___________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM 10-Q
(Mark One)
/x/ Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.
For the quarterly period ended March 31, 1995
/ / 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: 0-11778
____________________
SEEQ TECHNOLOGY INCORPORATED
(Exact name of registrant as specified in its charter)
DELAWARE 94-2711298
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
47200 Bayside Parkway
Fremont, California 94538
(510) 226-7400
(Address, including zip code, of Registrant's principal
executive offices and telephone number, including area code)
____________________
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 __
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock, $0.01 par value 26,353,099
(Class of common stock) (Shares outstanding at
March 31, 1995)
___________________________________________________________________
This report on Form 10-Q, including all exhibits, contains 23
pages. The exhibit index is located on page 19-20.
1
<PAGE>
SEEQ TECHNOLOGY INCORPORATED
FORM 10-Q
Table of Contents
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements . . . . . . . . . . . . . . . . . 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . 17
Item 2. Changes in Securities . . . . . . . . . . . . . . . . 17
Item 3. Defaults upon Senior Securities . . . . . . . . . . . 18
Item 4. Submission of Matters to a Vote of Security Holders . 18
Item 5. Other Information . . . . . . . . . . . . . . . . . . 18
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . 18
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SEEQ TECHNOLOGY INCORPORATED
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
The Unaudited Consolidated Condensed Financial Statements of
SEEQ Technology Incorporated ("SEEQ" or the "Company") have been
prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission. These financial statements
reflect, in the opinion of management, all adjustments (which include
only normal recurring adjustments, except for those adjustments
related to certain restructuring and other expenses) necessary to
present fairly the financial position and results of operations as of
and for the periods indicated. 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.
For purposes of presentation, the Company has indicated its
fiscal quarters as ending on December 31, March 31, June 30 and
September 30; whereas, in fact, the Company operates on a 52/53-week
fiscal year ending on the last Sunday in September of each year. The
fiscal quarter ends are actually December 25, March 26, June 25 and
September 24 for fiscal 1995 and December 26, March 27, June 26, and
September 25 for fiscal 1994.
The accompanying consolidated condensed financial statements
should be read in conjunction with the financial statements and the
notes thereto included in the Company's Annual Report to Stockholders
for the fiscal year ended September 30, 1994.
The results of operations for the three month and six month
periods ended March 31, 1995 are not necessarily indicative of the
results expected for the year ending September 30, 1995.
3
<PAGE>
<TABLE>
SEEQ TECHNOLOGY INCORPORATED
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
<CAPTION>
Three months ended Six months ended
_______________________ ______________________
Mar. 31, Mar. 31, Mar. 31, Mar. 31,
1995 1994 1995 1994
________ ________ ________ _______
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenues $ 6,189 $ 4,292 $ 12,369 $ 10,120
Costs and expenses:
Cost of revenues 3,932 3,939 8,263 8,667
Research and development 809 1,072 1,644 1,812
Marketing, general and 1,017 2,803 1,872 4,862
administrative
Restructuring (benefit) (41) 3,391 (326) 3,391
and other, net
________ ________ _________ ________
Total costs and expenses 5,717 11,205 11,453 18,732
________ ________ _________ ________
Income (loss) from operations 472 (6,913) 916 (8,612)
Interest expense (108) (164) (195) (296)
Interest and other income, net 113 55 255 101
________ ________ _________ ________
Income (loss) before income taxes 477 (7,022) 976 (8,807)
Provision for income taxes 7 -- 12 --
________ ________ _________ ________
Net income (loss) $ 470 $ (7,022) $ 964 $ (8,807)
======== ======== ========= ========
Net income (loss) per share:
Primary $ 0.02 $ (0.29) $ 0.04 $ (0.39)
======== ======== ========= ========
Fully diluted $ 0.02 $ 0.03
======== =========
Shares used in per share calculation:
Primary 26,737 23,816 26,646 22,809
======== ======== ========= ========
Fully diluted 28,498 28,457
======== =========
See accompanying notes to consolidated condensed financial
statements.
</TABLE>
4
<PAGE>
<TABLE>
SEEQ TECHNOLOGY INCORPORATED
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands, except per share amounts)
<CAPTION>
Mar. 31, Sep. 30,
1995 1994
________ ________
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,204 $ 2,253
Restricted cash 3,000 3,000
Accounts receivable, less allowances 3,947 3,254
Inventories 2,918 2,138
Other current assets 328 950
________ ________
Total current assets 11,397 11,595
Property and equipment, net 1,410 1,299
Other assets 4,282 4,413
________ ________
Total assets $ 17,089 $ 17,307
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable to bank $ 3,000 $ 3,000
Accounts payable 3,853 3,185
Accrued salaries, wages and 727 786
employee benefits
Other accrued liabilities 1,504 2,824
Current portion of long-term obligations 667 892
________ ________
Total current liabilities 9,751 10,687
Long-term obligations 1,597 2,564
________ ________
Total liabilities 11,348 13,251
________ ________
Stockholders' equity:
Common stock, $0.01 par value;
40,000,000 shares authorized,
26,353,099 and 25,622,853 shares
outstanding 263 258
Additional paid-in capital 118,227 117,511
Accumulated deficit (112,749) (113,713)
________ ________
Total stockholders' equity 5,741 4,056
________ ________
Total liabilities and
stockholders' equity $ 17,089 $ 17,307
======== ========
See accompanying notes to consolidated condensed financial
statements.
</TABLE>
5
<PAGE>
<TABLE>
SEEQ TECHNOLOGY INCORPORATED
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
(In thousands)
<CAPTION>
Six months ended
Mar. 31, Mar. 31,
________ ________
1995 1994
(Unaudited)
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ 964 $ (8,807)
Adjustments to reconcile net income
(loss) to net cash provided by
(used for) operating activities:
Depreciation and amortization 350 680
(Benefit) provision for restructuring (326) 3,391
(Gain) loss on equipment disposal (34) 42
Forgiveness of officer loans -- 472
Changes in assets and liabilities:
Accounts receivable (693) 2,374
Inventories (780) (284)
Other current assets 622 370
Other assets 131 196
Accounts payable 668 (26)
Accrued salaries, wages and
employee benefits (59) 129
Other accrued liabilities (1,309) (1,473)
Other long-term obligations (232) (16)
________ ________
Net cash (used for)
operating activities (698) (2,952)
________ ________
INVESTING ACTIVITIES
Capital expenditures, net (228) (233)
Proceeds on disposal of equipment 45 1
________ ________
Net cash (used for) investing activities (183) (232)
________ ________
FINANCING ACTIVITIES
Payments of capital lease obligations (362) (1,017)
Proceeds from issuance of stock 194 4,814
________ ________
Net cash (used for) provided by
financing activities (168) 3,797
________ ________
Net (decrease) increase in cash
and cash equivalents (1,049) 613
Cash and cash equivalents at
beginning of period 2,253 774
________ ________
________ ________
Cash and cash equivalents at end of period $ 1,204 $ 1,387
======== ========
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Cash paid during the period for interest $ 218 $ 241
SUPPLEMENTAL DISCLOSURE OF
NON-CASH INVESTING ACTIVITY:
Stock acquired from EEPROM Asset Sale $ -- $ 5,000
Issuance of stock for settlement
of litigation $ 527 $ --
See notes to consolidated condensed financial statements.
</TABLE>
6
<PAGE>
SEEQ TECHNOLOGY INCORPORATED
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
1. RECENT EVENTS
SALE OF EEPROM ASSETS AND SEEQ COMMON STOCK TO ATMEL
Pursuant to the Asset Purchase Agreement dated February 7, 1994
(the "Asset Purchase Agreement"), by and between SEEQ and Atmel
Corporation ("Atmel"), Atmel purchased the assets of SEEQ related to
its electrically erasable programmable read only memory ("EEPROM")
products (the "EEPROM Asset Sale"). Under the terms of the Asset
Purchase Agreement, Atmel acquired all of SEEQ's rights in assets
related to SEEQ's EEPROM products, including intellectual property,
equipment, inventory and a portion of the accounts receivable. The
purchase price for such assets consisted of 135,593 shares of Atmel's
common stock and $481,632 in cash. In addition, Atmel assumed
certain liabilities under equipment leases for equipment used in
producing EEPROM products.
During the third quarter of fiscal 1994, SEEQ sold the 135,593
shares of Atmel common stock it received in the EEPROM Asset Sale for
total proceeds of $6,693,000, reflecting a gain on the sale of
$1,693,000. A significant portion of the proceeds from the stock
sale was deposited in two escrow accounts subject to claims of
indemnity by Atmel under the Asset Purchase Agreement. One escrow
account, which contained $600,000 (recorded as other current assets
at September 30, 1994), was subject to claims by Atmel with respect
to the equipment, inventory and accounts receivable sold to Atmel in
the EEPROM Asset Sale. Atmel asserted a claim for the full amount
deposited in this escrow account. SEEQ notified Atmel that it
disagreed with the claim. On January 30, 1995 the Company entered
into an agreement with Atmel to settle Atmel's claim. Under this
agreement, out of the $600,000 in the escrow account, $250,000 has
been distributed to Atmel and the remaining $350,000 has been
distributed to SEEQ. All interest earned on the funds in such escrow
account has been distributed proportionately between SEEQ and Atmel.
The second escrow account, which originally contained $4,329,000
(recorded as other assets), is subject to any future claims that may
be made by Atmel with respect to the EEPROM technology sold to Atmel
in the EEPROM Asset Sale. During the first quarter of fiscal 1995,
$300,000 was distributed to SEEQ from the second escrow account,
leaving approximately $4,100,000 on deposit therein. Atmel has
notified SEEQ that, based on certain claims asserted by Hualon
Microelectronics Corporation ("Hualon"), one of SEEQ's former
foundries and joint development partners, that SEEQ previously
granted Hualon certain license rights to the EEPROM technology, Atmel
believes it may be entitled to assert a claim against this escrow
account, although Atmel has not done so to date. The funds in this
escrow account will remain in escrow until February 1999, or until a
determination is made that SEEQ is entitled to such funds under any
release condition in the escrow agreement, or if Atmel makes a claim
prior to February 1999 under such escrow, then until such claim is
resolved by a court.
In connection with the EEPROM Asset Sale, Atmel acquired 3,614,701
shares of SEEQ's Common Stock pursuant to the Stock Purchase
Agreement dated February 7, 1994, representing approximately 14% of
SEEQ's outstanding shares of Common Stock as of such date. Such
shares were purchased at a price of $1.25 per share, for a total
purchase price of $4,518,376. The Company filed a registration
statement for these shares that became effective with the Securities
and Exchange Commission on March 24, 1995.
RESTRUCTURINGS
In fiscal 1992, the Company entered into a wafer fabrication
foundry agreement with International Microelectronics Products, Inc.
("IMP") which allows the Company to perform all of its preproduction
and process activities at outside foundries. As a result of the IMP
agreement, the Company made a decision to completely phase out its
fabrication operations and close its wafer manufacturing facility. In
fiscal 1993, certain litigation arose as a result of the Company's
decision to abandon its fabrication facility and the Company recorded
a reserve to offset its exposure. As more fully described below, this
litigation was settled during the second quarter of fiscal 1995.
7
<PAGE>
In connection with the EEPROM Asset Sale and the Company's
decision in the second quarter of fiscal 1994 to discontinue its end-
user Ethernet adapter board product line, the Company adopted a
restructuring plan. The following table summarizes the activities
under this restructuring plan during the six month period ended
March 31, 1995 (in thousands):
<TABLE>
<CAPTION>
(Increase)/Decrease
_________________________
Utilization
Reserve at of Reserve/ Reserve at
Sep. 30, Change in Payments Made Mar. 31,
1994 Estimate in the Period 1995
<S> <C> <C> <C> <C>
Facility lease, inventory and other
equipment costs $ (616) $ (55) $ 637 $ (34)
EEPROM Asset Sale restructuring:
EEPROM Asset Sale (55) (113) 168
Excess facilities (2,534) 842 826 (866)
Discontinued inventories (150) 20 12 (118)
Other costs (292) (329) 3 (618)
(3,031) 420 1,009 (1,602)
End-user Ethernet adapter board
product write-off:
Other costs -- (39) 39 --
Total $ (3,647) $ 326 $ 1,685 $ (1,636)
</TABLE>
Facility Lease, Inventory and Other Equipment Costs
During the quarter ended March 31, 1995, the Company entered
into a final settlement of a lawsuit previously filed against the
Company by GOCO Realty Fund I for rent and damages under a lease of
certain premises previously occupied by the Company which the Company
vacated in July 1992. The claims asserted in this lawsuit were
subsequently assigned to Brazos Partners L.P. ("Brazos"). The terms
of the settlement provided for the payment by the Company to Brazos
of $37,500, the issuance by the Company to Brazos of 375,000 shares
of its common stock, and the assignment by the Company to Brazos of
a $360,000 promissory note and the $75,000 security deposit on such
premises which were both due to the Company. As a result of the
settlement, all actions and related claims against the Company in
this action and other related actions have been dismissed. In
connection with the action and the proposed settlement thereof, the
Company had previously recorded certain reserves covering, among
other things, the proposed issuance of the shares of common stock.
The market price of the Company's common stock had increased during
the second quarter of fiscal 1995, and, as a result, the Company
recorded additional reserves of $122,000 to reflect the higher market
price of the common stock at the time of the final settlement of the
lawsuit. During the first six months of fiscal 1995, the Company
also sold equipment that had been previously written off and settled
certain associated equipment lease obligations, resulting in a
$67,000 reduction to its restructuring reserves. Upon settlement of
this lawsuit, the restructuring reserves totalling approximately
$637,000 were utilized, of which $37,500 represented the cash portion
paid in the settlement.
EEPROM Asset Sale Restructuring
In connection with the EEPROM Asset Sale, the Company incurred
certain restructuring costs or realized certain benefits during the
first six months of fiscal 1995 as follows:
8
<PAGE>
EEPROM ASSET SALE. One January 30, 1994 the Company and Atmel
entered into a settlement agreement to settle Atmel's claims made
against the $600,000 escrow previously established. Under the
settlement agreement, $250,000 was distributed to Atmel and the
remaining $350,000 was distributed to the Company. As a result, the
Company recorded a $195,000 charge. In addition, the Company sold
EEPROM inventory returned from distributors for approximately
$82,000.
EXCESS FACILITIES. The Company determined that its current
headquarters' office and manufacturing space was substantially in
excess of the space necessary to operate the Company's continued
business. Since the Company occupies these facilities under a lease
with a remaining term of approximately eight years, the Company
decided to sublease its facilities for the remaining term of the
lease. In fiscal 1994, the Company recorded reserves representing the
Company's estimate of the difference between the rent payable by the
Company under the lease and the anticipated rent payable to the
Company under the sublease. During the first quarter of fiscal 1995,
the Company sublet the entire facility in which its headquarters and
operations are currently located at a higher rental rate than
previously estimated, and as a result recorded an $842,000 reduction
to its restructuring reserves. The Company also recorded $663,000 of
facility lease payments and broker fees in connection with the
sublease. The remaining reserve on the vacated facility represents
the difference between the contractual lease expense and the sublease
income on the facility.
DISCONTINUED INVENTORIES. As a result of the EEPROM Asset Sale,
the Company discontinued certain inventories, and, in the first
quarter of fiscal 1995, the Company paid $12,000 to a foundry for
inventories.
OTHER COSTS. The Company recorded other costs, primarily
reflecting anticipated legal fees in connection with the litigation
against Hualon.
End-user Ethernet Adapter Board Product Write-off
During the quarter ended March 31, 1994, the Company
discontinued its end-user Ethernet adapter board product line.
During the first six months of fiscal 1995, the Company recorded as
other costs a reserve of $39,000 reflecting the settlement of certain
litigation relating to end-user Ethernet adapter board products.
2. BALANCE SHEET DETAIL
Inventories
Inventories are stated at the lower of cost or market. Cost is
determined on a first-in, first-out basis. Inventories consist of the
following:
<TABLE>
<CAPTION>
Mar. 31, Sep. 30,
1995 1994
________ ________
(in thousands)
<S> <C> <C>
Raw materials $ 70 $ 928
Work in process 1,570 1,162
Finished goods 1,278 48
$ 2,918 $ 2,138
</TABLE>
Property and Equipment
Property and equipment are stated at cost. Depreciation is
computed using the straight-line method over the estimated useful
lives of the assets, generally five years. Depreciation of leasehold
improvements is computed using the shorter of the remaining term of
the leases or the estimated useful lives of the improvements.
Depreciation for federal income tax purposes is computed using
accelerated methods.
9
<PAGE>
<TABLE>
<CAPTION>
Mar. 31, Sep. 30,
1995 1994
________ ________
(in thousands)
<S> <C> <C>
Property and equipment:
Machinery and equipment $ 6,449 $ 6,795
Furniture and fixtures 2,428 4,224
Leasehold improvements 317 195
Total property and equipment, at cost 9,194 11,214
Accumulated depreciation and amortization (7,784) (9,915)
Total property and equipment, net $ 1,410 $ 1,299
Net Income (Loss) Per Share
</TABLE>
Primary and fully diluted net income per common and common
equivalent share in the three and six month periods ended March 31,
1995 were determined using the modified treasury stock method. Under
the modified treasury stock method, certain adjustments can occur
with respect to both weighted average shares and net income amounts
utilized in the calculation of earnings per share. The modified
treasury stock method can result in different earnings per share than
those calculated using the treasury stock method. Under the modified
treasury stock method, all common equivalents are assumed exercised
whether dilutive or not, and the proceeds from the assumed exercise
are applied in steps. First, stock is assumed to be repurchased up to
a maximum of 20% of the actual outstanding shares. Net income is then
adjusted to reflect the effect of using the remaining proceeds
first to reduce debt and then to acquire U.S. Government
Securities. Fully diluted earnings per common and common equivalent
share is computed by adjusting the primary shares outstanding for the
effect on the common stock equivalents of using the quarter end close
price to compute the equivalent buyback.
Net loss per share for the three and six months periods ended
March 31, 1994 was computed using the weighted average number of
common shares outstanding during the respective period. Common stock
equivalents are not included because the effect is antidilutive.
Fully diluted net loss per share disclosures are not displayed for
the three and six month periods ended March 31, 1994 because they are
the same as primary net loss.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
Consolidated Condensed Financial Statements and Notes thereto and the
SEEQ Technology Incorporated Annual Report and Form 10-K for the
fiscal year ended September 30, 1994.
SALE OF EEPROM ASSETS AND SEEQ COMMON STOCK TO ATMEL
Pursuant to the Asset Purchase Agreement dated February 7, 1994
(the "Asset Purchase Agreement"), by and between SEEQ and Atmel
Corporation ("Atmel"), Atmel purchased the assets of SEEQ related to
its electrically erasable programmable read only memory ("EEPROM")
products (the "EEPROM Asset Sale"). Under the terms of the Asset
Purchase Agreement, Atmel acquired all of SEEQ's rights in assets
related to SEEQ's EEPROM products, including intellectual property,
equipment, inventory and a portion of the accounts receivable. The
purchase price for such assets consisted of 135,593 shares of Atmel's
common stock and $481,632 in cash. In addition, Atmel assumed
certain liabilities under equipment leases for equipment used in
producing EEPROM products.
During the third quarter of fiscal 1994, SEEQ sold the 135,593
shares of Atmel common stock it received in the EEPROM Asset Sale for
total proceeds of $6,693,000, reflecting a gain on the sale of
$1,693,000. A significant portion of the proceeds from the stock
sale was deposited in two escrow accounts subject to claims of
indemnity by Atmel under the Asset Purchase Agreement. One escrow
account, which contained $600,000 (recorded as other current assets
at September 30, 1994), was subject to claims by Atmel with respect
to the equipment, inventory and accounts receivable sold to Atmel in
the EEPROM Asset Sale. Atmel asserted a claim for the full amount
deposited in this escrow account. SEEQ notified Atmel that it
disagreed with the claim. On January 30, 1995 the Company entered
into an agreement with Atmel to settle Atmel's claim. Under this
agreement, out of the $600,000 in the escrow account, $250,000 has
been distributed to Atmel and the remaining $350,000 has been
distributed to SEEQ. All interest earned on the funds in such escrow
account has been distributed proportionately between SEEQ and Atmel.
The second escrow account, which originally contained $4,329,000
(recorded as other assets), is subject to any future claims that may
be made by Atmel with respect to the EEPROM technology sold to Atmel
in the EEPROM Asset Sale. During the first quarter of fiscal 1995,
$300,000 was distributed to SEEQ from the second escrow account,
leaving approximately $4,100,000 on deposit therein. Atmel has
notified SEEQ that, based on certain claims asserted by Hualon
Microelectronics Corporation ("Hualon"), one of SEEQ's former
foundries and joint development partners, that SEEQ previously
granted Hualon certain license rights to the EEPROM technology, Atmel
believes it may be entitled to assert a claim against this escrow
account, although Atmel has not done so to date. The funds in this
escrow account will remain in escrow until February 1999, or until a
determination is made that SEEQ is entitled to such funds under any
release condition in the escrow agreement, or if Atmel makes a claim
prior to February 1999 under such escrow, then until such claim is
resolved by a court.
In connection with the EEPROM Asset Sale, Atmel acquired
3,614,701 shares of SEEQ's Common Stock pursuant to the Stock
Purchase Agreement dated February 7, 1994, representing approximately
14% of SEEQ's outstanding shares of Common Stock as of such date.
Such shares were purchased at a price of $1.25 per share, for a total
purchase price of $4,518,376. The Company filed a registration
statement for these shares that became effective with the Securities
and Exchange Commission on March 24, 1995.
RESTRUCTURINGS
In fiscal 1992, the Company entered into a wafer fabrication
foundry agreement with IMP which allows the Company to perform all of
its preproduction and process activities at outside foundries. As a
result of the IMP agreement, the Company made a decision to
completely phase out its fabrication operations and close its wafer
manufacturing facility. In fiscal 1993, certain litigation arose as
a result of the Company's decision to abandon its fabrication
facility and the Company recorded a reserve to offset its exposure.
As more fully described below, this litigation was settled during the
second quarter of fiscal 1995.
11
<PAGE>
In connection with the EEPROM Asset Sale and the Company's
decision in the second quarter of fiscal 1994 to discontinue its end-
user Ethernet adapter board product line, the Company adopted a
restructuring plan. The following table summarizes the activities
under this restructuring plan during the six month period ended March
31, 1995 (in thousands):
<TABLE>
<CAPTION>
(Increase)/Decrease
___________________
Utilization
Reserve at of Reserve/ Reserve at
Sep. 30, Change in Payments Made Mar. 31,
1994 Estimate in the Period 1995
<S> <C> <C> <C> <C>
Facility lease, inventory and
other equipment costs $ (616) $ (55) $ 637 $ (34)
________ ________ ________ ________
EEPROM Asset Sale restructuring:
EEPROM Asset Sale (55) (113) 168 --
Excess facilities (2,534) 842 826 (866)
Discontinued inventories (150) 20 12 (118)
Other costs (292) (329) 3 (618)
________ ________ ________ ________
(3,031) 420 1,009 (1,602)
________ ________ ________ ________
End-user Ethernet adapter board
product write-off:
Other costs -- (39) 39 --
________ ________ ________ ________
Total $ (3,647) $ 326 $ 1,685 $ (1,636)
======== ======== ======== ========
</TABLE>
Facility Lease, Inventory and Other Equipment Costs
During the quarter ended March 31, 1995, the Company entered
into a final settlement of a lawsuit previously filed against the
Company by GOCO Realty Fund I for rent and damages under a lease of
certain premises previously occupied by the Company which the Company
vacated in July 1992. The claims asserted in this lawsuit were
subsequently assigned to Brazos Partners L.P. ("Brazos"). The terms
of the settlement provided for the payment by the Company to Brazos
of $37,500, the issuance by the Company to Brazos of 375,000 shares
of its common stock, and the assignment by the Company to Brazos of
a $360,000 promissory note and the $75,000 security deposit on such
premises which were both due to the Company. As a result of the
settlement, all actions and related claims against the Company in
this action and other related actions have been dismissed. In
connection with the action and the proposed settlement thereof, the
Company had previously recorded certain reserves covering, among
other things, the proposed issuance of the shares of common stock.
The market price of the Company's common stock had increased during
the second quarter of fiscal 1995, and, as a result, the Company
recorded additional reserves of $122,000 to reflect the higher market
price of the common stock at the time of the final settlement of the
lawsuit. During the first six months of fiscal 1995, the Company
also sold equipment that had been previously written off and settled
certain associated equipment lease obligations, resulting in a
$67,000 reduction to its restructuring reserves. Upon settlement of
this lawsuit, the restructuring reserves totalling approximately
$637,000 were utilized, of which $37,500 represented the cash portion
paid in the settlement.
EEPROM Asset Sale Restructuring
In connection with the EEPROM Asset Sale, the Company incurred
certain restructuring costs or realized certain benefits during the
first six months of fiscal 1995 as follows:
EEPROM ASSET SALE. One January 30, 1994 the Company and Atmel
entered into a settlement agreement to settle Atmel's claims made
against the $600,000 escrow previously established. Under the
12
<PAGE>
settlement agreement, $250,000 was distributed to Atmel and the
remaining $350,000 was distributed to the Company. As a result, the
Company recorded $195,000 charge. In addition, the Company sold
EEPROM inventory returned from distributors for approximately
$82,000.
EXCESS FACILITIES. The Company determined that its current
headquarters' office and manufacturing space was substantially in
excess of the space necessary to operate the Company's continued
business. Since the Company occupies these facilities under a lease
with a remaining term of approximately eight years, the Company
decided to sublease its facilities for the remaining term of the
lease. In fiscal 1994, the Company recorded reserves representing the
Company's estimate of the difference between the rent payable by the
Company under the lease and the anticipated rent payable to the
Company under the sublease. During the first quarter of fiscal 1995,
the Company sublet the entire facility in which its headquarters and
operations are currently located at a higher rental rate than
previously estimated, and as a result recorded an $842,000 reduction
to its restructuring reserves. The Company also recorded $663,000 of
facility lease payments and broker fees in connection with the
sublease. The remaining reserve on the vacated facility represents
the difference between the contractual lease expense and the sublease
income on the facility.
DISCONTINUED INVENTORIES. As a result of the EEPROM Asset Sale,
the Company discontinued certain inventories, and, in the first
quarter of fiscal 1995, the Company paid $12,000 to a foundry for
inventories.
OTHER COSTS. The Company recorded other costs, primarily
reflecting anticipated legal fees in connection with the litigation
against Hualon.
End-user Ethernet Adapter Board Product Write-off
During the quarter ended March 31, 1994, the Company
discontinued its end-user Ethernet adapter board product line.
During the first six months of fiscal 1995, the Company recorded as
other costs a reserve of $39,000 reflecting the settlement of certain
litigation relating to end-user Ethernet adapter board products.
RESULTS OF OPERATIONS
Revenues
Net sales were $6,189,000 in the second quarter of fiscal 1995
and $12,369,000 for the six month period ended March 31, 1995,
representing an increase of $1,897,000 compared to the second quarter
of fiscal 1994 and $2,249,000 compared to the six month period ended
March 31, 1994, respectively. Since the EEPROM Asset Sale on
February 7, 1994, the Company has derived its sales exclusively from
the sale of data communication products. Consequently, there were no
EEPROM sales for the six month period ended March 31, 1995 compared
to EEPROM sales of $603,000 in the second quarter of fiscal 1994 and
$3,035,000 for the six month period ended March 31, 1994. Local area
network ("LAN") integrated circuit sales were $4,375,000 in the
second quarter of fiscal 1995, an increase compared to the second
quarter of fiscal 1994 by $964,000 as a result of an 80% increase in
average selling prices, partially offset by a 14% decrease in unit
sales. LAN integrated circuit sales were $8,430,000 for the six
month period ended March 31, 1995, an increase compared to the six month
period ended March 13, 1994 by $2,387,000 as a result of a 32%
increase in average selling prices and a 6% increase in unit sales.
The increases in average selling prices of LAN integrated circuits
during the second quarter and first six months of fiscal 1995 were
primarily a result of a change in product mix to higher priced
products. LAN subsystem product sales were $1,814,000 in the second
quarter of fiscal 1995 and $3,940,000 for the six month period ended
March 31, 1995, representing an increase of $931,000 compared to the
second quarter of fiscal 1994 and $2,899,000 compared to the six
month period ended March 31, 1994, respectively. The increases in LAN
subsystem product sales for the three and six month periods ended
March 31, 1995 were due solely to shipments of proprietary
transceiver products to Apple Computer which began in March 1994. As
previously disclosed by the Company, Apple Computer ceased ordering
the proprietary transceiver products as it began manufacturing its
own internally developed products in April 1995. The Company has
received orders for its LAN integrated
13
<PAGE>
circuits which will be subassembled into Apple Computer's proprietary
transceiver products. The Company is actively marketing its LAN
integrated circuits to Apple Computer for other data communication
applications. The proprietary transceiver product sales to Apple
Computer represented 29% and 32% of the Company's revenues for the
second quarter of fiscal 1995 and the six months ended March 31,
1995, respectively. Although the Company believes that it will be
able to substantially replace such sales with sales of LAN integrated
circuits to Apple Computer, additional sales of the Company's
existing product line to other customers, and sales of new products,
there can be no assurance that the Company will be successful in
doing so.
Gross Product Margins
The Company includes in cost of sales all costs associated with
the subcontract manufacturing, electrical test, subcontract assembly
and final test of its integrated circuits and subsystems,
warehousing, shipping, product returns and reserves for inventory
obsolescence. Allowances for product returns are deducted from sales
revenues. The Company recorded a gross profit of $2,257,000 in the
second quarter of fiscal 1995 compared to a gross profit of $353,000
in the second quarter of fiscal 1994 and a gross profit of $4,106,000
for the six month period ended March 31, 1995 compared to a gross
profit of $1,453,000 for the six month period ended March 31, 1994,
primarily as a result of a favorable change in product mix towards
sales of products with higher gross margins and the discontinued
sales of the lower margin EEPROMs as a result of the EEPROM Asset
Sale. As a result of the EEPROM Asset Sale in the second quarter of
fiscal 1994, the Company substantially reduced its work force,
reduced its facility requirements and eliminated its lower margin
products during the second quarter of fiscal 1994. Gross margins in
future periods will be affected primarily by sales levels and product
mix, average selling prices, wafer yields, the introduction of new
products and improvements in manufacturing costs.
Research and Development
Research and development expenditures decreased from $1,072,000
in the second quarter of fiscal 1994 to $809,000 in the second
quarter of fiscal 1995, and from $1,812,000 in the six month period
ended March 31, 1994 to $1,644,000 in the six month period ended
March 31, 1995, and decreased as a percentage of net sales from 25%
to 13% and from 18% to 13% for the same periods, respectively, as a
result of termination of personnel, the elimination of engineering
subcontracting and equipment expenses associated with EEPROM products
from the EEPROM Asset Sale. The Company expects that the level of
research and development spending will increase in absolute dollars
in the next several quarters as a result of increased development
efforts on new LAN products, but may vary as a percentage of net
sales.
Marketing, General and Administrative Expenses
Marketing, general and administrative expenses decreased from
$2,803,000 in the second quarter of fiscal 1994 to $1,017,000 in the
second quarter of fiscal 1995, and from $4,862,000 in the six month
period ended March 31, 1994 to $1,872,000 in the six month period
ended March 31, 1995, and decreased as a percentage of sales from 65%
to 18% and from 48% to 15% for the same periods, respectively. These
decreases were attributable primarily to a decrease in payroll,
selling and administrative expenses after the Company substantially
reduced its work force and terminated operations of sales offices no
longer needed after the EEPROM Asset Sales. The Company anticipates
that the level of marketing, general and administrative expenses will
remain at similar levels in absolute dollars in future quarters
during the remainder of this fiscal year, but are expected to vary as
a percentage of net sales.
Interest Expense
Interest expense decreased from $164,000 in the second quarter
of fiscal 1994 to $108,000 in the second quarter of fiscal 1995 and
decreased from $296,000 in the six month period ended March 31, 1994 to
$195,000 in the six month period ended March 31, 1995, primarily due
to a decrease in equipment lease line financing as a result of
terminated leases associated with EEPROM equipment sold after the
EEPROM Asset Sale, offset partially by an increase in interest paid
under the Company's bank credit line as a result of higher interest
rates.
14
<PAGE>
Interest Income and Other, Net
Interest income and other, net increased from $55,000 in the
second quarter of fiscal 1994 to $113,000 in the second quarter of
fiscal 1995 and increased from $101,000 in the six month period ended
March 31, 1994 to $255,000 for the six month period ended March 31,
1995 due to an increase in interest earned on excess cash balances,
restricted cash and cash held in escrow invested in short-term
investment instruments as a result of higher interest rates and
higher average cash balances.
Income Taxes
The Company's provision for income taxes for the first six
months of fiscal 1995 was computed by applying the estimated annual
effective tax rate to income before taxes.
Factors Affecting Future Operating Results
The semiconductor industry is highly cyclical. The industry is
characterized by rapid technological change, fluctuations in end-user
demand and price erosion. Accordingly, a particular company's
operating results may be affected not only by industry-wide demand,
but also by timely introduction of new products, market acceptance of
competitive products, price competition and the distribution channels
for its products. The Company's future quarterly operating results
may also fluctuate as a result of other Company specific factors,
such as price competition for mature products, growth of the Ethernet
LAN segment of the electronics market and acceptance of the Company's
newly introduced products for that market segment, variation in
manufacturing yields for its products, significant expenditures for
new products and process development, and dependence on certain
customer product shipment demands. With specific reference to
customer product shipment demands, the increase in LAN subsystem
product sales for the first quarter of fiscal 1995 was primarily due
solely to shipments of proprietary transceiver products to Apple
Computer which began in March 1994. Orders for the proprietary
transceiver products previously sold to Apple Computer ceased in the
second quarter of fiscal 1995 as Apple Computer began manufacturing
its own internally developed product. The Company is actively
marketing its LAN integrated circuits to Apple Computer for the
transceiver products and other data communication applications. The
proprietary transceiver products shipments represented 32% of the
Company's revenues for the first six months ended March 31, 1995.
The Company cannot predict the long term future requirements of Apple
Computer with any degree of certainty. Due to the foregoing and
other factors, past results may not be indicative of future results.
In addition, the securities of many high-technology companies
have historically been subject to extreme price and volume
fluctuations. The Company may be subject to these same fluctuations
which may adversely affect the market price of the Company's common
stock.
LIQUIDITY AND CAPITAL RESOURCES
The Company has satisfied its cash requirements principally
through the public and private sale of securities, cash flow from
operations and borrowings under bank lines of credit and capital
lease financing.
Management believes that existing sources of liquidity,
anticipated cash flow from operations, and borrowings under the
Company's credit facility will be adequate to satisfy its cash
requirements at least through the end of fiscal 1995. However, there
can be no assurance that the Company will have adequate resources to
satisfy such requirements. It may become necessary for the Company to
raise funds from debt and/or equity financing. There can be no
assurance that such funds will be available on terms acceptable to
the Company, if at all.
The Company's cash and cash equivalents balance decreased from
$2,253,000 as of September 30, 1994 to $1,204,000 as of March 31,
1995, primarily as a result of paying restructuring obligations,
including real estate commissions incurred in the sublease of its
previous headquarters building in Fremont, California, by paying for
tenant improvements in its newly subleased headquarters building, by
purchasing by the Company of inventory
15
<PAGE>
in the six month period ended March 31, 1995 in anticipation of
higher levels of shipments and by an increase in accounts receivables
during the same period, offset partially by funds provided by the
settlement with Atmel to settle Atmel's claims made against an escrow
account previously established in connection with the EEPROM Asset
Sale.
In connection with the EEPROM Asset Sale, the Company received
$4,917,000 in proceeds from the issuance and sale of its common stock
to Atmel. In November 1993, the Company entered into a two-year line
of credit agreement with The CIT Group ("CIT"). Although the Company
was not required to make use of the bank line of credit, during the
second quarter of fiscal 1994 it used cash resources to reduce its
effective short-term credit borrowings interest rate by borrowing the
minimum required borrowings of $3,000,000 under a secured bank line
of credit with CIT, and investing the proceeds in a short-term
certificate of deposit. The revolving credit facility is secured by
the assets of the Company and requires the Company to maintain
certain restrictive and financial covenants, including covenants
requiring the Company to maintain working capital of $750,000 and a
net worth of $3,000,000, and prohibiting the Company from incurring
or agreeing to incur capital expenditures of in excess of $1,200,000
in any fiscal year. The Company is currently in compliance with such
covenants. Interest on borrowings is payable at the lender's
reference prime rate plus 2.25% per annum, with a minimum quarterly
interest charge based on average borrowings of $3,000,000, and is
payable monthly. The credit facility has an initial term of two years
and is subject to renewal thereafter.
Operating Activities
Cash flows used for operating activities decreased from
$2,952,000 in the six month period ended March 31, 1994 to $698,000
in the six month period ended March 31, 1995, due primarily to the
profits generated by the Company in the first six months of fiscal
1995 as compared to the loss, net of provisions for restructuring,
incurred in the first six months of fiscal 1994.
Investing Activities
Cash flows used for investing activities decreased from $232,000
in the six month period ended March 31, 1994 to $183,000 in the six
month period ended March 31, 1995, primarily as a result of a
decrease in cash invested for capital expenditures from $233,000 to
$228,000 for the same periods, respectively. The decrease in cash
flows used for investing activities was also due to cash provided by
proceeds on disposal of equipment of $45,000 in the first six months
of fiscal 1995. The Company anticipates an increase in capital
expenditures in future periods associated with test operations and
its research and development activities.
Financing Activities
Cash flows used for financing activities were $168,000 in the
six month period ended March 31, 1995 compared to cash flows provided
by financing activities of $6,797,000 in the six month period ended
March 31, 1994. In the six month period ended March 31, 1995, the
Company made payments on capital lease obligations totaling $362,000,
offset partially by proceeds from the issuance of stock of $194,000.
In the six month period ended March 31, 1994 cash flows provided by
financing activities included an increase of $3,000,000 in short-term
borrowings under a bank line of credit with CIT and proceeds from the
issuance of stock of $4,814,000. The Company also made payments on
capital lease obligations totaling $1,017,000 in the six month period
ended March 31, 1994.
16
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
GOCO REALTY FUND I V. SEEQ TECHNOLOGY INCORPORATED (filed on
March 30, 1994 in the United States District Court for the Northern
District of California in San Francisco, California, Case No. C94
1075SAW). On March 30, 1994 the Company filed a lawsuit in the
United States District Court for the Northern District of California
against Hualon ("Hualon"), one of the Company's former foundries and
joint development partners. In the lawsuit, the Company originally
sought injunctive relief from the court to prevent Hualon from using
certain of the nonvolatile memory technology sold by the Company to
Atmel pursuant to the Asset Purchase Agreement, to which Hualon has
asserted certain license rights under an alleged license agreement.
In response to the Company's claims, Hualon asserted affirmative
defenses and counterclaims seeking a declaration by the court that
the alleged license agreement is valid and seeking specific
performance of the alleged license agreement and other agreements
previously entered into by the two parties. Hualon filed a motion
for summary judgment and the Company's initial claim was subsequently
dismissed by the court. Hualon has subsequently amended its counter
claims to include additional claims in the proceeding, including
claims for damages for breach of, and for money owed pursuant to,
other agreements between the Company and Hualon. The Company has
subsequently amended its original complaint to include a number of
additional claims against Hualon, including claims for damages for
breach of, and for money owed pursuant to, such other agreements. On
April 27, 1995, Hualon filed a motion for summary judgment with the
court seeking a determination that SEEQ's claims for rescission or
reformation of the alleged license agreement are without merit.
Under the terms of one of the escrow agreements entered into with
Atmel in connection with the EEPROM Asset Sale, under which
$4,105,859 is currently on deposit in escrow, the Company will be
entitled to receive such funds if it is determined that the alleged
license agreement is invalid, or, if no such determination is made,
to the extent that any claims made by Atmel that Atmel has suffered
damages as a result of the alleged license agreement are
unsuccessful, if Atmel fails to make a claim to such funds by
February 1999, or as otherwise agreed by the Company and Atmel. The
Company intends to vigorously prosecute its claims in this lawsuit
and to defend claims made by Hualon. The Company believes that
its claims and defenses in this lawsuit are meritorious. However,
there can be no assurance as to the possible outcome of this
proceeding. In the event that the Company is not successful in
invalidating the alleged license agreement, Atmel may assert a claim
against the Company under the Asset Purchase Agreement, including a
claim for damages, if suffered by Atmel as a result of Hualon's use
of any of such technology, and, in the event any such claim by Atmel
is determined to be valid, Atmel may recover any such damages from
the escrow described above. The Company believes that, in the event
of any claim by Atmel, the amount of damages that may be payable by
the Company upon a resolution thereof will not have a material
adverse effect on the Company's cash flow, financial position or
results of operations. However, there can be no assurance as to such
matters.
GOCO REALTY FUND V. SEEQ TECHNOLOGY INCORPORATED (filed on
September 4, 1992 in the Superior Court of California in and for the
County of Santa Clara, Case No. 724371). On September 4, 1992, an
action was filed against the Company by GOCO Realty Fund I, a
previous landlord, for rent and damages under a lease of the premises
previously occupied by the Company. The Company vacated the premises
in July 1992. The claims asserted in this action were subsequently
assigned to Brazos Partners L.P. ("Brazos"). During the quarter
ended March 31, 1995, the Company entered into a final settlement of
the action. The terms of the settlement provided for the payment by
the Company to Brazos of $37,000, the issuance by the Company to
Brazos of 375,000 shares of its common stock, and the assignment by
the Company to plaintiff of a $360,000 promissory note and the
$75,000 security deposit on such premises which were both due to the
Company. As a result of the settlement, all actions and related
claims against the Company in this action and other related actions
have been dismissed.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
17
<PAGE>
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On March 24, 1995 an Annual Meeting of Stockholders was held.
The following Directors were elected at this meeting:
Alan V. Gregory
Charles C. Harwood
Phillip J. Salsbury
Peter C. Chen
Other matters voted upon:
Votes
Affirmative Negative Abstain
Ratify the appointment of
Price Waterhouse LLP as
independent accounts of 21,174,520 36,260 77,100
the Company for fiscal
year ending September 24,
1995
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: For a list of exhibits to this Form 10-Q see
the exhibit index located on pages 19-20.
(b) Reports on Form 8-K: None.
18
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION OF DOCUMENT
3.1 Certificate of Incorporation (incorporated herein by
reference to Registrant's Registration on Form S-1 (Registration
No. 33-47985)).
3.2 Bylaws (incorporate herein by reference to Registrant's
Registration on Form S-1 (Registration No. 33-47985)).
4.1 Rights Agreement dated as of April 21, 1995 between the
Company and American Stock Transfer and Trust Company, including
exhibits thereto (incorporated herein by reference to Registrant's
Form 8-A on May 2, 1995).
10.1 Form of Indemnification Agreement with Directors and
Officers (incorporated herein by reference to Registrant's Form 8-B
filed on June 2, 1987).
10.2 Executive Compensation Plans and Arrangements.
10.2.1 Restated Periodic Purchase Plan, as amended (incorporated
herein by reference to Registrant's annual report on Form 10-K for
the fiscal year ended September 30, 1991).
10.2.2 Notice of Periodic Purchase Plan Offerings (incorporated
herein by reference to Registrant's Form S-8 Registration
Statement (Registration No. 33-27419 filed on March 7, 1989).
10.2.3 Restated 1982 Stock Option Plan, as amended (incorporated
herein by reference to Registrant's Form S-8 Registration Statement
(Registration No. 33-6544) filed on July 2,1993).
10.2.4 1989 Non-Employee Director Stock Option Plan
(incorporated herein by reference to Registrant's Form S-8
Registration Statement (Registration No. 33-35838) filed on
July 11, 1990).
10.2.5 Kodiak Technology Incorporated 1989 Stock Option Plan,
and related Stock Option and Stock Purchase Agreement (incorporated
herein by reference to Registrant's annual report on Form 10-K for
the fiscal year ended September 30, 1989).
10.2.6 Separation Agreement dated as of October 1, 1993, between
the Company and J. Daniel McCranie (incorporated herein by
reference to Registrant's Annual Report on Form
10-K for the fiscal year ended September 30, 1994)).
10.2.7 Separation Agreement dated as of March 4, 1994, between
the Company and Michael E. Villott (incorporated herein by
reference to Registrant's annual Report on Form 10-K for the fiscal
year ended September 31, 1994).
10.3 Build to Suit Lease dated as of October 15, 1982, as
amended ("1982 Lease"), between the Company and David W. Mariani
Investment Partnership dba Mariani Financial Co. (incorporated
herein by reference to Registrant's Annual Report on Form 10-K for
the fiscal year ended September 30, 1986).
10.4 Stock Purchase Agreement dated as of July 16 , 1990
between the Company and Hualon Microelectronics Corporation
(incorporated herein by reference to Registrant's Quarterly Report
on Form 10-Q for the period ended June 30, 1990).
10.5 Technology Transfer and Foundry Agreement dated as of
July 16, 1990 between the Company and Hualon Microelectronics
Corporation (subject to confidential treatment) (incorporated
herein by reference to Registrant's Quarterly Report on Form 10-Q
for the period ended June 30, 1990).
10.6 Business Loan Agreement with Silicon Valley Bank dated as
of August 2, 1991 (incorporated herein by reference to
Registrant's Annual Report on Form 10-K for the fiscal year ended
September 30, 1991).
10.7 Amendment to Business Loan Agreement with Silicon Valley
Bank as of February 24, 1993 (incorporated herein by reference to
Registrant's Registration Statement on Form S-1 (Registration No.
33-47985)).
10.8 Warrant Purchase Agreement dated as of August 2, 1991
with Silicon Valley Bank and warrant issued pursuant thereto
(incorporated herein by reference to Registrant's Annual Report on
Form 10-K for the fiscal year ended September 30, 1991).
19
<PAGE>
EXHIBIT NO. DESCRIPTION OF DOCUMENT
10.9 Foundry Agreement dated as of November 15, 1991 between
the Company and International Microelectronic Products Inc.
(subject to request for confidential treatment)(incorporated herein
by reference to Registrant's Annual report on Form 10-K for the
fiscal year ended September 30, 1991).
10.10 Loan and Security Agreement with CIT Group/Credit
Finance, Inc. dated November 22, 1993 (incorporated herein by
reference to Registrant's Annual Report on Form 10-K for the fiscal
year ended September 30, 1993).
10.11 Warrant Agreement dated January 29, 1992 between the
Company and certain stockholders (incorporated by reference herein
to Registrant's Registration Statement on Form S-1 (Registration
No. 33-64822)).
10.12 Warrant Agreement dated April 27, 1993 between the
Company and certain stockholders (incorporated by reference herein
to Registrant's Registration Statement on Form S-1 (Registration
No. 33-64822)).
10.13 Form of Warrant issued by the Company to certain
stockholders on July 30, 1993 (incorporated by reference herein to
Registrant's Registration Statement on Form S-1 (Registration No.
33-64822)).
10.14 Stock Purchase Agreement and Exhibits thereto dated
January 10, 1992 between the Company and certain stockholders
(incorporated by reference herein to Registrant's Registration
Statement on Form S-1 (Registration No. 33-64822)).
10.15 Asset Purchase Agreement dated February 7, 1994 between
the Company and Atmel Corporation (incorporated by reference to the
Company's Form 8-K dated February 7, 1994).
10.16 Stock Purchase Agreement dated February 7, 1994 between
the Company and Atmel Corporation (incorporated by reference to the
Company's Form 8-K dated February 7, 1994).
10.17 Escrow Agreement dated February 7, 1994 between the
Company, Atmel Corporation and Wilson, Sonsini, Goodrich & Rosati,
P.C. (incorporated by reference to the Company's Form 8-K dated
February 7, 1994).
10.18 Escrow Agreement dated April 14, 1994 between the
Company, Atmel and Bank of America NT&SA (incorporated by reference
to the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1994).
11.1 Schedule of Computation of Earnings Per Share.
27.1 Financial Data Schedule.
20
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned thereunto duly authorized.
SEEQ TECHNOLOGY INCORPORATED
(Registrant)
Dated: May 10, 1995 By: Phillip J. Salsbury
President and
Chief Executive Officer
By: Ralph J. Harms
Vice President, Finance
and Administration, Chief
Financial Officer and Secretary
21
<PAGE>
SEEQ TECHNOLOGY INCORPORATED
EXHIBIT 11.1
SCHEDULE OF COMPUTATION OF EARNINGS PER SHARE
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three months ended Six months ended
______________________ ______________________
Mar. 31, Mar. 31, Mar. 31, Mar. 31,
1995 1994 1995 1994
________ ________ ________ ________
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
PRIMARY
Earnings:
Net income (loss) $ 470 $ (7,022) $ 964 $ (8,807)
Add interest expense reduction
(as determined by the modified
treasury stock method) 12 -- 64 --
________ ________ ________ ________
As adjusted $ 482 $ (7,022) $ 1,028 $ (8,807)
Shares:
Number of common shares
outstanding 26,353 23,816 26,353 22,809
Add effect of dilutive
options and warrants
(as determined by the
modified treasury
stock method) 384 -- 293 --
________ ________ ________ ________
As adjusted 26,737 23,816 26,646 22,809
======== ======== ======== ========
Primary earnings per share $ 0.02 $ (0.29) $ 0.04 $ (0.39)
======== ======== ======== ========
FULLY DILUTED
Earnings:
Net income $ 470 $ 964
======== =========
Shares:
Number of common shares
outstanding 26,353 26,353
Add incremental effect of
dilutive options and
warrants (as determined
by the modified treasury
stock method) 2,144 2,104
________ ________
As adjusted 28,497 28,457
======== =========
Fully diluted earnings per share $ 0.02 $ 0.03
======== =========
22
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000702756
<NAME> SEEQ TECHNOLOGY INC.
<MULTIPLIER> 1000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> JAN-1-1995
<PERIOD-END> MAR-31-1995
<EXCHANGE-RATE> 1
<CASH> 1,204
<SECURITIES> 0
<RECEIVABLES> 3,947
<ALLOWANCES> 0
<INVENTORY> 2,918
<CURRENT-ASSETS> 11,397
<PP&E> 1,410
<DEPRECIATION> 0
<TOTAL-ASSETS> 17,089
<CURRENT-LIABILITIES> 9,751
<BONDS> 0
<COMMON> 26,353,099
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 17,089
<SALES> 6,189
<TOTAL-REVENUES> 6,189
<CGS> 3,932
<TOTAL-COSTS> 5,717
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 108
<INCOME-PRETAX> 477
<INCOME-TAX> 7
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 470
<EPS-PRIMARY> $0.02
<EPS-DILUTED> $0.02
</TABLE>
