UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 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 SEPTEMBER 30, 1995
Common Stock 15,403,269
SYMMETRICOM, INC.
FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Page
Consolidated Balance Sheets
September 30, 1995 and June 30, 1995 3
Consolidated Statements of Operations
Three months ended September 30, 1995 and 1994 4
Consolidated Statements of Cash Flows
Three months ended September 30, 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 8
SIGNATURES 9
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
SYMMETRICOM, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30, 1995 June 30, 1995
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 19,112 $ 19,354
Short-term investments 14,814 13,851
Accounts receivable 13,903 11,845
Inventories 17,758 17,855
Other current assets 4,085 3,715
________ ________
Total current assets 69,672 66,620
Property, plant and equipment, net 17,596 16,978
Other assets, net 1,527 1,728
________ ________
$ 88,795 $ 85,326
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,885 $ 4,308
Accrued liabilities 10,536 11,521
Current maturities of
long-term debt 53 52
________ ________
Total current liabilities 15,474 15,881
Long-term debt, less current
maturities 5,752 5,766
Deferred rent 177 231
Deferred income taxes 3,452 3,323
Shareholders' equity:
Preferred stock, no par value:
Authorized - 500 shares
Issued - none
Common stock, no par value:
Authorized - 32,000 shares
Issued and outstanding - 15,403
and 15,097 shares 20,106 19,062
Retained earnings 43,834 41,063
________ ________
Total shareholders' equity 63,940 60,125
________ ________
$ 88,795 $ 85,326
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
SYMMETRICOM, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Three months ended
September 30,
1995 1994
(Unaudited)
Net sales $ 27,678 $ 24,181
Cost of sales 14,612 13,360
________ ________
Gross profit 13,066 10,821
Operating expenses:
Research and development 3,626 3,037
Selling, general and administrative 5,940 5,413
________ ________
Operating income 3,500 2,371
Interest income 466 223
Interest expense (149) (150)
________ ________
Earnings before income taxes 3,817 2,444
Income taxes 1,046 445
________ ________
Net earnings $ 2,771 $ 1,999
======== ========
Net earnings per common and common
equivalent share $ .17 $ .13
======== ========
Weighted average common and common
equivalent shares outstanding 16,203 15,413
======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
SYMMETRICOM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three months ended
September 30,
1995 1994
(Unaudited)
Cash flows from operating activities:
Cash received from customers $ 25,440 $ 24,361
Cash paid to suppliers and employees (24,247) (22,228)
Interest received 441 223
Interest paid (149) (150)
Income taxes paid (98) (327)
________ ________
Net cash provided by operating activities 1,387 1,879
________ ________
Cash flows from investing activities:
Purchases of short-term investments (12,266)
Maturities of short-term investments 11,303
Capital expenditures, net (1,747) (1,181)
Other assets 50 74
________ ________
Net cash used for investing activities (2,660) (1,107)
Cash flows from financing activities:
Repayment of long-term debt (13) (11)
Proceeds from issuance of common stock 1,044 326
_________ ________
Net cash provided by financing activities 1,031 315
_________ ________
Net increase (decrease) in cash and cash
equivalents (242) 1,087
Cash and cash equivalents at beginning of period 19,354 21,250
_________ ________
Cash and cash equivalents at end of period $ 19,112 $ 22,337
========= ========
Reconciliation of net earnings to net cash
provided by operating activities:
Net earnings $ 2,771 $ 1,999
Adjustments
Depreciation and amortization 1,280 1,276
Net deferred income taxes 421 (80)
(Increase) decrease in accounts receivable (2,058) 185
(Increase) decrease in inventories 97 (595)
(Increase) in other current assets (662) (473)
Increase (decrease) in accounts payable 577 (415)
Increase (decrease) in accrued liabilities (985) 25
(Decrease) in deferred rent (54) (43)
________ ________
Net cash provided by operating activities $ 1,387 $ 1,879
======== ========
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 consolidated financial statements and the notes thereto
included in the Company's Annual Report on Form 10-K for the year ended
June 30, 1995.
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 September 30, 1995,
and its results of operations and its cash flows for the three month period
then ended. The results of operations for the period presented are not
necessarily indicative of those that may be expected for the full year.
2. Inventories Inventories are stated at the lower of cost (first-in,
first-out) or market. Inventories consist of:
September 30, June 30,
1995 1995
(In thousands)
Raw materials $ 4,805 $ 5,433
Work-in-process 7,893 6,910
Finished goods 5,060 5,512
________ ________
$ 17,758 $ 17,855
======== ========
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
Working capital increased by $3.5 million to $54.2 million at September 30,
1995, from $50.7 million at June 30, 1995, while the current ratio increased
to 4.5 to 1.0 from 4.2 to 1.0. During the same period, cash and cash
equivalents, and short-term investments increased to $33.9 million from $33.2
million primarily due to $1.4 million in cash provided by operating
activities and $1.0 million in proceeds from the issuance of common stock,
offset by $1.7 million used for capital expenditures.
At September 30, 1995, the Company had $7.0 million of unused credit available
under its bank line of credit.
The Company believes that cash and 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 September 30, 1995,
the Company had no material outstanding commitments to purchase capital
equipment.
Results of Operations
Net sales increased by $3.5 million (14%) to $27.7 million in the first
quarter of fiscal 1996 from $24.2 million in the first quarter of fiscal
1995. Telecom Solutions net sales increased by $2.8 million (19%) to
$17.2 million in the first quarter of fiscal 1996 from $14.4 million in the
corresponding period of fiscal 1995. The increase in
Telecom Solutions sales resulted from sales of new Synchronization
products which more than offset declines in sales of mature Synchronization
products and Analog products. Linfinity Microelectronics Inc. (Linfinity)
net sales increased by $.7 million (7%) to $10.5 million in the first quarter
of fiscal 1996 from $9.8 million in the first quarter of fiscal 1995 . 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% in
the first quarter of fiscal 1996 compared to 45% in the first quarter of
fiscal 1995. The higher gross profit margin percentage resulted primarily
from increased manufacturing efficiencies at both operations. Future gross
profit margins will largely depend on product mix and manufacturing
efficiencies.
Research and development expense increased by 19% to $3.6 million (or 13%
of sales) in the first quarter of fiscal 1996 from $3.0 million (or 13% of
sales) in the first quarter of fiscal 1995 primarily due to the Company's
commitment to both the development of new products and the enhancement of
existing products, with a proportionately higher increase at Linfinity.
Selling, general and administrative expense increased by 10% to $5.9
million (or 21% of net sales) in the first quarter of fiscal 1996 from $5.4
million (or 22% of net sales) in the first quarter of fiscal 1995. The
increase was essentially due to higher selling expenses principally at
Telecom Solutions and increased general and administrative costs.
Interest income increased to $.5 million in the first quarter of fiscal
1996 compared to $.2 million in the corresponding period of fiscal 1995
primarily due to an increase in cash available for investment.
The Company's effective tax rate was 27% in the first quarter of fiscal 1996
compared to 18% in the first quarter of fiscal 1995 and 11% for all of fiscal
1995. The effective tax rate for fiscal 1996 is expected to be lower than
the combined federal and state tax rate essentially due to the benefit of
lower income tax rates on income earned in Puerto Rico and to state tax
credits. In future years, certain provisions of the Omnibus Budget
Reconciliation Act of 1993 may result in less favorable tax
treatment for income earned in Puerto Rico.
As a result of the above factors, net earnings in the first quarter of
fiscal 1996 increased to $2.8 million, or $.17 per share, compared to $2.0
million, or $.13 per share, in the first quarter of fiscal 1995.
Future Company operating results will largely depend upon (i) the
Company's ability to implement new technologies and develop new products,
(ii) the Company's response to increased competition, (iii) changes in
product mix and (iv) manufacturing efficiencies. Future Telecom Solutions
operating results for a fiscal period will 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. Many factors, including 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
September 30, 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: October 20, 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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