-----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, PHuVNorAatpF0nr0mp4CJSXemOwOIjQ6nCTVoA19q1sGmxhKRBTOqPt3lf8z8W63 pxlrhu3wmLfMZEltvs5eQA== 0001012870-97-001146.txt : 19970613 0001012870-97-001146.hdr.sgml : 19970613 ACCESSION NUMBER: 0001012870-97-001146 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970430 FILED AS OF DATE: 19970612 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: 97623187 BUSINESS ADDRESS: STREET 1: 48500 KATO RD CITY: FREMONT STATE: CA ZIP: 94538 BUSINESS PHONE: 5106577555 10-Q 1 FORM 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 APRIL 30, 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 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 JUNE 6, 1997 ----- ------------------------------ Common Stock 2,187,361 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, 1997 and January 31, 1997 3 Consolidated Statements of Income - Three months ended April 30, 1997 and 1996 4 Consolidated Statements of Cash Flows - Three months ended April 30, 1997 and 1996 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, 1997 1997 ----------- ----------- ASSETS (Unaudited) Current assets: Cash and cash equivalents $ 1,553 $1,323 Accounts receivable 4,756 4,784 Inventories 2,449 2,015 Deferred income taxes 154 154 Prepaid expenses 214 304 ------- ------- Total current assets 9,126 8,580 Property and equipment 1,495 1,540 Cost in excess of net assets of acquired business 352 362 Other assets 1,399 1,317 ------- ------- $12,372 $11,799 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 680 $ 799 Accrued liabilities 2,631 1,849 Income taxes payable 76 206 ------- ------- Total current liabilities 3,387 2,854 Deferred income taxes 258 258 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: 2,180,962 at April 30 and 2,179,962 at January 31 2,990 2,988 Retained earnings 5,737 5,699 ------- ------- $12,372 $11,799 ======= ======= 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 April 30, ------------------ 1997 1996 ------ ------ Net sales $4,467 $3,775 Cost of sales 2,167 1,538 ------ ------ Gross profit 2,300 2,237 Operating expenses: Research and development 578 496 Marketing, general and administrative 1,705 1,475 ------ ------ 2,283 1,971 ------ ------ Operating income 17 266 Interest income 40 42 ------ ------ Income before income taxes 57 308 Income taxes 22 107 ------ ------ Net income $ 35 $ 201 ====== ====== Net income per common and common equivalent share $ .02 $ .09 ====== ====== Weighted average common and common equivalent shares outstanding 2,305 2,313 ====== ====== 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, --------------------- 1997 1996 ------- ------- (Unaudited) Cash flows from operating activities: Net income $ 35 $ 201 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 240 183 Changes in current assets and liabilities: Accounts receivable 28 (154) Inventories (434) 69 Prepaid expenses and other 90 (28) Accounts payables (119) (27) Accrued liabilities 782 (108) Income taxes payable (130) (79) ------ ------ Net cash provided by (used in) operating activities 492 57 ------ ------ Cash flows from investing activities: Purchases of property and equipment (110) (295) Redemption of certificates of deposit, net -- 100 Investment in software development (170) (175) Other 16 (75) ------ ------ Net cash provided by (used in) investing activities (264) (445) ------ ------ Cash flows from financing activities: Proceeds from issuance of common stock 2 6 Increase (decrease) in cash 230 (382) ------ ------ Cash at beginning of period 1,323 1,816 ------ ------ Cash at end of period $1,553 $1,434 ====== ====== Supplemental disclosure of cash flow information: Cash paid during period for income taxes $ 10 $ 175 ====== ======
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, 1997 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. For accounting purposes, the Company changed to a 52/53 week convention with the fiscal year ending on the Sunday nearest the end of January. However, for financial reporting purposes, each fiscal quarter or year is presented as if it ended on the last day of such period. 2. Inventories. Inventories are stated at the lower of cost (first-in, first- ----------- out) or market. Inventories consist of: April 30, January 31, 1997 1997 --------- ----------- (thousands) Raw materials $1,300 $1,221 Work in process 794 476 Finished goods 355 318 ------ ------ $2,449 $2,015 ====== ====== 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS - ------------------------------------------------------------------------------- OF OPERATIONS - ------------- This section of the report contains forward-looking statements regarding the Company's expected growth and enhanced future performance. All forward- looking statements are subject to risk and actual results could differ materially from those projected in the forward-looking statements as a result of many factors which are set forth below. Results of Operations - --------------------- Net sales for the first quarter of fiscal 1998 (three months ended May 4, 1997) increased by 18% to $4,467,000 from $3,775,000 in the first quarter of fiscal 1997 (three months ended April 30, 1996). The increase in net sales was due to the continuing growth in the Company's RedLine products sales, 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 49% in this year's first quarter compared to 41% in the first quarter last year. The increase in cost of sales is a result of service-related costs exceeding service-related revenues in the first quarter this year. Research and development expenses increased by $82,000 or 17% in the first quarter this year to $578,000 compared to the same period a year ago. The increase in expenses is primarily due to the continued 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 1998 increased by $230,000 or 16% to $1,705,000 from $1,475,000 in the same quarter last year. As a percentage of sales, however, expenses remained at the 38-39% level in both quarters. The increase primarily reflected additional sales, marketing and information systems personnel, and higher sales commissions due to higher sales and bookings. Net interest income was $40,000 this year compared to $42,000 in the first quarter last year. The effective tax rate computed for the first quarter this year was 38% compared to 35% in last year's first quarter. The Company reviews the tax rate quarterly and could make minor adjustments to reflect changing estimates. Factors that May Affect Future Results - -------------------------------------- The Company's future operating results may be affected by a number of factors, including: its ability to introduce new products, services and enhancements for its customers as demands for increasingly sophisticated measurement and control systems continue; timing of receipt of major system orders; timing of service revenues; product mix; uncertainties relative to global economic conditions; ability to compete for qualified 7 personnel in various technical positions; 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. Management expanded the services side of the Company's transportation market business. These services include systems integration, project management, commissioning and installation. These services are usually coupled with the sale of our RedLine products and has allowed us to pursue further growth in the transportation market by providing "one-stop" shopping to our customers. This services business raises several risk factors. Specifically, the success depends on the time it takes for services personnel and future staff to come up to speed on our products, customers and the services they will provide; market acceptance of the services; and the ability to manage customer projects profitably. Because of the foregoing factors, as well as other factors affecting the Company's operating results, past financial performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods. Liquidity and Capital Resources - ------------------------------- Cash and cash equivalents increased by $230,000 during the quarter ended April 30, 1997, to $1,553,000. The increase was due primarily to cash provided by operating activities. Cash was used in the quarter to: a) purchase equipment for additional personnel, and b) investment in software development. The Company's working capital remained level at approximately $5.7 million compared to January 31, 1997. Current ratio remained strong at 2.7 to 1 at April 30, 1997 from 3.0 to 1.0 at January 31, 1997. At April 30, 1997, 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, 1997, 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: Exhibit 27-Financial Data Schedule. 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 6, 1997 9 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS JAN-31-1998 FEB-01-1997 APR-30-1997 1,553 0 4,806 50 2,449 9,126 4,614 3,119 12,372 3,387 0 0 0 2,990 5,737 12,372 4,467 4,467 2,167 2,167 2,283 0 0 57 22 17 0 0 0 35 .02 .02
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