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Previous: IDS LIFE FLEXIBLE PAYMENT MARKET VALUE ANNUITY, 10-Q, 1996-05-14 |
Next: SUTRON CORP, 10QSB, 1996-05-14 |
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTIONS 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31, 1996 Commission File Number 0-13071
INTERPHASE CORPORATION
(Exact name of registrant as specified in its charter)
Texas 75-1549797
(State of incorporation) (IRS Employer Identification No.)
13800 Senlac, Dallas, Texas 75234
(Address of principal executive offices)
(214)-654-5000
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
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.
Class Outstanding at May 3, 1996
Common Stock, No par value 4,705,713
<PAGE>
INTERPHASE CORPORATION
INDEX
Part I -Financial Information
Item 1. Consolidated Interim Financial Statements
Consolidated Balance Sheets as of March 31, 1996
and October 31, 1995 3
Consolidated Statements of Operations for the three months
ended March 31, 1996 and April 30, 1995 4
Consolidated Statements of Cash Flows for the three months
ended March 31, 1996 and April 30, 1995 5
Notes to Consolidated Interim Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
Part II- Other Information
Signature 8
2
<PAGE>
INTERPHASE CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except number of shares)
<TABLE>
<CAPTION>
ASSETS March 31, October 31,
1996 1995
------------ -------------
(Unaudited)
<S> <C> <C>
Cash and cash equivalents $1,704 $3,320
Marketable securities 7,313 9,366
Trade accounts receivable, less allowances for uncollectible
accounts of $238 and $238, respectively 8,520 7,521
Inventories, net 9,065 7,486
Prepaid expenses and other current assets 1,006 957
Deferred income taxes, net 594
603
------------ -------------
Total current assets 28,211 29,244
Machinery and equipment 11,689 10,920
Leasehold improvements 2,790 2,758
Furniture and fixtures 351
267
------------ -------------
14,746 14,029
Less-accumulated depreciation and amortization (9,452) (8,820)
------------ -------------
Total property and equipment, net 5,294 5,209
Capitalized software, net of accumulated amortization 524
462
Deferred income taxes, net 301
301
Other assets 152
214
------------ -------------
Total assets $34,482 $35,430
============ =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued liabilities $3,078 $3,193
Accrued compensation 1,289 1,357
Income taxes payable 366
-
------------ -------------
Total current liabilities 4,367 4,916
Deferred lease obligations 103
92
------------ -------------
Total liabilities 4,459 5,019
Common stock, no par value; 100,000,000 shares authorized;
4,692,233 and 4,661,303 shares outstanding 24,331 24,177
Retained earnings 5,739 6,263
Unrealized holding period loss
(47) (29)
------------ -------------
Total shareholders' equity 30,023 30,411
------------ -------------
Total liabilities and shareholders' equity $34,482 $35,430
============ =============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE>
INTERPHASE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
------------------------------------------
31-Mar-96 30-Apr-95
-------------- -------------
<S> <C> <C>
Revenues $ 11,877 $ 11,473
Cost of sales 5,686 5,702
-------------- -------------
Gross profit 6,191 5,771
Research and development 2,228 1,875
Sales and marketing 2,131 2,061
General and administrative 987 1,004
-------------- -------------
Total operating expenses 5,346 4,940
-------------- -------------
Operating income 845 831
-------------- -------------
Interest income 166 144
Other, net (4) 30
-------------- -------------
Income before income taxes 1,007 1,005
Provision for income taxes 363 360
-------------- -------------
Net income $644 $645
============== =============
Net income per common and
common equivalent share $0.13 $0.13
============== =============
Weighted average common and common
equivalent shares 5,064 4,973
============== =============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
(Unaudited)
--------------------------------
31-Mar-96 30-Apr-95
--------------- ---------------
<S> <C> <C>
Cash flow from operating activities:
Net income $ 644 $ 645
Adjustment to reconcile net income to net cash provided (used) by operating
activities:
Depreciation and amortization
791 665
Change in assets and liabilities:
Trade accounts receivable (4,574) 781
Inventories 594 (804)
Prepaid expenses and other current assets (142) (44)
Accounts payable and accrued liabilities 243 (63)
Accrued compensation (111) 317
Income taxes payable - (75)
Deferred income taxes payable (10) 481
Deferred lease obligations (7) (1)
--------------- ---------------
Net adjustments (3,216) 1,257
--------------- ---------------
Net cash provided (used) by operating activities (2,572) 1,902
Cash flows from investing activities:
Additions to property, equipment and leasehold improvements (798) (355)
Additions to capitalized software (85) (30)
Decrease (Increase) in other assets 9 (14)
Decrease (Increase) in marketable securities 2,054 (125)
Change in holding period gain/loss on marketalbe securities (18) 88
--------------- ---------------
Net cash provided (used) by investing activities 1,162 (436)
Cash flows from financing activities:
Principal payments on capital lease obligations - 56
Increase in common stock 137 -
--------------- ---------------
Net cash provided (used) by financing activities 137 56
--------------- ---------------
Net increase (decrease) in cash and cash equivalents (1,273) 1,522
Cash and cash equivalents at beginning of year 2,977 3,527
--------------- ---------------
Cash and cash equivalents at end of period $ 1,704 $ 5,049
=============== ===============
Supplemental Disclosure of Cash Flow Information:
Income taxes paid 472 -
Income taxes refunded 8 -
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
INTERPHASE CORPORATION
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying consolidated interim financial statements include the accounts
of Interphase Corporation and its wholly owned subsidiary. Significant
intercompany accounts and transactions have been eliminated.
Effective January 31, 1996 the Company changed its fiscal year end from
October 31 to December 31. For comparison purposes, results for the quarter
ended March 31, 1996, are being compared with results from the prior year
quarter ended April 30, 1995. The Company has not recast the prior year
financial information presented herein to conform to the new fiscal quarter
ends, as management does not believe such recasting would be as meaningful for
comparative purposes, as the April 30, 1995 information presented herein.
Management believes the April 30, 1995 results are the most comparable to the
quarter ended March 31, 1996 results, particularly for comparing trends in
operations.
While the accompanying interim financial statements are unaudited, they have
been prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission. In the opinion of the Company, all material
adjustments and disclosures necessary to fairly present the results of such
periods have been made. 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 the rules and
regulations of the Securities and Exchange Commission. These financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto for the year ended October 31, 1995.
2. NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE
Net income per common and common equivalent share is computed using the weighted
average number of outstanding shares and common equivalent shares. The dilutive
impact of outstanding stock options have been considered under the treasury
stock method using the greater of the average bid price or closing bid price for
the period.
Weighted average common and common equivalent shares:
Three Months Ended:
March 31, April 30,
(in thousands) 1996 1995
------- ------
Outstanding 4,683 4,535
Stock options 381 438
------- ------
Total 5,064 4,973
======= =====
6
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Revenues for the three months ended March 31, 1996 increased $404,000 or
approximately 4% to $11,877,000 as compared to $11,473,000 for the three month
period ended April 30, 1995. Networking products represented a growth of 18%
over the three month period ended April 30, 1995. FDDI product revenues declined
3%, while Ethernet increased 26% and ATM increased 132%. Networking products in
total comprised 72% of total revenues for the first quarter of 1996, as compared
to 64% for the three month period ended April 30, 1995. FDDI, Ethernet and ATM
represented 45% , 16% and 8% of total revenues, respectively for the period
ended March 31, 1996. Mass storage product revenues, primarily SCSI adapter
cards, decreased 19% in 1996 compared to the three month period ended April 30,
1995. Mass storage products comprised 24% of total revenues in 1996 compared to
30% for the three month period ended April 30, 1995. Geographically, North
America revenues comprised 89% of consolidated revenues in the first quarter of
1996 compared to 87% for the three month period April 30, 1995. European
revenues comprised 7% of consolidated revenues in the first quarter of 1996
compared to 9% for the three month period ended April 30, 1995. Pacific Rim
revenues comprised 4% of consolidated revenues in the first quarter of 1996
compared to 4% for the three month period ended April 30, 1995.
The gross margin percentage for the three months ended March 31, 1996 was
approximately 52% as compared to approximately 50% for the three month period
ended April 30, 1995.
Operating expenses for the three month period ended March 31, 1996 were
$5,346,000 representing approximately 45% of consolidated revenue, as compared
to 43% for the three month period ended April 30, 1995. The increased spending
is primarily the result of additional research and development expenditures.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash , cash equivalents and marketable securities aggregated
$9,017,000 at March 31, 1996, and $12,686,000 at October 31, 1995. The decrease
in cash position is primarily the result of funding on going operations, an
increase in inventory and an increase in accounts receivable since October 31,
1995. The Company expects that its cash, cash equivalents and marketable
securities will be adequate to meet foreseeable needs for the next 12 months.
7
<PAGE>
SIGNATURE
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.
INTERPHASE CORPORATION
(Registrant)
Date: May 14, 1996
/s/ Robert L. Drury
-------------------
Robert L. Drury
Chief Financial Officer and
Vice President Finance
(Principal Financial and
Accounting officer)
8
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,704
<SECURITIES> 7,313
<RECEIVABLES> 8,758
<ALLOWANCES> 238
<INVENTORY> 9,065
<CURRENT-ASSETS> 28,211
<PP&E> 14,746
<DEPRECIATION> 9,452
<TOTAL-ASSETS> 34,482
<CURRENT-LIABILITIES> 4,367
<BONDS> 0
0
0
<COMMON> 24,331
<OTHER-SE> 5,692
<TOTAL-LIABILITY-AND-EQUITY> 34,482
<SALES> 11,877
<TOTAL-REVENUES> 11,877
<CGS> 5,686
<TOTAL-COSTS> 5,686
<OTHER-EXPENSES> 5,346
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,007
<INCOME-TAX> 363
<INCOME-CONTINUING> 644
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 644
<EPS-PRIMARY> 0
<EPS-DILUTED> 0.13
</TABLE>
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