UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-2287
SYMMETRICOM, INC.
(Exact name of registrant as specified in its charter)
California No. 95-1906306
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
85 West Tasman Drive, San Jose, California 95134-1703
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (408) 943-9403
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
Applicable Only to Issuers Involved in Bankruptcy Proceedings
During the Preceding Five Years:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes No
Applicable Only to Corporate Issuers:
Indicate number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date:
CLASS OUTSTANDING AS OF March 31, 1995
Common Stock 14,822,718
SYMMETRICOM, INC.
FORM 10-Q
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets
March 31, 1995 and June 30, 1994 3
Consolidated Statements of Operations
Three and nine months ended March 31, 1995 and 1994 4
Consolidated Statements of Cash Flows
Nine months ended March 31, 1995 and 1994 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 9
SIGNATURES 9
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
SYMMETRICOM, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, June 30,
1995 1994
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 21,059 $ 21,250
Short-term investments 5,899
Accounts receivable 14,432 12,277
Inventories 17,892 15,811
Other current assets 3,172 2,405
_________ _________
Total current assets 62,454 51,743
Property, plant and equipment, net 16,345 14,930
Other assets, net 1,798 2,381
_________ _________
$ 80,597 $ 69,054
_________ _________
_________ _________
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,242 $ 4,224
Accrued liabilities 11,262 8,969
Current maturities of long-term debt 50 47
_________ _________
Total current liabilities 16,554 13,240
Long-term debt, less current maturities 5,780 5,818
Deferred rent 284 430
Deferred income taxes 2,527 2,780
Commitments and contingencies
Shareholders' equity:
Preferred stock, no par value:
Authorized - 500 shares
Issued - none
Common stock, no par value:
Authorized - 32,000 shares
Issued and outstanding - 14,823
and 14,071 shares 17,538 16,069
Retained earnings 37,914 30,717
_________ _________
Total shareholders' equity 55,452 46,786
_________ _________
$ 80,597 $ 69,054
_________ _________
_________ _________
The accompanying notes are an integral part of these consolidated financial
statements.
SYMMETRICOM, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three months ended Nine months ended
March 31, March 31,
1995 1994 1995 1994
Net sales $ 26,261 $ 24,368 $ 76,032 $ 73,413
Cost of sales 13,798 14,457 41,368 42,271
________ ________ ________ ________
Gross profit 12,463 9,911 34,664 31,142
Operating expenses:
Research and development 3,313 2,567 9,609 8,626
Selling, general and
administrative 6,226 5,244 17,341 15,586
________ ________ ________ ________
Operating income 2,924 2,100 7,714 6,930
Interest income 378 83 879 242
Interest expense (150) (151) (450) (453)
________ ________ ________ ________
Earnings before income taxes 3,152 2,032 8,143 6,719
Income taxes 366 561 946 1,855
________ ________ ________ ________
Net earnings $ 2,786 $ 1,471 $ 7,197 $ 4,864
________ ________ ________ ________
________ ________ ________ ________
Net earnings per common and common
equivalent share $ .18 $ .10 $ .46 $ .32
Weighted average common and common
equivalent shares outstanding 15,786 15,263 15,624 15,428
The accompanying notes are an integral part of these consolidated financial
statements.
SYMMETRICOM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine months ended
March 31,
1995 1994
Cash flows from operating activities:
Cash received from customers $ 74,016 $ 73,116
Cash paid to suppliers and employees (64,272) (69,688)
Interest received 770 255
Interest paid (450) (453)
Income taxes paid (1,037) (1,324)
_________ ________
Net cash provided by operating activities 9,027 1,906
_________ _________
Cash flows from investing activities:
Purchase of short-term investments (5,899)
Capital expenditures, net (4,828) (2,463)
Disposition (acquisition) of other assets 75 (534)
Purchase of Navstar (2,012)
_________ _________
Net cash used for investing activities (10,652) (5,009)
_________ _________
Cash flows from financing activities:
Repayment of long-term debt (35) (32)
Proceeds from issuance of common stock 1,469 695
_________ _________
Net cash provided by financing activities 1,434 663
_________ _________
Net decrease in cash and cash equivalents (191) (2,440)
Cash and cash equivalents at beginning of period 21,250 18,232
_________ _________
Cash and cash equivalents at end of period $ 21,059 $ 15,792
_________ _________
_________ _________
Reconciliation of net earnings to net cash provided
by operating activities:
Net earnings $ 7,197 $ 4,864
Adjustments:
Depreciation and amortization 3,921 4,146
Net deferred income taxes (660) 168
(Increase) in accounts receivable (2,155) (560)
(Increase) in inventories (2,081) (4,892)
(Increase) in other current assets (360) (412)
Increase (decrease) in accounts payable 1,018 (265)
Increase (decrease) in accrued liabilities 2,293 (1,013)
(Decrease) in deferred rent (146) (130)
_________ _________
Net cash provided by operating activities $ 9,027 $ 1,906
_________ _________
_________ _________
The accompanying notes are an integral part of these consolidated financial
statements.
SYMMETRICOM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation. The consolidated financial statements included
herein have been prepared by Symmetricom, Inc., (the "Company"), without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures, normally included in
financial statements prepared in accordance with generally accepted accounting
principles, have been condensed or omitted pursuant to such rules and
regulations. Although the Company believes that the disclosures which are
made are adequate to make the information presented not misleading, it is
suggested that these consolidated financial statements be read in conjunction
with the financial statements and the notes thereto included in the Company's
Annual Report on Form 10-K for the year ended June 30, 1994.
In the opinion of the management, these unaudited statements contain all
adjustments (consisting only of normal recurring adjustments) necessary to
present fairly the financial position of the Company at March 31, 1995, the
results of operations for the three and nine month periods then ended and cash
flows for the nine month period then ended. The results of operations for the
periods presented are not necessarily indicative of those that may be expected
for the full year.
2. Fiscal Period. Fiscal years 1995 and 1994 consist of 52 and 53 weeks,
respectively. The three month periods ended March 31, 1995 and 1994 consist
of thirteen weeks. The nine month periods ended March 31, 1995 and 1994
consist of thirty-nine and forty weeks, respectively.
3. Short-term investments. Short-term investments, consisting of debt
securities, are valued at amortized cost which approximates market, and are
classified as available for sale as of the balance sheet date. Effective July
1, 1994, the Company adopted the provisions of Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities", with no significant effect on the Company's financial
position or results of operation.
4. Inventories. Inventories are stated at the lower of cost (first-in,
first-out) or market. Inventories consist of:
March 31, June 30,
1995 1994
(In thousands)
Raw materials $ 6,827 $ 7,677
Work-in-process 6,142 5,110
Finished goods 4,923 3,024
_________ ________
$ 17,892 $ 15,811
5. Warrants. During March 1995, 98,000 shares of the Company's common
stock were issued in connection with a net exercise of an outstanding warrant.
At March 31, 1995, no warrants were outstanding.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
Working capital increased by $7.4 million to $45.9 million at March 31,
1995 from $38.5 million at June 30, 1994, while the current ratio decreased to
3.8 to 1.0 from 3.9 to 1.0. During the same period, cash and cash equivalents
decreased by $.2 million to $21.1 million from $21.3 million. The decrease
was primarily due to $5.9 million used for purchases of short-term investments
and $4.8 million used for capital expenditures, offset by $9.0 million in cash
provided by operating activities and $1.5 million in proceeds from issuance of
common stock. At March 31, 1995, the Company had $7.0 million of unused
credit available under its bank line of credit.
The Company believes that cash, cash equivalents, short-term
investments, funds generated from operations and funds available under its
bank line of credit will be sufficient to satisfy working capital and capital
equipment requirements over the near term. At March 31, 1995, the Company had
no material outstanding commitments to purchase capital equipment.
Results of Operations
Net sales for the three and nine month periods ended March 31, 1995 and
1994 were as follows:
Three Months Nine Months
Ended Ended
March 31, March 31,
1995 1994 Change 1995 1994 Change
(In millions)
Net sales data*:
Telecom Solutions $ 16.0 $ 14.2 13% $ 46.2 $ 44.5 4%
Linfinity
Microelectronics Inc. 10.2 10.2 29.8 28.9 3%
______ ______ ______ ______
$ 26.3 $ 24.4 8% $ 76.0 $ 73.4 4%
*May not add due to rounding.
Telecom Solutions net sales increased in the third quarter and the first
three quarters of fiscal 1995 compared to the corresponding periods of fiscal
1994 principally due to substantially higher synchronization sales which more
than offset significantly lower analog sales. The higher synchronization
sales were primarily due to sales of new products. The analog product line
is mature and future sales are expected to be minimal. Linfinity
Microelectronics Inc. (Linfinity) net sales were flat during the third quarter
of fiscal 1995 compared to the third quarter of fiscal 1994, and increased by
3% during the first three quarters of fiscal 1995 compared to the
corresponding period of fiscal 1994. The increase was primarily due to higher
unit volume which more than offset a shift in sales to lower priced products.
The gross profit margin, as a percentage of net sales, increased to 47%
and 46% in the third quarter and first three quarters of fiscal 1995,
respectively, compared to 41% and 42% in the corresponding periods of fiscal
1994. The increases resulted primarily from improved manufacturing
efficiencies at both Telecom Solutions and Linfinty, and a shift to higher
margin products at Telecom Solutions. Future gross profit margins will
largely depend on product mix and manufacturing efficiencies.
Research and development expense was $3.3 million (or 13% of sales) and
$9.6 million (or 13% of sales) in the third quarter and first three quarters
of fiscal 1995, respectively, compared to $2.6 million (or 11% of sales) and
$8.6 million (or 12% of sales) in the corresponding periods of fiscal 1994 as
the Company continued its emphasis on new product development at both Telecom
Solutions and Linfinity.
Selling, general and administrative expense increased to $6.2 million
(or 24% of sales) and $17.3 million (or 23% of sales) in the third quarter and
first three quarters of fiscal 1995, respectively, compared to $5.2 million
(or 22% of sales) and $15.6 million (or 21% of sales) in the corresponding
periods of fiscal 1994. The increases were primarily due to higher
compensation levels, and to higher marketing and selling expenses principally
at Telecom Solutions.
Interest income increased to $.4 million and $.9 million in the third
quarter and first three quarters of fiscal 1995, respectively, compared to $.1
million and $.2 million in the corresponding periods of fiscal 1994 primarily
due to an increase in cash available for investment and higher interest rates.
The Company's effective tax rate was 12% in both the third quarter and
first three quarters of fiscal 1995, compared to 28% in both of the
corresponding periods of fiscal 1994 and 19% for all of fiscal 1994. The
effective tax rate for fiscal 1995 is expected to be lower than the combined
federal and state tax rate primarily due to the reduction in the valuation
allowance for deferred tax assets based on the Company's assessment of future
realizability of such assets, and to the benefit of lower income tax rates on
income earned in Puerto Rico. In future years, the Company expects the
effective rate to more closely approximate the combined federal and state tax
rate reduced by any benefit that may be derived from the Company's operation
in Puerto Rico.
As a result of the above factors, net earnings in the third quarter of
fiscal 1995 increased to $2.8 million, or $.18 per share, compared to $1.5
million, or $.10 per share, in the same quarter of fiscal 1994. Net earnings
in the first three quarters of fiscal 1995 increased to $7.2 million, or $.46
per share, from $4.9 million, or $.32 per share, in the same period of fiscal
1994.
Future Company operating results will largely depend upon the Company's
ability to implement new technologies and develop new products, changes in
product mix and manufacturing efficiencies. Future Telecom Solutions
operating results for a fiscal period will probably continue to be, as past
results have been, highly dependent upon the receipt and shipment of customer
orders during that fiscal period. Therefore, any delays in the receipt of
orders, particularly large orders, may result in a significant fluctuation in
operating results from quarter to quarter. Future Linfinity operating results
will also be subject to the cyclical nature of the semiconductor industry.
The Company's stock price has been and may continue to be subject to
significant volatility. Any shortfall in sales or earnings from levels
expected by securities analysts and investors could have an immediate and
significant adverse effect on the trading price of the Company's common stock.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the three months ended
March 31, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SYMMETRICOM, INC.
(Registrant)
DATE: April 21, 1995 By: /s/ J. Scott Kamsler
_____________________________
J. Scott Kamsler
Vice President, Finance
and Chief Financial Officer
(for Registrant and as Principal
Financial and Accounting Officer
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