<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 May 3, 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 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 11,717,199 shares of common stock outstanding as of May 3, 1997.
-1-
<PAGE> 2
Part I. Financial Information
Item 1. Financial Statements
<TABLE>
Unitrode Corporation
Consolidated Balance Sheets
(in thousands)
<CAPTION>
May 3, 1997 January 31, 1997
Assets (Unaudited)
- -------------------------------------------------------------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 51,076 $52,012
Accounts receivable, net of
allowance of $383 in May,
1997 and $383 in January, 1997 25,244 15,864
Notes receivable 803 905
Inventories:
Raw materials 934 1,282
Work in process 8,208 6,303
Finished goods 2,069 3,365
-------- --------
Total inventory 11,211 10,950
-------- --------
Deferred income taxes 3,627 3,322
Prepaid expenses and other
current assets 3,402 4,410
-------- --------
Total current assets 95,363 87,463
-------- --------
Property, plant and equipment, at cost 109,998 93,725
Less accumulated depreciation 54,412 52,037
-------- --------
Property, plant and equipment, net 55,586 41,688
-------- --------
Notes and other receivables, net of
discount 3,329 3,514
Deferred income taxes 1,240 1,191
Restricted cash and investments 816 812
Excess of cost over net assets acquired,
net of accumulated amortization of
$2,181 in May, 1997 and
$2,110 in January, 1997 1,909 1,980
Other assets and deferred charges 5,670 5,755
-------- --------
Total assets $163,913 $142,403
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
-2-
<PAGE> 3
Unitrode Corporation
Consolidated Balance Sheets
(in thousands except per share data)
<TABLE>
<CAPTION>
May 3, 1997 January 31, 1997
Liabilities and Stockholders' Equity (Unaudited)
- ----------------------------------------------------------------------------
<S> <C> <C>
Current liabilities:
Accounts payable $ 15,446 $ 8,768
Income taxes payable 7,520 4,346
Accrued employee compensation and benefits 5,203 4,416
Other current liabilities 9,871 7,350
-------- --------
Total current liabilities 38,040 24,880
-------- --------
Deferred income taxes 1,141 1,151
Other long-term liabilities 728 819
-------- --------
Total liabilities 39,909 26,850
-------- --------
Stockholders' equity:
Common stock, $.20 par value;
Authorized - 30,000 shares
Issued - 11,717 in May, 1997
and 11,633 in January, 1997 2,343 2,327
Additional paid-in capital 30,051 28,102
Retained earnings 91,717 85,255
-------- --------
124,111 115,684
Less:
Deferred compensation 107 131
-------- --------
Total stockholders' equity 124,004 115,553
-------- --------
Total liabilities and
stockholders' equity $163,913 $142,403
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
-3-
<PAGE> 4
Unitrode Corporation
Consolidated Statements of Operations
(Unaudited)
(in thousands except per share data)
<TABLE>
<CAPTION>
For the three months ended May 3, 1997 April 27, 1996
- -------------------------------------------------------------------------
<S> <C> <C>
Net revenues $40,840 $34,221
Cost of revenues 19,146 16,016
------- -------
Gross profit 21,694 18,205
------- -------
Operating expenses:
Research and development 4,322 4,450
Selling, general and administrative 6,727 6,361
New fab pre-operating expenses 1,514 -
------- -------
Total operating expenses 12,563 10,811
------- -------
Income from operations 9,131 7,394
------- -------
Other income:
Non-operating income(expense), net 175 (13)
Royalty income 603 694
Interest income, net 611 409
------- -------
Total other income 1,389 1,090
------- -------
Income before income tax provision 10,520 8,484
Income tax provision 3,934 3,223
------- -------
Net income $ 6,586 $ 5,261
======= =======
Earnings per common share:
Net income $ .54 $ .44
======= =======
Average common and common equivalent
shares outstanding 12,195 11,855
======= =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
-4-
<PAGE> 5
Unitrode Corporation
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
For the three months ended May 3, 1997 April 27, 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 6,586 $ 5,261
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 2,759 2,524
Deferred compensation 24 46
Deferred income taxes (364) (158)
Other, net (2) 1
(Increase) decrease in assets:
Accounts receivable (9,380) (3,696)
Inventories (261) (321)
Prepaid expenses and other current assets 159 (75)
Other assets and deferred charges 3 -
Increase (decrease) in liabilities:
Accounts payable 6,678 (382)
Income taxes payable 4,239 3,374
Accrued employee compensation and benefits 787 (3,990)
Other current and long-term liabilities 2,430 613
------- -------
Total adjustments 7,072 (2,064)
------- -------
Net cash provided by operating activities 13,658 3,197
------- -------
Cash flows from investing activities:
Property, plant, equipment and deposits (15,745) (2,726)
Repayment of notes receivable 292 199
Proceeds on sale of assets 88 14
Restricted cash and investments (5) (1,539)
Purchases of short-term investments - (4,370)
------- -------
Net cash used by investing activities (15,370) (8,422)
------- -------
Cash flows from financing activities:
Proceeds from exercise of warrants 9 -
Proceeds from exercise of common stock options 931 248
Purchase of common stock (164) -
------- -------
Net cash provided by financing activities 776 248
------- -------
Net decrease in cash and cash equivalents (936) (4,977)
Cash and cash equivalents at beginning of period 52,012 36,228
------- -------
Cash and cash equivalents at end of period $51,076 $31,251
======= =======
Supplemental information:
Interest paid $ 47 $ 19
Income taxes paid, net of tax refunds 59 30
</TABLE>
The accompanying notes are an integral part of the financial statements.
-5-
<PAGE> 6
Unitrode Corporation
Notes to Consolidated Financial Statements
May 3, 1997
(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, 1997.
In the opinion of management, all adjustments considered necessary for a fair
presentation have been included. Operating results for the three month period
ended May 3, 1997 are not necessarily indicative of the results that may be
expected for the year ended January 31, 1998. Certain amounts for fiscal year
1997 have been reclassified to conform with presentation of similar amounts in
fiscal year 1998.
Note 2 - New Accounting Standards
- ---------------------------------
In February, 1997, the Financial Accounting Standards Board issued SFAS No. 128,
"Earnings per Share", which requires the presentation of basic and diluted
earnings per share. Basic earnings per share excludes dilutive securities such
as stock options and is computed by dividing net income by the weighted-average
number of common shares outstanding for the period. Diluted earnings per share
is computed similarly to the existing rules for fully diluted earnings per
share. The Company will adopt SFAS No. 128 as of January 31, 1998 and will
restate all prior period earnings per share data presented. Basic earnings per
share calculated under the provisions of SFAS No. 128 for the three months ended
May 3, 1997 and April 27, 1996 would have been $.56 and $.46, respectively.
-6-
<PAGE> 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Three Months Ended May 3, 1997 versus Three Months Ended April 27, 1996
Results of Operations
- ---------------------
Net revenues for the quarter ended May 3, 1997 were $40.8 million compared with
$34.2 million in the previous year's first quarter, an increase of $6.6 million
or 19%. This increase in revenues was primarily due to the increase in demand
for products in the electronic data processing markets. Product sales to one of
the Company's customers represented approximately 28% and 26% of sales for the
first quarter of fiscal years 1998 and 1997, respectively. Approximately 68% of
sales in the first quarter were international compared with 65% in the prior
year.
Gross profit as a percentage of net revenues was essentially unchanged at 53%
for the first quarter of fiscal year 1998, compared to the same quarter in the
prior year.
Research and development expenses were approximately 11% of net revenues, or
$4.3 million, compared with 13%, or $4.5 million, in the prior year. Selling,
general and administrative expenses as a percentage of net revenues decreased
approximately 2 percentage points to 16% when compared to the previous year's
first quarter. The percentage decreases for both research and development
expenses and selling, general and administrative expenses were principally due
to the increased sales volume.
During fiscal year 1998, the Company estimates spending approximately $5 to $6
million in pre-operating expenses associated with the 6" BiCMOS wafer
fabrication facility in Merrimack, New Hampshire. Pre-operating costs, which are
incurred prior to the commencement of production, relate primarily to the
recruitment and training of personnel as well as the qualification of equipment
and manufacturing processes to meet design, test, and reliability specifications
for production. In the first quarter of fiscal year 1998, the Company incurred
$1.5 million in pre-operating expenses.
Interest income increased by $202,000 principally due to the increase in the
Company's cash and cash equivalents.
The consolidated effective tax rate for the quarter ended May 3, 1997 was 37.4%
compared with 38.0% for the quarter ended April 27, 1996. This decrease was due
primarily to a reduction in the state tax rate for the Company.
Net income increased 25% from $5.3 million, or $.44 per share, for the first
quarter of fiscal year 1997 compared to $6.6 million, or $.54 per share, for the
first quarter of fiscal year 1998.
-7-
<PAGE> 8
Financial Condition
- -------------------
Cash and short-term investments at May 3, 1997 decreased by $0.9 million since
the beginning of fiscal year 1998. The principal sources of cash were $13.7
million from operating activities and $0.9 million in proceeds from exercises of
employee stock options offset by $15.7 million in capital expenditures.
The ratio of current assets to current liabilities was 2.51:1 at May 3, 1997
compared with 3.52:1 at January 31, 1997. Working capital of $57.3 million at
May 3, 1997 decreased by $5.3 million from January 31, 1997. It is anticipated
that the Company's operating cash needs for fiscal year 1998, including planned
capital expenditures, will be met by internally generated funds and available
cash.
In fiscal year 1997, the Company began construction of a new 6" BiCMOS wafer
fabrication facility in Merrimack, New Hampshire, in order to increase
manufacturing capacity and expand process capabilities. The initial phase is
expected to cost approximately $36 million. As of May 3, 1997, the Company has
spent approximately $23 million on this new facility, with the remaining balance
of approximately $13 million estimated to be spent by the middle of fiscal year
1998, when the construction of this new facility is expected to be completed.
Equipment installation and qualification of manufacturing processes are
scheduled for the remainder of the fiscal year.
In addition to the new wafer fabrication facility, the Company plans to spend
approximately $21 million for capital expenditures in fiscal year 1998 to
support ongoing operations. These capital investments are primarily for
additional manufacturing and testing capacity.
Accounts receivable at May 3, 1997 increased by $9.4 million from January 31,
1997 primarily due to the higher level of sales. Receivable days sales
outstanding were 52 days at May 3, 1997 compared to 44 days at January 31, 1997
and 48 days at April 27, 1996.
Accounts payable and other current liabilities at May 3, 1997 increased by a
total of $9.2 million from January 31, 1997 primarily due to obligations for
capital assets and pre-operating costs related to the new wafer fabrication
expansion program.
New Accounting Standards
- ------------------------
See Note 2 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, 1997, 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
May 3, 1997
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
- ---------------------------------------------------------------
The Registrant's annual meeting of stockholders was held on June 2,
1997, at which two matters were submitted to a vote of security
holders: (1) the election of Edward H. Browder and Kenneth Hecht as
directors of the Registrant, each for a three-year term ending in
2000; and, (2) the approval and ratification of an amendment to the
Registrant's 1992 Employee Stock Option Plan to increase the number
of shares of common stock available for issuance under the Plan from
2,000,000 shares to 3,000,000 shares. As of April 4, 1997, the
record date for said meeting, there were outstanding 11,710,174
shares of the Registrant's common stock entitled to vote at the
meeting. At such meeting, the holders of 10,638,004 shares were
represented in person or by proxy, constituting a quorum. At such
meeting, the votes with respect to the matters proposed to the
stockholders were as follows:
(1) Election of Directors
---------------------
<TABLE>
<CAPTION>
For Withheld
---------- --------
<S> <C> <C>
Mr. Browder 10,383,011 254,993
Mr. Hecht 10,385,046 252,958
</TABLE>
(2) Approval and Ratification of Amendment to the Unitrode 1992
-----------------------------------------------------------
Employee Stock Option Plan
--------------------------
<TABLE>
<CAPTION>
For Against Abstain
--------- --------- -------
<S> <C> <C>
6,230,852 2,730,531 105,683
</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, 1998.
-10-
<PAGE> 11
Unitrode Corporation
May 3, 1997
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 16, 1997 /s/Robert L. Gable
- ------------------------- -----------------------------------
Date Chairman and Chief Executive
Officer
June 16, 1997 /s/ Cosmo S. Trapani
- ------------------------- -----------------------------------
Date Executive Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
-11-
<PAGE> 1
Exhibit 11
Unitrode Corporation
Computation of Primary and Fully Diluted Earnings per Share
(in thousands except per share data)
<TABLE>
<CAPTION>
Three months ended May 3, 1997 April 27, 1996
- ----------------------------------------------------------------------------
<S> <C> <C>
Net income $ 6,586 $ 5,261
======= =======
Primary earnings per share:
- --------------------------
Weighted average of common shares outstanding 11,678 11,479
Equivalent shares arising from the assumed
exercise of stock options 517 376
------- -------
Weighted average of common and common
equivalent shares outstanding 12,195 11,855
======= =======
Net income $ .54 $ .44
======= =======
Fully diluted earnings per share:
- --------------------------------
Weighted average of common and common
equivalent shares outstanding
(as determined for primary earnings
per share above) 12,195 11,855
Incremental shares to reflect full
dilution 79(1) -(1)
------- -------
Weighted average of common and common
equivalent shares outstanding, as
adjusted 12,274 11,855
======= =======
Net income $ .54 $ .44
======= =======
</TABLE>
(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> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-START> FEB-01-1997
<PERIOD-END> MAY-03-1997
<EXCHANGE-RATE> 1
<CASH> 51,076
<SECURITIES> 0
<RECEIVABLES> 25,627
<ALLOWANCES> 383
<INVENTORY> 11,211
<CURRENT-ASSETS> 95,363
<PP&E> 109,998
<DEPRECIATION> 54,412
<TOTAL-ASSETS> 163,913
<CURRENT-LIABILITIES> 38,040
<BONDS> 0
0
0
<COMMON> 2,343
<OTHER-SE> 121,661
<TOTAL-LIABILITY-AND-EQUITY> 163,913
<SALES> 40,840
<TOTAL-REVENUES> 40,840
<CGS> 19,146
<TOTAL-COSTS> 19,146
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 10,520
<INCOME-TAX> 3,934
<INCOME-CONTINUING> 6,586
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,586
<EPS-PRIMARY> .54
<EPS-DILUTED> .54
</TABLE>
