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FOR ANNUAL AND TRANSITION REPORTS PURSUANT
TO SECTIONS 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended March 29, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
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 (I.R.S. Employer
of incorporation or organization) Identification No.)
2830 North First Street
San Jose, California 95134
(Address of Principal Executive Offices, including Zip Code)
Registrant's telephone number, including area code:
(408) 432-9100
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
None None
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Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value
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 by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of voting stock held by non-affiliates of the
Registrant, as of June 25, 1998 was approximately $28,435,139 (based upon the
closing price for shares of the Registrant's Common Stock as reported by the
Nasdaq National Market System on that date). Shares of Common Stock held by each
officer, director and holder of 5% or more of the outstanding Common Stock have
been excluded in that such persons may be deemed to be affiliates. This
determination of affiliate status is not necessarily a conclusive determination
for other purposes.
On June 25, 1998, approximately 30,347,000 shares of Common Stock, $.001
par value, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE.
Information contained in the Registrant's Proxy Statement for the 1998
Annual Meeting of Stockholders to be held on August 19, 1998 has been
incorporated by reference in Part III of this Form 10-K.
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PART I
ITEM I. BUSINESS.
This Annual Report on Form 10-K, and the documents incorporated herein
by reference, contains forward-looking statements that have been made pursuant
to and in reliance on the provisions of the Private Securities Litigation Reform
Act of 1995.
Statements regarding IMP's business that are not historical facts are
"forward-looking statements" that involve risks and uncertainties, including,
but not limited to demand for the Company's products, foundry utilization, the
ability of the Company to develop new products, demand by end-users of the
products produced by the Company's customers, and the other risks detailed from
time to time in the Company's reports filed with the Securities and Exchange
Commission. Words such as "anticipates," "expects," "intends," "plan,"
"believe," "seeks," "estimates," and variations of such words and similar
expressions relating to the future operations are intended to identify
forward-looking statements.
All forward-looking statements are based on the Company's current expectations,
estimates, projections, beliefs and plans or objectives about its business and
its industry. These statements are not guarantees of future performance and are
subject to risk and uncertainty. Actual results may differ materially from those
predicted or implied in any such forward-looking statement.
Risks and uncertainties that could cause actual results to differ materially
include those set forth throughout this Form 10-K and in the documents
incorporated herein by reference. Particular attention should be paid to the
section below entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
The Company undertakes no obligation to update any forward-looking statement,
whether as a result of new information relating to existing conditions, future
events or otherwise. However, readers should carefully review future reports and
documents that the Company files from time to time with the Securities and
Exchange Commission, such as its quarterly reports on Form 10-Q (particularly
"Management's Discussion and Analysis of Financial Condition and Results of
Operations") and any current reports on Form 8-K.
INTRODUCTION
IMP, Inc., ("IMP", or the "Company") designs, develops, manufactures, and
markets linear and mixed-signal integrated circuits ("ICs"), collectively
referred to as analog circuits, for computer, communications and control
applications. The Company also provides silicon wafer manufacturing ("foundry"),
test, and assembly services to OEM customers and other semiconductor companies.
IMP operates an ISO 9001 certified wafer-fabrication plant and test facility in
San Jose, California capable of producing CMOS, BiCMOS, EEPROM and high-voltage
technologies, which are tailored to meet IMP analog design requirements and
specific customer specifications. The Company believes that its in-house wafer
fabrication capability provides a competitive advantage because it facilitates
close collaboration between design and process engineers, provides control over
wafer supply and quality, offers the potential for lower manufacturing
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costs, and accelerates product introduction schedules. The Company believes that
it has adequate wafer production capacity to support its near term plans.
The Company was originally incorporated in California in January 1981 as
International Microelectronic Products. It reincorporated in Delaware as
International Microelectronic Products, Inc. in April 1987 and the new
corporation succeeded to the business of its predecessor. The Company made its
initial public stock offering in 1987 and is traded on the Nasdaq National
Market System under the symbol IMPX. The Company amended its Certificate of
Incorporation in September 1993 to change its name to IMP, Inc. The Company's
principal executive offices are located at 2830 North First Street, San Jose,
California 95134-2071, and its telephone number is (408) 432-9100.
IMP BACKGROUND
IMP was founded to serve a developing market opportunity for CMOS standard-cell,
customer-designed Application-Specific ICs ("ASICs") employing advanced computer
aided engineering software and libraries of pre-characterized cells. The Company
built its own wafer fabrication and testing facility to provide fast turnaround
engineering services for its customers. The Company has produced wafers for more
than one thousand mask designs for customers ranging from AT&T, Adaptec,
Daimler-Benz, and Level One, to Rockwell and Siemens. In the mid-1980s the
Company believes that it was one of the first vendors to combine analog and
digital functions on the same chip to create cell-based, mixed-signal devices.
Beginning in 1990, IMP focused the majority of its manufacturing capacity and
sales activities on the supply of wafer foundry services to other semiconductor
companies. The Company's cell design, product and test engineering personnel
were re-deployed to develop highly integrated, IMP proprietary
application-specific, analog circuits for mass-storage and control applications.
These IMP designed products included some of the industry's first commercial
electrically programmable analog devices.
IMP mass-storage circuits have included programmable filters, integrated
read-channels, preamplifiers, write drivers and other complex products for disk
drive and PC tape back-up peripheral systems. From fiscal 1996 through 1998, the
Company supplied over eight million read-channel IC's to Iomega Corporation, for
the Ditto(TM) and Zip(TM) removable-media storage drives. Other customers for
these products have included Hewlett-Packard, Conner Peripherals, Seagate
Technology, and the 3M Corporation (now Imation).
In order to diversify its business base across a broader range of markets,
customers, and applications, in fiscal 1997 new management redirected the
Company's product development and marketing efforts towards industry-standard
analog integrated circuits.
THE ANALOG INTEGRATED CIRCUIT MARKET
Integrated circuit designs can be generally categorized as either digital or
linear devices based on their mode of operation. Circuits combining both linear
and digital modes on the same chip are known as mixed-signal devices.
Mixed-signal devices are frequently employed to translate information presented
in a linear signal into digital information and vice versa. Linear and mixed
signal circuits are collectively called analog products.
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Digital circuits generate just two signal levels. Each level represents a one or
a zero in binary arithmetic. Digital functions are most efficient at storing and
processing signals represented by digital bit streams. Linear circuits process
continuous signals that convey information about the value of some varying
characteristic, such as the amplitude, phase, or frequency of voltage or
current. The continuously varying signals may represent "real world" properties
such as temperature, pressure, weight, or speed.
The Analog Integrated Circuit market comprises those devices having a purely
linear operating mode, as well as mixed-signal devices having a high degree of
linear circuit content. Examples of linear devices include, amplifiers,
comparators, regulators and certain specialized functions used in power
management applications. Mixed-signal devices falling into the analog category
include disk-drive read-channels, data communications interface, and data
conversion devices, such as analog-to-digital (ADC) and digital-to-analog
converter (DAC) products. Mixed-signal chips with predominantly digital content,
such as modems, PC audio, and graphics display functions are usually included in
the category of digital products.
From the 1960s through the 1980s, the mainstream analog IC business was
dominated by divisions of large semiconductor companies. While these operations
are still significant in terms of unit shipments, today it is also served by a
large number of independent specialized analog vendors. According to the World
Semiconductor Trade Statistics ("WSTS") program, in calendar 1997 worldwide
analog revenue was $19.8 billion out of total integrated circuit sales of $119.5
billion. The Company believes that ongoing widespread electronic system design
activity based on low-cost microprocessors will support continued growth in the
market for analog ICs by increasing the demand for interfaces to the real world
and for managing power supply resources as efficiently as possible.
MARKETS AND APPLICATIONS
Digital signals are most efficient for manipulation of bits of data. Analog
signals best represent the values of real world parameters outside of a
computer. Analog components are therefore an essential element of every
electronic system that must operate in a real world environment, from battery
powered computers, mobile phones, hearing aids and hand-held instruments to
desktop computers, servers and mainframes to industrial equipment, automobiles,
and avionics.
A simple example of an application for analog devices is in the
control of an electric fan. Changes in room temperature, an analog signal, are
measured using a sensor and an amplifier. This signal is converted with an ADC
into a digital value for a microcontroller in the fan to determine when the
motor should be turned on and at what speed. When the decision is made, a DAC
then converts the digital output of the controller back into an analog signal
which is then amplified to a high current level to drive the fan motor.
An established analog IC supplier may offer hundreds of different basic device
types, in numerous package variations and operating ranges, representing
thousands of part numbers in a catalog. A typical product portfolio may include
general-purpose linear devices, such as amplifiers, filters, voltage regulators
and references, as well as more application-specific mixed-signal products, such
as motor controllers, data communications, data acquisition, and interface
devices.
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End customers for analog integrated circuits manufacture electronic
equipment serving numerous and widely differing applications in instrumentation,
industrial control, data processing, military, video, medical equipment, and
voice and data communications over private and public, local area and wide-area
network systems, such as the Internet. For each application, different users may
have unique requirements for circuits with specific resolution, accuracy,
linearity, speed, power, and signal amplitude capability, which results in a
high degree of market complexity. As a result IMP believes that, compared to the
market for digital integrated circuits, the analog market is characterized by a
wider range of standard products used in smaller quantities by a large number of
customers. Further, the Company believes that many of these products have longer
life cycles, less competition from Japanese and other foreign manufacturers,
lower capital requirements as a result of using more mature manufacturing
technologies, and relatively more stable growth rates.
IMP OBJECTIVE AND STRATEGIES
The Company's objective is to change its business profile from a revenue base
dominated by a small number of wafer foundry and mass-storage product customers,
to predominantly that of sales of finished analog integrated circuit products
serving a broad range of markets, customers, and applications. To achieve this
objective, the Company seeks to use its expertise in analog process and circuit
development and high-volume production to:
1. Develop wafer-manufacturing processes that enable the production of
advanced analog devices. Currently these development activities are
addressing a variety of CMOS and BiCMOS technologies, ranging from 30
volts to several hundred volts in capability. The Company plans to use
these technologies as the basis for providing specialty analog
wafer-foundry services to OEM manufacturers and other semiconductor
vendors, as well as for its own products. Where appropriate, IMP will also
continue to co-develop and import customer designed processes.
2. Build a portfolio of second-source, industry-standard analog IC products,
based on the new processes described in 1. above, to serve growth
opportunities in computer, communications, and control markets. To
accomplish this, IMP has identified opportunities for families of devices
in Power Management and Data Communications Interface applications. Other
applications areas may be addressed in the future.
3. Utilize its process optimization and volume manufacturing experience to
produce standard analog circuits at competitive costs. IMP plans to
promote these products based on the benefits of competitive pricing
combined with volume production capability and ISO 9001 certified
standards of quality and reliability, together with responsive levels of
customer service.
4. Identify customers that are leaders in each of the Company's targeted
market segments and to work with these manufacturers to understand their
current and new applications and product needs. Based on this knowledge,
IMP will seek to create improved standard analog circuits that offer a
combination of increased functionality, performance, and cost savings.
The current new product strategy was developed in response to a significant
downturn in the Company's foundry and mass-storage product businesses in fiscal
year 1997. Changes were implemented in both wafer foundry and finished IC
product areas. Company management took
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into account the following considerations when evaluating which new analog
products it should design:
1. The products should take advantage of the available IMP engineering
disciplines in the design, test and product development of analog circuits.
2. The products should be capable of economic, high-volume, production in the
existing IMP fabrication facility.
3. The products must offer a near to mid-term revenue stream with long term
growth potential.
4. The products should appeal to a broad customer base across diverse markets
and applications.
As a result of this analysis, the Company identified analog power management and
data communications interface products as offering the best match between its
engineering and manufacturing capabilities and growing market opportunities.
Power Management ICs control, distribute, generate, monitor and regulate the
supply of voltage and current, and provide electrical and thermal protection to
an electronic system. Examples include Voltage Regulators, DC-DC Converters, and
Electroluminescent (EL) Lamp Drivers. Data Communications Interface ICs are used
to generate the critical voltage, current and timing values required for
transmission of electrical signals reliably from one system function to another.
Example products include single-ended and multi-mode SCSI Terminators.
The Company's first in-house designed product aimed at power management
applications, an EL lamp driver, was introduced in April 1998. IMP entered the
data communications interface market via a technology licensing and cooperative
product development agreement with Linfinity Microelectronics, a subsidiary of
SymmetriCom Inc., in 1997, on a family of Small Computer Systems Interface
(SCSI) termination devices.
SALES, DISTRIBUTION AND MARKETING
IMP sells its products directly to OEM customers and through a worldwide network
of independent sales representatives and distribution firms managed by Company
personnel. The Company's direct sales force consists of sales and applications
personnel based in the San Jose headquarters and in regional sales offices, who
provide business, technical, and applications support directly to customers and
through the employees of the various channels of distribution.
In North America, the Company currently uses 15 independent sales representative
firms and one distribution company having 30 sales offices in the USA and
Canada. In some cases these organizations promote products that are competitive
with those of IMP. In the fiscal year ending March 29, 1998, sales through North
American distribution outlets accounted for less than 5% of revenue. As the
Company proceeds with its transition to sales of more standard analog IC
products, it believes that its sales through distribution firms will account for
an increasing percent of net revenue. As is customary in the industry, domestic
distributors are entitled to certain price rebates and product return
privileges.
Outside North America, the Company sells its products through various channels,
including independent sales representative, distributor, and stocking
representative/distributor firms. These companies may buy and stock the
Company's products for resale or may act as the Company's agent in arranging for
the direct sales from the Company to an OEM customer.
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Sales to customers in North America, Asia and Europe accounted for 69%, 30%, and
1%, respectively, of the Company's net revenues for the fiscal year ended March
29, 1998, compared to 66%, 33%, and 1%, respectively, of the Company's net
revenue for 1997, and 94%, 3%, and 3%, respectively, of the Company's net
revenue for fiscal 1996. The Company's standard products are sold throughout the
world, while its custom and foundry products are sold primarily to North
American customers. See Note (7) of notes to financial statements for more
information on Export Sales.
The Company's international sales are primarily denominated in U.S. dollars.
Consequently, changes in exchange rates that strengthen the U.S. dollar could
increase the price in local currencies of the Company's products in foreign
markets and make the Company's products relatively more expensive than
competitor's products that are denominated in local currencies, leading to a
reduction in sales or profitability in those foreign markets. The Company has
not taken any protective measures against exchange rate fluctuations, such as
purchasing hedging instruments with respect to such fluctuations. Although
export sales are subject to certain governmental restrictions, including the
Export Administration Act of 1979, the Export Administration Amendments Act of
1985 and regulations promulgated thereunder, the Company has not experienced any
material difficulties to date because of these restrictions.
In fiscal 1998, IMP's largest customer was Iomega Corporation, which accounted
for approximately 22% of total revenue. The Iomega programs that used the
Company's products have now been largely completed. As a result IMP does not
expect to generate any revenue from these old designs in fiscal 1999.
International Rectifier accounted for approximately 14% of total sales. Three
other customers each exceeded 10% of sales and accounted for a total of
approximately 32% in revenue. The customers are Level One, Colorado Memory
Systems, and Linfinity.
Other than the companies identified above, no other end customer accounted for
more than 10% of total sales during fiscal 1998. The unanticipated loss of any
of its major customers or the unanticipated cancellation or rescheduling of
orders by any of them could have a material adverse impact on the Company's
business.
Due to the relatively long manufacturing cycle for integrated circuits, the
Company builds some of its inventory in advance of receiving orders from its
customers. As a consequence of inaccuracies inherent in forecasting demand for
such products, inventory imbalances periodically occur that result in surplus
amounts of some Company products and shortages of others. Such shortages can
adversely affect customer relationships; surpluses can result in larger than
desired inventory levels.
The Company's backlog consists of distributor and OEM customer orders required
to be shipped within six months following the order date. Customers may
generally cancel or reschedule orders to purchase products without significant
penalty to the customer. As a result, to reflect changes in their needs,
customers frequently revise the quantities of the Company's products to be
delivered and their delivery schedules. Since backlog can be canceled or
rescheduled without significant penalty, the Company does not believe its
backlog is a meaningful indicator of future revenue. In addition, the Company's
backlog includes its orders from domestic distributors. Such products when sold
may result in revenue lower than the stated backlog amounts as a result of
discounts that are authorized by the Company at the time of sale by the
distributors.
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The Company typically warrants its products against defects in materials and
workmanship for a period of one year. Warranty expense to date has been minimal.
RESEARCH AND DEVELOPMENT
The success of the Company's standard analog IC strategy will depend
substantially on its ability to define, design, develop, and introduce on a
timely basis new products offering design, technology, cost, availability,
quality, reliability, performance, or other features that meet or exceed those
of its competitors.
Research and development in analog integrated circuits is characterized
primarily by new process development, circuit design, and product and test
engineering contributions that enable new device functionality or improved
performance. The Company's research and development efforts are also directed at
improving and reducing the cost of existing manufacturing process technologies
and products. With respect to more established products, the Company's research
and development efforts also include product redesign, reduction of chip size,
and improvement in the yield of good die per wafer to reduce device costs.
As of March 29, 1998, the Company had 32 employees engaged in research and
development. The Company's research and development efforts are dependent upon
attracting and retaining qualified analog process, design, product engineering
test, and applications engineers, of which there is a limited supply. The
Company also utilizes independent contractors for certain research and
development projects.
In fiscal 1998, 1997 and 1996, the Company spent approximately $9 million, $10.3
million, and $9.9 million, respectively, on research and development. The
Company expects that it will continue to invest substantial funds in research
and development activities. There can be no assurance that the Company will be
able to identify new product opportunities successfully and develop and bring to
market such new products or that the Company will be able to respond effectively
to new technological changes or new product announcements by others. There also
can be no assurance that the market will accept the Company's new products.
Moreover, the end markets for the Company's new products, such as the
communications and computer markets, are subject to rapid technological change
and there can be no assurance that as such markets change the Company's product
offerings will remain current and suitable for them.
The Company's research and development programs are currently focused on
development of new analog IC products and enhancing its CMOS and BiCMOS
processes including its high voltage manufacturing processes. The greatest
amount of resources are concentrated in the area of IC product development. The
Company has in the past and expects in the future to enter into cross-licensing
agreements under which it would acquire certain rights pertaining to the
technologies of its partners in exchange for the transfer of similar rights to
its partners or for other consideration.
COMPETITION
The Company currently competes in the markets for analog silicon foundry,
application specific mass-storage, and standard analog integrated circuit
products. All these sectors are highly competitive and subject to rapid
technological change.
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Currently, the Company's principal competitors in the analog silicon foundry
market include Orbit Semiconductor, a division of the DII Group, American
Microsystems Inc., a division of Japan Energy Corporation, Austrian Micro
Systems, Tower Semiconductor, as well as internal manufacturing facilities
within its end customers. To a lesser extent the Company competes with large
Asian foundries such as Chartered Semiconductor of Singapore and TSMC of Taiwan.
The principal competitive factors in the silicon foundry market include service,
price, manufacturing capability, quality, and manufacturing cycle time. IMP
believes its competitive strengths arise from its experience in specialized CMOS
and BiCMOS analog process technologies. The Company also believes it competes
effectively because of its service-oriented approach and close customer
relationships, which result in flexibility and responsiveness to customer
requirements. There can be no assurance that the Company will be able to compete
successfully in the future.
The market for analog ICs is also intensely competitive with the competitive
pressures expected to increase. Significant competitive factors in the analog
market for standard products include product features, performance, price, the
timing of product introductions, the emergence of new computer and communication
standards, quality, and customer support. With respect to mass-storage products
such as programmable filters and read channels, the Company's principal
competitor is Silicon Systems, a division of Texas Instruments. IMP plans to
continue to supply its mass-storage devices as long as a viable market remains
for them, however it is not currently developing any new products based on this
technology. The current focus areas of data communications interface and power
management products, because the markets are diverse and highly fragmented, the
Company expects to encounter different competitors on different products. The
Company's principal competitors are expected to include Linear Technology
Corporation, and Maxim Integrated Products, Inc., in one or more of its product
areas. Other competitors will likely include Dallas Semiconductor, Linfinity
Microelectronics, Micrel, Motorola, National Semiconductor Corporation, Semtech,
Sipex, Supertex, Texas Instruments, Unitrode Corporation and certain European
and Asian manufacturers.
In addition, the Company has licensed technology from and to parties, which
have, in certain cases, the right to use the technology to develop products
competitive to those of the Company.
The Company's principal competitors and many of its potential competitors have
substantially greater technical, manufacturing, financial, and marketing
resources than the Company. IMP also faces competition from smaller highly
focussed companies, although not all such companies have internal wafer
manufacturing capability.
Due to the increasing demands for analog circuits, the Company expects
intensified competition from existing suppliers and the entry of new
competitors. Increased competition could adversely affect the Company's
business, financial condition, or results of operations.
There can be no assurance that the Company will be able to compete successfully
in the future, or that competitive pressure will not adversely affect the
Company. Competitive pressures could reduce market acceptance of the Company's
products and result in price reductions and increases in expenses that could
adversely affect the Company's business, financial condition or results of
operations.
PATENTS AND LICENSES
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The Company has 21 United States patents, one of which is jointly owned, and has
filed additional United States and foreign patent applications to certain of its
inventions. The issued patents expire at various times from 2009 to 2014.
Although patents, patent protection, and patent applications may have value, the
Company believes that other factors such as managerial and technological
experience and the creative abilities of its personnel are of more significance
in the rapidly changing semiconductor industry.
The Company has also obtained licenses for certain devices and technology, and
may obtain additional licenses in the future. Because of technological
developments in the semiconductor industry, it is possible that certain of the
Company's designs or processes may involve infringement of existing patents. The
Company has from time to time received communications from third parties
asserting patent rights, mask work rights, copyrights or trademark rights on
certain of the Company's products and technologies. The Company has entered into
an agreement with two such parties pursuant to which the Company obtained a
license to certain rights in exchange for making certain royalty payments. The
Company believes that, based upon industry practice, any necessary licenses or
rights under patents could be obtained on conditions that would not have a
material adverse effect on the Company. However, there can be no assurance that
such licenses could in fact be obtained on terms acceptable to the Company.
The Company has also acquired software and licenses to software from a number of
software companies, primarily for CAD and CAE applications.
The Company attempts to protect its trade secrets and other proprietary
information through agreements with customers and suppliers, proprietary
information agreements with employees, and other security measures. Although the
Company intends to protect its rights vigorously, there can be no assurance that
these measures will be successful.
MANUFACTURING
All of the wafers used by the Company in fiscal 1998 were manufactured at its
facility in San Jose, California. This wafer manufacturing and test facility has
the capacity to produce up to 15,000 five inch wafers per month. The maximum
practical number of wafers may be less than this at any specific time due to the
number of masking levels or other critical process steps demanded by the current
product mix. The Company believes that its in-house wafer fabrication facility
provides a competitive advantage because it facilitates close collaboration
between design and process engineers, provides control over wafer supply, offers
the potential for lower manufacturing costs, and accelerates product
introduction schedules.
The Company manufactures all of its wafers at the one fabrication facility in
San Jose. Given the unique nature of the Company's processes, it would be
difficult to arrange for independent manufacturing facilities to supply such
wafers in a short period of time. Any prolonged inability to utilize the
Company's manufacturing facility as a result of fire, natural disaster or
otherwise, would have a material adverse effect on the Company's financial
condition or results of operations. Although it believes that it has adequate
capacity to support its near term plans, the Company has in the past
subcontracted the fabrication of a portion of its wafer production to outside
foundries, and may need to do so again. At the present time, there are several
wafer foundries that are capable of supplying the certain of Company's needs.
However, there can be no assurance that the Company will always be able to find
the necessary foundry capacity.
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During periods of low demand, high fixed wafer fabrication costs have
historically had a material adverse effect on the Company's results of
operations. For example, during the last three-quarters of fiscal 1997 and all
of fiscal 1998 the Company's operating results were adversely impacted due to
low utilization of the Company's manufacturing facility.
Furthermore, the Company is dependent on a number of subcontractors for certain
of its manufacturing processes, such as epitaxial deposition services. The
failure of any of these subcontractors to perform these processes on a timely
basis could result in manufacturing delays, which could materially adversely
affect the Company's results of operations. Currently, the Company purchases
certain materials, including silicon wafers, on a purchase order basis from a
limited number of vendors. Any disruption or termination of supply from any of
these suppliers could have a material adverse effect on the Company's business,
financial condition, or results of operations.
After fabrication and wafer testing at the Company's San Jose, California
facility, wafers are sent to contract assembly houses in Asia to be packaged.
Upon completion of the packaging operation, the units are returned to IMP for
final testing and are then shipped to customers worldwide. IMP may in the future
seek to perform certain testing and marking operations at external vendors.
As is common in the industry, independent third party subcontractors in Asia
currently assemble all of the Company's products. In the event that any of the
Company's subcontractors were to experience financial, operational, production,
or quality assurance difficulties resulting in a reduction or interruption in
supply to the Company, the Company's operating results would be adversely
affected until alternate subcontractors, if any, became available. Certain of
the raw materials included in such products are obtained from sole source
suppliers. Although the Company seeks to reduce its dependence on its sole and
limited source suppliers, disruption or termination of any of these sources
could occur and such disruptions could have a material adverse effect on the
Company's business, financial condition, or results of operations.
The fabrication of integrated circuits is a highly complex and precise process.
Minute impurities, contaminants in the manufacturing environment, difficulties
in the fabrication process, defects in the masks used to print circuits on a
wafer, manufacturing equipment failure, wafer breakage, or other factors can
cause a substantial percentage of wafers to be rejected or numerous die on each
wafer to be nonfunctional. The majority of the Company's costs of manufacturing
are relatively fixed, and, consequently, the number of shippable die per wafer
for a given product is critical to the Company's results of operations. To the
extent the Company does not achieve acceptable manufacturing yields or
experiences product shipment delays, its business, financial condition, and
results of operations would be materially and adversely affected. The Company
has from time to time in the past experienced lower than expected production
yields, which have delayed product shipments and adversely affected gross
margins. Moreover, there can be no assurance that the Company in general will be
able to maintain acceptable manufacturing yields in the future.
ENVIRONMENTAL AND SAFETY REGULATION
Federal, state, and local regulations impose a variety of safety and
environmental controls on the storage, handling, discharge and disposal of
certain chemicals and gases used in semiconductor manufacturing. The Company's
facilities have been designed to comply with these regulations,
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and it believes that its activities are conducted in material compliance with
such regulations. There can be no assurance, however, that interpretation and
enforcement of current or future environmental regulations will not impose
costly requirements upon the Company. Any failure of the Company to control
adequately the storage, use, and disposal of regulated substances could result
in future liabilities.
Increasing public attention has been focused on the safety and environmental
impacts of electronic manufacturing operations. While the Company to date has
not experienced any materially adverse effects on its business from such
regulations, there can be no assurance that changes or new interpretations of
such regulations will not impose costly equipment, facility or other
requirements.
EMPLOYEES
As of March 29, 1998, the Company employed approximately 228 persons, including
144 in manufacturing, 28 in manufacturing support, 32 in research and
development, including process development, circuit design, and product and test
engineering, 11 in sales and marketing, and 13 in administrative, financial and
management positions.
The Company's ability to attract and retain qualified personnel is essential to
its continued success. In particular, the supply of skilled analog designers and
other specialized engineers required for IMP's business is limited, and
competition for such personnel is intense. The Company's growth also requires
the hiring or training of middle-level managers. If the Company is unable to
hire, retain, and motivate qualified technical and management personnel, its
operations, and financial condition will be adversely affected.
None of the Company's employees are represented by collective bargaining
agreements, nor has the Company ever experienced any work stoppage through
employee initiated actions. The Company believes its employee relations are
good.
13
<PAGE> 14
ITEM 2. PROPERTIES.
The Company's primary manufacturing activities and process technology research
and development activities are located in a 59,000 square foot building in San
Jose, California leased under agreements expiring in fiscal 2000. The Company
has the right to extend these leases for two additional six-year periods. The
Company's general administrative activities, sales and marketing and certain
engineering activities are located in a nearby 22,000 square foot building
leased under an agreement expiring in fiscal 2000. The Company's internal
circuit design research and development activities are performed in a 5,500
square foot office located in Pleasanton, California under an agreement expiring
in fiscal 2003.
14
<PAGE> 15
ITEM 3. LEGAL PROCEEDINGS.
IMP v. JTS Corporation
On May 5, 1998 the Company filed a lawsuit in California Superior Court,
Santa Clara County against a Customer, JTS Corporation for breach of contract.
Refusal of defendant to accept delivery of product produced under valid purchase
orders, and refusal of defendant to accept financial responsibility for related
work in process inventory. The Company is seeking relief in the amount of
$1,803,600.
IMP v. Power Max
On or about July 14, 1995, the Company instituted a collection action in
the California Superior Court, Santa Clara County against a former customer,
Power Max Enterprises, Inc. ("Power Max"). The Company later amended the
complaint to add the shareholders, directors and officers of Power Max (and a
related company) who the Company alleged were personally liable for the debts of
Power Max. Power Max filed a cross-complaint against the Company, alleging that
the Company interfered with a contractual relationship between Power Max and Ma
Laboratories, Inc. The Company in turn filed a cross-complaint for indemnity
against Ma Laboratories, Inc. Subsequently the parties reached a settlement with
respect to the dispute.
The Company collected all money due to it.
IMP v. ID Technologies
On or about January 5, 1996, the Company instituted a collection action
in the California Superior Court, Santa Clara County against a former customer,
ID Technologies. ID Technologies filed an answer generally denying the
allegations and filed a cross-complaint seeking $ 125,000 in damages against the
Company for allegedly breaching a contract. On February 2, 1997 the parties have
reached a settlement in principle whereby ID Technologies will make certain
payments over time and dismiss its cross-complaint.
The Company collected all money due to it.
Class-Action Lawsuits
Several purported securities class action and derivative lawsuits have
been filed against the Company and certain of its present and former officers
and directors based on events which allegedly occurred in the time period of
April 24, 1996 through July 22, 1996. The lawsuits are as follows: two
stockholder class actions are pending: Lee, et al, v. IMP, Inc., et. al.,
(Superior Court, Santa Clara County, September 17, 1996) is a securities class
action consolidating several complaints filed in California State Superior
Court. In re IMP, Inc. Securities Litigation, (N.D. Cal. October 1, 1996) is a
securities class action consolidating several complaints filed in the United
States District Court for the Northern District of California. In addition, two
stockholder derivative actions are pending and assert claims on behalf of the
Company against certain of its
15
<PAGE> 16
present and former officers and directors. They are Shockley, et. al., v.
Carrington, et. al (Superior Court, Santa Clara County, January 15, 1997) and
Walsh, et. al., v. Carrington, Et., al., (N.D. Cal. March 18, 1997. These
lawsuits, all of which include similar factual allegations, allege that the
Company and, certain of its present and former officers and directors issued
false or misleading statements regarding the Company's business, resulting in
inflation of the Company's stock price, and that certain of the defendants
traded stock while in possession of material non-public information. These
lawsuits assert claims under the federal securities laws, California securities
laws, and California common law. The plaintiffs in all actions seek damages in
an unspecified amount.
The parties in all of the above class-action lawsuits have settled in
principle and court documents have been submitted for final approval.
16
<PAGE> 17
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year ended March 29, 1998.
EXECUTIVE OFFICERS OF THE COMPANY
The current executive officers of the Company with their respective
ages and positions are as follows:
<TABLE>
<CAPTION>
Name Age Position
- --------------------------------------- ------------- --------------------------------------------------------------
<S> <C> <C>
James Phillips Ferguson 67 President, Chief Executive Officer and Director
David A. Laws 57 Chairman of the Board of Directors
George Rassam 51 Vice President Finance, Administration, Chief Financial
Officer and Secretary
Barry Wiley 61 Vice President, Sales and Application Engineering
Tarsiam Batra 63 Vice President, Manufacturing
Moiz B. Khambaty 64 Vice President, Technology
Jerry DaBell 52 Senior Vice President, Design Engineering
Ron Laugesen 59 Vice President, Product Engineering
</TABLE>
On December 12, 1997, Mr. Robert Crossley retired as a Company Vice
President.
Mr. Ferguson joined the Company in June 1997 as President, Chief
Executive Officer and a member of the Board of Directors. He served as a
consultant to the Company from December 1996 to June 1997. From 1967 to June
1997 he was a principal in Ferguson Associates, a firm providing domestic and
international consulting services. Recent consulting assignments included Mr.
Ferguson assuming chief executive officer or chief operating officer
responsibilities with QuickLogic Corporation, Plus Logic and Paradigm
Technologies. Mr. Ferguson's prior employment included positions at Texas
Instruments and Fairchild Semiconductor and he was founder, President and Chief
Executive Officer of General Microelectronics.
Mr. Laws joined the Company in February 1995 as its Senior Vice
President, Marketing and Business Developments and served in this position until
May 1996. From May 1996 until June 1997, he served as President and Chief
Executive Officer and as a director of the Company and in June 1997 he was
appointed to serve as Chairman of the Board of Directors. Mr. Laws was President
and Chief Executive Officer of QuickLogic Corporation, a company engaged in the
development of field programmable gate arrays, from September 1990 to January
1994. From January 1986 to September 1990, Mr. Laws was Vice President of
Marketing for Altera Corporation, a supplier of programmable logic devices.
Prior to Altera, he served in various positions at Advanced Micro Devices from
May 1975 to January 1986, including Managing Director of the PLD business unit
and Vice President of Business Development.
17
<PAGE> 18
Mr. Rassam joined the Company in June 1983 as Controller. In November
1996, he was named Chief Financial Officer and Secretary. Prior to joining IMP,
Mr. Rassam was Operations Controller at Zilog Corporation from 1978 to 1983.
From 1973 to 1978, Mr. Rassam was employed as Manager, Cost Accounting by AMI,
Inc.
Mr. Wiley joined the Company in 1997 as Vice President of Sales and
Marketing. Prior to joining IMP, Inc. Mr. Wiley held the position of Vice
President of Sales and Marketing at Cherry Semiconductor. From 1980 to 1985 Mr.
Wiley held various management positions with Unitrode Corporation.
Dr. Batra joined the Company in November 1994 as a Yield Improvement
Consultant. In May 1995, he was promoted to Manager, Operations Research. In
November 1996, he was promoted to Director of Manufacturing and in February 1997
he was promoted to Vice President, Manufacturing. Prior to joining IMP, Dr.
Batra's thirty year career in the semiconductor industry encompassed various
manufacturing, engineering and research positions, most recently General
Manager, Semiconductor Division of California Micro Devices from 1989 to 1993.
Dr. Khambaty joined the Company in November 1981 as Manager of
Technology Development. In October 1983 he was promoted to Director, Technology
Development and in April 1984 to Vice President, Technology. From 1978 to 1981
Dr. Khambaty was a Sr. Staff Scientist with Gould Electronics (AMI, Inc.). From
1956 to 1978 he was employed in various engineering and managerial positions
with Siemens, Fairchild, Honeywell and the Atomic Energy Establishment of the
Government of India.
Mr. DaBell joined the Company in May 1988 as Vice President of Design
Technology. In July 1988 he was promoted to Vice President of Design
Engineering. In March 1993 he was assigned to the position of Vice President,
Business Development and in May 1997 was promoted to Senior Vice President,
Product Development. From 1973 to 1988 Mr. DaBell was employed in various design
engineering and management positions with Gould Electronics (AMI, Inc.). From
1971 to 1973 he served as an instrumentation engineer with the General Electric
Company.
Mr. Laugesen joined the Company in 1989 as ISDN Design Manager. In May
1997, he was named as Vice President of Product and Test Engineering. Prior to
joining IMP, Mr. Laugesen was Design and Product Engineer Manager at IDT
Corporation from 1986 to 1989. From 1977 to 1986 Mr. Laugesen was employed as
Telecomm Design Manager at AMD.
Officers are elected by and serve at the discretion of the Board of
Directors.
18
<PAGE> 19
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Price Range of Common Stock
The Common Stock of the Company is traded on the Nasdaq National Market
under the symbol "IMPX". The following tables set forth the high and the low
last reported sales price for the Common Stock as reported by the Nasdaq
National Market during the fiscal quarters indicated:
<TABLE>
<CAPTION>
Fiscal Year End Fiscal Year End
March 29, 1998 March 30, 1997
---------- ---------- ----------- ----------
High Low High Low
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
First Quarter $ 2.188 $ 1.594 $ 21.750 $ 6.875
Second Quarter $ 1.906 $ 1.375 $ 10.625 $ 4.437
Third Quarter $ 1.750 $ 0.625 $ 4.937 $ 2.625
Fourth Quarter $ 1.531 $ 0.688 $ 2.843 $ 1.625
</TABLE>
The Company intends to retain any future earnings for the use in its
business and, accordingly, does not anticipate paying any cash dividends on its
common stock in the foreseeable future.
As of June 25, 1998, there were approximately 897 shareholders of record
(not including beneficial holders of stock held in street name) of the Company's
Common Stock, which closed at $.937 per share on the Nasdaq National Stock
Market as of that date.
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Fiscal Year Ended (1)
--------------------------------------------------------------
March 29, March 30, March 31, March 26, March 27,
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Net revenues $ 40,420 $ 64,891 $ 76,827 $ 59,750 $ 48,195
Net income (loss) (2) (3,799) (12,367) 5,469 790 390
Basic net income (loss) (.14) (.44) .20 .03 .01
per share(3)
Diluted net income
(loss) per share (3) (.14) (.44) .20 .03 .01
Balance Sheet Data:
Total assets 31,949 37,271 50,733 41,301 36,397
Long term obligations
excluding current
portion 6,173 9,074 8,979 4,799 1,648
Stockholders' equity $ 10,598 $ 14,301 $ 25,445 $ 18,463 $ 17,183
</TABLE>
19
<PAGE> 20
(1) The Company's fiscal year ends on the Sunday nearest March 31. Fiscal 1998,
1997 and 1995 each consisted of 52 weeks; and fiscal 1996 and 1993
consisted of 53 weeks.
(2) In fiscal 1997, the Company recorded $1,862,000 of restructuring charges.
(See Note 2 of Notes to Financial Statements).
(3) See Note 1 of Notes to Financial Statements for an explanation of the
computation of net income (loss) per share.
ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
Except for the historical information contained herein, the matters discussed
below are forward-looking statements that involve certain risks and
uncertainties, including the risks and uncertainties set forth below in this
section under the sub-heading "Factors Affecting Future Results."
Results of Operations
Revenues in fiscal 1998 declined 38% to $40.4 million, from $64.9
million in fiscal 1997. Revenues in fiscal 1997 decreased 16% to $64.9 million
from $76.8 million in fiscal 1996. The decline in revenues from fiscal 1997 to
fiscal 1998 was primarily due to lower than expected orders from one customer
after the Company had structured its business to concentrate on this customer
and a general decline in foundry business due to excess supply relative to
demand experienced by several customers. The fiscal 1996 to fiscal 1997 decline
was driven mainly by reduced demand for standard products for secondary storage
applications and lower average selling prices for foundry products. Foundry
product sales accounted for 67% of sales in fiscal 1998, 58% in fiscal 1997, and
73% in fiscal 1996. The Company is attempting to shift from foundry product
sales to sales of the Company's standard products. In 1998 sales of standard
products were lower than anticipated due to a reduction in revenue from one
particular customer. The Company anticipates that revenues for fiscal 1999 will
be flat with fiscal 1998.
Cost of revenues as a percentage of sales was 72% in fiscal 1998
compared to 83.0% in fiscal 1997, and 67.9% in fiscal 1996. Specifically
included in cost of revenues for fiscal 1997 are provisions of $1.4 million for
gate array inventories related to the Company's decision to discontinue the gate
array product and $1.9 million for specific inventories associated with customer
order cancellations and an overall decline in customer demand. The increase in
fiscal 1997 over 1996 was primarily due to less than optimum utilization of the
Company's wafer manufacturing capacity, due to the adverse business environment
discussed earlier and the Company's exit from the gate array business.
Research and development expense in fiscal 1998 was $9.0 million,
compared to $10.3 million in fiscal 1997, and $9.9 million in fiscal 1996. The
decrease from fiscal 1997 to fiscal 1998 was due to the discontinuance of
development on secondary storage products, and EPACTM products. This was offset
by charges of $962,000 related to license fees for R&D product
20
<PAGE> 21
development. Research and development spending is expected to increase
reflecting the Company's thrust in the area of power management products.
Selling, general and administrative expense in fiscal 1998 was $5.1
million compared to $10.0 million in fiscal 1997, and $8.3 million in fiscal
1996. The decline in selling, general and administrative expense in fiscal 1998,
is primarily due to lower accounts receivable write-offs compared to the prior
year, and lower spending due to reduced sales activity.
During the second quarter of fiscal 1997, the Company's operating
results were affected by a decline in product demand and a downturn in the
market. In response to the downturn, the Company made the decision to implement
a restructuring plan which involved discontinuing the gate array product line,
downsizing the workforce and closing a recently acquired new product design
center. The Company incurred a restructuring charge of approximately $1.9
million during the second quarter of fiscal 1997. The charge comprises: employee
termination costs of $998,000 associated with reductions in the workforce; a
design center equipment write-off of $587,000 due to management's decision to
close one of the Company's design center facilities; and $277,000 associated
with wafer cancellation costs and the write-off of gate array capital equipment
no longer usable.
Net interest expense in fiscal 1998 was approximately $924,000 million
compared to $1.2 million in fiscal 1997 and $985,000 million in fiscal 1996. The
decrease in fiscal 1998 was primarily attributable to lower interest rates on
capitalized leases. However, the increase in fiscal 1997 from 1996 was due to
increases in leased equipment.
The Company had a net loss of $3.8 million in fiscal 1998, or $0.14 per
share, compared to a loss of $12.4 million in fiscal 1997 or $0.44 per share,
and $5.5 million profit in fiscal 1996, or $0.20 per diluted share. The fiscal
1998 net loss was primarily attributable to low factory utilization.
The Company has taken steps to address the year 2000 issues. The
products that the Company sells do not have the year 2000 issue associated with
them. However, the hardware and software used in the design and production of
these products are impacted by the year 2000 issue. To that affect, the Company
has contacted all vendors and is continuing to work with them to resolve any
problems that may occur. We have assurances from some of them that they will
have solutions at the later part of the year; others anticipate that they will
have assurances some time next year. This matter is not within the control of
the Company. However, our vendors are large computer manufacturers, capital
equipment manufacturers and software producers. They do sell large quantities to
our industry and we rely on their representation.
Liquidity and Capital Resources
Cash and cash equivalents decreased to $11.8 million at March 29, 1998
from $13.3 million at March 30, 1997, and $9.0 million at March 31, 1996. The
decrease from fiscal 1997 to fiscal 1998 was primarily due to investment in
certain product technology licensing rights, investment in capital equipment,
and operating losses. The increase in cash from 1996 to 1997 was mainly due to
financing of capital equipment.
21
<PAGE> 22
Cash flows provided by operating activities in fiscal 1998 were $4.8
million compared to $5.8 million in fiscal 1997 and $11.0 million in fiscal
1996. The fiscal 1997 to fiscal 1998 decrease in cash was very modest, due to
spending control measures. The fiscal 1996 to fiscal 1997 decrease in cash flows
provided by operating activities was due primarily to the net loss of $12.4
million and a decrease in accounts payable and other current liabilities of $3.3
million. Partially offsetting these factors was a decrease of $7.5 million in
accounts receivable due to a decrease in sales, a decrease of $7.0 million in
inventories due to management efforts to reduce inventory to be more in-line
with current sales levels and an increase of $1.9 million in depreciation and
amortization expense. The fiscal 1995 to fiscal 1996 increase in cash flows
provided by operating activities was due primarily to the fiscal 1996 net profit
of approximately $5.5 million and increases in accrued payroll, related expenses
and current liabilities, partially offset by an increase in accounts receivable
and inventories.
Cash used for investing activities was approximately $700,000 in fiscal
1998, $1.9 million in fiscal 1997 and $2.0 million in fiscal 1996; reflecting
cash invested in property and equipment acquisitions. Management expects capital
additions for fiscal 1999 to remain flat or below fiscal 1998 capital additions.
Cash used for financing activities was approximately $5.6 million. The
Company made payments on capital lease obligations and note payable in the
amount of $5.7 million. This is offset by proceeds from stock sale of $96,000.
In fiscal 1997 the Company paid $8.4 million on notes and capital lease
obligations offset by $7.6 million in equipment financing and $1.2 million of
stock option exercises. In fiscal 1996 the Company paid $10.0 million in notes
and capital lease obligations offset by proceed from stock option exercises of
$1.5 million.
At March 29, 1998, the Company had a line of credit agreement with a
bank which provides through October 31, 1998, for borrowings up to the lesser of
$5.0 million or up to 80% of eligible accounts receivable. At March 29, 1998, no
amounts were outstanding under this line of credit. Borrowings under this line
of credit accrue interest at the bank's reference rate plus 0.50% resulting in
an interest rate of 9.0% at March 29, 1998 and are collateralized by all of the
assets of the Company. Under the agreement, the Company is restricted from
paying dividends and is required to maintain certain financial ratios among
other restrictive covenants. At March 29, 1998, the Company was not in
compliance with certain financial covenants under this financing agreement due
to the decline in the Company's operating results, for which it obtained a
waiver from the bank. The Company intends to replace this line of credit with a
new agreement but there is no guarantee that it will be able to do so upon
acceptable terms.
Management believes that existing sources of liquidity, anticipated cash
flow from operations and borrowings under the Company's credit facilities will
be adequate to satisfy its anticipated working capital and capital equipment
requirements through 1999.
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 products and those
22
<PAGE> 23
of its customers, foundry utilization, concentration of customers, its ability
to retain trained design and process engineers, the development and introduction
of new technology and products and the availability of raw materials. The
fulfillment arrangements for standard analog products generally provide that
orders may be terminated at will by either party and the customer is not
required to commit to purchase a specific number of products, although
cancellation or rescheduling charges may be imposed in certain circumstances.
The unanticipated loss of any of its major customers or the unanticipated
cancellation or rescheduling of orders by any of them could have a material
adverse impact on the Company's business, particularly if the Company's efforts
with other customers do not result in the volume of manufacturing orders
anticipated by the Company.
The Iomega Programs that accounted for approximately 39% of revenues in
fiscal 1997 and 22% in fiscal 1998, were completed in fiscal 1998. No further
revenues are expected from these programs in the future.
In addition, the current business climate has and will continue to
result in less than optimum utilization of the Company's manufacturing
facilities, which will adversely affect the Company's business and results of
operations. The Company made two significant reductions in workforce during
fiscal 1997 that primarily affected manufacturing employees. In fiscal 1998 the
labor count was constant.
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. Rapidly changing
customer demands may result in the obsolescence of existing Company inventories.
There can be no assurances that the Company will be successful in its efforts to
keep pace with changing customer demands. In this regard, the ability of the
Company to develop higher-margin products will be materially and adversely
affected if it is unable to retain its engineering personnel due to the
Company's current business climate.
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.
23
<PAGE> 24
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Index to financial statements and financial statement schedules.
<TABLE>
<CAPTION>
Page
<S> <C>
Financial statements:
Report of Independent Accountants..................................................................... 25
Balance sheets as of March 29, 1998 and March 30, 1997................................................ 26
Statements of operations for each of the three years in the period ended March 29, 1998............... 28
Statement of stockholders' equity for each of the three years in the period March 29, 1998............ 29
Statements of cash flows for each of the three years in the period ended March 29, 1998............... 30
Notes to financial statements......................................................................... 32
Financial statement schedule for each of the three years in the period ended
March 29, 1998:
Report of Independent Accountants on Financial Statement Schedule..................................... 49
II - Valuation and Qualifying Accounts................................................................ 50
</TABLE>
24
<PAGE> 25
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of IMP, Inc.
In our opinion, the accompanying balance sheets and related statements of
operations, of stockholders' equity and of cash flows present fairly, in all
material respects, the financial position of IMP, Inc. at March 29, 1998 and
March 30, 1997, and the results of its operations and its cash flows for each of
the three years in the period ended March 29, 1998, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
San Jose, California
May 5, 1998
25
<PAGE> 26
IMP, Inc.
BALANCE SHEETS
(In thousands, except per share data)
<TABLE>
<CAPTION>
March 29, March 30,
1998 1997
-------- --------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 11,819 $ 13,306
Accounts receivable, net of allowances
for doubtful accounts and returns of
$2,715 and $2,041 5,357 6,112
Inventories 3,064 3,306
Other current assets 950 759
-------- --------
Total current assets 21,190 23,483
-------- --------
Leasehold improvements and machinery and equipment:
Leasehold improvements 7,883 7,883
Machinery and equipment 81,048 78,115
-------- --------
88,931 85,998
Less accumulated depreciation and amortization (78,547) (72,285)
-------- --------
Net leasehold improvements and
machinery and equipment 10,384 13,713
-------- --------
Deposits and other long term assets 375 75
-------- --------
$ 31,949 $ 37,271
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of notes payable $ 3,348 $ 3,739
Current portion of capital lease obligations 3,582 3,733
Trade accounts payable 6,018 4,111
Accrued payroll and related expenses 1,954 1,563
Other current liabilities 276 750
-------- --------
Total current liabilities 15,178 13,896
-------- --------
Long term portion of notes payable 1,669 3,018
-------- --------
Long term portion of capital lease obligations 4,504 6,056
-------- --------
Commitments & contingencies (Note 3 and 8)
Stockholders' equity:
Convertible preferred stock, $0.001 par
value; 5,000 shares authorized; no shares
issued and outstanding -- --
Common stock, $0.001 par value; 50,000
shares authorized; 30,347 and 30,284 shares
issued and outstanding 30 30
Additional paid in capital 70,370 70,274
Accumulated deficit ) (55,905) (52,106
Treasury stock; at cost, 2,029 shares ) (3,897) (3,897
-------- --------
Total stockholders' equity 10,598 14,301
======== ========
$ 31,949 $ 37,271
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
26
<PAGE> 27
IMP, Inc.
STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Fiscal Year Ended
------------------------------------
March 29, March 30, March 31,
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Net revenues $ 40,420 $ 64,891 $ 76,827
Cost of revenues 29,194 53,889 52,155
-------- -------- --------
Gross profit 11,226 11,002 24,672
-------- -------- --------
Operating expenses:
Research and development 8,959 10,286 9,934
Selling, general and administrative 5,142 10,000 8,284
Restructuring charges -- 1,862 --
-------- -------- --------
Total operating expenses 14,101 22,148 18,218
-------- -------- --------
Income (loss) from operations (2,875) (11,146) 6,454
Interest and other expense, net (924) (1,221) (985)
-------- -------- --------
Net income (loss) $ (3,799) $(12,367) $ 5,469
======== ======== ========
Net income (loss) per common share:
Basic $ (.14) $ (.44) $ .20
======== ======== ========
Diluted $ (.14) $ (.44) $ .20
======== ======== ========
Shares used in per share computation:
Basic 28,229 28,153 26,710
======== ======== ========
Diluted 28,229 28,153 28,003
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
28
<PAGE> 28
IMP, Inc.
STATEMENT OF STOCKHOLDERS' EQUITY
(In thousands)
<TABLE>
<CAPTION>
Common Stock Additional Accumulated Treasury Total
Shares Amount Paid in Deficit Stock Stockholders'
Capital Equity
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance, March 26, 1995 28,044 $ 28 $ 67,540 $(45,208) $ (3,897) $ 18,463
Issuance of common stock
under incentive stock option
plan and employee stock
purchase plan 1,089 1 1,512 -- -- 1,513
Net income -- -- -- 5,469 -- 5,469
-------- -------- -------- -------- -------- --------
Balance, March 31, 1996 29,133 29 69,052 (39,739) (3,897) 25,445
Issuance of common stock
under incentive stock option
plan 1,104 1 1,222 -- -- 1,223
Issuance of shares in
conjunction with warrants
exercised 47 -- -- -- -- --
Net loss -- -- -- (12,367) -- (12,367)
-------- -------- -------- -------- -------- --------
Balance, March 30, 1997 30,284 30 70,274 (52,106) (3,897) 14,301
Issuance of common stock
under incentive stock option
plan and employee stock
purchase plan 63 -- 96 -- -- 96
Net loss -- -- -- (3,799) -- (3,799)
-------- -------- -------- -------- -------- --------
Balance, March 29, 1998 30,347 $ 30 $ 70,370 $(55,905) $ (3,897) $ 10,598
======== ======== ======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
29
<PAGE> 29
IMP, Inc.
STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Fiscal Year Ended
--------------------------------------
March 29, March 30, March 31,
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (3,799) $(12,367) $ 5,469
Adjustments to reconcile net
income (loss) to net cash provided
by operating activities:
Depreciation and amortization 6,262 7,789 5,913
Increase (decrease) from changes in:
Accounts receivable 755 7,546 (1,859)
Inventories 242 6,996 (1,154)
Other current assets (191) (268) 328
Long term assets (300) -- --
Trade accounts payable 1,907 (2,064) 172
Accrued payroll and related expenses 391 (577) 552
Other current liabilities (474) (1,271) 1,562
-------- -------- --------
Net cash provided by
operating activities 4,793 5,784 10,983
-------- -------- --------
Cash flows from investing activities:
Net cash used for investing activities
for purchase of capital equipment (688) (1,893) (1,959)
-------- -------- --------
Cash flows from financing activities:
Principal payments on notes payable (1,740) (4,383) (5,929)
Principal payments under capital lease
obligations (3,948) (4,032) (4,054)
Proceeds from long term financing
agreement -- 7,569 --
Proceeds from exercise of options
to purchase common stock 96 1,223 1,513
-------- -------- --------
Net cash provided by (used for)
financing activities (5,592) 377 (8,470)
-------- -------- --------
Net increase (decrease) in cash and cash
equivalents (1,487) 4,268 554
Cash and cash equivalents at beginning of
period 13,306 9,038 8,484
Cash and cash equivalents at end of
-------- -------- --------
period $ 11,819 $ 13,306 $ 9,038
======== ======== ========
Supplemental information:
Cash paid during the year for interest $ 1,504 $ 1,521 $ 1,065
Acquisition of equipment
under capital lease obligations $ 2,245 $ 2,440 $ 10,147
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
30
<PAGE> 30
IMP, Inc.
NOTES TO FINANCIAL STATEMENTS
Years ended March 29, 1998, March 30, 1997, and March 31, 1996
Note 1 - The Company and its significant accounting policies
IMP, Inc. (the "Company") develops and manufactures analog CMOS integrated
circuit solutions for communications, computer and control applications.
Fiscal Year - The Company's fiscal year ends on the Sunday nearest March 31.
Fiscal 1998 and 1997 each consisted of 52 weeks and fiscal 1996 consisted of 53
weeks.
Basis of Presentation - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Cash and cash equivalents - The Company considers all highly liquid financial
instruments purchased with an original maturity of three months or less to be
cash equivalents. The fair market value of these highly liquid instruments
approximates cost at March 29, 1998 and March 30, 1997.
Inventories - Inventories are stated at the lower of standard cost (which
approximates actual cost on a first-in first-out basis) or market.
Inventories consist of the following:
<TABLE>
<CAPTION>
(In thousands) March 29, 1998 March 30, 1997
-------------- --------------
<S> <C> <C>
Raw materials $1,111 $ 965
Work-in-process 1,650 1,589
Finished goods 303 752
====== ======
$3,064 $3,306
====== ======
</TABLE>
Included in cost of sales for the year ended March 30, 1997 are provisions of
$1,400,000 for gate array inventories related to the Company's decision to
discontinue the gate array product line (note 2) and $1,873,000 for specific
inventories associated with customer order cancellations and an overall decline
in customer demand.
Leasehold improvements and machinery and equipment - Leasehold improvements and
machinery and equipment are stated at cost and are amortized using the
straight-line method over the shorter of the period of the lease or the
estimated useful lives of the assets. Machinery and equipment at March 29, 1998
and March 30, 1997 includes $45,909,000 and $43,664,000, respectively, of assets
under lease that have been
32
<PAGE> 31
capitalized. Accumulated depreciation for such machinery and equipment
approximated $38,301,000 and $33,493,000, respectively.
Net revenues - Component revenues are recognized as products are shipped. Design
revenues are recognized under design and engineering contracts as defined
development phases are completed by the Company and accepted by the customers.
Design engineering revenues aggregated $1,939,000, $1,539,000, and $2,580,000
for fiscal 1998, 1997, and 1996, respectively. Costs related to design
engineering aggregating $1,570,000, $1,100,000, and $1,576,000 for fiscal 1998,
1997, and 1996, respectively, are included in research and development expense
as incurred.
Stock based compensation - Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("SFAS 123"), establishes a fair value
method of accounting for stock-based employee compensation plans. The Company
has chosen to continue to account for stock-based compensation using the
intrinsic value method prescribed in Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" and to comply with the pro forma
disclosure requirements of SFAS123.
Earnings Per Share - The Company adopted Statement of Accounting Standard No.
128 ("FAS 128"), Earnings per Share ("EPS"), which was issued in February 1997.
FAS 128 requires presentation of both basic and diluted EPS on the income
statement. For all periods presented, basic EPS is computed by dividing net
income available to common stockholders by the weighted average number or common
shares outstanding during the period. Diluted EPS is computed using the weighted
average number of common and potential common stock equivalent shares
outstanding during the period, except when antidilutive. In computing dilutive
EPS, the average stock price for the period is used in determining the number of
shares assumed to be purchased from the exercise of stock options. All prior
period EPS data has been restated to comply with the requirements of FAS 128. A
reconciliation of the numerators and the denominators of the basic and diluted
per share computation as follows:
<TABLE>
<CAPTION>
1998 1997 1996
------------------------------- -------------------------------- -----------------------------
Per Share Per Share Per Share
Income Shares Amount Income Shares Amount Income Shares Amount
------- ------ --------- -------- ------ --------- ------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Basic EPS:
Net Income
(loss) $(3,799) 28,229 $(.14) $(12,367) 28,153 $(.44) $(5,469) 26,710 $(.20)
Effects of
dilutive
securities:
Stock Options -- -- -- -- 1,293 --
------------------- -------------------- -------------------
Diluted EPS:
Net Income
(loss) $(3,799) 28,229 $(.14) $(12,367) 28,153 $(.44) $(5,469) 28,003 $(.20)
------- ------ ----- -------- ------ ----- ------- ------ -----
</TABLE>
Options to purchase 2,340,000 and 1,224,000 shares of common stock were
outstanding at March 31, 1998 and 1997, respectively, but were not included in
the computation of
33
<PAGE> 32
diluted EPS as the Company was in a loss situation and to do so would have been
anti-dilutive.
Concentration of credit risk - The Company performs credit evaluations of its
customers and maintains reserves for losses. At March 29, 1998 customers
individually representing more than 10% of the Company's 1998 net revenues also
accounted for 42% of accounts receivable. At March 30, 1997, customers
individually representing more than 10% of the Company's 1997 net revenues also
accounted for 51% of accounts receivable. The Company's products are primarily
sold to resellers.
During fiscal 1998, 1997, and 1996, sales to certain customers individually
represented more than 10% of the Company's net revenues as follows:
<TABLE>
<CAPTION>
(in thousands) 1998 1997 1996
- -------------------------- ---- ---- ----
<S> <C> <C> <C>
Iomega 22% 39% 13%
International Rectifier 14% 15% *
Level One 11% * *
CMS 11% * *
Linfinity 10% * *
Rockwell * 10% 33%
Quick Logic * * 10%
</TABLE>
*less than 10% of net revenues
Note 2 - Restructuring
During the second quarter of fiscal 1997, the Company's operating results were
affected by a decline in product demand and a downturn in the market. In
response to the downturn, the Company made the decision to implement a
restructuring plan which involved discontinuing the gate array product line,
downsizing the workforce and closing a recently acquired new product design
center.
The Company incurred a $1,862,000 restructuring charge during the second quarter
of fiscal 1997. The charge was comprised of employee termination costs of
$998,000 associated with reductions in the workforce; a design center equipment
write-off of $587,000 due to management's decision to close one of their design
center facilities; and $277,000 associated with wafer cancellation costs and
gate array capital equipment no longer usable.
34
<PAGE> 33
Note 3 - Notes payable
<TABLE>
<CAPTION>
Notes payable consist of the following: March 29, March 30,
(In thousands) 1998 1997
------- -------
<S> <C> <C>
Bank equipment term loan $ 2,064 $ 2,640
Equipment notes payable 2,953 4,117
------- -------
Total notes payable 5,017 6,757
Less current portion (3,348) (3,739)
======= =======
Long term portion of notes payable $ 1,669 $ 3,018
======= =======
</TABLE>
Bank equipment term loan - At March 29, 1998 and March 30, 1997, the Company had
a financing agreement in place with a bank under which the Company may borrow up
to $3,000,000 to finance 100% of the cost of collateralized equipment. In fiscal
1997 and 1996, the Company utilized $2,640,000 and $1,311,000, respectively
under this financing agreement. Borrowings accrue interest at the bank's
reference rate plus 1.0 percent (9.50% at March 29, 1998) and requires 60 equal
monthly principal payments. Borrowings outstanding at March 29, 1998 expire at
various dates through 2002. Under the agreement, the Company is restricted from
paying dividends and is required to maintain certain financial ratios among
other restrictive covenants. At March 29, 1998, the Company was not in
compliance with certain financial covenants under this financing agreement for
which it obtained a waiver. The waiver was one time only and was specific to the
period ended March 29, 1998. At March 29, 1998 the Company did not have the
ability to borrow further amounts under this term loan.
Equipment notes payable - In fiscal 1995, the Company fully utilized a
$3,000,000 borrowing facility with an asset-based lender allowing the Company to
finance 100% of the cost of collateralized equipment. In May 1996, the facility
was increased to $5,000,000 that the Company fully utilized. The Company used
the additional proceeds to purchase equipment. The note accrues interest at
9.98% and requires 60 equal monthly principal payments that began in June 1996.
The note does not contain any restrictive or financial covenants.
Maturities of loans and notes payable - The aggregate maturities of notes
payable at March 29, 1998 are as follows (in thousands):
Fiscal year ending March:
<TABLE>
<S> <C>
1999 $3,348
2000 2,019
2001 250
------
Total $5,017
======
</TABLE>
Line of credit - At March 29, 1998, the Company had a line of credit agreement
with a bank, which provides through October 31, 1998 for borrowings up to the
lessor of $5,000,000 or 80% of eligible accounts receivable. At March 29, 1998,
no amounts were
35
<PAGE> 34
outstanding under this line of credit, and $4,286,000 was available under this
line. Borrowings under this line of credit accrue interest at the bank's
reference rate plus 0.50% (9.0% at March 29, 1998) and are collateralized by all
the assets of the Company. Under the agreement, the Company is restricted from
paying dividends and is required to maintain certain financial ratios among
other restrictive covenants. At March 29, 1998, the Company was not in
compliance with certain financial covenants under this financing agreement for
which it obtained a waiver from the bank.
Note 4 - Stockholders' equity
Employee stock purchase plan - In December 1986, the Company adopted a qualified
"employee stock purchase plan" under Section 423 of the Internal Revenue Code,
which was effective on June 10, 1987, upon the completion of the Company's
initial public offering of its common stock. During fiscal year 1998, 56,000
shares at an aggregate price of approximately $86,000 were issued. During Fiscal
1997, no shares were issued under the plan. In Fiscal 1996, 378,000 shares at an
aggregate price of approximately $586,000 were issued under the plan.
Shares are purchased by participants at 85% of the lower of the fair market
value at the date of grant or at the end of the offering period through payroll
deductions (up to 15% of participants base compensation).
Stock option plan - The Company has an option plan which provides for the
issuance of incentive stock options and non-statutory stock options to
employees, officers and directors to purchase common stock at a price not less
than 85% (100% for incentive stock options) of the fair market value of the
stock on the grant date. To date all options have been granted at 100% of fair
market value. The plan was most recently restated in August 1994 and renamed the
Stock Option Plan which terminates in 2005. In May 1997, the Company's Board of
Directors authorized (and shareholders approved) an additional 750,000 shares to
be reserved for issuance under the plan. The Stock Option Plan provides for a
total of 6,117,000 shares of the stock to be issued. Options granted under the
plan generally vest ratably over four years and expire five to ten years from
the date of grant. The Board of Directors has the right to determine the terms
of each option including allowing optionees to exercise their options early,
subject to a right to repurchase unvested shares.
In September 1997, substantially all stock options with exercise prices in
excess of $1.44 with the exception of directors and officers and in February
1998, substantially all stock options with exercise prices in excess of $1.16,
were cancelled and replaced with new options with exercise price of $1.44 and
$1.16, respectively.
The Board of Directors may grant the right to surrender unexercised options for
an amount equal to the difference between the fair market value of the number of
shares vested at the surrender date and the aggregate option price vested for
such shares. The Company has not granted any such stock appreciation rights.
36
<PAGE> 35
Summary of option activity - The following table summarizes the Company's stock
option activity and related weighted average exercise price within each category
for each of the years ended March 29, 1998, March 30, 1997, and March 31, 1996
(in thousands, except per share amounts):
<TABLE>
<CAPTION>
1998 1997 1996
---------------------- ---------------------- ----------------------
Weighted Weighted Weighted
Average Average Average
Shares Price Shares Price Shares Price
------ -------- ------ -------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Options outstanding 1,224 $2.96 1,893 $2.01 2,319 $1.27
Options granted 3,562 1.31 615 3.50 359 5.28
Options canceled (2,439) 2.15 (180) 5.96 (74) 2.41
Options exercised (7) 1.25 (1,104) 1.09 (711) 1.29
------ ----- ------ ----- ------ -----
Options outstanding
at end of fiscal year 2,340 $1.30 1,224 $2.96 1,893 $2.01
====== ===== ====== ===== ====== =====
Options exercisable
at end of fiscal year 531 $1.55 228 $3.60 1,060 $1.18
====== ===== ====== ===== ====== =====
</TABLE>
At March 29, 1998, 298,000 shares were available for grant.
Option groups outstanding at March 29, 1998 and related weighted average
exercise price and remaining contractual life information are as follows:
<TABLE>
<CAPTION>
Option with Outstanding Exercisable Remaining
exercise prices ------------------ ----------------- Life
ranging from: Shares Price Shares Price (years)
- --------------- ------ ----- ------ ----- ---------
<S> <C> <C> <C> <C> <C>
$.81 - $1.16 1,815 $1.15 375 1.14 10
1.25 - 1.43 36 1.28 2 1.38 9
1.44 - 2.25 430 1.51 120 1.69 8
2.57 - 16.13 59 4.38 34 5.62 8
------ ----- ----- ----- --
2,340 $1.30 531 1.55 9
====== ===== ===== ===== ==
</TABLE>
Fair value of stock options and employee purchase rights
The fair value of options granted in fiscal 1998 and 1997 was estimated using
the Black-Scholes model with the following assumptions:
<TABLE>
<CAPTION>
Stock Option Plan Employee Stock Purchase Plan
1998 1997 1996 1998 1997 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Expected life (in years) 4 4 4 .5 -- 0.5%
Risk-free interest rate 6.2% 6.0% 6.3% 5.4% -- 5.2%
Volatility 85% 82% 75% 75% -- 75%
Dividend yield 0% 0% 0% 0% -- 0%
</TABLE>
The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options that have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions, including the expected stock price volatility. Because
the Company's options have characteristics significantly different from those
traded options, and because changes in the subjective input assumptions can
materially affect the fair value estimate, in the
37
<PAGE> 36
opinion of management, the existing models do not necessarily provide a reliable
single measure of the fair value of its options.
The weighted average fair value of Employee Stock Purchase Plan shares granted
during fiscal 1998 and 1996 was $0.73 and $0.29 per share, respectively. The
weighted average estimated fair value of shares granted under the Stock Option
Plan during fiscal 1998, 1997 and 1996 was $1.42, $2.20 and $3.20, respectively.
For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options' vesting period. Had the Company
recorded compensation costs based on the estimated grant date fair value, as
defined by SFAS 123, for awards granted under its stock option plan and employee
stock purchase plan, the Company's net income (loss) per share would have been
decreased/increased to the pro forma amounts below for the years ended March 29,
1998, March 30, 1997, and March 31, 1996.
<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Pro forma net income (loss) $ (4,494) $ (12,800) $ 5,186
Pro forma basic and diluted income
(loss) per share $ (.16) $ (.46) $ .19
</TABLE>
The effects on pro forma disclosures of applying SFAS No. 123 are not likely to
be representative of the effects on pro forma disclosures of future years.
Because SFAS No. 123 is applicable only to options granted subsequent to March
31, 1995, the pro forma effect will not be fully reflected until fiscal 2001.
Warrants - In 1991, the Company issued warrants to purchase 50,000 shares of
common stock at a price of $1.00 per share in connection with a credit line from
a bank. In fiscal 1997, the warrants were exercised, and as provided in the
warrant agreement, the warrant holder received a reduced number of shares in
exchange for the aggregate purchase price due, resulting in the issuance by the
Company of 46,666 shares.
Note 5 - Litigation
Several purported securities class action and derivative lawsuits have
been filed against the Company and certain of its present and former officers
and directors based on events which allegedly occurred in the time period of
April 24, 1996 through July 22, 1996. The lawsuits are as follows: two
stockholder class actions are pending: Lee, et. al. v. IMP, Inc., et. al., No.
CV760793 (Superior Court, Santa Clara County, September 17, 1996) is a purported
securities class action consolidating several complaints file in California's
State Superior Court. In re IMP, Inc. Securities Litigation, No. C96-20826-SW
(N.D. Cal. October 1, 1996) is a purported securities class action consolidating
several complaints file in the United States District Court for the Northern
District of California. In addition, two stockholder derivative actions were
pending and purported to assert claims on behalf of the Company against certain
of its present and former officers and directors. They are Shockley, et. al., v.
Carrington, et. al.,
38
<PAGE> 37
No. CV762109 (Superior Court, Santa Clara County, January 15, 1997) and Walsh,
et. al., v. Carrington, et., al., No. C97-201238-SW (N.D. Cal. March 18, 1997.
These lawsuits, all of which include similar factual allegations, alleged that
the Company and certain of its present and former officers and directors issued
false or misleading statements regarding the Company's business, resulting in
inflation of the Company's stock price, and that certain of the defendants
traded stock while in possession of material adverse information. These lawsuits
assert claims under the federal securities laws, California securities laws, and
California common law. The plaintiffs in all actions sought damages in an
unspecified amount.
As of March 29, 1998 the parties have settled in principle and court
documents have been submitted for final approval.
Note 6 - Income taxes
No provision for federal or state income taxes has been recorded for
fiscal years 1998, 1997 and 1998. The Company's provisions are computed by
applying the estimated annual tax rate to income, taking into account net
operating loss carryforwards and alternative minimum taxes. At March 29, 1998
the Company had net operating loss carryforwards for federal and state income
tax purposes of approximately $53,500,000 and $18,000,000 which may be utilized
to reduce future taxable income. These amounts expire at various dates,
beginning in 1999 through 2013. Deferred tax assets (liabilities) are comprised
of the following (in thousands):
<TABLE>
<CAPTION>
March 29, 1998 March 30, 1997
-------------- --------------
<S> <C> <C>
Net operating loss, tax-effected $ 19,309 $ 17,103
Non-deductible expenses 6,111 4,803
Investment and R&D tax credit 3,005 3,046
Other 178 (124)
-------- --------
Total 28,603 24,828
Valuation allowance (28,603) (24,828)
-------- --------
Net deferred tax asset $- $-
======== ========
</TABLE>
Management has recorded a full valuation allowance against all of its
deferred tax assets on the basis that sufficient uncertainty exists regarding
the realizability of the assets. These factors include losses generated in prior
years and the lack of carryback capacity to realize deferred tax assets.
Note 7 - Geographic Information
The Company operates in one industry segment and is engaged in the design
development, manufacture and marketing of integrated circuits. Export sales to
Western Europe were $515,000, $62,000, and $2,277,000 and to Asia were
$11,787,000, $21,409,000, and $2,194,000, in fiscal 1998, 1997, and 1996,
respectively.
39
<PAGE> 38
Note 8 - Leasing arrangements and commitments
The Company leases certain machinery and equipment under long-term lease
agreements which are reported as capital leases. The terms of the leases range
from four to five years, with purchase options at the end of the respective
lease terms. The Company intends to exercise such purchase options, which will
require minimal payments. The Company leases its facility under a noncancelable
operating lease which expires in December 1999, with options to extend the lease
for two additional six-year periods. The lease requires the Company to pay
taxes, insurance and maintenance expense. Rental expense is recorded using the
straight-line method and totaled $1,472,000, $1,450,000, and $1,460,000 in
fiscal 1998, 1997, and 1996, respectively. Future minimum lease payments,
including capitalized purchase options, at March 29, 1998 are as follows (in
thousands):
<TABLE>
<CAPTION>
Capital Operating
Fiscal Year Ending March Leases Leases
------ ------
<S> <C> <C>
1999 $4,108 $1,302
2000 2,561 977
2001 1,907 --
2002 506 --
------ ------
Total minimum payments 9,082 $2,279
======
Less imputed interest (996)
------
Present value of payments under capital leases 8,086
Less current portion (3,582)
------
Long-term lease obligations $4,504
======
</TABLE>
40
<PAGE> 39
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
41
<PAGE> 40
PART III
ITEM 10. DIRECTORS AND OFFICERS OF REGISTRANT
(1) Identification of Directors:
The information concerning the Company's directors and nominees
is incorporated by reference from the section entitled "Proposal No. 1 --
Election of Directors" in the Proxy Statement for the 1998 Annual Meeting of
Stockholders to be held on August 19, 1998, a copy of which will be filed with
the Securities and Exchange Commission no later than 120 days from the end of
the Company's last fiscal year.
(2) Identification of Executive Officers:
See Part I, "Executive Officers of the Company."
(3) Information with respect to compliance with Section 16 (a) of
the Securities Exchange Act of 1934 is incorporated by reference from the
information under the caption "Section 16 (a) Beneficial Ownership Reporting
Compliance" in the Registrant's Proxy Statement for the 1998 Annual Meeting of
Stockholders to be held on August 19, 1998, a copy of which will be filed with
the Securities and Exchange Commission.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated by reference from the section entitled "Executive
Compensation" in the Proxy Statement for the 1998 Annual Meeting of Stockholders
to be held on August 19, 1998, a copy of which will be filed with the Securities
and Exchange Commission.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated by reference from the sections entitled "Share
Ownership" in the Proxy Statement for the 1998 Annual Meeting of Stockholders to
be held on August 19, 1998, a copy of which will be filed with the Securities
and Exchange Commission.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated by reference from the section entitled "Certain
Relationships and Related Transactions" in the Proxy Statement for the 1998
Annual Meeting of Stockholders to be held on August 19, 1998, a copy of which
will be filed with the Securities and Exchange Commission.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
42
<PAGE> 41
The following financial statements are included in Item
8 of this Annual Report on Form 10-K:
- Report of Independent Accountants
- Balance sheets as of March 29, 1998 and March 30,
1997
- Statements of operations for each of the three years
in the period ended March 29, 1998
- Statement of stockholder's equity for each of the
three years in the period ended March 29, 1998
- Statements of cash flows for each of the three years
in the period ended March 29, 1998
- Notes to financial statements
(a) 2. Financial statement schedules for each of the three
years in the period ended March 29, 1998: Report of
Independent Accountants on Financial Statement Schedule
II - Valuation and Qualifying Accounts
All other schedules are omitted since the required information is not
present in amounts sufficient to require submission of the schedules, or because
the required information is included in the financial statements or notes
thereto.
(a) 3. Listing of Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
3.1(5) Restated Certificate of Incorporation.
3.2(1) Bylaws.
3.3(9) Certificate of Amendment to Restated Certificate of
Incorporation.
10.21(1) Real Property Lease Agreement dated as of August 26,
1981 between the Company and Orchard Investment Company
No. 701.
10.22(1) Real Property Lease Agreement dated as of July 6, 1983
between the Company and Orchard Investment Company No.
701.
10.23(1) Real Property Lease Agreement dated as of August 1,
1984 between the Company and Orchard Investment Company
No. 701.
10.29(1) Form of Indemnification Agreement executed by the
Company and its officers and directors.
10.40(2) Letter Agreement dated October 19, 1987 between the
Company and George Rassam.
</TABLE>
43
<PAGE> 42
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
10.47(6) Technology Agreement between the Company and IMP Europe
Limited.
10.48(6) Supply Agreement between the Company and IMP Europe
Limited.
10.49(6) Agreement for the sale and purchase of all the A
Ordinary Shares in IMP Europe Limited dated as of July
3, 1990, between the Company and Dialogue Semiconductor
Limited.
10.50(7)* License Agreement dated as of September 12, 1991,
between the Company and Asahi Chemical Industry Co.,
Ltd.
10.51(7)* Distributorship Agreement dated as of December 1, 1991
by and between the Company and Asahi Chemical Industry
Co., Ltd.
10.53(7)* Heads of Agreement dated as of March 27, 1992, between
the Company and South African Micro-Electronic Systems
Pty Limited.
10.54(9) First Amendment dated March 11, 1994 to Real Property
Lease Agreement dated August 26, 1981 between the
Company and Orchard Investments Company No. 701.
10.55(9) First Amendment dated December 21, 1987, Second
Amendment dated March 15, 1989, Third Amendment dated
November 25,1991, Fourth Amendment dated December 13,
1993 and Fifth Amendment dated March 11, 1994 to the
Real Estate Lease Agreement dated July 6, 1983 between
the Company and Orchard Investment Company No. 701.
10.56(10) Loan Modification Agreement dated September 19, 1995 by
and between the Company and Silicon Valley Bank.
10.57(10) Letter Agreement dated February 13, 1995 between the
Company and David Laws.
10.58(10) Real Property Sublease Agreement dated November 9, 1992
by and between the Company and AT&T Resource Management
Corporation, and Master Lease dated September 23, 1986
by and between AT&T Resource Management Corporation and
American Telephone and Telegraph Company.
</TABLE>
44
<PAGE> 43
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
23.1 Consent of Price Waterhouse LLP, Independent
Accountants.
27.1 Financial Data Schedule.
27.2 Restated Financial Data Schedule.
27.3 Restated Financial Data Schedule.
27.4 Restated Financial Data Schedule.
27.5 Restated Financial Data Schedule.
27.6 Restated Financial Data Schedule.
27.7 Restated Financial Data Schedule.
27.8 Restated Financial Data Schedule.
27.9 Restated Financial Data Schedule.
</TABLE>
* "*" on such exhibits indicates that portions have been omitted for which
confidential treatment has been requested and filed separately with the
Securities and Exchange Commission.
(1) Incorporated by reference from an identically numbered exhibit filed with
the Company's Registration Statement on Form S-1 (File No. 33-13600)
declared effective by the Securities and Exchange Commission on June 10,
1987.
(2) Incorporated by reference from an identically numbered exhibit filed with
the Company's Annual Report on Form 10-K for the year ended March 27, 1988
filed with the Securities and Exchange Commission on June 25, 1988.
(3) Incorporated by reference to an identically numbered exhibit filed with
the Post-Effective Amendment No. 1 to the Company's Registration Statement
on Form S-8 (File No. 33-16624), as filed with the Securities and Exchange
Commission on November 13, 1987.
(4) Incorporated by reference to an identically numbered exhibit filed with
the Company's Registration Statement on Form S-8 (File No. 33-24635) as
filed with the Securities and Exchange Commission on September 15, 1988.
(5) Incorporated by reference from an identically numbered exhibit filed with
the Company's Annual Report on Form 10-K for the year ended March 26, 1989
filed with the Securities and Exchange Commission on June 26, 1989.
(6) Incorporated by reference from an identically numbered exhibit filed with
the Company's Annual Report on Form 10-K for the year ended March 31, 1991
filed with the Securities and Exchange Commission on July 1, 1991.
(7) Incorporated by reference from an identically numbered exhibit filed with
the Company's Annual Report on Form 10-K for the year ended March 29, 1992
filed with the Securities and Exchange Commission on June 29, 1992, as
amended by Amendment to Application or Report on Form 8 filed with the
Securities and Exchange Commission on September 16, 1992.
45
<PAGE> 44
(8) Portions incorporated by reference from an identically numbered exhibit
filed with the Company's Annual Report on Form 10-K for the year ended
March 28, 1993 filed with the Securities and Exchange Commission on June
28, 1993.
(9) Portions incorporated by reference from an identically numbered exhibit
filed with the Company's Amendment to the Annual Report on Form 10-K for
the year ended March 27, 1994 filed with the Securities and Exchange
Commission on July 6, 1994.
(10) Portions incorporated by reference from an identically numbered exhibit
filed with the Company's Annual Report on Form 10-K for the year ended
March 26, 1995 filed with the Securities and Exchange Commission on June
26, 1995.
(b) Reports on Form 8-K
Not applicable
46
<PAGE> 45
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, in San Jose,
California on this X.
IMP, INC.
By: /s/ George Rassam
---------------------------------
George Rassam
Chief Financial Officer and Secretary
(Principal Financial and Accounting Officer)
47
<PAGE> 46
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENT, that each person whose signature
appears below constitutes and appoints James Phillips Ferguson or George Rassam,
or either of them, with the power of substitution, his attorney-in-fact and
agents, to sign any and all amendments to this Annual Report on Form 10-K, and
to file the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorney-in-fact, or his substitute or
substitutes may do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
/s/ James Phillips Ferguson President and Chief June 24, 1998
- -------------------------------------------- Executive Officer and
James Phillips Ferguson Director (Principal
Executive Officer)
/s/ George Rassam Chief Financial Officer June 24, 1998
- -------------------------------------------- and Secretary
George Rassam (Principal Financial and
Accounting Officer)
/s/ David A. Laws Chairman of the Board June 24, 1998
- -------------------------------------------- of Directors
David A. Laws
/s/Zvi Grinfas Director June 24, 1998
- --------------------------------------------
Zvi Grinfas
/s/ Peter D. Olson Director June 24, 1998
- --------------------------------------------
Peter D. Olson
/s/ Bernard V. Vonderschmitt Director June 24, 1998
- --------------------------------------------
Bernard V. Vonderschmitt
</TABLE>
48
<PAGE> 47
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Board of Directors of IMP, Inc.
Our audits of the financial statements referred to in our report dated May 5,
1998 appearing in this Annual Report on Form 10-K also included an audit of the
Financial Statement Schedule listed in Item 14(a)(2) of this Form 10-K. In our
opinion, this Financial Statement Schedule present fairly, in all material
respects, the information set forth therein when read in conjunction with the
related financial statements.
PRICE WATERHOUSE LLP
San Jose, California
May 5, 1998
49
<PAGE> 48
SCHEDULE II
IMP, Inc.
Valuation and Qualifying Accounts
(in thousands)
<TABLE>
<CAPTION>
Balance at the Balance at
beginning of Charged to costs Deductions the end of
the period and expenses* write-offs period
-------------- ---------------- ---------- ----------
<S> <C> <C> <C> <C>
Provisions for returns,
allowance and doubtful
accounts and returns:
Year ended March 31, 1996 $ 795 $ 0 $ 140 $ 655
Year ended March 30, 1997 $ 655 $3,388 $2,002 $2,041
Year ended March 29, 1998 $2,041 $ 674 $ 0 $2,715
</TABLE>
*Includes amounts charged directly to revenues
50
<PAGE> 49
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
3.1(5) Restated Certificate of Incorporation.
3.2(1) Bylaws.
3.3(9) Certificate of Amendment to Restated Certificate of
Incorporation.
10.21(1) Real Property Lease Agreement dated as of August 26, 1981
between the Company and Orchard Investment Company No. 701.
10.22(1) Real Property Lease Agreement dated as of July 6, 1983 between
the Company and Orchard Investment Company No. 701.
10.23(1) Real Property Lease Agreement dated as of August 1, 1984 between
the Company and orchard Investment company No. 701.
10.29(1) Form of Indemnification Agreement executed by the Company and
its officers and directors.
10.40(2) Letter Agreement dated October 19, 1987 between the Company and
George Rassam.
</TABLE>
<PAGE> 50
<TABLE>
<CAPTION>
Exhibit
Number Description
- --------- -----------------------------------------------------------------
<S> <C>
10.47(6) Technology Agreement between the Company and IMP Europe Limited.
10.48(6) Supply Agreement between the Company and IMP Europe Limited.
10.49(6) Agreement for the sale and purchase of all the A Ordinary Shares
in IMP Europe Limited dated as of July 3, 1990, between the
Company and Dialogue Semiconductor Limited.
10.50(7)* License Agreement dated as of September 12, 1991, between the
Company and Asahi Chemical Industry Co., Ltd.
10.51(7)* Distributorship Agreement dated as of December 1, 1991 by and
between the Company and Asahi Chemical Industry Co., Ltd.
10.53(7)* Heads of Agreement dated as of March 27, 1992, between the
Company and South African Micro-Electronic Systems Pty Limited.
10.54(9) First Amendment dated March 11, 1994 to Real Property Lease
Agreement dated August 26, 1981 between the Company and Orchard
Investments Company No. 701.
10.55(9) First Amendment dated December 21, 1987, Second Amendment dated
March 15, 1989, Third Amendment dated November 25, 1991, Fourth
Amendment dated December 13, 1993 and Fifth Amendment dated
March 11, 1994 to the Real Estate Lease Agreement dated July 6,
1983 between the Company and Orchard Investment Company No. 701.
10.56(10) Loan Modification Agreement dated September 19, 1995 by and
between the Company and Silicon Valley Bank.
10.57(10) Letter Agreement dated February 13, 1995 between the Company and
David Laws.
10.58(10) Real Property Sublease Agreement dated November 9, 1992 by and
between the Company and AT&T Resource Management Corporation,
and Master Lease dated September 23, 1986 by and between AT&T
Resource Management Corporation and American Telephone and
Telegraph Company.
</TABLE>
<PAGE> 51
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
23.1 Consent of Price Waterhouse LLP, Independent Accountants.
27.1 Financial Data Schedule.
27.2 Restated Financial Data Schedule.
27.3 Restated Financial Data Schedule.
27.4 Restated Financial Data Schedule.
27.5 Restated Financial Data Schedule.
27.6 Restated Financial Data Schedule.
27.7 Restated Financial Data Schedule.
27.8 Restated Financial Data Schedule.
27.9 Restated Financial Data Schedule.
</TABLE>
- ------------
* "*" on such exhibits indicates that portions have been omitted for which
confidential treatment has been requested and filed separately with the
Securities and Exchange Commission.
(1) Incorporated by reference from an identically numbered exhibit filed with
the Company's Registration Statement on Form S-1 (File No. 33-13600)
declared effective by the Securities and Exchange Commission on June 10,
1987.
(2) Incorporated by reference from an identically numbered exhibit filed with
the Company's Annual Report on Form 10-K for the year ended March 27,1988
filed with the Securities and Exchange Commission on June 25, 1988.
(3) Incorporated by reference to an identically numbered exhibit filed with
the Post-Effective Amendment No. 1 to the Company's Registration Statement
on Form S-8 (File No. 33-16624), as filed with the Securities and Exchange
Commission on November 13, 1987.
(4) Incorporated by reference to an identically numbered exhibit filed with
the Company's Registration Statement on Form S-8 (File No. 33-24635) as
filed with the Securities and Exchange Commission on September 15, 1988.
(5) Incorporated by reference from an identically numbered exhibit filed with
the Company's Annual Report on Form 10-K for the year ended March 26, 1989
filed with the Securities and Exchange Commission on June 26, 1989.
(6) Incorporated by reference from an identically numbered exhibit filed with
the Company's Annual Report on Form 10-K for the year ended March 31, 1991
filed with the Securities and Exchange Commission on July 1, 1991.
(7) Incorporated by reference from an identically numbered exhibit filed with
the Company's Annual Report on Form 10-K for the year ended March 29, 1992
filed with the Securities and Exchange Commission on June 29, 1992, as
amended by Amendment to Application or Report on Form 8 filed with the
Securities and Exchange Commission on September 16, 1992.
<PAGE> 52
(8) Portions incorporated by reference from an identical numbered exhibit
filed with the Company's Annual Report on Form 10-K for the year ended
March 28, 1993 filed with the Securities and Exchange Commission on
June 28, 1993.
(9) Portions incorporated by reference from an identically numbered exhibit
filed with the Company's Amendment to the Annual Report on Form 10-K for
the year ended March 27, 1994 filed with the Securities and Exchange
Commission on July 6, 1994.
(10) Portions incorporated by reference from an identically numbered exhibit
filed with the Company's Annual Report on Form 10-K for the year ended
March 26, 1995 filed with the Securities and Exchange Commission on
June 26, 1995.
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (No. 33-85008, No. 33-65578 and No. 33-62751) of IMP,
Inc. of our report dated May 5, 1998, appearing in this Annual Report on Form
10-K. We also consent to the incorporation by reference of our report on the
Financial Statement Schedule, which appears in the Form 10-K.
PRICE WATERHOUSE LLP
San Jose, California
June 24, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000812927
<NAME> BOWEN
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-29-1998
<PERIOD-START> MAR-30-1997
<PERIOD-END> MAR-29-1998
<CASH> 11,819
<SECURITIES> 0
<RECEIVABLES> 5,357
<ALLOWANCES> 2,715
<INVENTORY> 3,064
<CURRENT-ASSETS> 21,190
<PP&E> 88,931
<DEPRECIATION> (78,547)
<TOTAL-ASSETS> 31,949
<CURRENT-LIABILITIES> 15,178
<BONDS> 0
0
0
<COMMON> 30
<OTHER-SE> 70,370
<TOTAL-LIABILITY-AND-EQUITY> 31,949
<SALES> 40,420
<TOTAL-REVENUES> 40,420
<CGS> 29,194
<TOTAL-COSTS> 29,194
<OTHER-EXPENSES> 14,101
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 924
<INCOME-PRETAX> (3,799)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,799)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,799)
<EPS-PRIMARY> (.14)<F1>
<EPS-DILUTED> (.14)
<FN>
<F1>For Purposes of This Exhibit, Primary means Basic.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-30-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> MAR-30-1997
<CASH> 13,306
<SECURITIES> 0
<RECEIVABLES> 6,112
<ALLOWANCES> 2,041
<INVENTORY> 3,306
<CURRENT-ASSETS> 23,483
<PP&E> 85,998
<DEPRECIATION> (72,285)
<TOTAL-ASSETS> 37,271
<CURRENT-LIABILITIES> 13,896
<BONDS> 0
0
0
<COMMON> 30
<OTHER-SE> 70,274
<TOTAL-LIABILITY-AND-EQUITY> 37,271
<SALES> 64,891
<TOTAL-REVENUES> 64,891
<CGS> 53,889
<TOTAL-COSTS> 53,889
<OTHER-EXPENSES> 22,148
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,221
<INCOME-PRETAX> (12,367)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12,367)
<EPS-PRIMARY> (.44)
<EPS-DILUTED> (.44)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<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>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-29-1996
<CASH> 8,934
<SECURITIES> 0
<RECEIVABLES> 13,042
<ALLOWANCES> 3,089
<INVENTORY> 7,882
<CURRENT-ASSETS> 31,175
<PP&E> 84,708
<DEPRECIATION> (68,090)
<TOTAL-ASSETS> 47,868
<CURRENT-LIABILITIES> 16,976
<BONDS> 0
0
0
<COMMON> 29
<OTHER-SE> 70,218
<TOTAL-LIABILITY-AND-EQUITY> 47,868
<SALES> 18,211
<TOTAL-REVENUES> 18,211
<CGS> 18,552
<TOTAL-COSTS> 18,552
<OTHER-EXPENSES> 9,310
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 347
<INCOME-PRETAX> (9,998)
<INCOME-TAX> 0
<INCOME-CONTINUING> (9,998)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,998)
<EPS-PRIMARY> (.35)
<EPS-DILUTED> (.35)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-30-1997
<PERIOD-START> SEP-30-1996
<PERIOD-END> DEC-29-1996
<CASH> 13,468
<SECURITIES> 0
<RECEIVABLES> 8,324
<ALLOWANCES> 2,109
<INVENTORY> 2,730
<CURRENT-ASSETS> 25,189
<PP&E> 84,722
<DEPRECIATION> (69,873)
<TOTAL-ASSETS> 40,113
<CURRENT-LIABILITIES> 11,380
<BONDS> 0
0
0
<COMMON> 29
<OTHER-SE> 70,271
<TOTAL-LIABILITY-AND-EQUITY> 40,113
<SALES> 15,127
<TOTAL-REVENUES> 15,127
<CGS> 13,071
<TOTAL-COSTS> 13,071
<OTHER-EXPENSES> 3,935
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 348
<INCOME-PRETAX> (2,133)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,133)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,133)
<EPS-PRIMARY> (.08)
<EPS-DILUTED> (.08)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<CIK> 0000812927
<NAME> BOWNE
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> MAR-27-1995
<PERIOD-END> MAR-31-1996
<CASH> 9,038
<SECURITIES> 0
<RECEIVABLES> 13,658
<ALLOWANCES> 655
<INVENTORY> 10,302
<CURRENT-ASSETS> 33,489
<PP&E> 81,665
<DEPRECIATION> (64,496)
<TOTAL-ASSETS> 50,733
<CURRENT-LIABILITIES> 16,309
<BONDS> 0
0
0
<COMMON> 29
<OTHER-SE> 69,052
<TOTAL-LIABILITY-AND-EQUITY> 50,733
<SALES> 76,827
<TOTAL-REVENUES> 76,827
<CGS> 52,155
<TOTAL-COSTS> 52,155
<OTHER-EXPENSES> 18,218
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 879
<INCOME-PRETAX> 5,575
<INCOME-TAX> 106
<INCOME-CONTINUING> 5,469
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,469
<EPS-PRIMARY> .20
<EPS-DILUTED> .20
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-28-1995
<PERIOD-START> MAR-27-1995
<PERIOD-END> JUN-25-1995
<CASH> 8,889
<SECURITIES> 0
<RECEIVABLES> 10,703
<ALLOWANCES> 795
<INVENTORY> 8,757
<CURRENT-ASSETS> 550
<PP&E> 72,451
<DEPRECIATION> (59,970)
<TOTAL-ASSETS> 41,225
<CURRENT-LIABILITIES> 15,517
<BONDS> 0
0
0
<COMMON> 28
<OTHER-SE> 67,934
<TOTAL-LIABILITY-AND-EQUITY> 41,255
<SALES> 16,510
<TOTAL-REVENUES> 16,510
<CGS> 11,444
<TOTAL-COSTS> 11,444
<OTHER-EXPENSES> 4,085
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 376
<INCOME-PRETAX> 605
<INCOME-TAX> 12
<INCOME-CONTINUING> 593
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 593
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<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> 8,280
<SECURITIES> 0
<RECEIVABLES> 11,386
<ALLOWANCES> 975
<INVENTORY> 8,524
<CURRENT-ASSETS> 29,376
<PP&E> 73,129
<DEPRECIATION> (61,389)
<TOTAL-ASSETS> 41,191
<CURRENT-LIABILITIES> 14,730
<BONDS> 0
0
0
<COMMON> 28
<OTHER-SE> 58,351
<TOTAL-LIABILITY-AND-EQUITY> 41,191
<SALES> 18,514
<TOTAL-REVENUES> 18,514
<CGS> 12,846
<TOTAL-COSTS> 12,846
<OTHER-EXPENSES> 4,224
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 347
<INCOME-PRETAX> 1,097
<INCOME-TAX> 27
<INCOME-CONTINUING> 1,070
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,070
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<CIK> 0000812927
<NAME> IMP, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-26-1995
<PERIOD-START> MAR-27-1995
<PERIOD-END> DEC-31-1995
<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>
