SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 2, 1995
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-10464
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DALLAS SEMICONDUCTOR CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 75-1935715
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4401 South Beltwood Parkway, Dallas, Texas 75244-3292
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 450-0400
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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
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Number of shares outstanding of the registrant's Common Stock as of
May 7, 1995: 25,994,821.
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<PAGE> 2
DALLAS SEMICONDUCTOR CORPORATION
INDEX TO FORM 10-Q
PART I. FINANCIAL INFORMATION
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Item 1. FINANCIAL STATEMENTS Page No.
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Condensed Consolidated Statements of Income (Unaudited)
Three months ended April 2, 1995 and April 3, 1994 ...................3
Condensed Consolidated Balance Sheets
April 2, 1995 (Unaudited) and January 1, 1995 ........................4
Condensed Consolidated Statements of Cash Flows (Unaudited)
Three months ended April 2, 1995 and April 3, 1994 ...................5
Notes to Condensed Consolidated Financial Statements ............. 6 - 7
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
- ------- ----------------------------------------
FINANCIAL CONDIDTION AND RESULTS OF OPERATIONS ...... 8 - 10
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PART II. OTHER INFORMATION
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Items 1. through 6. ................................................. 11
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SIGNATURE ............................................................ 12
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<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
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DALLAS SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months ended
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Apr. 2, Apr. 3,
(Thousands except per share amounts) 1995 1994
- ------------------------------------ ------- -------
Net sales $52,035 $43,183
Operating costs and expenses:
Cost of sales 26,045 21,331
Research and development 6,532 5,253
Selling, general and administrative 7,905 6,284
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Total 40,482 32,868
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Operating income 11,553 10,315
Interest income, net 733 798
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Income before income taxes 12,286 11,113
Provision for income taxes 4,116 3,779
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Net income $ 8,170 $ 7,334
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Net income per share $ .30 $ .27
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Weighted average common and common
equivalent shares outstanding 27,243 27,414
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Dividends declared per share $ .025 $ --
======= =======
See accompanying notes.
<PAGE> 4
DALLAS SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
Apr. 2, Jan. 1,
(Thousands except per share amounts) 1995 1995
- ----------------------------------------------- --------- ---------
(unaudited)
Assets
Current assets:
Cash and cash investments $ 65,824 $ 64,520
Accounts receivable, net 30,046 28,330
Inventories 45,125 40,453
Deferred tax assets 2,629 2,561
Other current assets 3,178 3,730
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Total current assets 146,802 139,594
Property, plant and equipment, at cost:
Land 6,088 5,400
Building and improvements 30,495 28,617
Machinery and equipment 133,632 130,216
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170,215 164,233
Less accumulated depreciation (90,298) (85,391)
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Property, plant and equipment, net 79,917 78,842
Other assets 3,340 2,791
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$230,059 $221,227
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 13,168 $ 14,827
Accrued salaries and benefits 4,786 5,328
Accrued taxes other than income 932 2,486
Other accrued liabilities 2,178 2,712
Income taxes payable 4,710 1,121
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Total current liabilities 25,774 26,474
Stockholders' equity:
Preferred stock, $0.10 par value;
5,000,000 shares authorized; no shares
issued and outstanding --- ---
Common stock, $0.02 par value; 40,000,000
shares authorized; issued:
25,942,004 shares at April 2, 1995, and
25,575,586 shares at January 1, 1995 519 511
Additional paid-in capital 81,153 80,562
Retained earnings 123,488 115,962
Treasury stock, shares at cost:
55,625 shares at April 2, 1995, and
153,900 shares at January 1, 1995 (875) (2,282)
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Total stockholders' equity 204,285 194,753
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$230,059 $221,227
======== ========
See accompanying notes.
<PAGE> 5
DALLAS SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
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Apr. 2, Apr. 3,
(Thousands) 1995 1994
- -------------------------------------------- -------- --------
Cash flows from operating activities:
Net income $ 8,170 $ 7,334
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 4,907 3,297
Deferred tax benefit (68) (347)
Increase in receivables (1,716) (917)
Increase in inventories (4,672) (590)
Decrease (increase) in other current assets 552 (9)
(Decrease) increase in accounts payable (1,659) 1,605
Decrease in accrued salaries and benefits (542) (784)
Decrease in accrued taxes other than income (1,554) (807)
Decrease in other accrued liabilities (534) (206)
Increase in income taxes payable 4,138 2,699
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Net cash provided by operating activities 7,022 11,275
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Cash flows from investing activities:
Additions to property, plant and equipment (5,982) (8,708)
(Increase) decrease in other assets (549) 70
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Net cash used by investing activities (6,531) (8,638)
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Cash flows from financing activities:
Proceeds from issuance of stock
upon exercise of stock options 1,877 440
Purchase of treasury stock (420) --
Dividend paid to shareholders (644) --
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Net cash provided by financing activities 813 440
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Net increase in cash and cash investments 1,304 3,077
Cash and cash investments at beginning of
period 64,520 76,273
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Cash and cash investments at end of period $ 65,824 $ 79,350
======== ========
Cash payments for:
Interest $ -- $ 6
Income taxes $ 47 $ 1,426
Supplementary schedule of non-cash financing activities:
Reduction of income tax payable and increase
in paid-in capital resulting from the tax benefit
of stock option exercises $ 549 $ 367
See accompanying notes.
<PAGE> 6
DALLAS SEMICONDUCTOR CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The accompanying condensed consolidated financial statements have not
been audited by independent auditors, except for the balance sheet as
of January 1, 1995. In the opinion of the Company's management, the
accompanying financial statements reflect all adjustments (consisting only
of normal recurring accruals) necessary to present fairly the Company's
financial position at April 2, 1995 and January 1, 1995,and results of
operations and cash flows for the periods presented.
Certain footnote information has been condensed or omitted from these
financial statements. Therefore, these financial statements should be read
in conjunction with the financial statements and related notes included in
the Company's 1994 Annual Report, which statements and notes were
incorporated by reference in the Company's Annual Report on Form 10-K for
the year ended January 1, 1995. Results of operations for the three
months ended April 2, 1995 are not necessarily indicative of results to be
expected for the full year.
During the quarter ended April 2, 1995, the Company classified its cash
investments as current. Amortized cost of such investments approximates
their fair market values. Accordingly, all of the Company's investments are
presented as current assets and balances as of January 1, 1995 have been
reclassified to conform to the April 2, 1995 presentation.
The difference between primary and fully diluted net income per share
was not material in any period.
April 2, Jan. 1,
2. INVENTORIES (in thousands) 1995 1995
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Raw materials $ 6,923 $ 5,596
Work-in-process 25,244 23,727
Finished goods 12,958 11,130
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$ 45,125 $ 40,453
======== ========
Inventories are stated at the lower of standard cost, which approximates
actual cost (first-in, first-out), or market.
<PAGE> 7
DALLAS SEMICONDUCTOR CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
3. INCOME TAXES
The provision for income taxes includes estimated federal and state income
taxes at statutory rates and a deferred tax benefit of $68,000 and $347,000
for the first quarter of 1995 and 1994, respectively. Company's effective
tax rate was 33.5% in the three months ended April 2, 1995, decreasing from
34.0% for the same period in 1994. This decrease was a result of changes
in anticipated differences between income for financial statement purposes
and taxable income for the two periods.
<PAGE> 8
DALLAS SEMICONDUCTOR CORPORATION
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
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Net sales for the first quarter of 1995 were $52,035,000 an increase of
20% over the first quarter of 1994. The Company's revenue growth is
supported by increased unit sales of new and existing products in several
product families including Telecommunications, System Extension,
Microcontrollers, NV SRAMs, Silicon Timed Circuits, and other product
families.
Gross margins remained relatively constant in the first quarter of 1995,
decreasing to 50% from 51% in the first quarter of 1994.
Research and development ("R&D") expenses for the first quarter of
1995 increased 24% from the first quarter of 1994. The increase resulted
primarily from increased personnel costs due to increased headcount.
R&D expenses as a percent of sales increased from 12% in the first quarter
of 1994 to 13% in the first quarter of 1995.
Selling, general and administrative ("SG&A") expenses for the first quarter
of 1995 increased 26% compared with the first quarter of 1994. The
increase in SG&A expenses resulted primarily from increased sales commission
amounts due to higher net sales, increased personnel costs and increased
advertising expenditures.
Operating income for the first quarter of 1995 increased 12% over the same
period in 1994. Operating income as a percent of sales decreased in the
first quarter of 1995 to 22% from 24% in the first quarter of 1994. The
decrease resulted from higher first quarter 1995 operating expenses as a
percent of net sales.
Net interest income decreased by $65,000 in the first quarter of 1995
compared with the first quarter of 1994. The decrease resulted primarily
from lower average cash balances during the first quarter of 1995. Changes
in interest rates will continue to affect net interest income as will any
substantial change in the amount of the Company's cash and cash
investments or borrowings.
<PAGE> 9
The provision for income taxes includes estimated federal and state income
taxes at statutory rates and a deferred tax benefit of $68,000 and $347,000
in the first quarter of 1995 and 1994, respectively. The Company's effective
tax rate decreased from 34.0% in the first quarter of 1994 to 33.5% in the
first quarter of 1995. This decrease was a result of changes in anticipated
differences between income for financial statement purposes and taxable
income for the two periods.
A number of uncertainties exist that may influence the Company's future
operating results, including general economic conditions, changes in
conditions affecting original equipment manufacturers, competition
(including alternative technologies), the Company's success in developing
new products and process technologies, market acceptance of the Company's
new products, the ability of the Company to continue diversifying its
product line, manufacturing performance, availability and price
fluctuations of raw materials, and other factors.
FINANCIAL CONDITION
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Cash and cash investments were $65.8 million at the end of the first
quarter of 1995, compared with $64.5 million at the end of fiscal year
1994. The Company continued investing in financial instruments having
maturities in excess of one year in order to obtain yields higher than
those available in the short-term market.
Gross capital additions were $6.0 million in the first quarter of 1995,
compared with $8.7 million in the same period of 1994. The decrease is
primarily the result of lower wafer fabrication facility capital expenditures
in the first quarter of 1995 compared with the first quarter of 1994.
In February 1995, the Company purchased two buildings adjacent to its
facility in Dallas for $1.6 million, increasing the Company's owned
building space to approximately 392,000 square feet and land to 26.4
acres. Capital expenditures for 1995, estimated at approximately $40
million including the building purchase, is expected to be for wafer
fabrication, manufacturing and test equipment, and computer hardware and
software.
<PAGE> 10
In 1994 the board of directors authorized the purchase from time-to-time,
depending on market conditions, up to 500,000 shares of the Company's
common stock. As of April 2, 1995, a total of 180,000 shares, totalling
$2,703,000 have been purchased pursuant to this stock repurchase program.
In the first quarter of 1995, 125,000 of these treasury shares were
issued to fund employee stock option exercises.
On March 1, 1995, a $.025 dividend was paid on each outstanding share of
common stock to shareholders of record on February 15, 1995, totalling
$644,000. On April 26, 1995 a $.025 dividend was declared on each
outstanding share of common stock, payable on June 1, 1995, to shareholders
of record on May 15, 1995.
The Company had no long-term debt at the end of the first quarter of 1995
or at the end of fiscal 1994.
<PAGE> 11
DALLAS SEMICONDUCTOR CORPORATION
PART II. OTHER INFORMATION
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Items 1.- 5.
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Not applicable.
Item 6. Exhibits and Reports on Form 8-K
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(a) Exhibit 27 - Financial Data Schedule
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None.
(b) Reports on Form 8-K
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No Reports on Form 8-K were filed during the period
for which this report is filed.
<PAGE> 12
DALLAS SEMICONDUCTOR CORPORATION
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.
DALLAS SEMICONDUCTOR CORPORATION
By: /s/ Alan P. Hale
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Alan P. Hale
Vice President, Finance
Date: May 16, 1995
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> APR-02-1995
<CASH> 65,824
<SECURITIES> 0
<RECEIVABLES> 30,046
<ALLOWANCES> 0
<INVENTORY> 45,125
<CURRENT-ASSETS> 146,802
<PP&E> 170,215
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<CURRENT-LIABILITIES> 25,774
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<COMMON> 519
0
0
<OTHER-SE> 204,285
<TOTAL-LIABILITY-AND-EQUITY> 230,059
<SALES> 52,035
<TOTAL-REVENUES> 52,035
<CGS> 26,045
<TOTAL-COSTS> 40,482
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<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 12,286
<INCOME-TAX> 4,116
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,170
<EPS-PRIMARY> .30
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