<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 June 18, 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)
<TABLE>
<S> <C>
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)
</TABLE>
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 JUNE 18, 1995
18,164,427
Page 1 of 10 Pages
<PAGE> 2
XICOR, INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED
JUNE 18, 1995
PART I
FINANCIAL INFORMATION
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<PAGE> 3
XICOR, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
June 18,
1995 December 31,
(Unaudited) 1994
----------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $18,599,000 $14,754,000
Short-term investments 7,932,000 5,886,000
Accounts receivable 13,948,000 11,060,000
Inventories 12,785,000 15,234,000
Prepaid expenses and other
current assets 763,000 610,000
----------- -----------
Total current assets 54,027,000 47,544,000
Property, plant and equipment, at
cost less accumulated depreciation 13,265,000 15,383,000
Other assets 356,000 356,000
----------- -----------
$67,648,000 $63,283,000
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,489,000 $ 5,976,000
Accrued expenses 7,480,000 6,879,000
Deferred income on shipments
to distributors 13,934,000 12,190,000
Current portion of obligations
under capital leases 2,635,000 2,668,000
----------- -----------
Total current liabilities 29,538,000 27,713,000
----------- ------------
Long-term obligations under
capital leases 3,053,000 4,186,000
----------- ------------
Shareholders' equity:
Preferred stock; 5,000,000
shares authorized -- --
Common stock; 75,000,000
shares authorized; 18,164,427
and 18,022,727 shares
outstanding 121,234,000 120,820,000
Accumulated deficit (86,177,000) (89,436,000)
----------- -----------
35,057,000 31,384,000
----------- -----------
$67,648,000 $63,283,000
=========== ===========
</TABLE>
See accompanying notes to consolidated financial information
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<PAGE> 4
XICOR, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Twelve weeks ended Twenty-four weeks ended
----------------------------- -----------------------------
June 18, June 19, June 18, June 19,
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $25,683,000 $24,783,000 $49,218,000 $49,551,000
----------- ----------- ----------- -----------
Costs and expenses:
Cost of sales 15,696,000 16,420,000 30,258,000 33,438,000
Research and development 3,459,000 3,102,000 6,917,000 5,875,000
Selling, general and
administrative 4,592,000 4,508,000 8,934,000 8,876,000
----------- ----------- ----------- -----------
23,747,000 24,030,000 46,109,000 48,189,000
----------- ----------- ----------- -----------
Income from operations 1,936,000 753,000 3,109,000 1,362,000
Interest expense (138,000) (145,000) (291,000) (301,000)
Interest income 335,000 105,000 614,000 184,000
----------- ----------- ----------- -----------
Income before income taxes 2,133,000 713,000 3,432,000 1,245,000
Provision for income taxes 107,000 29,000 173,000 50,000
----------- ----------- ----------- -----------
Net income $ 2,026,000 $ 684,000 $ 3,259,000 $ 1,195,000
=========== =========== =========== ===========
Net income per common share $ .11 $ .04 $ .18 $ .07
=========== =========== =========== ===========
Average common shares and
equivalents 18,791,000 18,406,000 18,595,000 18,356,000
=========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial information
-4-
<PAGE> 5
XICOR, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Twenty-four weeks ended
----------------------------
June 18, June 19,
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,259,000 $ 1,195,000
Adjustments to reconcile net income to
cash provided by (used for) operating
activities:
Depreciation and amortization 3,730,000 6,181,000
Changes in assets and liabilities:
Accounts receivable (2,888,000) (170,000)
Inventories 2,449,000 (2,046,000)
Prepaid expenses and other
current assets (153,000) (79,000)
Other assets -- (24,000)
Accounts payable and accrued
expenses 114,000 93,000
Deferred income on shipments
to distributors 1,744,000 559,000
----------- -----------
Net cash provided by operating activities 8,255,000 5,709,000
----------- -----------
Cash flows from investing activities:
Investments in plant and equipment, net (1,442,000) (652,000)
Purchases of short-term investments (7,046,000) (3,935,000)
Maturities of short-term investments 5,000,000 2,017,000
----------- -----------
Net cash provided by (used for)
investing activities (3,488,000) (2,570,000)
----------- -----------
Cash flows from financing activities:
Repayments of obligations under
capital leases (1,336,000) (1,404,000)
Proceeds from sale of common stock
to employees 414,000 17,000
----------- -----------
Net cash used for financing activities (922,000) (1,387,000)
----------- -----------
Increase in cash and cash equivalents 3,845,000 1,752,000
Cash and cash equivalents at beginning
of year 14,754,000 8,347,000
----------- -----------
Cash and cash equivalents at end of
quarter $18,599,000 $10,099,000
=========== ===========
Supplemental information:
Cash paid during the quarter for:
Interest $ 314,000 $ 324,000
Income taxes 30,000 15,000
Equipment acquired pursuant to
capital leases 170,000 1,016,000
</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>
June 18, December 31,
1995 1994
-------- ------------
<S> <C> <C>
Inventories:
Raw materials and supplies $ 1,888,000 $ 1,686,000
Work in process 5,197,000 8,048,000
Finished goods 5,700,000 5,500,000
------------ ------------
$ 12,785,000 $ 15,234,000
============ ============
Property, plant and equipment:
Leased building and building
improvements $ 1,602,000 $ 1,602,000
Leasehold improvements 16,651,000 16,558,000
Equipment 73,613,000 72,763,000
Furniture and fixtures 1,697,000 1,680,000
Construction in progress 1,183,000 950,000
------------ ------------
94,746,000 93,553,000
Less accumulated depreciation (81,481,000) (78,170,000)
------------ ------------
$ 13,265,000 $ 15,383,000
============ ============
Accrued expenses:
Accrued wages and employee benefits $ 3,150,000 $ 2,890,000
Other accrued expenses 4,330,000 3,989,000
------------ ------------
$ 7,480,000 $ 6,879,000
============ ============
</TABLE>
Accounts receivable:
Accounts receivable at June 18, 1995 and December 31, 1994 are
presented net of an allowance for doubtful accounts of $500,000.
-6-
<PAGE> 7
XICOR, INC.
Quarterly Period Ended June 18, 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 and
twenty-four weeks ended June 18, 1995 are not necessarily indicative of results
to be expected in future periods.
RESULTS OF OPERATIONS
Sales for the second quarter of 1995 were $25.7 million, an increase of
4% over second quarter 1994 sales of $24.8 million and 9% over first quarter
1995 sales of $23.5 million. The sales growth in the second quarter of 1995 was
due to increased bookings in the first two quarters of 1995. Although second
quarter 1995 sales were up, sales for the first half of 1995 were flat compared
to the same period of 1994. Slow bookings in the second half of 1994 caused
first quarter 1995 sales to be 5% lower than the comparable prior year quarter
and first half 1995 sales to be flat with 1994. While strong bookings in the
first half of 1995 resulted in a higher next quarter shippable backlog at the
beginning of the third quarter of 1995 than at the beginning of the second
quarter of 1995, sales growth for the balance of 1995 is contingent on bookings
continuing at the 1995 first half rate.
Cost of sales as a percentage of sales was 62% and 61% for the first
and second quarter of 1995, respectively, compared to 69% and 66% for the
corresponding periods of 1994. The improvement over the 1994 quarters was due
primarily to reduced depreciation expense and increased manufacturing
efficiencies. 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. While manufacturing efficiencies improved in the second quarter of 1995
relative to the first quarter of 1995 due to increased production volumes, gross
margins were negatively impacted by increased sales of commodity products.
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.
-7-
<PAGE> 8
Research and development expenses were 13% and 14% of sales for the
second quarter and first half of 1995, respectively, compared to 13% and 12% for
the corresponding 1994 periods. Xicor is continuing to invest substantial funds
in research and development of new proprietary products and an advanced
manufacturing process with the goal of further reducing cost of sales as a
percentage of sales by increasing the proportion of higher margin proprietary
products and by improving manufacturing efficiencies.
Selling, general and administrative expenses remained relatively
constant in the second quarter and first half of 1995 compared to the
corresponding periods of 1994.
Interest expense in the second quarter and first half of 1995 was
relatively flat compared to the corresponding 1994 periods. 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 second quarter and first half of 1995
compared to the second quarter and first half of 1994 due to an increase in the
average balance invested caused by funds generated from operations and the
upward trend in interest rates during 1994 and the first quarter of 1995.
The provision for income taxes for the second quarter and first half 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,
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<PAGE> 9
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 June 18, 1995, Xicor had $26.5 million in cash, cash equivalents and
short-term investments compared to $20.6 million at December 31, 1994. During
the first half of 1995, Xicor generated $8.3 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 $15 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 $5 million of the equipment. Xicor is presently
investigating additional equipment financing. At June 18, 1995 Xicor had entered
into commitments for equipment purchases aggregating approximately $6 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
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<PAGE> 10
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 June 18, 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.
PART II - OTHER INFORMATION
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 June 18, 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: July 19, 1995
-10-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-02-1995
<PERIOD-END> JUN-18-1995
<CASH> 18,599,000
<SECURITIES> 7,932,000
<RECEIVABLES> 14,448,000
<ALLOWANCES> 500,000
<INVENTORY> 12,785,000
<CURRENT-ASSETS> 54,027,000
<PP&E> 94,746,000
<DEPRECIATION> 81,481,000
<TOTAL-ASSETS> 67,648,000
<CURRENT-LIABILITIES> 29,538,000
<BONDS> 0
<COMMON> 121,234,000
0
0
<OTHER-SE> (86,177,000)
<TOTAL-LIABILITY-AND-EQUITY> 67,648,000
<SALES> 49,218,000
<TOTAL-REVENUES> 49,218,000
<CGS> 30,258,000
<TOTAL-COSTS> 30,258,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 291,000
<INCOME-PRETAX> 3,432,000
<INCOME-TAX> 173,000
<INCOME-CONTINUING> 3,259,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,259,000
<EPS-PRIMARY> 0.18
<EPS-DILUTED> 0
</TABLE>
