UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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: April 30, 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: 0-11552
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TeleVideo, Inc.
------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 94-2383795
- -------------------------------- --------------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2345 Harris Way, San Jose, California 95131
-------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (408) 954-8333
----------------------------
___________________________
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
--- ---
The number of shares outstanding of registrant's Common Stock, as of June 10,
1997 is: 45,404,745.
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<PAGE>
PART I. FINANCIAL INFORMATION
-----------------------------
ITEM 1. FINANCIAL STATEMENTS.
TELEVIDEO, INC.
---------------
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------
1997 and 1996 Quarterly Data
- ----------------------------
The condensed consolidated financial statements included herein have
been prepared by the management of TeleVideo, Inc. (the "Company"), without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted, pursuant to such rules and
regulations, although the Company believes the disclosures which are made are
adequate to make the information presented not misleading. Further, the
condensed consolidated financial statements reflect, in the opinion of
management, all adjustments (which included only normal recurring adjustments)
necessary to present fairly the financial position and results of operations as
of and for the periods indicated.
It is suggested that these condensed consolidated financial statements
be read in conjunction with the financial statements and the notes thereto
included in the Company's Report on Form 10-K for the fiscal year ended October
31, 1996.
The results of operations for the six-month period ended April 30,
1997, are not necessarily indicative of the results to be expected for the
entire fiscal year ending October 31, 1997.
[The remainder of this page is intentionally left blank.]
1
<PAGE>
TELEVIDEO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
April 30, Oct. 31,
ASSETS 1997 1996
-------- --------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents (including restricted cash of $2,000) $ 7,081 $ 4,496
Accounts receivable, less allowance of $937 in 1997 and $888 in 1996 3,316 4,394
Receivables from related parties,
net of allowance of $302 in 1997 and $391 in 1996 -- --
Inventories 3,316 5,834
Prepayments and other 153 62
Note receivable from sale of building -- 5,000
-------- --------
Total current assets 13,866 19,786
-------- --------
PROPERTY, PLANT AND EQUIPMENT:
Land 890 890
Building 1,035 1,035
Production equipment 497 1,263
Office furniture and equipment 1,140 1,753
Building improvements 1,105 1,105
-------- --------
4,667 6,046
Less accumulated depreciation and amortization 1,755 2,968
-------- --------
Property, plant and equipment, net 2,912 3,078
INVESTMENTS IN AFFILIATES 2,601 226
-------- --------
Total assets $ 19,379 $ 23,090
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 495 $ 3,080
Accrued liabilities 755 855
Income taxes 611 611
-------- --------
Total current liabilities 1,861 4,546
-------- --------
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value;
Authorized--75,000,000 shares
Outstanding--45,404,745 shares in 1997 and 45,402,245
shares in 1996 454 454
Additional paid-in capital 95,635 95,634
Accumulated deficit (78,571) (77,544)
-------- --------
Total stockholders' equity 17,518 18,544
-------- --------
Total liabilities and stockholders' equity $ 19,379 $ 23,090
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
TELEVIDEO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED APRIL 30, 1997 AND APRIL 30, 1996
(In thousands, except per share amounts)
1997 1996
-------- --------
NET SALES $ 4,110 $ 3,426
COST OF SALES 3,660 3,454
-------- --------
GROSS PROFIT 450 (28)
OPERATING EXPENSES:
Sales and Marketing 487 532
Research and development 242 262
General and administration 326 333
-------- --------
Total operating expenses 1,055 1,127
-------- --------
Loss from operations (605) (1,155)
INTEREST INCOME, net 120 214
OTHER INCOME, net (28) 896
-------- --------
Net loss $ (513) $ (45)
======== ========
Net loss per share $ (0.01) $ (0.00)
======== ========
Average shares outstanding 45,405 45,349
======== ========
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
TELEVIDEO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1997 AND APRIL 30, 1996
(In thousands, except per share amounts
1997 1996
-------- --------
NET SALES $ 8,574 $ 8,625
COST OF SALES 7,518 7,958
-------- --------
GROSS PROFIT 1,056 667
OPERATING EXPENSES:
Sales and Marketing 1,262 1,418
Research and development 428 632
General and administration 618 626
-------- --------
Total operating expenses 2,308 2,676
-------- --------
Loss from operations (1,252) (2,009)
INTEREST INCOME, net 276 337
OTHER INCOME, net (50) 1,318
-------- --------
Net loss $ (1,026) $ (354)
======== ========
Net loss per share $ (0.02) $ (0.01)
======== ========
Average shares outstanding 45,405 45,260
======== ========
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
TELEVIDEO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED APRIL 30, 1997 AND APRIL 30, 1996
(In thousands)
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
INCREASE (DECREASE) IN CASH:
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $(1,026) $ (354)
Charges (credits) to operations not affecting cash:
Depreciation and amortization 182 137
Changes in operating assets and liabilities:
Accounts receivable 1,078 (242)
Inventories 2,518 1,256
Prepayments and other 4,909 127
Accounts payable (2,585) (1,379)
Accrued liabilities and royalties (101) (148)
Current and deferred income taxes -- --
------- -------
Net cash provided by (used in) operating activities 4,975 (603)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net retirements of (additions to) property, plant and equipment (16) (15)
Investment in marketable securities -- (1)
Investments in affiliate (2,375) (120)
Payments received on notes receivable from affiliate and other -- 1,349
------- -------
Net cash provided by (used in) investing activities (2,391) 1,213
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 1 64
------- -------
Net cash provided by financing activities 1 64
------- -------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,585 674
CASH AND CASH EQUIVALENTS AT THE BEGINNING
OF THE YEAR 4,496 5,145
------- -------
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR $ 7,081 $ 5,819
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
TELEVIDEO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
April 30, 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
------------------------------------------
Principles of Consolidation
---------------------------
The condensed consolidated financial statements include the accounts of the
Company and certain of its majority owned subsidiaries, after elimination of
intercompany accounts and transactions. The Company's investments in joint
ventures in the Commonwealth of Independent States, some of which represent
a majority interest in the joint venture, are not consolidated due to the
lack of reliable financial information from the entity. Such investments are
carried at cost.
Translation
-----------
The Company applies Statement of Financial Accounting Standards No. 52 for
purposes of translating foreign currency financial statements of its foreign
subsidiaries. Translation gains and losses resulting from the translation of
foreign currency financial statements are deferred and classified as
adjustments to stockholders' equity.
Use of Estimates
----------------
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the
financial statements, as well as revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Cash and Cash Equivalents
-------------------------
The Company considers all highly liquid investments with original maturities
of three months or less to be cash equivalents. Approximately $2.0 million,
invested in short term certificates of deposit, are pledged as security
under letter of credit agreements.
Inventories
-----------
Inventories are stated at the lower of cost or market. Costs are computed on
a currently adjusted standard basis (which approximates average cost) for
both finished goods and work-in-process and includes material, labor and
manufacturing overhead costs. The cost of purchased parts is determined on a
first-in, first-out basis. Amounts shown are net of reserves for
obsolescence of $434,000 and $663,000 in 1997 and 1996, respectively:
April 30, Oct. 31,
1997 1996
--------- ---------
Purchased parts and subassemblies $ 1,647 $ 4,040
Work-in-process 719 422
Finished goods 950 1,372
--------- ---------
$ 3,316 $ 5,834
========= =========
6
<PAGE>
Property, Plant and Equipment
-----------------------------
Depreciation and amortization are provided over the estimated useful lives
of the assets using both straight-line and accelerated methods.
Building 40 years
Production equipment 1-10 years
Office furniture 1-10 years
Net Income (Loss) Per Share
---------------------------
Net income (loss) per share is based on the weighted average number of
shares of Common Stock outstanding during each period.
2. ACQUISITIONS AND DIVESTITURES:
------------------------------
AdMOS Technologies Inc.
-----------------------
During fiscal 1991, the Company acquired through its wholly owned
subsidiary, Silicon Logic, Inc., a 20% equity interest in a chip engineering
firm (AdMOS Technologies Inc.) in exchange for certain assets and a nominal
cash payment, the total value of which was $145,000. The acquisition of this
interest had been accounted for on the cost method. This investment was
written off in fiscal 1992 due to the continued economic difficulties
experienced by AdMOS.
In fiscal 1991 and 1992, the Company loaned AdMOS a total of $470,000, which
has been partially repaid. The outstanding balance at April 30, 1997 was
$104,000. The repayment of a portion of this loan is personally guaranteed
by the President and controlling shareholders of AdMOS. Due to the economic
difficulties AdMOS is currently experiencing, the principal and interest
balances due on this note have been fully reserved.
In February 1995, the Company further loaned AdMOS $384,000 at an interest
rate of 10% per annum. Approximately $204,000 was repaid to the Company in
fiscal 1995 and fiscal 1996. In December 1996, the Company received another
$100,000 from AdMOS. The Company has fully reserved the unpaid balance of
$80,000 plus accrued interest as of April 30, 1997.
TLK, Inc.
---------
In November 1996, the Company invested $150,000 in exchange for a 20%
ownership in TLK, Inc. for the China Power Plant projects in Lin Zhang, Quin
Yuan and Henan Provinces in China. The Company expects to have a return on
investment within the next twelve months.
Koram, Inc.
-----------
On March 3, 1997, the Company invested $224,820 (equivalent to
KRW200,000,000) in exchange for a 50% ownership in Koram, Inc. which will
conduct food services in Seoul of Korea. The investment is carried at cost.
Applied Photonics Technology, Inc.
----------------------------------
On April 16, 1997, the Company entered into a Common Stock Purchase
Agreement with Applied Photonics Technology, Inc., a California Corporation
("APT") whereby the Company purchased 30% of the Common Stock of APT. In
consideration for the issuance of the APT stock, the Company agreed to pay
$3,000,000 to APT: $2,000,000 payable on the day of closing and the
remaining $1,000,000 payable 90 days after closing.
7
<PAGE>
Founded in October 1996, APT is a high-tech engineering firm specializing in
the development of electronics display technology. The markets for APT's
Outdoor Media Display system include the high end of the billboard and
illuminated sign markets, sports stadiums and arenas, transportation
terminals, volume retailers and malls, and safety/public information
displays.
The authorized capital of APT consists of no shares of Preferred Stock and
20,000,000 shares of Common Stock, of which 5,593,800 shares are issued and
outstanding. Except for options representing an aggregate of 1,000,000
shares issuable in the future in consideration of contributions by key
employees and certain consultants of APT, TeleVideo received Common Stock
equal to 30% of all issued and outstanding shares as of closing date, for a
total of 1,678,140 shares. The Company funded the purchase of the Common
Stock through the retirement of its Time Deposits.
Russian Joint Ventures
----------------------
In fiscal 1995, 1996 and 1997, the Company acquired interests in various
joint ventures, primarily in the Commonwealth of Independent States. These
investments are accounted for on the cost method.
Three H
-------
Three H Partners (owned equally by TeleVideo and a Russian entity) was
formed in fiscal 1991 for the purpose of conducting short term commodities
trading and the initial investment was $16,000. In July 1996, the Company
further invested $60,000 in the joint venture.
TeleVideo-RUS
-------------
In January 1996, TeleVideo set up a company called "TeleVideo-RUS" in the
Commonwealth of Independent States with an initial investment of $150,000.
The main purpose of this company is to act as a liaison between TeleVideo
and the authorities in the CIS. One of the projects that the Company is
anticipating will be the construction of truck terminals.
Risks of Operations in the Commonwealth of Independent States
-------------------------------------------------------------
There are a number of risks involved in TeleVideo's participation in foreign
joint ventures located in the Commonwealth of Independent States. These
risks include the ability to execute and enforce the agreements, the future
regulations governing the repatriation of funds, the political and economic
instability and the dependence on future events which can influence the
success or failure of the ventures and, thus, may affect the recoverability
of the amounts invested by TeleVideo. Management of the Company is aware of
the attendant risks relating to these ventures and continually monitors the
conditions in the CIS and the activities of the joint ventures. Management
further believes the investments to be secure and thus no reserves are
required as of April 30, 1997. However, there can be no assurance that
conditions in the CIS will not deteriorate and place the Company's
investment in jeopardy.
At the indicated dates the Company had the following investments in
affiliates and joint ventures: (in thousands)
April 30, Oct. 31,
1997 1996
--------- ---------
TLK, Inc. $ 150 $ -
Koram, Inc. 225 -
Applied Photonics Technology, Inc. 2,000 -
Three H 76 76
TeleVideo-RUS 150 150
--------- ---------
$ 2,601 $ 226
========= =========
8
<PAGE>
3. LETTER OF CREDIT AGREEMENT:
---------------------------
The Company has a letter of credit agreement with a bank whereby the bank
will issue up to $3.0 million of standby and sight letters of credit. This
agreement is contingent upon the Company maintaining cash deposits of $2.0
million at the bank as collateral. These funds are held in three month
certificates of deposits and earn interest at the rate of approximately 5.2%
per annum. At April 30, 1997, the Company had letters of credit outstanding
of approximately $1,529,769.
4. INCOME TAXES:
-------------
The Company adopted, effective November 1, 1993, Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes," issued
in February 1992. Under the liability method specified by SFAS 109, deferred
tax assets and liabilities are determined based on the difference between
the financial statement and tax bases of assets and liabilities as measured
by the enacted tax rates which will be in effect when these differences
reverse. Deferred tax expense is the result of changes in deferred tax
assets and liabilities. The change from the deferred method to the liability
method of accounting for income taxes had no material impact on the
financial position or results of operations of the Company for the quarter
ended April 30, 1997.
As of April 30, 1997, the only tax issues pending are the Massachusetts
State Tax audit and the California Franchise Tax exposure resulting from the
previous Federal Income Tax audits. The Company believes that a resolution
of one or both of these audits could occur in fiscal 1997 and its maximum
exposure, collectively will not exceed $600,000. The Company has accrued
this full amount at April 30, 1997.
5. LITIGATION AND OTHER:
---------------------
The Company has been named, along with dozens of other manufacturers,
designers, and distributors of computer equipments, as a defendant in
several lawsuits regarding product liability in connection with the alleged
defective design of computer terminal keyboards and the size of the video
screens. The first issue alleges that the various plaintiffs have suffered
some form of severe wrist injury from the use of said keyboards. The second
issue alleges that there was false advertising in which the actual viewable
size of the video screens were smaller than they were claimed. The Company's
attorneys have prepared a defense for these cases and the Company's
insurance carriers are informed of the plaintiff's claims.
On October 3, 1996, a complaint was filed by Carol Levy in the Marin County
Superior Court claiming that the advertising content of the "TeleVideo Model
EX-16," a computer sound card which includes an amplifier, was untrue. This
case alleges that the Company advertised that the power output of the signal
was 6 watts per channel, for a total of 12 watts, but the actual power
output to each speaker was less than 6 watts.
On May 8, 1997, Activision, Inc. filed suit against the Company in the
Superior Court of California (County of Los Angeles) alleging deficiency in
royalty payment of $112,500.
The Company intends to vigorously defend against the allegations of these
suits. Management believes that the ultimate outcome of these lawsuits will
not have a material adverse effect on the Company's financial position.
9
<PAGE>
6. RELATED PARTY TRANSACTIONS:
---------------------------
During 1997 and 1996 the Company has had transactions with its affiliates as
follows (in thousands):
April 30, Oct. 31,
1997 1996
--------- ---------
Note receivable:
AdMOS (1) $ 104 $ 104
AdMOS (1) 80 180
Interest receivable:
AdMOS (1) 68 65
AdMOS (1) 50 42
(1) Amounts are fully reserved.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
RESULTS OF OPERATIONS
Net sales for the second quarter of fiscal 1997 were approximately
$4.11 million, or an increase of approximately 20.0% from the approximately
$3.43 million in net sales reported in the second quarter of fiscal 1996. The
increase in net sales was principally due to the increase in the sales volume of
multimedia products from $607,500 in the second quarter of fiscal 1996 to $1.81
million in the second quarter of fiscal 1997 but partially offset by the
decrease in sales of the terminal and OMTI board products. Net sales for the six
months ended April 30, 1997 of approximately $8.57 million were approximately
0.6% below the same period of time a year ago which totaled approximately $8.63
million.
Cost of sales increased from approximately $3.45 million in the second
quarter of fiscal 1996 to approximately $3.66 million in the second quarter of
fiscal 1997, and decreased as a percentage of sales from approximately 100.8% to
approximately 89.1% during the same period. The percentage decrease in cost of
sales and the corresponding increase in gross margins in fiscal 1997 (an
increase from approximately -0.8% to 10.9%) were primarily the results of the
elimination of those unprofitable product lines, a strategy that the Company
expects to continue.
Cost of sales were approximately $7.52 million for the six months ended
April 30, 1997, or 5.5% lower than the approximately $7.96 million reported in
the same period a year ago. Cost of sales also decreased as a percentage of
sales from approximately 92.3% in fiscal 1996 to approximately 87.7% in fiscal
1997.
Sales and marketing expenses decreased as a percentage of sales from
approximately 15.5% in the second quarter of fiscal 1996 to 11.8% in the second
quarter of fiscal 1997, while actual sales and marketing expenses decreased from
$532,000 in the second quarter of fiscal 1996 to $487,000 in the second quarter
of fiscal 1997, a decrease of 8.5% from the prior year. On a six month basis,
sales and marketing expenses decreased as a percentage of sales from
approximately 16.4% in fiscal 1996 to 14.7% in fiscal 1997, while actual
expenses decreased approximately 11.0%. The decrease in sales and marketing
expenses was due primarily to decreased expenditures resulting from the decrease
in employee staffing levels. The number of sales and marketing employees
decreased from 25 in fiscal 1996 to 18 in fiscal 1997, while actual compensation
expense decreased from $860,000 in the first six months of 1996 to $659,000 in
the first six months of fiscal 1997.
Research and development expenses decreased as a percentage of sales
from approximately 7.6% in the second quarter of fiscal 1996 to 5.9% in the
second quarter of fiscal 1997, while actual research and development expenses
decreased from $262,000 in fiscal 1996 to 242,000 in fiscal 1997 on a
comparative quarter-to-quarter basis, a decrease of 7.6% from the fiscal 1996
levels. On a six month basis, research and development expenses decreased as a
percentage of sales from approximately 7.3% in fiscal 1996 to 5.0% in fiscal
10
<PAGE>
1997, while actual expenses decreased approximately 32.3%. The decrease in
percentage and actual research and development expenses in fiscal 1997 compared
to the same period in the prior year was primarily a result of the decrease in
employee staffing levels from 10 in fiscal 1996 to 7 in fiscal 1997 while actual
compensation expense decreased from $454,000 in the first six months of fiscal
1996 to $260,000 in fiscal 1997 on a comparative period-to-period basis.
General and administrative expenses decreased as a percentage of sales
from approximately 9.7% in the second quarter of fiscal 1996 to 7.9% in the
second quarter of fiscal 1997, while actual expenses decreased approximately
2.1% over this same three month period. On a six month basis, general and
administrative expenses decreased as a percentage of sales from approximately
7.3% in fiscal 1996 to 7.2% in fiscal 1997, while actual expenses decreased
approximately 1.3% over this same six month period.
The loss from operations decreased approximately 47.6%, from $1,155,000
in the second quarter of fiscal 1996 to $605,000 in the second quarter of fiscal
1997. Operating loss for the six months ended April 30, 1997 of approximately
$1.25 million was approximately 37.7% lower comparing the same period in fiscal
1996 which totaled approximately 2.01 million. This decrease was primarily due
to the decrease in actual operating expenses from a total of $2.68 million to
$2.31 million on a comparative period-to-period basis.
Interest income earned decreased from $337,000 in the first six months
of fiscal 1996 to $276,000 in the first six months of fiscal 1997, a 18.1%
decrease from the prior year. Such decrease was primarily due to the retirement
of notes receivable which bore a higher interest rate.
The Company sold its 51% ownership in "InterTerminal" joint venture in
fiscal 1995 for approximately $1.3 million and the full amount was received and
recognized as a gain in the first and second quarters of fiscal 1996.
Net loss for the second quarter of fiscal 1997 was approximately
$513,000, or $0.01 per share, compared to a net loss of $45,000 in the second
quarter of fiscal 1996, or $0.00 per share, a year ago for the same three month
period. Net loss for the six months ended April 30, 1997 totaled approximately
$1,026,000, or $0.02 per share, compared to a net loss of 354,000, or $0.01 per
share, for the same period a year ago. The loss in fiscal 1997 was a result of
the various factors noted above.
As a result of the foregoing, net loss per share in the second quarter
of fiscal 1997 was $0.01, based on 45,404,745 weighted average shares
outstanding, compared to a net loss per share in the second quarter of fiscal
1996 of $0.00, based on 45,348,537 weighted average shares outstanding.
No income tax expense or credit was provided for in the quarter ended
April 30, 1997, as the Company believes that it has adequate net operating loss
and credit carryovers to offset future federal and state corporate income tax
liabilities. No net deferred tax asset has been recognized by the Company for
any future tax benefit to be provided from the loss carryforwards since
realization of any such benefit is not assured.
Inflation had no significant impact on the Company's business or
results of operations.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents totaled approximately $7.1 million at April
30, 1997, up $2.6 million (approximately 57.5%) from fiscal 1996 year-end levels
of $4.5 million. The increase in the cash and cash equivalents resulted
primarily from the repayment of its note receivable of $5.0 million from the
sale of its former headquarters while partially offset by the net cash used in
investing activities of $2.4 million.
Approximately $2.0 million in certificates of deposit were pledged as
collateral for comparable amounts of stand-by and sight letters of credit under
the letter of credit agreements as of the end of the second quarter of fiscal
1997. At April 30, 1997, the Company had approximately $1,529,769 in outstanding
letters of credit which were secured by the pledged deposits under this
agreement.
11
<PAGE>
Net accounts receivable of $3.32 million at the end of the second
quarter of fiscal 1997 were down approximately 24.5% from the 1996 year-end
level of $4.39 million. Days sales outstanding in accounts receivable increased
from 89 days in fiscal 1996 to 91 days in fiscal 1997.
Net inventories of approximately $3.32 million at the end of the
quarter ended April 30, 1997 were down approximately 43.2% from the 1996
year-end level of $5.83 million.
Working capital at the end of the second quarter of fiscal 1997 was
approximately $12.01 million, down approximately 21.23% from the fiscal 1996
year-end level of approximately $15.24 million.
At the current consumption rate, the Company's cash balance of
approximately $7.08 million at April 30, 1997 (which includes $2.0 million
pledged as security for stand-by and sight letters of credit), together with
anticipated revenues from operations and other non-operating cash receipts, was
anticipated to be adequate to fund the Company's fiscal 1997 operations at
projected levels.
12
<PAGE>
PART II. OTHER INFORMATION
--------------------------
ITEM 1. LEGAL PROCEEDINGS.
See Note 5 of "Notes to Condensed Consolidated Financial Statements."
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Company held its annual meeting of shareholders on March 24, 1997,
at which K. Philip Hwang, Stephen S. Kahng, Kristine Kim and Robert E. Larson
were elected by the shareholders as Directors of the Company's Board.
The shareholders also: (1) approved the amendment of the Company's
Certificate of Incorporation to change the corporate name from TeleVideo
Systems, Inc. to TeleVideo, Inc.; and (2) ratified the appointment of Grant
Thornton LLP as the Company's independent public accountant for the fiscal year
ending October 31, 1997.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibit(s).
-----------
Exhibit 27.0 Financial Data Schedule.
(b) Reports on Form 8-K.
--------------------
The Company filed a current report on Form 8-K, dated April 30, 1997,
reporting that:
(1) on April 16, 1997 the Company entered into a Common Stock Purchase
Agreement with Applied Photonics Technology, Inc. whereby the
Company purchased 30% of the Common Stock of APT in exchange for a
total cash payment of $3,000,000; and
(2) on April 22, 1997, the Company filed a Certificate of Amendment of
its Certificate of Incorporation, thereby changing its name from
TeleVideo Systems, Inc. to TeleVideo, Inc.
[The remainder of this page is intentionally left blank.]
13
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
TELEVIDEO, INC.
---------------------------------
(Registrant)
Date: June 10, 1997 By: /s/ K. Philip Hwang
---------------------------------
Dr. K. Philip Hwang
Chairman of the Board and
Chief Executive Officer
/s/ David Kim
--------------------------------
David Kim
Chief Financial Officer
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF TELEVIDEO, INC. FOR THE SIX MONTHS ENDED APRIL 30, 1997,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
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