<PAGE> 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 March 26, 1995
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 0-9653
XICOR, INC.
(Exact name of registrant as specified in its charter)
California 94-2526781
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1511 Buckeye Drive, Milpitas, California 95035
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (408) 432-8888
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
--- ---
NUMBER OF SHARES OUTSTANDING AT MARCH 26, 1995
18,027,427
Page 1 of 10 Pages
<PAGE> 2
XICOR, INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED
MARCH 26, 1995
PART I
FINANCIAL INFORMATION
-2-
<PAGE> 3
XICOR, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 26, December 31,
1995 1994
---- ----
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 15,793,000 $ 14,754,000
Short-term investments 6,892,000 5,886,000
Accounts receivable 13,298,000 11,060,000
Inventories 13,138,000 15,234,000
Prepaid expenses and other current assets 763,000 610,000
------------ ------------
Total current assets 49,884,000 47,544,000
Property, plant and equipment, at cost less
accumulated depreciation
13,875,000 15,383,000
Other assets 356,000 356,000
------------ ------------
$ 64,115,000 $ 63,283,000
============ ============
</TABLE>
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<S> <C> <C>
Current liabilities:
Accounts payable $ 5,947,000 $ 5,976,000
Accrued expenses 6,587,000 6,879,000
Deferred income on shipments to distributors 12,649,000 12,190,000
Current portion of obligations under capital leases 2,558,000 2,668,000
------------ ------------
Total current liabilities 27,741,000 27,713,000
------------ ------------
Long-term obligations under capital leases 3,750,000 4,186,000
------------ ------------
Shareholders' equity:
Preferred stock; 5,000,000 shares authorized -- --
Common stock; 75,000,000 shares authorized;
18,027,427 and 18,022,727 shares outstanding 120,827,000 120,820,000
Accumulated deficit (88,203,000) (89,436,000)
------------ ------------
32,624,000 31,384,000
------------ ------------
$ 64,115,000 $ 63,283,000
============ ============
</TABLE>
See accompanying notes to consolidated financial information
-3-
<PAGE> 4
XICOR, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Twelve weeks ended
------------------------------
March 26, March 27,
1995 1994
---- ----
<S> <C> <C>
Net sales $ 23,535,000 $ 24,768,000
------------- -------------
Costs and expenses:
Cost of sales 14,562,000 17,018,000
Research and development 3,458,000 2,773,000
Selling, general and administrative 4,342,000 4,368,000
------------- -------------
22,362,000 24,159,000
------------- -------------
Income from operations 1,173,000 609,000
Interest expense (153,000) (156,000)
Interest income 279,000 79,000
------------- -------------
Income before income taxes 1,299,000 532,000
Provision for income taxes 66,000 21,000
------------- -------------
Net income $ 1,233,000 $ 511,000
============= =============
Net income per share $ .07 $ .03
============= =============
Average common shares and equivalents 18,362,000 18,300,000
============= =============
</TABLE>
See accompanying notes to consolidated financial information
-4-
<PAGE> 5
XICOR, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Twelve weeks ended
------------------------------
March 26, March 27,
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,233,000 $ 511,000
Adjustments to reconcile net income to cash provided
by (used for) operating activities:
Depreciation and amortization 1,958,000 3,163,000
Changes in assets and liabilities:
Accounts receivable (2,238,000) 765,000
Inventories 2,096,000 (642,000)
Prepaid expenses and other current assets (153,000) (237,000)
Accounts payable and accrued expenses (321,000) (896,000)
Deferred income on shipments to distributors 459,000 (118,000)
------------- -------------
Net cash provided by operating activities 3,034,000 2,546,000
------------- -------------
Cash flows from investing activities:
Investments in plant and equipment, net (340,000) (2,000)
Purchases of short-term investments (3,006,000) (991,000)
Maturities of short-term investments 2,000,000 2,017,000
------------- -------------
Net cash provided by (used for) investing activities (1,346,000) 1,024,000
------------- -------------
Cash flows from financing activities:
Repayments of obligations under capital leases (656,000) (687,000)
Proceeds from sale of common stock to employees 7,000 --
------------- -------------
Net cash used for financing activities (649,000) (687,000)
------------- -------------
Increase in cash and cash equivalents 1,039,000 2,883,000
Cash and cash equivalents at beginning of year 14,754,000 8,347,000
------------- -------------
Cash and cash equivalents at end of quarter $ 15,793,000 $ 11,230,000
============= =============
Supplemental information:
Cash paid during the quarter for interest $ 165,000 $ 167,000
Equipment acquired pursuant to capital leases 110,000 481,000
</TABLE>
See accompanying notes to consolidated financial information
-5-
<PAGE> 6
XICOR, INC.
NOTES TO CONSOLIDATED FINANCIAL INFORMATION
(Unaudited)
Note 1 - The Company:
In the opinion of management, all adjustments necessary for a fair
statement of the results of the interim periods presented (consisting only of
normal recurring adjustments) have been included. These financial statements,
notes and analyses should be read in conjunction with Xicor's Annual Report on
Form 10-K for the year ended December 31, 1994 filed with the Securities and
Exchange Commission.
Note 2 - Balance sheet detail:
<TABLE>
<CAPTION>
March 26, December 31,
1995 1994
---- ----
<S> <C> <C>
Inventories:
Raw materials and supplies $ 2,121,000 $ 1,686,000
Work in process 5,783,000 8,048,000
Finished goods 5,234,000 5,500,000
-------------- --------------
$ 13,138,000 $ 15,234,000
============== ==============
Property, plant and equipment:
Leased building and building improvements $ 1,602,000 $ 1,602,000
Leasehold improvements 16,634,000 16,558,000
Equipment 73,203,000 72,763,000
Furniture and fixtures 1,684,000 1,680,000
Construction in progress 526,000 950,000
-------------- --------------
93,649,000 93,553,000
Less accumulated depreciation (79,774,000) (78,170,000)
-------------- --------------
$ 13,875,000 $ 15,383,000
============== ==============
Accrued expenses:
Accrued wages and employee benefits $ 2,834,000 $ 2,890,000
Other accrued expenses 3,753,000 3,989,000
-------------- --------------
$ 6,587,000 $ 6,879,000
============== ==============
</TABLE>
Accounts receivable:
Accounts receivable at March 26, 1995 and December 31, 1994 are
net of an allowance for doubtful accounts of $500,000.
-6-
<PAGE> 7
XICOR, INC.
Quarterly Period Ended March 26, 1995
Management's Discussion and Analysis of Financial Condition
and Results of Operations
The following discussion should be read in conjunction with the
accompanying Quarterly Financial Information and Notes thereto and Xicor's
Annual Report on Form 10-K for the year ended December 31, 1994 and is qualified
in its entirety by the foregoing. The results of operations for the twelve weeks
ended March 26, 1995 are not necessarily indicative of results to be expected in
future periods.
RESULTS OF OPERATIONS
Sales for the first quarter of 1995 were $23.5 million, a slight
increase over the 1994 fourth quarter run rate, but below first quarter 1994
sales of $24.8 million due to the slow bookings during the second half of 1994.
During the first quarter of 1995 bookings improved substantially from the second
half of 1994. Sales growth for the balance of 1995 is contingent on bookings
continuing at the 1995 first quarter rate.
Cost of sales as a percentage of sales was 62% for the first quarter of
1995, an improvement from 69% for the comparable prior year quarter and 64% for
the fourth quarter of 1994. The improvement over the comparable 1994 period was
due primarily to increased manufacturing efficiencies subsequent to the first
quarter of 1994 and reduced depreciation expense. The improvement from the
fourth quarter of 1994 was due primarily to reduced depreciation. Cost of sales
in the first quarter of 1995 was negatively affected by reduced production
levels in response to the low bookings in the second half of 1994. Production is
being increased to match the increased first quarter 1995 bookings. While
manufacturing efficiencies are expected to improve as a result of the increased
production volumes, Xicor also expects average selling prices to decline
somewhat due to increased bookings of commodity products and competitive
pressures. Maintaining and increasing profitability for the balance of 1995 is
contingent upon product mix and prices and the successful execution of Xicor's
plans to further improve manufacturing efficiencies.
Research and development expenses increased to 15% of sales in the
first quarter of 1995 compared to 11% in the comparable 1994 quarter. The
increase in the first quarter of 1995 reflects Xicor's continued expenditures
towards developing an advanced manufacturing process and more complex products
and towards integrating its EEPROM technology with Digital Signal Processing
(DSP) on a single chip. Research and development activities are requiring an
increasing degree of complexity of design and manufacturing process and
consequently a larger percentage of sales is expected to be invested in research
and development in 1995 than was invested in 1994.
Selling, general and administrative expenses remained at the same level
in both the first quarter of 1995 and 1994.
-7-
<PAGE> 8
Interest expense in the first quarter of 1995 was relatively flat compared to
the comparable 1994 quarter. Interest expense is expected to increase slightly
in the latter part of 1995 due to the planned financing of certain capital
equipment additions.
Interest income increased in the first quarter of 1995 compared to the
first quarter of 1994 due to an increase in the average balance invested caused
by funds generated from operations in 1994 and the first quarter of 1995 and the
upward trend in interest rates during 1994.
The provision for income taxes for the first quarter of 1995 and 1994
consisted primarily of federal and state minimum taxes, which result from
limitations on the use of net operating loss carryforwards, and foreign taxes.
Net deferred tax assets of $38 million at December 31, 1994 remain fully
reserved because of the uncertainty regarding the ultimate realization of these
assets.
FACTORS AFFECTING FUTURE RESULTS
The semiconductor industry is highly competitive and characterized by
rapidly changing technology and steadily declining product prices. Xicor's
results of operations are affected by a wide variety of factors, including
general economic conditions and conditions specific to the semiconductor
industry, decreases in average selling price over the life of any particular
product, the timing of new product introductions (both by Xicor and
competitors), availability of new manufacturing technologies and the ability to
secure intellectual property rights in a rapidly evolving market. The sales
level in any specific quarter is also a function of orders received during that
quarter, as customers continue to shorten lead times for purchase commitments.
Consistent with industry practice, customer orders are generally subject to
cancellation by the customer without penalty. Xicor may be at a disadvantage in
competing with major domestic and foreign concerns that have significant
financial resources, established and diverse product lines, worldwide vertically
integrated production facilities and extensive research and development staffs.
The semiconductor industry is also characterized by substantial capital
and research and development investment for products and processes. The rapid
rate of technological change within the industry requires Xicor to continually
develop new and improved products to maintain its competitive position. Xicor
expects to continue to invest in the research and development of new products
and manufacturing processes in 1995 and beyond, although there can be no
assurances that such research and development efforts or new products will be
successful.
Due to the foregoing and other factors, past results are a much less
reliable predictor of the future than is the case in many older, more stable and
less dynamic industries. In addition, the securities of many high technology
companies have historically been subject to extensive price and volume
fluctuations which may adversely affect the market price of their common stock.
LIQUIDITY AND CAPITAL RESOURCES
At March 26, 1995, Xicor had $22.7 million in cash, cash equivalents
and short-term investments compared to $20.6 million at December 31, 1994.
During the first quarter of 1995, Xicor generated $3 million of cash from
operating activities which was partially offset by principal payments on lease
debt and equipment purchases.
-8-
<PAGE> 9
Capital expenditures for 1995 are presently planned at approximately $7
million. At March 26, 1995, Xicor had entered into commitments for equipment
purchases and leasehold improvements aggregating approximately $1.5 million.
Xicor has a line of credit agreement with a financial institution that
expires March 31, 1996, provides for borrowings of up to $7.5 million against
eligible accounts receivable and is secured by all of Xicor's assets. Interest
on borrowings is charged at the prime lending rate plus 3% and is payable
monthly. At March 26, 1995, the entire $7.5 million was available to Xicor based
on the eligible accounts receivable balances and the borrowing formulas. To
date, no amounts have been borrowed under this line of credit.
Management believes that currently available cash and expected cash
flow from operations will be adequate to support Xicor's operations for the next
twelve months.
-9-
<PAGE> 10
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
11.1 Statement of Computation of Earnings Per Share
27 Financial Data Schedule
(b) Reports on Form 8-K:
No reports on Form 8-K were filed with the Securities and
Exchange Commission during the quarter ended March 26, 1995.
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.
XICOR, INC., a
California Corporation
By /s/ Raphael Klein
--------------------------
Raphael Klein
President
(Principal Executive Officer)
By /s/ Klaus G. Hendig
------------------------
Klaus G. Hendig
Vice President, Finance
and Administration
(Principal Financial Officer)
Date: May 9, 1995
-10-
<PAGE> 1
EXHIBIT 11.1
XICOR, INC.
STATEMENT OF COMPUTATION OF EARNINGS PER SHARE
(UNAUDITED)
<TABLE>
<CAPTION>
Twelve weeks ended
-------------------------
March 26, March 27,
1995 1994
---- ----
<S> <C> <C>
Net income $ 1,233,000 $ 511,000
=========== ===========
Weighted average number of common shares
outstanding during the period 18,023,000 17,989,000
Equivalent common shares attributed to dilutive
employee stock options 339,000 311,000
----------- -----------
Total common and common equivalent shares 18,362,000 18,300,000
=========== ===========
Earnings per share $ 0.07 $ 0.03
=========== ===========
</TABLE>
Fully diluted earnings per share does not differ significantly from primary
earnings per share.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-02-1995
<PERIOD-END> MAR-26-1995
<CASH> 15,793,000
<SECURITIES> 6,892,000
<RECEIVABLES> 13,298,000
<ALLOWANCES> 500,000
<INVENTORY> 13,138,000
<CURRENT-ASSETS> 49,884,000
<PP&E> 93,649,000
<DEPRECIATION> 79,774,000
<TOTAL-ASSETS> 64,115,000
<CURRENT-LIABILITIES> 27,741,000
<BONDS> 0
<COMMON> 120,827,000
0
0
<OTHER-SE> (88,203,000)
<TOTAL-LIABILITY-AND-EQUITY> 64,115,000
<SALES> 23,535,000
<TOTAL-REVENUES> 23,535,000
<CGS> 14,562,000
<TOTAL-COSTS> 14,562,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 153,000
<INCOME-PRETAX> 1,299,000
<INCOME-TAX> 66,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,233,000
<EPS-PRIMARY> 0.07
<EPS-DILUTED> 0
</TABLE>
