UNITED STATES
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
Date of Report October 22, 1997
QUALITY SEMICONDUCTOR, INC.
(Exact name of registrant as specified in its charter)
California 2-23128 77-0199189
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
851 Martin Avenue
Santa Clara, CA 95050
(Address of principal executive offices) (including Zip code)
(408) 450-8000
(Registrant's telephone number, including area code)
Exhibit Index on page 4
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Item 5. Other Events
On October 22, 1997, Quality Semiconductor, Inc., a California
corporation (the "Company") announced its financial results for the fiscal year
ended September 30, 1997. Further details of this announcement are contained in
the Company's press release dated October 22, 199 attached as an exhibit hereto
and incorporated by reference herein.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
Exhibit 99 Quality Semiconductor, Inc. Press Release dated October 22, 1997.
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SIGNATURES
Pursuant the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
QUALITY SEMICONDUCTOR, INC.
Date:October 22, 1997 By: /s/ John P. Goldsberry
-------------------------
John P. Goldsberry
Vice President of Finance and
Chief Financial Officer
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QUALITY SEMICONDUCTOR, INC.
CURRENT REPORT ON FORM 8-K
EXHIBIT INDEX
Exhibit No. Exhibit
99 Quality Semiconductor, Inc. Press Release dated October 22, 1997
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For more information contact:
John P. Goldsberry
Chief Financial Officer
Quality Semiconductor, Inc.
(408) 450-8000
FOR IMMEDIATE RELEASE
QUALITY SEMICONDUCTOR REPORTS FISCAL FOURTH QUARTER
AND YEAR-END RESULTS
SANTA CLARA, CA - (October 22, 1997) - Quality Semiconductor, Inc.
(Nasdaq:QUAL) today reported results for the fiscal fourth quarter and year
ended September 30, 1997. Revenue for the quarter was a record $20,502,000
versus $11,216,000 for the fourth quarter a year ago, and $16,542,000 for the
prior quarter. This represents an increase of 83 percent over the year ago
quarter and a sequential increase of 24 percent over last quarter. Net loss for
the fourth quarter was $1,180,000, or a $0.16 loss per share, compared to a net
loss of $851,000, or a $0.15 loss per share in the fourth quarter of fiscal
1996, and net income of $887,000, or $0.13 per share for the prior quarter. The
net loss for the quarter reflects a $2,500,000 inventory adjustment, due
primarily to a decision by the Company to exit the FIFO product line. Prior to
the inventory writedown, net income for the fourth quarter would have been
$445,000, or $0.06 per share. Average weighted common shares for the fourth
quarter ended September 30, 1997 were 7,322,000 versus 5,540,000 for the fourth
quarter of the previous fiscal year.
Revenue for the year ended September 30, 1997 was $62,691,000
compared to $44,688,000 for the prior fiscal year. This represents an increase
of 40 percent over fiscal 1996. Net income for fiscal 1997 was $210,000, or
$0.03 per share versus a net loss of $1,310,000 or $0.24 loss per share in
fiscal 1996. Prior to the previously mentioned inventory writedown, net income
for fiscal 1997 would have been $1,835,000, or $0.26 per share. Average weighted
common shares for the twelve months ending September 30, 1997 were 6,989,000
versus 5,524,000 for the previous fiscal year.
Paul Gupta, President and Chief Executive Officer, commented, "We
believe our networking, communications, and clock management products represent
the strongest growth opportunities for the Company. In particular, our
networking product sales reached $16.1 million in fiscal 1997. In line with our
desire to sharpen our focus on these strong growth opportunities, we have
decided to exit the commodity FIFO market.
"While we experienced exceptional revenue growth this quarter, our
gross margin was impacted by pricing pressure in networking and other product
areas, combined with greater than expected sales of other lower margin products.
As we look ahead, we intend to build on the market interest in our networking,
communications and clock management products, and will target new product
development towards these fast-growing markets," concluded Mr. Gupta.
Except for historical information contained herein, the matters
discussed in this press release are forward-looking statements that are subject
to certain risks and uncertainties that could cause the actual results to differ
materially from those projected, including, among others, litigation, the impact
of competitive products and pricing, general economic conditions and conditions
specific to the semiconductor industry, fluctuations in customer demand, the
timing and market acceptance of new product introductions, the timely
development and qualification of new products and other risk factors listed in
the Company's SEC reports including the Company's periodic reports filed
pursuant to the Security Exchange Act of 1934 and the Registration Statement on
Form S-1 filed by the Company in connection with its initial public offering.
Quality Semiconductor assumes no obligation to update the information included
in this press release.
Quality Semiconductor, Inc. designs, develops and markets
high-performance logic as well as networking and logic-intensive specialty
memory semiconductor products. The Company targets systems manufacturers
principally in the networking, computer and communications markets. The
company's products include the 3.3-volt and 5-volt FCT and LCX families of
high-speed, low noise interface logic devices, the QuickSwitch family of high
speed, low resistance bus switches, a family of low-skew clock management
products, a family of analog switch devices and new JTAG products designed to
allow board-level testing of complex products. Quality Semiconductors networking
products include two Fast Ethernet CMOS transceivers that provide high
integration solutions for the adapter, repeater, switch and card bus markets.
-tables to follow-
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Quality Semiconductor Inc.
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Year Ended
-----------------------------------------------------------------------------
September 30, September 30,
-------------------------------- ---------------------------------
1997 1996 1997 1996
------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
Net revenues $ 20,502 $ 11,216 $ 62,691 $ 44,688
Product cost of sales 13,159 7,731 37,573 30,226
Inventory writedown 2,500 2,500
- -
------------ ------------ ------------- -------------
Total cost of sales 15,659 7,731 40,073 30,226
Gross Margin 4,843 3,485 22,618 14,462
Operating expenses:
Research and development 2,742 2,057 9,281 6,982
Sales and marketing 2,520 1,678 8,323 6,986
General and administrative 1,267 4,294 4,024
963
------------ ------------ ------------- -------------
Total operating expenses 6,529 4,698 21,898 17,992
Operating income (loss) (1,686) (1,213) 720 (3,530)
Other income 1,438
- - -
Interest, net (398)
(130) (88) 77
------------ ------------ ------------- -------------
Income (loss) before taxes (1,816) (1,301) 322 (2,015)
Provision (benefit) for taxes 112 (705)
(636) (450)
------------ ------------ ------------- -------------
Net income (loss) $ (1,180) $ (851) $ 210 $ (1,310)
------------ ------------ ------------- -------------
------------ ------------ ------------- -------------
Net income (loss) per share $ (0.16) $ (0.15) $ 0.03 $ (0.24)
------------ ------------ ------------- -------------
------------ ------------ ------------- -------------
Weighted shares outstanding 7,322 5,540 6,989 5,524
------------ ------------ ------------- -------------
</TABLE>
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Quality Semiconductor Inc.
Consolidated Balance Sheets
(unaudited, in thousands)
Sept 30, Sept. 30,
------------ ------------
1997 1996
------------ ------------
Assets
Current assets:
Cash, cash equivalen $ 14,168 $ 7,333
and short-term investments
Accounts receivable, net 8,748 7,348
Inventories 17,689 13,984
Other current assets 5,327 2,771
------------ -------------
Total current assets 45,932 31,436
Property and equipment, net 22,859 18,079
Other assets 2,150 3,006
------------ -------------
Total assets $ 70,941 $ 52,521
------------ -------------
------------ -------------
Liabilities and Shareholders Equity
Current liabilities:
Accounts payable, accrued liabilities, $ 12,491 $ 9,673
and deferred income
Current portion of long-term obligations 5,666 7,660
--------- -------------
Total current liabilities 18,157 17,333
Long-term liabilities 7,202 2,840
Deferred tax liabilities 1,945 2,003
Shareholders equity 43,637 30,345
----------- -------------
Total liabilities and shareholders equity $ 70,941 $ 52,521
----------- -------------
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