<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
(Mark One)
[x] Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934.
For the Quarterly Period ended MARCH 31, 1995 or
[ ] 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 0-13381
MYLEX CORPORATION
---------------------------------------------------------------
(Exact name of registrant as specified in its charter)
FLORIDA 59-2291597
- ------------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
34551 Ardenwood Blvd., Fremont, California 94555
- --------------------------------------------- --------
(Address of principal executive offices) ZIP Code
Registrant's telephone number (including area code): (510) 796-6100
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 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
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock, $.01 par value 14,727,269 shares
- ---------------------------- -----------------
Class Outstanding at March 31,1995
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
MYLEX CORPORATION
BALANCE SHEET
(IN $000'S)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
ASSETS 1995 1994
--------- ------------
<S> <C> <C>
CURRENT ASSETS:
CASH AND EQUIVALENTS $562 $3,866
ACCOUNTS RECEIVABLE 15,519 11,321
ALLOWANCE FOR DOUBTFUL ACCOUNTS (507) (532)
--------- ------------
ACCOUNTS RECEIVABLE, NET 15,012 10,789
INVENTORIES 11,926 10,237
PREPAID EXPENSES AND OTHER CURRENT ASSETS 821 775
--------- ------------
TOTAL CURRENT ASSETS $28,321 $25,667
PROPERTY AND EQUIPMENT, NET 1,534 1,579
OTHER ASSETS 112 112
TOTAL ASSETS $29,967 $27,358
--------- ------------
--------- ------------
LIABILITIES AND STOCK HOLDERS EQUITY
CURRENT LIABILITIES:
ACCOUNTS PAYABLE $4,791 $3,187
ACCRUED LIABILITIES 3,593 3,151
LINE OF CREDIT PAYABLE TO BANK 500 2,350
CURRENT PORTION OF LONG-TERM CAPITAL LEASE
OBLIGATIONS 391 417
--------- ------------
TOTAL CURRENT LIABILITIES $9,275 $9,105
LONG-TERM CAPITAL LEASE OBLIGATIONS 416 493
STOCKHOLDERS' EQUITY:
COMMON STOCK 147 146
ADDITIONAL PAID-IN CAPITAL 14,001 13,526
RETAINED EARNINGS 6,128 4,088
--------- ------------
TOTAL STOCKHOLDERS' EQUITY $20,276 $17,760
--------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $29,967 $27,358
--------- ------------
--------- ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
2
<PAGE>
MYLEX CORPORATION
STATEMENTS OF OPERATIONS, THREE
MONTHS ENDED
UNAUDITED
(IN $000'S, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
MARCH 31, MARCH 31,
1995 1994
---------------- --------------
<S> <C> <C>
NET SALES $17,085 $13,642
COST OF SALES 10,813 9,655
---------------- --------------
GROSS PROFIT 6,272 3,987
OPERATING EXPENSES:
SELLING AND MARKETING 1,125 774
RESEARCH AND DEVELOPMENT 957 735
GENERAL AND ADMINISTRATIVE 973 875
TOTAL OPERATING EXPENSES $3,055 $2,384
---------------- --------------
OPERATING PROFIT $3,217 $1,603
INTEREST INCOME 8 7
INTEREST EXPENSE (57) (131)
OTHER EXPENSE (29) (27)
---------------- --------------
INCOME BEFORE TAXES 3,139 1,452
INCOME TAX EXPENSE (BENEFIT) 1,099 363
---------------- --------------
NET INCOME $2,040 $1,089
EARNINGS PER COMMON SHARE:
PRIMARY $0.13 $0.07
FULLY DILUTED $0.13 $0.07
AVERAGE COMMON SHARES OUTSTANDING:
PRIMARY 15,511,900 14,651,700
FULLY DILUTED 15,512,600 15,249,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
3
<PAGE>
MYLEX CORPORATION
STATEMENT OF CASH FLOWS, THREE MONTHS ENDED
UNAUDITED
(IN $000'S)
<TABLE>
<CAPTION>
MARCH 31, MARCH 31,
1995 1994
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME $2,040 $1,089
DEPRECIATION AND AMORTIZATION 212 270
CHANGES IN OPERATING ASSETS & LIABILITIES
ACCOUNTS RECEIVABLE, NET (4,223) (5,431)
INVENTORIES (1,689) (481)
PREPAID EXPENSES AND
OTHER CURRENT ASSETS (46) (85)
ACCOUNTS PAYABLE 1,604 2,200
ACCRUED LIABILITIES 442 565
--------- ---------
NET CASH USED BY OPERATING ACTIVITIES (1,660) (1,873)
CASH FLOWS FROM INVESTING ACTIVITIES:
CAPITAL EXPENDITURES (167) (137)
--------- ---------
NET CASH USED BY INVESTING ACTIVITIES (167) (137)
CASH FLOWS FROM FINANCING ACTIVITIES:
REPAYMENTS AGAINST LINE OF CREDIT (1,850) (206)
REPAYMENT OF CAPITAL LEASE OBLIGATIONS (103) (92)
ISSUANCE OF CONVERTIBLE SUBORDINATED DEBENTURES -- (50)
EXERCISE OF STOCK OPTIONS 476 255
--------- ---------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (1,477) (93)
--------- ---------
NET INCREASE (DECREASE) IN CASH (3,304) (2,103)
CASH AND CASH EQUIVALENTS: AT BEGINNING OF PERIOD $3,866 $3,253
--------- ---------
--------- ---------
CASH AND CASH EQUIVALENTS: AT END OF PERIOD $562 $1,150
--------- ---------
--------- ---------
CASH PAID DURING THE PERIOD:
CASH PAID FOR INTEREST $57 $73
CASH PAID FOR INCOME TAXES $300 --
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
4
<PAGE>
MYLEX CORPORATION
NOTES TO FINANCIAL STATEMENTS
UNAUDITED
NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
In the opinion of the Company, the accompanying financial statements
contain all adjustments (consisting only of normal recurring adjustments)
necessary to fairly present the Company's financial position and its results of
operations and cash flows as of the dates and for the periods indicated.
Certain information and footnote disclosures normally contained in
financial statements prepared in accordance with generally accepted accounting
principles have been omitted. These condensed financial statements should be
read in conjunction with the financial statements contained within the Company's
Form 10-K for the year ended December 31, 1994. The results of operations for
the three months ended March 31, 1995, are not necessarily indicative of the
operating results for the full year.
PER SHARE DATA
Primary earnings per share is based on the weighted average common
and, when dilutive, common equivalent shares outstanding each period.
Common equivalent shares consist of dilutive shares issuable upon the exercise
of stock options and warrants. In determining fully diluted earnings per share,
convertible subordinated debentures are considered converted upon issuance
and the related interest expense, net of taxes, is added back to net income.
NOTE B. INVENTORIES (in $000's)
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
--------- ------------
<S> <C> <C>
Raw materials 7,457 6,924
Work-in-process 3,288 2,263
Finished goods 1,180 1,050
--------- ------------
Total Inventories 11,925 10,237
</TABLE>
5
<PAGE>
NOTE C. ACCOUNTS RECEIVABLE
Northgate Computer Systems, Inc. ("Northgate") declared bankruptcy in
the fourth quarter of 1994. The Company to date received net proceeds of
$113,167 through the liquidation of Northgate's inventory and continues its
efforts, as an unsecured creditor through the credit committee, to collect on
the outstanding account receivables due from Northgate.
NOTE D. CONTINGENCIES
The Company is party to an arbitration proceeding that alleges breach of
contract and other claims relating to a royalty agreement entered into by the
Company with American Megatrends Inc. ("AMI"). The amount of damages
sought by AMI is unspecified. The Company has certain defenses and
counterclaims and intends to continue to defend this action vigorously. It
should be noted, however, that legal proceedings can be unpredictable, and an
unfavorable outcome could have a material adverse effect on the Company's
business and results of operations. (see Part II, item 1.)
The former Chief Executive Officer of the Company, Dr. M. A. Chowdry,
filed a complaint against the Company and its outside directors on October 13,
1994, seeking $5 million in damages and claiming breach of an employment
agreement that he entered into with the Company approximately three months
prior to his termination as the Company's Chief Executive Officer. Dr. Chowdry
voluntarily filed an amendment to his complaint on February 23, 1995. On
March 17, 1995 the Company and the individual defendants filed a response
(demurrer) to the amended complaint. A hearing on the demurrer filed by the
Company and the individual defendants was held on April 27, 1995 and a
decision on the demurrer is still under submission. The Company believes it
has meritorious defenses and will vigorously defend this lawsuit.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS AND RESULTS OF OPERATION
Mylex Corporation (the "Company") was incorporated under the laws of
the State of Florida in May 1983. In September 1987, the Company moved its
headquarters and manufacturing facility from Florida to Fremont, California. In
May 1991, the Company again moved to a larger facility in Fremont, California.
Mylex Corporation is a technology-based company engaged in the
design, development, production and marketing of high performance disk array
controllers, network interface cards, personal computer system boards and
SCSI host adaptors as well as supporting proprietary software and firmware.
The products currently being produced by the Company provide enhanced
6
<PAGE>
performance for a wide range of personal computers, workstations and servers.
All of the Company's products are sold in the high-technology electronic
products segment. The Company's customers are original equipment
manufacturers (OEMs), system integrators, value-added resellers (VARs), and
computer distributors and dealers.
As of May 5, 1995, the Company had approximately 144 employees. The
employees are not represented at the Company by any labor union nor
employed by the Company under any collective bargaining agreement.
LIQUIDITY AND CAPITAL RESOURCES
During the first quarter of 1995 the Company financed its operations
primarily from existing cash balances and cash generated from operations.
As of March 31, 1995, the Company's working capital had increased to
$19.1 million from $16.6 million at December 31, 1994. This increase in working
capital was due primarily to a $4.2 million growth in accounts receivable and a
$1.7 million rise in inventories. This was offset by a decrease in cash of $3.3
million for a net increase in working capital of $2.5 million. Accounts
receivable increased over year end 1994 balance due to a high percentage of the
quarter's sales occuring in March.
Cash balances decreased by $3.3 million from $3.9 million at December
31, 1994, to $562 thousand at March 31, 1995. This decline in the cash balance
is due primarily to a reduction in the amount drawn on the line of credit of
$1,850,000 and reduced collections in the quarter resulting from the high
percentage of sales occurring in March.
The Company has a revolving line of credit with Imperial Bank (the
"Bank"), secured by the Company's unencumbered assets, which expires on May
15, 1995. The line of credit bears interest at the Bank's prime rate plus
0.75%. Borrowings are limited to 80% of eligible accounts receivable, and
are subject to an overall limit of $6,000,000. The Company is required to
maintain a compensating deposit balance with the Bank of at least $500,000
and to comply with certain covenants with respect to dividends, stock
repurchases, borrowings, and maintenance of specific financial ratios. The
Company was not in compliance with ratios pertaining to accounts receivable
and inventory. The Bank recognized this noncompliance and waived its rights
with respect to such non-compliance in this specific instance. The Company
paid a net of $1,850,000 against the line of credit during the first quarter
of 1995 reducing the outstanding balance of $2,350,000 at December 31, 1994,
to $500,000 at March 31, 1995. The Company concluded negotiations on the
renewal of its line of credit after the end of the quarter. As a result of
the negotiations, the Bank increased the line to $8 million and extended
it to May 15, 1996. In addition, the financial ratios with respect to
accounts receivable and inventory have been removed.
7
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The Company presently expects to finance near-term and long-term
operations and capital requirements through cash provided by continuing
operations, existing cash balances, and borrowings under the revolving bank
line of credit. However, there can be no assurance that the Company will not
require outside financing, or, if required, that such financing will be
available on terms favorable to the Company.
Accounts payable increased to $4.8 million at March 31, 1995, compared
to $3.2 million at December 31, 1994, an increase of $1.6 million or 50%. This
increase was due to the high percentage of inventory purchases made during
the final month of the quarter.
Net accounts receivable increased to $15.0 million at March 31, 1995,
compared to $10.8 million at December 31, 1994, an increase of $4.2 million
or 39%. This increase was attributable to a large percentage of the
quarter's sales occurring in March. The accounts receivable attributable to
those sales are anticipated by the Company to be collected in the second
quarter. When compared to last quarter, March's sales contribution was a
higher percentage than December's sales contribution in its quarter. This
difference between quarters resulted in the prior quarter's accounts
receivable being collected earlier and its ending balance being lower.
RESULTS OF OPERATIONS
SALES AND GROSS PROFITS. The Company's net sales for the three
months ended March 31, 1995, totaled $17.1 million, compared to $13.6 million
for the corresponding period of fiscal year 1994, an increase of approximately
25%. Sales increased primarily due to increased shipments of the Company's
disk array and Pentium system board products, which more than offset the
decline in sales of the Company's 486 based system boards and other
peripheral products during the first quarter of 1995, as compared to the first
quarter of 1994. Sales have not been significantly impacted by inflation over
the last three fiscal years.
Gross profit for the three months ended March 31, 1995, was $6.3 million
or 37% of net sales, compared to $4.0 million or 29% of net sales for the same
period in 1994. The increase in gross margins was attributable to increased
sales of the Company's higher margin disk array controller products during the
three months ended March 31, 1995, which more than offset the declining
margins of the Company's 486 system boards. The Company expects price
competition for its system board products to continue and expects to encounter
price competition for its disk array controller products which will create
pressure on the Company's gross margin. However, the Company is taking steps to
introduce feature and performance improved disk array products and to further
reduce production and material costs in its effort to offer competitive prices
for its products without significantly affecting its gross margin.
8
<PAGE>
Maintenance of current gross margins or improvement of future gross
margins are dependent upon continued manufacturing cost reductions and the
successful development and market acceptance of the Company's future disk
array controller products. There can be no assurance that the Company will be
able to develop and introduce such products in a timely manner or that such
products will gain or sustain market acceptance. The Company anticipates
increased competition in the market for its disk array products during 1995.
The impact of such competition on the Company's sales and gross profits is
uncertain. The Company anticipates that additional competition could result in
a decline in the selling prices for these products that would impact both gross
margins and operating results. Sales of disk array products accounted for 84%
of net sales during the quarter ended March 31, 1995, as compared to 78.5% of
net sales during the corresponding period in 1994. Sales of the Company's
system board products in the first quarter of 1995 was 13% of total sales. This
compares with sales of $2.3 million or 17% of total sales in the first quarter
of 1994.
The Company's largest customer during the first quarter of 1995 was
Digital Equipment Corporation ("DEC"), which accounted for $4.1 million or 24%
of the Company's sales during that period. The Company second largest
customer during the three month ending March 31 was IBM. Sales to IBM were
$3.8 million or 22% of the total sales. While there are OEM agreements in place
that define the terms of the sales and support services with some of the
Company's largest customers, these agreements do not include specific quantity
commitments. The Company sells products to its customers on a purchase
order basis. As a result, historical sales cannot be relied upon as an accurate
indicator of future sales.
The Company's backlog as of March 31, 1995 totaled $10.3 million. This
ending backlog represents a $2.4 million decline from the corresponding period
of 1994. The Company attributes the reduction in the backlog to the decline in
orders for EISA bus based disk array products as the industry transitions to PCI
bus based products. Due to industry practice with respect to customer changes
in delivery schedules and cancellation of orders, the Company believes that
backlog as of any particular date may not be indicative of actual net revenues
for any succeeding period. Substantially all orders outstanding at March 31,
1995, which were not subsequently changed or canceled would have been scheduled
for delivery within the three months ended June 30, 1995.
The Company continued to release new RAID (Redundant Array of
Independent Disk) products in the latter part of 1994 and the first quarter of
1995. These new product releases are a result of the commitment to
development of new products as well as enhancement of existing products. The
9
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Company believes its future profitability is dependent to a large extent upon
the continued market acceptance of its PCI and SCSI-to-SCSI disk array product
families as well as market acceptance of its feature and performance improved
disk array products. However, there can be no assurance that new products will
be successfully developed or, if developed, that such products or the Company's
current products will achieve and sustain market acceptance.
The Mylex disk array controller products are designed for integration into
the client server, networked PC, and scientific workstation environments.
Because of the Company's transition to primarily disk array controller products,
marketing these products entailed development of new distribution channels and
marketing methods. The Company continued to market its disk array products to
several OEM's during the three months ending March 31, 1995. Sales to major
OEM's accounted for 67% of the Company's total revenue for the first quarter of
1995. Additionally, the Company was able to market these products to leading
distributors, system integrators and value added resellers during the period
through its alternate channel sales division.
This course of seeking additional new markets is motivated by the
Company's commitment to technological innovation and by the Company's desire
to diversify its product line. The Company expects that sales of its current
generation of disk array controller boards will continue to generate a
significant part of the Company's revenue during 1995. A major reduction in
sales of such products without a corresponding increase in the sales of the
Company's new disk array products would have a material adverse effect on
the Company.
The Company's ability to compete successfully in either the personal
computer market or the market for its more sophisticated products depends upon
its ability to develop products which obtain market acceptance, which can be
sold at competitive prices while maintaining adequate gross margin levels and
which are proven to be reliable. Although the Company believes that certain of
its products have certain competitive advantages, there can be no assurance
that the Company will be able to compete successfully in the future or that
other companies may not develop products with greater performance or at more
favorable prices and thus reduce the demand for the Company's products.
The Company depends heavily on its suppliers to provide materials on
timely basis, at a reasonable price, and with suitable credit terms. Although
many of the components for the Company's products are available from
numerous sources at competitive prices, some of the most critically needed
components are sole-sourced. At the current time, the Company is dealing with
world wide shortages of DRAM simm memory modules and surface mount
capacitors. DRAM simm modules are in heavy demand throughout the personal
10
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computer industry and surface mount capacitor supplies are in high demand for
use in the manufacturing of cellular phones. The Company is developing
different design strategies to cope with these shortages. In the event that
essential components, alternative designs or additional manufacturing capacity
cannot be obtained as required, the Company could be unable to meet demand
for its products, thus adversely affecting results from operations. In
addition, scarcity of such components could result in cost increases, which
could adversely affect the Company's gross margins.
SALES AND MARKETING EXPENSES
Sales and marketing expenses for the three months ended March 31, 1995,
totaled $1.1 million, an increase of $351 thousand or 45% from the
corresponding period in 1994. Sales and marketing expenses represented 6.6%
of net sales for the three months ended March 31, 1995, compared to 5.7%
incurred during the three months ended March 31, 1994. Increases in sales
and marketing expenditures resulted from increased head count, higher
compensation and commission expenses as well as increased advertising,
promotional and travel expenses. The Company expects that sales and marketing
expenses will increase during 1995 as the infrastructure is expanded to
support growing market opportunities through both domestic and international
channels.
RESEARCH AND DEVELOPMENT EXPENSES
Research and development expenses for the three months ended March 31,
1995, totaled $957 thousand, an increase of 30% from the $735 thousand
incurred during the corresponding period in 1994. Research and development
expenses represented 5.6% of net sales for the three months ended March 31,
1995 as compared to 5.4% in 1994. Research and development expenses
increased during the first three months of 1995 due to increased staffing
expense resulting from higher salaries and increased head count. The Company
expects to increase its investment in research and development activities
during 1995 in an effort to achieve market acceptance of future products and
to continue its strategy of maintaining technology leadership in the RAID
market.
GENERAL AND ADMINISTRATIVE
General and administrative expenses for the three months ended March
31, 1995, totaled $973 thousand, an increase of $98 thousand or 11% from the
corresponding period of 1994. General and administrative expenses totaled
5.7% of net sales for the three months ended March 31, 1995, compared to 6.4%
incurred during the three months ended March 31, 1994. General and
administrative expenses increased during the quarter due to higher
compensation and benefit expenses as a result of the addition of employees in
this area. Legal expenses also increased over those incurred during the first
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quarter of 1994. The Company anticipates that general and administrative
expenses will continue to increase during 1995. These expenses may vary as a
percentage of net sales in future periods as expenses related to litigation
matters are incurred.
INCOME TAXES
The Company's effective tax rate during the quarter ended March 31,
1995, was 35% as compared to 25% in the corresponding period of the prior
year. The tax rate for the first quarter of 1995 reflects the impact in the
reduction of available tax benefits.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company and American Megatrends, Inc. ("AMI") entered into an
agreement on February 15, 1987, pursuant to which, inter alia, AMI licensed to
the Company the rights to use a basic input/output system ("BIOS") and certain
other technical information in consideration for the payment of royalties. On
May 5, 1992, AMI initiated arbitration proceedings before the American
Arbitration Association in Miami, Florida, asserting a right under the agreement
to audit the Company's books and records for the purpose of calculating
royalties. The Company counterclaimed against AMI for breach of contract,
failure to pay a written account, failure to pay for goods sold and delivered,
and failure to provide required information.
On March 16, 1993, AMI amended its demand for arbitration, seeking
specific performance of AMI's audit rights under the February 15, 1987,
agreement, and in particular, seeking to include in the audit additional records
sought by AMI. AMI has also asserted claims for any monies that the audit may
indicate are due to AMI, for recovery of all fees and costs associated with the
arbitration, and for recovery of additional costs allegedly incurred with
respect to the audit.
On September 3, 1993, while arbitration was still pending, AMI also filed
suit against the Company in the United States District Court in Atlanta,
Georgia, alleging claims similar to those presented in the arbitration. The
complaint alleged claims for breach of contract, fraud, breach of fiduciary
duty, tortious interference with contractual rights and prospective business
relations, and unfair competition. The relief sought included injunctive
relief, accounting damages in an unspecified amount, exemplary damages and
attorneys' fees and costs. On October 29, 1993, the Company filed an answer and
counterclaim denying the allegations of the complaint, setting forth various
affirmative defenses, and presenting counterclaims for breach of contract,
unjust enrichment and unfair
12
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competition. The relief sought included injunctive relief, accounting damages
an unspecified amount, exemplary damages and attorney's fees and costs. On
October 29th, 1993, the Company filed an answer and counterclaimed denying
the allegations of the complaint, setting forth various affirmative defenses,
and presenting counterclaims for breach of contracts, unjust enrichment and
unfair competition. On April 1, 1994, both AMI and the Company filed amended
pleadings in the arbitration to include all claims and counterclaims
previously asserted in the federal court action. Pursuant to a stipulation
of the parties, the federal court lawsuit was dismissed without prejudice in
February 1995. Preliminary conferences with the arbitrators were held on
March 19, 1993, on November 2, 1993, on July 29, 1994 and on November 22,
1994. The matter is in the discovery stage. The evidentiary hearings are
scheduled for a two-week period beginning June 19, 1995.
While the Company believes it has numerous defenses to AMI's claims and
intends to continue to vigorously defend the arbitration, there can be no
assurance that the Company will ultimately prevail. An unfavorable outcome
could have a material adverse effect on the Company's business and results of
operations.
The former Chief Executive Officer of the Company, Dr. M. A. Chowdry,
filed a complaint against the Company and its outside directors seeking $5
million in damages on October 13, 1994, claiming breach of an employment
agreement that he entered into with the Company approximately three months
prior to his termination as the Company's Chief Executive Officer. Dr.
Chowdry voluntarily filed an amendment to his complaint on February 23, 1995.
On March 17, 1995 the Company and the individual defendants filed a response
(demurrer) to the amended complaint. A hearing on the demurrer filed by the
Company and the individual defendants was held on April 27, 1995 and a
decision on the demurrer is still under submission. The Company believes it
has meritorious defenses and will vigorously defend this lawsuit.
In addition to matters discussed herein, the Company is a party to routine
suits and claims arising in the ordinary course of its business which the
Company does not believe will have a material adverse effect on its business or
financial condition.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, in Fremont, California, on
the 12th day of May 1995.
MYLEX CORPORATION
By /s/ Colleen Meyers
--------------------------------
Colleen Meyers
Vice President of Finance and
Chief Financial Officer
14
<PAGE>
INDEX TO EXHIBITS
Mylex Corporation
Quarterly Report on Form 10-Q
Sequentially
Exhibit No. Description Numbered Page
- ----------- ----------- -------------
11.1 Statement re Computation
of Per Share Earnings 16-17
15
<PAGE>
EXHIBIT 11.1
MYLEX CORPORATION
EARNINGS PER SHARE COMPUTATION
THREE MONTHS ENDED MARCH 31, 1995 AND 1994
The basis for computing net income per common share is described in Note A to
the financial statements, beginning on page 5 of the Company's Quarterly Report
on Form 10-Q for the three months ended March 31, 1995.
The computation of primary and fully diluted earnings per share is as follows:
<TABLE>
<CAPTION>
Three Months Ended
PRIMARY EARNINGS March 31, March 31,
PER SHARE 1995 1994
<S> <C> <C>
Net earnings $2,040,200 $1,089,200
Weighted average number on
common shares outstanding
during this period 14,648,300 13,053,800
Number of common share equivalents
resulting from stock options
and warrants, computed using
the treasury stock method 863,600 1,597,900
-----------------------------
Number of common and common share 15,511,900 14,651,700
equivalents used in computation
Primary earnings per share $0.13 $0.07
</TABLE>
16
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<TABLE>
<CAPTION>
Three Months Ended
FULLY DILUTED EARNINGS March 31, March 31,
PER SHARE 1995 1994
<S> <C> <C>
Net earnings $2,040,200 $1,089,200
Interest on converted convertible
debentures (net of taxes) 0 43,250
-----------------------------
$2,040,200 $1,132,450
Weighted average number on
common shares outstanding
during this period 14,648,300 13,053,800
Number of common share equivalents
resulting from stock options
and warrants, computed using
the treasury stock method 864,300 1,597,900
Weignted average shares isssuable
from assumed conversion of
convertible subordinated
debentures since issuance 0 597,300
-----------------------------
Weighted average common and
dilutive common shares outstanding 15,512,600 15,249,000
Fully diluted earnings per share $0.13 $0.07
</TABLE>
17
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 562,179
<SECURITIES> 0
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0
0
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</TABLE>
