-----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, EQ6gTCyX4js0RteFjRSfSF/WuwWMS7aQEp/OU0gc7+xvb9cOzp2MHcR5AOmomqE4 fF5s43lSLo8BRKdrBHotKA== 0000950130-96-002245.txt : 19960617 0000950130-96-002245.hdr.sgml : 19960617 ACCESSION NUMBER: 0000950130-96-002245 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960430 FILED AS OF DATE: 19960614 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: 96581268 BUSINESS ADDRESS: STREET 1: 48500 KATO RD CITY: FREMONT STATE: CA ZIP: 94538 BUSINESS PHONE: 5106577555 10-Q 1 QUARTERLY REPORT 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 APRIL 30, 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 0-14677 _____________________________________________________ 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 daae: CLASS OUTSTANDING AS OF JUNE 12, 1996 ----- ------------------------------- Common Stock 2,160,963 DSP TECHNOLOGY INC. AND SUBSIDIARIES TABLE OF CONTENTS FORM 10-Q Page ---- PART I. FINANCIAL INFORMATION Item 1. Financial Statements: Consolidated Balance Sheets - April 30, 1996 and January 31, 1996 3 Consolidated Statements of Income - Three months ended April 30, 1996 and 1995 4 Consolidated Statements of Cash Flows - Three months ended April 30, 1996 and 1995 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) April 30, January 31, 1996 1996 ----------- ----------- ASSETS (Unaudited) Current assets: Cash and cash equivalents $ 1,434 $1,816 Certificates of deposit 99 199 Accounts receivable 3,456 3,302 Inventories 2,126 2,195 Deferred income taxes 257 257 Prepaid expenses 183 155 ------- ------ Total current assets 7,555 7,924 Property and equipment 1,229 1,044 Cost in excess of net assets of acquired business 392 403 Other assets 1,112 923 ------- ------ $10,288 $10,294 ------- ------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 432 $ 459 Accrued liabilities 1,263 1,371 Income taxes payable 543 622 ------- ------- Total current liabilities 2,238 2,452 Deferred income taxes 145 144 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: 2,159,963 at April 30 and 2,154,463 at January 31 2,926 2,920 Retained earnings 4,979 4,778 ------- ------- $10,288 $10,294 ------- ------- The accompanying notes are an integral part of these financial statements. DSP TECHNOLOGY INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) (Unaudited)
Three months ended April 30, ------------------ 1996 1995 ------ ------ Net sales $3,775 $3,211 Cost of sales 1,538 1,238 ------ ------ Gross profit 2,237 1,973 Operating expenses: Research and development 496 457 Marketing, general and administrative 1,475 1,270 ------ ------ 1,971 1,727 ------ ------ Operating income 266 246 Interest income 42 32 ------ ------ Income before income taxes 308 278 Income taxes 107 105 ------ ------ Net income $ 201 $ 173 ====== ====== Net income per common and common equivalent share $.09 $.08 ====== ====== Weighted average common and common equivalent shares outstanding 2,315 2,288 ====== ======
The accompanying notes are an integral part of these financial statements. 4 DSP TECHNOLOGY INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Thousands)
Three months ended April 30, ------------------- 1996 1995 ---- ---- (Unaudited) Cash flows from operating activities: Net income $ 201 $ 173 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 183 93 Changes in current assets and liabilities: Accounts receivable (154) 1,279 Inventories 69 (139) Prepaid expenses and other (28) 16 Accounts payables (27) (28) Accrued liabilities (108) (26) Income taxes payable (79) (242) ------ ------ Net cash provided by (used in) operating activities 57 1,126 ------ ------ Cash flows from investing activities: Purchases of property and equipment (295) (129) (Purchases) redemptions of certificates of deposit, net 100 -- Investment in software development (175) Other (75) 152 ------ ------ Net cash provided by (used in) investing activities (445) 23 ------ ------ Cash flows from financing activities: Proceeds from issuance of common stock 6 51 Increase (decrease) in cash (382) 1,200 ------ ------ Cash at beginning of period 1,816 1,334 ------ ------ Cash at end of period $1,434 $2,534 ====== ====== Supplemental disclosure of cash flow information: Cash paid during period for income taxes $ 175 $ 345 ====== ======
The accompanying notes are an integral part of these financial statements. 5 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, 1996 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:
April 30, January 31, 1996 1996 --------- ----------- (thousands) Raw materials $1,265 $1,247 Work in process 414 492 Finished goods 447 456 ------ ------ $2,126 $2,195 ====== ======
6 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 1997 (three months ended April 30, 1996) increased by 18% to $3,775,000 from $3,211,000 in the first quarter of fiscal 1996 (three months ended April 30, 1995). The Transportation Group's RedLine products, which remain the Company's largest product line led the increase in first quarter sales this year compared to last year's first quarter. Cost of sales as a percentage of net sales increased to 41% in this year's first quarter compared to 39% in the first quarter last year. The increase is a result of the addition of new service personnel in anticipation of future growth. These service personnel are responsible for customizing our products to customers' specific requirements. In addition, they install and commission the Company's systems in the field. Research and development expenses increased by $39,000 or 9% in the first quarter this year to $496,000 compared to the same period a year ago. The increase in expenses is primarily due to the ramp up of joint new product development with FEV, the Company's strategic ally in Germany and offset by higher capitalization of software development costs in this year's first quarter. Marketing, general and administrative expenses in the first quarter of fiscal 1997 increased by $205,000 or 16% to $1,475,000 from $1,270,000 in the same quarter last year. As a percentage of sales, however, expenses remained at the 39-40% level in both quarters. The increase in expenses was primarily due to the addition of new sales and marketing personnel. The Company's strategy is to add these new personnel to help deal with the current and future increase in sales activity level. Net interest income was $42,000 compared to $32,000 in the first quarter last year. The increase reflected higher cash balances invested in interest bearing accounts with higher interest rates this year compared to last year. The effective tax rate computed for the first quarter this year was 35% compared to 38% in last year's first quarter. The lower tax rate is attributable to increase in profit contribution from our United Kingdom subsidiary which enjoys a lower overall tax rate than our US operations. The Company reviews the tax rate quarterly and could make minor adjustments to reflect changing estimates. 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 received a large system order in the first quarter this year while last year, there was no large system order placed. A little under half of the large system order received this year is not shippable in the current fiscal 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. 7 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 stike the California area where the Company's headquarters and manufacturing facility are located; and availability and cost of components for its products. Liquidity and Capital Resources - ------------------------------- Cash and cash equivalents decreased by $382,000 during the quarter ended April 30, 1996, to $1,434,000. The decrease was due primarily to the Company's: a) purchases of equipment for additional personnel and to upgrade our information systems capabilities, and b) investment in software development. The Company's working capital, also, decreased slightly to $5,317,000 at April 30, 1996 compared to $5,472,000 at January 31, 1996. Notwithstanding, current ratio remained strong at 3.4 to 1 at April 30, 1996 from 3.2 to 1.0 at January 31, 1996. At April 30, 1996, the Company has $1,000,000 secured bank line of credit. The Company currently anticipates that internally generated funds and bank borrowings will be sufficient to satisfy its anticipated operating and capital needs over the foreseeable future. At April 30, 1996, 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 and financial condition. 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: June 13, 1996 9 EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS JAN-31-1997 FEB-01-1996 APR-30-1996 1434 99 3506 50 2126 7555 3784 2555 10288 2238 0 2926 0 0 4979 10288 3775 3775 1538 1538 1971 0 0 308 107 201 0 0 0 201 .09 .09
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