-----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, M7Xp+k2fcnl2OO4bardmBhwRkQpSFo7p4a63HAaKq0J0jewEA0hFvu9BwDuTaV/p BHEOgkMa+Pf0Py9XkHNihw== 0000800460-95-000017.txt : 19951120 0000800460-95-000017.hdr.sgml : 19951120 ACCESSION NUMBER: 0000800460-95-000017 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CALIFORNIA MICRO DEVICES CORP CENTRAL INDEX KEY: 0000800460 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 942672609 STATE OF INCORPORATION: CA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-15449 FILM NUMBER: 95593169 BUSINESS ADDRESS: STREET 1: 215 TOPAZ ST CITY: MILPITAS STATE: CA ZIP: 95035-5430 BUSINESS PHONE: 4082633214 MAIL ADDRESS: STREET 1: 215 TOPAZ STREET STREET 2: 215 TOPAZ STREET CITY: MILPITAS STATE: CA ZIP: 95035-5430 10-Q 1 United States SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [ x ] Quarterly Report Pursuant To Section 13 Or 15(d) Of The Securities Exchange Act Of 1934 For the Period Ended September 30, 1995 or [ ] Transition Report Pursuant To Section 10 or 15(d) of The Securities Exchange Act of 1934 For the Transition Period From ____________ to ___________ Commission File Number 0-15449 CALIFORNIA MICRO DEVICES CORPORATION (Exact name of registrant as specified in its charter) California 94-2672609 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 215 Topaz Street, Milpitas, California 95035-5430 (Address of principal executive offices) (Zip Code) (408) 263-3214 (Registrant's telephone number, including area code) Not applicable (Former name, former address, and former fiscal year if changed since last report) 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 the court. Yes X No Applicable Only to Corporate Issuers Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: As of September 30, 1995, there were outstanding 10,189,303 shares of Issuer's Common Stock. CALIFORNIA MICRO DEVICES CORPORATION INDEX PART I. FINANCIAL INFORMATION Page Number Item 1. Financial Statements Statements of Operations Three and Six Months Ended September 30, 1995 and 1994 2 Balance Sheets September 30, 1995 and March 31, 1995 3 Statements of Cash Flows Three and Six Months Ended September 30, 1995 and 1994 4 Notes to Financial Statements 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 6 PART II. OTHER INFORMATION Item 1. Legal Proceedings 8 Item 4. Submission of Matters to a Vote of Security Holders 8 Item 6. Exhibits and Reports on Form 8-K 9 Signature 10 ii PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements. CALIFORNIA MICRO DEVICES CORPORATION STATEMENTS OF OPERATIONS (Amounts in Thousands, Except Per Share Data) (Unaudited) Three Months Six Months Ended Ended September 30, September 30, 1995 1994 1995 1994 (restated) Revenues: Net product sales $9,322 $7,558 $17,666 $13,936 Technology related revenues 307 255 610 5,975 ------ ------ ------ ------ Total revenues 9,629 7,813 18,276 19,911 Cost and expenses: Cost of sales 5,314 6,096 10,067 22,511 Research and development 795 872 1,661 1,765 Selling, marketing and administrative 2,729 1,619 5,203 4,179 ------ ----- ------ ----- Total costs and expenses 8,838 8,587 16,931 28,455 ----- ----- ------ ------ Operating income (loss) 791 (774) 1,345 (8,544) Other (income) expense, net (45) (38) (8) 208 ----- ------ ------ ----- Income (loss) before income taxes 836 (736) 1,353 (8,752) Income taxes (benefit) - 50 - (578) ----- ----- ------ ------ Income (loss) before cumulative effect of change in accounting 836 (786) 1,353 (8,174) Cumulative effect of change in accounting, net of tax - 835 - 835 ----- ------- ------ ------ Net income (loss) $ 836 $(1,621) $1,353 $(9,009) ===== ======= ====== ======= Net income (loss) per common share: Income (loss) before cumulative effect of change in accounting $0.08 ($0.09) $0.13 ($0.96) Cumulative effect of change in accounting - (0.10) - (0.10) ----- ------- ----- ------- Net income (loss) per share $0.08 $(0.19) $0.13 $(1.06) ===== ======= ===== ====== Weighted average common shares and share equivalents outstanding 10,866 8,537 10,324 8,279
The accompanying notes are an integral part of these financial statements. 2 CALIFORNIA MICRO DEVICES CORPORATION BALANCE SHEETS (Amounts in Thousands, Except Share Data) (Unaudited) Sept. 30, March 31, 1995 1995 ASSETS: Current assets: Cash and cash equivalents $2,565 $10,556 Short-term securities 19,261 8,404 Accounts receivable, less allowance for doubtful accounts of $866 and $832 4,557 3,203 Inventories 5,408 4,747 Refundable income taxes and other assets 442 5,445 ------ ------ Total current assets 32,233 32,355 Property, plant & equipment, net 8,337 6,665 Restricted cash 1,068 989 Other long term assets 649 679 ------- ------- Total assets $42,287 $40,688 ======= ======= LIABILITIES & SHAREHOLDERS' EQUITY: Current liabilities: Accounts payable $2,935 $2,725 Accrued salaries and benefits 855 560 Other accrued liabilities 4,825 3,748 Deferred margin on shipments to distributors 1,059 1,157 Current portion of long-term debt and capital lease obligations 2,006 2,516 ------ ------ Total current liabilities 11,680 10,706 Long-term debt, less current maturities 7,724 7,923 Capital lease obligations, less current maturites 644 1,278 Deferred income 106 136 ------ ------ Total liabilities 20,154 20,043 Shareholders' equity: Common stock - no par value; authorized 25,000,000; issued and outstanding 10,189,303 shares 54,987 54,947 Retained earnings (32,854) (34,302) ------- ------- Total shareholders' equity 22,133 20,645 ------- ------- Total liabilities and shareholders' equity $42,287 $40,688 ======= =======
The accompanying notes are an integral part of these financial statements. 3 CALIFORNIA MICRO DEVICES CORPORATION STATEMENTS OF CASH FLOWS (Amounts in Thousands) (Unaudited) Six Months Ended September 30, 1995 1994 (restated) Cash flows from operating activities: Net income /(loss) $1,353 ($9,010) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 708 900 Net (increase)/decrease in inventories (661) 10,434 Net (increase)/decrease in accounts receivable (1,354) 687 Net (increase) /decrease in prepaid expenses and other current assets 3,628 (1,926) Net increase in trade accounts payable and other current liabilities 1,582 1,232 CMD/HML -Joint venture 1,375 -- Net decrease in other long term assets 30 379 Deferred margin on distributor sales (98) 1,221 -------- ------- Net cash (used) provided by operating activities 6,563 3,917 ------ ------ Cash (used) in investing activities: Securities, net purchases (10,762) (3,000) Capital expenditures (2,410) (1,096) Net change in restricted cash (79) (69) -------- ------- Net cash used in investing activities (13,251) (4,165) -------- ------- Cash (used) provided by financing activities: Payment of capital lease obligations (1,144) (895) Payment of long-term debt (199) (160) Proceeds from sale/lease back -- 1,383 Proceeds from issuance of common stock 40 15,465 ------ ------ Net cash (used) provided by financing activities (1,303) 15,793 ------- ------ Net increase /(decrease) in cash and cash equivalents (7,991) 15,545 Cash and cash equivalents at beginning of period 10,556 10,561 ------ ------- Cash and cash equivalents at end of period $2,565 $26,106 ------ ------- Supplemental disclosures of cash flow information: Interest paid $ 630 $ 650 Income taxes paid -- $ 2,700 Supplemental disclosures of non-cash investing and financing activities: Unrealized gain/(loss) on securities $ 95 -- Capital expenditures financed through capital lease obligations -- $ 403
4 CALIFORNIA MICRO DEVICES CORPORATION Notes to Financial Statements 1. Basis of Presentation In the opinion of management, the accompanying unaudited condensed financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the Company's financial position as of September 30, 1995, results of operations for the six month periods ended September 30, 1995 and 1994, and cash flows for the six month periods ended June 30, 1995 and 1994. Results for the periods are not necessarily indicative of fiscal year results. The condensed financial statements should be read in conjunction with the California Micro Devices Corporation financial statements included with the Company's annual report on Form 10-K for the nine months ended March 31, 1995. 2. Change in Method of Accounting for Shipments to Distributors Effective July 1, 1994, the Company changed its accounting method of recognizing revenue on shipments to distributors until final sale by the distributor. Previously, including the quarter ended September 30, 1994, the Company recognized revenue at the time of shipment to the distributor. Distributor agreements allow the distributors certain rights of return and price protection on unsold merchandise. As a result, the Company believes that deferral of the recognition of distributor sales and related gross margins until the merchandise is resold by the distributors results in a more meaningful measurement of operations and is a preferable method of accounting for such shipments. Information to compute the proforma effect of this accounting change on the quarter ended September 30, 1994 is not available. 3. Litigation In the securities class action lawsuits filed against the Company and pending before Judge Vaughn Walker of the U.S. District Court for the Northern District of California, the parties and others have filed pleadings related to the class' renewed Motion for Preliminary Approval of Settlement. This motion is set for hearing on November 17, 1995. Pursuant to the Court's order of August 4, 1995, counsel for the class surveyed selected institutional and large individual class members in an effort to determine whether the purposed settlement with the Company was affirmatively supported. Class members who responded to the survey generally expressed support for the settlement. On October 12, 1995, the Colorado Public Employees Retirement Association, a class member, filed an application for leave to appear in the action for the limited purpose of participating in the settlement discussions and determination whether the proposed settlement may be improved. To date the court has not ruled on that application. The motion has been opposed by certain of the Company's former officers. In addition, counsel representing certain institutions, including both class member and non-class members, has expressed concerns regarding the adequacy of the notice sent to the selected class members. On September 18, 1995, Ultrasound Technology Associates ("UTA") filed a complaint against the Company, alleging causes of action purportedly arising from the Company's termination of its contract with UTA. On October 13, 1995, the Company filed a complaint for libel per se against UTA and its attorney. On October 17, 1995, the Company answered UTA's complaint and counterclaimed against UTA based on UTA's breach of the contract between the companies. The Company intends to vigorously pursue this litigation. Based upon the information currently available to the Company, management believes this matter will not have a material adverse affect on the Company's financial position or results of operations. 5 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Results of Operations Product sales for the quarter ended September 30, 1995, increased by $1,764,000, or 23%, compared to the quarter ended September 30, 1994, due primarily to increased sales of thin film products. Thin film products represented 70% of sales for the quarter ended September 30, 1995, compared to 45% of sales for the year ago quarter. Product sales for the six month period ended September 30, 1995, increased by $3,730,000, or 27%, also due to the increase in thin film products. For the six months ended September 30, 1995, thin film products represented 66% of sales, compared to approximately 40% in the six months ended September 30, 1994. Sales of thin film products (in absolute dollars) have approximately doubled during both the three and six months ended September 30, 1995, when compared to the same periods a year earlier. The increase in thin film products was partially offset by diminished sales of an aging semiconductor product line, which declined by approximately 30% during the three and six months ended September 30, 1995, when compared with the same periods a year earlier. Technology related revenues, relating to engineering projects partially funded by Hitachi Metals, Ltd. (HML), were at comparable levels during the three months ended September 30, 1995 and 1994. Technology related revenue for the six months ended September 30, 1994 included a one-time sale of rights to previously developed technology in connection with the initial alliance with HML and cannot be used for direct comparison Cost of goods for the quarter ended September 30, 1995, decreased by $782,000 due to the implementation of cost reduction programs, improved factory utilization and the increased mix of higher margin thin film products. Gross margins as a percent of net product sales increased to 43% in the quarter ended September 30, 1995, compared to 19% in the year earlier quarter. Cost of sales for the six month periods ended September 30, 1995 and 1994 do not provide meaningful comparisons due to a $10.2 million charge for obsolete and slow moving inventory and a $1.7 million warranty charge, both included in the three months ended June 30, 1994. Excluding these charges, gross margins as a percent of net product sales would have been 24% in the six months ended September 30, 1994 as compared to 43% for the 1995 period. Research and development expenditures declined in dollars and as a percentage of sales during the three and six months ended September 30, 1995, due to the lower cost of wafers and other materials used in engineering projects compared to the year earlier periods. Selling, marketing and administrative costs increased overall and as a percentage of sales in the quarter ended September 30, 1995, when compared to the year earlier quarter due to costs associated with shareholder litigation and related matters, including approximately $300,000 in unusual legal fees. Additionally, increased sales and profits have resulted in increased sales commissions and bonuses. Other cost increases include the cost of the annual shareholders' meeting (none held last year), relocation and recruitment costs, and severance reserves. The six months ended September 30, 1995, include significantly higher audit and consulting fees associated with the clean-up of the Company's administrative affairs as well as costs associated with shareholder litigation and related matters, including approximately $500,000 in unusual legal costs. The six months ended September 30, 1994, include a $1.3 million bad debt write-off recognized in the quarter ended June 30, 1994. 6 As a result of the factors discussed above, operating income for the quarter and six months ended September 30, 1995, was $791,000 and $1,345,000, respectively, compared with losses of $774,000 and $8.5 million, respectively, in the year earlier periods. Other expense for the six months ended September 30, 1995, decreased by $200,000 from the year earlier period due to increased interest income and reduced interest expense. No income taxes were accrued for the quarter and six months ended September 30, 1995, due to the availability of tax loss carryforwards. An income tax benefit of $628,000 was recorded in the quarter ended June 30, 1994, representing the benefit of carryback losses. There were foreign withholding taxes of $50,000 in the quarter ended September 30, 1994. The net losses for the six months periods ended September 30, 1994, include a $835,000 one-time charge for the cumulative effect of change in accounting principle. See Note 2 of Notes to Financial Statements. The weighted average common shares outstanding increased to 10.9 million shares and 10.4 million shares for the three and six months ended September 30, 1995, respectively, from 8.5 million shares in the year earlier periods due to the issuance of 1.5 million shares held in trust for the tentative settlement of shareholder class action lawsuits and 100,000 shares issued to HML, as well as the dilutive effect of stock options. Liquidity and Capital Resources The Company's cash and short term securities increased by $2.9 million from $18,960,000 on March 31, 1995, to $21,826,000 on September 30, 1995, due to the collection of income tax refunds and a receivable from HML related to a discontinued project in the Philippines. These were partially offset by capital expenditures of $2,410,000, which included end-of-lease equipment buy-outs of $882,000. The remaining capital expenditures of $1,528,000 are made up primarily of selected investments to enhance manufacturing efficiency and capacity and investments in new computer systems and software. Accounts receivable increased by $1,354,000 due primarily to increased sales. Gross days sales outstanding were 52 days at September 30, 1995, compared to 50 days at March 31, 1995. Inventories increased by $661,000, or 14%, from June 30, 1995, due to increased work-in-process inventories to support increased orders. Backlog of product orders was $10.3 million at September 30, 1995, compared to $5.6 million at March 31, 1995. Accrued salaries and benefits increased due to increased headcount, increased bonus expense, and severance reserves. Other accrued liabilities increased primarily due to increased sales tax and sales commissions, relocation and recruitment costs, and accrued royalties. The Company expects to be able to fund its liquidity needs for a least the next twelve months through its existing cash balances, cash flows from operations, and bank borrowings under its line of credit. The Company has a bank line of credit, expiring July 31, 1996, under which it can borrow up to $3,000,000, at prime, collateralized by short term investments managed by the bank. There have been no borrowings against this line of credit. 7 PART II. OTHER INFORMATION ITEM 1. Legal Proceedings. In the securities class action lawsuits filed against the Company and pending before Judge Vaughn Walker of the U.S. District Court for the Northern District of California, the parties and others have filed pleadings related to the class' renewed Motion for Preliminary Approval of Settlement. This motion is set for hearing on November 17, 1995. Pursuant to the Court's order of August 4, 1995, counsel for the class surveyed selected institutional and large individual class members in an effort to determine whether the purposed settlement with the Company was affirmatively supported. Class members who responded to the survey generally expressed support for the settlement. On October 12, 1995, the Colorado Public Employees Retirement Association, a class member, filed an application for leave to appear in the action for the limited purpose of participating in the settlement discussions and determination whether the proposed settlement may be improved. To date the court has not ruled on that application. The motion has been opposed by certain of the Company's former officers. In addition, counsel representing certain institutions, including both class member and non-class members, has expressed concerns regarding the adequacy of the notice sent to the selected class members. On September 18, 1995, Ultrasound Technology Associates ("UTA") filed a complaint against the Company, alleging causes of action purportedly arising from the Company's termination of its contract with UTA. On October 13, 1995, the Company filed a complaint for libel per se against UTA and its attorney. On October 17, 1995, the Company answered UTA's complaint and counterclaimed against UTA based on UTA's breach of the contract between the companies. The Company intends to vigorously pursue this litigation. Based upon the information currently available to the Company, management believes this matter will not have a material adverse affect on the Company's financial position or results of operations. ITEM 4. Submission of Matters to a Vote of Security Holders The Company's annual meeting of stockholders, at which the proposals described below were submitted to stockholders, was held on September 15, 1995. Proposal No. 1 Election of Directors. the following individuals, who received the votes indicated, were elected as directors: NAME FOR WITHHELD David Schoon 7,371,129 0 Wade Meyercord 6,621,858 0 Jeffrey Kalb 6,621,858 0 C. K. N. Patel 6,621,852 0 Dr. Angel Jordan 6,621,738 0 Stuart Schube 6,621,738 0
Proposal No. 2 The proposal to ratify the appointment of Ernst & Young LLP, as the Company's independent auditors for the current fiscal year was approved. The results of the voting was as follows: FOR AGAINST WITHHELD 6,610,232 38,691 1,962,297 8 Proposal No. 3 The proposal to approve the 1995 Stock Option Plan was approved. The results of the voting was as follows: FOR AGAINST WITHHELD 4,206,056 2,437,670 115,415 Proposal No. 4 The proposal to approve the 1995 Employee Stock Purchase Plan was approved. The results of the voting was as follows: FOR AGAINST WITHHELD 6,356,465 191,693 95,194 Proposal No. 5 The proposal to approve the 1995 Non- Employee Directors' Stock Option Plan was approved. The results of the voting was as follows: FOR AGAINST WITHHELD 4,131,100 2,471,765 156,276 ITEM 6. Exhibits and Reports on Form 8-K. (a) Exhibits Exhibit 11 Computation of Per Share Earnings (b) Reports on Form 8-K (i) On September 28, 1995, the Company filed a report on Form 8-K, reporting the results of its Annual Meeting of Shareholders resulting in the election of a Board of Directors, approval of Stock Options Plans, and ratification of independent auditors of the Company. (ii) On September 28, 1995, the Company filed a report on Form 8-K, reporting the election of Bob Filiault, Vice President of Worldwide Sales, as an Officer of the Company. (iii) On October 5, 1995, the Company filed a report on Form 8-K, reporting the release of certain information at its Annual Shareholder's Meeting. (iv) On November 3, 1995, the Company filed a report on Form 8-K, reporting the release of certain information on October 26, 1995, regarding the Company's second quarter 1996 financials. (c) Reports on Form S-8 On August 17, 1995, the Company filed a report on Form S-8, reporting the registration of 2,335,000 shares of the Company's common stock. 9 SIGNATURE Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CALIFORNIA MICRO DEVICES CORPORATION (Registrant) Date: November 14, 1995 /s/ John E. Trewin John E. Trewin Vice President and Chief Financial Officer 10 EXHIBIT 11 CALIFORNIA MICRO DEVICES CORPORATION Computation of Per Share Earnings (Amounts in Thousands, Except Share Data) (Unaudited) Three Months Six Months Ended Ended September 30, September 30, 1995 1994 1995 1994 (restated) Net income (loss) $ 836 ($1,621) $1,353 $(9,009) PRIMARY: Weighted average common shares outstanding 10,215 8,537 9,780 8,279 Common equivalents attributable to: Options and warrants 651 544 Total weighted average common and common equivalent shares outstanding 10,866 8,537 10,324 8,279 Net income (loss) per share $ 0.08 ($0.19) $0.13 $(1.09) FULLY DILUTED Weighted average common shares 10,215 8,537 9,780 8,279 Common equivalent attributable to: Options and warrants 671 577 Total weighted average common and common equivalent shares outstanding 10,886 8,537 10,357 8,279 Net income (loss) per share $0.08 ($0.19) $0.13 $(1.09)
11 EX-27 2
5 0000800460 CALIFORNIA MICRO DEVICES CORPORATION 1,000 6-MOS MAR-31-1995 SEP-30-1995 2,565 19,261 5,423 866 5,408 32,233 10,054 0 42,287 11,680 0 54,987 0 0 (32,854) 42,287 9,322 9,629 5,314 5,314 3,524 0 (45) 836 0 836 0 0 0 836 .08 .08 Includes Refundable income taxes and other assets - 442. Includes Property, plant & equipment, net - 8,337; Restricted cash - 1,068; and Other long term assets - 649. Includes Technology related sales - 307. Includes Research and Development - 795; Selling, marketing, and administrative expense - 2,729.
-----END PRIVACY-ENHANCED MESSAGE-----