<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 September 10, 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 SEPTEMBER 10, 1995
18,298,727
Page 1 of 11 Pages
<PAGE> 2
XICOR, INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED
SEPTEMBER 10, 1995
PART I
FINANCIAL INFORMATION
-2-
<PAGE> 3
XICOR, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
September 10, December 31,
1995 1994
---- ----
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 19,634,000 $ 14,754,000
Short-term investments 10,947,000 5,886,000
Accounts receivable 16,553,000 11,060,000
Inventories 12,073,000 15,234,000
Prepaid expenses and other
current assets 935,000 610,000
------------ ------------
Total current assets 60,142,000 47,544,000
Property, plant and equipment, at
cost less accumulated depreciation 13,263,000 15,383,000
Other assets 356,000 356,000
------------ ------------
$ 73,761,000 $ 63,283,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 7,601,000 $ 5,976,000
Accrued expenses 7,514,000 6,879,000
Deferred income on shipments
to distributors 14,650,000 12,190,000
Current portion of obligations
under capital leases 2,695,000 2,668,000
------------ ------------
Total current liabilities 32,460,000 27,713,000
------------ ------------
Long-term obligations under
capital leases 3,096,000 4,186,000
------------ ------------
Shareholders' equity:
Preferred stock; 5,000,000
shares authorized -- --
Common stock; 75,000,000 shares
authorized; 18,298,727 and
18,022,727 shares outstanding 121,616,000 120,820,000
Accumulated deficit (83,411,000) (89,436,000)
------------ ------------
38,205,000 31,384,000
------------ ------------
$ 73,761,000 $ 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 Thirty-six weeks ended
--------------------------- -----------------------------
September 10, September 11, September 10, September 11,
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $27,931,000 $23,276,000 $77,149,000 $72,827,000
Cost of sales 16,569,000 15,180,000 46,827,000 48,618,000
----------- ----------- ----------- -----------
Gross profit 11,362,000 8,096,000 30,322,000 24,209,000
----------- ----------- ----------- -----------
Operating expenses:
Research and
development 3,981,000 3,365,000 10,898,000 9,240,000
Selling,
general and
administrative 4,718,000 4,217,000 13,652,000 13,093,000
----------- ----------- ----------- -----------
8,699,000 7,582,000 24,550,000 22,333,000
----------- ----------- ----------- -----------
Income from
operations 2,663,000 514,000 5,772,000 1,876,000
Interest expense (126,000) (139,000) (417,000) (440,000)
Interest income 377,000 135,000 991,000 319,000
----------- ----------- ----------- -----------
Income before
income taxes 2,914,000 510,000 6,346,000 1,755,000
Provision for
income taxes 148,000 39,000 321,000 89,000
----------- ----------- ----------- -----------
Net income $ 2,766,000 $ 471,000 $ 6,025,000 $ 1,666,000
=========== =========== =========== ===========
Net income per
common share $ .14 $ .03 $ .32 $ .09
=========== =========== =========== ===========
Average common
shares and
equivalents 19,225,000 18,369,000 18,826,000 18,358,000
=========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial information
-4-
<PAGE> 5
XICOR, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Thirty-six weeks ended
----------------------------
September 10, September 11,
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 6,025,000 $ 1,666,000
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation and amortization 5,346,000 9,047,000
Changes in assets and liabilities:
Accounts receivable (5,493,000) 90,000
Inventories 3,161,000 (2,584,000)
Prepaid expenses and other
current assets (325,000) (199,000)
Other assets -- 30,000
Accounts payable and accrued expenses 2,260,000 (913,000)
Deferred income on shipments
to distributors 2,460,000 1,175,000
----------- -----------
Net cash provided by operating activities 13,434,000 8,312,000
----------- -----------
Cash flows from investing activities:
Investments in plant and equipment, net (2,203,000) (1,221,000)
Purchases of short-term investments (14,061,000) (5,938,000)
Maturities of short-term investments 9,000,000 3,017,000
----------- -----------
Net cash provided by (used for)
investing activities (7,264,000) (4,142,000)
----------- -----------
Cash flows from financing activities:
Repayments of obligations under capital
leases (2,086,000) (2,192,000)
Proceeds from sale of common stock
to employees 796,000 32,000
----------- -----------
Net cash used for financing activities (1,290,000) (2,160,000)
----------- -----------
Increase in cash and cash equivalents 4,880,000 2,010,000
Cash and cash equivalents at beginning
of year 14,754,000 8,347,000
----------- -----------
Cash and cash equivalents at end of quarter $19,634,000 $10,357,000
=========== ===========
Supplemental information:
Cash paid during the quarter for:
Interest $ 451,000 $ 473,000
Income taxes 5,000 15,000
Equipment acquired pursuant to capital
leases 1,023,000 1,276,000
</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>
September 10, December 31,
1995 1994
---- ----
<S> <C> <C>
Inventories:
Raw materials and supplies $ 2,331,000 $ 1,686,000
Work in process 4,366,000 8,048,000
Finished goods 5,376,000 5,500,000
------------ ------------
$ 12,073,000 $ 15,234,000
============ ============
Property, plant and equipment:
Leased building and building
improvements $ 1,602,000 $ 1,602,000
Leasehold improvements 16,661,000 16,558,000
Equipment 74,787,000 72,763,000
Furniture and fixtures 1,698,000 1,680,000
Construction in progress 1,360,000 950,000
------------ ------------
96,108,000 93,553,000
Less accumulated depreciation (82,845,000) (78,170,000)
------------ ------------
$ 13,263,000 $ 15,383,000
============ ============
Accrued expenses:
Accrued wages and employee benefits $ 3,273,000 $ 2,890,000
Other accrued expenses 4,241,000 3,989,000
------------ ------------
$ 7,514,000 $ 6,879,000
============ ============
</TABLE>
Accounts receivable:
Accounts receivable at September 10, 1995 and December 31, 1994 are
net of an allowance for doubtful accounts of $500,000.
-6-
<PAGE> 7
XICOR, INC.
Quarterly Period Ended September 10, 1995
Management's Discussion and Analysis of Financial Condition
and Results of Operations
The following discussion should be read in conjunction with the
accompanying 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 and
thirty-six weeks ended September 10, 1995 are not necessarily indicative of
results to be expected in future periods.
RESULTS OF OPERATIONS
Sales for the third quarter of 1995 were $27.9 million, an increase of
20% over third quarter 1994 sales of $23.3 million and 9% over second quarter
1995 sales of $25.7 million. The sales growth in the third quarter of 1995 was
due to strong 1995 bookings through the end of the quarter. While such bookings
have also resulted in a higher next quarter shippable backlog at the beginning
of the fourth quarter of 1995 than at the beginning of the prior quarter, sales
growth for the balance of 1995 is contingent on bookings remaining strong.
Gross profit as a percentage of sales was 38%, 39% and 41% for the
first, second and third quarters of 1995, respectively, compared to 31%, 34%
and 35% for the corresponding periods of 1994. The improvement over the 1994
quarters was due primarily to reduced depreciation expense and increased
manufacturing efficiencies. The sequential quarterly gross profit percentage
improvement during 1995 was due primarily to improved manufacturing
efficiencies resulting principally from increased production volumes.
Maintaining or increasing the gross profit percentage 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 were 14% of sales for the twelve and
thirty-six weeks ended September 10, 1995, compared to 14% and 13% for the
corresponding 1994 periods. Xicor is continuing to invest substantial funds in
the development of innovative proprietary products and an advanced
manufacturing process with the goal of further improving the gross profit
percentage by increasing the proportion of higher margin proprietary products
and by improving manufacturing efficiencies.
-7-
<PAGE> 8
Selling, general and administrative expenses as a percentage of sales
remained relatively constant in the twelve and thirty-six weeks ended September
10, 1995 compared to the corresponding periods of 1994.
Interest expense in each of the first three quarters of 1995 was
relatively flat compared to the corresponding 1994 periods. Interest expense
is expected to increase substantially in 1996 due to the planned financing of
certain capital equipment additions.
Interest income increased in each of the three quarters of 1995
compared to the corresponding quarters of 1994 primarily due to an increase in
the average balance invested as a result of funds generated from operations.
The provision for income taxes for the twelve and thirty-six weeks
ended September 10, 1995 and September 11, 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 and processes to maintain its
competitive
-8-
<PAGE> 9
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 September 10, 1995, Xicor had $30.6 million in cash, cash
equivalents and short-term investments compared to $20.6 million at December
31, 1994. During the thirty-six weeks ended September 10, 1995, Xicor
generated $13.4 million of cash from operating activities which was partially
offset by principal payments on lease debt and equipment purchases.
Planned capital expenditures for the balance of 1995 are presently
expected to be approximately $14 million consisting principally of production
equipment to support anticipated sales growth in 1996 and beyond. Initially
some of this equipment will be used in the development of an advanced
manufacturing process and related products currently under development. Lease
financing has been arranged for approximately $8.5 million of the equipment.
Xicor is presently investigating additional equipment financing. As of
September 10, 1995 Xicor had entered into commitments for equipment purchases
aggregating approximately $13.5 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 September 10, 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 equipment
financing 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 4. Submission of Matters to a Vote of Security Holders.
On June 23, 1995 the shareholders of Xicor held their annual meeting
in Milpitas, California. The holders of 16,314,871 shares of Common
Stock were present or represented by proxy, and accordingly, a quorum
was present and matters were voted upon as follows:
(a) The following persons were elected directors:
<TABLE>
<CAPTION>
Votes for Votes withheld
---------- --------------
<S> <C> <C>
Raphael Klein 15,956,518 358,353
Julius Blank 16,111,518 203,353
Hans G. Dill 16,112,218 202,653
Andrew W. Elder 16,115,918 198,953
S. Allan Kline 16,113,118 201,753
</TABLE>
(b) The following resolutions were submitted to a vote of the
shareholders at the meeting:
(1) To approve and ratify the Xicor, Inc. 1995 Director
Option Plan.
The resolution was passed, 14,628,413 shares voting in favor,
968,507 shares voting against, 175,506 shares abstaining and
542,445 broker non-votes.
(2) To approve and ratify the Amended and Restated Xicor,
Inc. 1990 Incentive and Non-Incentive Stock Option Plan.
The resolution was passed, 14,321,826 shares voting in favor,
1,258,349 shares voting against, 192,251 shares abstaining and
542,445 broker non-votes.
(3) To ratify the designation of Price Waterhouse LLP as
independent accountants for the period ending December
31, 1995.
The resolution was passed, 16,094,099 shares voting in favor,
168,816 shares voting against and 51,956 shares abstaining.
-10-
<PAGE> 11
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
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 September 10,
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: October 12, 1995
-11-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-02-1995
<PERIOD-END> SEP-10-1995
<CASH> 19,634,000
<SECURITIES> 10,947,000
<RECEIVABLES> 17,053,000
<ALLOWANCES> 500,000
<INVENTORY> 12,073,000
<CURRENT-ASSETS> 60,142,000
<PP&E> 96,108,000
<DEPRECIATION> 82,845,000
<TOTAL-ASSETS> 73,761,000
<CURRENT-LIABILITIES> 32,460,000
<BONDS> 0
<COMMON> 121,616,000
0
0
<OTHER-SE> (83,411,000)
<TOTAL-LIABILITY-AND-EQUITY> 73,761,000
<SALES> 77,149,000
<TOTAL-REVENUES> 77,149,000
<CGS> 46,827,000
<TOTAL-COSTS> 46,827,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 417,000
<INCOME-PRETAX> 6,346,000
<INCOME-TAX> 321,000
<INCOME-CONTINUING> 6,025,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,025,000
<EPS-PRIMARY> 0.32
<EPS-DILUTED> 0
</TABLE>
