SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 10549
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 April 2, 1994
or
- --------- Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Commission File Number 0-11438
BURR-BROWN CORPORATION
______________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 86-0445468
________________________ _______________________
(State of Incorporation) (IRS Employer I.D. No.)
6730 South Tucson Boulevard
Tucson, Arizona 85706
________________________________________
(Address of principle executive offices)
(602) 746-1111
_______________________________
(Registrant's telephone number)
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 close of the period covered by
this report.
Common Stock, $0.01 par value 9,533,999 Shares
BURR-BROWN CORPORATION AND SUBSIDIARIES
INDEX
_______
Page #
______
PART I. FINANCIAL INFORMATION
Item 1 Financial Statement
Consolidated Statements of Financial Position,
April 2, 1994, and December 31, 1993 3
Consolidated Statements of Operations,
Quarters Ended April 2, 1994, and April 3, 1993 4
Consolidated Statements of Cash Flows,
Quarters Ended April 2, 1994 and April 3, 1993 5
Notes to Consolidated Financial Statements 6
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of
Operations 7
PART II. OTHER INFORMATION
Item 1 Legal Proceedings 8
Item 4 Submission of Matters to a Vote of
Security Holders 9
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibit 11: Computation of Consolidated
Earnings Per Share 10
(b) Reports on Form 8-K 11
SIGNATURES
Signature Page 11
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PART 1. FINANCIAL INFORMATION
BURR-BROWN CORORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited)
(In thousands)
APR 2, DEC 31,
1994 1993
--------- --------
ASSETS
Current Assets
Cash and Cash Equivalents $ 15,038 $ 13,066
Trade Receivables 38,234 34,822
Inventories 44,628 44,036
Deferred Income Taxes 1,075 1,011
Other Current Assets 1,971 2,091
--------- ---------
Total Current Assets 100,946 95,026
Land, Buildings and Equipment
Land 3,379 3,378
Buildings and Improvements 21,308 20,818
Equipment 79,662 76,853
--------- ---------
104,349 101,049
Less Accumulated Depreciation (61,890) (58,622)
--------- ---------
42,459 42,427
Other Assets 4,875 4,609
--------- ---------
$148,280 $142,062
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes Payable $ 18,631 $ 15,000
Accounts Payable 10,600 9,064
Accrued Expenses 9,998 9,610
Accrued Employee Comp. and Payroll Taxes 3,708 4,284
Income Taxes Payable 2,907 3,593
Current Portion of Long-Term Debt 3,042 2,923
--------- ---------
Total Current Liabilities 48,886 44,474
Long-Term Debt 8,255 8,802
Deferred Gain 5,238 5,612
Deferred Income Taxes 1,188 1,194
Other Long-Term Liabilities 2,738 2,429
Commitments and Contingencies
Stockholders' Equity
Preferred Stock
Common Stock 97 97
Additional Paid-In Capital 26,013 26,013
Retained Earnings 52,422 49,605
Equity Adjustment From
Foreign Currency Transactions 2,773 2,083
Current Earnings 1,737 2,817
Treasury Stock (1,067) (1,064)
--------- ---------
81,975 79,551
--------- ---------
$148,280 $142,062
========= =========
See Notes to Consolidated Financial Statements.
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BURR-BROWN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands except per share amounts)
QUARTERS ENDED
APR 2, APR 3,
1994 1993
--------- ---------
Net Sales $ 47,355 $ 42,280
Cost of Sales 24,481 21,956
--------- ---------
Gross Margin 22,874 20,324
Expenses:
Sales and Marketing 9,331 9,008
Product Development 4,929 4,708
General and Administrative 5,250 4,437
--------- ---------
19,510 18,153
Income From Operations 3,364 2,171
Interest Expense (514) (614)
Other Expense (295) (517)
--------- ---------
Income Before Income Taxes 2,555 1,040
Provision for Income Taxes 818 468
--------- ---------
Net Income $ 1,737 $ 572
========= =========
Earnings Per Common Share $ 0.18 $ 0.06
========= =========
Shares Used In Per Common Share Calculation 9,535 9,642
======= =======
See Notes to Consolidated Financial Statements.
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BURR-BROWN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
QUARTERS ENDED
APR 2, APR 3,
1994 1993
--------- ---------
OPERATING ACTIVITIES:
Net Income $ 1,737 $ 572
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation and Amortization 2,476 2,472
Amortization of Deferred Gain (374) (374)
Provision for Losses on Inventories 1,073 1,481
Credit for Deferred Income Taxes (26) -
Loss on Disposition of Equipment 6 3
Loss (Gain) on Foreign Currency Trans 36 (157)
(Gain) Loss From Unconsol Affiliates (16) 172
Changes in Operating Assets and Liabilities:
Increase in Trade Receivables (2,116) (2,280)
(Increase) Decrease in Inventories (1,084) 218
Decrease in Other Assets 210 592
Increase in A/P & Other Liabilities 518 1,349
--------- ---------
Net Cash Provided By Operating Activities 2,440 4,048
INVESTING ACTIVITIES:
Purchases of Land, Buildings and Equipment (2,451) (1,590)
Proceeds from Sale of Equipment 351 12
--------- ---------
Net Cash Used In Investing Activities (2,100) (1,578)
FINANCING ACTIVITIES:
Proceeds from S-T and L-T Borrowings 2,403 615
Payments of S-T and L-T Borrowings (646) (1,064)
Payments for Capital Stock Activity, Net (3) (64)
--------- ---------
Net Cash Provided By (Used In)
Financing Activities 1,754 (513)
Effect of Exchange Rate Changes (122) (223)
--------- ---------
Increase in Cash and Cash Equivalents 1,972 1,734
Cash and Cash Equiv. at Beginning of Year 13,066 9,490
--------- ---------
Cash and Cash Equiv. at End of Quarter $ 15,038 $ 11,224
========= =========
See Notes to Consolidated Financial Statements.
- 5 -
BURR-BROWN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands)
1. BASIS OF PRESENTATION
The consolidated financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted account-
ing principles have been condensed or omitted pursuant to such
rules and regulations. In the opinion of management, all adjust-
ments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating
results for the quarter ended April 2, 1994, are not necessarily
indicative of the results to be expected for the year ended
December 31, 1994. For further information, refer to the consoli-
dated financial statements and footnotes thereto included in the
Company's Annual Report or Form 10-K for the year ended December
31, 1993, filed with the Securities and Exchange Commission.
2. INVENTORIES
Inventories consist of the following:
APR 2, DEC 31,
1994 1993
--------- ---------
Raw Material $ 16,260 $ 14,578
Work-In-Process 17,788 18,047
Finished Goods 22,809 23,285
--------- ---------
56,857 55,910
Valuation Reserve (12,229) (11,874)
--------- ---------
$ 44,628 $ 44,036
========= =========
3. COMMITMENTS AND CONTINGENCIES
The Company is involved in three ground water contamination claims
that are still in the early stages of the legal process. Based on
investigations to date, management does not believe the Company
contributed to the alleged contamination and, therefore, is of the
opinion that the disposition of these claims will not result in any
material liability to the Company.
- 6 -
BURR-BROWN CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
(In thousands)
RESULTS OF OPERATIONS
Order bookings for the quarter were $48,092, up 18 percent from the
preceding quarter, primarily in North America and Asia, and up 9
percent from the corresponding quarter of 1993, primarily in Europe
and Asia.
Sales in the first quarter of 1994 were $47,355, up 16 percent from
sales of $40,876 for the previous quarter and up 12 percent from
sales of $42,280 for the first quarter of 1993. The net currency
impact on sales was a favorable $240 when compared with the pre-
vious quarter and a favorable $1,091 when compared with the first
quarter of 1993. This currency impact is primarily attributed to
the strengthening of the Japanese yen.
The increase in sales dollars was chiefly in our core components
business, although the power convertibles line is also showing
marked improvement. With continued economic stability in the
Company's major markets, further growth in both sales and orders
can be anticipated for 1994.
First quarter gross margin of $22,874 increased 11 percent over the
previous quarter and 13 percent over the first quarter of 1993
primarily due to higher sales volume. For the three months ended
April 2, 1994, gross margin remained level, as a percent of sales,
at 48 percent when compared to the first quarter of 1993. However,
gross margin was down from 51 percent of sales in the previous
quarter primarily as the product mix changed.
Operating expenses for the quarter increased 4 percent, or $656,
over the previous quarter and 8 percent, or $1,357, over the first
quarter of 1993. However, as a percentage of sales, these expenses
decreased 5 points from the previous quarter and 2 points from the
first quarter of 1993.
As a result of the higher sales volume, income from operations of
$3,364 for the quarter reflected a 55 percent increase over the
year ago quarter.
The effective tax rate for the first three months of 1994 was 32
percent as compared with 45 percent in the corresponding period of
1993. The lower rate in the current year is attributed to a shift
in the mix of earnings among the different tax jurisdictions in
which the Company operates.
Net income of $1,737 increased 106 percent over $845 in the
previous quarter and 204 percent over $572 in the first quarter of
1993.
FINANCIAL CONDITION
During the first three months of 1994, the Company generated a cash
flow of $2,440 from operations. Cash and cash equivalents increased
$1,972 over December 31, 1993. However, the flow of cash from
operations decreased $1,608 from the first quarter of 1993, and
this change was mainly due to increasing inventories and invest-
ments in research. Compared to December 31, 1993, accounts
receivable increased $3,412 of which $1,616 was due to currency
translation, and the rest can primarily be attributed to North
America sales.
Expenditures for plant and equipment during the first three months
of 1994 totaled $2,451 while planned capital investments for the
whole year are anticipated to be from $10,000 to $14,000. These
capital investments will be financed by cash from operations and,
if needed, by borrowing under existing credit lines.
- 7 -
FINANCIAL CONDITION (Cont'd)
The Company's current ratio decreased to 2.06 at April 2, 1994,
from 2.14 at December 31, 1993. In addition to its term debt, the
Company had approximately $60,251 in credit facilities available
with domestic and overseas banks at the end of the first quarter,
of which approximately $18,631 or 31 percent was utilized. Manage-
ment believes the Company has sufficient capital resources
available for the next 12 months.
The Company is a named party in three toxic tort cases. After
undertaking extensive hydrological investigations and consultation
with independent environmental consultants, management does not
believe the Company contributed to the alleged contamination and,
therefore, is of the opinion that the disposition of these claims
will not result in any material liability to the Company. However,
environmental litigation is inherently uncertain, and there can be
no assurance as to the ultimate outcome of these claims.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The following three proceedings are not ordinary pending litiga-
tions:
a. Bahrs et.al. versus Hughes Aircraft Company, Burr-Brown
Company, et.al., Superior Court, State of Arizona, Pima
County. Filed on January 13, 1992. This case is a tort
complaint charging that the Company released contaminants
including Trichloroethylene (TCE) which went into the
ground waters. The plaintiffs are charging that they and
their respective properties are damaged and they are
asking for monetary damages. The Company spent the first
year discussing a stipulated dismissal. The Company has
now requested the Superior Court to begin consideration
for dismissal. The Company's insurer, under a reser-
vation of rights, has agreed to the payment of reasonable
and necessary fees for the defense of this matter.
b. Yslava et.al. versus Hughes Aircraft Company, U.S. Dis-
trict Court, District of Arizona. Filed on September 20,
1991. This is a sister case where other plaintiffs
allege that Hughes' discharge of toxic waste into the
ground water that the plaintiffs drank has personally
damaged them in an unspecified amount. On September 30,
1993, Burr-Brown and other companies were identified as
third party co-defendants in a Motion to file a
Third-Party Complaint. The Company's insurer, under a
reservation of rights, has agreed to the payment of
reasonable and necessary fees for the defense of this
matter.
c. Lanier versus Hughes Aircraft Company, U.S. District
Court, District of Arizona. Filed on August 7, 1992.
This is a sister case to the Yslava case where other
plaintiffs allege that Hughes' discharge of toxic waste
into the ground water the plaintiffs drank has personally
damaged them in an unspecified amount. On March 7, 1994,
Burr-Brown and other companies were identified as third
party co-defendants in a Motion to File a Third-Party
Complaint.
Risk exposure to the defendants is not ascertainable at
this time. The Company has factual records that indicate
it is an improper party to these actions.
- 8 -
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
a. The Annual Meeting of Shareholders was held April 22, 1994.
b. All of the Directors were re-elected to serve until the next
Annual Meeting and until their successors are duly elected and
qualified. The Directors are as follows:
Thomas R. Brown, Jr.
Francis J. Aguilar
John S. Anderegg, Jr.
Bob J. Jenkins
Syrus P. Madavi
James A. Riggs
Thomas J. Troup
Voting on this resolution were 7,093,109 shares for, 3,177
shares against, 3,949 shares abstained, and 2,433,361 shares
not voted.
c. The shareholders approved an amendment to the Company's 1993
Stock Incentive Plan that will (1) impose a limitation on the
maximum number of shares for which any one participant may be
granted stock options and direct share issuances over the
remaining term of the 1993 Stock Incentive Plan and (2) estab-
lish an automatic option grant program for the non-employee
members of the Board of Directors.
Voting on this resolution were 5,788,689 shares for, 474,073
shares against, 837,473 shares abstained, and 2,433,361 shares
not voted.
d. The shareholders approved the selection of Ernst & Young as
Independent auditors for the Corporation for the ensuing
fiscal year.
Voting on this resolution were 7,083,032 shares for, 9,495
shares against, 7,708 shares abstained, and 2,433,361 shares
not voted.
e. In their discretion, the Proxies are authorized to vote upon
such other business as may properly come before the meeting.
Voting on this resolution were 7,100,235 for and 2,433,361 not
voted.
- 9 -
ITEM 6. EXHIBITS
Exhibit 11
BURR-BROWN CORPORATION AND SUBSIDIARIES
COMPUTATION OF CONSOLIDATED EARNINGS PER SHARE
(Unaudited)
Earnings per share are computed using the weighted average number
of shares outstanding plus incremental shares issuable upon
exercise of outstanding options under the treasury stock method.
QUARTERS ENDED
APR 2, APR 3,
1994 1993
---------- ----------
INCOME
Net Income $1,737,000 $ 572,000
PRIMARY EARNINGS PER SHARE:
Weighted Average No. of Shares 9,535,000 9,555,000
Outstanding
Net Effect of Dilutive Stock
Options Based on the Treasury
Stock Method Using the Average - 87,000
Market Price of Common Stock ---------- ----------
Common Stock and Common Stock 9,535,000 9,642,000
Equivalents ========== ==========
Primary Earnings Per Share $ 0.18 $ 0.06
======= =======
FULLY DILUTED EARNINGS PER SHARE:
Weighted Average No. of Shares 9,535,000 9,555,000
Outstanding
Net Effect of Dilutive Stock
Options Based on the Treasury
Stock Method Using the End of
Period Market Price of Common
Stock, If Higher Than Average - 100,000
---------- ----------
Common Stock and Common Stock 9,535,000 9,655,000
Equivalents. ========== ==========
Fully Diluted Earnings Per Share $ 0.18 $ 0.06
======= =======
- 10 -
REPORTS ON FORM 8K:
On May 5, 1994, Burr-Brown Corporation filed a report on Form 8-K
announcing the election of Syrus P. Madavi as President, Chief
Executive Officer and member of the Board of Directors.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
BURR-BROWN CORPORATION
----------------------
(Registrant)
May 13, 1994 SYRUS P. MADAVI
- ------------ ----------------------
(Date) Syrus P. Madavi
President and Chief
Executive Officer
- 11 -
