<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 December 25, 1994 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)
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<S> <C>
DELAWARE 94-2722142
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2830 NORTH FIRST STREET, SAN JOSE, CA 95134
(Address of principal executive offices) (Zip Code)
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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.
Outstanding at
Common Stock, $0.0001 par value December 25, 1994
25,984,116
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IMP, Inc.
FORM 10-Q
THIRD QUARTER
INDEX
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Page
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Part I: Financial Information (unaudited)
Condensed Balance Sheet at 4
Dec 25, 1994 and March 27, 1994
Condensed Statement of 5
Operations for the three months ended
Dec 25, 1994 and Dec 26, 1993
Condensed Statement of 6
Operations for the nine months ended
Dec 25, 1994 and Dec 26, 1993
Condensed Statement of Cash 7
Flows for the nine months ended
Dec 25, 1994 and Dec 26, 1993
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 8-K 14
Signatures 15
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IMP, Inc.
CONDENSED BALANCE SHEET
(In thousands)
(unaudited)
ASSETS
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<CAPTION>
Dec. 25, Mar 27,
1994 1994
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<S> <C> <C>
Current assets:
Cash and cash equivalents, including
restricted cash of $3,000 at Sept 25, 1994
and at March 27, 1994 $ 8,377 $ 7,625
Accounts receivable - net 9,078 8,458
Inventories 9,591 8,642
Deposits and other current assets 900 446
-------- --------
Total current assets 27,946 25,171
-------- --------
Leasehold improvements and equipment 69,753 64,257
Accumulated depreciation (57,218) (53,325)
-------- --------
Net leasehold improvements and equipment 12,535 10,932
-------- --------
Other long term assets 155 294
-------- --------
$ 40,636 $ 36,397
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable 6,500 6,500
Trade accounts payable 8,058 6,030
Accrued payroll and related expenses 1,778 1,247
Other accrued liabilities 172 418
Current portion of capital
lease obligations 2,982 3,371
--------- --------
Total current liabilities 19,490 17,566
--------- --------
Long-term capital lease
obligations 2,783 1,648
--------- --------
Stockholders' equity:
Common stock 28 28
Additional paid-in capital 67,531 67,050
Accumulated deficit (45,299) (45,998)
Treasury stock at cost (3,897) (3,897)
--------- --------
18,363 17,183
Less notes receivable from stockholders -- --
--------- --------
Total stockholders' equity 18,363 17,183
--------- --------
40,636 36,397
========= ========
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See notes to unaudited condensed financial statements.
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IMP, Inc.
CONDENSED STATEMENT OF OPERATIONS
(In thousands, except per share amounts)
(unaudited)
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<CAPTION>
Three Months Ended
-----------------------
Dec. 25, Dec. 26,
1994 1993
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<S> <C> <C>
Net revenues $ 15,727 $11,395
Cost of revenues (11,274) (7,968)
-------- -------
Gross profit 4,453 3,427
Operating expenses:
Research and development 2,282 1,839
Selling, general and administrative 1,715 1,122
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Operating income 456 466
-------- -------
Interest:
Expense (316) (401)
Income 33 14
-------- -------
Net interest (283) (387)
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Income before provision for
income taxes 173 79
Provision for income taxes -- --
-------- -------
Net income $ 173 $ 79
======== =======
Net income per share $ .01 $ .0
======== =======
Shares used in computing
net income per share 26,451 26,559
======== =======
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See notes to unaudited condensed financial statements.
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IMP, Inc.
CONDENSED STATEMENT OF OPERATIONS
( In thousands, except per share amounts)
(unaudited)
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<CAPTION>
Nine Months Ended
Dec. 25, Dec. 26,
1994 1993
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<S> <C> <C>
Net revenues $ 44,333 $ 35,385
Cost of revenues (31,136) (23,827)
-------- --------
Gross profit 13,197 11,558
Operating expenses:
Research and development 6,614 6,683
Selling, general and administrative 4,967 3,452
-------- --------
Operating income 1,616 1,423
-------- --------
Interest:
Expense (989) (1,160)
Income 72 62
-------- --------
Net interest (917) (1,098)
-------- --------
Income before provision for
income taxes 699 325
Provision for income taxes -- 14
-------- --------
Net income $ 699 $ 311
======== ========
Net income per share $ .03 $ .01
======== ========
Shares used in computing
net income per share 26,459 26,669
======== ========
</TABLE>
See notes to unaudited consolidated condensed financial statements.
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IMP, Inc.
CONDENSED STATEMENT OF CASH FLOWS
(in thousands)
(unaudited)
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<CAPTION>
Nine Months Ended
----------------------
Dec 25, Dec 26,
1994 1993
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Cash flows from operating activities:
Net income $ 699 $ 311
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 3,893 3,048
Increase (decrease) from changes in:
Accounts receivable (620) (2,526)
Inventories (949) (102)
Deposits and other current assets (315) (246)
Trade accounts payable 2,028 334
Accrued payroll and related expenses 531 (166)
Other current liabilities (246) (423)
------- -------
Total adjustments 4,322 (81)
------- -------
Net cash provided by operating activities 5,021 230
------- -------
Cash flows from investing activities:
Capital expenditures (305) (703)
------- -------
Net cash used for investing activities (305) (703)
------- -------
Cash flows from financing activities:
Payment of principal under capital lease
obligation (4,445) (3,107)
Proceeds payments under line of credit -- 500
Proceeds from issuance of common stock 481 400
Payment of shareholders note -- --
------- -------
Net cash used for financing activities (3,964) (2,163)
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IMP, Inc.
CONDENSED STATEMENT OF CASH FLOWS -- CONTINUED
(in thousands)
(unaudited)
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<CAPTION>
Nine Months Ended
----------------------
Dec 25, Dec 26,
1994 1993
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Net (decrease) in cash
and cash equivalents 752 (2,636)
Cash and cash equivalents at beginning of
the period 7,625 8,244
------- -------
Cash and cash equivalents at end of the
period $ 8,377 $ 5,608
======= =======
Supplemental disclosures of cash paid
during the period:
Interest $ 917 $ 950
Income taxes -- 1
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See notes to unaudited condensed financial statements.
Supplemental schedule of non cash investing and financing activities: Capital
lease obligation of $5,191,000 and $1,587,000 were incurred for the quarters
ending December 25, 1994 and December 26, 1993 respectively, when the Company
entered into leases for new equipment.
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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 27, 1994 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:
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<CAPTION>
Dec 25, 1994 March 27, 1994
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<S> <C> <C>
Raw Materials $ 870 $ 922
Work-in-process 6,450 6,352
Finished goods 2,271 1,368
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$9,591 $8,642
====== ======
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3. Line of Credit
At Dec 25, 1994 the Company has outstanding borrowings of $6,500,000 of
which $3,000,000 is outstanding under a line of credit agreement with a
bank, and is secured by cash on deposit with the bank. The remaining
$3,500,000 is outstanding under a revolving line of credit, which is
secured by accounts receivable. In October 1994, the Company negotiated
an increase in its line of credit to a total of $8 million. The
agreement expires on October 5, 1995.
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.
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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 - Results of Operations - Third Quarter of Fiscal 1995
Compared to Third Quarter of Fiscal 1994
Net revenues for the three month period ending December 25, 1994 was $15.7
million, an increase of $4.3 million or 38% in comparison to the same period of
the prior year. The increase was primarily attributable to improved sales volume
of certain of the Company's mature products and new products. Management
anticipates foundry sales volume to increase during the next twelve months.
Cost of revenues in the third quarter was $11.3 million or 72% of net revenues
up from $8.0 million or 69.9% in the corresponding quarter of last year. The
increase was due to a shift to lower margin products. Management expects cost of
revenue to remain consistent as a percent of revenue through the next quarter.
Research and development expenses were $2.3 million for the third quarter fiscal
1995 up from $1.8 million in the same quarter of the prior year. The increase
was primarily due to increased wafer and tooling activity associated with new
product development. Management expects R&D costs to remain consistent both in
dollars and as a percentage of revenue through the next quarter.
Selling, general and administrative expenses were $1.7 million up from $1.1
million in the same quarter of the prior year. The major increase was due to
higher commissions. Management expects selling, general and administrative
expenses to remain consistent as a percentage of sales through the next quarter.
The net interest expense was $283,000 during the third quarter fiscal 1995,
compared to $387,000 in the corresponding quarter of the prior year. The
decrease was due to lower interest expense on capitalized leases.
Net income of $173,000 for the quarter ended December 25, 1994 increased from
income of $79,000 in the corresponding quarter of the prior year. Income per
share of $.01 in the current quarter compared to income per share of $.00 in the
same period of the prior year.
<PAGE> 12
Results of Operations - First Nine Months of Fiscal 1995
Compared to First Nine Months of Fiscal 1994
Net revenues for the nine month period ending December 25, 1994 were $44.3
million, an increase of $8.9 million or 25% in comparison to the same period of
the prior year. The increase was primarily attributable to improved sales volume
of certain of the Company's mature products and new products. Management
anticipates foundry sales volume to increase during the next twelve months.
Cost of revenues in the nine month period ending December 25, 1994 was $31.1
million or 71.2% of net revenues compared to $23.8 million or 67.2% in the
corresponding quarter of last year. Management expects cost of revenues to
remain consistent as a percent of revenue, through the next quarter.
Research and development expenses were $6.6 million for the nine month period
ended December 25, 1994 essentially unchanged from $6.7 million over the
comparable period of fiscal 1994. Management expects that R&D expenses will
remain consistent for the next 3 to 6 months.
Selling, general and administrative expenses were $5.0 million compared to $3.5
million in the corresponding period of the prior year. The increase was due to
higher commissions and higher marketing expenses on ASSP products. Managenent
expects selling, general and administrative costs to remain consistent for the
next 3 to 6 months.
Net interest expense was $917,000 compared to $1,100,000 of net interest
expensed in the corresponding period of the prior year. The decrease was due to
lower interest expense on capitalized leases.
Net income was $699,000 for the nine month period ending December 25, 1994
compared to net income of $311,000 for the corresponding period of the prior
year. Income per share was $.03 in the nine month period ending December 25,
1994 compared to income per share of $.01 during the same period of the prior
year.
Liquidity and Capital Resources
Working capital of the Company increased by $851,000 to $8.5 million during the
period March 27, 1994 to December 25, 1994 as a result of the Company's net
income for the period, and the repayment of capital lease obligations. As of
December 25, 1994, the Company had cash and cash equivalents of approximtely
$8.4 million.
Funding for operations has come from credit lines, capital leases, cash
generated from operations and sales of securities.
<PAGE> 13
The Company believes the current level of cash and cash equivalents, along with
available lines of credit and capital lease lines will be sufficient to fund
anticipated capital equipment purchases and the current and anticipated level of
operations for at least the next 12 months.
Factors Affecting Future Results
While the Company's business conditions appear to be improved, intense
competition and the instability of the world economy, as well as the rapid pace
of technological change make profitability trends difficult to predict.
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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.
<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.
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IMP, Inc.
---------------------------------
Registrant
/s/ Charles S. Isherwood
- - - ------------- ---------------------------------
2/6/95 Charles S. Isherwood
Senior Vice President and
Chief Financial Officer
/s/ George Rassam
- - - ------------- ---------------------------------
2/6/95 George Rassam
Controller (Chief Accounting Officer)
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<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> 0
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-26-1995
<PERIOD-START> APR-28-1994
<PERIOD-END> MAR-26-1995
<EXCHANGE-RATE> 1
<CASH> 8377
<SECURITIES> 0
<RECEIVABLES> 9778
<ALLOWANCES> 700
<INVENTORY> 9591
<CURRENT-ASSETS> 27946
<PP&E> 69753
<DEPRECIATION> 57218
<TOTAL-ASSETS> 40636
<CURRENT-LIABILITIES> 19490
<BONDS> 0
<COMMON> 28
0
0
<OTHER-SE> 67531
<TOTAL-LIABILITY-AND-EQUITY> 40636
<SALES> 44333
<TOTAL-REVENUES> 44333
<CGS> 31136
<TOTAL-COSTS> 31136
<OTHER-EXPENSES> 11581
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 917
<INCOME-PRETAX> 699
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 699
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
