<PAGE> 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 quarterly period ended April 27, 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 1-5609
Unitrode Corporation
(Exact name of registrant as specified in its charter)
Maryland 04-2271186
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7 Continental Boulevard, Merrimack, New Hampshire 03054
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (603) 424-2410
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of 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 11,490,223 shares of common stock outstanding as of April 27, 1996.
-1-
<PAGE> 2
Part I. Financial Information
<TABLE>
Item 1. Financial Statements
<CAPTION>
Unitrode Corporation
Consolidated Balance Sheets
April 27, 1996 January 31, 1996
Assets (Unaudited)
- --------------------------------------------------------------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 31,251,122 $ 36,228,314
Short-term investments 4,358,997 --
Accounts receivable, net of
allowance of $377,708 in April,
1996 and $367,804 in January, 1996 21,590,562 17,904,537
Notes receivable 889,515 884,645
Inventories:
Raw materials 1,641,238 1,698,344
Work in process 6,151,201 5,384,901
Finished goods 2,500,025 2,888,182
------------ ------------
Total inventory 10,292,464 9,971,427
------------ ------------
Deferred income taxes 4,298,000 4,112,000
Prepaid expenses and other
current assets 2,244,352 2,241,077
------------ ------------
Total current assets 74,925,012 71,342,000
------------ ------------
Property, plant and equipment, at cost 81,779,101 79,078,555
Less accumulated depreciation 46,176,736 43,789,869
------------ ------------
Property, plant and equipment, net 35,602,365 35,288,686
------------ ------------
Notes and other receivables, net of
discount 4,143,094 4,341,604
Deferred income taxes 102,000 102,000
Restricted cash and investments 477,473 437,285
Excess of cost over net assets acquired,
net of accumulated amortization of
$1,897,204 in April, 1996 and
$1,826,203 in January, 1996 2,193,125 2,264,126
Other investments 2,500,000 1,000,000
Other assets and deferred charges 3,679,356 3,648,505
------------ ------------
Total assets $123,622,425 $118,424,206
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
-2-
<PAGE> 3
Unitrode Corporation
<TABLE>
Consolidated Balance Sheets
<CAPTION>
April 27, 1996 January 31, 1996
Liabilities and Stockholders' Equity (Unaudited)
- -----------------------------------------------------------------------------
<S> <C> <C>
Current liabilities:
Accounts payable $ 8,019,843 $ 8,401,521
Income taxes payable 5,374,474 2,000,229
Accrued employee compensation and benefits 3,804,170 7,794,635
Other current liabilities 6,604,264 5,998,299
------------ ------------
Total current liabilities 23,802,751 24,194,684
------------ ------------
Deferred income taxes 1,368,000 1,340,000
Other long-term liabilities 479,194 472,348
------------ ------------
Total liabilities 25,649,945 26,007,032
------------ ------------
Stockholders' equity:
Common stock, $.20 par value;
Authorized - 30,000,000 shares
Issued - 11,490,223 in April, 1996
and 11,467,948 in January, 1996 2,298,045 2,293,590
Additional paid-in capital 25,825,625 25,582,283
Retained earnings 70,100,248 64,838,832
------------ ------------
98,223,918 92,714,705
Less:
Deferred compensation 251,438 297,531
------------ ------------
Total stockholders' equity 97,972,480 92,417,174
------------ ------------
Total liabilities and
stockholders' equity $123,622,425 $118,424,206
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
-3-
<PAGE> 4
Unitrode Corporation
<TABLE>
Consolidated Statements of Operations
(Unaudited)
<CAPTION>
For the three months ended April 27, 1996 April 29, 1995
- -------------------------------------------------------------------------
<S> <C> <C>
Net sales $34,220,537 $25,324,457
Cost of sales 16,015,780 12,101,878
----------- -----------
Gross profit 18,204,757 13,222,579
----------- -----------
Operating expenses:
Research and development 4,450,317 3,045,589
Selling, general and administrative 6,360,811 5,223,393
----------- -----------
Total operating expenses 10,811,128 8,268,982
----------- -----------
Income from operations 7,393,629 4,953,597
----------- -----------
Other income:
Non-operating expense, net (12,500) (12,958)
Royalty income 694,464 563,013
Interest income 432,261 454,385
Interest expense (23,438) (22,203)
----------- -----------
Total other income 1,090,787 982,237
----------- -----------
Income before income tax provision 8,484,416 5,935,834
Income tax provision 3,223,000 2,137,000
----------- -----------
Net income $ 5,261,416 $ 3,798,834
=========== ===========
Earnings per common share:
Net income $ .44 $ .32
=========== ===========
Average common and common equivalent
shares outstanding 11,855,054 12,050,577
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
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<PAGE> 5
Unitrode Corporation
<TABLE>
Consolidated Statements of Cash Flows
(Unaudited)
<CAPTION>
For the three months ended April 27, 1996 April 29, 1995
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 5,261,416 $ 3,798,834
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 2,523,952 1,999,568
Provision for losses on accounts receivable 10,000 5,100
Deferred compensation 46,093 58,500
Deferred income taxes (158,000) (256,000)
Other, net (9,166) 3,338
(Increase) decrease in assets:
Accounts receivable (3,696,025) (3,118,325)
Inventories (321,037) (1,155,995)
Prepaid expenses and other current assets (74,877) 110,949
Increase (decrease) in liabilities:
Accounts payable (381,678) (1,090,982)
Income taxes payable 3,374,245 2,183,849
Accrued employee compensation and benefits (3,990,465) (1,352,181)
Other current and long-term liabilities 612,811 230,459
----------- -----------
Total adjustments (2,064,147) (2,381,720)
----------- -----------
Net cash provided by operating activities 3,197,269 1,417,114
----------- -----------
Cash flows from investing activities:
Purchase of property, plant and equipment (2,726,509) (1,268,927)
Repayment of notes receivable 199,354 194,722
Proceeds on sale of assets 14,108 416,998
Restricted cash and investments (40,188) -
Other investments (1,499,370) (9,005)
Maturities of short-term investments - 11,001,000
Purchases of short-term investments (4,369,653) (1,289,427)
Accrued disposal costs - (143,834)
----------- -----------
Net cash provided (used) by investing activities (8,422,258) 8,901,527
------------ -----------
Cash flows from financing activities:
Principal payments on debt - (57,692)
Proceeds from exercise of common stock options 247,797 613,034
Purchase of common stock - (10,014,375)
----------- -----------
Net cash provided (used) by financing activities 247,797 (9,459,033)
----------- -----------
Net increase (decrease) in cash and cash equivalents (4,977,192) 859,608
Cash and cash equivalents at beginning of period 36,228,314 17,752,008
----------- -----------
Cash and cash equivalents at end of period $31,251,122 $18,611,616
=========== ===========
Supplemental information:
Interest paid $ 19,000 $ 24,000
Income taxes paid, net of tax refunds 30,000 209,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
-5-
<PAGE> 6
Unitrode Corporation
Notes to Consolidated Financial Statements
April 27, 1996
(Unaudited)
Note 1 - Basis of Presentation
- ------------------------------
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and pursuant to the rules and regulations of the
Securities and Exchange Commission. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. For further information, refer to the
consolidated financial statements and footnotes included in the Company's annual
report on Form 10-K for the year ended January 31, 1996.
In the opinion of management, all adjustments considered necessary for a fair
presentation have been included. Operating results for the three month period
ended April 27, 1996 are not necessarily indicative of the results that may be
expected for the year ended January 31, 1997. Certain amounts for fiscal year
1996 have been reclassified to conform with presentation of similar amounts in
fiscal year 1997.
Note 2 - Acquisitions and Dispositions of Assets
- ------------------------------------------------
On February 28, 1996, the Company made an additional $1.5 million investment in
GMT Microelectronics Corporation ("GMT") redeemable preferred stock which
entitles the Company to favorable pricing terms on specific products. GMT is a
foundry in which the Company has a minority investment and has a right to a
certain percentage of its capacity.
Note 3 - New Accounting Standards
- ---------------------------------
Effective February 1, 1996, the Company adopted "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed of" ("SFAS No.
121"). The adoption of SFAS No. 121 had no material effect on the Company's
financial statements.
In October 1995, Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("SFAS No. 123"), was issued and will
require the Company to elect either expense recognition or a disclosure-only
alternative for stock-based employee compensation. SFAS 123 must be adopted in
the Company's fiscal year 1997 financial statements with comparable disclosures
for the prior year. The Company has determined that it will elect the
disclosure-only alternative. The Company will be required to disclose pro forma
net income and earnings per share in the notes to the financial statements using
the fair-value-based method beginning in fiscal year 1997 with comparable
disclosures for fiscal year 1996. The Company has not yet determined the impact
of these pro forma adjustments to its net income or earnings per share.
-6-
<PAGE> 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Three Months Ended April 27, 1996 versus Three Months Ended April 29, 1995
Results of Operations
- ---------------------
Net sales for the quarter ended April 27, 1996 were $34.2 million compared with
$25.3 million in the previous year's first quarter, an increase of $8.9 million
or 35%. This increase in sales was primarily due to the increase in demand for
products in the computer peripherals segment of the electronic data processing
markets. Product sales to one of the Company's customers represented
approximately 24% and 19% of integrated circuit sales for the first quarter of
fiscal years 1997 and 1996, respectively. Approximately 65% of sales in the
first quarter were international compared with 63% in the prior year.
Gross profit as a percentage of net sales was 53.2% for the first quarter of
fiscal year 1997, an increase of approximately 1 percentage point compared to
the same quarter in the prior year. This improvement was primarily due to an
increase in the overall average selling prices of the Company's products.
Research and development expenses were 13% of net sales, or $4.5 million,
compared with 12%, or $3.0 million, in the prior year. This increase of
approximately $1.4 million related primarily to increased staffing and
additional product and process development efforts to support opportunities in
the Company's markets. Selling, general and administrative expenses as a
percentage of net sales decreased approximately 2 percentage points to 19% when
compared to the previous year's first quarter. This percentage decrease was
primarily due to the increased sales volume.
Royalty income increased by $131,000 principally due to certain lump sum
receipts and additional licensees under the Company's agreement with
International Rectifier Corporation.
The consolidated effective tax rate for the quarter ended April 27, 1996 was
38.0% compared with 36.0% for the quarter ended April 29, 1995. This increase
was due primarily to the absence in fiscal year 1997 of benefits related to tax
credits that were present in fiscal year 1996.
Net income was $5.3 million, or $.44 per share, for the first quarter of fiscal
year 1997 compared to $3.8 million, or $.32 per share, for the first quarter of
fiscal year 1996, an increase of 39%.
Bookings in the first quarter increased 32% or approximately $8.7 million to
$36.1 million when compared with the prior year's first quarter. Backlog at
April 27, 1996 increased 33% to $39.7 million compared with $29.9 million at
April 29, 1995. The book-to-bill ratio for the first quarter was 1.06 compared
to 1.08 in the prior year's first quarter. The lower book-to-bill ratio reflects
the present tendency in the marketplace of many customers to order in smaller
quantities because of greater vendor supply capability and shorter vendor lead
times resulting from vendor capacity expansion and slower market growth rates
for some computer and communication products.
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<PAGE> 8
Financial Condition
- -------------------
Cash and short-term investments at April 27, 1996 decreased by $0.6 million
since the beginning of fiscal year 1997. The principal source of cash was $3.2
million from operating activities offset by $2.7 million in capital expenditures
and $1.5 million in an additional investment in the redeemable preferred stock
of GMT Microelectronics Corporation, ("GMT").
The ratio of current assets to current liabilities improved to 3.15:1 at April
27, 1996 compared with 2.95:1 at January 31, 1996. Working capital of $51.1
million at April 27, 1996 increased by $4.0 million from January 31, 1996. It is
anticipated that the Company's operating cash needs for fiscal year 1997,
including planned capital expenditures, will be met by internally generated
funds and available cash.
The Company currently plans to make approximately $39 million in capital
expenditures in fiscal year 1997. It is estimated that $16 million will be spent
to support ongoing operations and $23 million will be spent under the Company's
wafer fabrication expansion program. This wafer fabrication expansion program is
expected to cost approximately $59 million and to be completed over the next
several years. Actual expenditures may vary depending on the demand for the
Company's products and construction schedules.
On February 28, 1996, the Company made an additional $1.5 million investment in
GMT redeemable preferred stock which entitles the Company to favorable pricing
terms on specific products.
Accounts receivable at April 27, 1996 increased by $3.7 million from January 31,
1996 primarily due to the higher level of sales. Receivable days sales
outstanding were 48 days at April 27, 1996 and January 31, 1996, compared to 53
days at April 29, 1995.
Accrued employee compensation and benefits has decreased by $4.0 million since
year-end primarily due to incentive compensation benefit payments relating to
fiscal year 1996 performance, such as profit sharing and management, sales and
employee bonuses.
New Accounting Standards
- ------------------------
See Note 3 in the Company's consolidated financial statements for a discussion
of recently issued accounting standards.
-8-
<PAGE> 9
Forward-Looking Information
- ---------------------------
The Private Securities Litigation Reform Act of 1995 ("the Act") provides a new
"safe harbor" for forward-looking statements so long as those statements are
identified as forward-looking and are accompanied by meaningful cautionary
statements identifying important factors that could cause actual results to
differ materially from those discussed in the statement. The Company desires to
take advantage of the new "safe harbor" provisions of the Act. Certain
information contained herein, particularly the information appearing under the
headings "Results of Operations" and "Financial Condition" are forward-looking.
Information regarding certain important factors that could cause actual results
of operations or outcomes of other events to differ materially from any such
forward-looking statement appear together with such statement, and/or elsewhere
herein. This information should be read in conjunction with the Company's annual
report on Form 10-K for the year ended January 31, 1996, particularly the
information appearing under the heading "Factors Affecting Future Results" in
the "Management's Discussion and Analysis of Financial Condition and Results of
Operations" section of the report.
-9-
<PAGE> 10
Part II. Other Information
Unitrode Corporation
April 27, 1996
Item 1. Legal Proceedings
- -----------------------------
None.
Item 2. Changes in the Rights of the Company's Security Holders
- -------------------------------------------------------------------
None.
Item 3. Defaults upon Senior Securities
- -------------------------------------------
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
- ---------------------------------------------------------------
<TABLE>
The Registrant's annual meeting of stockholders was held on June 3,
1996, at which one matter was submitted to a vote of security
holders: the election of Louis E. Lataif and James T. Vanderslice as
directors of the Registrant, each for a three-year term ending in
1999. As of April 5, 1996, the record date for said meeting, there
were outstanding 11,487,723 shares of the Registrant's common stock
entitled to vote at the meeting. At such meeting, the holders of
10,578,400 shares were represented in person or by proxy,
constituting a quorum. At such meeting, the vote with respect to the
matter proposed to the stockholders was as follows:
<CAPTION>
Election of Directors
---------------------
For Withheld or Against
--- -------------------
<S> <C> <C>
Mr. Lataif 10,502,940 15,460
Mr. Vanderslice 10,502,340 16,060
</TABLE>
Item 5. Other Information
- -----------------------------
None.
Item 6. Exhibits and Reports on Form 8-K
- --------------------------------------------
(a) Exhibits
--------
Exhibit 11 - Computation of Primary and Fully Diluted Earnings
per Share
Exhibit 27 - Financial Data Schedule
(b) REPORTS ON FORM 8-K: No reports on Form 8-K were filed by the
Registrant during the first quarter of the fiscal year ended January
31, 1997.
-10-
<PAGE> 11
Unitrode Corporation
April 27, 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.
UNITRODE CORPORATION
June 11, 1996 /s/ Robert L. Gable
- ------------------- --------------------------------
Date Chairman and Chief Executive
Officer
June 11, 1996 /s/ Cosmo S. Trapani
- ------------------- --------------------------------
Date Executive Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
-11-
<PAGE> 1
Exhibit 11
Unitrode Corporation
<TABLE>
Computation of Primary and Fully Diluted Earnings per Share
<CAPTION>
Three months ended April 27, 1996 April 29, 1995
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Net income $ 5,261,416 $ 3,798,834
=========== ==========
PRIMARY EARNINGS PER SHARE:
Weighted average of common shares outstanding 11,478,529 11,689,850
Equivalent shares arising from the assumed
exercise of stock options 376,525 360,727
----------- ----------
Weighted average of common and common
equivalent shares outstanding 11,855,054 12,050,577
=========== ==========
Net income $ .44 $ .32
=========== ==========
FULLY DILUTED EARNINGS PER SHARE:
Weighted average of common and common
equivalent shares outstanding
(as determined for primary earnings
per share above) 11,855,054 12,050,577
Incremental shares to reflect full
dilution --(1) 41,433(1)
----------- ----------
Weighted average of common and common
equivalent shares outstanding, as
adjusted 11,855,054 12,092,010
=========== ==========
Net income $ .44 $ .31
=========== ==========
- ---------
<FN>
(1) This calculation is submitted in accordance with Regulation S-K item
601(b)(11) although not required by footnote 2 to paragraph 14 of APB
Opinion No. 15 because it results in dilution of less than 3%.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-START> FEB-01-1996
<PERIOD-END> APR-27-1996
<EXCHANGE-RATE> 1
<CASH> 31,251,122
<SECURITIES> 4,358,997
<RECEIVABLES> 21,968,270
<ALLOWANCES> 377,708
<INVENTORY> 10,292,464
<CURRENT-ASSETS> 74,925,012
<PP&E> 81,779,101
<DEPRECIATION> 46,176,736
<TOTAL-ASSETS> 123,622,425
<CURRENT-LIABILITIES> 23,802,751
<BONDS> 0
<COMMON> 2,298,045
0
0
<OTHER-SE> 95,674,435
<TOTAL-LIABILITY-AND-EQUITY> 123,622,425
<SALES> 34,220,537
<TOTAL-REVENUES> 34,220,537
<CGS> 16,015,780
<TOTAL-COSTS> 16,015,780
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 10,000
<INTEREST-EXPENSE> 23,438
<INCOME-PRETAX> 8,484,416
<INCOME-TAX> 3,223,000
<INCOME-CONTINUING> 5,261,416
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,261,416
<EPS-PRIMARY> .44
<EPS-DILUTED> .44
</TABLE>
