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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
JANUARY 22, 1998
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Date of Report (Date of earliest event reported)
OAK TECHNOLOGY, INC.
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(Exact name of registrant as specified in charter)
DELAWARE 0-25298 77-0161486
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
139 KIFER COURT, SUNNYVALE, CALIFORNIA 94086
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (408) 737-0888
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N/A
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(Former name or former address, if changed since last report.)
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Item 5. Other Events.
On January 22, 1998, the Registrant issued a press release announcing
simultaneously with releasing its fiscal second quarter results that it has
decided to focus its resources on its three core markets: Optical Storage,
Consumer Electronics, and Digital Office Equipment and therefore, will divest
its graphics and audio businesses. The Registrant also announced that Mr.
Richard Black, a director of the Registrant since 1987, will join the
executive management team as president, and that it has added Mr. Young Sohn,
president of Quantum Corporation's Enterprise and Personal Storage Group, to
its Board of Directors. Furthermore the Registrant announced that its Board
of Directors approved a stock repurchase plan authorizing, for a period of
one year, the purchase of up to two million shares of the Registrant's Common
Stock.
Item 7. Exhibits.
A copy of the Registrant's press release announcing its fiscal second
quarter results, its decision to focus on its three core markets, the election
of a new president and a new member to its Board or Directors, and the
authorization of its stock repurchase plan is attached hereto as Exhibit 99.1
and incorporated herein by reference.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
OAK TECHNOLOGY, INC.
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(Registrant)
Date: January 28, 1998 By /s/ Sidney S. Faulkner
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Name: Sidney S. Faulkner
Title: Vice President, Finance
Chief Financial Officer and Secretary
(Principal Financial and Accounting
Officer and Duly Authorized Officer)
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INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION PAGE
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99.1 Press Release disseminated January 22, 1998.
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PRESS RELEASE
CONTACTS:
INVESTOR RELATIONS EDITORIAL
Supriya Venkat Jonathan Bloom
Oak Technology, Inc. McGrath/Power Public Relations
(408) 328-6899 (408) 727-0351
[email protected] [email protected]
OAK TECHNOLOGY ANNOUNCES Q2'98 RESULTS AND BUSINESS UNIT
RESTRUCTURING
- COMPANY TO FOCUS ON THREE CORE MARKETS AND DIVEST ITS INTERESTS
IN PC AUDIO AND GRAPHICS
- NEW PRESIDENT AND NEW ADDITION TO BOARD OF DIRECTORS
- UP TO TWO MILLION SHARE STOCK REPURCHASE AUTHORIZED
Sunnyvale, Calif. - January 22, 1998 - Simultaneously with releasing its fiscal
second quarter results, Oak Technology (NASDAQ: OAKT) today announced that it
would refocus its efforts by concentrating on three core markets: Optical
Storage, Consumer Electronics and Digital Office Equipment and therefore, will
divest its graphics and audio businesses. The Company also announced that it
has elected a new president and a new member to its Board of Directors.
Furthermore, the Company announced its Board of Directors has authorized the
repurchase of up to two million shares of its Common Stock.
RESULTS FOR Q2 '98
The Company today reported results for the second fiscal quarter of 1998
ending December 31, 1997. Net sales for the quarter were $49.4 million, an
increase of 4 percent over the second fiscal quarter of 1997 net sales of
$47.6 million. Net income of $7.6 million compares to net income of $13.2
million in the comparable period of fiscal 1997. Diluted net income per
share of $0.18 compares with net income of $0.31 per diluted share in the
second quarter of fiscal 1997. Net income for the quarter ending December
31, 1997 includes non-operating income of approximately $4.8 million or $0.07
per diluted share net of taxes, resulting from a favorable legal settlement.
Net income for the second quarter of fiscal 1997 includes the impact of
favorable inventory-related adjustments of approximately $14.5 million to
cost of revenues.
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OAK ANNOUNCES Q2 '98 RESULTS AND BUSINESS RESTRUCTURING-2
The Optical Storage business continued to account for the largest portion of
Oak's business, representing approximately 80 percent of the Company's revenues
during the fiscal second quarter. The business continues to experience pressure
from new competitors entering the market, pressure from the sub-$1000 PC segment
for lower-cost components, and the effects of a strong dollar versus Asian
currencies. Due to these factors as well as lower PC unit demand after the
holiday season, the company expects it may incur a loss from operations in the
March quarter.
FOCUS ON THREE CORE MARKETS; DIVESTITURE OF PC AUDIO AND GRAPHICS INTERESTS
The Company has made a strategic decision to focus all its resources on its
three core markets: Optical Storage, Consumer Electronics, and Digital Office
Equipment. As a result of this decision, the Company plans to divest its
interests in PC audio and graphics.
"In order to extend our leadership positions in the Optical Storage and
Digital Office Equipment markets and expand our presence in the Consumer
Electronics market, we have decided to focus all of our resources on these
strategically important core markets," stated David D. Tsang, chairman and chief
executive officer of Oak Technology. "For our PC audio and graphics divisions,
we are actively seeking interested parties that can leverage these businesses
with their own to achieve maximum value," further stated Tsang.
"Our PC audio and graphics businesses combined accounted for less than 5
percent of this quarter's revenues and approximately 20 percent of operating
expenses," continued Tsang. "The audio and graphics semiconductor markets are
highly competitive and we believe they offer limited opportunities for Oak. We
also believe that there is value in what we have developed and that for the
right company, acquiring these businesses can offer a tremendous head start."
ADDITIONS TO THE EXECUTIVE MANAGEMENT TEAM AND BOARD
The Company also announced today Mr. Richard Black will join Oak's
executive management team as president. Mr. Black joined the Company's Board of
Directors in 1987 and will continue to serve as a director. He has been
president and CEO of three large companies, two with sales in excess of one
billion dollars. His management experience spans diverse fields such as
electronic publishing equipment and software, networking hardware,
semiconductors, and interactive video software.
The Company also stated that it has added Mr.Young Sohn, president of
Quantum Corporation's Enterprise and Personal Storage Group, to its Board of
Directors. Mr. Sohn was president and managing director of Quantum Asia-Pacific
until June 1994. Prior to joining Quantum in 1992, he spent nine years as a
marketing and sales executive at Intel Corporation.
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OAK ANNOUNCES Q2 '98 RESULTS AND BUSINESS RESTRUCTURING-3
"I am excited to announce these new additions to the Oak team," said Tsang.
"with Rick as part of the executive management team, I expect to concentrate on
strategic direction and key customer relationships while Rick will be
responsible for the day-to-day operations of the Company. In addition, we look
forward to utilizing Mr. Sohn's industry experience on our Board to help guide
the Company as we move forward."
STOCK REPURCHASE PLAN
The Company's Board of Directors today approved a stock repurchase plan
authorizing the purchase of up to two million shares of Oak Technology Common
Stock. Repurchases will be made from time to time in open market or privately
negotiated transactions. The plan authorizes, but does not require, Oak to
purchase all two million shares. Actual repurchases in any period will depend on
market conditions and other factors and could be in substantially lesser
amounts. The repurchase program is authorized for one year, unless further
extended by the Board.
BUSINESS REVIEW FOR SECOND FISCAL QUARTER '98
OPTICAL STORAGE
During the quarter, the Company demonstrated its continued commitment to
expanding its product offerings as well as achieving higher levels of product
integration in Optical Storage. The OTI-9325, announced in the second quarter,
is an integrated, high-performance three-in-one CD-ROM controller. Although
integrated products have higher ASPs (average selling prices) than the Company's
single-function products, gross margins will continue to come under pressure
from the competitive environment of this market. During the quarter, the Company
continued to ship its OTI-975 CD-RW controller which is used in leading CD-RW
drives in the market today, and sampled the OTI-9800 DVD-ROM controller.
CONSUMER ELECTRONICS
The Company's Consumer Electronics business comprises Oak's existing MPEG-1
decoders used in VideoCD players, MPEG-2/Dolby Digital decoders for the DVD
player market, and DVD navigation software. This month, Oak announced the
OTI-257, a highly integrated, low-cost solution for VideoCD players including
karaoke support. "Oak is committed to investing the necessary resources to be
competitive in this market and we intend to leverage our MPEG technology with
our strong Optical Storage expertise to deliver complete solutions for this
developing market," explained Tsang.
DIGITAL OFFICE EQUIPMENT
Oak believes the Digital Office Equipment market offers growth
opportunities and is pursuing these through its Pixel Magic subsidiary.
During the quarter, Pixel announced design wins at JetFax and Xerox. Last
month, Pixel announced the signing of a letter of intent to acquire
Xerographic Laser Images (XLI) which develops products that produce enhanced
resolution output from printers, copiers, fax systems and multifunction
peripherals. The Company expects to complete this acquisition by the end of
its fiscal year.
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OAK ANNOUNCES Q2 '98 RESULTS AND BUSINESS RESTRUCTURING-4
THE FOREGOING STATEMENTS CONTAIN FORWARD-LOOKING STATEMENTS MADE PURSUANT TO THE
SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.
FACTORS THAT COULD CAUSE ACTUAL OUTCOME TO DIFFER MATERIALLY FROM THOSE SET
FORTH INCLUDE, WITHOUT LIMITATION, MARKET CONDITIONS IN THE PERSONAL COMPUTER
AND SEMICONDUCTOR INDUSTRIES, THE DEGREE OF COMPETITIVENESS OF THE COMPANY'S
CUSTOMERS, LEVELS OF INVENTORY HELD BY THE COMPANY'S CUSTOMERS, THE RATE AT
WHICH THE PC INDUSTRY MOVES TO HIGHER SPEED DRIVES AS WELL AS DVD-ROM DRIVES,
AND THE COMPANY'S CUSTOMERS' PERCEPTIONS THEREOF, ECONOMIC CONDITIONS IN ASIA,
THE COMPANY'S ABILITY TO CONTROL EXPENSES, AND OTHER RISKS THAT ARE CONTAINED IN
DOCUMENTS WHICH THE COMPANY FILES WITH THE SECURITIES AND EXCHANGE COMMISSION.
FOR A DISCUSSION OF SUCH RISKS, SEE THE COMPANY'S MOST RECENT SEC FORM 10-K AND
10-Q.
ABOUT OAK TECHNOLOGY
Founded in 1987, Oak Technology, Inc. designs, develops and markets
semiconductors and related software to original equipment manufacturers
worldwide who serve the optical storage, consumer electronics and digital office
equipment markets. Oak has a software design center in Boca Raton, Fla.; a mixed
signal design center in Austin, Texas; and subsidiaries in Japan (Oak Technology
K.K.), Taiwan (Oak Technology, Taiwan), and Andover, Mass. (Pixel Magic, Inc.).
The Company completed its initial public offering in February 1995. Additional
information about Oak Technology and its products can be found on the World Wide
Web at www.oaktech.com.
Oak Technology and the Oak logo are registered trademarks of Oak Technology,
Inc. Pixel Magic is a trademark of Oak Technology. All other product names or
Company names are mentioned for identification purposes only, and may be
trademarks of their respective holders.
# # #
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OAK ANNOUNCES Q2 '98 RESULTS AND BUSINESS RESTRUCTURING-5
OAK TECHNOLOGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(Unaudited)
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<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
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1997 1996 1997 1996
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<S> <C> <C> <C> <C>
Net revenues $49,353 $47,611 $92,646 $66,537
Cost of revenues 23,233 15,225 43,988 25,441
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Gross profit 26,120 32,386 48,658 41,096
Research and development expenses 11,921 7,860 22,752 15,954
Selling, general, and administrative expenses 8,090 5,087 14,401 9,380
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Operating income 6,109 19,439 11,505 15,762
Nonoperating income 5,586 850 9,718 1,984
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Income before income taxes 11,695 20,289 21,223 17,746
Income taxes 4,093 7,101 7,428 6,211
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Net income $ 7,602 $13,188 $13,795 $11,535
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Net income per share:
Basic $ 0.18 $ 0.33 $ 0.33 $ 0.29
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Diluted $ 0.18 $ 0.31 $ 0.32 $ 0.27
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Shares used in computing net income per share:
Basic 41,824 40,382 41,716 40,348
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Diluted 42,643 42,701 42,762 42,399
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OAK ANNOUNCES Q2 '98 RESULTS AND BUSINESS RESTRUCTURING-6
OAK TECHNOLOGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
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<CAPTION>
(Unaudited)
DECEMBER 31, JUNE 30,
1997 1997
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<S> <C> <C>
ASSETS
Current assets:
Cash and investments $132,946 $145,269
Accounts receivable, net 27,991 24,872
Inventories 12,184 12,322
Prepaid expenses and other current assets 24,984 23,472
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Total current assets 198,105 205,935
Property and equipment, net 24,892 19,958
Foundry deposits 18,265 19,145
Other assets 54,115 42,557
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Total assets $295,377 $287,595
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current portion of long-term debt $ 9,505 $ 7,264
Accounts payable 14,778 16,144
Other accrued liabilities 12,230 14,359
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Total current liabilities 36,513 37,767
Long-term liabilities 4,440 11,131
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Total liabilities 40,953 48,898
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Stockholders' equity:
Common stock 161,874 159,942
Retained earnings 92,550 78,755
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Total stockholders' equity 254,424 238,697
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Total liabilities and stockholders' equity $295,377 $287,595
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