDARD INDUSTRIAL CLASSIFICATION: INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS [3825] IRS NUMBER: 942832651 STATE OF INCORPORATION: CA FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14677 FILM NUMBER: 95602168 BUSINESS ADDRESS: STREET 1: 48500 KATO RD CITY: FREMONT STATE: CA ZIP: 94538 BUSINESS PHONE: 5106577555 10-Q 1 10-Q 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 OCTOBER 31, 1995 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 0-14677 --------------------------------------------------------- DSP TECHNOLOGY INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) CALIFORNIA 94-2832651 - --------------------------------------- -------------------------- (State or other jurisdiction of I.R.S. Employer incorporation or organization) Identification Number 48500 KATO RD., FREMONT, CA 94538 - --------------------------------------- -------------------------- (Address of principal executive offices) (Zip Code) (510) 657-7555 - -------------------------------------------------------------------------------- (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 ----- ---- APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. YES NO ---- ---- APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate number of shares outstanding of each of the issuer's classes of common stock, at the latest practical date: CLASS OUTSTANDING AS OF NOVEMBER 13, 1995 ----- ----------------------------------- COMMON STOCK 2,154,463 1 DSP TECHNOLOGY INC. AND SUBSIDIARIES TABLE OF CONTENTS FORM 10-Q Page ---- PART I. FINANCIAL INFORMATION Item 1. Financial Statements: Consolidated Balance Sheets - October 31, 1995 and January 31, 1995 3 Consolidated Statements of Income - Three months and nine months ended October 31, 1995 and 1994 4 Consolidated Statements of Cash Flows - Nine months ended October 31, 1995 and 1994 5 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. 8 Signatures 9 2 DSP TECHNOLOGY INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
October 31, January 31, 1995 1995 ----------- ----------- ASSETS (Unaudited) Current assets: Cash $ 2,343 $ 1,334 Accounts receivable 2,131 3,003 Inventories 2,561 1,807 Deferred income taxes 257 257 Prepaid expenses 146 120 --------- --------- Total current assets 7,438 6,521 Property and equipment 950 972 Cost in excess of net assets of acquired business 413 445 Other assets 887 806 --------- --------- $ 9,688 $ 8,744 --------- --------- --------- --------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 810 $ 562 Accrued liabilities 987 1,399 Income taxes payable 501 370 --------- --------- Total current liabilities 2,298 2,331 Deferred income taxes 145 145 Commitments and contingencies -- -- Shareholders' equity: Preferred stock. Authorized 2,500,000 shares; none issued -- -- Common stock. 25,000,000 shares authorized; shares issued and outstanding: 2,153,963 at October 31 and 2,106,765 at January 31 2,917 2,767 Retained earnings 4,328 3,501 --------- --------- Total shareholders' equity 7,245 6,268 --------- --------- $ 9,688 $ 8,744 --------- --------- --------- ---------
The accompanying notes are an integral part of these financial statements. 3 DSP TECHNOLOGY INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) (Unaudited)
Three months ended Nine months ended October 31, October 31, -------------------------- --------------------------- 1995 1994 1995 1994 -------- -------- -------- -------- Net sales $ 4,215 $ 3,545 $ 11,028 $ 9,166 Cost of sales 1,655 1,388 4,235 3,656 -------- -------- -------- -------- Gross profit 2,560 2,157 6,793 5,510 Operating expenses: Research and development 621 572 1,623 1,329 Marketing, general and administrative 1,357 1,117 3,918 3,314 -------- -------- -------- -------- 1,978 1,689 5,541 4,643 -------- -------- -------- -------- Operating income 582 468 1,252 867 Interest income 32 15 95 36 -------- -------- -------- -------- Income before income taxes 614 483 1,347 903 Income taxes 239 193 520 359 -------- -------- -------- -------- Net income $ 375 $ 290 $ 827 $ 544 -------- -------- -------- -------- -------- -------- -------- -------- Net income per common and common equivalent share $ .16 $ .13 $ .36 $ .25 -------- -------- -------- -------- -------- -------- -------- -------- Weighted average common and common equivalent shares outstanding 2,357 2,189 2,329 2,180 -------- -------- -------- -------- -------- -------- -------- --------
The accompanying notes are an integral part of these financial statements. 4 DSP TECHNOLOGY INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Thousands)
Nine months ended October 31, --------------------- 1995 1994 -------- ------ (Unaudited) Cash flows from operating activities: Net income $ 827 $ 544 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 501 327 Changes in current assets and liabilities: Accounts receivable 872 (1,143) Inventories (754) (786) Prepaid expenses (26) 253 Accounts payables 248 164 Accrued liabilities (412) 344 Income taxes payable 131 77 ---------- ---------- Net cash provided by (used in) operating activities 1,387 (220) ---------- ---------- Cash flows from investing activities: Purchases of property and equipment (343) (217) Investment in software development (117) (100) Purchase of Applion technology -- (368) Other (68) 110 ---------- ---------- Net cash (used in) investing activities (528) (575) ---------- ---------- Cash flows from financing activities: Proceeds from issuance of common stock 150 4 ---------- ---------- Net cash provided by financing activities 150 4 ---------- ---------- Increase (decrease) in cash 1,009 (791) ---------- ---------- Cash at beginning of period 1,334 1,109 ---------- ---------- Cash at end of period $ 2,343 $ 318 ---------- ---------- ---------- ---------- Supplemental disclosure of cash flow information: Cash paid during period for income taxes $ 433 $ 166 ---------- ---------- ---------- ----------
The accompanying notes are an integral part of these financial statements. DSP TECHNOLOGY INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. BASIS OF PRESENTATION. The accompanying consolidated financial statements have been prepared, without audit, in accordance with Securities and Exchange Commission requirements for interim financial statements. Therefore, they do not include all the disclosures that would be presented in the Company's Annual Report on Form 10-K. The financial statements should be read in conjunction with the Company's January 31, 1995 financial statements and accompanying notes thereto. The information furnished reflects all adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of financial position, results of operations and cash flows for the interim period. The results of operations for the periods presented are not necessarily indicative of results to be expected for the full year. 2. INVENTORIES. Inventories are stated at the lower of cost (first-in, first- out) or market. Inventories consist of:
October 31, January 31, 1995 1995 ----------- ----------- (thousands) Raw materials $ 1,229 $ 1,040 Work in process 667 405 Finished goods 665 466 --------- --------- $ 2,561 $ 1,911 --------- --------- --------- ---------
3. ACQUISITION OF APPLION. In June 1994, the company acquired substantially all the assets of Applion, a start-up California partnership for $420,000. The operating results of Applion are included in the consolidated statements of income since the date of acquisition. 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Net sales for the third quarter of fiscal 1996 ended October 31, 1995 increased by $670,000 or 19% to $4,215,000 from $3,545,000 in the quarter of fiscal 1995 ended October 31, 1994. For the first nine months of fiscal 1996, net sales were $11,028,000 or 20% higher than net sales of $9,166,000 in the first nine months of fiscal 1995. The increases were due to continued higher shipments of the company's core products brought about by a higher shippable sales backlog at the beginning of each of the quarters this year compared to the same periods last year. Cost of sales as a percentage of net sales remained at 39% in this year's second quarter from the same period last year. Cost of sales as a percentage of net sales decreased to 38% in the first nine months of fiscal 1996 compared to 39% in the first nine months of fiscal 1995. The decrease in the first nine months reflect the positive effect of the economies of scale resulting from higher volume production this year compared to last year. In the third quarter, these economies were offset by higher revenues derived from lower margin services. Research and development expenses increased by $49,000 to $621,000 in the third quarter this year compared to $572,000 in the same period last year while expenses in the first three quarters of this year increased by $294,000 to $1,623,000 from $1,329,000 in the first nine months of fiscal 1995. The increases in expenses resulted primarily from the higher capitalization of the dynamometer control software development costs last year compared to this year and higher expenses due to additions in personnel this year compared to last year. Marketing, general and administrative expenses in the third quarter of fiscal 1996 increased by $240,000 or 21% to $1,357,000 compared to the same period a year ago. Expenses in the first nine months of this year increased by $604,000 to $3,918,000 from $3,3,14,000 last year. As a percentage of sales, however, expenses remained unchanged at 32% in this year's third quarter compared to last year's second quarter, and at 36% in the first nine months of this year from the same period last year. The increases were principally due to higher expenses associated with a major trade show, higher sales expenses and increased legal expenses associated with a strategic alliance formation. Net interest income was $32,000 in this year's third quarter compared to $15,000 last year and $95,000 in the first nine months versus $36,000 in the same period last year. Higher interest incomes reflect higher available cash invested in interest-bearing accounts this year compared to the same period last year. The effective tax rates computed were 39% for the third quarter and for the first nine months this year compared to 40% for the third quarter and first nine months last year, respectively. The company reviews the tax rate quarterly and could make minor adjustments to reflect changing estimates. LIQUIDITY AND CAPITAL RESOURCES The Company's cash and certificates of deposits increased by $1,009,000 during the nine month period ended October 31, 1995. The primary use of the Company's cash in the first nine months of fiscal 1996 has been the purchase of capital equipment used to equip additional personnel and to fund new software product development. Working capital at October 31, 1995 was $5,140,000 compared to $4,190,000 at the beginning of the fiscal year, while the current ratios stood at 3.2 to 1.0 at October 31, 1995 and at 2.8 to 1.0 at January 31, 1995. The Company has a $1,000,000 secured bank line of credit. 7 Based on its current operating plan, the Company believes that the liquidity provided by cash generated from operations, its existing cash and short-term investments and the borrowing arrangements described above, will be sufficient to meet the Company's operating and capital requirements for fiscal 1996. At October 31, 1995, the Company had no material outstanding commitments to purchase capital equipment. Management believes that inflation has not had a material effect on the Company's operations or financial condition. FACTORS THAT MAY AFFECT FUTURE RESULTS Large system orders represent an increasingly large percentage of the Company's sales. Also, sales of such systems have been concentrated in a relatively small number of customers. The Company did not receive a large system order in the first nine months this year while last year, the first nine months sales and orders benefited from receipt of two major system contracts totaling approximately $3.6 million which were delayed from the previous year. Hence, the Company's operating results may fluctuate, especially when measured on a quarterly basis as a result of the timing of receipt of major system orders. The Company's future operating results may also be affected by a number of factors, including: its ability to introduce new products and enhancements for its customers as demands for increasingly sophisticated measurement and control systems continue; uncertainties relative to global economic conditions; the company's ability to withstand competition particularly from several companies that are much larger in size than the Company; natural disasters, particularly earthquakes which may strike the California area where the Company's headquarters and manufacturing facility are located; and availability and cost of components for its products. Part II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K A. Exhibits: None. B. Reports on Form 8-K: None. 8 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. DSP TECHNOLOGY INC. ------------------------------ (Registrant) By: /s/ Jose M. Millares -------------------------- Jose M. Millares Chief Financial Officer Date: November 15, 1995 9 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS JAN-31-1996 FEB-01-1995 OCT-31-1995 2,343 0 2,181 50 2,561 7,438 3,311 2,361 9,688 2,298 0 2,917 0 0 4,328 9,688 11,028 11,028 4,235 4,235 5,541 0 0 1,347 520 827 0 0 0 827 .36 .36
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