<PAGE>
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
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 27, 1996.....................
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD ENDED........TO.................................
COMMISSION FILE NUMBER ..............0-4187...............................
AMATI COMMUNICATIONS CORPORATION
(FORMERLY ICOT CORPORATION)
(Exact name of registrant as specified in its charter)
DELAWARE 94-1675494
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
3801 ZANKER ROAD, PO BOX 5143, SAN JOSE, CA 95150-5143
(Address of Principal Executive Offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (408) 433-3300
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 AT LEAST THE PAST 90 DAYS.
YES X NO
----- -----
NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF COMMON STOCK:
AS OF JUNE 7, 1996, 17,360,549 SHARES OF REGISTRANT'S COMMON STOCK WERE
OUTSTANDING.
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
<PAGE>
FORM 10-Q
Contents
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Consolidated Condensed Statements of Operations
Consolidated Condensed Balance Sheets
Consolidated Condensed Statements of Cash Flows
Notes to Consolidated Condensed Financial Statements
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
PART II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMATI COMMUNICATIONS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------------ --------------------------------
APRIL 27, April 29, APRIL 27, April 29,
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 3,756 $ 3,036 $ 9,634 $ 8,737
Cost of sales 2,180 1,867 5,566 5,061
--------- --------- --------- ---------
Gross margin 1,576 1,169 4,068 3,676
Operating expenses:
Research and development 1,105 353 2,489 1,281
Marketing and sales 276 239 480 760
General and administrative 696 184 1,527 815
Non-recurring charge (1) -- -- 31,554 --
--------- --------- --------- ---------
Total operating expenses 2,077 776 36,050 2,856
Income (loss) from
operations (501) 393 (31,982) 820
Other income (expense):
Interest income 11 72 155 198
Interest expense (8) (1) (11) (7)
--------- --------- --------- ---------
Total other income 3 71 144 191
Income (loss) before
income taxes (498) 464 (31,838) 1,011
Provision for income taxes -- 23 43 51
--------- --------- --------- ---------
NET INCOME (LOSS) $ (498) $ 441 $ (31,881) $ 960
--------- --------- --------- ---------
--------- --------- --------- ---------
NET INCOME (LOSS) PER
SHARE $ (0.03) $ 0.04 $ (2.16) $ 0.08
--------- --------- --------- ---------
--------- --------- --------- ---------
Weighted Average Number of
Common Shares and Common
Share Equivalents 17,138 11,454 14,747 11,595
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
(1) Reflects the write-off of in-process research and development acquired
through the Company's acquisition of the Old Amati in November 1995.
The accompanying notes are an integral part of these
consolidated condensed financial statements.
1
<PAGE>
AMATI COMMUNICATIONS CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
APRIL 27, July 29,
1996 1995
------------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,478 $ 1,066
Short-term investments -- 2,425
Accounts receivable, less allowance of
$41 in 1996 and $21 in 1995 3,197 1,933
Inventories 1,289 1,427
Other current assets 952 942
----------- -----------
Total current assets 6,919 7,793
Amati advances and acquisition costs -- 3,240
Equipment and leasehold improvements-net 734 586
Other assets 324 492
----------- -----------
TOTAL ASSETS $ 7,974 $ 12,111
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 3,279 $ 1,241
Employee compensation 680 350
Convertible notes payable 395 --
----------- -----------
Total current liabilities 4,354 1,591
Long-term liabilities:
Obligations under lease commitments 294 294
----------- -----------
Total long-term liabilities 294 294
Stockholders' equity 3,326 10,226
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 7,974 $ 12,111
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of these
consolidated condensed financial statements.
2
<PAGE>
AMATI COMMUNICATIONS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Nine Months Ended
------------------------------------
APRIL 27, April 29,
1996 1995
------------- ---------------
<S> <C> <C>
Cash flows from operating activities:
NET INCOME (LOSS) $ (31,881) $ 960
Adjustments to reconcile net income (loss) to net
cash provided by (used for) operating activities:
Depreciation and amortization 418 539
Non-recurring charges -- merger 31,554 --
Provision for bad debts 20 --
Retirement of capital equipment 3 43
Increase in accounts receivable (333) (223)
Decrease in inventories 138 334
Increase in other assets (7) (361)
Decrease in accounts payable, accrued
expenses and employee compensation (917) (667)
Increase (decrease) in other liabilities 395 (124)
------------ -----------
NET CASH PROVIDED BY (USED FOR) OPERATING
ACTIVITIES (610) 501
------------ -----------
Cash flows from investing activities:
Advances to Amati and acquisition costs incurred (2,266) (550)
Purchases of held-to-maturity investments -- (5,862)
Proceeds from maturities of held-to-maturity investments 2,425 6,885
Capital expenditures (161) (61)
------------ -----------
NET CASH PROVIDED BY (USED FOR) INVESTING
ACTIVITIES (2) 412
------------ -----------
Cash flows from financing activities:
Payment of lease obligations -- (76)
Repurchase of common stock -- (563)
Proceeds from exercise of stock options 1,024 2
------------ -----------
NET CASH PROVIDED BY (USED FOR) FINANCING
ACTIVITIES 1,024 (637)
------------ -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 412 276
BEGINNING BALANCE -- CASH AND CASH EQUIVALENTS 1,066 645
------------ -----------
ENDING BALANCE -- CASH AND CASH EQUIVALENTS $ 1,478 $ 921
------------ -----------
------------ -----------
Supplemental disclosures of cash flow information:
Cash paid during the period for interest $ 3 $ 7
------------ -----------
------------ -----------
</TABLE>
The accompanying notes are an integral part of these
consolidated condensed financial statements.
3
<PAGE>
AMATI COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
April 27, 1996
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial statements have been
prepared in accordance with the rules and regulations of the Securities and
Exchange Commission and 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 of normal
recurring entries) considered necessary for a fair presentation have been
included. For further information, refer to the financial statements and notes
related thereto included in the Company's Annual Report on Form 10-K for the
year ended July 29, 1995. The results for the period are not necessarily
indicative of results for the full fiscal year.
On November 28, 1995, the Company announced the completion of its merger with
Amati Communications Corporation ("Old Amati"). The business combination,
accounted for as a purchase, resulted in a one time write-off of $31,554,000 for
acquired in-process research and development (See Note E for further
discussion). The accompanying condensed financial statements include the
results of the Old Amati since the consummation of the merger.
NOTE B - NET INCOME (LOSS) PER SHARE
Net income (loss) per share is based on the weighted average number of shares
outstanding of common stock and common stock equivalents (when dilutive) using
the treasury stock method. No common stock equivalents have been included in
fiscal 1996 because the effect would decrease the loss per share.
NOTE C - INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out) or market and
are comprised of the following:
<TABLE>
<CAPTION>
April 27, 1996 July 29, 1995
-------------- -------------
<S> <C> <C>
Finished goods $ 1 $ 1
Work in process 578 711
Purchased and service parts 710 715
------- -------
$ 1,289 $ 1,427
------- -------
------- -------
</TABLE>
4
<PAGE>
AMATI COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
April 27, 1996
(Unaudited)
NOTE D - LITIGATION
In November 1993, an action was brought against the Company for damages related
to the use of the Company's products. The plaintiff filed a suit claiming
repetitive stress injuries resulting from the use of the Company's product in
the course of employment with American Airlines from the period May 1981 through
July 1991. The plaintiff alleges damages in the amount of $1 million and
punitive damages of $10 million. The Company believes that the claim is without
merit and has tendered defense of this action to its insurance carriers. In the
opinion of management, the outcome of this litigation will not have a material
adverse effect on the Company's financial position or its results of operations.
The Company is not involved in any other substantial litigation.
NOTE E - ACQUISITION OF OLD AMATI
On November 28, 1995, the Company acquired all of the outstanding shares of
Amati Communications Corporation ("Old Amati") for approximately $ 29.5 million
based upon the fair market value of the Company's common stock of $3.8875 per
share using the average of the closing prices of the Company's common stock as
reported by the Nasdaq National Market for the five trading days between
November 1, 1995 and November 7, 1995.
In accordance with an Emerging Issues Task Force Consensus in November 1995,
because the purchase price was contingent upon the Adjustment Condition, as
defined in the Prospectus/Proxy Statement, the measurement date for valuing the
equity securities is established as of November 3, 1995 which is the date the
Adjustment Condition was met and the applicable ratio was established. The
purchase price consisted of the issuance of 2.6 million shares of Company common
stock in exchange for all shares of Old Amati common stock, 1.5 million shares
of Company common stock in exchange for all shares of Old Amati Series A
Preferred Stock, warrants for the purchase of 1.1 million shares of Company
common stock in exchange for all Old Amati warrants, and 1.6 million stock
options for the purchase of Company common stock in exchange for all Old Amati
stock options. The purchase price also includes registration and other
acquisition costs of $0.8 million, total cash advances to Old Amati prior to the
merger of $5.6 million, net of the estimated proceeds from the assumed exercise
of Old Amati options and warrants of $3.3 million.
The transaction was accounted for using the purchase method of accounting. The
Company allocated the purchase price to the net assets based upon their
estimated fair values. The fair values of tangible assets acquired and
liabilities assumed were $1.2 million and $3.2 million, respectively. The
balance of the purchase price, $31.6 million, was charged to earnings to write
off in-process research and development that had not reached technological
feasibility and had no alternative future uses.
5
<PAGE>
AMATI COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
April 27, 1996
(Unaudited)
The following table reflects unaudited pro forma combined results of operations
of the Company and Old Amati on the basis that the acquisition had taken place
and the related charge, noted above, was recorded at the beginning of the fiscal
year for each of the periods presented:
<TABLE>
<CAPTION>
Nine Months Ended
---------------------------------------
April 27, 1996 April 29, 1995
-------------- --------------
(in thousands except per share data)
<S> <C> <C>
Revenues $ 11,061 $ 9,454
Net loss $ (34,330) $ (35,138)
Net loss per share $ (2.04) $ (2.16)
Number of Shares used in
computation 16,827 16,250
</TABLE>
In management's opinion, the unaudited pro forma combined results of operations
are not necessarily indicative of the actual results that would have occurred
had the acquisition been consummated at the beginning of 1995 or at the
beginning of 1996 or of future operations of the combined companies under the
ownership and management of the Company.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
To the extent that Management's Discussion and Analysis of Financial Condition
and Results of Operation discusses financial projections, information or
expectation about the Company's products or markets, or otherwise makes
statements about future events, such statements are forward-looking and are
subject to a number of risks and uncertainties that could cause actual results
to differ materially from the statements made. These include, among others,
successful and timely development and acceptance of new products, the
availability of sufficient funding to complete development of new products and
other factors described below. In addition, such risks and uncertainties also
include the matters identified under the heading "Risk Factors" below.
OVERVIEW
On November 28, 1995, ICOT Corporation, the ("Company"), and Amati
Communications Corporation ("Old Amati"), a privately held Mountain View,
California based company completed a merger by which Old Amati became a wholly-
owned subsidiary of the Company. Effective as of the merger, the name of the
Company was changed to "Amati Communications Corporation," and the Company's
common stock began trading on the Nasdaq National Market under the symbol "AMTX"
on November 29, 1995.
Under the terms of the merger agreement with Old Amati, the shareholders,
warrant holders and option holders of Old Amati acquired approximately 35% of
the fully diluted shares (6,788,924) of the Company. As of the merger date, Old
Amati employed twenty-four full time employees, including four in manufacturing,
two in sales and customer support, fifteen in engineering and three in finance
and administration. Old Amati is a development stage company that develops and
markets advanced transmission systems utilizing Discrete Multi-tone ("DMT")
technology to provide high speed transmission over copper and cable media. Old
Amati's DMT technology has been selected as the ANSI and ETSI standard for
Asymmetric Digital Subscriber Line ("ADSL").
The Company is also a provider of network connectivity systems for the PC-
Connectivity and Original Equipment Manufacturing ("OEM") markets. Its products
include local area network gateways, client based work station, software and
network data communications interfaces. The products are sold principally in
the United States from its corporate headquarters in San Jose, California. The
combined business is not expected to operate profitably in the foreseeable
future.
7
<PAGE>
RESULTS OF OPERATIONS
Total net sales in the third quarter of fiscal 1996 increased 24% to $3,756,000
from sales of $3,036,000 in the third quarter of the prior fiscal year. For the
nine months of fiscal 1996, net sales increased 10% to $9,634,000 compared to
sales of $8,737,000 for the comparable fiscal 1995 nine-month period.
Sales to IBM accounted for 56% and 64% of the Company's revenue in the third
quarter and nine-month-period of fiscal 1996, respectively, compared with 81%
for the comparable periods of fiscal 1995. Although dependence on one dominant
customer has been reduced since the merger the Company expects that IBM will
continue to account for a substantial portion of the Company's revenues until
the time it completes development and commercialization of its ADSL products.
IBM is not obligated to purchase any specified amounts of products or to provide
binding forecasts of product purchases for any period. Since IBM considers
product sales and market data confidential, the Company has very little ability
to forecast future demand. Furthermore, since IBM has the exclusive
responsibility for marketing and selling of the products that the Company
develops, results of operations can be significantly affected by IBM's success
in the market place.
During the period following the merger, the Company has shipped Old Amati's
Overture series of transceivers. The Overture 4 is a prototype that does not
have a low enough cost or low enough power consumption for mass deployment and
its components are entirely discrete (off the shelf). This product is to be
phased out in favor of the next series called Overture 8. In the third quarter
of fiscal 1996 the Company delivered the Overture 8 which is characterized by a
higher bandwidth as defined by the ANSI standards. This product is currently
installed in its first field trial of broadcast video in Australia. Sales of
Overture series field trials were $994,000 and $1,743,000 in the third quarter
and nine-month period of fiscal 1996, respectively. In addition, contract
revenues of $148,000 from customization of products were also realized in the
third quarter of fiscal 1996. The Company anticipates the Overture series to
continue to participate in additional field trials internationally for the
remainder of fiscal 1996.
PC to Mainframe Connectivity sales of $528,000 and $1,540,000 for the third
quarter and the nine-month period of fiscal 1996 represent a decline of 1% and
6%, respectively, when compared with the same periods of the prior fiscal year.
The PC to Mainframe Connectivity market is highly competitive and is
characterized by rapid advances in technology which frequently result in the
introduction of new products with improved performance characteristics, thereby
subjecting the Company's products to risk of technological obsolescence. The
Company competes directly or indirectly with a broad range of companies, many of
whom have significantly greater resources. In addition, the Company is only
competing for a limited and declining segment of the market.
Gross margins as a percent of sales were 42% for the third quarter and nine
months of fiscal 1996 compared with 39% and 42% for the same periods of fiscal
1995. The increase in margin in the third quarter of fiscal 1996 was primarily
attributable to product mix resulting from shipment of new products to IBM and
costs to complete the Overture series of test trials. Amortization of
capitalized
8
<PAGE>
software costs charged to cost of sales were $61,000 and $185,000 in
the third quarter and nine months of fiscal 1996, respectively.
Net research and development expenses increased 213% to $1,105,000 in the third
quarter and 94% to $2,489,000 in the nine months of fiscal 1996 when compared to
the same periods of fiscal 1995 largely as a result of the fifteen Old Amati
engineers added because of the merger and the addition of three new employees.
Research and development expenses are net of funded development costs from IBM.
Funded development costs in the third quarter and nine month period of fiscal
1996 were $150,000 and $288,000 compared with $222,000 and $470,000,
respectively, in fiscal 1995. There was no capitalization of software
development costs in either fiscal quarter. The Company considers research and
development a key element in its ability to compete and will continue to make
investments in product development for IBM and its support of product
reliability. From the technology acquired in the merger, the Company believes
it has a leadership position in DMT modulation. Maintaining this position is
largely dependent on the Company's ability to develop new products that meet a
wide range of customer needs. Research and development efforts for the DMT
technology are grouped into three areas: the microelectronics group primarily
focused on ADSL and Very High Speed Digital Subscriber Lines (VDSL) markets,
the software group on the development of firmware for the Overture series and
the hardware group directed towards analogy and digital design activities. All
research and development expenses related to this technology are charged to
operations as incurred.
Marketing and sales expenses increased by $37,000 or 15% for the third quarter
as a result of overseas travel when compared with the same period of prior
fiscal year. For the nine month period of fiscal 1996 a decrease of $280,000 or
37% is due to a reduction in inside sales personnel and less participation in
trade shows related to the PC-Connectivity business when compared with the same
nine month period of fiscal 1995. Sales, marketing and customer support
operations of the acquired business, which cover both domestic and international
markets, is handled by three persons. The Company's strategy is to sell to
telephone companies worldwide through large telecommunication suppliers who will
integrate the Company's products into larger systems for their customers. This
type of OEM selling does not require a large sales force.
General and administrative expenses increased by $512,000 or 278% in the third
quarter and $712,000 or 87% in the nine months of fiscal 1996 when compared with
the same periods of prior fiscal year. This is primarily due to additional
corporate staffing, travel expenses and occupancy costs associated with the
merger.
Interest income decreased to $11,000 in the third quarter and to $155,000 in the
nine months of fiscal 1996 due to maturities of held-to-maturity investments
when compared to the same period of fiscal 1995.
The provision for income taxes for the nine months of fiscal 1996 was $43,000
compared to $51,000 for the comparable period of fiscal 1995. Tax provisions
were required for Federal alternative minimum tax and California state taxes due
to limitations on the use of California's loss carryforwards. The Company had
provided a valuation allowance against the deferred tax asset attributable to
the net operating losses due to uncertainties regarding the realization of these
assets.
9
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company had cash and short term investments of $1,478,000 as of April 27,
1996, compared to $3,491,000 as of July 29, 1995. Cash used for operating
activities of $610,000 related primarily to the Company's net loss after
adjusting for non-recurring charges. Cash used for investing activities
resulted primarily from the purchase of Old Amati, net of cash acquired of
$2,266,000 offset by the maturities of held-to-maturity investments of
$2,425,000. Cash provided by financing activities of $1,024,000 were from
proceeds of stock options exercised.
Currently, the Company has a bank line of credit for $1,200,000. The Company
anticipates that available cash reserves, along with its collaborative research
and development agreements and licensing contracts should be adequate to satisfy
capital requirements of the Company through the 1996 fiscal year. Establishment
of a capital lease line is underway and should be in place before the end of
fiscal 1996. The Company's future capital requirements will depend on many
factors, including sales levels, progress in research and development programs,
the establishment of collaborative agreements, and costs of manufacturing
facilities and commercialization activities.
It is likely that the Company will seek additional funding through collaborative
agreements or through public or private sale of securities prior to the
commercialization of Old Amati products. Old Amati's core technology is DMT, a
multicarrier modulation technology. The purpose of a modulation technology is
to transmit a signal over a given medium as efficiently as possible. The
Company is currently developing products to provide high speed digital video,
voice and data transmission over copper and coaxial cable media. The Company
believes that, in order to design and manufacture commercially acceptable
products, cost and performance improvements beyond what is available with
current technology will be necessary. Accordingly, the Company has assembled a
microelectronic team that is designing custom integrated semiconductor circuits
utilizing standard ASIC design systems and certain technologies beyond ASIC. The
Company intends to continue to invest in and expand this activity.
The Company had no material commitments for capital expenditures as of
April 27, 1996. It is the Company's policy to monitor the state of its
business, cash requirements, and capital structure.
RISK FACTORS
Any long-term viability, profitability and growth from the Company's technology
depends upon successful commercialization of products resulting from research
and development activities. Extensive additional research and development will
be required prior to commercialization of certain products.
There can be no assurance that the Company will be successful in developing ADSL
products that can be sold at prices low enough to be viable in the market.
Furthermore, there is no assurance that the Company's DMT technology will be
successful in obtaining the ANSI VDSL standard.
Competition in the telecommunications transmission business is expected to
increase. Most of the Company's competitors in the communications industry,
including major communications companies,
10
<PAGE>
are more established, benefit from greater market recognition and have greater
financial, technical, production and marketing resources than the Company.
There can be no assurance that developments by others will not render the
Company's products or technologies obsolete or noncompetitive or that
the Company will be able to keep pace with new technological developments.
The Company is largely dependent on systems integrators for the introduction of
its telecommunications products to field trials. There can be no assurance that
systems integrators will select the Company's products for field trials or, if
they do initially select the Company's products, that they will continue to
use them.
The Company expects that sales outside of the United States will represent a
significant portion of its future sales, especially of the Company's ADSL
products. Operations outside of the United States are subject to various risks,
including exposure to currency fluctuations, the imposition of governmental
controls, the need to comply with a wide variety of foreign and United States
export laws, political and economic instability, trade restrictions, changes in
tariffs and taxes, and longer payment cycles typically associated with
international sales.
Legislation recently passed by Congress significantly alters the regulations on
telephone companies and cable companies in the United States, and there can be
no assurance that such legislation will not adversely affect the
commercialization of the Company's telecommunications products.
The Company intends to outsource its manufacturing operations to independent
third party manufacturers. There can be no assurance that the Company's third
party manufacturers will provide adequate supplies of quality product on a
timely basis. The inability to obtain such products on a timely basis would
have a material adverse effect on the Company's business, operation results and
financial condition.
There can be no assurance that any patents owned or controlled by the Company
will provide commercially significant protection of the Company's technology or
ensure that the Company not be determined to infringe valid patents of others.
The Company's future capital requirements depend on many factors, including
sales levels, progress in research and development programs, establishment of
collaborative agreements, and costs of manufacturing and commercialization
activities. There can be no assurance that additional funding will be available
on acceptable terms, if at all. Stockholders and potential investors should
carefully consider the risks associated with the Company and should be aware
that these risks may negatively impact the Company's stock price.
11
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
REPORTS ON FORM 8-K
The Company did not file any reports on Form 8-K during the fiscal quarter ended
April 27, 1996.
12
<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.
AMATI COMMUNICATIONS CORPORATION
----------------------------------------
(Registrant)
Dated: June 7, 1996 /S/ JAMES STEENBERGEN
----------------------------------------
James Steenbergen
Director, President,
Chief Executive Officer and
Chief Financial Officer
Dated: June 7, 1996 /S/ TERRY MEDEL
----------------------------------------
Terry Medel
Controller, Treasurer, Secretary and
Chief Accounting Officer
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUL-27-1996
<PERIOD-START> JUL-30-1995
<PERIOD-END> APR-27-1996
<CASH> 1478
<SECURITIES> 0
<RECEIVABLES> 3238
<ALLOWANCES> 41
<INVENTORY> 1289
<CURRENT-ASSETS> 6919
<PP&E> 3813
<DEPRECIATION> 3079
<TOTAL-ASSETS> 7974
<CURRENT-LIABILITIES> 4354
<BONDS> 0
0
0
<COMMON> 3448
<OTHER-SE> 122
<TOTAL-LIABILITY-AND-EQUITY> 7974
<SALES> 9634
<TOTAL-REVENUES> 9634
<CGS> 5566
<TOTAL-COSTS> 5566
<OTHER-EXPENSES> 36050
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11
<INCOME-PRETAX> (31838)
<INCOME-TAX> 43
<INCOME-CONTINUING> (31881)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (31881)
<EPS-PRIMARY> (2.16)
<EPS-DILUTED> (2.16)
</TABLE>
