-----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, GDSNPZGJdds7d0/EPuVajiYBDaL3Y5gw5gbXm4QwcBNI1arzoo67GbPCZdJp62tw tst0+hnDqPnCgztT4TpnZg== 0000940332-96-000002.txt : 19960726 0000940332-96-000002.hdr.sgml : 19960726 ACCESSION NUMBER: 0000940332-96-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960725 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANADIGICS INC CENTRAL INDEX KEY: 0000940332 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 222582106 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-25662 FILM NUMBER: 96598710 BUSINESS ADDRESS: STREET 1: 35 TECHNOLOGY DR CITY: WARREN STATE: NJ ZIP: 07059 BUSINESS PHONE: 9086685000 MAIL ADDRESS: STREET 1: 35 TECHNOLOGY DRIVE CITY: WARREN STATE: NJ ZIP: 07059 10-Q 1 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 JUNE 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 No. 0-25662 ANADIGICS, Inc. (Exact name of registrant as specified in its charter) Delaware (State of other jurisdiction of incorporation or organization) 22-2582106 (I.R.S. Employer Identification No.) 35 Technology Drive Warren, New Jersey (Address of principal executive offices) 07059 (Zip Code) (908) 668-5000 (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 [ ] The number of shares outstanding of the registrant's common stock as of June 30, 1996 was 8,318,314. INDEX ANADIGICS, Inc. Part. I. Financial Information Item 1. Financial Statements (unaudited) Condensed balance sheets - June 30, 1996 and December 31, 1995. Condensed statements of income - Three and six months ended June 30, 1996 and June 30, 1995. Condensed statements of cash flows - Six months ended June 30, 1996 and June 30, 1995. Notes to condensed financial statements - June 30, 1996. Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations. Part II. Other Information Item 4. Submission of Matters to a Vote of Security Holders Item 6. Exhibits and Reports on Form 8-K PART I FINANCIAL STATEMENTS Item 1. Financial Statements (unaudited) CONDENSED BALANCE SHEETS ANADIGICS, Inc. (Amounts in thousands) June 30, 1996 Dec 31, 1995 * (unaudited) Assets Current assets: Cash and cash equivalents $15,646 $6,394 Marketable securities 14,566 22,788 Accounts receivable, net 9,012 7,379 Inventory - Note 2 10,425 8,735 Prepaid expenses and other current assets 1,850 981 Deferred taxes 291 184 Total current assets 51,790 46,461 Equipment and furniture 37,778 31,951 Leasehold improvements 2,784 2,586 Less accumulated depreciation and amortization 18,806 16,060 21,756 18,477 Deposits 502 280 Deferred taxes 1,032 1,032 Total assets $75,080 $66,250 Liabilities and stockholders' equity Current liabilities: Accounts payable $3,818 $2,671 Accrued liabilities 4,205 4,027 Income taxes payable 2,837 2,092 Current maturities of capital lease obligations 1,679 1,718 Total current liabilities 12,539 10,508 Capital lease obligation, less current portion 1,086 1,919 Total liabilities 13,625 12,427 Stockholders' equity - Note 3 Common stock 83 77 Common stock non-voting - 3 Common stock subscribed (2) (2) Additional paid-in capital 97,903 94,105 Accumulated deficit (36,529) (40,360) Total stockholders' equity 61,455 53,823 Total liabilities and equity $75,080 $66,250 * The condensed balance sheet at December 31, 1995 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. See Notes to Condensed Financial Statements. CONDENSED STATEMENTS OF INCOME ANADIGICS, Inc. (Amounts in thousands, except per share amounts) Three months ended Six months ended 06/30/96 06/30/95 06/30/96 06/30/95 (unaudited) (unaudited) (unaudited) (unaudited) Net sales $15,862 $12,465 $29,437 $23,435 Cost of sales 8,254 5,767 15,090 11,207 Gross profit 7,608 6,698 14,347 12,228 Research and development exp 3,284 3,182 6,162 5,911 Selling and administrative exp 2,063 1,658 4,031 3,057 Operating income 2,261 1,858 4,154 3,260 Interest expense 90 184 214 410 Interest income 411 330 849 419 Income before income taxes 2,582 2,004 4,789 3,269 Provision for income taxes 516 581 958 948 Net income $2,066 $1,423 $3,831 $2,321 Net income per share $0.24 $0.18 $0.45 $0.34 CONDENSED STATEMENTS OF CASH FLOWS ANADIGICS, Inc. (Amounts in thousands) The six months ended June 30, 1996 June 30, 1995 (unaudited) (unaudited) Cash flow from operating activities Net income $3,831 $2,321 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation 1,765 1,146 Amortization 1,119 1,128 Changes in operating assets and liabilities: Accounts receivable (1,633) 1,539 Inventory (1,690) (1,216) Other current assets (869) (373) Deferred taxes (107) - Deposits (222) 49 Accounts payable 1,147 1,268 Income taxes payable 745 947 Accrued liabilities 178 1,124 Net cash provided by operating activities 4,264 7,933 Cash flows from investing activities Purchase of plant and equipment (6,163) (4,664) Purchase of marketable securities (5,529) 0 Proceeds from sale of marketable securities 13,688 0 Net cash provided by (used in) investing activities 1,996 (4,664) Cash flows from financing activities: Payment of capital lease obligations (872) (1,056) Payment of long-term debts 0 (2,583) Exercise of warrants 3,610 0 Exercise of options 253 4 Issuance of common stock 1 25,104 Proceeds of common stock subscribed - 18 Net cash provided by (used in) financing activities 2,992 21,487 Net increase in cash and cash equivalents 9,252 24,756 Cash and cash equivalents at beginning of period 6,394 4,564 Cash and cash equivalents at end of period $15,646 $29,320 Non-cash investing and financing activities: Acquisition of plant and equipment under financing leases $0 $1,341 Interest paid $214 $410 Taxes paid $320 $0 ANADIGICS, Inc. Notes to Condensed Financial Statements (unaudited) June 30, 1996 1. Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six month periods ended June 30, 1996 are not necessarily indicative of the results that may be expected for the year ending December 31, 1996. For further information, refer to the financial statements for the year ended December 31, 1995 and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1995. 2. Inventories Inventories are stated at the lower of cost (first-in, first-out method) or market. Inventories consist of the following: June 30 Dec. 31 1996 1995 Raw materials $1,265 $882 Work in process 6,290 6,137 Finished goods 2,870 1,716 $10,425 $8,735 3. Stockholders' Equity Common stock consists of the following: June 30 Dec. 31 1996 1995 Common stock, $0.01 par value; 34,000,000 shares authorized at December 31, 1995 and June 30, 1996, 7,735,957 and 8,271,373 shares issued and outstanding at December 31, 1995 and June 30, 1996, respectively $83 $77 Common stock, non-voting $0.01 par value; 1,000,000 shares authorized at December 31, 1995 and June 30, 1996, 347,781 and 46,941 shares issued and outstanding at December 31, 1995 and June 30, 1996, respectively $0 $3 ANADIGICS, Inc. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation Results of Operations The following table sets forth unaudited statements of operations data as a percent of net sales for the periods presented: Statements of Operations Three months ended Six months ended 06/30/96 06/30/95 06/30/96 06/30/95 Net sales 100.0% 100.0% 100.0% 100.0% Cost of sales 52.0% 46.3% 51.3% 47.8% Gross profit 48.0% 53.7% 48.7% 52.2% Research and development expenses 20.7% 25.5% 20.9% 25.2% Selling and administrative expenses 13.0% 13.3% 13.7% 13.0% Operating income 14.3% 14.9% 14.1% 14.0% Interest expense 0.6% 1.4% 0.7% 1.8% Interest income 2.6% 2.6% 2.9% 1.8% Income before income taxes 16.3% 16.1% 16.3% 14.0% Provision for income taxes 3.3% 4.7% 3.3% 4.1% Net income 13.0% 11.4% 13.0% 9.9% Second Quarter 1996 (Ended June 30, 1996) Compared to Second Quarter 1995 (Ended June 30, 1995) Net Sales. Net sales during the second quarter of 1996 increased 27% to $15.9 million from $12.5 million in the second quarter of 1995. Second quarter 1996 sales of integrated circuits (ICs) for fiber optic telecommunications and data communication applications increased 54% to $3.3 million from $2.1 million in the second quarter of 1995 as demand for OC-12 and lower bit rate transimpedance amplifiers (TIA) increased. Sales of ICs for direct broadcast satellite applications increased 24% during the second quarter of 1996 to $4.0 million from $3.2 million in the second quarter of 1995. Sales of ICs for cable television applications increased 22% during the second quarter of 1996 to $3.8 million from $3.1 million in the second quarter of 1995. Sales of ICs for cellular and personal communication applications increased 4% during the second quarter of 1996 to $3.9 million from $3.8 million in the second quarter of 1995. Engineering service sales which reflect customers' contributions to research and development increased $0.6 million during the quarter to $0.9 million from $0.3 million in the second quarter of 1995. Gross Margin. Gross margin during the second quarter of 1996 declined to 48.0% from 53.7% in the second quarter of 1995. Product gross margins declined due to generally lower IC prices while manufacturing efficiency associated with higher volumes were significantly offset by start-up cost inefficiencies on new products. The Company expects that product gross margins in the next quarter may continue to be adversely impacted by start-up costs and manufacturing inefficiencies associated with new products. As production yields improve and the conversion from 3" to 4" wafers is completed, the Company expects to see product gross margins improve at the end of 1996. Research and Development. Company funded research and development expense increased 3% during the second quarter of 1996 to $3.3 million from $3.2 million in the second quarter of 1995. As a percent of sales company funded research and development declined to 20.7 % in the second quarter of 1996 from 25.5% in the second quarter of 1995. Total research and development spending, which includes company funded and customer funded research and development increased 13% during the second quarter of 1996 to $3.8 million from $3.4 million in the second quarter of 1995. Selling and Administrative. Selling and administrative expenses increased 24% during the second quarter of 1996 to $2.1 million from $1.7 million in the second quarter of 1995. As a percentage of sales it declined to 13.0 % in the second quarter of 1996 from 13.3 % in the second quarter of 1995. Higher sales commissions associated with the increased sales and higher advertising expenses were mainly responsible for the increase. Interest income. Interest income increased to $0.4 million during the second quarter of 1996 from $0.3 million in the second quarter of 1995 on higher average invested cash balances. Interest expense. Interest expense declined during the second quarter of 1996 to $0.1 million from $0.2 million in the second quarter of 1995 on lower levels of indebtedness. Provision for Income Taxes. The provision for income taxes during the second quarter of 1996 was recorded at an effective tax rate of 20% of pre-tax income. Six Months 1996 (Ended June 30, 1996) Compared to Six Months 1995 (Ended June 30, 1995) Net Sales. Net sales during the first six months of 1996 increased 26% to $29.4 million from $23.4 million in the first six months of 1995. First six month 1996 sales of integrated circuits for cable television applications increased 50% to $7.2 million from $4.8 million in the first six months of 1995 as demand for tuner ICs from set top box manufacturers increased . Sales of ICs for fiber optic telecommunication and data communication applications increased 41% during the first six months of 1996 to $6.1 million from $4.3 million in the first six months of 1995. Sales of ICs for direct broadcast satellite applications increased 15% during the first six months of 1996 to $7.6 million from $6.6 million in the first six months of 1995. Sales of ICs for cellular and personal communication system applications decreased 5% during the first six months of 1996 to $6.8 million from $7.1 million in the first six months of 1995. Engineering service sales which reflect customers' contributions to research and development increased $1.2 million during the first six months of 1996 to $1.8 million from $0.6 million in the first six months of 1995. Gross Margin. Gross margin during the first six months of 1996 declined to 48.7% from 52.2% in the first six months of 1995. Product gross margins declined due to generally lower IC prices and manufacturing inefficiency associated with new product start up. Research and Development. Company sponsored research and development expense increased 4% during the first six months of 1996 to $6.2 million from $5.9 million in the first six months of 1995. As a percent of sales company funded research and development declined to 20.9 % in the first six months of 1996 from 25.2% in the first six months of 1995. Selling and Administrative. Selling and administrative expenses increased 32% during the first six months of 1996 to $4.0 million from $3.1 million in the first six months of 1995. As a percentage of sales it increased to 13.7 % in the first six months of 1996 from 13.0 % in the first six months of 1995. Interest income. Interest income increased to $0.8 million during the first six months of 1996 from $0.4 million in the first six months of 1995 on higher average invested cash balances. Interest expense. Interest expense declined during the first six months of 1996 to $0.2 million from $0.4 million in the first six months of 1995 on lower levels of indebtedness. Provision for Income Taxes. The provision for income taxes during the first six months of 1996 was recorded at an effective tax rate of 20% of pre-tax income. Liquidity and Capital Resources At June 30, 1996, the Company had $15.6 million in cash and cash equivalents on hand and $14.6 million in marketable securities. Sales and purchases of marketable securities provided a net of $8.2 million of cash during the first six months of 1996. There was no balance outstanding on its $15 million revolving credit facilities with First Union Bank. Operations generated $4.3 million in cash during the first six months of 1996 after the impact of increases in accounts receivable of $1.6 million and in inventories of $1.7 million. Capital expenditures of $6.2 million were made during the first six months of 1996. The equipment acquired includes items to upgrade and increase wafer fabrication capacity and other production capacity as well as equipment for research and development. At June 30, 1996 the Company had committed to purchase $8.1 million of capital equipment. The Company expects to spend approximately $15.0 million on capital equipment and $3.0 million on capital improvements to new and existing leased facilities in 1996. In 1997 and 1998, the Company expects to spend approximately $35 million on the recently announced new GaAs wafer fabrication facility. Net cash generated by financing activities was $3.0 million. In May, 1996 certain warrant holders elected to exercise warrants at $17.25 per share for 209,270 shares of Common Stock, thereby generating $3.6 million in cash. Shares outstanding at June 30, 1996 were 8,318,314 compared with 7,997,228 at June 30, 1995. The Company believes that its sources of capital, including internally generated funds and existing bank credit facilities will be adequate to satisfy anticipated capital needs for the next twelve months. Nevertheless, the Company may elect to finance its future capital requirements through additional equity or debt financing. Risks and Uncertainties Except for historical information contained herein, this Management's Discussion and Analysis of Financial Condition and Results of Operation contains forward-looking statements that are subject to risks and uncertainties, including timely product development, individual product pricing pressure, order rescheduling or cancellation, variation in production yield, difficulties in obtaining components and assembly services needed for production of integrated circuits, change in economic conditions of the various markets the Company serves, as well as the other risks detailed from time to time in the Company's reports filed with the Securities and Exchange Commission, including the report on Form 10-K for the year ended December 31, 1995. ANADIGICS, Inc. PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders The Company held its annual meeting of stockholders on May 23, 1996 at which the Company's stockholders voted on (a) the election of three Class I Directors, and (b) ratification of the appointment of Ernst & Young LLP as independent auditors for the fiscal year ending December 31, 1996. The Company solicited proxies from stockholders by a proxy statement dated as of April 23, 1996. The election of the three Class I Directors was approved by holders of approximately 5,579,132 shares of the Company's capital stock, or 83.0% of outstanding capital stock. No holders voted against the nominees. Holders of approximately 4,094 shares of capital stock, or .06%, abstained from voting on such nominees. The ratification of the appointment of Ernst & Young LLP as independent auditors was approved by holders of approximately 5,572,107 shares of the Company's capital stock, or 82.9% of outstanding capital stock. Holders of approximately 3,000 shares of capital stock, or .04% voted against, and holders of approximately 8,119 shares of capital stock, or .12%, abstained from voting on such ratification. Item 6. Exhibits and reports on Form 8-K (a) The following exhibit is included herein: Exhibit 11. Statement Re: Computation of Earnings Per Share (unaudited) Exhibit 27. Financial Data Schedule (b) The Company did not file any reports on Form 8-K during the quarter ended June 30, 1996. 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. ANADIGICS, INC. By: /s/ John F. Lyons John F. Lyons Vice President and Chief Financial Officer Dated: July 25, 1996 ANADIGICS, Inc. EXHIBIT INDEX Page Exhibit 11. Statement Re: Computation of Earnings Per Share (unaudited) 14 Exhibit 27. Financial Data Schedule 15 ANADIGICS, Inc. Exhibit 11. Statement Re: Computation of Earnings Per Share (unaudited) Three months ended Six months ended 06/30/96 06/30/95 06/30/96 6/30/95 Average shares outstanding 8,205,620 7,406,844 8,146,126 6,456,870 Net effect of dilutive stock options - based on treasury stock method using average market price 391,639 324,359 339,947 314,628 Totals 8,597,259 7,731,203 8,486,073 6,771,498 Net income (in thousands) $2,066 $1,423 $3,831 $2,321 Per share amount $0.24 $0.18 $0.45 $0.34 -----END PRIVACY-ENHANCED MESSAGE-----