<PAGE>
- --------------------------------------------------------------------------------
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 MARCH 31, 1998
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 0-23107
FAROUDJA, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 77-0444978
(State or other jurisdiction of (I.R.S. employer identification number)
incorporation and organization)
750 PALOMAR AVENUE, SUNNYVALE, CA 94086
(Address of Principal Executive Offices, including zip code)
(408) 735-1492
(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 .
--- ---
As of May 1, 1998, there were 12,084,557 shares of Common Stock ($.001 par value
per share) outstanding.
- --------------------------------------------------------------------------------
<PAGE>
FAROUDJA, INC.
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets - March 31, 1998
and December 31, 1997. . . . . . . . . . . . . . . . . . . . . 3
Condensed consolidated statements of income - Three months
ended March 31, 1998 and 1997. . . . . . . . . . . . . . . . . 4
Condensed consolidated statements of cash flows - Three months
ended March 31, 1998 and 1997. . . . . . . . . . . . . . . . . 5
Notes to condensed consolidated financial statements -
March 31, 1998 . . . . . . . . . . . . . . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of Financial Condition
And Results of Operations. . . . . . . . . . . . . . . . . . . 8
Item 3. Quantitative and Qualitative Disclosures about Market Risk . . 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . 13
Item 2. Changes in Securities. . . . . . . . . . . . . . . . . . . . . 13
Item 3. Defaults upon Senior Securities. . . . . . . . . . . . . . . . 13
Item 4. Submission of Matters to a Vote of Security Holders. . . . . . 13
Item 5. Other Information. . . . . . . . . . . . . . . . . . . . . . . 13
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . 14
SIGNATURES.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
EXHIBIT INDEX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
2
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FAROUDJA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
--------- ------------
Assets (Unaudited) (Note)
<S> <C> <C>
Current Assets
Cash and cash equivalents $21,595 $23,272
Short-term investments 280 277
Accounts receivable, net 3,021 3,098
Inventories 3,123 2,943
Deferred tax assets 942 942
Prepaid expenses and other current assets 399 596
------- -------
Total current assets 29,360 31,128
Property and equipment 4,030 3,862
Accumulated depreciation and amortization (1,991) (1,836)
------- -------
2,039 2,026
Other Assets 321 335
------- -------
Total Assets $31,720 $33,489
------- -------
------- -------
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable $ 673 $ 1,445
Other current liabilities 1,584 2,696
------- -------
Total current liabilities 2,257 4,141
Commitments
Stockholders' Equity
Preferred Stock, par value $0.001 per share:
Authorized - 5,000 shares; none issued
and outstanding - -
Common Stock, par value $0.001 per share:
Authorized - 50,000 shares;
Issued and outstanding-12,085 shares at March
31 and 12,059 shares at December 31 12 12
Additional paid-in capital 29,068 28,978
Deferred compensation (221) (238)
Retained earnings 604 596
------- -------
29,463 29,348
------- -------
Total Liabilities and
Stockholders' Equity $31,720 $33,489
------- -------
------- -------
</TABLE>
Note - The balance sheet at December 31, 1997 has been derived from the audited
financial statements at that date.
See notes to condensed consolidated financial statements.
3
<PAGE>
FAROUDJA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1998 1997
---- ----
<S> <C> <C>
Revenues:
Product sales $ 2,608 $2,835
License and royalty revenues 750 750
-------- ------
Total revenues 3,358 3,585
Cost of product sales 1,104 999
-------- ------
Gross profit 2,254 2,586
Operating expenses:
Research and development 1,077 899
Sales and marketing 752 678
General and administrative 690 392
Financing expenses - 312
-------- ------
Total operating expenses 2,519 2,281
-------- ------
Operating (loss) income (265) 305
Other income 278 97
-------- ------
Income before provision for income taxes 13 402
Provision for income taxes 5 153
-------- ------
Net income $ 8 $ 249
-------- ------
-------- ------
Net income per share:
Basic $0.00 $0.03
Diluted $0.00 $0.03
Number of shares used in per share computation:
Basic 12,079 8,200
Diluted 12,766 9,054
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE>
FAROUDJA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNADUDITED)
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1998 1997
---- ----
<S> <C> <C>
Cash Provided by (Used In)
Operating Activities $ (1,610) $ 696
Investing Activities:
Purchases of equipment (168) (174)
Other assets 14 -
Purchases of short-term investments (3) -
Sales of short-term investments - 1,499
-------- --------
Total (157) 1,325
-------- --------
Financing Activities:
Sale of common stock for cash upon exercise
of options and employee stock purchase plan 90 -
-------- --------
Total 90 -
-------- --------
Net Increase (Decrease) in Cash
and Cash Equivalents $ (1,677) $ 2,021
-------- --------
-------- --------
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE>
FAROUDJA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
(UNAUDITED)
NOTE A - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
The accompanying unaudited condensed consolidated 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 only of normal recurring
adjustments) considered necessary for a fair presentation have been
included. Operating results for the three months ended March 31, 1998, are
not necessarily indicative of the results that may be expected for the year
ended December 31, 1998. For further information, reference is made to the
consolidated financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997.
NOTE B - INVENTORIES
Inventory is valued at the lower of cost (first-in, first-out method) or
market. The components of inventory consist of the following (in
thousands):
<TABLE>
<CAPTION>
March 31, 1998 December 31, 1997
-------------- -----------------
<S> <C> <C>
Raw materials $ 645 $ 770
Work-in-process 1,654 1,508
Finished goods 824 665
------ ------
$3,123 $2,943
------ ------
------ ------
</TABLE>
NOTE C - NET INCOME PER SHARE
Basic net income per share is computed using the weighted average number of
shares of Common Stock outstanding during the period. Diluted net income
per share also gives effect to the dilutive effect of stock options and
warrants (using the treasury stock method).
NOTE D - INCOME TAXES
The effective tax rate used in computing the provision for income taxes is
based on projected fiscal year income before taxes, including estimated
income by tax jurisdiction. The difference between the effective tax rate
and the statutory rate is due primarily to the utilization of research and
development tax credits offset by state taxes.
6
<PAGE>
FAROUDJA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
NOTE E - SIGNIFICANT CUSTOMERS
Revenues from one customer, S3 Incorporated ("S3") accounted for 22.3% and
23.0% of revenues for the three months ended March 31, 1998 and 1997. Such
amounts mainly represented pre-paid non-refundable royalty payments in
order to maintain exclusive rights to license certain technology. S3 has
advised the Company that no prepayments will be made with respect to any
periods after March 31, 1998. There can be no assurance as to the amount
of royalties, if any, the Company will receive in the future as the Company
does not have any other license agreements in effect pursuant to which it
expects to receive substantial royalties. Sales to Vidikron Industries
accounted for 5.5% and 13.6% of revenues for the three months ended March
31, 1998 and 1997.
NOTE F - COMPREHENSIVE INCOME
As of January 1, 1998, the Company adopted Statement 130, REPORTING
COMPREHENSIVE INCOME. Statement 130 establishes new rules for the
reporting and display of comprehensive income and its components; however,
the adoption of this Statement had no impact on the Company's net income or
stockholders' equity. Statement 130 requires unrealized gains or losses on
the Company's available-for-sale securities and foreign currency
translation adjustments, which prior to adoption were reported separately
in stockholders' equity, to be included in comprehensive income. Prior
year financial statements have been reclassified to conform to the
requirement of Statement 130.
During the first quarter of 1998 and 1997, total comprehensive income
amounted to $8,000 and $155,000, respectively.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THE FOLLOWING MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS CONTAINS FORWARD-LOOKING STATEMENTS BASED UPON
CURRENT EXPECTATIONS THAT INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S
ACTUAL RESULTS AND TIMING OF CERTAIN EVENTS COULD DIFFER MATERIALLY FROM
THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF
CERTAIN FACTORS, INCLUDING THOSE SET FORTH UNDER "FACTORS AFFECTING FUTURE
OPERATING RESULTS" AS DESCRIBED IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K.
OVERVIEW
The Company develops, manufactures and sells consumer and commercial
products designed to bring HDTV-quality images to the digital broadcast,
display, PC/TV-convergence and home-theater markets.
The Company's operating results have varied in the past and are likely to
vary significantly in the future from period to period as a result of a
number of factors, including the volume and timing of orders received
during the period, fluctuations in the amount and timing of license and
royalty revenues, if any, the timing of new product introductions by
the Company and its competitors, demand for, and market acceptance of, the
Company's products, product line maturation, the impact of price
competition on the Company's average selling prices, delays encountered by
the Company's strategic partners, the availability and pricing of
components for the Company's products, changes in product or distribution
channel mix and product returns or price protection charges from customers.
Many of these factors are beyond the Company's control. In addition, due
to the short product life cycles that characterize the markets for the
Company's products, the Company's failure to introduce new, competitive
products consistently and in a timely manner could materially adversely
affect operating results for one or more product cycles. The Company
introduced its new family of Digital Format Translators in April 1998.
There is no assurance as to the eventual demand for this product, the size
of the digital broadcast market, or that the digital broadcast market will
develop in the timeframe currently specified by the Federal Communications
Commission.
The Company has received quarterly prepaid license fees from S3 to maintain
exclusivity under its license agreement with the Company. S3 has advised
the Company that no prepayments will be made with respect to any periods
after March 31, 1998. There can be no assurance as to the amount of
royalties, if any, the Company will receive in the future as the Company
does not have any other license agreements in effect pursuant to which it
expects to receive substantial royalties.
To maintain favorable margin levels on product sales, the Company must
introduce new products, introduce enhanced versions of its products, and
continue its cost reduction efforts. The Company anticipates that it will
incur lower overall gross margins in future periods as it introduces lower
margin products for consumer markets until such time as license and
royalties, if achieved, become a significantly larger percentage of
revenues.
The Company intends to increase its efforts in the design, development and
sale of board and chip level products while continuing the sale
8
<PAGE>
of stand-alone products for the high-end home theater, industrial and
broadcast markets. On an absolute dollar basis, sales and marketing
expenses, general and administrative expenses and research and development
expenses are expected to increase in 1998 over 1997. Consequently, without a
corresponding increase in revenues, net income will be adversely impacted.
RESULTS OF OPERATIONS
The following table sets forth-certain items from the Company's
consolidated statements of income expressed as a percentage of total
revenues for the periods indicated.
<TABLE>
<CAPTION>
Quarter Ended March 31,
1998 1997
---- ----
<S> <C> <C>
Revenues:
Product sales 77.7% 79.1%
License and royalty revenues 22.3 20.9
------------------
Total revenues 100.0 100.0
Cost of product sales 32.9 27.9
------------------
Gross margin 67.1 72.1
Operating expenses:
Research and development 32.1 25.1
Sales and marketing 22.4 18.9
General and administrative 20.5 10.9
Financing expense - 8.7
------------------
Total operating expenses 75.0 63.6
------------------
Operating income (loss) (7.9) 8.5
Other income 8.2 2.7
------------------
Income before provision for income taxes 0.3 11.2
Provision for income taxes 0.1 4.3
------------------
Net Income 0.2% 6.9%
------------------
</TABLE>
TOTAL REVENUES. Revenues from S3 accounted for 22.3% and 23.0% of total
revenues in the first quarter of 1998 and 1997, respectively. Sales to
Vidikron accounted for 5.5% and 13.6% of total revenues in the first
quarter of 1998 and 1997, respectively.
Export sales, consisting primarily of VP400, VP-280 and VP250 products
shipped to dealers and distributors in Asia and Europe, represented 17.9%
and 6.8% of total revenues in the first quarter of 1998 and 1997,
respectively. All export sales are denominated in U.S. dollars. The
Company intends to pursue efforts to increase its export sales in the
future; however, there can be no assurance that any growth in export sales
will be achieved. The Company believes that current economic conditions in
Asia might adversely impact any increase in sales to that region in 1998.
The Company's future success will depend, in large part, on its ability to
continue to enhance its existing products and to develop new products and
features to meet changing customer requirements and evolving industry
standards. The Company anticipates that sales from its line multiplier
product line will experience limited growth, or may decline, in future
periods. In the first quarter of 1998, the home theater market continued
to exhibit weakness, which the Company attributes to consumer confusion
over high definition television ("HDTV"). The Company believes that such
confusion and related
9
<PAGE>
market weakness could continue until HDTV broadcasting begins on a wide-scale
basis, as currently anticipated, at the end of the third quarter of 1998. The
Company expects that approximately one-half of its total revenues in 1998
will be derived from license and royalty revenues and from sales of products
introduced in 1997 and scheduled to be introduced in 1998.
GROSS PROFIT. Gross profit as a percentage of total revenues was 67.1% in
the first quarter of 1998 and 72.1% in the first quarter of 1997. The
decrease in gross margin in 1998 compared to 1997 was primarily due to lower
product gross margin. Product gross margin as a percentage of product sales
decreased to 57.7% in the first quarter of 1998 from 64.8% in the first
quarter of 1997. This was primarily due to the sale of products introduced
in the second half of 1997, such as the RP4800 rear screen projection system,
DV-1000 DVD player and VP-100 decoder, which have lower margins than the
Company's line multiplier products.
RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses
increased to $1.1 million in the first quarter of 1998 from $899,000 in the
first quarter of 1997. The increases were primarily due to costs incurred by
the Company for the development of ASIC components used in the full range of
the Company's products. Research and development expenses as a percentage of
total revenues increased to 32.1% in 1998 from 25.1% in 1997 due to the
expansion of the VLSI department that occurred throughout 1997. The Company
increased its engineering and management personnel, and related equipment, to
enable the ongoing development of its high performance VLSI design
capability. The Company intends to increase its engineering efforts in the
design and development of broadcast, board and chip level products, and
therefore, expects that research and development expenses will continue to
increase in absolute dollars.
SALES AND MARKETING EXPENSES. Sales and marketing expenses increased to
$752,000 in the first quarter of 1998 from $678,000 in the first quarter of
1997. Sales and marketing expenses increased as a percentage of total
revenues to 22.4% in the first quarter of 1998 from 18.9% in the first
quarter of 1997 primarily due to increases in the Company's sales and
marketing staff, including the addition of sales executives and the
development of a network of regional managers and sales representatives.
The Company intends to increase its sales and marketing efforts, and
intends to increase its international market presence. Accordingly, sales
and marketing expenses are expected to increase in absolute dollars in the
future.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased to $690,000 in the first quarter of 1998 from $392,000 in the
first quarter of 1997. General and administrative expenses increased as a
percentage of total revenues to 20.5% in the first quarter of 1998 from
10.9% in the first quarter of 1997. This was primarily due to expenses
associated with being a public company, additions to the Company's general
and administrative staff, and an increase in legal fees associated with
assertion of the Company's patents against alleged infringers. The Company
anticipates that it will incur increases in general and administrative
expenses in future periods associated with litigation to protect the
Company's intellectual property and with legal, accounting and other
expenses of being a public company.
FINANCING EXPENSES. The Company incurred $312,000 of expenses related to
financing activities in the first quarter of 1997.
10
<PAGE>
OTHER INCOME. Interest and other income was $278,000 in the first quarter
of 1998 and $97,000 in the first quarter of 1997. The increase in 1998
from 1997 was due to the investment of the $15.6 million net proceeds of
the Company's initial public offering completed in November 1997, and the
$5 million investment by S3 in the Company in June 1997, in short-term,
interest bearing, investment grade securities. As a result of such
increased investments, the Company anticipates that interest income will
increase significantly in 1998 from 1997.
PROVISION FOR INCOME TAXES. The Company's effective tax rate was 38% for
the first quarter of both 1998 and 1997. The Company anticipates
implementing certain tax planning strategies to reduce the effective tax
rate in future periods.
LIQUIDITY AND CAPITAL RESOURCES
OPERATING ACTIVITIES. In the first quarter of 1998, net cash used in
operating activities was $1.6 million, primarily composed of (i) a $772,000
decrease in accounts payable, (ii) a $692,000 decrease in accrued
compensation, (iii) a $198,000 decrease in income taxes payable, (iv) a
$222,000 decrease in other accrued liabilities, and (v) a $180,000 increase
in inventory. These were partially offset by a $197,000 decrease in other
current assets.
INVESTING ACTIVITIES. Capital equipment purchases in the first quarter of
1998 were $168,000, primarily for hardware and software used in research
and development, engineering test equipment and furniture and fixtures.
FINANCING ACTIVITIES. In the first quarter of 1998, the Company received
$90,000 from stock purchased under the employee stock purchase plan.
LIQUIDITY. At March 31, 1998, the Company's principal sources of liquidity
consisted of cash, cash equivalents and short-term investments totaling
$21.9 million, and a bank credit facility for $2.0 million. The Company's
working capital at March 31, 1998 was $27.1 million. In April 1997, the
Company renewed its bank revolving line of credit which now expires in May
1999. The line of credit is secured by substantially all of the Company's
tangible assets. Borrowings are limited to defined percentages of eligible
accounts receivable. In addition, the Company must satisfy certain
financial covenants.
The Company's future capital requirements are expected to include (i)
supporting the expansion of the research and development and sales and
marketing departments, (ii) funding the acquisition of capital equipment,
primarily for research and development and consisting of such items as
engineering equipment, computers and furniture, and (iii) funding the
growth of working capital items such as receivables and inventory.
The Company may investigate means to acquire greater control over
semiconductor production, whether by joint venture, prepayments, equity
investments in, or loans to, wafer suppliers. In addition, as part of its
business strategy, the Company occasionally evaluates potential
acquisitions of businesses, products and technologies. Accordingly, a
portion of its available cash may be used for the acquisition of
complementary products, technologies or businesses or to assure foundry
capacity. Such potential transactions may require substantial capital
resources, which may require the Company to seek additional debt or equity
financing. There can be no assurance that the Company will consummate any
such transactions.
11
<PAGE>
The Company believes that its current cash, cash equivalents and short-term
investments will be sufficient to support the Company's planned activities
through at least the next twelve months.
YEAR 2000. The Company has determined that its present internal management
information systems are not compliant with Year 2000 requirements and has
implemented plans to upgrade both its software and hardware in the normal
course of business during 1998. It will also be initiating discussions
with its significant suppliers, customers and financial institutions to
ensure that their systems are Year 2000 compliant. The Company expects the
total costs of these upgrades to be less than $500,000 and is scheduled to
complete its upgrades by the end of 1998. It does not anticipate the cost
of such upgrade to have a significant impact on its operations or financial
position.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not applicable.
12
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
In January 1997 and May 1997, the Company filed actions against
DWIN Electronics, Inc. ("DWIN") and Snell & Wilcox, Inc. ("Snell &
Wilcox"), respectively, seeking relief and damages for the infringement of
US Patent Number 4,876,596 ("the '596 Patent"), which was issued on October
24, 1989, is owned by Yves Faroudja and is licensed to the Company. DWIN
and Snell & Wilcox have raised defenses and counterclaims, including
assertions that the patent is invalid and not infringed. The actions
against DWIN and Snell & Wilcox were filed in the United States District
Court, Northern District of California, San Jose Division, as Civil Action
No. C-97 20010 SW (PVT) and Civil Action No. C-97 20422 SW (PVT),
respectively. The Company is seeking an injunction and unspecified
monetary damages against both DWIN and Snell & Wilcox. DWIN and Snell &
Wilcox have filed counterclaims seeking declaratory judgments that all of
the claims of the patent are invalid and/or that the '596 Patent has not
been infringed. They are also seeking recovery of their respective
attorneys' fees and costs. Discovery has commenced in both matters. On
February 18, 1998, the court in the Snell & Wilcox action granted the
Company's motion for leave to amend its complaint against Snell & Wilcox to
add claims of infringement of U.S. Patent Number 4,998,287 ("the '287
Patent") and U.S. Patent Number 4,881,125 ("the '125 Patent"), and to name
additional Snell & Wilcox products as being within the category of
infringing products. The '287 Patent, which was issued on March 5, 1991,
and the '125 Patent, which was issued on November 14, 1989, are owned by
General Instrument Corporation and licensed to the Company pursuant to a
license agreement dated May 1, 1996. By order dated May 1, 1998, the court
granted Snell & Wilcox's motion for summary judgment as to the '596 Patent
on the basis of noninfringement. The action will continue with respect to
the '125 Patent and the '287 Patent. The Company's management believes
that a finding that all of the claims of the patents at issue in these
cases are invalid or have not been infringed, in one or both actions, would
not have a material adverse effect on the Company because the Company's
products and business are protected by a variety of patents and the Company
will remain competitive even in the absence of the protection afforded by
the respective patents.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
13
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11.1 Statement re Computation of Per Share Earnings
27.1 Financial Data Schedule
(b) Reports on Form 8-K.
The Company did not file any reports on Form 8-K during the three
months ended March 31, 1998.
14
<PAGE>
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.
FAROUDJA, INC.
(Registrant)
By: /s/ Michael Hoberg
-------------------------------------
Michael Hoberg, Vice President of Finance and Chief Financial Officer
(Duly Authorized Officer and Principal Financial Officer)
Date: May 13, 1998
15
<PAGE>
EXHIBIT INDEX
11.1 Statement re Computation of Earnings per Share
27.1 Financial Data Schedule
16
<PAGE>
Exhibit 11.1
FAROUDJA, INC.
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1998 1997
----------------------------
<S> <C> <C>
NET INCOME $ 8 $ 249
------- ------
------- ------
BASIC:
Computation of weighted average common
shares outstanding:
Weighted average common shares outstanding 12,079 8,200
------- ------
------- ------
Net income per share $.00 $.03
------- ------
------- ------
DILUTED:
Computation of weighted average common
and common equivalent shares outstanding:
Weighted average common shares outstanding 12,079 8,200
Common equivalent shares from stock
options and warrants 687 854
------- ------
Shares used in per share computation 12,766 9,054
------- ------
------- ------
Net income per share $.00 $.03
------- ------
------- ------
</TABLE>
17
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENT INCLUDED IN ITEM 1 OF FORM 10-Q DATED MARCH 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 21,595
<SECURITIES> 280
<RECEIVABLES> 3,021
<ALLOWANCES> 165
<INVENTORY> 3,123
<CURRENT-ASSETS> 29,360
<PP&E> 2,039
<DEPRECIATION> 1,991
<TOTAL-ASSETS> 31,720
<CURRENT-LIABILITIES> 2,257
<BONDS> 0
0
0
<COMMON> 12
<OTHER-SE> 29,451
<TOTAL-LIABILITY-AND-EQUITY> 31,720
<SALES> 2,608
<TOTAL-REVENUES> 3,358
<CGS> 1,104
<TOTAL-COSTS> 1,104
<OTHER-EXPENSES> 1,077
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 13
<INCOME-TAX> 5
<INCOME-CONTINUING> 8
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
