<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 31, 1995 or
-----------------
Transition report pursuant to Section 13 or 15(d) of the Securities
- -- Exchange Act of 1934
For the transition period from to
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Commission file number 0-15858
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IMP, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 94-2722142
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(State or other jurisdiction (IRS Employer
of incorporation or Identification No.)
organization)
2830 North First Street, San Jose, CA 95134
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(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code (408) 432-9100
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(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
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<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 31, 1995
26,821,708
<PAGE> 3
IMP, Inc.
FORM 10-Q
THIRD QUARTER
INDEX
<TABLE>
<CAPTION>
Part I: Financial Information (unaudited)
Page
<S> <C>
Condensed Balance Sheet at 4
Dec 31, 1995 and March 26, 1995
Condensed Statement of 5
Operations for the three months ended
Dec 31, 1995 and Dec 25, 1994
Condensed Statement of 6
Operations for nine months ended
Dec 31 1995 and Dec 25, 1994
Condensed Statement of Cash 7
Flows for the nine months ended
Dec 31, 1995 and Dec 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 8-K 14
Signatures 15
</TABLE>
<PAGE> 4
IMP, Inc.
CONDENSED BALANCE SHEET
(In thousands)
(unaudited)
<TABLE>
<CAPTION>
(audited)
ASSETS
------
Dec 31, 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 $ 8,203 $ 8,484
Accounts receivable - net 11,543 11,799
Inventories 9,992 9,148
Deposits and other current assets 706 739
-------- --------
Total current assets 30,444 30,170
-------- --------
Leasehold improvements and equipment 77,830 69,559
Accumulated depreciation (62,802) (58,583)
-------- --------
Net leasehold improvements and equipment 15,028 10,976
-------- --------
Other long term assets 75 155
-------- --------
$ 45,547 $ 41,301
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Note payable 2,500 6,500
Trade accounts payable 6,033 6,003
Accrued payroll and related expenses 1,701 1,588
Other accrued liabilities 1,574 459
Current portion of capital
lease obligations 4,008 3,489
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Total current liabilities 15,816 18,039
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Long-term capital lease
obligations 6,771 4,799
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Stockholders' equity:
Common stock 28 28
Additional paid-in capital 68,719 67,540
Accumulated deficit (41,890) (45,208)
Treasury stock at cost (3,897 (3,897)
-------- --------
Total stockholders' equity 22,960 18,463
-------- --------
$ 45,547 $ 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
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Dec 31, Dec 25,
1995 1994
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<S> <C> <C>
Net revenues 20,029 15,727
Cost of revenues 13,510 11,274
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Gross profit 6,519 4,453
Operating expenses:
Research and development 2,521 2,282
Selling, general and administrative 2,238 1,715
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Operating income 1,760 456
Interest:
Expense (128) (316)
Income 65 33
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Net interest (63) (283)
Income before provision of
income taxes 1,697 173
Provision for income taxes 42 -
------- -------
Net income $ 1,655 $ 173
======= =======
Net income per share $ .06 $ .01
======= =======
Shares used in computing
net income per share 28,239 26,451
======= =======
</TABLE>
See notes to unaudited condensed financial statements.
<PAGE> 6
IMP, Inc.
CONDENSED STATEMENT OF OPERATIONS
(In thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
------------------
Dec 31, Dec 25,
1995 1994
---- ----
<S> <C> <C>
Net revenues $55,053 $44,333
Cost of revenues 37,800 31,136
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Gross profit 17,253 13,197
Operating expenses:
Research and development 6,949 6,614
Selling, general and administrative 6,118 4,967
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Operating income 4,186 1,616
Interest:
Expense (916) (989)
Income 129 72
------- -------
Net interest (787) (917)
Income before provision of
income taxes 3,399 699
Provision for income taxes 81 -
------- -------
Net income $ 3,318 $ 699
======= =======
Net income per share $ .12 $ .03
======= =======
Shares used in computing
net income per share 27,862 26,459
======= =======
</TABLE>
See notes to unaudited consolidated condensed financial statements.
<PAGE> 7
IMP, Inc.
CONDENSED STATEMENT OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
-----------------
Dec 31, Dec 25,
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,318 $ 699
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 4,219 3,893
Increase (decrease) from changes in:
Accounts receivable 256 (620)
Inventories (844) (949)
Deposits and other current assets 113 (315)
Trade accounts payable 30 2,028
Accrued payroll and related expenses 113 531
Other current liabilities 1,115 (246)
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Total adjustments 5,002 4,322
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Net cash provided by operating activities 8,320 5,021
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Cash flows from investing activities:
Capital expenditures (300) (305)
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Net cash used for investing activities (300) (305)
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Cash flows from financing activities:
Payment of principal under capital lease
obligation (5,480) (4,445)
Proceeds payments under line of credit (4,000) -
Proceeds from issuance of common stock 1,179 481
Payment of shareholders note - -
------- -------
Net cash used for financing activities (8,301) (3,964)
------- -------
</TABLE>
<PAGE> 8
<TABLE>
<CAPTION>
Nine Months Ended
-----------------
Dec 31, Dec 25,
1995 1994
---- ----
<S> <C> <C>
Net increase (decrease) in cash and cash
equivalents (281) 752
Cash and cash equivalents at beginning of
the period 8,484 7,625
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Cash and cash equivalents at end of the
period 8,203 8,377
======= ======
Supplemental disclosures of cash paid
during the period:
Interest $ 787 $ 917
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>
Dec 31, 1995 March 26, 1995
------------ --------------
<S> <C> <C>
Raw Materials $1,252 $ 854
Work-in-process 7,445 7,285
Finished goods 1,295 1,009
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$9,992 $9,148
====== ======
</TABLE>
3. Line of Credit
At December 31, 1995, the Company had $2,500,000 borrowing outstanding
under revolving line of credit, which is secured by Accounts
Receivable.
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 - Results of Operations - Third Quarter of Fiscal 1996
Compared to Third Quarter of Fiscal 1995
Net revenues for the three month period ending December 31, 1995 was $20.0
million, an increase of $4.3 million or 27% 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 standard product sales volume to increase during the
next twelve months.
Cost of revenues in the third quarter was $13.5 million or 67.5% of net
revenues up from $11.3 million or 72% in the corresponding quarter of last
year. The percentage decrease in cost was due to a higher level of factory
utilization, and a shift to higher margin standard products. Management
expects cost of revenue to decline as a percent of revenue through the next
quarter.
Research and development expenses were $2.5 million for the third quarter
fiscal 1996 up from $2.3 million in the same quarter of the prior year. The
increase was primarily due to the fact that the third quarter had 14 weeks in
fiscal 1996 compared to 13 in fiscal 1995. Management expects R&D costs to
remain consistent as a percentage of revenue through the next quarter.
Selling, general and administrative expenses were $2.2 million up from $1.7
million in the same quarter of the prior year. The major increase was due to
higher commissions but the added week in fiscal 1996 also added to expenses.
Management expects selling, general and administrative expenses to remain
consistent as a percentage of sales through the next quarter.
The net interest expense was $64,000 during the third quarter fiscal 1996,
compared to $283,000 in the corresponding quarter of the prior year. The
decrease was due to lower interest expense on capitalized leases, and certain
one time adjustments.
Net income of $1,655,000 for the quarter ended December 31, 1995 increased from
income of $173,000 in the corresponding quarter of the prior year. Income per
share of $.06 in the current quarter compared to income per share of $.01 in
the same period of the prior year.
<PAGE> 12
Results of Operations - First Nine Months of Fiscal 1996
Compared to First Nine Months of Fiscal 1995
Net revenues for the nine month period ending December 31, 1995 were $55.1
million, an increase of $10.8 million or 24% 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 standard product sales volume to increase during the
next twelve months.
Cost of revenues in the nine month period ending December 31, 1995 was $37.8
million or 68.6% of net revenues compared to $31.1 million or 71.2% in the
corresponding quarter of last year. Management expects cost of revenues to
decline as a percent of revenue, through the next quarter.
Research and development expenses were $6.9 million for the nine month period
ended December 31, 1995 essentially unchanged from $6.6 million over the
comparable period of fiscal 1995. Management expects that R&D expenses will
remain consistent as a percent of revenues for the next 3 to 6 months.
Selling, general and administrative expenses were $6.1 million compared to $5.0
million in the corresponding period of the prior year. The increase was due to
higher commissions and higher marketing expenses on ASSP products. Management
expects selling, general and administrative costs to remain consistent as a
percent of revenues for the next 3 to 6 months.
Net interest expense was $787,000 compared to $917,000 of net interest expensed
in the corresponding period of the prior year. The decrease was due to lower
interest expense on capitalized leases, and certain one time charges.
Net income was $3,318,000 for the nine month period ending December 31, 1995
compared to net income of $669,000 for the corresponding period of the prior
year. Income per share was $.12 in the nine month period ending December 31,
1995 compared to income per share of $.03 during the same period of the prior
year.
Liquidity and Capital Resources
Working capital of the Company increased by $2,400,000 to $14.6 million during
the period March 26, 1995 to December 31, 1995 as a result of the Company's net
income for the period, and the repayment of capital lease obligations. As of
December 31, 1995, the Company had cash and cash equivalents of approximately
$8.2 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 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.
<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
- ------------- ---------------------------------
1/29/96 Charles S. Isherwood
Senior Vice President and
Chief Financial Officer
/S/ George Rassam
- ------------- ---------------------------------
1/29/96 George Rassam
Controller (Chief Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000812927
<NAME> IMP, INC.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-26-1995
<PERIOD-START> MAR-27-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1
<CASH> 8,203
<SECURITIES> 0
<RECEIVABLES> 11,543
<ALLOWANCES> 605
<INVENTORY> 9,992
<CURRENT-ASSETS> 30,444
<PP&E> 77,830
<DEPRECIATION> (62,802)
<TOTAL-ASSETS> 45,547
<CURRENT-LIABILITIES> 15,816
<BONDS> 0
0
0
<COMMON> 28
<OTHER-SE> 68,719
<TOTAL-LIABILITY-AND-EQUITY> 45,547
<SALES> 20,029
<TOTAL-REVENUES> 20,029
<CGS> 13,510
<TOTAL-COSTS> 13,510
<OTHER-EXPENSES> 4,759
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 63
<INCOME-PRETAX> 1,697
<INCOME-TAX> 42
<INCOME-CONTINUING> 1,655
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,655
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
</TABLE>
