<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- --- ACT OF 1934
For the Fiscal Year Ended January 31, 1996 or
----------------
TRANSITION REPORT PURSUANT TO SECTION 14 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
For the transition period from to
---------- ----------
Commission File Number 0-14677
DSP TECHNOLOGY INC.
(Exact name of registrant as specified in its charter)
CALIFORNIA 94-2832651
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
48500 KATO ROAD, FREMONT, CALIFORNIA 94538
(Address of principal executive offices, zip code)
Registrant's telephone number, including area code: (510) 657-7555
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, WITHOUT PAR VALUE
(Title of Class)
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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. X
---
The aggregate market value of registrant's voting Common Stock held by non-
affiliates of the registrant was approximately $9,404,000 (based on the closing
sales price of the Company's Common Stock at April 18, 1996 as reported by
NASDAQ). Shares of Common Stock held by each officer and director and by each
person who owns more than 5% of the Company's Common Stock have been excluded
because such persons may be deemed to be affiliates. This is not intended to be
a conclusive determination of affiliate status for any other purposes. The
number of shares outstanding of the registrant's Common Stock at April 18, 1996
was 2,159,963.
DOCUMENTS INCORPORATED BY REFERENCE:
Information in Part III is incorporated by reference to the Proxy Statement
for the Company's 1995 Annual Meeting of Shareholders which is to be filed with
the Securities and Exchange Commission before May 24, 1996.
This report (including exhibits) contains 26 pages. The Index to Exhibits
begins on page 21 of this report.
1
<PAGE>
PART I
ITEM 1: BUSINESS
This report contains forward-looking statements identified by use of the
words "expects," "anticipates," "believes," or other similar phrases within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Actual results could differ materially from
those projected in the forward-looking statements as a result of competition,
technological change and other risks detailed from time to time the Company's
filings with the Securities and Exchange Commission.
INTRODUCTION
DSP Technology Inc. (the "Company") was incorporated in California in July
1982 and commenced operations in May 1984. All references in this report to the
"Company" refer to DSP Technology Inc. and its wholly-owned subsidiaries.
The Company designs, develops, manufactures and markets high-speed
computer-automated instrumentation for measurement and control applications in
three major areas: powertrain testing, vehicle safety and component testing, and
general data acquisition and signal analysis. The transportation industry is
currently its largest market while the Company continues to market products to
aerospace companies, universities and government-funded agencies.
The Company's products are used by engineers and scientists to gather and
measure analog signals generated by transducers and/or detectors which measure
physical properties such as temperature, pressure, acceleration and radiation.
These products have been used in the transportation industry in applications as
diverse as powertrain dynamometer control, automotive combustion research, and
vehicle impact testing. Aerospace companies, universities and government-funded
agencies, on the other hand, use the Company's products in ultrasonics, chemical
kinetics, plasma diagnostics, spectroscopy, fusion research, explosives testing,
and vibration analysis.
In June 1994, the Company acquired substantially all the assets including
the technology of Applion, a California partnership, for $420,000 cash. The
acquisition supported the Company's corporate strategy to become a leading
supplier of high-speed data acquisition and control instrumentation. Applion's
products complemented the Company's sales of integrated turnkey systems with
what the Company believed will be a higher unit-volume, lower unit-price product
line. See "Products--SigLab."
In February 1995, the Company entered into a strategic alliance agreement
with FEV Motorentechnik GmbH & CO KG ("FEV"). The purpose of the alliance is to
develop and distribute test instrumentation and control products for the
transportation industry. FEV is a privately-held company based in Aachen,
Germany, and is a leader in complete engine and powertrain research and
development and instrumentation for the transportation industry.
PRODUCTS
The Company manufactures and markets data acquisition and control products
in the form of integrated systems, modules and software. These products are
categorized into three application areas: powertrain testing, vehicle safety and
component testing, and general data acquisition and signal analysis.
Powertrain Testing Products:
---------------------------
RedLine Advanced Powertrain Test ("RedLine ADAPT"). RedLine ADAPT performs
--------------------------------------------------
many inter-related functions in a dynamometer test cell. It provides real-time
control over the engine or powertrain under test and the dynamometer used to
simulate road, load and driver conditions. It can be integrated
2
<PAGE>
with other test-cell instruments or sub-systems. It can modify real-time control
on the basis of information about the internal combustion process, emissions,
temperatures, pressures and safety conditions. It also offers networking
capabilities. All of these features are controlled through a convenient windows-
based graphical user interface. The systems sell from $30,000 for a base system
up to $500,000 with accessory products, hardware spares, custom software,
integration, installation and training.
RedLine Advanced Combustion Analysis System ("RedLine ACAP"). RedLine ACAP
------------------------------------------------------------
is used in the transportation industry for applications involving powertrain
development. The system measures both combustion and/or spark events in real-
time. The systems range in price from about $30,000 for a base system to over
$150,000.
Test Cell Instrumentation and Accessory Products. The Company provides
------------------------------------------------
various test cell instrumentation and support products as integral parts of
RedLine ACAP and RedLine ADAPT installations. These off-the-shelf solutions
include the RedLine CONNECT signal interface system, lubricant conditioners and
containerized powertrain test cells. It also provides accessory products such as
swing boom assemblies, engine mounting stands and portable cooling fans.
Customer Support Service ("RedLine ASSIST"). RedLine ASSIST is a
-------------------------------------------
comprehensive after-sale customer support package that includes two-way video
linkage between the customer and the Company's support technicians, plus on-line
interactive sharing of application software. This combination of product and
service assures remote, real-time troubleshooting of customers' systems.
Vehicle Safety and Component Testing Products.
---------------------------------------------
IMPAX Data Acquisition Systems ("IMPAX"). IMPAX is a system typically used
----------------------------------------
in collecting and processing data from full-scale vehicle crash tests, sled
simulators and component test stands. In addition, they have been used for
investigating lift-off dynamics for TITAN IV launch vehicles. Systems prices
range from about $150,000 to $600,000 depending on the configuration.
General Data Acquisition and Signal Analysis Products.
-----------------------------------------------------
SigLab Signal Acquisition Products ("SigLab"). SigLab high-performance
---------------------------------------------
signal acquisition products are subsystems for personal computers and
workstations in the electro-mechanical device analysis market. SigLab products
provide a cost-effective, portable technology for measurement applications like
computer hard disk head positioning or acoustic noise suppression systems in
automobiles. The products are controlled by and integrated with the MATLAB
software from The MathWorks Inc., of Natick, Massachusetts. The products range
in price from $ 5,000 for a base 2-channel unit to $21,000 for an 8-channel
system with optional software and additional memory.
Custom Data Acquisition Systems. The Company, also, designs custom systems
-------------------------------
for customer-specific measurement or control applications. These systems are
configured from the Company's line of modules, such as, signal conditioners,
transient recorders, analog-to-digital converters and interface modules. These
systems are typically sold to universities, government-funded labs and research
and development labs. The typical selling price of a system ranges from about
$25,000 to about $300,000 for a complex installation.
CUSTOMERS
Transportation industry customers use the Company's systems to help improve
vehicle performance and durability and reduce fuel consumption and emissions. In
addition, they gather and process data from vehicle crash tests, other impact
tests, sled simulators and component test stands. The Company's major customers
in the transportation market are General Motors ("GM"), Chrysler
3
<PAGE>
Corporation ("Chrysler"), Ford Motor Company ("Ford"), Sverdrup Technology,
Hyundai and Morton International.
University, government-funded laboratories, aerospace and research
laboratories (collectively, "Advanced Research") utilize the Company's products
in defense and aerospace applications, energy and fusion research and university
scientific research. The Company's major customers in the advanced research
market include EG&G, Sandia National Laboratories, Martin Marietta Corporation,
University of Virginia, and Boeing.
GM accounted for 11% of net sales in fiscal 1996 while three separate
customers accounted for 10% or more of net sales in fiscal 1995 as follows: AVL
for 19%, GM for 14% and Ford for 12%. Ford and GM accounted for 16% and 14% of
sales in fiscal 1994, respectively. No other customer accounted for 10% or more
of the Company's net sales in fiscal years 1996, 1995 or 1994.
MANUFACTURING AND SUPPLIERS
The Company manufactures its products from components and prefabricated
parts such as integrated circuits, printed circuit boards, power supplies, and
enclosures manufactured by others. Manufacturing operations consist of assembly
of printed circuit boards, power supplies, and crates, system integration and
final testing. Materials and components used by the Company in manufacturing are
available primarily from domestic sources. Where possible, the Company buys from
multiple sources to avoid dependence on any single supplier. However, certain
custom analog devices are only available from a limited number of suppliers.
MARKETING AND SALES
In the United States, the Company primarily sells and services its products
through its own sales and service organizations located in Michigan and
California. In Canada, Western Europe, Korea and Japan, the Company sells its
products through independent distributors through whom the Company provides
technical and administrative assistance. In the United Kingdom, the Company
operates a sales and customer support subsidiary for its powertrain testing
products. The Company's standard terms of sale generally require payment within
30 days of shipment.
Export sales, primarily to Western Europe, Canada and the Far East,
accounted for approximately 18%, 18%, and 10% of sales in 1996, 1995, and 1994,
respectively.
At January 31, 1996 the Company had an order backlog of approximately
$4,900,000, compared to a backlog of approximately $5,400,000 at January 31,
1995, and approximately $1,750,000 at January 31, 1994. Backlog consists of
orders believed by management to be firm and scheduled for delivery within six
months. However, most orders can be rescheduled or canceled by customers without
significant penalty. In addition, backlog is dependent on the timing of orders,
and on seasonal spending for capital requirements. Accordingly, backlog at
January 31, 1996, or at any other date, may not be indicative of prospective
sales.
SERVICE AND WARRANTY
The Company maintains a telephone "hotline" staffed with qualified
technicians to respond to service calls. Most servicing is performed at its
facilities in Fremont, California and Ann Arbor, Michigan.
The Company generally extends a one year warranty for its products.
Warranty costs have been nominal to date.
4
<PAGE>
RESEARCH AND DEVELOPMENT
The Company's ability to compete successfully in an industry subject to
rapid technological change depends on, among other things, its ability to
anticipate and respond to such change. Accordingly, the Company is committed to
a high level of research and development activity. The Company incurred
expenditures for research and development of $2,250,000 in fiscal 1996,
$1,842,000 in fiscal 1995, and $1,362,000 in fiscal 1994, representing 14%, 14%,
and 15%, of total sales in each such period. In accordance with the Statement of
Financial Accounting Standards No. 86 which requires the capitalization of
software development costs incurred subsequent to establishment of the
technological feasibility of producing the finished software product, the
Company capitalized $322,000, $100,000, and $276,000 in fiscals 1996, 1995 and
1994, respectively.
There can be no assurance that customers' budgets in the automotive and
advanced research markets for data acquisition and control products will
continue at present levels or that the Company will be successful in marketing
any new product it develops. In addition, there can be no assurance that the
Company will be able to develop, manufacture or market additional products as a
result of its efforts; that expenditures in addition to those currently
anticipated may not be required to complete the research and development or
that, if required, financing for these expenditures will be available; that
future sales from existing or developed products will be significant; or that
any sales will be profitable.
COMPETITION
Competition, from both U.S. and foreign competitors, is strong and active.
Some of these competitors are substantially larger companies with greater
resources. Management believes that these companies include AVL located in Graz,
Austria, and Sverdrup Technologies.
The Company competes primarily on the basis of product diversity, features
and functions, price/performance, flexibility, and technical support. In
addition, the Company believes that an additional competitive factor in the
automotive market is its installed base in the United States. The Company
believes that it competes favourably with respect to all these factors. Systems
integration experience and ability is increasingly a factor in large system
orders and the Company believes that it has the personnel and the resources to
ably compete in this area.
PROPRIETARY RIGHTS
The Company relies upon a combination of copyright, trade secret laws and
non-disclosure and licensing agreements to establish and maintain its
proprietary rights to its products. The laws of certain foreign countries may
not protect the Company's proprietary rights to the same extent as do the laws
of the United States. Although the Company continues to implement protective
measures and intends to defend its proprietary rights, there can be no assurance
that these measures will be successful. The Company believes, however, that,
because of the rapid pace of technological change in the automated test,
measurement and control industries, the legal protections for its products are
less significant factors in the Company's success than the knowledge, ability,
and experience of the Company's employees, the frequency of product enhancements
and the timeliness and quality of support services provided by the Company.
The Company is subject to the risk of adverse claims and litigation
alleging infringement of intellectual property rights. Certain technology used
in the Company's products is licensed from third parties on a non-exclusive
basis. These license agreements generally require the Company to pay royalties
and to fulfill confidentiality obligations in order to maintain the licenses.
The termination of any of these licenses may have a material adverse effect on
the Company's operations. While it may be necessary or desirable in the future
to obtain other licenses relating to one or more of its products or
5
<PAGE>
relating to current or future technologies, there can be no assurance that the
Company will be able to do so on commercially reasonable terms.
EMPLOYEES
The Company had 112 employees at January 31, 1996. Of these employees, 73
worked in manufacturing and engineering, 25 in marketing and sales and 14 in
administration. None of the Company's employees is represented by a labor union
and there has never been a disruption of operations due to labor dispute.
ITEM 2: PROPERTIES
The Company's facilities consist of approximately 28,000 square feet of
space in Fremont, California and about 13,500 square feet of space in Ann Arbor,
Michigan which are leased under operating leases. The Fremont facility lease
which expires in October 1998 provides for monthly rent payments of $13,009
during the first year and progressing to $15,146 during the final year. The Ann
Arbor facility lease is a seven year lease which expires in January 2000,
providing for monthly rent payments starting in January 1993 of $8,551 during
the first year and increasing annually until the monthly payments reach $10,257
during the seventh year. The Company is obligated to pay real estate taxes,
insurance and maintenance expenses associated with the leased facilities.
Management believes that the existing facilities are adequate for the Company's
present size.
ITEM 3: LEGAL PROCEEDINGS
Not applicable.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matter was submitted to a vote of security holders during the fourth
quarter of the Company's fiscal year ended January 31, 1996.
PART II
ITEM 5: MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
MARKET INFORMATION
The Company's Common Stock is currently traded on the NASDAQ Market under
the symbol DSPT. The following table sets forth, for the periods indicated, the
high and low closing sales prices of the Common Stock as reported by NASDAQ.
<TABLE>
<CAPTION>
Year ended January 31, 1996 Year ended January 31, 1995
--------------------------- ---------------------------
High Low High Low
---- --- ---- ---
<S> <C> <C> <C> <C>
First Quarter $6-7/8 $ 5 $4-3/8 $ 3
Second Quarter 7-5/8 5-3/4 4-1/4 3-1/8
Third Quarter 7-7/8 6 4-3/8 3-1/8
Fourth Quarter 7-1/2 6 6 3-1/2
</TABLE>
6
<PAGE>
HOLDERS
The approximate number of holders of record of the Company's Common Stock
at April 24, 1996 was 125. The Company believes that these recordholders hold
beneficially for more than 500 shareholders.
DIVIDEND POLICY
The Company has not paid dividends on its common stock. The Board of
Directors intends to retain earnings for the foreseeable future for the
Company's business.
ITEM 6: SELECTED FINANCIAL DATA
The following table presents selected historical financial data for the
Company derived from the audited financial statements of the Company and should
be read in conjunction with Item 7: "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Consolidated Financial
Statements and respective Notes thereto, included elsewhere in this report.
DSP Technology Inc.
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Operating Results Data (for the year):
- --------------------------------------
Net sales $15,538 $12,977 $9,180 $11,041 $8,226
Net income 1,277 874 250 921 831
Net income per common share .55 .40 .12 .43 .40
Balance Sheet Data (at year end):
- ---------------------------------
Working capital $ 5,472 $ 4,190 $3,644 $ 3,574 $2,775
Total assets 10,294 8,744 6,774 6,671 5,937
Long-term obligations -- -- -- -- --
Shareholders' equity 7,698 6,268 5,390 5,090 4,134
</TABLE>
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
RESULTS OF OPERATIONS
The following table sets forth, for the indicated periods, the percentages
that certain items in the Consolidated Statements of Income bear to net sales.
The table and subsequent discussion should be read in conjunction with the
Consolidated Financial Statements and the Notes thereto included elsewhere in
this report.
<TABLE>
<CAPTION>
Year ended January 31,
-------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Net sales 100% 100% 100%
Cost of sales 40 40 44
Research and development 14 14 15
Marketing, general and administrative 33 35 37
Operating income 13 11 4
Net income 8 7 3
</TABLE>
7
<PAGE>
Net sales increased by 20% to $15,538,000 in 1996 and by 41% to $12,977,000
in 1995. The increases in 1996 and 1995 were principally due to continued higher
shipments of the Company's RedLine products.
Cost of sales as a percentage of net sales were 40%, 40%, and 44% in 1996,
1995 and 1994, respectively. In 1996, further positive benefits from economies
of scale were offset by higher volume of lower-margin products and services. In
1995, the lower cost of sales percentage reflected the positive effect of a
higher margin product mix and economies of scale resulting from higher volume
production.
Research and development expenses increased by $408,000 to $2,250,000 in
1996 and by $480,000 to $1,842,000 in 1995. As a percentage of net sales,
research and development expenses were 14%, 14%, and 15% in 1996, 1995 and 1994.
The increases in expenses in both 1996 and 1995 were attributable to personnel
additions. In addition, for 1995, the higher amortization of RedLine products'
software development costs in 1995 more than offset lower capitalization of
RedLine ADAPT software development costs, contributing to the increase.
Marketing, general and administrative expenses increased by 13% to
$5,145,000 (or 33% of net sales) in 1996 from $4,558,000 (or 35% of net sales)
in 1995 from $3,432,000 (or 37% of net sales) in 1994. The increase in 1996 was
primarily due to higher expenses associated with a major trade show, higher
sales expenses and increased legal expenses associated with strategic alliance
and acquisition negotiation activities. In 1995, the higher expenses were
principally a result of higher marketing and administrative expenses for
technical and marketing support personnel at the Transportation Group, higher
selling expenses associated with increased revenues, higher legal expenses in
connection with various matters, and higher trade show expenses.
Net interest income increased to $136,000 in 1996 after decreasing to
$41,000 in 1995 from $69,000 in 1994. The increase this year was due to higher
available cash balances invested in higher-yielding interest-bearing accounts
this year compared to 1995. The decrease in 1995 reflected lower cash balances
invested in interest bearing accounts with continued lower interest rates due to
market conditions.
The effective tax rate was approximately 39% in 1996, 40% in 1995, and 37%
in 1994.
As a result of the factors discussed above, net income increased to
$1,277,000, or $.55 per share in 1996 compared to $874,000, or $.40 per share in
1995, and net income of $250,000, or $.12 per share, in 1994.
FACTORS THAT MAY AFFECT FUTURE RESULTS
Large system orders, when they occur, represent a large percentage of the
Company's revenues. Also, sales of such systems have been concentrated in a
relatively small number of customers. The Company did not receive a large system
order in 1996, while in 1995, the Company's revenues and orders benefited from
receipt of two major system contracts totaling about $3.6 million. Hence, the
Company's operating results may fluctuate, especially when measured on a
quarterly basis, as a result of the timing of receipt of major system orders.
The Company's future operating results are also dependent upon a number of
factors, including: its ability to achieve and continue market acceptance of
current and new products; the mix of products sold; uncertainties relative to
general market conditions and conditions in the automotive industry, including
capital budgets; the Company's ability to withstand competition, particularly
from several companies that are much larger in size than the Company; the
Company's ability to penetrate foreign
8
<PAGE>
markets; the Company's ability to attract and retain key technical and sales
personnel; natural disasters, particularly earthquakes which may strike the
California area where the Company's headquarters and manufacturing facility are
located; and availability and cost of components for its products. The Company
believes that its growth is dependent on the ability to perform system
integration for customers and it is developing expertise in this area.
Because of the foregoing factors, as well as other factors affecting the
Company's operating results, past financial performance should not be considered
to be a reliable indicator of future performance, and investors should not use
historical trends to anticipate results or trends in future periods.
LIQUIDITY AND CAPITAL RESOURCES
Working capital increased by $1,282,000 to $5,472,000 at January 31, 1996
from $4,190,000 at January 31, 1995, while the current ratio increased to 3.2 to
1.0 from 2.8 to 1.0. In 1996, cash and cash equivalents increased to $1,816,000
from $1,334,000 primarily due to $1,417,000 provided by operating activities,
offset primarily by $521,000 used for capital expenditures and $322,000
investment in software development. At January 31, 1996, the Company had a
$1,000,000 secured bank line of credit.
The Company's management believes that cash and cash equivalents, funds
from operations and funds available under its bank line of credit will be
sufficient to satisfy its anticipated requirements in 1996. At January 31, 1996,
the Company had no material outstanding commitments to purchase capital
equipment.
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Consolidated Financial Statements
<TABLE>
<CAPTION>
DSP TECHNOLOGY INC. AND SUBSIDIARIES Page
----
<S> <C>
Report of Independent Certified Public Accountants 10
Consolidated Balance Sheets 11
Consolidated Statements of Income 12
Consolidated Statement of Shareholders' Equity 13
Consolidated Statements of Cash Flows 14
Notes to Consolidated Financial Statements 15
</TABLE>
9
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of DSP Technology Inc.:
We have audited the accompanying consolidated balance sheets of DSP
Technology Inc. and subsidiaries as of January 31, 1996 and 1995, and the
related consolidated statements of income, shareholders' equity and cash flows
for each of the three years in the period ended January 31, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of DSP Technology
Inc. and subsidiaries as of January 31, 1996 and 1995, and the consolidated
results of their operations and their consolidated cash flows for each of the
three years in the period ended January 31, 1996, in conformity with generally
accepted accounting principles.
GRANT THORNTON LLP
San Jose, California
March 22, 1996
10
<PAGE>
DSP TECHNOLOGY INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
January 31,
-----------------------
1996 1995
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,816 $1,334
Certificates of deposit 199 --
Accounts receivable, net of allowance for doubtful
accounts of $50 in 1996 and 1995 3,302 3,003
Inventories 2,195 1,807
Deferred income taxes 257 257
Prepaid expenses and other 155 120
------- ------
Total current assets 7,924 6,521
Property and equipment, net 1,044 972
Cost in excess of net assets of acquired business, net of
accumulated amortization of $482 in 1996 and $440
in 1995 403 445
Other assets 923 806
------- ------
$10,294 $8,744
======= ======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 459 $ 562
Accrued liabilities 1,371 1,399
Income taxes payable 622 370
------- ------
Total current liabilities 2,452 2,331
Deferred income taxes 144 145
Commitments -- --
Shareholders' equity:
Preferred stock; 2,500,000 shares authorized;
none issued -- --
Common stock; 25,000,000 shares authorized; shares
issued and outstanding: 2,154,463 in 1996 and
2,109,465 in 1995 2,920 2,767
Retained earnings 4,778 3,501
------- ------
Total shareholders' equity 7,698 6,268
------- ------
$10,294 $8,744
======= ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
11
<PAGE>
DSP TECHNOLOGY INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Year ended January 31,
---------------------------
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Net sales $15,538 $12,977 $9,180
Cost of sales 6,187 5,161 4,060
------- ------- ------
Gross profit 9,351 7,816 5,120
Operating expenses:
Research and development 2,250 1,842 1,362
Marketing, general and administrative 5,145 4,558 3,432
------- ------- ------
7,395 6,400 4,794
------- ------- ------
Operating income 1,956 1,416 326
Interest income 136 41 69
------- ------- ------
Income before income taxes 2,092 1,457 395
Income taxes 815 583 145
------- ------- ------
Net income $ 1,277 $ 874 $ 250
======= ======= ======
Net income per common and common
equivalent share $.55 $.40 $.12
======= ======= ======
Weighted average common and common
equivalent shares outstanding 2,331 2,189 2,163
======= ======= ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
12
<PAGE>
DSP TECHNOLOGY INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(In Thousands)
<TABLE>
<CAPTION>
Common stock Total
--------------- Retained shareholders'
Shares Amount earnings equity
------ ------ -------- ------
<S> <C> <C> <C> <C>
Balance at January 31, 1993 2,057 $2,713 $2,377 $5,090
Exercise of stock options 50 50 50
Net income 250 250
----- ------ ------ ------
Balance at January 31, 1994 2,107 $2,763 $2,627 $5,390
Exercise of stock options 2 4 4
Net income 874 874
----- ------ ------ ------
Balance at January 31, 1995 2,109 $2,767 $3,501 $6,268
Exercise of stock options 45 153 153
Net income 1,277 1,277
----- ------ ------ ------
Balance at January 31, 1996 2,154 $2,920 $4,778 $7,698
===== ====== ====== ======
</TABLE>
The accompanying notes are an integral part of this financial statement.
13
<PAGE>
DSP TECHNOLOGY INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
Year ended January 31,
-----------------------------
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Increase (Decrease) in Cash and Cash Equivalents
Cash flows from operating activities:
Net income $ 1,277 $ 874 $ 250
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 741 662 489
Changes in operating assets and liabilities:
Accounts receivable (299) (1,176) 961
Inventories (388) (682) (3)
Deferred income taxes, net -- (133) 115
Prepaid expenses and other (35) 488 (128)
Accounts payables (103) 194 (89)
Accrued liabilities (28) 689 (388)
Income taxes payable 252 254 90
------- ------- ------
Net cash provided by operating activities 1,417 1,170 1,297
------- ------- ------
Cash flows from investing activities:
Purchases of property and equipment (521) (474) (646)
(Purchases) redemptions of certificates of deposit, net (199) -- 99
Investment in software development (322) (100) (276)
Purchase of Applion technology -- (368) --
Other (46) (7) (81)
------- ------- ------
Net cash used in investing activities (1,088) (949) (904)
------- ------- ------
Cash flows from financing activities:
Proceeds from issuance of common stock 153 4 50
------- ------- ------
Increase in cash and cash equivalents 482 225 443
Cash and cash equivalents at beginning of period 1,334 1,109 66
------- ------- ------
Cash and cash equivalents at end of period $ 1,816 $ 1,334 $1,109
======= ======= ======
Supplemental disclosure of cash flow information:
Cash paid during year for income taxes $ 433 $ 2 $ 173
======= ======= ======
Cash paid during year for interest $ 12 $ 5 $ 2
======= ======= ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
DSP TECHNOLOGY INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business. The Company is engaged in a single business consisting of the
design, manufacture, marketing and maintenance of high-speed, computer-automated
measurement and control systems for the worldwide automotive powertrain, vehicle
safety and advanced research and development markets. The Company's principal
markets are in the United States.
Principles of Consolidation. The consolidated financial statements include
the accounts of the Company and its subsidiaries. All significant intercompany
accounts and transactions have been eliminated.
Inventories. Inventories are stated at the lower of cost (first-in, first-
out) or market.
Property and Equipment. Property and equipment are stated at cost.
Depreciation and amortization are computed using the straight-line method based
on the estimated useful lives of the assets (three to seven years) or the lease
term if shorter.
Intangible Assets. Cost in excess of net assets (goodwill) is amortized on
a straight line basis over 25 years. The company evaluates the realizability of
goodwill periodicallly by comparing the carrying value to the undiscounted
future cash flows of the related assets. Purchased technology, is included in
other assets and amortized over five years. Effective February 1, 1996,
impairments will be recognized in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-
Lived Assets and Long-Lived Assets to Be Disposed Of," if applicable.
Research and Development. Expenditures for research and development are
expensed as incurred, except for certain costs incurred in developing computer
software to be sold, which have been capitalized in accordance with the
provisions of SFAS Statement No. 86, "Accounting for the Costs of Computer
Software to Be Sold, Leased or Otherwise Marketed." Such costs are capitalized
once technological feasibility of the product has been established. Capitalized
software costs aggregated $322,000, $100,000 and $276,000 for the years ended
January 31, 1996, 1995 and 1994, respectively. Capitalized software is included
in other assets and is being amortized over the life of the product on a
straight-line basis. The Company evaluates the realizability of capitalized
software on an ongoing basis relying on a number of factors including operating
results, business plans, market trends and product development cycles.
Income Taxes. The Company accounts for deferred income taxes using the
liability method. Under the liability method, deferred tax assets and
liabilities are determined based on the difference between the financial
statement and tax bases of assets and liabilities as measured by the enacted tax
rates which will be in effect when the differences reverse. Deferred tax expense
is the result of changes in deferred tax assets and liabilities.
Net Income Per Share. Net income per common share is computed by dividing
net income by the weighted average number of outstanding common shares and
dilutive common stock equivalent shares. Common stock equivalents consist of
stock options.
15
<PAGE>
Cash and Cash Equivalents. The Company considers all highly liquid debt
instruments purchased with a maturity of three months or less to be cash and
cash equivalents. These instruments are recorded at their carrying values which
approximate fair values because of their short maturity.
Using Estimates. In preparing financial statements in conformity with
generally accepted accounting principles, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements, as well as revenue and expenses during the
reporting period. Actual results could differ from those estimates.
NOTE B - ACQUISITION OF APPLION
In June 1994, the Company purchased substantially all the assets of
Applion, a start-up California partnership, for cash of 420,000. The fair value
of assets acquired included $378,000 in purchased technology and other
intangibles and $42,000 in tangible assets. Applion products are sub-systems for
personal computers and workstations in the electromechanical device analysis
market. The operating results of Applion are included in the consolidated
statements of income since the date of acquisition and have not been material to
consolidated operations. See Note I.
NOTE C - INVENTORIES
Inventories consist of:
<TABLE>
<CAPTION>
January 31,
---------------
1996 1995
------ ------
(Thousands)
<S> <C> <C>
Raw materials $1,247 $ 975
Work-in-process 492 440
Finished goods 456 392
------ ------
$2,195 $1,807
====== ======
</TABLE>
NOTE D - PROPERTY AND EQUIPMENT
Property and equipment consist of:
<TABLE>
<CAPTION>
January 31,
-------------------
1996 1995
------- -------
(Thousands)
<S> <C> <C>
Machinery and equipment $ 682 $ 648
Office furniture 1,355 1,196
Computer equipment 1,452 1,124
------- ------
3,489 2,968
Accumulated depreciation and
amortization (2,445) (1,996)
------- ------
$ 1,044 $ 972
======= ======
</TABLE>
16
<PAGE>
NOTE E - OTHER ASSETS
Other assets consist of:
<TABLE>
<CAPTION>
January 31,
-------------
1996 1995
---- ----
(Thousands)
<S> <C> <C>
Capitalized software, net of amortization of
$331 in 1996 and $155 in 1995 $570 $424
Purchased technology, net of amortization of $117 in
1996 and $43 in 1995 251 325
Other 102 57
---- ----
$923 $806
==== ====
</TABLE>
NOTE F - BANK LINE OF CREDIT
At January 31, 1996, the Company has a $1,000,000 line of credit with a
bank renewable annually in May. Under the provisions of the line of credit
agreement, the Company may borrow amounts up to $1,000,000 at the bank's prime
rate of interest (8.25% at January 31, 1996). Borrowings are collaterized by all
unencumbered assets of the Company and the Company must maintain certain
financial ratios and be profitable on an annual basis. There was no outstanding
balance at January 31, 1996 and at January 31, 1995. Maximum balances
outstanding were $460,000 in fiscal 1996, and $330,000 in fiscal 1995. The
weighted average amounts outstanding were $139,000 and $68,000 during 1996 and
1995, respectively. Funds were borrowed at a weighted average interest rate of
8.9% and 7.7% during 1996 and 1995, respectively.
NOTE G - ACCRUED LIABILITIES
Accrued liabilities consist of:
<TABLE>
<CAPTION>
January 31,
----------------
1996 1995
------ ------
(Thousands)
<S> <C> <C>
Employee compensation and benefits $ 781 $ 838
Commissions 86 110
Other 504 451
------ ------
$1,371 $1,399
====== ======
</TABLE>
NOTE H - INCOME TAXES
Income tax expense consists of:
<TABLE>
<CAPTION>
Year ended January 31,
----------------------
1995 1994 1993
---- ---- ----
(Thousands)
<S> <C> <C> <C>
Currently payable:
Federal income taxes $575 $ 548 $15
State income taxes 182 153 15
Foreign Taxes 58 15 --
---- ----- ---
815 716 30
Deferred:
Federal income taxes -- (111) 115
State income taxes -- (22) --
---- ----- ----
-- (133) 115
---- ----- ----
$815 $ 583 $145
==== ===== ====
</TABLE>
17
<PAGE>
The difference between income tax rates computed by applying the Federal
statutory income tax rate to income before income taxes and the actual effective
tax rate is reconciled as follows:
<TABLE>
<CAPTION>
Year ended January 31,
----------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Federal statutory rate 34.0% 34.0% 34.0%
Goodwill .7 1.0 3.6
State income taxes 5.7 6.9 5.8
Research and development credits (1.8) -- (7.5)
Other .3 (1.9) (.8)
---- ---- ----
Effective tax rate 38.9% 40.0% 36.7%
==== ==== ====
</TABLE>
At January 31, 1996 and 1995, respectively, the major components of
deferred tax assets are: inventory reserves and cost capitalization - $ 129,000
and $ 132,000; receivable and warranty reserves - $ 36,000 and $ 47,000; accrued
compensation-$87,000 and $67,000; and state taxes-$ 26,000 and $46,000. The
major item in non-current deferred tax liabilities is research and development
expenses of $186,000 at January 31, 1996 and $149,000 at January 31, 1995.
NOTE I - STOCK OPTION PLANS
Under the Company's stock option plans, options for shares of the Company's
common stock have been issued to key personnel and outside directors. Options
outstanding include options from the 1991 stock option plan (the "1991 Option
Plan"), the 1991 outside directors stock option plan (the "1991 Directors Option
Plan") and the 1985 stock option plans, which have since been terminated.
The 1991 Option Plan provides for the granting of incentive and non-
statutory options to employees (including officers and directors who are
employees) to purchase common stock at purchase prices of not less than the fair
market value of the common stock on the date of grant or at 110% of the fair
market value for those holding more than 10% of the Company's outstanding common
stock. The share reserve for the 1991 Option Plan includes 210,000, 80,000 and
100,000 of newly reserved Common Stock added in fiscal years 1996, 1995 and
1994, respectively, as well as unused optioned shares of Common Stock previously
reserved for issuance under the 1985 stock option plans.
The 1991 Directors Option Plan has 75,000 reserved Common Stock shares
which includes 25,000 shares of newly reserved Common Stock added in fiscal
1995. It provides for the granting of nonqualified stock options to directors of
the Company who are not employees of the Company.
18
<PAGE>
All options have five or ten year terms and are exercisable in cumulative
annual installments of one-third beginning one year after the grant date. Stock
option activity for the three years ended January 31, 1996 is summarized as
follows:
<TABLE>
<CAPTION>
Options Outstanding
---------------------------------
Options Number Price
Available of per Aggregate
for Grant Shares Share Price
--------- ------ ------------- ---------
(Thousands, except per share amounts)
<S> <C> <C> <C> <C>
Balance at January 31, 1993 106 304 .813- 5.500 967
Reserved 100
Granted (106) 106 2.625- 5.625 360
Exercised -- (50) 1.000 (50)
Canceled 18 (18) 3.125- 5.250 (83)
---- --- ------------- ------
Balance at January 31, 1994 118 342 .813- 5.625 1,194
Reserved 105
Granted (134) 134 3.500- 5.313 466
Exercised -- (2) 1.313- 2.875 (4)
Canceled 22 (22) 1.313- 5.125 (82)
---- --- ------------- ------
Balance at January 31, 1995 111 452 .813- 5.625 1,574
Reserved 210
Granted (165) 165 5.063- 7.750 1,052
Exercised -- (45) 2.875- 4.875 (153)
Canceled 17 (17) 3.000- 7.750 (95)
---- --- ------------- ------
Balance at January 31, 1996 173 555 .813- 7.750 2,378
==== --- ------------- ------
Exercisable at January 31, 1996 271 $ .813- 5.625 $ 965
=== ============= ======
Exercisable at January 31, 1995 216 $ .813- 5.500 $ 732
=== ============= ======
</TABLE>
There are no other stock options outstanding under this plan. In connection
with the Applion acquisition (Note B), employment agreements with the former
principals of Applion contain options for the purchase, at market value, of up
to 210,000 shares of common stock.
In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, "Accounting for Stock-Based Compensation." Companies are required to adopt
the provisions of SFAS No. 123 for fiscal years beginning after December 15,
1995. The Company has not yet adopted the new rules and, upon adoption next
year, presently intends to continue to continue to measure compensation using
APB Opinion No. 25, "Accounting for Stock Issued to Employees."
NOTE J - COMMITMENTS
Leases. The Company leases its facilities in Fremont, California and Ann
Arbor, Michigan under operating leases which expire in October 1998 and January
2000, respectively. The Fremont facility lease provides for monthly rent
payments starting in November 1993 of $13,009 during the first year, $14,721
during the second and third years and $15,146 during the fourth and fifth years.
The Ann Arbor facility lease is a seven year lease with monthly rent payments
starting in January 1993 of $8,551 during the first year and increasing annually
until the monthly payments reach $10,257 during the seventh year. Rental
expenses were $286,000 in 1996, $267,000 in 1995, and $247,000 in 1994.
19
<PAGE>
Future minimum rental commitments for all leases with initial non-
cancelable lease terms of more than one year are $295,000 in 1997, $298,000 in
1998, $256,000 in 1999 and $118,000 in 2000.
NOTE K - MAJOR CUSTOMERS
One customer accounted for 11% of net sales for 1996. Three separate customers
accounted for 10% or more of net sales in 1995 as follows: 19%, 14% and 12%. Net
sales to two separate customers represented approximately 16% and 14% of net
sales in 1994. In 1996, 1995 and 1994 foreign sales, primarily to Western
Europe, Canada and the Far East, accounted for approximately 18%, 18% and 10% of
net sales, respectively.
NOTE L - EMPLOYEE BENEFIT PLAN
The Company has established the DSP Technology Inc. 401(k) Profit Sharing Plan
covering substantially all employees of the Company who have at least six months
of service and are at least twenty-one years of age. The amount participants may
voluntarily contribute in any year is established by law and jubject to cost of
living adjustments. The Company has the option to make matching contributions on
a year to year basis. Contributions to the plan by the Company in 1996, 1995,
and 1994 aggregated $46,000, $28,000 and none, respectively.
- --------------------------------------------------------------------------------
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable
PART III
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS
Information contained in Registrant's Proxy Statement for its 1996 Annual
Meeting of Shareholders under the captions, "ELECTION OF DIRECTORS" and
"Executive Officers of the Company," is hereby incorporated herein by reference.
ITEM 11: EXECUTIVE COMPENSATION
Information contained in Registrant's Proxy Statement for its 1996 Annual
Meeting of Shareholders under the caption, "EXECUTIVE COMPENSATION AND OTHER
MATTERS" is hereby incorporated herein by reference.
ITEM 12: SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information contained in Registrant's Proxy Statement for its 1996 Annual
Meeting of Shareholders under the caption, " GENERAL INFORMATION---Stock
Ownership of Certain Beneficial Owners and Management" is hereby incorporated
herein by reference.
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not applicable.
20
<PAGE>
PART IV
ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A)(1) FINANCIAL STATEMENTS
The financial statements required in accordance with this Item have been
filed as part of this Report under Part II, Item 8.
(A)(2) FINANCIAL STATEMENT SCHEDULES
The following financial statement schedule has been filed as part of this
Report:
<TABLE>
<CAPTION>
Schedule Description Page No.
- -------- ----------- --------
<S> <C> <C>
Auditors' Report on Schedule 23
II Valuation and Qualifying Accounts 24
</TABLE>
Financial statement schedules not listed above have been omitted because
the information required to be set forth herein is inapplicable or is shown in
the Consolidated Financial Statements or Notes thereto.
(A)(3) EXHIBITS
The following exhibits are filed or incorporated by reference as part of
this Report:
<TABLE>
<CAPTION>
Ex. No. Description
- ------- ----------------------------------------------------------------------
<S> <C>
3.1 Restated Articles of Incorporation (1)
3.2 Amendment to Restated Articles of Incorporation (2)
3.3 Amended and Restated By-laws (4)
3.4 Form of Indemnity Agreement (4)
3.5 Certificate of Amendment of Articles of Incorporation on September 28,
1988 (4)
10.39 Profit Sharing Plan Employees' Retirement Trust (3) **
10.40 Non-Qualified Unfunded Deferred Compensation Plan (3) **
10.51 1991 Directors Stock Option Plan, as amended **
10.52 Form of 1991 Directors Stock Option Plan Agreement (5) **
10.53 1991 Stock Option Plan , as amended**
10.54 Form of 1991 Stock Option Plan Agreement (5) **
10.55 Lease Agreement dated July 15, 1992 between Varsity Drive Company Inc.
and DSP Technology Inc. (6)
10.56 Lease Agreement dated August 2, 1993 between Minos Management Company
and DSP Technology Inc.(7)
22.1 Subsidiaries of Registrant
23.1 Consent of independent Certified Public Accountants (to
incorporate report on consolidated financial statements into
Company's Form S-8 Registration
Statements)
- -------------------------------------
</TABLE>
21
<PAGE>
<TABLE>
<S> <C>
** Compensatory plan or arrangement.
(1) Incorporated by reference to the corresponding Exhibit filed as part of the
Company's Registration Statement on Form S-1 (File No. 2-99364) on August
1, 1985.
(2) Incorporated by reference to the corresponding Exhibit filed as part of
Amendment No. 1 to the Company's Registration Statement Form S-1 (File No.
2-99364) on November 5, 1985.
(3) Incorporated by reference to the corresponding Exhibit filed as part of the
Company's Annual Report on Form 10-K (File No. 0-14677) on April 24, 1987.
(4) Incorporated by reference to the corresponding Exhibit filed as part of the
Company's Annual Report on Form 10-K (File No. 0-14677) on April 14, 1989.
(5) Incorporated by reference to the corresponding Exhibit filed as part of the
Company's Annual Report on Form 10-K (File No. 0-14677) on April 27, 1992.
(6) Incorporated by reference to the corresponding Exhibit filed as part of the
Company's Annual Report on Form 10-K (File No. 0-14677) on April 27, 1993.
(7) Incorporated by reference to the corresponding Exhibit filed as part of the
Company's Annual Report on Form 10-K (File No 0-14677) on April 22, 1994.
</TABLE>
(b) REPORTS ON FORM 8-K
None.
22
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON SCHEDULE
To the Board of Directors and Shareholders of DSP Technology Inc.:
In connection with our audits of the consolidated financial statements of DSP
Technology Inc. and subsidiary companies referred to in our report dated March
22, 1996, which is included in Part II of this form, we have also audited
Schedule II for each of the three years in the period ended January 31, 1996. In
our opinion, this schedule presents fairly the information required to be set
forth therein.
GRANT THORNTON LLP
San Jose, California
March 22, 1996
23
<PAGE>
Schedule II
DSP TECHNOLOGY Inc.
Valuation and Qualifying Accounts
(Thousands)
<TABLE>
<CAPTION>
Additions
Balance at Charged to Balance at
Beginning Costs and at End
of Year Expenses Deductions of Year
---------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Allowance for doubtful accounts:
Year ended:
January 31, 1994................. 50 35 35 (1) 50
January 31, 1995................. 50 (18) 18 (1) 50
January 31, 1996................. 50 0 0 (1) 50
Reserve for inventory obsolescence:
Year ended:
January 31, 1994................. 155 30 (30) 155
January 31, 1995................. 155 100 (11) 244
January 31, 1996................. 244 71 (24) 291
</TABLE>
(1) Uncollectible accounts written off, net of recoveries
24
<PAGE>
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, this 14th day of May
1996.
DSP TECHNOLOGY INC.
By /s/ Jose M. Millares
--------------------
JOSE M. MILLARES
Chief Financial Officer
25
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints F. Gil Troutman, Jr. and Jose M. Millares, Jr.,
or either of them, his attorneys-in-fact, each with power of substitution, for
him in any and all capacities, to sign this Annual Report on Form 10-K, and any
amendments thereto, and to file the same, with Exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant, in the capacities and on the dates indicated.
Signatures Title Date
---------- ----- ----
/s/ Howard O. Painter, Jr. Chairman of the Board April 30, 1996
- --------------------------
Howard O. Painter, Jr.
/s/ F. Gil Troutman, Jr. Director, Chief Executive Officer April 30, 1996
- -------------------------- and President (Principal Executive
F. Gil Troutman, Jr. Officer)
/s/ Jose M. Millares Vice President, Finance April 30, 1996
- -------------------- (Principal Financial
Jose M. Millares and Accounting Officer
and Secretary)
/s/ J. Scott Kamsler Director April 30, 1996
- --------------------
J. Scott Kamsler
/s/ Michael A. Ford Director April 30, 1996
- -------------------
Michael A. Ford
26
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
---------------------------------------------------
We have issued our reports dated March 22, 1996 accompanying the consolidated
financial statements and schedule included in the annual report of DSP
Technology Inc. and subsidiaries on Form 10-K for the year ended January 31,
1996. We hereby consent to the incorporation by rererence of said reports in the
Registration Statements of DSP Technology Inc. and subsidiaries on Forms S-8,
(File No. 33-6994, effective July 13, 1990, File No. 33-43163 and File No.
33-43164, effective October 4, 1991, and File No. 33-85554 and File No.
33-85540, effective October 24, 1994).
GRANT THRONTON LLP
San Jose, California
May 10, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-START> FEB-01-1995
<PERIOD-END> JAN-31-1996
<CASH> 1,816
<SECURITIES> 199
<RECEIVABLES> 3,352
<ALLOWANCES> 50
<INVENTORY> 2,195
<CURRENT-ASSETS> 7,924
<PP&E> 3,489
<DEPRECIATION> 2,445
<TOTAL-ASSETS> 10,294
<CURRENT-LIABILITIES> 2,452
<BONDS> 0
0
0
<COMMON> 2,920
<OTHER-SE> 4,778
<TOTAL-LIABILITY-AND-EQUITY> 10,294
<SALES> 15,538
<TOTAL-REVENUES> 15,538
<CGS> 6,187
<TOTAL-COSTS> 6,187
<OTHER-EXPENSES> 7,395
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,092
<INCOME-TAX> 815
<INCOME-CONTINUING> 1,277
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,277
<EPS-PRIMARY> .55
<EPS-DILUTED> .55
</TABLE>
