<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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 July 2, 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 0-3698
SILICONIX INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 94-1527868
(State or other jurisdiction (I.R.S. Employer
of incorporation Identification No.)
or organization)
2201 Laurelwood Road, Santa Clara, California 95054
(Address of principal executive offices)
Registrant's telephone number including area code (408) 988-8000
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
--- ---
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 X No
--- ---
Indicate the number of shares outstanding of each of the registrant's
classes of common stock:
Common stock, $0.01 par value -- 9,959,680 outstanding shares as of August
15, 1995.
Page 1 of 10
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SILICONIX INCORPORATED
TABLE OF CONTENTS TO FORM 10-Q
<TABLE>
<S> <C> <C>
Part I. Financial Information Page No.
Item 1 Financial Statements (Unaudited)
Condensed consolidated statements of
operations for the three months and six
months ended July 2, 1995 and
July 3, 1994 3
Condensed consolidated balance sheets as
of July 2, 1995 and December 31, 1994 4
Condensed consolidated statements of cash flows
for the six months ended July 2, 1995 and July 3, 1994 5
Notes to condensed consolidated
financial statements 6
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-8
Part II. Other Information
Item 4 Submission of Matters to a Vote of Security Holders 9
Signature 10
</TABLE>
Page 2 of 10
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SILICONIX INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
(Amounts in thousands 3 Months Ended 6 Months Ended
except per share amounts)
July 2, July 3, July 2, July 3,
1995 1994 1995 1994
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $61,125 $51,725 $112,474 $94,195
Cost of sales 38,216 32,780 70,289 57,958
--------------------------------------------------------
Gross profit 22,909 18,945 42,185 36,237
Research and development 4,937 3,926 9,240 7,947
Selling, marketing and administration 12,045 11,137 23,533 22,083
--------------------------------------------------------
Operating income 5,927 3,882 9,412 6,207
Interest expense 621 543 1,267 934
Other (income) expense - net (126) 265 (318) 347
--------------------------------------------------------
Income before taxes 5,432 3,074 8,463 4,926
Income taxes 890 225 1,387 450
--------------------------------------------------------
Net income after taxes $4,542 $2,849 $7,076 $4,476
--------------------------------------------------------
--------------------------------------------------------
Per share amounts:
Net income $0.46 $0.29 $0.71 $0.45
--------------------------------------------------------
--------------------------------------------------------
Shares used to compute earnings per share 9,960 9,960 9,960 9,960
--------------------------------------------------------
--------------------------------------------------------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
Page 3 of 10
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SILICONIX INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
July 2, December 31,
1995 1994
-----------------------------------------------------------------------------------------------------
(000's omitted)
Assets
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets:
Cash and equivalents $11,100 $10,743
Accounts receivable, less allowances 35,686 30,379
Accounts receivable from affiliates 7,730 5,312
Inventories 28,047 31,033
Other current assets 7,252 5,456
------------------------
Total current assets 89,815 82,923
------------------------
Property, plant and equipment, at cost:
Land 279 279
Buildings and improvements 35,574 34,633
Machinery and equipment 150,077 142,641
------------------------
185,930 177,553
Less accumulated depreciation (113,485) (109,641)
------------------------
Net property, plant and equipment 72,445 67,912
------------------------
Other assets 4,834 4,200
------------------------
Total assets $167,094 $155,035
------------------------
------------------------
Liabilities and Shareholders' Equity
-----------------------------------------------------------------------------------------------------
Current liabilities:
Current portion of debt obligations $584 $612
Accounts payable 13,121 15,194
Accounts payable to affiliates 7,082 4,980
Accrued payroll and related compensation 8,411 7,752
Accrued liabilities 22,709 19,781
------------------------
Total current liabilities 51,907 48,319
Long-term related party debt 34,570 34,570
Long-term debt, less current portion 6,642 6,264
------------------------
Total liabilities 93,119 89,153
------------------------
Shareholders' equity:
Common stock 100 100
Additional paid-in-capital 59,256 59,193
Retained earnings 14,413 7,337
Accumulated translation adjustments 206 (748)
------------------------
Total shareholders' equity 73,975 65,882
------------------------
Total liabilities and shareholders' equity $167,094 $155,035
------------------------
------------------------
</TABLE>
Note: The balance sheet at December 31, 1994 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
See accompanying notes to condensed consolidated financial statements.
Page 4 of 10
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SILICONIX INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
6 Months Ended
July 2, July 3,
1995 1994
-----------------------------------------------------------------------------------------------------
(000's omitted)
<S> <C> <C>
Cash flows from operating activities:
Net income $7,076 $4,476
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 6,255 5,706
Loss on disposal of property, plant and equipment - 136
Other non-cash (income) and expenses 378 (22)
Changes in:
Accounts receivable (7,685) (6,470)
Inventories 4,036 (123)
Other current assets (1,446) (539)
Accounts payable (163) 3,155
Accrued liabilities 3,552 6,080
------------------------
Net cash provided by operating activities 12,003 12,399
------------------------
Cash flows from investing activities:
Purchase of property, plant and equipment (10,318) (13,308)
Purchase of other assets (1,375) (1,234)
------------------------
Net cash used in investing activities (11,693) (14,542)
------------------------
Cash flows from financing activities:
Proceeds from sale of restricted common stock 63 39
Repayment of long-term debt (28) (320)
------------------------
Net cash provided by (used in) financing activities 35 (281)
------------------------
Effect of exchange rate changes on
cash and equivalents 12 (165)
------------------------
Net increase (decrease) in cash
and equivalents 357 (2,589)
Cash and equivalents:
Beginning of period 10,743 8,609
------------------------
End of period $11,100 $6,020
------------------------
------------------------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
Page 5 of 10
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SILICONIX INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of the management of the Company, the
consolidated condensed financial statements appearing herein contain all
adjustments (consisting only of normal recurring accruals) necessary for a fair
presentation of the results for, and as of the end of, the periods indicated
therein. These statements should be read in conjunction with the Company's
December 31, 1994 consolidated financial statements and notes thereto. The
results of operations for the first six months of 1995 are not necessarily
indicative of the results to be expected for the full year.
NOTE 2. INVENTORIES
The components of inventory consist of the following:
<TABLE>
<CAPTION>
July 2, December 31,
1995 1994
------- ---------
(000's omitted)
<S> <C> <C>
Finished goods $ 4,801 $ 6,886
Work-in-process 19,521 20,625
Raw materials 3,725 3,522
------- -------
$28,047 $31,033
------- -------
------- -------
</TABLE>
NOTE 3. CONTINGENCIES
The Company is party to two environmental proceedings. The first
involves property that the Company vacated in 1972. The California Regional
Water Quality Board issued a cleanup and abatement order to both the Company and
the current owner of the property. The Company subsequently reached a
settlement of this matter with the current owner in which the current owner
indemnifies the Company against any liability that may arise out of any
governmental agency actions brought for environmental cleanup of the site,
including liability arising out of the current cleanup and abatement order. The
second proceeding involves the Company's current facility in Santa Clara. The
Company is currently engaged in certain remedial action.
In management's opinion, based on discussion with legal counsel and other
considerations, the ultimate resolution of the above-mentioned matters will not
have a material adverse effect on the Company's consolidated financial position
or results of operations.
Page 6 of 10
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ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net sales for the second quarter of 1995 increased 19% compared to the
first quarter of 1995 and 18% against the second quarter of 1994. Much of this
growth was due to strength in Power MOSFET products which increased from 54% of
total revenues in the second quarter of 1994 to 59% of total revenues in the
second quarter of 1995. In Japan, net sales for the second quarter of 1995 grew
over 90% compared to the second quarter of 1994. Japan accounted for 11% of
total revenues in the second quarter of 1995 vs 7% in the second quarter of
1994. Sales for the first six months of 1995 increased 19% compared to the first
six months of 1994.
Gross profit for the second quarter of 1995 was consistent at 37.5% of
revenues against the first quarter of 1995. Gross profit as a percentage of
revenues for the second quarter of 1995 increased 1% compared to the second
quarter of 1994 due to improved product mix. Gross Profit for the first six
months of 1995 increased 16% compared to the first six months of 1994. This
increase was driven by higher revenues.
Research and development for the second quarter of 1995 remains at about
8% of second quarter revenues due to continued investment in Power IC and Power
MOSFET products. Research and development as a percentage of revenues for the
first six months of 1995 was consistent with the first six months of 1994.
Selling, marketing, and administration expenses for the second quarter
of 1995 declined to 20% of revenues compared to 22% in the first quarter of 1995
and second quarter of 1994 due to higher revenues combined with a relatively
stable cost structure. Although higher selling and marketing costs were incurred
due to increased revenues, costs did not increase at the same rate as revenue.
Administration costs were flat. Selling, marketing and administration expenses
for the first six months of 1995 increased 7% compared to the first six months
of 1994.
Interest expense increased 36% in the first six months of 1995 to $1.3
million, up $.3 million over the first six months of 1994. The increase is the
result of higher short-term market interest rates during the first six months of
1995 as compared to the same period in 1994.
Other income for the first six months of 1995 was $.3 million as compared
to other expense of $.3 million for the first six months of 1994. Other income
for the first six months of 1995 is comprised mainly of interest income whereas
other expense for the first six months of 1994 was comprised mainly of losses on
disposal of assets which were of a non-recurring nature.
Income tax expense increased in the second quarter of 1995 to $.9
million, up $.7 million over the second quarter of 1994. Tax expense for the
first six months of 1995 as compared to the first six months of 1994 increased
as a result of the reduction in net operating loss carryforwards available in
1995 and the increase in earnings before tax.
Page 7 of 10
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LIQUIDITY AND CAPITAL RESOURCES
Cash flows from operations were $12.0 million for the six-month period
ended July 2, 1995 as compared to $12.4 million in the comparable period of
1994. Cash and equivalents increased by $.4 million from December 31,1994 due to
cash from operations exceeding cash used by investing and financing activities.
1995 operating cash flows are expected to be sufficient to fund operations,
investments, research and development.
Accounts receivable increased $5.3 million or 17.5% from December 31,
1994 solely as a result of strong sales during the first half of 1995. Strong
sales in Europe during the first half account for a large portion of this
increase due to the longer payment terms typically afforded European customers.
Inventories decreased $3.0 million or 9.6% from December 31,1994 due
mainly to the increase in sales and high demand for the Company's semiconductor
products during the first six months of 1995.
Capital expenditures were $10.3 million in the first six months of 1995.
These related mostly to additions for plant capacity expansion and regulatory
compliance. 1995 capital expenditures are expected to exceed the 1994 annual
level of $25.0 million.
Current liabilities increased $3.6 million or 7.4% from December 31,
1994. This increase is due to timing of payments and the increase in business
during the first half of 1995.
Page 8 of 10
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PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The registrant's Annual Meeting of Shareholders was held on June 2,
1995.
(b) Not applicable.
(c) There were three matters voted on at the Meeting. A brief
description of each of these matters, and the results of the votes
thereon, are as follows:
1. Election of Directors
<TABLE>
<CAPTION>
Nominee For Abstain
------- --- -------
<S> <C> <C>
Hanspeter Eberhardt 9,654,768 16,329
Richard Kulle 9,661,773 9,324
Frank Maier 9,654,812 16,285
Gustav Muehlschlegel 9,654,768 16,329
Robert Wehrli 9,660,963 10,174
Peter Westrick 9,448,099 16,329
</TABLE>
2. Ratification of the appointment of KPMG Peat Marwick LLP as the
registrant's auditors for
the fiscal year ending December 31, 1995
<TABLE>
<CAPTION>
Broker
For Against Abstain Nonvotes
--- ------- ------- --------
<S> <C> <C> <C>
9,655,520 12,944 2,633 -0-
</TABLE>
3. Shareholder proposal to establish senior management stock
option plan
<TABLE>
<CAPTION>
Broker
For Against Abstain Nonvotes
--- ------- ------- --------
<S> <C> <C> <C>
157,984 8,895,944 29,084 588,085
</TABLE>
(d) Not applicable.
Page 9 of 10
<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.
SILICONIX INCORPORATED
Date: August 15, 1995 By: /s/Juergen F. Biehn
-------------------
Juergen F. Biehn
Vice President and
Chief Financial Officer
Page 10 of 10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUL-01-1995
<CASH> 11,100
<SECURITIES> 0
<RECEIVABLES> 41,806
<ALLOWANCES> (6,120)
<INVENTORY> 28,047
<CURRENT-ASSETS> 89,815
<PP&E> 185,930
<DEPRECIATION> (113,485)
<TOTAL-ASSETS> 167,094
<CURRENT-LIABILITIES> 51,907
<BONDS> 0
<COMMON> 100
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 167,094
<SALES> 112,474
<TOTAL-REVENUES> 112,474
<CGS> 70,289
<TOTAL-COSTS> 32,773
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,267
<INCOME-PRETAX> 8,463
<INCOME-TAX> 1,387
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,076
<EPS-PRIMARY> .71
<EPS-DILUTED> .71
</TABLE>
