<PAGE>
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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 SEPTEMBER 30, 1996.
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 0-26944
SILICON STORAGE TECHNOLOGY, INC.
(Exact name of Company as specified in its charter)
CALIFORNIA 77-0225590
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1171 SONORA COURT, SUNNYVALE, CA 94086
(Address of principal executive offices) (Zip code)
Company's telephone number, including area code: (408) 735-9110
__________
Indicate by check mark whether the Company (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 Company was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No _.
Number of shares outstanding of the Company's Common Stock, no par value, as
of the latest practicable date, October 31,1996: 23,292,648. Total number of
pages in document: 13. Index to Exhibits is on page 11.
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1
<PAGE>
SILICON STORAGE TECHNOLOGY, INC.
FORM 10-Q: QUARTER ENDED SEPTEMBER 30, 1996
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements:
Condensed Consolidated Statements of Operations...... 3
Condensed Consolidated Balance Sheets................ 4
Condensed Consolidated Statements of Cash Flows...... 5
Notes to Condensed Consolidated Financial Statements. 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operation........................ 8
PART II - OTHER INFORMATION
Item 1. Legal Proceedings........................................ 11
Item 5. Other Information........................................ 11
Item 6. Exhibits and Reports on Form 8-K......................... 11
2
<PAGE>
PART I
------
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SILICON STORAGE TECHNOLOGY, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------- -------------------------------
1995 1996 1995 1996
---- ---- ---- -----
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Revenues:
Product $12,472 $23,046 $21,721 $67,566
License 436 359 1,157 2,233
------- ------- ------- -------
Net revenues 12,908 23,405 22,878 69,799
Costs and expenses:
Cost of revenues 8,453 14,339 15,942 41,532
Research and development 974 1,713 2,536 4,986
Sales and marketing 751 1,129 1,584 3,584
General and administrative 440 722 887 2,356
------- ------- ------- -------
10,618 17,903 20,949 52,458
------- ------- ------- -------
Income from operations 2,290 5,502 1,929 17,341
Interest income (expense), net 19 306 (52) 1,228
Other income - - - 179
------- ------- ------- -------
Income before provision for income
taxes 2,309 5,808 1,877 18,748
Provision for income taxes - 2,115 1 7,134
------- ------- ------- -------
Net income $2,309 $3,693 $1,876 $11,614
------- ------- ------- -------
------- ------- ------- -------
Net income per share $0.12 $0.15 $0.10 $0.46
------- ------- ------- -------
------- ------- ------- -------
Shares used in per share calculation 19,269 24,999 19,072 25,158
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
3
<PAGE>
SILICON STORAGE TECHNOLOGY, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
(unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $48,405 $18,508
Short-term investments - 13,611
Accounts receivable, net 7,480 12,411
Accounts receivable from related parties - 3,577
Inventories 2,483 18,860
Current deferred tax asset 1,930 3,423
Other current assets 605 906
------------ -------------
Total current assets 60,903 71,296
Long-term investments - 1,504
Furniture, fixtures, and equipment, net 5,178 10,347
Other assets 322 1,415
------------ -------------
Total assets $66,403 $84,562
------------ -------------
------------ -------------
LIABILITIES
Current liabilities:
Trade accounts payable 3,559 6,932
Account payable to related party 4,581 7,921
Accrued expenses and other liabilities 4,754 4,316
Deferred revenue 1,337 1,661
------------ -------------
Total current liabilities 14,231 20,830
------------ -------------
SHAREHOLDERS' EQUITY
Common stock and deferred stock compensation 53,457 53,320
Retained earnings (accumulated deficit) (1,285) 10,412
------------ -------------
Total shareholders' equity 52,172 63,732
------------ -------------
Total liabilities and shareholders' equity $66,403 $84,562
------------ -------------
------------ -------------
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
4
<PAGE>
SILICON STORAGE TECHNOLOGY, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
1995 1996
---- ----
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income $1,876 $11,614
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 1,202 1,832
Provision for doubtful accounts receivable 136 (19)
Provisions for excess and obsolete inventories 125 2,211
Amortization of deferred stock compensation 9 27
Deferred income taxes - (1,943)
Changes in operating assets and liabilities:
Accounts receivable (4,044) (4,912)
Accounts receivable from related parties - (3,577)
Inventories (2,002) (18,359)
Prepaid expenses and other current and noncurrent assets (255) 312
Trade accounts payable and accounts payable to related party 4,392 6,713
Accrued expenses and other liabilities 1,740 (438)
Deferred revenue (93) 324
------ -------
Net cash provided by (used in) operating activities 3,086 (6,215)
------ -------
Cash flows from investing activities:
Acquisition of furniture, fixtures and equipment (2,698) (7,001)
Purchases of available-for-sale investments - (71,261)
Sales and maturities of available-for-sale investments - 56,146
Other (6) (939)
------ -------
Net cash provided by (used in) investing activities (2,704) (23,055)
------ -------
Cash flows from financing activities:
Proceeds from loan from corporate partner 3,776 -
Issuance of shares of common stock and other 139 96
Change in restricted cash balance 800 -
Repayment of notes payable to bank (800) -
Repurchase of stock - (723)
------ -------
Net cash provided by (used in) financing activities 3,915 (627)
------ -------
Net increase (decrease) in cash and cash equivalents 4,297 (29,897)
Cash and cash equivalents at beginning of period 2,751 48,405
------ -------
Cash and cash equivalents at end of period $7,048 $18,508
------ -------
------ -------
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
5
<PAGE>
SILICON STORAGE TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited condensed interim consolidated financial
statements include all adjustments, consisting only of normal recurring
adjustments and accruals, that in the opinion of the management of Silicon
Storage Technology, Inc. (the "Company" or "SST") are necessary for a fair
presentation of the Company's financial position as of September 30, 1996 and
the results of operations and cash flows for the nine months ended September
30, 1995 and 1996. The unaudited interim consolidated financial statements
should be read in conjunction with the audited consolidated financial
statements of the Company and the notes thereto included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1995, filed with
the Securities and Exchange Commission.
The year-end balance sheet at December 31, 1995 was derived from audited
financial statements, but does not include all disclosures required by
generally accepted accounting principles.
2. COMPUTATION OF NET INCOME PER SHARE
Net income per share is computed using the weighted average number of common
and common equivalent shares outstanding during the period. Pursuant to
Securities and Exchange Commission Staff Accounting Bulletin No. 83, all
common and common equivalent shares issued during the twelve months preceding
the filing date of the Company's initial public offering have been included
in the calculation of the number of shares used to determine net income per
share as if the shares had been outstanding for all periods presented using
the treasury stock method.
3. INVENTORIES (IN THOUSANDS):
DECEMBER 31, SEPTEMBER 30,
------------ -------------
1995 1996
------------ -------------
(unaudited)
Raw materials $133 $3,221
Work in process 1,831 13,340
Finished goods 519 2,299
------------ -------------
$2,483 $18,860
------------ -------------
------------ -------------
4. LEGAL PROCEEDINGS
On January 3, 1996, Atmel Corporation ("Atmel") sued the Company in the U.S.
District Court for the Northern District of California. Atmel's complaint
alleges that the Company, by making, using and selling devices, is willfully
infringing five U.S. patents owned by, or exclusively licensed to, Atmel.
Regarding each of these five patents, Atmel seeks a judgment that the Company
has infringed the patent, an injunction prohibiting further infringement,
treble the amount of damages caused by the alleged infringement and
attorney's fees, costs and expenses. On February 13, 1996 the Company filed
an answer denying Atmel's allegations and asserting affirmative defenses and
counterclaims. There can be no assurance that the Atmel complaint or other
third party assertions will be resolved without costly litigation or in a
manner that is not adverse to the Company. Accordingly, while the Company
has accrued certain amounts for costs associated with this matter, it is
reasonably possible that the ultimate resolution could result in payments in
excess of the amounts accrued in the accompanying financial statements and/or
require royalty payments in the future which could adversely impact gross
margins. No estimate of these possible payments can be made.
6
<PAGE>
5. STOCK REPURCHASE PROGRAM
In July, 1996 the Board of Directors authorized the purchase of up to 500,000
shares of the Company's stock in the open market. Approximately 100,000
shares were repurchased under this authorization during August and September
1996 for an aggregate purchase price of $722,500.
6. STOCK OPTION REPRICING PROGRAM
On September 11, 1996 the Board of Directors authorized employees the right
to convert certain outstanding stock options into option grants with an
exercise price of $7.125 per share (the fair market value as of the date of
the Board's authorization). The converted option grants vest on a date that
is six months after the date such installment would have vested had the
option not been amended by the employee exercising this conversion right.
Approximately 276,500 stock options were repriced pursuant to this program.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION.
The following discussion may be understood more fully by reference to the
condensed consolidated financial statements, notes to the condensed
consolidated financial statements, and management's discussion and analysis
contained in the Company's Annual Report on Form 10-K for the year ended
December 31, 1995, as filed with the Securities and Exchange Commission.
Except for the historical information contained herein, the following
discussion may contain forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from
those discussed here. Factors that could cause or contribute to the Company's
actual results to differ materially from expected results include: the
availability, deliverability and cost of wafers from the Company's suppliers,
competitive pricing pressures, fluctuations in manufacturing yields, new
product announcements and introductions by the Company or its competitors,
changes in demand for, or in the mix of, the Company's products, changes in
average selling prices, the gain or loss of significant customers, market
acceptance of products utilizing the Company's SuperFlash technology, changes
in the channels through which the Company's products are distributed, foreign
currency fluctuations, unanticipated research and development expenses
associated with new product introductions and the timing of significant
orders. Operating results could also be adversely affected by general
economic conditions and a downturn in the market for consumer products which
incorporate the Company's products, such as personal computers and cellular
telephones. All of these factors, and other factors, are difficult to
forecast and can materially affect the Company's quarterly or annual
operating results. Fluctuations in revenues and operating results may cause
volatility in the Company's stock price. Please also refer to the Company's
Form 10-K for the year ended December 31, 1995 in the Risk Factors section
for a discussion of such risk factors.
GENERAL
SST ("Silicon Storage Technology, Inc." or the "Company") was incorporated in
California in 1989. The Company is a supplier of flash memory devices,
addressing the requirements of high volume applications. Currently, the Company
offers medium density flash memory devices ranging from 512Kbit to 4Mbit that
target a broad range of existing and emerging applications in the personal
computer, PC peripheral, communications, multimedia, set-top box, and video
game markets. End products currently sold with the Company's products include,
but are not necessarily limited to, personal computers, CD-ROMs and hard disk
drives, electronic organizers/personal digital assistants, cellular telephones,
and pagers. For fiscal year 1996 to date, a majority of the Company's product
revenues have been derived from the sale of 1Mbit flash memory devices, with
the balance of the Company's product revenues have been derived from the sales
of 512Kbit, 2Mbit, and 4Mbit flash memory devices. The Company is developing
higher density flash memory products to address emerging markets such as
digital cameras, voice recorders, video telephones, memory cards, network
adaptor cards, digital cellular phones and printer font storage.
During the third quarter of 1996, the Company derived approximately 35% of
its product revenues from sales to Taiwan-based PC manufacturers. The
Company intends to diversify its customer base by increasing sales in other
geographic areas and to continue targeting additional high volume
applications such as the cellular telephone, CD-ROM drive, hard disk drive,
video game, electronic organizer and set-top box markets. The Company is
increasing the scope of its international sales efforts and expects that
international sales will continue to account for a significant portion of its
product revenues although the percentage may fluctuate from period to period.
Although the Company's international sales are primarily denominated in U.S.
dollars, these sales are subject to a number of risks associated generally
with international sales, including the effect of geo-political
uncertainties, currency fluctuations, state-imposed restrictions on the
repatriation of funds, import and export duties and restrictions.
RESULTS OF OPERATION: QUARTER ENDED SEPTEMBER 30, 1996
The following discussion relates to the financial statements of the Company
for the three months ended September 30, 1996 (current quarter) of the fiscal
year ending December 31, 1996, in comparison to the three months ended
September 30, 1995 (comparable quarter of the prior year) and for the nine
months ended September 30, 1996 as compared to the nine months ended
September 30, 1995. Operating results for the nine months ended September 30,
1996 are not necessarily indicative of the results to be achieved for the
full fiscal year ending December 31, 1996.
8
<PAGE>
NET REVENUES. Net revenues increased from $23.4 million in the current
quarter as compared to $12.9 million for the comparable quarter of the prior
year due to increased shipment volumes. Net revenues were $69.8 million for
the nine months ended September 30, 1996 as compared to $22.9 million for the
nine months ended September 30, 1995. Net revenues increased year-to-year
due primarily to increased unit shipments across all product lines.
Product revenues were $23.0 million in the current quarter as compared to
$12.5 million for the comparable quarter of the prior year, again due the
increased shipments of 1Mbit and 512Kbit products. Product revenues were
$67.6 million for the first nine months ended September 30, 1996 as compared
to $21.7 million for the same period ended 1995, due to increased shipment
volumes for all product lines. License, royalty and development revenues
were $0.4 million for the current quarter as compared to $0.4 million in the
comparable quarter for the prior year, and $2.2 million for the nine months
ended September 30, 1996 as compared to $1.2 million for the same period in
the prior year. License revenues increased during these comparable nine
months periods due to the receipt of royalty payments from a related party.
Current quarter license revenues consist primarily of one nonrefundable
upfront license and development fee from a third party and a royalty payment
from a related party. Such upfront license fees and royalty payments may or
may not recur in future quarters.
During the third quarter of 1996, the Company derived approximately 35% of
product revenues from sales to Taiwan-based PC manufacturers, as compared to
68% for the comparable quarter of the prior year. While the Company intends
to diversify both the market application of its products and its customer
base, there can be no assurance that such diversification will occur.
International sales accounted for approximately 85% of product revenues
during the current quarter, as compared to 87% for the comparable quarter of
the prior year. For the nine months ended September 30, 1996, 42% of product
revenues were from Taiwan and, over the same period, 88% of product revenues
were from international sales. International sales are anticipated to
account for a substantial majority of all product revenues for the
foreseeable future.
COST OF REVENUES. Gross margin was $9.1 million or 39% of net revenues in the
third quarter of 1996 as compared to $4.5 million or 35% of net revenues for
the comparable quarter in 1995 and increased due to increased shipment
volumes. Gross margin was $28.3 million for the nine months ended September
30, 1996 as compared to $6.9 million for the nine months ended September 30,
1995, also increasing due to higher shipment volumes. Future fluctuations in
gross margins may occur as a result of changes in the mix between license
revenues and product revenues or the impact of changes in the product mix.
The Company's agreement with Sanyo provides for wafer price adjustments based
on dollar/yen exchange rate fluctuations. As a result, a strengthening yen
could result in higher cost of revenues.
Average selling prices of Flash memory product are subject to significant
fluctuation due to periodic changes in supply and demand. Declining average
selling prices will adversely affect gross margins unless the Company is able
to offset such declines with reductions in per unit costs or changes in
product mix.
RESEARCH AND DEVELOPMENT. Research and development expenses were $1.7 million
or 7% of net revenues during the third quarter of 1996 as compared to $1.0
million or 8% of net revenues during the comparable quarter of 1995. The
increase in research and development expenses since last year is primarily a
result of hiring additional personnel, depreciation related to purchases of
additional engineering test equipment, and increased prototyping and product
qualification costs associated with the Company's process and development
efforts. Research and development expenses were $5.0 million for the nine
months ended September 30, 1996 as compared to $2.5 million for the nine
months ended September 30, 1995. Research and development expenses increased
year-to-year for this period due to increases in personnel, depreciation, and
project related expenses.
SALES AND MARKETING. Sales and marketing expenses were $1.1 million or 5% of
net revenues during the third quarter of 1996, as compared to $0.8 million or
6% of net revenues for the comparable quarter in 1995. Sales and marketing
expenses consist primarily of sales commissions to manufacturer's
representatives, salaries of the Company's sales and marketing personnel and
product literature expenses. The increase in expense from the third quarter
of 1996 as compared to the third quarter of 1995 corresponds primarily to
increased commissions resulting from higher product revenue levels. Sales
and marketing expenses were $3.6 million for the nine months ended September
30, 1996 as compared to $1.6 million for the nine months ended September 30,
1995. Sales and marketing expenses increased year-to-year for this period
due to increases in personnel and increased commissions related to higher
revenue levels.
9
<PAGE>
GENERAL AND ADMINISTRATIVE. General and administrative expenses were $0.7
million or 3% of net revenues during the quarter ended September 30, 1996,
and $0.4 million or 3% of net revenues during the comparable quarter ended
September 30, 1995. The increase is primarily due to the higher headcount,
higher facilities-related expenses and costs necessary to meet public company
reporting requirements. General and administrative expenses were $2.5
million for the nine months ended September 30, 1996 as compared to $0.9
million for the nine months ended September 30, 1995. General and
administrative expenses increased year-to-year for this period due to
increases in personnel, facility-related expenses and public company expenses.
INTEREST INCOME (EXPENSE). Interest income was $0.3 million or 1% of net
revenues during the third quarter of 1996 compared to $19 thousand during the
comparable quarter of 1995. Net interest income was $1.2 million for the nine
months ended September 30, 1996 as compared to $52 thousand of interest
expense for the nine months ended September 30, 1995. Interest income
increased over both comparable periods due to higher interest earned on
increased cash proceeds from the Company's initial public offering in
November, 1995.
PROVISION FOR INCOME TAXES. The provision for income taxes was $2.0 million
during the third quarter of 1996 as compared to $2.4 million for the previous
quarter of 1996. The Company's effective income tax rate was 36% in the
current quarter and 38% for the first nine months of 1996, which resulted in
a $7.1 million provision for income taxes as of September 30, 1996, as
compared to a provision of $1 thousand for the first nine months of 1995. The
decrease in the effective tax rate in the third quarter of 1996 was primarily
due to the impact of the reinstatement of the Research and Experimentation
Tax Credit effective July 1, 1996, on the Company's anticipated income taxes
payable. During the first nine months of 1995, the Company utilized federal
and state net operating losses incurred in previous years, and therefore no
provision for income was made.
NET INCOME PER SHARE. The Company's net income per share for the current
quarter was $0.15, compared to a net income per share of $0.12 in the
comparable quarter of the prior year. Net income per share increased from
the comparable quarter of the prior year due to higher sales volumes,
improved gross margins, lower operating expenses as a percentage of revenues,
and higher interest income offset by higher provision for taxes. The
Company's net income per share for the nine months ended September 30, 1996
was $0.46, as compared to net income per share of $0.10 for the same period
in the prior year. The Company's increase in net income per share was
primarily due to higher shipment volumes, improved gross margins, lower
operating expenses as a percentage of revenues, and higher interest income
offset by a higher provision for income taxes. This increase in net income
per share occurred despite addition of over 6 million shares to the
calculation of net income per share related to the Company's initial public
offering and related activities since September 30, 1995.
LIQUIDITY AND CAPITAL RESOURCES
Principal sources of liquidity at September 30, 1996 consisted of $32.1
million of cash, cash equivalents, and short-term investments and $1.5
million of long-term investments. As of September 30, 1996, the Company had
no open lines of credit or non-trade debt. However, the Company may endeavor
to open a line of credit in the future to secure additional working capital
to finance operational growth. The Company believes that the cash balances,
together with funds expected to be generated from operations will be
sufficient to meet its projected working capital and other cash requirements
through at least the next twelve months. However, there can be no assurance
that events in the future will not require the Company to seek additional
capital sooner or, if so required, that it will be available on terms
acceptable to the Company.
Year-to-date, the Company's operating activities used cash of $6.2 million,
which consisted primarily of net increases in net income $11.6 million and
accounts payable of $6.7 million offset by increases to inventory and
accounts receivable of $18.4 million and $8.5 million, respectively.
Increases in inventory in general and, more specifically, work in process,
were primarily the result of responding to shorter customer order cycles.
Accounts receivable increases were primarily due to higher monthly sales
volumes.
10
<PAGE>
The Company made capital expenditures of approximately $2.9 million during
the current quarter as compared to $0.6 million during the comparable quarter
of the prior year and $3.4 in the previous quarter. Capital expenditures were
$7.0 million for the first nine months of 1996 as compared to expenditures of
$2.7 million for the first nine months of 1995. These expenditures were
primarily for the purchase of manufacturing test equipment, design and
engineering tools, and computer equipment. Similar levels of capital
spending are expected to continue, and may even increase, during the rest of
1996. In addition, the Company may use its working capital to secure
additional foundry capacity. These expenditures may be in the form of
deposits, equipment purchases, loans or equity investments or joint ventures
in or with wafer fabrication or other companies.
Year-to-date, the Company's financing activities used cash of approximately
$0.7 million, primarily for the repurchase of stock on the open market. In
comparison, financing activities during the same period of the prior year
provided $3.9 million and consisted primarily from proceeds from a loan from
a corporate partner.
PART II
ITEM 1. LEGAL PROCEEDINGS
Except for the historical information contained herein, the following
discussion contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from
those discussed herein. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed in this section.
On January 3, 1996, Atmel sued the Company in the U.S. District Court for the
Northern District of California. Atmel's complaint alleges that the Company,
by making, using and selling devices, is willfully infringing five U.S.
patents owned by or exclusively licensed to Atmel. Regarding each of these
five patents, Atmel seeks a judgment that the Company has infringed the
patent, an injunction prohibiting further infringement, treble the amount of
damages caused by the alleged infringement and attorney's fees, costs and
expenses. On February 13, 1996 the Company filed an answer denying Atmel's
allegations and asserting affirmative defenses and counterclaims.
At the present time, there is no other pending litigation or proceeding
involving a director, officer, employee or other agent of the Company in
which indemnification would be required or permitted. The Company is not
aware of any threatened litigation or proceeding which may result in a claim
for such indemnification.
ITEM 5. OTHER INFORMATION.
On October 23, 1996, Mr. Michael Hsu resigned from the Board of Directors for
personal reasons.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS. The Company hereby incorporates by reference all exhibits
filed in connection with Form 10-K for the year ended December 31, 1995 and
Form 10-Q filed for the quarters ended March 31, 1996 and June 30, 1996.
EXHIBIT NUMBER DESCRIPTION
11.1 Statement Regarding Computation of Net Income Per Share
(b) Reports on Form 8-K filed during the quarter ended September 30, 1996:
None.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the Company
has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Sunnyvale, County of Santa Clara,
State of California, on the 13th day of November, 1996.
SILICON STORAGE TECHNOLOGY, INC.
By: /S/ BING YEH
---------------------------------------
Bing Yeh
President, Chief Executive Officer
and Director (Principal Executive
Officer)
/S/ MICHAEL J. PRAISNER
---------------------------------------
Michael J. Praisner
Vice President Finance & Administration,
Chief Financial Officer and Secretary
(Principal Financial and Accounting
Officer)
12
<PAGE>
EXHIBIT 11.1
SILICON STORAGE TECHNOLOGY, INC.
STATEMENT REGARDING COMPUTATION OF NET INCOME PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
PRIMARY AND FULLY DILUTED BASIS:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
--------------------------------
1995 1996
---- ----
<S> <C> <C>
Weighted average shares of common stock 6,475 23,098
Weighted average shares of common stock obtainable
on exercise of options and warrants and upon
conversion of convertible preferred stock 8,113 1,901
SAB 83 3,596 -
------- ------
Shares used in per share calculation 19,269 24,999
------- ------
Net income $2,309 $3,693
------- ------
Net income per share $0.12 $0.15
------- ------
------- ------
</TABLE>
PRIMARY AND FULLY DILUTED BASIS:
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
1995 1996
---- ----
<S> <C> <C>
Weighted average shares of common stock 6,740 22,934
Weighted average shares of common stock obtainable
on exercise of options and warrants and upon
conversion of convertible preferred stock 8,774 2,224
SAB 83 3,558 -
------- ------
Shares used in per share calculation 19,072 25,158
------- ------
Net income $1,876 $11,614
------- ------
Net income per share $0.10 $0.46
------- ------
------- ------
</TABLE>
Net income per share is presented under the primary basis as the effect of
dilution under the fully diluted basis is not material.
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED BALANCE SHEETS AND THE CONSOLIDATED CONDENSED STATEMENTS
OF OPERATIONS FOUND IN THE COMPANY'S FORM 10-Q FOR THE YEAR TO DATE AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 18,508
<SECURITIES> 15,115
<RECEIVABLES> 15,988
<ALLOWANCES> 0
<INVENTORY> 18,860
<CURRENT-ASSETS> 71,296
<PP&E> 10,347
<DEPRECIATION> 0
<TOTAL-ASSETS> 84,562
<CURRENT-LIABILITIES> 20,830
<BONDS> 0
0
0
<COMMON> 53,320
<OTHER-SE> 10,412
<TOTAL-LIABILITY-AND-EQUITY> 84,562
<SALES> 67,566
<TOTAL-REVENUES> 69,799
<CGS> 41,532
<TOTAL-COSTS> 52,458
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 18,748
<INCOME-TAX> 7,134
<INCOME-CONTINUING> 11,614
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,614
<EPS-PRIMARY> $0.46
<EPS-DILUTED> $0.46
</TABLE>
