-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, CPBaTL/mjMGBoYDaHEW7XX94bZxIdD45YVWPndV+2ZqWd7psM0Su/y4rVAYz/ivk dsYJpkrRiUC/JSaqB1uIvA== 0000861289-95-000006.txt : 19950614 0000861289-95-000006.hdr.sgml : 19950614 ACCESSION NUMBER: 0000861289-95-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950214 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ADVANCED LOGIC RESEARCH INC CENTRAL INDEX KEY: 0000861289 STANDARD INDUSTRIAL CLASSIFICATION: 3571 IRS NUMBER: 330084573 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-18753 FILM NUMBER: 95510819 BUSINESS ADDRESS: STREET 1: 9401 JERONIMO ROAD CITY: IRVINE STATE: CA ZIP: 92718 BUSINESS PHONE: 7145816770 MAIL ADDRESS: STREET 1: ADVANCED LOGIC RESEARCH INC STREET 2: 9401 JERONIMO CITY: IRVINE STATE: CA ZIP: 92718 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________ FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 1994 Commission File Number 0-18753 ---------------------------------------- ADVANCED LOGIC RESEARCH, INC. A Delaware Corporation IRS Employer ID No. 33-0084573 9401 Jeronimo Road Irvine, California 92718 (714) 581-6770 __________________________ Indicate by check mark whether the Registrant (l) 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 [ ]. There were 11,478,347 shares of the Registrant's Common Stock, par value $.01 per share, outstanding on January 31, 1994. PART I. FINANCIAL INFORMATION Item 1. Financial Statements ADVANCED LOGIC RESEARCH, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share data) (unaudited)
December 31, September 30, ASSETS 1994 1994 Current assets: Cash and cash equivalents $44,305 $40,836 Trade accounts receivable, less allowance of $1,918 and $1,870 at December 31, 1994 and September 30, 1994, respectively 25,403 24,507 Inventories 23,140 22,555 Prepaid expenses and other assets 3,249 4,540 Deferred income taxes 1,822 1,597 Total current assets 97,919 94,035 Equipment, furniture and fixtures, net 2,966 3,316 Other assets 579 578 $101,464 $97,929 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Payable to affiliates $2,419 $2,619 Accounts payable 10,871 9,024 Accrued expenses 10,513 9,425 Income taxes 44 0 Total current liabilities 23,847 21,068 Stockholders' equity: Preferred stock, $.01 par value; 2,500,000 shares authorized; none issued Common stock, $.01 par value; 25,000,000 shares authorized; 11,478,347 issued and outstanding at December 31, 1994 and September 30, 1994 115 115 Additional paid-in capital 53,842 53,842 Retained earnings 22,580 21,931 Adjustments for foreign currency translation 1,080 973 Total stockholders' equity 77,617 76,861 $101,464 $97,929 See accompanying notes to consolidated financial statements.
ADVANCED LOGIC RESEARCH, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share data) (unaudited)
Three Months Ended December 31, 1994 1993 Net sales $45,718 $49,617 Cost of sales 37,665 41,433 Gross profit 8,053 8,184 Operating expenses: Selling, general and administrative 5,318 4,886 Engineering, research and development 1,116 1,036 Royalty expense, net 1,310 1,723 Total operating expenses 7,744 7,645 Operating income 309 539 Interest income 557 266 Interest expense 0 (60) Income before taxes 866 745 Provision for income taxes 217 224 Net income $649 $521 Net income per common and common equivalent share $0.06 $0.05 Common and common equivalent shares used in per share calculation 11,555 11,445 See accompanying notes to consolidated financial statements.
ADVANCED LOGIC RESEARCH, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (unaudited)
Three Months Ended December 31, 1994 1993 Cash flows from operating activitites: Net income $649 $521 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 493 620 Loss on disposal of equipment 1 206 Provision for losses on accounts receivables 69 (100) Deferred income tax expense (benefit) (226) 654 Change in assets and liabilities: Trade accounts receivable (839) (65) Inventories (503) (2,274) Prepaid expenses and other assets 1,298 (489) Payable to affiliates (200) 721 Accounts payable 1,811 (1,206) Accrued expenses 1,061 1,455 Income taxes 44 0 Net cash provided by operating activities 3,658 43 Cash flows from investing activities - Purchase of equipment, furniture and fixtures (136) (187) Cash flows from financing activities - Net repayments to banks 0 (249) Effect of foreign exchange rate change on cash (53) 1 Net increase (decrease) in cash and cash equivalents 3,469 (392) Cash and cash equivalents at beginning of period 40,836 34,447 Cash and cash equivalents at end of period $44,305 $34,055 Supplemental disclosure of cash flow information: Cash paid (refunded) during the period for: Interest $0 $1 Income taxes ($219) $28 See accompanying notes to consolidated financial statements.
Advanced Logic Research, Inc. Notes to Unaudited Consolidated Financial Statements Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared by Advanced Logic Research, Inc., (the "Company") pursuant to Securities and Exchange Commission regulations. In the opinion of management, the unaudited financial statements include all adjustments, consisting of only normal recurring accruals, necessary for a fair presentation. The results of operations for the interim period are not necessarily indicative of results to be expected for the full year. These consolidated financial statements should be read in conjunction with the financial statements included in the Company's 1994 Form 10-K as filed with the Securities and Exchange Commission on December 23, 1994. Net Income Per Share Information Net income per share is computed using the weighted average number of common shares outstanding at the average market price for the period. Fully diluted income per share amounts are not presented because they approximate primary net income per share. Cash Equivalents Cash equivalents are highly liquid investments with an original maturity of three months or less, consisting primarily of commercial paper, variable-rate demand notes, short-term government obligations and other money market instruments. Inventories Inventories are stated at the lower of cost (first-in, first-out) or market (net realizable value) and consist of the following (in thousands):
- - - - ---------------------------------------------------------------------------- December 31, September 30, 1994 1994 - - - - ---------------------------------------------------------------------------- Raw materials and component parts $ 6,209 $ 7,782 Work in process 6,092 3,244 Finished goods 10,839 11,529 ------ ------- $23,140 $22,555 ====== ======
Item 2. Management's Discussion and Analysis of Consolidated Financial Condition and Results of Operations. Results of Operations: The following table presents the results of operations for the Company for the period indicated as a percentage of net sales.
Three Months Ended December 31, 1994 1993 Net sales 100.0% 100.0% Cost of sales 82.4% 83.5% Gross profit 17.6% 16.5% Operating expenses: Selling, general and administrative 11.6% 9.8% Engineering, research and development 2.4% 2.1% Royalty expense, net 2.9% 3.5% Total operating expenses 16.9% 15.4% Operating income 0.7% 1.1% Interest income, net 1.2% 0.4% Income before taxes 1.9% 1.5% Provision for income taxes 0.5% 0.4% Net income 1.4% 1.1%
Management's Discussion and Analysis of Financial Condition and Results of Operations Net Sales Net sales for the first quarter of fiscal 1995 decreased by 8% to $45.7 million from $49.6 million for the first quarter of fiscal 1994. The decline in sales was principally attributable to longer book to ship lead time associated with sales to an OEM customer and shortages of the Company's Express system caused by delivery delays from a major vendor. These factors delayed shipments and postponed revenue recognition, consequently, the Company's open order backlog increased during the first quarter of fiscal 1995 from September 30, 1994. Despite the longer book to ship lead time associated with an OEM customer, sales to this channel rose by $1.6 million to $3.7 million for the first quarter of fiscal 1995 compared to the first quarter of fiscal 1994 due primarily to the addition of UNISYS Corporation as an OEM customer in October 1994 for certain high-end products. Also during the first quarter of fiscal 1995, sales made directly to corporate and individual end-users increased by $1.5 million to $7.1 million compared to same prior year quarter reflecting the success of the Company's programs to sell directly to large corporate end-users. Negating the increase in sales to these channels were lower sales to VARs, dealers and national retail organizations ("NROs"). Sales to VARs and dealers declined by 10% to $31.6 million for the first quarter of fiscal 1995 compared to the first quarter of fiscal 1994. This decline was principally attributable to the shortage of Express systems which delayed customer shipments and postponed revenue recognition. The decline in sales to NROs occurred due to the termination of reseller agreements with Intelligent Electronics and ComputerLand during fiscal 1994 though the Company continues to sell its products directly to the franchisees and affiliates of these NROs. Net sales of $3.6 million to the Company's major distributors for the first quarter of fiscal 1995 was unchanged from the first quarter of fiscal 1994. For the first quarter of fiscal 1995, system unit sales declined by 17% to approximately 21,000 systems from approximately 25,000 units for the first quarter of fiscal 1994. However, due to the Company's focus on high-end desktop systems and servers the average system selling price increased by 21% to $1,855 per system for the first quarter of fiscal 1995 from $1,531 per system for the first quarter of fiscal 1994. Sales to international customers for the first quarter of fiscal 1995 declined by 9% to $22.0 million compared to the first quarter of fiscal 1994. The decline was principally attributable to lower sales to Asia-Pacific customers primarily caused by the shortage of the Company's Express systems. Also contributing to the decline in sales to international customers were lower sales to the Company's Canadian customers. Partially offsetting these declines was a $1.9 million or 21% increase in sales to European and Latin American customers substantially related to the addition of a large European systems integrator as a customer in the latter half of fiscal 1994. Gross Profit Gross profit margins for the quarter ended December 31, 1994 increased to 17.6% from 16.5% for the quarter ended December 31, 1993. The shift in sales to high-end desktop systems and client/servers, which typically generate greater gross profit margins than the Company's entry-level and mid-range systems, coupled with lower vendor component costs, particularly on CPUs and disk drives, favorably impacted gross profit margins compared to the similar prior year period. Revenues from high-end desktop systems and client/servers represented approximately 48% of total sales for the first quarter of fiscal 1995 compared to approximately 23% of total sales for the first quarter of fiscal 1994. Operating Expenses Selling, General and Administrative. Selling, general and administrative expenses increased by 9% or $.4 million to $5.3 million for the first quarter of fiscal 1995 compared to the first quarter of fiscal 1994. The increase in expenses was principally attributable to increased expenditures for advertising and promotion during the first quarter of fiscal 1995 and a reduction in bad debt reserves during the first quarter of fiscal 1994. The increase in advertising expense was chiefly associated with the Company's Revolution line of Pentium-based systems which were introduced during the latter half of fiscal 1994. Engineering, Research and Development. Engineering, research and development expenses increased by 8% or $80,000 to $1.1 million for the quarter ended December 31, 1994 compared to the similar prior year period. The increase was attributable to greater outside professional service fees associated with product design and testing and higher engineering material expenses related to the continued development of new products. Net Royalty Expense Net royalty expense for the quarter ended December 31, 1994 was $1.3 million and represented 2.9% of sales compared to $1.7 million or 3.5% of sales for the quarter ended December 31, 1993. The decline in net royalty expense as a percentage of sales was principally attributable to certain products being exempt from royalties. Interest Income, Net Net interest income increased by $.4 million for the quarter ended December 31, 1994 compared to the similar period ended December 31, 1993. The increase was due to a greater average cash and equivalents balance and increased rates of return on short-term investments complemented by lower interest expense due to the repayment of outstanding bank debt in January 1994. Income Taxes The Company's tax expense for the first quarter of fiscal 1995 was based on estimated effective annual rates. The effective tax rate for the quarters ended December 31, 1994 and December 31, 1993 was 25% and 30%, respectively. The decrease in the effective tax rate for the first quarter of fiscal 1995 was primarily attributable to a change in the earnings mix among the Company's subsidiaries located in various taxing jurisdictions. Liquidity and Capital Resources The Company's liquidity and capital resources position continued to improve during the quarter ended December 31, 1994. At December 31, 1994, the Company's cash and equivalents totaled $44.3 million compared to $40.8 million at September 30, 1994 and working capital increased to $74.1 million at December 31, 1994 compared to $73.0 million at September 30, 1994. The Company had no bank debt outstanding at December 31, 1994 and September 30, 1994. The Company's primary credit facility continues to be a three-year, $15.0 million revolving line with Heller Financial, Inc. The line is secured by the Company's assets and availability is subject to a borrowing base requirement. The facility contains certain net worth, profitability, financial ratio and other covenants with which the Company was in compliance during the first quarter of fiscal 1995. ALR International, the Company's subsidiary in Singapore, continues to have available a revolving credit line with an availability of approximately $4.0 million which is used to supplement its working capital requirements. The Company believes that its existing cash resources, combined with anticipated cash flows from future operating activities, supplemented as necessary with funds available under existing credit agreements will provide it with sufficient resources to meet present and reasonably foreseeable working capital requirements and other cash needs. Part II. Other Information Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: None (b) Reports on Form 8-K: None SIGNATURES Pursuant to the requirements of section 13 or 15(d) 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. ADVANCED LOGIC RESEARCH, INC. (Registrant) Date: February 13, 1995 /s/ Gene Lu ------------------------------ Gene Lu Chairman, President and Chief Executive Officer Date: February 13, 1995 /s/ Ron Sipkovich ------------------------------- Ronald J. Sipkovich Vice President, Finance and Administration, Chief Financial Officer and Secretary EX-27 2 ARTICLE 5 FDS FOR 1ST QTR 10-Q
5 1,000 Sep-30-1995 Oct-01-1994 Dec-31-1994 3-MOS 44305 0 27321 1918 23140 97919 12060 9094 101464 23847 0 0 0 115 77502 101464 45718 45718 37665 7744 0 69 (557) 866 217 649 0 0 0 649 0.06 0.06
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