<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
/X/ Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 24, 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 0-15858
IMP, Inc.
(Exact name of registrant as specified in its charter)
DELAWARE 94-2722142
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
2830 NORTH FIRST STREET, SAN JOSE, CA 95134
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (408) 432-9100
_________________________________________________________________
(Former name, former address and former fiscal year
if changed since last report)
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
--- ---
<PAGE> 2
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Outstanding at
September 24, 1995
------------------
<S> <C>
Common Stock, $0.0001 par value 26,543,904
</TABLE>
<PAGE> 3
IMP, Inc.
FORM 10-Q
SECOND QUARTER
INDEX
PART I: Financial Information (unaudited)
Page
Condensed Balance Sheet at 4
Sept 24, 1995 and March 26, 1995
Condensed Statement of 5
Operations for the three months ended
Sept 24, 1995 and Sept 25, 1994
Condensed Statement of 6
Operations for six months ended
Sept 24, 1995 and Sept 25, 1994
Condensed Statement of Cash 7
Flows for the six months ended
Sept 24, 1995 and Sept 25, 1994
Notes to condensed financial 9
statements
Management's discussion and analysis of 11
financial condition and results of
operations
Part II: Other Information
Item 6, Exhibits and Reports on Form S-K 14
Signatures 15
<PAGE> 4
IMP, Inc.
CONDENSED BALANCE SHEET
(In thousands)
(unaudited)
ASSETS
<TABLE>
<CAPTION>
Sept. 24, March 26,
1995 1995
--------- --------
<S> <C> <C>
Current assets:
Cash and cash equivalents, including
restricted cash of $0 and $2,000
at March 26, 1995 $ 8,280 $ 8,484
Accounts receivable - net 11,386 11,799
Inventories 8,524 9,148
Deposits and other current assets 1,186 739
-------- --------
Total current assets 29,376 30,170
-------- --------
Leasehold improvements and equipment 73,129 69,559
Accumulated depreciation (61,389) (58,583)
-------- --------
Net leasehold improvements and equipment 11,740 10,976
-------- --------
Other long term assets 75 155
-------- --------
$ 41,191 $ 41,301
======== ========
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<S> <C> <C>
Current liabilities:
Note payable 3,000 6,500
Trade accounts payable 5,097 6,003
Accrued payroll and related expenses 1,798 1,588
Other accrued liabilities 964 459
Current portion of capital
lease obligations 3,871 3,489
-------- --------
Total current liabilities 14,730 18,039
-------- --------
Long-term capital lease
obligations 5,524 4,799
-------- --------
Stockholders' equity:
Common stock 28 28
Additional paid-in capital 68,351 67,540
Accumulated deficit (43,545) (45,208)
Treasury stock at cost (3,897) (3,897)
-------- --------
Total stockholders' equity 20,937 18,463
-------- --------
41,191 41,301
======== ========
</TABLE>
See notes to unaudited condensed financial statements
<PAGE> 5
IMP, Inc.
CONDENSED STATEMENT OF OPERATIONS
(In thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
------------------
Sept 24, Sept 25,
1995 1994
-------- --------
<S> <C> <C>
Net revenues $ 18,514 $ 15,134
Cost of revenues (12,846) (10,480)
-------- --------
Gross profit 5,668 4,654
Operating expenses:
Research and development 2,164 2,192
Selling, general and administrative 2,060 1,602
-------- --------
Operating income 1,444 860
-------- --------
Interest:
Expense (388) (376)
Income 41 27
-------- --------
Net interest (347) (349)
-------- --------
Income before provision of
income taxes 1,097 511
Provision for income taxes 27 --
-------- --------
Net income $ 1,070 $ 511
======== ========
Net income per share $ .04 $ .02
======== ========
Shares used in computing
net income per share 28,005 $ 26,476
======== ========
See notes to unaudited condensed financial statements.
</TABLE>
<PAGE> 6
IMP, Inc.
CONDENSED STATEMENT OF OPERATIONS
(In thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
----------------
Sept 24, Sept 25,
1995 1994
-------- --------
<S> <C> <C>
Net revenues $ 35,024 $ 28,606
Cost of revenues (24,290) (19,862)
-------- --------
Gross profit 10,734 8,744
Operating expenses:
Research and development 4,428 4,332
Selling, general and administrative 3,880 3,252
-------- --------
Operating income 2,426 1,160
-------- --------
Interest:
Expense (788) (674)
Income 64 40
-------- --------
Net interest (724) (634)
-------- --------
Income before provision for
income taxes 1,702 526
Provision for income taxes 39 -
-------- --------
Net income $ 1,663 $ 526
======== ========
Net income per share $ .06 $ .02
======== ========
Shares used in computing
net income per share 27,674 26,463
======== ========
</TABLE>
See notes to unaudited consolidated condensed financial statements.
<PAGE> 7
IMP, Inc.
CONDENSED STATEMENT OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
----------------
Sept 24, Sept 25,
1995 1994
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,663 $ 526
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 2,806 2,511
Increase (decrease) from changes in:
Accounts receivable 413 (989)
Inventories 624 (1,294)
Deposits and other current assets (367) 10
Trade accounts payable (906) 934
Accrued payroll and related expenses 210 356
Other current liabilities 505 (217)
------- -------
Total adjustment 3,285 1,311
------- -------
Net cash provided by operating activities 4,948 1,837
------- -------
Cash flows from investing activities:
Capital expenditures (950) (205)
------- -------
Net cash used for investing activities (950) (205)
------- -------
Cash flows from financing activities:
Payment of principal under capital lease
obligation (1,513) (1,977)
Proceeds payments under line of credit (3,500) -
Proceeds from issuance of common stock 811 248
Payment of shareholders note - -
Net cash used for financing activities (4,202) (1,729)
------- -------
</TABLE>
<PAGE> 8
<TABLE>
<S> <C> <C>
Net increase (decrease) in cash
and cash equivalents (204) (97)
Cash and cash equivalents at beginning of
the period 8,484 7,625
------- -------
Cash and cash equivalents at end of the
period $ 8,280 $ 7,528
======= =======
Supplemental disclosures of cash paid
during the period:
Interest $ 724 $ 674
Income taxes - -
</TABLE>
See notes to unaudited condensed financial statements.
<PAGE> 9
IMP, Inc.
NOTES TO CONDENSED FINANCIAL
STATEMENTS
(unaudited)
1. Basis of presentation
The accompanying unaudited interim consolidated condensed financial
statements have been prepared in conformity with generally accepted
accounting principles, consistent with those applied in, and should
be read in conjunction with, the audited consolidated financial
statements for the year ended March 26, 1995 included in the Annual
Report on Form 10-K filed with the Securities and Exchange Commission.
The interim financial information is unaudited, but reflects all
adjustments consisting only of normal recurring adjustments which are,
in the opinion of management, necessary to a fair statement of results
for the interim periods presented. The results for the interim periods
are not necessarily indicative of results to be expected for the fiscal
year.
2. Inventories
Inventories consisted of:
<TABLE>
<CAPTION>
Sept 24, 1995 March 26, 1995
------------- --------------
<S> <C> <C>
Raw Materials $ 736 $ 854
Work-in-process 6,560 7,285
Finished goods 1,228 1,009
------ ------
$8,524 $9,148
====== ======
</TABLE>
3. Line of Credit
At September 24, 1995, the Company had $3,000,000 borrowing
outstanding under revolving line of credit, which is secured by
Accounts Receivable. The Company signed a new line for $8,000,000
with a new bank on October 12, 1995. The line expires a year
from now.
4. Earnings per share
Net income per share is computed on the basis of the weighted average
number of common shares and common equivalent shares outstanding
using the treasury stock method.
<PAGE> 10
5. Contingencies
From time to time, the Company is made aware of various patent-related
and other claims arising in the normal course of business. The Company
evaluates such claims and negotiates license agreements with claimants
as necessary. In the opinion of management, these proceedings will not
have a material adverse effect on the results of operations of the
Company.
<PAGE> 11
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operation
Net revenues for the second quarter of fiscal 1996 increased by 22.5% compared
to the same period of the prior year. Net revenue increases are primarily
attributable to existing foundry products, and standard products.
Cost of revenues in the second quarter of fiscal 1996 was 69% of revenues
compared to 69% in the same quarter of the prior year.
Research and development expenses were $2,164,000 or 11.7% of net revenues in
fiscal 1996 compared to $2,192,000 or 14.5% of net revenues in the
corresponding quarter of the prior year. R&D spending as a percentage of net
revenues decreased due to increase in revenues in the current quarter. The
company anticipates R&D spending to increase in gross dollars, but to remain
relatively flat as a percentage of sales.
Selling, general and administrative expenses were $2,060,000 or 11.1% of net
revenues up from $1,602,000 or 10.6% of net revenues same quarter of the prior
year. The increase in gross dollars was due to higher commission expenses in
the current year as a result of increased revenues.
The net interest expense in the second quarter of fiscal 1995 was $347,000
compared to $349,000 in the prior year.
Net income of $1,070,000 for the second quarter of fiscal 1996 compared to
$511,000 for the same period of the prior year. Income per share of $.04 in the
quarter ended September 24, 1995 compared to $.02 per share during the same
period of the prior year.
<PAGE> 12
Results of Operations - First Six Months of Fiscal 1996
Compared to First Six Months of Fiscal 1995
Net revenues for the six month period ending September 24, 1995 increased by 22%
compared to the same period of the prior year. Net revenue increases were
primarily attributable to sales of existing foundry products, and standard
products.
Cost of revenues in the six month period ending September 24, 1995 was 69% of
revenues compared to 69% in the corresponding period of the prior year.
Research and development expenses were $4,428,000 or 12.6% of revenues for the
six month period ended September 24, 1995 compared to $4,332,000 or 15.1% of
revenue in the comparable period of fiscal 1995.
Selling, general and administrative expenses were $3,880,000 or 11.1% of
revenue, compared to $3,252,000 or 11.4% of the corresponding period of the
prior year. The major factors in the increase were higher commissions,
resulting from increased revenue.
Net interest expense was $724,000 compared to $643,000 in the corresponding
period of the prior year. The increase was to increases in outstanding capital
lease obligations, and a term loan executed in March 1995.
Net income was $1,663,000 for the six month period ending September 24, 1995,
compared to $526,000 for the corresponding period of the prior year. Income per
share of $.06 in the six month period ending September 24, 1995 compared to
$.02 per share during the same period of the prior year.
Liquidity and Capital Resources
Working capital of the Company increased by $2,500,000 to $14.7 million during
the six month period ending September 24, 1995.
The Company believes the current level of cash and cash equivalents at
September 24, 1995 along with cash generated from operations along with
available lines of credit and lease lines will be sufficient to fund its
current liabilities, anticipated capital equipment purchases and the current
and anticipated level of operations for at least the next 12 months.
<PAGE> 13
Factors Affecting Future Results
The Company's business, financial condition and results of operations have
been, and may in the future be, affected by a variety of factors, including the
availability of raw materials, concentration of customers, markets for its
customer's products, foundry capacity, the development and introduction of new
technology and products and the availability of trained design processing
engineers, in particular those skilled in analog design. Specifically,
although the Company believes it currently has adequate access to necessary raw
materials, it does not have any long-term commitments for the supply of raw
wafers and polysubstrates. The Company also recently announced that one of
its semiconductor products was designed into the Zip drive by Iomega
Corporation. Any decline in the demand for the Zip drive, or any other decline
in the demand by end-users of the products produced by the Company's customers
could lead to a decline in, or cancellation of, orders for the Company's
products by Iomega, which could adversely affect the Company's business and
results of operations.
As is the case generally worldwide, the Company's foundry is operating at or
near fully currently available capacity. The ability of the Company to
transition from the fabrication of lower-margin products to higher-margin
products, including both those developed by the Company and those for which it
serves as a third-party foundry, is very important for the Company's future
results of operations. In addition, the Company will seek to obtain outside
foundry capacity where appropriate. There can be no assurances that the Company
will be successful in these efforts.
Any adverse fluctuation in the Company's business, financial condition or
results of operations could have an adverse effect on the trading price of the
Company's Common Stock. In addition, the trading prices for semiconductor
company stocks have experienced a dramatic increase in calendar years 1994 and
1995. Any decline in the market for semiconductor company stocks, or for
technology stocks in general, could also have a material adverse effect on the
trading price of the Company's Common Stock.
<PAGE> 14
IMP, Inc.
PART II OTHER INFORMATION
Item 6, Exhibits and Reports on Form 8-K
The Company did file a report on Form 8-K during the quarter ended Dec. 25,
1994. This was associated with increasing the pool for the stock purchase plan.
Also included is Exhibit 27, Financial Data Schedule.
<PAGE> 15
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.
IMP, Inc.
Registrant
/s/ Charles S. Isherwood
- - ---------------- -------------------------------------
11/6/95 Charles S. Isherwood
Senior Vice President and
Chief Financial Officer
/s/ George Rassam
- - ---------------- -------------------------------------
11/6/95 George Rassam
Controller (Chief Accounting Officer)
<PAGE> 16
EXHIBIT INDEX
EX. 27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-26-1995
<PERIOD-START> MAR-27-1995
<PERIOD-END> SEP-24-1995
<CASH> 8280
<SECURITIES> 0
<RECEIVABLES> 11386
<ALLOWANCES> 975
<INVENTORY> 8524
<CURRENT-ASSETS> 29376
<PP&E> 73129
<DEPRECIATION> (61389)
<TOTAL-ASSETS> 41191
<CURRENT-LIABILITIES> 14730
<BONDS> 0
<COMMON> 28
0
0
<OTHER-SE> 68351
<TOTAL-LIABILITY-AND-EQUITY> 41191
<SALES> 18514
<TOTAL-REVENUES> 18514
<CGS> 12846
<TOTAL-COSTS> 12846
<OTHER-EXPENSES> 4224
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 347
<INCOME-PRETAX> 1097
<INCOME-TAX> 27
<INCOME-CONTINUING> 1070
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1070
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
