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 June 30, 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
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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 28,686,768
(Class of common stock) (Shares outstanding at
June 30, 1995)
-----------------------------------------------------------------
This report on Form 10-Q, including all exhibits, contains
22 pages. The exhibit index is located on page 19.
1
<PAGE>
SEEQ TECHNOLOGY INCORPORATED
FORM 10-Q
Table of Contents
Page
PART I. FINANCIAL INFORMATION................................. 3
Item 1. Financial Statements................................. 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................. 11
PART II. OTHER INFORMATION................................... 17
Item 1. Legal Proceedings.................................... 17
Item 2. Changes in Securities................................ 17
Item 3. Defaults upon Senior Securities...................... 17
Item 4. Submission of Matters to a Vote of Security Holders.. 17
Item 5. Other Information.................................... 17
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 nine
month periods ended June 30, 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 Nine months ended
June 30, June 30, June 30, June 30,
1995 1994 1995 1994
___________________________ _________________________
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenues $5,353 $5,943 $17,722 $16,062
Costs and expenses:
Cost of revenues 3,331 3,446 11,594 12,114
Research and development 740 794 2,384 2,606
Marketing, general and administrative 1,028 1,219 2,900 6,081
Restructuring (benefit) and other, net (73) 1,664 (399) 5,055
______ ______ _______ _______
Total costs and expenses 5,026 7,123 16,479 25,856
______ ______ _______ _______
Income (loss) from operations 327 (1,180) 1,243 (9,794)
Interest expense (118) (72) (313) (367)
Interest and other income, net 113 32 368 133
Gain on sale of stock - 1,693 - 1,693
______ ______ _______ _______
Income (loss) before income taxes 322 473 1,298 (8,335)
Provision for income taxes 1 - 13 -
______ ______ _______ _______
Net income (loss) $321 $473 $1,285 $(8,335)
====== ====== ======= =======
Net income (loss) per share:
Primary $0.01 $0.02 $0.05 $(0.35)
====== ====== ======= =======
Fully diluted $0.01 $0.04
====== =======
Shares used in per share calculation:
Primary 30,287 25,788 27,365 23,777
====== ====== ======= =======
Fully diluted 31,629 30,182
====== =======
See accompanying notes to consolidated condensed financial statements.
4
</TABLE>
<PAGE>
<TABLE>
SEEQ TECHNOLOGY INCORPORATED
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands except per share amounts)
<CAPTION>
June 30, Sep. 30,
1995 1994
________ ________
(Unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $2,221 $2,253
Restricted cash 3,000 3,000
Accounts receivable, less allowances 4,469 3,254
Inventories 2,538 2,138
Other current assets 485 950
________ ________
Total current assets 12,713 11,595
Property and equipment, at cost 8,310 11,214
Accumulated depreciation and amortization (6,671) (9,915)
________ ________
Property and equipment, net 1,639 1,299
Other assets 4,349 4,413
________ ________
Total assets $18,701 $17,307
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Note payable to bank $3,000 $3,000
Accounts payable 2,458 3,185
Accrued salaries, wages and employee benefits 767 786
Other accrued liabilities 1,212 2,824
Current portion of long-term obligations 371 892
________ ________
Total current liabilities 7,808 10,687
Long-term obligations 1,638 2,564
________ ________
Total liabilities 9,446 13,251
________ ________
Stockholders' equity:
Common stock, $0.01 par value; 40,000,000 shares
authorized, 28,686,768 and 25,799,535 shares
outstanding 287 258
Additional paid-in capital 121,396 117,511
Accumulated deficit (112,428) (113,713)
Total stockholders' equity 9,255 4,056
________ ________
Total liabilities and stockholders' equity $18,701 $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>
Nine months ended
June 30, June 30,
1995 1994
________ ________
(Unaudited)
<S> <C> <C>
Operating Activities
Net income (loss) $1,285 $(8,335)
Adjustments to reconcile net income (loss)
to net cash used for operating activities:
Depreciation and amortization 525 876
Gain on sale of stock held in escrow - (1,195)
(Benefit) provision for restructuring (399) 5,055
(Gain) loss on equipment disposal (19) 24
Forgiveness of officer loans - 472
Changes in assets and liabilities:
Accounts receivable (1,215) 2,526
Inventories (400) 1,539
Other current assets 465 343
Other assets 64 267
Accounts payable (727) (1,141)
Accrued salaries, wages and
employee benefits (19) (100)
Other accrued liabilities (1,528) (2,094)
Other long-term obligations (451) (219)
________ ________
Net cash (used for) operating activities (2,419) (1,982)
________ ________
Investing Activities
Capital expenditures, net (648) (280)
Proceeds on disposal of equipment 46 98
________ ________
Net cash (used for) investing activities (602) (182)
Financing Activities
Payments of capital lease obligations (398) (1,108)
Proceeds from issuance of stock 3,387 4,907
________ ________
Net cash (used for) provided by financing activities 2,989 3,799
________ ________
Net (decrease) increase in cash and cash equivalents (32) 1,635
Cash and cash equivalents at beginning of period 2,253 774
________ ________
Cash and cash equivalents at end of period $2,221 $2,409
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $313 $357
Supplemental disclosure of non-cash investing
and financing activity:
Stock held in escrow sold for cash held in escrow - $4,929
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. 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 $4,029,000 on deposit
therein as of June 30, 1995 (excluding interest earned to date).
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 effec-
tive with the Securities and Exchange Commission on March 24,
1995.
Restructurings
In fiscal 1992, the Company entered into a wafer
fabrication 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, a lawsuit
7
<PAGE>
was filed against the Company by GOCO Realty Fund I 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.
As more fully described in the "Sale of the EEPROM Assets
and SEEQ Common Stock to Atmel" above, during the quarter ended
March 31, 1994, the Company sold its assets related to its EEPROM
products to Atmel in the EEPROM Asset Sale.
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 nine month period ended June 30, 1995 (in thousands):
<TABLE>
<CAPTION>
(Increase)/Decrease
Utilization
Reserve at Change of Reserve/ Reserve at
Sep. 30, in Payments made June 30,
1994 Estimate in the Period 1995
_________ ________ _____________ __________
<S> <C> <C> <C> <C>
Facility lease, inventory and other
equipment costs $(616) $11 $600 $(5)
______ ____ ______ _______
EEPROM Asset Sale restructuring:
EEPROM Asset Sale (55) (113) 168 -
Excess facilities (2,534) 818 881 (835)
Discontinued inventories (150) 51 - (99)
Other costs (292) (329) 50 (571)
______ ____ ______ _______
(3,031) 427 1,099 (1,505)
______ ____ ______ _______
End-user Ethernet adapter board
product write-off:
Other costs - (39) 39 -
______ ____ ______ _______
Total $ (3,647) $399 $1,738 $(1,510)
====== ==== ====== =======
</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 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 settlements, 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. Upon settlement of this lawsuit, the
restructuring reserves totaling approximately $637,000 were
utilized, of which $37,500 represented the cash portion paid in
the settlement which
8
<PAGE>
were offset by the sale of assets which had been previously
written off. During the first nine months of fiscal 1995, the
Company also sold equipment that had been fully reserved and
settled certain associated lease obligations, resulting in a
$133,000 reduction to the restructuring reserves.
EEPROM Asset Sale Restructuring
In connection with the EEPROM Asset Sale, the Company
incurred certain restructuring costs or realized certain benefits
during the first nine months of fiscal 1995 as follows:
EEPROM Asset Sale. On 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 were located at a higher rental rate than previously
estimated, and as a result recorded through the nine months ended
June 30, 1995, a $818,000 reduction to its restructuring
reserves. The Company also recorded $881,000 of facility lease
payments and broker fees in connection with the sublease.
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, which was offset by the sale of
previously written-off inventory for $12,000.
Other costs. The Company recorded other costs, primarily
reflecting anticipated legal fees in connection with certain
litigation against Hualon. The Company also paid $50,000 to an
outside foundry for memory product process development and lease
payments for certain equipment related to EEPROM products.
End-User Ethernet Adapter Board Product Write-Off
During the first nine months of fiscal 1995, the Com-
pany 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:
9
<PAGE>
June 30, Sep. 30,
1995 1994
______ _______
(in thousands)
Raw materials $ 15 $ 928
Work in process 1,211 1,162
Finished goods 1,312 48
______ ______
$2,538 $2,138
====== ======
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.
<TABLE>
<CAPTION>
June 30, Sep. 30,
1995 1994
________ ________
(in thousands)
<S> <C> <C>
Property and equipment:
Machinery and equipment $5,553 $6,795
Furniture and fixtures 2,436 4,224
Leasehold improvements 321 195
______ ______
Total property and equipment, at cost 8,310 11,214
Accumulated depreciation and amortization (6,671) (9,915)
______ ______
Total property and equipment, net $1,639 $1,299
====== ======
</TABLE>
Net Income (Loss) Per Share
Primary and fully diluted net income per share for the
three and nine month periods ended June 30, 1995 were determined
using the treasury stock method. Primary income per share per
common and common equivalent share is computed using the weighted
average number of shares outstanding during the respective
periods, including dilutive stock options and warrants. Fully
diluted income per common and common equivalent share reflects
additional dilution related to stock options and warrants due to
the use of the market price at the end of the period, when higher
than the average price for the period.
Net loss per share for the three and nine months periods ended
June 30, 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 nine month periods ended June 30,
1994 because they are the same as primary net loss per share.
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 Interim 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. 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 $4,029,000 on deposit
therein, as of June 30, 1995, excluding interest earned to date.
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.
Restructurings
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.
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 nine month period ended June 30, 1995 (in thousands):
11
<PAGE>
<TABLE>
<CAPTION>
(Increase)/Decrease
Utilization
Reserve at Change of Reserve/ Reserve at
Sep. 30, in Payments made June 30,
1994 Estimate in the Period 1995
__________ ________ _____________ __________
<S> <C> <C> <C> <C>
Facility lease, inventory and other
equipment costs $(616) $11 $600 $(5)
________ ____ ______ _______
EEPROM Asset Sale restructuring:
EEPROM Asset Sale (55) (113) 168 -
Excess facilities (2,534) 818 881 (835)
Discontinued inventories (150) 51 - (99)
Other costs (292) (329) 50 (571)
________ ____ ______ _______
(3,031) 427 1,099 (1,505)
________ ____ ______ _______
End-user Ethernet adapter board product
write-off:
Other costs - (39) 39 -
________ ____ ______ _______
Total $ (3,647) $399 $1,738 $(1,510)
======== ==== ====== =======
</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 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 reelect the higher
market price of the common stock at the time of the final
settlement of the lawsuit. Upon settlement of this lawsuit, the
restructuring reserves totaling approximately $637,000 were
utilized, of which $37,500 represented the cash portion paid in
the settlement which were offset by the sale of assets which had
been previously written off. During the first nine months of
fiscal 1995, the Company also sold equipment that had been fully
reserved and settled certain associated lease obligations,
resulting in a $133,000 reduction to the restructuring reserves.
EEPROM Asset Sale Restructuring
In connection with the EEPROM Asset Sale, the Company
incurred certain restructuring costs or realized certain benefits
during the first nine months of fiscal 1995 as follows:
EEPROM Asset Sale. On 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
12
<PAGE>
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 were located at a higher rental rate than previously
estimated, and as a result recorded through the nine months ended
June 30, 1995 an $818,000 reduction to its restructuring
reserves. The Company also recorded $881,000 of facility lease
payments and broker fees in connection with the sublease.
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, which was offset by the sale of
previously written-off inventory for $12,000.
Other costs. The Company recorded other costs, primarily
reflecting anticipated legal fees in connection with certain
litigation against Hualon. The Company also paid $50,000 to an
outside foundry for memory product process development and lease
payments for certain equipment related to EEPROM products. During
the first nine 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 $5,353,000 in the third quarter of fiscal
1995 and $17,722,000 for the nine month period ended June 30,
1995, representing a decrease of $590,000 compared to the third
quarter of fiscal 1994 and an increase of $1,660,000 compared to
the nine month period ended June 30, 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 nine
month period ended June 30, 1995 compared to EEPROM sales of
$3,035,000 for the nine month period ended June 30, 1994. Local
area network ("LAN") integrated circuit sales of $5,353,000 in
the third quarter of fiscal 1995, represented an increase of
$1,117,000 compared to the third quarter of fiscal 1994 as a
result of a 74% increase in unit sales, partially offset by a 27%
decrease in average selling prices resulting from a change to a
lower priced product mix. LAN integrated circuit sales were
$13,782,000 for the nine month period ended June 30, 1995,
represented an increase of $3,503,000 compared to the nine month
period ended June 30, 1994 as a result of a 25% increase in unit
sales and a 7% increase in average selling prices. The Company
was notified in fiscal 1995 by Apple Computer that the Company
will receive no additional orders for the Company's proprietary
transceiver products following the second quarter of fiscal 1995.
As a result, there were no LAN subsystem product sales in the
third quarter of fiscal 1995, compared to $1,638,000 for the
third quarter of 1994. LAN subsystem product sales in the nine
months ended June 1995 were $3,940,000, an increase of $1,258,000
from the comparable period of 1994. This increase in LAN
subsystem sales was solely due to shipments of proprietary
transceiver products to Apple Computer, which began in March
1994. The Company is actively marketing its LAN integrated
circuits to Apple Computer for the transceiver products and other
data communication applications. Although the Company believes
that over the next few fiscal quarters it will be able to replace
such sales with sales of LAN integrated
13
<PAGE>
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 $2,022,000 in the third quarter of fiscal 1995
compared to a gross profit of $2,497,000 in the third quarter of
fiscal 1994. The decrease in margin was mainly attributable to a
change in product mix toward products with lower gross margins.
The Company recorded a gross profit of $6,128,000 for the nine
month period ended June 30, 1995 compared to a gross profit of
$3,948,000 for the nine month period ended June 30, 1994,
primarily as a result of the discontinued sales of the lower
margin EEPROMs as a result of the EEPROM Asset Sales, as well as
a favorable change in product mix towards sales of products with
higher gross margins. As a result of the EEPROM Asset Sale in the
second quarter of fiscal 1994, the Company substantially reduced
its workforce, 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
$794,000 in the third quarter of fiscal 1994 to $740,000 in the
third quarter of fiscal 1995, and from $2,606,000 in the nine
month period ended June 30, 1994 to $2,384,000 in the nine month
period ended June 30, 1995. As a percentage of net sales,
research and development expenditures increased from 13% in the
third quarter of fiscal 1994 to 14% in the third quarter of
fiscal 1995 primarily due to a decline in revenues and decreased
from 16% to 13% for nine month periods ending June 30, 1994 and
June 30, 1995 primarily, as a result of increased revenues,
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 $1,219,000 in the third quarter of fiscal 1994 to $1,028,000
in the third quarter of fiscal 1995, and from $6,081,000 in the
nine month period ended June 30, 1994 to $2,900,000 in the nine
month period ended June 30, 1995, and decreased as a percentage
of sales from 21% to 19% and from 33% to 16% for the same
periods, respectively. These decreases were attributable
primarily to a decrease in payroll and selling and administrative
expenses after the Company substantially reduced its workforce
and terminated operations of sales offices no longer needed after
the EEPROM Asset Sale. 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 increased from $72,000 in the third
quarter of fiscal 1994 to $118,000 in the third quarter of fiscal
1995 as a result of higher interest rates on funds borrowed under
the Company's bank credit line and decreased from $367,000 in the
nine month period ended June 30, 1994 to $313,000 in the nine
month
14
<PAGE>
period ended June 30, 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.
Interest Income and Other Income, Net
Interest income and other income, net, increased from
$32,000 in the third quarter of fiscal 1994 to $113,000 in the
third quarter of fiscal 1995 and increased from $133,000 in the
nine month period ended June 30, 1994 to $368,000 for the nine
month period ended June 30, 1995 due to an increase in interest
rates earned on excess cash balances, restricted cash and cash
held in escrow invested in short-term investment instruments as a
result of higher average cash balances due primarily to stock
option and warrant exercises.
Income Taxes
The Company's provision for income taxes for the first
nine 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 increases in
LAN subsystem product sales for the first and second quarters of
fiscal 1995 were primarily due to shipments of proprietary
transceiver products to Apple Computer which began in March 1994.
The Company was notified in fiscal 1995 by Apple Computer that
the Company will receive no additional orders for the Company's
proprietary transceiver products following the second quarter of
fiscal 1995. 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 22% of the Company's revenues for
the first nine months of fiscal 1995 ended June 30, 1995.
Although the Company believes that over the next few fiscal
quarters it will be able to 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. 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
15
<PAGE>
the end of fiscal 1996. 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 $2,221,000
as of June 30, 1995, primarily as a result of paying one-time
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 in the nine month period ended June 30, 1995
in anticipation of higher levels of shipments, by an increase in
accounts receivable and decrease in accounts payable 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 and proceeds from the exercise of stock options and
warrants.
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 increased from
$1,982,000 in the nine month period ended June 30, 1994 to
$2,419,000 in the nine month period ended June 30, 1995, due
primarily to the increased accounts receivable and inventory
balances, offset by decreased accounts payable and accrual
balances.
Investing Activities
Cash flows used for investing activities increased from
$182,000 in the nine month period ended June 30, 1994 to $602,000
in the nine month period ended June 30, 1995, primarily as a
result of an increase in cash invested for capital expenditures
from $280,000 to $648,000 for the same periods, respectively. The
Company anticipates an increase in capital expenditures in future
periods associated with test operations and research and
development activities.
Financing Activities
Cash flows provided by financing activities were
$2,989,000 in the nine month period ended June 30, 1995 compared
to $3,799,000 in the nine month period ended June 30, 1994. In
the nine month period ended June 30, 1995, the Company made
payments on capital lease obligations totaling $398,000, offset
by proceeds from the issuance of stock of $3,387,000, primarily
from warrant exercises. In the nine month period ended June 30,
1994, cash flows provided by financing activities included net
proceeds of $4,907,000 from the issuance of stock to Atmel and
warrant and stock option exercises. The Company also made
payments on capital lease obligations totaling $1,108,000 in the
nine month period ended June 30, 1994.
16
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal proceedings
Hualon 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
counterclaims 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. Under the terms of one of the escrow
agreements entered into with Atmel in connection with the EEPROM
Asset Sale, under which $4,029,000 was on deposit in escrow as of
June 30, 1995, excluding interest earned to date, the Company
will be entitled to received 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.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
In June 1995, the Company's Chief Financial Officer
resigned his position with the Company. The Company is currently
in the process of recruiting a replacement for the Chief
Financial Officer position.
17
<PAGE>
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 page 19.
(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 (incorporated herein by reference to
Registrant's Registration on Form S-1
(Registration No. 3347985)).
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 1-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)).
19
<PAGE>
EXHIBIT NO. DESCRIPTION OF DOCUMENT
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).
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 had duly caused this Report to be signed
on its behalf by the undersigned thereunto duly authorized.
SEEQ TECHNOLOGY INCORPORATED
(Registrant)
Dated: August ___, 1995
By:
PHILLIP J. SALSBURY
Phillip J. Salsbury
President and Chief
Executive Officer,
Chief Financial Officer
21
<TABLE>
SEEQ Technology Incorporated
EXHIBIT 11
SCHEDULE OF COMPUTATION OF EARNINGS PER SHARE
(in thousands except per share amounts)
<CAPTION>
Three Months Ended Nine Months Ended
---------------------------------------- --------------------------------------
June 30, June 30, June 30, June 30,
1995 1994 1995 1994
------------------ ---------------- ---------------- ----------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Primary
Earnings:
------------------ ---------------- ---------------- ----------------
Net income (loss) $321 $473 $1,285 $(8,335)
================== ================ ================ ================
Shares:
Average common shares
outstanding 27,854 25,712 26,525 23,777
Add effects of dilutive
options and warrants (as
determined by the
treasury stock method) 2,433 76 840 -
------------------ ---------------- ---------------- ----------------
As adjusted 30,287 25,788 27,365 23,777
================== ================ ================ ================
Primary earnings per share $0.01 $0.02 $0.05 $(0.35)
================== ================ ================ ================
Fully Diluted
Earnings:
Net income $321 $1,285
================== ================
Shares:
Average common shares
outstanding 27,854 26,525
Add incremental effect of
dilutive options and
warrants (as determined
by the treasury stock
method) 3,775 3,657
------------------ ----------------
As adjusted 31,629 30,182
================== ================
Fully diluted earnings per share $0.01 $0.04
================== ================
22
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000702756
<NAME> SEEQ TECHNOLOGY INCORPORATED
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> APR-01-1995
<PERIOD-END> JUN-30-1995
<EXCHANGE-RATE> 1
<CASH> 2,221
<SECURITIES> 0
<RECEIVABLES> 4,469
<ALLOWANCES> 0
<INVENTORY> 2,538
<CURRENT-ASSETS> 12,713
<PP&E> 8,310
<DEPRECIATION> (6,671)
<TOTAL-ASSETS> 18,701
<CURRENT-LIABILITIES> 7,808
<BONDS> 0
<COMMON> 28,686,768
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 18,701
<SALES> 5,353
<TOTAL-REVENUES> 5,353
<CGS> 3,331
<TOTAL-COSTS> 5,026
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (118)
<INCOME-PRETAX> 322
<INCOME-TAX> 1
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 321
<EPS-PRIMARY> 30,287
<EPS-DILUTED> 31,629
</TABLE>
