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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended
March 31, 1995
Commission File Number
0-17187
Logic Devices Incorporated
(Exact name of registrant as specified in its charter)
California 94-2893789
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
628 East Evelyn Avenue, Sunnyvale, California 94086
(Address of principal executive offices) (Zip Code)
(408) 737-3300
(Registrant's telephone number,including area code)
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 the number of shares outstanding of the issuer's
classes of common stock, as of the latest practicable date. On
May 7, 1995, 4,855,417 shares of Common Stock, without par value,
were outstanding.
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Logic Devices Incorporated
INDEX
Page
Number
Part I. Financial Information
Item 1. Financial Statements
Balance Sheets as of March 31, 1995 and 3
December 31, 1994
Statements of Income for the three months ended 4
March 31, 1995 and 1994
Statements of Cash Flows for the three months 5
ended March 31, 1995 and 1994
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of 8
Financial Condition and Results of Operations
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
Exhibit 11 12
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Part I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Logic Devices Incorporated
Balance Sheets
March 31, December 31,
1995 1994
Assets (unaudited)
Current assets:
Cash and cash equivalents $ 200,500 $ 222,300
Accounts receivable, net of allowan ce 4,194,200 4,057,600
Inventories 6,985,000 7,081,600
Prepaid expenses 396,600 405,800
Deferred income taxes 336,100 336,100
Total current assets 12,112,400 12,103,400
Equipment and leasehold improvements, net 2,106,300 2,162,700
Other Assets 631,800 658,500
$14,850,500 $14,924,600
Liabilities and Shareholders' Equity
Current liabilities:
Bank borrowing $ 2,891,400 $ 2,846,400
Current portion of obligations to shareholders 200,000 200,000
Current portion of long-term obligations 125,400 125,400
Accounts payable 1,028,300 1,270,300
Accrued expenses 247,900 292,500
Income taxes payable 131,100 151,400
Total current liabilities 4,624,100 4,886,000
Obligations to shareholders, less current portion 613,900 663,900
Long-term debt obligations, less current portion 112,500 155,100
Deferred income taxes 409,500 409,400
Total liabilities 5,760,000 6,114,400
Shareholders' equity:
Preferred stock 77,000 154,000
Common stock 6,156,300 6,071,200
Retained earnings 2,857,200 2,585,000
Total shareholders' equity 9,090,500 8,810,200
$14,850,500 $14,924,600
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Logic Devices Incorporated
Statements of Income
Three months ended March 31, 1995 and 1994
(unaudited)
1995 1994
Net sales $ 3,549,700 $ 3,297,000
Cost of sales 1,883,500 1,821,100
Gross margin 1,666,200 1,475,900
Operating expenses:
Research and development 350,100 343,000
Selling, general and administrative 817,500 779,900
Operating expenses 1,167,600 1,122,900
Income from operations 498,600 353,000
Other (income) expense, net 98,900 67,800
Income before taxes 399,700 285,200
Income taxes 127,500 97,000
Net income $ 272,200 $ 188,200
Net income per common share $ 0.06 $ 0.04
Weighted average common share equivalents 4,913,306 4,741,250
outstanding
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Logic Devices Incorporated
Statements of Cash Flows
Three months ended March 31, 1995 and 1994
(unaudited)
1995 1994
Cash flows from operating activities:
Net income $ 272,200 $ 188,200
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 312,500 308,600
ESOP compensation expense - 60,500
Change in operating assets and liabilities:
Accounts receivable, net (136,600) 20,000
Inventories 96,600 (140,100)
Prepaid expenses and other assets 9,300 (17,000)
Accounts payable (242,000) (294,000)
Accrued expenses (44,600) 46,100
Income taxes payable (20,300) 95,200
Net cash provided by (used in) 247,100 267,500
operating activities
Cash flows from investing activities:
Capital expenditures (179,900) (76,500)
Increase in other assets (49,500) (19,100)
Net cash (used in) investing activities (229,400) (95,600)
Cash flows from financing activities:
Bank borrowing, net 45,000 (150,500)
Repayment of long-term obligations (42,600) (132,700)
Repayment of obligations to shareholders (50,000) (50,000)
Proceeds from exercise of employee stock options 8,100 48,800
Net cash provided by (used in) (39,500) (284,400)
financing activities
Net increase (decrease) in cash (21,800) (112,500)
Cash and cash equivalents at beginning of
period $ 222,300 $ 194,400
Cash and cash equivalents at end of period $ 200,500 $ 81,900
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Logic Devices Incorporated
Notes to Financial Statements
March 31, 1995 and December 31, 1994
(unaudited)
(A) Basis of Presentation
The accompanying unaudited interim financial statements reflect all
adjustments which are, in the opinion of management, necessary to present
fairly the financial position, results of operations and cash flows for the
periods indicated.
The accompanying unaudited interim financial statements have been prepared in
accordance with the instructions for Form 10-Q and therefore do not include
all information and footnotes necessary for a complete presentation of the
financial position, results of operations, and cash flows, in conformity with
generally accepted accounting principles. The Company filed audited financial
statements which include all information and footnotes necessary for such a
presentation of the financial position, results of operations and cash flows
for the years ended December 31, 1994 and 1993, with the Securities and
Exchange Commission. It is suggested that the accompanying unaudited interim
financial statements be read in conjunction with the aforementioned audited
financial statements. The unaudited interim financial statements contain all
normal and recurring entries. The results of operations for the interim
period ended March 31, 1995 are not necessarily indicative of the results to
be expected for the full year.
(B) Inventories
A summary of inventories follows:
March 31, December 31,
1995 1994
Raw Materials $ 733,000 $ 835,500
Work-in-process 4,716,500 4,418,300
Finished goods 1,535,500 1,827,800
$ 6,985,000 $ 7,081,600
Based on forecasted 1995 sales levels, the Company has on hand inventories
aggregating approximately ten months of sales.
(C) Debt Financing
The Company has a $3,000,000 revolving line of credit with a bank which
expires on May 31, 1995, bears interest at the bank's prime rate plus 1.500%
(10.500% at March 31, 1995) and is secured by the assets of the Company. The
line of credit requires the Company to maintain a minimum tangible net worth,
a maximum ratio of debt to tangible net worth, a minimum current ratio, a
minimum quick ratio, and profitability over a specified interval of time. As
of March 31, 1995, the Company had $108,600 available under the revolving line
of credit. The Company currently has a renewal commitment from the bank for
extension of the revolving line of credit until May 31, 1996 with
substantially the same terms and conditions.
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Logic Devices Incorporated
Notes to Financial Statements
March 31, 1995 and December 31, 1994
(unaudited)
(D) Obligation to Shareholders
The obligation due to shareholders was scheduled to mature on March 31,
1995. On February 15, 1995, the shareholder lenders agreed to extend the
maturity date to March 31, 1996. The obligation due to shareholders bears
interest at 12.5% and is collateralized by the assets of the Company. The
promissory note evidencing this obligation is subordinated to all bank
financing and certain other debt. The outstanding balance at March 31, 1995
under this note is $813,900 of which $200,000 is classified as currently
payable.
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Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Results of Operations
Revenues
Net revenues increased by 8%, from $3,297,000 in the three
months ended March 31, 1994 to $3,549,700 in the three months
ended March 31, 1995. The increase in net revenues was due to
sales of the Company's SRAM products which increased to 34% of
net revenues in 1995 from 14% of net revenues in 1994.
Expenses
Cost of revenues increased from $1,821,100 in the three
months ended March 31, 1994 to $1,883,500 in the three months
ended March 31, 1995. Gross profit increased by 13%, from
$1,475,900 in 1994 to $1,666,200 in 1995 as a result of the
increased net revenues and improved gross profit margins related
to lower cost of manufacturing and lower raw material cost
resulting from new designs and wafer process technology in 1995
versus in the 1994. As a percentage of net revenues, gross
profit increased from 45% in the three months ended March 31,
1994 to 47% in the three months ended March 31, 1995.
Research and development expense increased slightly from
$343,000 (10% of net revenues) in the 1994 period to $350,100
(10% of net revenues) in the 1995 period, as the Company
continues to make substantial investments in its product research
and development.
Selling, general and administrative expense increased from
$779,900 (24% of net revenues) in the 1994 period to $817,500
(23% of net revenues) in the 1995 period due to increased
marketing and promotional expenses and sales commissions.
Net operating income for 1995 increased to $498,600 up 41%
from $353,000 in 1994, due to the above mentioned factors. As a
percentage of net revenues operating income increased to 14% for
the 1995 period versus 11% in 1994.
As a result of the foregoing, net income increased from
$188,200 in the 1994 period to $272,200 in the 1995 period.
Liquidity and Capital Resources
Working capital
For the three months ended March 31, 1995 the Company's
after-tax cash earnings (net income plus non-cash charges) was
significantly higher than net income due to accruals for
depreciation and amortization. Such after-tax earnings ($584,700
for the 1995 period and $557,300 for the 1994 period) have served
as the Company's primary source of financing for working capital
needs and for capital expenditures.
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During the 1995 period, after-tax earnings of $584,700
supplemented by reduction in inventory of $96,600 funded the
increase in accounts receivables of $136,600 and reduction in
accounts payable of $242,000 and other current liabilities of
$64,900 and resulted in net cash provided by operations of
$247,100. Such amount financed capital expenditures of $229,400
and allowed the Company to reduce net indebtedness by $39,500.
During the 1994 period, after-tax earnings of $557,300
supplemented by reduction in accounts receivables of $20,000
funded the increase in inventory of $140,100 and reduction in
accounts payable and other current liabilities $152,700 and
resulted in net cash provided by operations of $267,500. Such
amount financed capital expenditures of $95,600 and allowed the
Company to reduce net indebtedness by $284,400.
Debt
The Company has a $3,000,000 revolving line of credit with a
bank which expires on May 31, 1995, bears interest at the bank's
prime rate plus 1.500% (10.500% at March 31, 1995) and is secured
by the assets of the Company. The line of credit requires the
Company to maintain a minimum tangible net worth, a maximum ratio
of debt to tangible net worth, a minimum current ratio, a minimum
quick ratio, and profitability over a specified interval of time.
As of March 31, 1995, the Company had $108,600 available under
the revolving line of credit. The Company currently has a
renewal commitment from the bank for extension of the revolving
line of credit until May 31, 1996 with substaintially the same
terms and conditions.
The obligation due to shareholders was scheduled to mature
on March 31, 1995. On February 15, 1995, the shareholder lenders
agreed to extend the maturity date to March 31, 1996. The
obligation due to shareholders bears interest at 12.5% and is
collateralized by the assets of the Company. The promissory note
evidencing this obligation is subordinated to all bank financing
and certain other debt. The outstanding balance at March 31,
1995 under this note is $813,900 of which $200,000 is classified
as currently payable.
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Part II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a)
(1) Exhibit 11 - Computation of Earnings Per Common Share.
(2) Exhibit 27 - Financial Data Schedule
(b) No reports on Form 8-K have been filed during the quarter
for which this report is filed.
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SIGNATURES
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.
Logic Devices Incorporated
(Registrant)
Date: May 12, 1995 By /s/ William J. Volz
William J. Volz
President and Principal
Executive Officer
Date: May 12, 1995 By /s/ Todd J. Ashford
Todd J. Ashford
Chief Financial Officer
Principal Financial and
Accounting Officer
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EXHIBIT 11
Logic Devices Incorporated
Computation of Earnings per Common Share
(unaudited)
Three months ended March 31, 1995 and 1994
1995 1994
Weighted average shares of common stock 4,776,473 4,757,584
outstanding
Common stock equivalent convertible 12,833 25,666
preferred stock
Dilutive effect of common stock options 14,000 15,989
Dilutive effect of common stock warrants 110,000 70,385
Weighted average common and 4,913,306 4,869,624
common share equivalents
Net income $ 272,200 $ 188,200
Net income per common $ .06 $ .04
share equivalent
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<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> MAR-31-1995
<CASH> 200,500
<SECURITIES> 0
<RECEIVABLES> 4,194,200
<ALLOWANCES> 0
<INVENTORY> 6,985,000
<CURRENT-ASSETS> 12,112,400
<PP&E> 9,129,300
<DEPRECIATION> 7,023,000
<TOTAL-ASSETS> 14,850,500
<CURRENT-LIABILITIES> 4,624,100
<BONDS> 0
<COMMON> 6,156,300
0
77,000
<OTHER-SE> 2,857,200
<TOTAL-LIABILITY-AND-EQUITY> 14,850,500
<SALES> 3,549,700
<TOTAL-REVENUES> 3,549,700
<CGS> 1,883,500
<TOTAL-COSTS> 3,051,100
<OTHER-EXPENSES> 98,900
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 98,900
<INCOME-PRETAX> 399,700
<INCOME-TAX> 127,500
<INCOME-CONTINUING> 272,200
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 272,200
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
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