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Previous: CADIZ LAND CO INC, 10-Q, 1995-08-11 |
Next: EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES /NY/, 10-Q, 1995-08-11 |
<PAGE>
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
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
-------------------- ----------------------------
Commission File Number: 0-13244
---------------------------------------
ZYCAD CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 41-1404495
- -------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
47100 BAYSIDE PARKWAY, FREMONT, CALIFORNIA 94538
- -------------------------------------------------------------------------------
(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code: 510-623-4400
-------------------------------------
Indicate by check mark whether 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
----- -----
On August 1, 1995, there were 19,459,652 shares of the Registrant's common
stock outstanding.
1
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1: Financial Statements
ZYCAD CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
June 30, 1995 December 31, 1994
--------------- -----------------
(unaudited)
ASSETS
- ------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 4,043 $ 2,861
Short-term investments 225 225
Accounts receivable, net 10,870 12,481
Inventories 840 948
Other current assets 1,411 1,134
--------- ---------
Total current assets 17,389 17,649
Property and equipment, net 5,984 7,224
Purchased technology 1,249 1,370
Other assets 3,768 3,582
--------- ---------
Total assets $28,390 $29,825
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Borrowings under line of credit $ 890 $ 2,897
Current portion of debt obligations 836 998
Accounts payable 2,364 2,516
Accrued expenses 4,038 4,368
Asset write-downs and staff reductions 842 1,792
Deferred revenues 3,952 3,457
--------- ---------
Total current liabilities 12,922 16,028
Other long-term liabilities 293 408
Non-current portion of debt obligations 1,454 1,874
--------- ---------
Total liabilities 14,669 18,310
--------- ---------
Stockholders' equity:
Common stock, par value $.10 1,944 1,903
Additional paid-in capital 47,148 46,739
Notes receivable from stock options (900) (900)
Accumulated translation adjustments 179 (156)
Accumulated deficit (34,650) (36,071)
--------- ---------
Total stockholders' equity 13,721 11,515
--------- ---------
Total liabilities and stockholders' equity $28,390 $29,825
--------- ---------
--------- ---------
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
2
<PAGE>
ZYCAD CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT FOR PER-SHARE DATA)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ----------------------
1995 1994 1995 1994
---------- ----------- --------- ---------
<S> <C> <C> <C> <C>
Revenues:
Product $ 7,412 $8,638 $14,745 $15,842
Service 5,236 4,869 10,467 9,910
---------- ----------- --------- ---------
Total revenues 12,648 13,507 25,212 25,752
---------- ----------- --------- ---------
Cost of revenues:
Product 1,661 2,263 3,469 4,528
Service 2,655 2,725 5,253 5,425
---------- ----------- --------- ---------
Total cost of revenues 4,316 4,988 8,722 9,953
---------- ----------- --------- ---------
Gross Profit 8,332 8,519 16,490 15,799
---------- ----------- --------- ---------
Operating expenses:
Sales and marketing 4,205 5,207 7,986 9,446
Research and development 2,585 2,582 5,306 5,052
General and administrative 705 646 1,424 1,213
---------- ----------- --------- ---------
Total operating expenses 7,495 8,435 14,716 15,711
---------- ----------- --------- ---------
Operating income 837 84 1,774 88
---------- ----------- --------- ---------
Other income (expense):
Interest income 59 66 117 83
Interest expense (124) (71) (315) (80)
Other ( 31) 29 (155) 82
---------- ----------- --------- ---------
Other, net ( 96) 24 (353) 85
---------- ----------- --------- ---------
Net income $ 741 $ 108 $1,421 $ 173
---------- ----------- --------- ---------
---------- ----------- --------- ---------
Net income per share $ .04 $ .01 $ .07 $ .01
---------- ----------- --------- ---------
---------- ----------- --------- ---------
Shares used in per share
computation 20,318 19,744 20,392 19,876
---------- ----------- --------- ---------
---------- ----------- --------- ---------
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30
----------------------
<S> <C> <C>
1995 1994
Operating activities:
Net Income $ 1,421 $ 173
--------- --------
Adjustments to reconcile income to net
cash provided (used) by operating activities:
Depreciation and amortization 2,314 2,043
Sales under capital leases (904) (50)
Changes in assets and liabilities:
Accounts receivable 2,095 (2,751)
Inventories 108 494
Other assets, net 10 (1,288)
Accounts payable and accrued expenses (1,708) 567
Deferred revenue 355 754
--------- --------
Total adjustments 2,270 (231)
--------- ---------
Net cash provided (used) by operating activities 3,691 (58)
--------- ---------
Investing activities:
Capital expenditures (541) (2,068)
Collections from capital leases 502 255
Capitalized software (400) (1,200)
Short-term investment, proceeds, net ---- 233
--------- --------
Net cash used by investing activities (439) (2,780)
---------- ---------
Financing activities:
Proceeds from issuance of common stock 450 3,214
Increase (decrease) of equipment financing debt (590) 758
Reduction of bank debt (2,000) ----
---------- --------
Net cash provided by (used in) financing activities (2,140) 3,972
---------- --------
Effect of exchange rate changes on cash and cash equivalents 70 46
--------- --------
Net increase in cash and cash equivalents 1,182 1,180
Cash and cash equivalents, beginning of period 2,861 3,790
--------- --------
Cash and cash equivalents, end of period $ 4,043 $ 4,970
--------- --------
--------- --------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
ZYCAD CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Financial Statements:
The unaudited condensed consolidated financial statements of Zycad
Corporation for the three and six months ended June 30, 1995 and 1994
reflect, in the opinion of management, all adjustments (which include only
normal recurring adjustments) necessary to fairly state the results of
operations for the interim period. The results of operations for any
interim period are not necessarily indicative of results for the full year.
The unaudited condensed consolidated interim financial statements should be
read in conjunction with the consolidated financial statements and notes
thereto contained in the Company's December 31, 1994 Annual Report on Form
10-K.
2. Net Income Per Share:
Per-share data is computed by using the weighted average number of shares
of common stock and dilutive common stock equivalents outstanding, as
applicable during each period.
3. Inventories consisted of (in 000's):
<TABLE>
<CAPTION>
June 30, 1995 December 31, 1994
------------- -----------------
<S> <C> <C>
Finished goods $ 455 $ 211
Raw materials 385 737
----- -----
$ 840 $ 948
------ ------
------ ------
</TABLE>
5
<PAGE>
Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations
RESULTS OF OPERATIONS
REVENUES
Revenues in the second quarter 1995 were $12.6 million, a decrease of $.9
million compared to the comparable period in 1994. Product revenue
declined primarily due to a customer order of $3.2 million that was
included in the 1994 results and not repeated in 1995. Service revenues
increased $.4 million principally related to the 8% and 67% increase in
maintenance and commercial services contract revenue, respectively,
partially offset by a decline in federal contract revenue.
Total revenues for the six-month period ended June 30, 1995 decreased $.5
million compared to the same period in 1994 primarily due to reasons
discussed above.
GROSS PROFIT
Gross profit for the second quarter 1995 was $8.3 million a decrease of $.2
million compared to the second quarter 1994. Product gross profit declined
primarily due to the decline in revenue discussed above, however, the
margin percentage improved as the average selling price increased in 1995.
Service gross profit increased principally due to the increase in revenue,
discussed above and continued cost containment efforts initiated in late
1994.
Gross profit for the six-month period ending June 30, 1995 increased $.7
million compared to 1994. Product margins declined slightly while the
percentage improved primarily due to the same reasons discussed above.
Service margins increased over last years level due to an increase in
revenue and maintaining cost levels.
OPERATING EXPENSES
SALES AND MARKETING
Sales and marketing expenses decreased 19% and 15% in the three and six-
month periods ended June 30, 1995 compared to the same periods in 1994
primarily due to a decrease in costs related to lower levels of marketing
staffing resulting from cost reduction actions taken in late 1994.
RESEARCH AND DEVELOPMENT
Research and development expenses in the three-month period ended June 30,
1995 remained essentially the same compared to the comparable period in
1994.
Research and development expenses in the six-month period ended June 30,
1995 increased 5% primarily as a result of a lower level of capitalized
software development costs in 1995 compared to 1994.
GENERAL AND ADMINISTRATIVE
General and administrative expenses in the three and six-month periods
ended June 30, 1995 increased 9% and 17%, respectively, compared to the
same periods in 1994 principally due to the increase in consulting costs
for certain short-term projects.
6
<PAGE>
OTHER EXPENSE, NET
Other expense, net increased in the three and six-month periods ended June
30, 1995 compared to 1994 principally due to the increase in interest
expense as the Company's debt balance was higher in 1995 compared to 1994.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1995, working capital was $4.5 million compared to $1.6 million
at December 31, 1994. Combined cash and short-term investments increased
$1.2 million during the first six months of 1995 primarily due to income
from operations and a $1.6 million reduction of accounts receivable,
partially offset by a $2.0 million paydown of bank debt and payments
related to year-end restructuring accruals. The decrease in accounts
receivable is related to lower revenue levels in the second quarter 1995
compared to the fourth quarter 1994 and collecting the December 31, 1994
receivables.
Management believes that the current level of working capital, together
with the funds generated from operations and the availability of funds
under the Companys $4.0 million bank line-of-credit will be adequate to
finance the Company's operating needs in the foreseeable future. At June
30, 1995 $.9 million was outstanding under this line. See Note 5 of Notes
to Consolidated Financial Statements in the Company's 1994 Annual Report to
Shareholders.
7
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
None.
(b) Reports on Form 8-K:
None.
8
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
ZYCAD CORPORATION
/s/ Peter J. Cassidy
------------------------
Peter J. Cassidy
Executive Vice President and
Chief Financial Officer
Authorized Officer of the Registrant
Dated: August 9, 1995
9
<PAGE>
Exhibit (11)
ZYCAD CORPORATION
COMPUTATION OF NET INCOME PER SHARE
(IN THOUSANDS)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted average shares outstanding 19,083 18,854 19,181 18,850
Effect of dilutive stock options and
warrants based on treasury
stock method 1,235 890 1,211 1,026
------- ------- ------- -------
Average common and common
equivalent shares 20,318 19,744 20,392 19,876
------- ------- ------- -------
------- ------- ------- -------
Net income $ 741 $ 108 $ 1,421 $ 173
------- ------- ------- -------
------- ------- ------- -------
Net income per share $ .04 $ .01 $ .07 $ .01
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 4,043
<SECURITIES> 225
<RECEIVABLES> 10,870
<ALLOWANCES> 0
<INVENTORY> 840
<CURRENT-ASSETS> 1,411
<PP&E> 5,984
<DEPRECIATION> 0
<TOTAL-ASSETS> 28,390
<CURRENT-LIABILITIES> 12,922
<BONDS> 0
<COMMON> 1,944
0
0
<OTHER-SE> 26,446
<TOTAL-LIABILITY-AND-EQUITY> 28,390
<SALES> 7,412
<TOTAL-REVENUES> 12,648
<CGS> 1,661
<TOTAL-COSTS> 4,312
<OTHER-EXPENSES> 7,495
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (124)
<INCOME-PRETAX> 741
<INCOME-TAX> 0
<INCOME-CONTINUING> 741
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 741
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
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