================================================================================
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, 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 0-24758
MICRO LINEAR CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 94-2910085
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2092 Concourse Drive 95131
San Jose, California (Zip Code)
(Address of principal executive
offices)
Registrant's telephone number, including area code: (408) 433-5200
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 Par Value
Indicate by check mark whether the Registrant (1) has filed all reports 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 [ ]
The number of shares of the Registrant's Common Stock outstanding as of
March 31, 1996 was 12,337,221.
<PAGE>
TABLE OF CONTENTS
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Statements of Income for the three months ended
March 31, 1996 and 1995................................... 3
Balance Sheets at March 31, 1996, and at
December 31, 1995......................................... 4
Condensed Statements of Cash Flows for the three months
ended March 31, 1996 and 1995,............................ 5
Notes to 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.......................... 12
SIGNATURES............................................................ 14
See accompanying notes.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
MICRO LINEAR CORPORATION
STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended
-----------------------------------
March 31, March 31,
1996 1995
-------------- ----------------
<S> <C> <C>
Net revenues........................................................... $15,327 $12,867
Cost of revenues....................................................... 5,097 6,081
-------------- ----------------
Gross profit........................................................ 10,230 6,786
Operating expenses:
Research and development............................................ 2,657 2,543
Selling, general and administrative................................. 2,881 2,348
-------------- ----------------
5,538 4,891
-------------- ----------------
Income from operations.............................................. 4,692 1,895
Interest and other income.............................................. 359 324
Interest expense....................................................... (80) (124)
-------------- ----------------
Income before provision for taxes on income......................... 4,971 2,095
Provision for taxes on income.......................................... 1,988 377
-------------- ----------------
Net income.......................................................... $ 2,983 $ 1,718
============== ================
Net income per share................................................... $ 0.22 $ 0.13
============== ================
Shares used in computing net income per share amounts.................. 13,532 13,530
============== ================
<FN>
See accompanying notes.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MICRO LINEAR CORPORATION
BALANCE SHEETS
(In thousands, except per share amounts)
March 31, December 31,
1996 1995
(Unaudited) (See note below)
--------------------- ---------------------
Assets
Current assets:
<S> <C> <C>
Cash and cash equivalents........................................................... $1,953 $4,175
Short-term investments.............................................................. 26,420 26,299
Accounts receivable, net of allowance for doubtful accounts of $255 and $240 at
March 31, 1996 and December 31, 1995, respectively................................ 7,024 6,571
Inventories......................................................................... 11,155 8,986
Deferred tax assets................................................................. 3,702 3,452
Other current assets................................................................ 1,007 781
--------------------- ---------------------
Total current assets.............................................................. 51,261 50,264
Property, plant and equipment.......................................................... 38,400 36,276
Less accumulated depreciation and amortization......................................... 20,090 19,470
--------------------- ---------------------
18,310 16,806
Other assets........................................................................... 877 901
--------------------- ---------------------
Total assets.................................................................... $70,448 $67,971
===================== =====================
Liabilities and Stockholders' Equity Current liabilities:
Accounts payable.................................................................... $ 3,044 $ 3,576
Accrued compensation and benefits................................................... 1,681 1,382
Deferred income on shipments to distributors........................................ 1,533 1,517
Income tax payable.................................................................. 2,306 507
Other accrued liabilities........................................................... 1,626 1,494
Current portion of long-term debt................................................... 459 467
--------------------- ---------------------
Total current liabilities......................................................... 10,649 8,943
Long-term debt......................................................................... 3,076 3,181
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.001 par value
Authorized shares 5,000,000
None issued and outstanding....................................................... - -
Common stock, $.001 par value
Authorized shares 30,000,000
Issued and outstanding shares 12,337,221 and 12,455,519 at March 31, 1996 and
December 31, 1995, respectively................................................. 13 12
Additional paid-in capital.......................................................... 49,322 49,103
Retained earnings................................................................... 9,715 6,732
Treasury stock, 267,500 shares at cost (2,327 ) -
--------------------- ---------------------
--------------------- ---------------------
Total stockholders' equity........................................................ 56,723 55,847
-------------------- ---------------------
Total liabilities and stockholders' equity...................................... $70,448 $67,971
===================== =====================
<FN>
Note: The balance sheet at December 31, 1995 has been derived from the audited financial statements at
that date.
See accompanying notes.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MICRO LINEAR CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Three Months Ended
------------------------------------
March 31, March 31,
1996 1995
-------------- ---------------
<S> <C> <C>
Cash provided by operating activities......................................... $ 2,429 $ 2,038
Investing activities:
Capital expenditures....................................................... (2,245 ) (950 )
Purchases of short-term investments........................................ (7,961 ) (8,810 )
Sales of short-term investments............................................ 7,840 1,952
-------------- ---------------
Net cash provided by (used in) investing activities...................... (2,366 ) (7,808 )
Financing activities:
Principal payments under capital lease obligations and debt................ (181 ) (346 )
Proceeds from issuance of common stock..................................... 200 64
Acquisition of treasury stock.............................................. (2,304 ) -
-------------- ---------------
Net cash (used in) financing activities.................................. (2,285 ) (282 )
-------------- ---------------
Net decrease in cash and cash equivalents.................................. (2,222 ) (6,052 )
Cash and cash equivalents at beginning of period........................... 4,175 23,216
-------------- ---------------
Cash and cash equivalents at end of period................................. $1,953 $17,164
============== ===============
<FN>
See accompanying notes.
</FN>
</TABLE>
<PAGE>
16
MICRO LINEAR CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1) Micro Linear Corporation (the "Company") designs, develops and markets high
performance analog and mixed signal integrated circuits for a broad range of
applications within the communications, computer and industrial markets for
sale primarily in North America, Asia and Europe.
2) The Company's fiscal year ends on the Sunday closest to December 31. Fiscal
year 1995 ended on December 31, 1995. The Company's fiscal quarters end on
the Sunday closest to the end of each calendar quarter. The first quarter of
1996, first quarter of 1995 and fourth quarter of 1995 ended on March 31,
1996, April 2, 1995 and December 31, 1995, respectively. For ease of
presentation, the accompanying financial statements have shown the first
quarter of 1996 and 1995 as ending March 31. The 1995 fourth quarter and
1995 year are shown as ending December 31.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
3) The accounting policies followed by the Company are set forth in Note 1 of
Notes to Financial Statements included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1995.
4) Net income per share is computed using the weighted average number of shares
of common stock and from stock options and warrants (using the treasury
stock method). Dual presentation of primary and fully diluted net income per
share is not shown
5) Inventory is stated at the lower of standard cost (which approximates actual
cost on a first-in, first-out basis) or market (estimated net realizable
value).
Inventories consist of the following (in thousands):
March 31, December 31,
1996 1995
------------- --------------
Raw Materials........................ $ 1,787 $1,434
Work-in-process...................... 4,819 3,926
Finished Goods....................... 4,549 3,626
------- -------
$11,155 $8,986
======= ======
6) The accompanying interim financial statements are unaudited and have been
prepared by the Company in accordance with generally accepted accounting
principles and pursuant to the rules and regulations of the Securities and
Exchange Commission. In the opinion of management, all adjustments
(consisting of normal recurring accruals) have been made to present a fair
statement of results for the interim periods presented. The results of
operations for the interim periods shown in this report are not necessarily
indicative of results to be expected for the fiscal year. All information
reported in this Form 10-Q should be read in conjunction with the Company's
annual financial statements on Form 10-K for the year ended December 31,
1995.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Result
of Operations
This report on Form 10-Q contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. The forward-looking statements contained herein
are subject to certain factors tha could cause actual results to differ
materially from those projected in the forward-looking statements. Such factors
include, but are not limited to, the factors set forth below and elsewhere in
this Form 10-Q.
Results of Operations
Net Revenues
Net revenues were $15.3 million for the first quarter of 1996, a 19%
increase over net revenues of $12.9 million for the first quarter of 1995 and a
1% increase over net revenues of $15.2 million for the fourth quarter of 1995.
Net revenues for the first quarter of 1996 compared to the first quarter of 1995
increased 60% in the communications market, decreased 20% in the industrial
market and decreased 17% in the computer market. Net revenues for the first
quarter of 1996 compared to the fourth quarter of 1995 increased 21% in the
communications market, increased 1% in the industrial market and decreased 41%
in the computer market. The computer market includes the Winchester hard disk
drive ("HDD") sub-market. Net revenues in the HDD sub-market were $1.1 million
for the first quarter of 1996, a 51% decrease over net revenues of $2.2 million
in the HDD sub-market for the first quarter of 1995 and a 56% decrease over net
revenues of $1.9 million for the fourth fourth quarter of 1995. HDD sub-market
revenues decreased to 7% of total net revenues for the first quarter of 1996
from 17% of total net revenues for the first quarter of 1995 and 13% of total
net revenues for the fourth quarter of 1995. The Company's markets are
characterized by intense competition, relatively short product life cycles and
rapid technological changes. In addition, these markets have undergone rapid
growth and consolidation in the last few years. The Company's net revenues and
results of operations would be materially and adversely affected in the event of
a market slowdown.
International net revenues were $4.9 million for the first quarter of 1996,
or 32% of net revenues, as compared to $3.8 million, or 29% of net revenues for
the first quarter of 1995 and $4.8 million, or 32% of net revenues for the
fourth quarter of 1995. International revenues exclude shipments to Amtron
International ("Amtron"), a domestic sales representative. A significant portion
of Amtron's purchases are HDD products which are sold to Samsung Electronics.
Sales to Amtron were 1% of net revenues in the first quarter of 1996, compared
to 21% of net revenues in the first quarter of 1995 and 3% of net revenues in
the fourth quarter of 1995. A majority of the shipments to Amtron are secured by
irrevocable letters of credit. The decline in sales to Amtron as a percent of
net revenues in the first quarter of 1996 compared to first quarter of 1995 was
a result of the Company's Samsung HDD products reaching the end of their product
lives in the fourth fiscal quarter of 1995. The Company does not currently
expect any future shipments of these Samsung HDD products. Although the Company
has received orders for certain new HDD products, the net revenue from the sale
of these products did not offset the decline in net revenues of the Samsung HDD
products.
Domestic distributor revenues were approximately 16% of net revenues for the
first quarter of 1996, 15% of net revenues for the first quarter of 1995 and 19%
for the fourth quarter of 1995. The Company expects sales to domestic
distributors to increase in the future as a percentage of total net revenues due
to anticipated shifts in the sales channel mix. Several of the Company's OEM
(Original End Manufacturer) customers are moving their manufacturing operations
to subcontractors. The subcontractors are in turn placing their orders through
distribution. The Company defers recognition of revenue derived from sales to
domestic distributors until such distributors resell the products to their
customers; however, revenue is recognized by the Company upon shipment to
international representatives who generally have no return privileges.
Gross Margin
Gross margin is affected by the volume of product sales, price, product mix,
manufacturing utilization, product yields and the mix of sales to OEM's and to
distributors. Gross margin has been and will continue to be periodically
affected by expenses incurred in connection with start-up and installation of
new process technologies at outside manufacturing foundries.
The Company's gross margin improved to 67% in first quarter of 1996 from 53%
in the first quarter of 1995 and 58% in the fourth quarter of 1995, primarily
due to lower per unit manufacturing costs resulting from continued change in
shipment mix to higher margin products and higher manufacturing utilization.
The Company's gross margins are adversely impacted by the costs associated
with installing new processes at its foundries. Although the Company has
recently been able to mitigate the adverse impact on gross margin associated
with new wafer manufacturing process costs by relying upon process technologies
existing at its outside wafer foundries, there can be no assurance that the
Company will not be required to incur significant expenses in the future to
develop, or obtain access to, advanced process technologies and to transfer and
install such technologies at one or more of its foundries, which could have a
material adverse affect on gross margin in the future. Approximately one-third
of the Company's bipolar wafers are purchased from a wafer foundry in Japan and
have pricing contracts that are tied to currency fluctuations of the yen. Wafer
pricing for this foundry is adjusted every 6 months, either up or down,
depending on the movement of the yen. The Company does not expect to be
significantly impacted by this pricing agreement, however, due to the
uncertainty of the currency markets and the recent fluctuations of the yen
versus the U.S. dollar, there can be no assurance that significant swings in
currency will not have a material adverse effect on gross margin in the future
due to the impact of such fluctuations on this contract or other contracts the
Company has with foundries in Japan.
The Company currently purchases its wafers from ten wafer suppliers, two of
which were added in the third quarter of 1995. A majority of the Company's wafer
supply is obtained from three wafer suppliers. The Company's products are
assembled and packaged by four vendors. Any delays or interruptions due to such
factors as inadequate capacity or unavailable raw materials in the Company's
wafer suppliers or assembly vendors could materially and adversely affect
product shipments and operating results. See Other Factors Affecting Operating
Results.
Research and Development Expenses
Research and development expenses include costs associated with the
definition, design and development of standard and semi-standard products, tile
arrays, standard cells and the design products using existing or new tile
arrays. The Company also expenses prototype wafers and new production mask sets
related to new products as research and development costs until products based
on new designs are fully characterized by the Company and are demonstrated to
support published data sheets and satisfy reliability tests.
Research and development expenses were $2.7 million for the first quarter of
1996, or 17% of net revenues, compared to $2.5 million, or 20% of net revenues,
for the first quarter of 1995 and $2.2 million, or 14% of net revenues, for the
fourth quarter of 1995. The increase in research and development expenses in
absolute dollars in the first quarter of 1996 compared to the first and fourth
quarters of 1995 is generally attributable to increased staffing, higher
compensation and benefits to existing engineering personnel and increased
prototype and mask costs. The Company believes that the development and
introduction of new products is critical to its future success and expects that
research and development expenses will increase in the future in absolute
dollars, but currently expects these expenses to decrease as a percentage of net
revenues.
Selling, General and Administrative
Selling, general and administrative expenses were $2.9 million for the first
quarter of 1996, or 19% of net revenues, compared to $2.3 million, or 18% of net
revenues, for the first quarter of 1995 and $2.5 million, or 17% of net
revenues, for the fourth quarter of 1995. The increases in absolute dollars in
the first quarter of 1996 compared to first and fourth quarters of 1995 is
generally attributable to the addition of two new executive staff positions,
increased travel for sales personnel and increased advertising and media costs.
The Company expects additional spending increases in absolute dollars in the
future but currently expects these expenses to decrease as a percentage of net
revenues.
Interest and Other Income and Interest Expense
Interest and other income was $.4 million for the first quarter of 1996, $.3
million for the first quarter of 1995 and $.4 million for the fourth quarter of
1995. The increase in the first quarter of 1996 over the first of 1995 was due
to higher average cash balances and slightly higher interest rates. Interest
income for the first quarter of 1996 was slightly lower than the fourth quarter
of 1995 because of reduced average cash balances. Interest income is affected by
changes in the Company's cash balance as well as the prevailing interest rates.
Interest expense was $80,000 for the first quarter of 1996, $124,000 for the
first quarter of 1995 and $92,000 for the fourth quarter of 1995. The interest
expense decrease in the first quarter of 1996 and the first and fourth quarters
of 1995 is principally due to the reduction in outstanding indebtedness. The
Company also incurs interest expense on capital equipment lease obligations
which were fully paid off in March 1996. The portion of interest expense related
to the capital lease obligations was $762 in the first quarter of 1996, $34,827
in the first quarter of 1995 and $9,372 in the fourth quarter of 1995.
Provision for Income Taxes
The Company's effective tax rate for the first quarter of 1996 was 40%
compared to 18% for the first quarter of 1995 and 21% for the fourth quarter of
1995. The effective tax rates for the first and fourth quarters of 1995 differ
from the statutory income tax rate primarily as a result of utilization of net
operating loss and tax credit carryforwards and adjustments of the valuation
allowance for deferred tax assets. The higher effective tax rate in 1996 was due
principally to a higher federal tax rate as a result of the full utilization of
all remaining net operating loss and tax credit carryforwards in fiscal year
1995.
Liquidity and Capital Resources
Since 1990, the Company has financed its operations and capital requirements
principally through cash flow from operations, equipment lease financing
arrangements and the proceeds from of its initial public offering in October
1994. Operations provided $2.4 million of net cash during the first quarter of
1996, an increase of $.4 million over the first quarter of 1995. The increase in
the first quarter of 1996 is primarily attributable to higher net income and
payables which was offset by increased trade receivables, inventory levels and
prepaid expenses. The increase in payables was mainly due to additional income
tax payables that occurred as a result of higher net income in the first quarter
of 1996. The primary increase in prepaid expenses was for deferred tax assets.
Cash used in investing activities for the first quarter of 1996 is
attributable to capital expenditures of $2.2 million.
Financing activities for the first quarter of 1996 consisted primarily of
principal payments under capital lease and debt obligations of $.2 million. The
Company also generated $.2 million of proceeds from the sale of common stock
under employee stock option and purchase plans. In January 1996, the Board of
Directors approved a stock repurchase program in which up to $3 million of the
Company's Common Stock may be purchased by the Company on the open market from
time to time, depending upon market conditions, share price and other factors.
As of March 31, 1996, the Company had repurchased 267,500 shares of its Common
Stock for approximately $2.3 million . The stock repurchase program was
completed in April 1996 with the Company repurchasing a total of 308,000 shares
of its Common Stock for a total of $2.7 million.
Working capital amounted to $40.6 million as of March 31, 1996, compared to
$41.3 million as of December 31, 1995 and includes cash and cash equivalents of
$2.0 million and short-term investments of $26.4 million.
The Company anticipates that its existing cash resources and cash generated
from operations will fund necessary purchases of capital equipment and provide
adequate working capital at least through 1996. 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 such capital will be
available on terms acceptable to the Company.
Other Factors Affecting Future Operating Results
The Company's quarterly and annual operating results are affected by a wide
variety of factors that could materially and adversely affect revenues and
profitability, including the Company's access to advanced process technologies,
the timing and extent of process development costs, the Company's ability to
introduce new products on a timely basis, the volume and timing of orders
received, market acceptance of the Company's and its customers' products, the
timing of new product announcements and introductions by the Company or its
competitors, changes in the mix of products sold, the timing and extent of
research and development expenses, the availability and cost of wafers from
outside foundries, fluctuations in manufacturing yields, fluctuations in the
relative exchange rate of the yen and the U.S. dollar, competitive pricing
pressures and cyclical semiconductor industry conditions. A majority of the
Company's net revenues are derived from sales of a limited number of products.
Historically, average selling prices in the semiconductor industry have
decreased over the life of any particular product. Although the Company has not
generally experienced material decreases in its average selling prices over
time, there can be no assurance that the average selling prices of the Company's
products will not be subject to significant pricing pressures in the future. The
Company's business is characterized by short-term orders and shipment schedules,
and customer orders typically can be canceled or rescheduled without significant
penalty to the customer. Due to the absence of substantial non-cancellable
backlog, the Company typically plans its production and inventory levels based
on internal forecasts of customer demand, which are highly unpredictable and can
fluctuate substantially. In addition, the Company is limited in its ability to
reduce costs quickly in response to any revenue shortfalls. As a result of the
foregoing or other factors, there can be no assurance that the Company will not
experience material fluctuations in future operating results on a quarterly or
annual basis which would materially and adversely affect the Company's business.
The markets for the Company's products are characterized by rapid
technological change and frequent new product introductions. To remain
competitive, the Company must develop or obtain access to advanced semiconductor
process technologies in order to reduce die size, increase die performance and
functional complexity, and improve yields. Semiconductor design and process
methodologies are subject to rapid technological change, requiring large
expenditures for research and development. If the Company is unable to develop
or obtain access to advanced wafer processing technologies as they become
needed, or is unable to define, design, develop and introduce competitive new
products on a timely basis, its future operating results will be materially and
adversely affected. In addition, if the Company is unable to transfer and
install such new process technologies to one or more of its foundries in a
timely manner, its business and results of operations could be materially and
adversely affected.
The Company does not own or operate a full wafer fabrication facility, and
all of the Company's wafer requirements are currently supplied by outside
foundries. In particular, a substantial portion of the Company's bipolar wafers
are manufactured by one foundry in Japan and a substantial portion of the
Company's BiCMOS wafers are manufactured by one foundry in Taiwan. There are
certain significant risks associated with the Company's reliance on outside
foundries, including the lack of assured wafer supply and control over delivery
schedules, the unavailability of or delays in obtaining access to key process
technologies and limited control over manufacturing yields and production costs.
Although the Company had undertaken to diversify its sources of wafer supply and
works closely with its foundries to minimize the likelihood of reduced
manufacturing yields, the Company's foundries have from time to time experienced
lower than anticipated manufacturing yields, particularly in connection with the
introduction of new products and the installation and start-up of new process
technologies. Such reduced yields have at times materially and adversely
affected the Company's operating results. In addition, the Company's reliance
upon offshore foundries subjects the Company to risks of exchange rate
fluctuations, export and import restrictions, trade sanctions, tariff increases
and political instability.
The Company purchases wafers from its outside foundries pursuant to purchase
orders and does not have a guaranteed level of wafer capacity at any of its
foundries. Therefore, the Company's wafer suppliers could choose to prioritize
capacity for other uses or reduce or eliminate deliveries to the Company on
short notice. Accordingly, there is no assurance that the Company's foundries
will allocate sufficient wafer capacity to satisfy the Company's requirements.
Any sudden demand for an increased amount of wafers or sudden reduction or
elimination of any existing source or sources of wafers could result in a
material delay in the shipment of the Company's products. There can be no
assurance that material disruptions in supply, which have occurred periodically
in the past, will not occur in the future. Any such disruption could materially
and adversely affect the Company's operating results. In the event of any such
disruption, if the Company were unable to qualify alternative manufacturing
sources for existing or new products in a timely manner or if such sources were
unable to produce wafers with acceptable manufacturing yields, the Company's
business and operating results would be materially and adversely affected.
A substantial portion of the Company's net revenues are derived from sales
of products for computer networking applications. Sales of the Company's
products to network equipment manufacturers accounted for approximately 47%, 41%
and 37% of the Company's net revenues in 1995, 1994 and 1993, respectively.
Sales of one of the Company's computer networking products represented 12% and
10% of the Company's net revenues during 1995 and 1994, respectively. The
computer networking equipment is characterized by intense competition,
relatively short product life cycles and rapid technological change. In
addition, the computer network equipment market has undergone a period of rapid
growth and consolidation in recent years. Although the Company has expanded its
product mix and customer base, the Company expects to increase its dependency on
sales to network equipment manufacturers in 1996. The Company's business and
results of operations would be materially and adversely affected in the event of
a significant slowdown in the computer networking equipment market.
The Company's market diversification and product development activities have
placed, and could continue to place, a significant strain on the Company's
limited personnel and other resources. The Company's ability to manage any
future growth effectively will require it to integrate its new employees into
its overall operations, to continue to improve its operational, financial and
management systems and to attract, train, motivate and manage its employees
successfully. If the Company's management is unable to manage growth
effectively, the Company's business and results of operations could be
materially and adversely affected.
The semiconductor industry is characterized by rapid technological change,
cyclical market patterns, significant price erosion, periods of over-capacity
and production shortages, variations in manufacturing costs and yields and
significant expenditures for capital equipment and product development. The
industry has from time to time experienced depressed business conditions. The
Company may experience substantial period-to-period fluctuations in future
operating results due to general semiconductor industry conditions or other
factors.
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11.1 - Statement Regarding Computation of Earnings Per Share.
(b) Reports on Form 8-K
None
<PAGE>
<TABLE>
Exhibit 11.1
<CAPTION>
Micro Linear Corporation
Statement Re Computation of Earnings Per Share
(Unaudited)
(In thousands, except per share data)
Three Months Ended
March 31,
---------------------------------
1996 1995
-------------- ---------------
<S> <C> <C>
Net income............................................. $2,983 $1,718
============== ===============
PRIMARY:
Weighted average common shares outstanding............. 12,428 11,974
Common equivalents attributable to:
Convertible preferred shares...................... - -
Options and warrants.............................. 1,104 1,556
Shares related to SAB No. 55, 64 and 83................ - -
-------------- ---------------
Total weighted average common and common
equivalent shares outstanding..................... 13,532 13,530
============== ===============
Net income per share................................... $ 0.22 $ 0.13
============== ===============
FULLY DILUTED:
Weighted average common shares outstanding............. 12,428 11,974
Common equivalents attributable to:
Convertible preferred shares...................... - -
Options and warrants - using quarter-end 1,110 1,618
market price.................................
Shares related to SAB No. 55, 64 and 83................ - -
-------------- ---------------
Total weighted average common and common
equivalent shares outstanding..................... 13,538 13,592
============== ===============
Net income per share................................... $ 0.22 $ 0.13
============== ===============
</TABLE>
<PAGE>
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.
MICRO LINEAR CORPORATION
Date: May 14, 1996 By: /s/ J. PHILIP RUSSELL
------------------------
J. Phillip Russell
Chief Financial Officer
(Principal Financial and Accounting Officer)
<TABLE>
<CAPTION>
Exhibit 11.1
Micro Linear Corporation
Statement Re Computation of Earnings Per Share
(Unaudited)
(In thousands, except per share data)
Three Months Ended
March 31,
---------------------------------
1996 1995
-------------- ---------------
<S> <C> <C>
Net income............................................. $2,983 $1,718
============== ===============
PRIMARY:
Weighted average common shares outstanding............. 12,428 11,974
Common equivalents attributable to:
Convertible preferred shares...................... - -
Options and warrants.............................. 1,104 1,556
Shares related to SAB No. 55, 64 and 83................ - -
-------------- ---------------
Total weighted average common and common
equivalent shares outstanding..................... 13,532 13,530
============== ===============
Net income per share................................... $ 0.22 $ 0.13
============== ===============
FULLY DILUTED:
Weighted average common shares outstanding............. 12,428 11,974
Common equivalents attributable to:
Convertible preferred shares...................... - -
Options and warrants - using quarter-end 1,110 1,618
market price.................................
Shares related to SAB No. 55, 64 and 83................ - -
-------------- ---------------
Total weighted average common and common
equivalent shares outstanding..................... 13,538 13,592
============== ===============
Net income per share................................... $ 0.22 $ 0.13
============== ===============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Micro Linear Corporation
Financial Data Schedule
This schedule contains summary financial information extracted from the
statements of income and balance sheets on pages 3 and 4 of the Company's First
Quarter 1996 Form 10-Q and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 875359
<NAME> Micro Linear Corp
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> dec-31-1996
<PERIOD-START> jan-01-1996
<PERIOD-END> mar-31-1996
<CASH> 1953
<SECURITIES> 26420
<RECEIVABLES> 7024
<ALLOWANCES> 255
<INVENTORY> 11155
<CURRENT-ASSETS> 51261
<PP&E> 38400
<DEPRECIATION> 20090
<TOTAL-ASSETS> 70448
<CURRENT-LIABILITIES> 10649
<BONDS> 0
0
0
<COMMON> 13
<OTHER-SE> 56710
<TOTAL-LIABILITY-AND-EQUITY> 70448
<SALES> 15327
<TOTAL-REVENUES> 15327
<CGS> 5097
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 80
<INCOME-PRETAX> 4971
<INCOME-TAX> 1988
<INCOME-CONTINUING> 2983
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2983
<EPS-PRIMARY> 0.22
<EPS-DILUTED> 0.22
</TABLE>
