<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 June 30, 1996 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 Identification No.)
organization)
2830 North First Street, San Jose, CA 95134
(Address of principal (Zip Code)
executive offices)
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
Common Stock, $0.0001 par value June 30, 1996
-------------
<S> <C>
28,058,700
</TABLE>
<PAGE> 3
IMP, Inc.
FORM 10-Q
FIRST QUARTER
INDEX
Part I: Financial Information (unaudited)
Page
Condensed Balance Sheet at 4
June 30, 1996 and March 31, 1996
Condensed Statement of 5
Operations for the three months ended
June 30, 1996 and June 25, 1995
Condensed Statement of Cash 6
Flows for the three months ended
June 30, 1996 and June 25,
Notes to condensed financial 8
statements
Management's discussion and analysis of 10
financial condition and results of
operations
Part II: Other Information
Item 6, Exhibits and Reports on Form 8-K 12
Signatures 13
<PAGE> 4
IMP, Inc.
CONDENSED BALANCE SHEET
(In thousands)
(unaudited)
ASSETS
<TABLE>
<CAPTION>
June 30, March 31,
1996 1996
---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents, including
restricted cash of $0 and $2,000
at March 26, 1995 $ 7,648 $ 9,038
Accounts receivable - net 16,556 13,658
Inventories 12,060 10,302
Deposits and other current assets 1,452 491
-------- --------
Total current assets 37,716 33,489
-------- --------
Leasehold improvements and equipment 84,258 81,665
Accumulated depreciation (66,296) (64,496)
-------- --------
Net leasehold improvements and equipment 17,962 17,169
-------- --------
Other long term assets 75 75
-------- --------
$ 55,753 $ 50,733
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable $ 311 $ 1,311
Trade accounts payable 8,372 6,175
Accrued payroll and related expenses 1,676 2,140
Other accrued liabilities 1,068 2,021
Current portion of capital
lease obligations and long term debt 4,625 4,662
-------- --------
Total current liabilities 16,052 16,309
-------- --------
Long-term capital lease
obligations and long term debt 10,679 8,979
-------- --------
Stockholders' equity:
Common stock 29 29
Additional paid-in capital 70,154 69,052
Accumulated deficit (37,264) (39,739)
Treasury stock at cost (3,897) (3,897)
-------- --------
Total stockholders' equity 29,022 25,445
-------- --------
$ 55,753 $ 50,733
======== ========
</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
------------------
June 30, June 25,
1996 1995
---- ----
<S> <C> <C>
Net revenues $ 23,525 $ 16,510
Cost of revenues 15,563 11,444
-------- --------
Gross profit 7,962 5,066
Operating expenses:
Research and development 2,840 2,264
Selling, general and administrative 2,242 1,821
-------- --------
Operating income 2,880 981
-------- --------
Interest:
Expense (397) (399)
Income 62 23
-------- --------
Net interest (335) (376)
-------- --------
Income before provision of
income taxes 2,545 605
Provision for income taxes 70 12
-------- --------
Net income $ 2,475 $ 593
======== ========
Net income per share $ .09 $ .02
======== ========
Shares used in computing
net income per share 28,804 27,342
======== ========
</TABLE>
See notes to unaudited condensed financial statements.
<PAGE> 6
IMP, Inc.
CONDENSED STATEMENT OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
------------------
June 30, June 25,
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,475 $ 593
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 1,800 1,387
Increase (decrease) from changes in:
Accounts receivable (2,898) 1,096
Inventories (1,758) 391
Deposits and other current assets (961) 269
Trade accounts payable 2,197 (383)
Accrued payroll and related expenses (464) 415
Other current liabilities (953) 20
------- -------
Total adjustments (3,037) 3,195
------- -------
Net cash used by operating activities (562) (3,788)
Cash flows from investing activities:
Capital expenditures (1,500) (150)
------- -------
Net cash used for investing activities (1,500) (150)
------- -------
Cash flows from financing activities:
Payments of principal under capital lease
obligation (proceeds from lease
extension) net 570 (827)
Payments under line of credit (1,000) (3,000)
Proceeds from issuance of common stock 1,102 394
Net cash used for financing activities 672 (3,433)
------- -------
</TABLE>
<PAGE> 7
<TABLE>
<S> <C> <C>
Net increase (decrease) in cash and cash
equivalents (1,390) 205
Cash and cash equivalents at beginning of
the period 9,038 8,484
------- -------
Cash and cash equivalents at end of the
period 7,648 8,689
======= =======
Supplemental cash flow disclosures:
Interest $ 335 $ 376
Income taxes 100 --
</TABLE>
See notes to unaudited condensed financial statements.
<PAGE> 8
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 31, 1996 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. For financial reporting purposes, the
Company reports on a 13 or 14 week quarter and a 52 or 53 week year
ending on the Sunday closest to March 31. For presentation purposes,
the consolidated financial statements refer to the quarter's calendar
month end for convenience. The results for the interim periods are not
necessarily indicative of results to be expected for the fiscal year.
2. Inventories
Inventories consist of:
<TABLE>
<CAPTION>
June 30, 1996 March 31, 1996
------------- --------------
<S> <C> <C>
Raw Materials $ 1,247 $ 987
Work-in-process 9,505 8,425
Finished goods 1,308 890
------- -------
$12,060 $10,302
======= =======
</TABLE>
3. Lines of Credit
At June 30, 1996, the Company had no borrowings outstanding under its
revolving bank line of credit, which is secured by Accounts Receivable.
The Company had $5,000,000 available to borrow under the line.
During the first fiscal quarter of 1997, the Company increased its line
of credit with an asset based lender to $5,000,000 million. At June 30,
1996, the Company had borrowed the entire $5,000,000 million which is
payable over four years.
<PAGE> 9
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.
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> 10
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operation
Except for the historical information contained herein, the matters discussed in
this document are forward-looking statements that involve certain risks and
uncertainties, including the risks and uncertainties set forth below under
"Factors Affecting Future Results."
Net revenues for the first quarter of fiscal 1997 increased by 42% compared to
the same period of the prior year. This increase is primarily attributable to
increased sales of mass storage standard products. However, the general softness
in the market is now starting to have an impact on the Company's future
business, as a number of customers are currently requesting that the Company
delay shipment of orders originally scheduled for delivery in the second quarter
of fiscal 1997. Therefore, the Company does not expect to report continued
sequential growth in the second quarter and revenues and net income will
probably be either flat or decrease from the June quarter. Continued weakness in
the market could also negatively impact the Company's third quarter results.
Cost of revenues in the first quarter of fiscal 1997 was 66.2% of revenues,
compared to 69.3% for the same quarter in the prior year. The improvement was
due to higher margin products constituting a higher percentage of product mix.
If the uncertainties discussed above result in a reduction in wafer fabrication
activities, margins could be adversely affected.
Research and development expenses of $2,840,000 for the first quarter of fiscal
1997 year were an increase over the $2,264,000 of the corresponding quarter of
the prior year. The increase was due to higher product development expense.
Although increases in research and development expenses are planned, any adverse
impact on revenues or gross margins may also affect such increases.
Selling, general and administrative expenses were $2,242,000 up from $1,821,000
in the same quarter of the prior year. The increase was due to higher
commissions and payroll costs.
Net interest expense was $335,000 for the first quarter of fiscal 1997 compared
to $376,000 of net interest expense in the same period of the prior year. The
difference was due to decreased interest on capitalized equipment leases and
interest on a $3 million term loan completed in fiscal 1995.
Net income of $2,475,000 for the first fiscal quarter of 1997 represents an
increase from a net income of $593,000 for the corresponding quarter of the
prior year.
<PAGE> 11
Liquidity and Capital Resources
Working capital of the Company increased by $4,484,000 to $21,664,000 million
during the first quarter of fiscal 1997. As of June 30, 1996, the Company had
cash and cash equivalents of approximately $7.6 million. The Company's bank line
of credit of $5,000,000 secured by accounts receivable expires on October 15,
1996. The Company does not anticipate any difficulties in obtaining a new line.
Cash flows used by operating activities in the first quarter of fiscal 1997 and
fiscal 1996 were $562,000 and $3,788,000, respectively, reflects improvements in
net income in the first quarter of 1997. This was partially offset by an
increase in accounts receivables and inventory due to increased sales and higher
level of production.
Cash flows used for investing activities in the first quarter of fiscal 1997 and
1996 were $1,500,000 and $150,000, respectively, reflecting cash investment in
property and equipment. Management expects this to continue for the rest of
fiscal 1997.
Cash flow proceeds from financing activities in the first quarter of fiscal 1997
were primarily due to lease extensions and stock option exercises of $1,102,000,
partially affected by payment of long term financing.
The Company believes its present cash position, cash and cash equivalents
generated from operations and its bank lines will be sufficient to meet the
Company's needs through at least fiscal 1997.
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 markets
for its customer's products, foundry utilization, the availability of raw
materials, concentration of customers, the development and introduction of new
technology and products and the availability of trained design processing
engineers, in particular those skilled in analog design. The Company announced
in July 1995 that one of its semiconductor products was designed into the Zip
drive by Iomega Corporation. The Company anticipates that Iomega will seek a
second source for this semiconductor product. Any decline in demand for the
Company's products, including the one designed into the Zip drive or a 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 or other
customers, which could adversely affect the Company's business and results of
operations. In addition, the semiconductor market situation may result in less
than optimum utilization of the Company's foundry. 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.
<PAGE> 12
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.
<PAGE> 13
IMP, Inc.
PART II OTHER INFORMATION
Exhibit 27 Financial Data Schedule
On April 29, 1996, the Company filed a Current Report on Form 8-K dated April
26, 1996 for Item 5, Other Events.
<PAGE> 14
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
- ------------- ---------------------------------
8/2/96 Charles S. Isherwood
Senior Vice President and
Chief Financial Officer
/s/ George Rassam
- ------------- ---------------------------------
8/2/96 George Rassam
Controller (Chief Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000812927
<NAME> BOWNE
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-30-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 7,648
<SECURITIES> 0
<RECEIVABLES> 16,556
<ALLOWANCES> 740
<INVENTORY> 12,060
<CURRENT-ASSETS> 37,716
<PP&E> 84,258
<DEPRECIATION> (66,296)
<TOTAL-ASSETS> 55,733
<CURRENT-LIABILITIES> 16,052
<BONDS> 0
0
0
<COMMON> 29
<OTHER-SE> 70,154
<TOTAL-LIABILITY-AND-EQUITY> 55,753
<SALES> 23,525
<TOTAL-REVENUES> 23,525
<CGS> 15,563
<TOTAL-COSTS> 15,563
<OTHER-EXPENSES> 5,082
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 335
<INCOME-PRETAX> 2,545
<INCOME-TAX> 70
<INCOME-CONTINUING> 2,475
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,475
<EPS-PRIMARY> .09
<EPS-DILUTED> .09
</TABLE>
