<PAGE>
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 0-3698
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 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
May 15, 1996.
Page 1 of 9
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SILICONIX INCORPORATED
TABLE OF CONTENTS TO FORM 10-Q
Part I. Financial Information Page No.
Item 1 Financial Statements (Unaudited)
Consolidated statements of operations for the
three months ended March 31, 1996 and April 2, 1995 3
Consolidated balance sheets as
of March 31, 1996 and December 31, 1995 4
Consolidated statements of cash flows
for the three months ended March 31, 1996 and April 2, 1995 5
Notes to consolidated
financial statements 6
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-8
Part II. Other Information
Signature 9
Page 2 of 9
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SILICONIX INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
------------------------------------------------------------------------
(Amounts in thousands 3 Months Ended
except per share amounts)
March 31 April 2
1996 1995
------------------------------------------------------------------------
<S> <C> <C>
Net sales $70,061 $51,349
Cost of sales 41,379 32,073
-----------------------
Gross profit 28,682 19,276
Research and development 6,170 4,303
Selling, marketing and administration 14,424 11,488
-----------------------
Operating income 8,088 3,485
Interest expense 590 646
Other (income) expense - net (162) (192)
-----------------------
Income before taxes 7,660 3,031
Income taxes 841 497
-----------------------
Net income after taxes $6,819 $2,534
-----------------------
-----------------------
Per share amounts:
Net income $0.68 $0.25
-----------------------
-----------------------
Shares used to compute earnings per share 9,960 9,960
-----------------------
-----------------------
</TABLE>
See accompanying notes to consolidated financial statements.
Page 3 of 9
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SILICONIX INCORPORATED
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
March 31, Dec. 31,
1996 1995
-------------------------------------------------------------------------------------
(000s omitted)
Assets
-------------------------------------------------------------------------------------
<S> <C> <C>
Current assets:
Cash and equivalents $8,021 $10,513
Short term investment with affiliate 7,600 17,195
Accounts receivable, less allowances 43,510 41,201
Accounts receivable from affiliates 10,161 11,093
Inventories 27,777 26,740
Other current assets 13,714 9,033
Deferred income taxes 2,224 2,024
--------------------------
Total current assets 113,007 117,799
--------------------------
Property, plant and equipment, at cost:
Land 1,195 279
Buildings and improvements 41,718 40,474
Machinery and equipment 166,220 160,421
--------------------------
209,133 201,174
Accumulated depreciation (119,388) (117,324)
--------------------------
Net property, plant and equipment 89,745 83,850
--------------------------
Other assets 9,519 6,313
--------------------------
Total assets $212,271 $207,962
--------------------------
--------------------------
Liabilities and Shareholders' Equity
-------------------------------------------------------------------------------------
Current liabilities:
Current portion of debt obligations $586 $586
Accounts payable 21,533 24,347
Accounts payable to affiliates 17,948 12,465
Accrued payroll and related compensation 10,026 11,613
Accrued liabilities 24,285 28,023
--------------------------
Total current liabilities 74,378 77,034
Long-term related party debt 34,570 34,570
Long-term debt, less current portion 6,215 6,082
--------------------------
Total liabilities 115,163 117,686
--------------------------
Shareholders' equity:
Common stock 100 100
Additional paid-in-capital 59,423 59,423
Retained earnings 38,368 31,558
Accumulated translation adjustments (783) (805)
--------------------------
Total shareholders' equity 97,108 90,276
--------------------------
Total liabilities and shareholders' equity $212,271 $207,962
--------------------------
--------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
Page 4 of 9
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SILICONIX INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
3 Months Ended
March 31 April 2
1996 1995
--------------------------------------------------------------------------------------
(000s omitted)
<S> <C> <C>
Cash flows from operating activities:
Net income $6,819 $2,534
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 3,758 3,009
Deferred income taxes (200) -
Other non-cash expenses 133 236
Changes in:
Accounts receivable (2,132) (469)
Accounts receivable from affiliates 932 (1,519)
Inventories (1,011) 276
Other current assets (4,394) (1,719)
Accounts payable (2,836) 1,497
Accounts payable to affiliates 5,483 (507)
Accrued liabilities (5,365) (2,033)
-------- -------
Net cash provided by operating activities 1,187 1,305
-------- -------
Cash flows from investing activities:
Purchase of property, plant and equipment (9,371) (3,787)
Proceeds from sale of property, plant and equipment 4 15
Investment in joint venture (2,053) -
Short term investment with affiliate 9,595 -
Purchase of other assets (1,726) (859)
-------- -------
Net cash used in investing activities (3,551) (4,631)
-------- -------
Cash flows from financing activities:
Proceeds from sale of restricted common stock - 31
Repayment of long-term debt - (28)
-------- -------
Net cash provided by (used in) financing activities - 3
-------- -------
Effect of exchange rate changes on
cash and equivalents (128) 153
-------- -------
Net decrease in cash
and equivalents (2,492) (3,170)
Cash and equivalents:
Beginning of period 10,513 10,743
-------- -------
End of period $8,021 $7,573
-------- -------
-------- -------
</TABLE>
See accompanying notes to consolidated financial statements.
Page 5 of 9
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SILICONIX INCORPORATED
NOTES TO 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
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, 1995
consolidated financial statements and notes thereto. The results of operations
for the first three months of 1996 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:
March 31, December 31,
1996 1995
----------- -------------
(000s omitted)
Finished goods $ 6,577 $ 5,931
Work-in-process 17,744 17,449
Raw materials 3,456 3,360
----------- -------------
$27,777 $26,740
----------- -------------
----------- -------------
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 and has accrued
$400,000 for the estimated future costs related to this matter at December
31, 1995.
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.
The Company is engaged in discussions with various parties regarding
patent licensing and cross patent licensing issues. In the opinion of
management, the outcome of these discussions will not have a material adverse
effect on the financial position or overall trends in the results of
operations of the Company.
Page 6 of 9
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ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Siliconix designs, markets, and manufactures power and analog
semiconductor products. The Company focuses on technologies and products for
the computer, data storage, communications, and automotive markets.
Revenues increased 36% in the first quarter of 1996 to $70.1 million, up
$18.7 million over the first quarter of 1995. Increased demand for power
MOSFET products accounted for much of this growth. Sales of power MOSFET's
grew by 5%, fueled by products used in the telecommunication and computing
markets, increasing to 60% of total revenues in the first quarter of 1996,
compared with 55% in the first quarter of 1995. Sales in Japan and Europe
were up 250% and 28%, respectively, from the first quarter of 1995. These
accounted for 21% and 28%, respectively, of total revenues in the first
quarter of 1996, compared with 8% and 29%, respectively, of total revenues
in the first quarter of 1995.
Gross profit for the first quarter of 1996 increased to 41% from 38% in
the first quarter of 1995. This increase reflects economies of scale in
manufacturing operations, improved yields, and the strong pricing environment
in the last half of 1995. The Company is beginning to experience much more
pricing pressure in 1996 compared to the previous year. Management expects
to see pressure on margins develop as the year progresses.
Research and development expenditures increased 43% in the first quarter
of 1996 to $6.2 million, up $1.9 million over the first quarter of 1995.
Research and development as a percentage of sales for the first quarter of
1996 remained flat at about 9% of revenues. The Company remains committed to
the development of future products and continues to invest in power MOSFET
and power IC technology and product development.
Selling, marketing, and administrative expenses as a percentage of
revenues decreased from 22% in the first quarter of 1995 to 21% in the first
quarter of 1996. This decrease as a percentage of revenues is due to revenues
increasing at a faster rate compared to selling, marketing, and
administrative expenses, in turn due to economies of scale and cost controls.
Interest expense remained flat at $.6 million in the first three months
of 1996, as short-term market interest rates have remained relatively flat
over the past year.
Other income, comprised mainly of interest income, remained flat at $.2
million for the first quarter of 1996.
Income tax expense increased in the first quarter of 1996 to $.8
million, up $.3 million over the first quarter of 1995. Tax expense for the
first three months of 1996 as compared to the first three months of 1995
increased as a result of the reduction in net operating loss carryforwards
available in 1996 and the increase in earnings before taxes.
Page 7 of 9
<PAGE>
During its quarterly assessment of deferred income taxes, management
reduced the valuation allowance on deferred income tax assets to realize an
additional $200,000 net deferred income tax asset. This decision to recognize
additional net deferred income tax assets was based on management's belief
that, it is more likely than not, the Company will realize benefit from a
portion of its deferred income taxes. The primary positive factors assessed
by management in reaching its conclusion about the Company's ability to
realize the additional deferred income tax assets include: positive net
earnings and continued increases in gross profits for the past three years
and a 36% growth in sales in the first three months of 1996.
The expectations for the future are that, even with the extremely
volatile environment in which the Company competes, operating income of the
Company will more than likely be sufficient to realize a portion of the
deferred income tax asset; however, due to certain factors beyond
management's control there can be no assurance that sufficient taxable income
will be generated in each of the Company's taxing jurisdictions to realize
recorded tax benefits. In addition, there is no assurance that the Company
will generate any earnings or any specific level of continuing earnings in
future years.
The primary negative factors assessed by management in reaching its
conclusion about the Company's ability to realize the net deferred income tax
asset are discussed in the section titled "Certain Factors" in the Company's
1995 annual report.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows from operations were $1.2 million for the three-month period
ended March 31, 1996 as compared to $1.3 million in the comparable period of
1995. Cash and equivalents decreased by $2.5 million and the short term
investment with affiliate decreased by $9.6 million from December 31, 1995
due to large expenditures in the first quarter. These included capital
expenditures, royalties and commissions as well as yearly management and
employment bonuses and annual 401(k) company match, and profit sharing
contributions. Management expects 1996 cash flows from operations to be
sufficient to fund investments in capital expenditures and research and
development.
Accounts receivable increased $2.3 million or 6% from December 31, 1995.
This increase is largely attributable to continuing strong sales in Europe
during the first three months and due to the longer payment terms typically
afforded European customers.
Capital expenditures were $9.4 million in the first three months of
1996, compared to $3.8 million in the first three months of 1995. These
related mostly to additions for plant capacity expansion. 1996 capital
expenditures are expected to exceed the 1995 annual level of $28.2 million.
Current liabilities decreased $2.7 million or 3% from December 31, 1995.
This decrease is mainly due to the payment of certain liabilities which are paid
only once a year, including annual management and employee bonuses, the 401(k)
Company match, and profit sharing contributions.
Page 8 of 9
<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: May 15, 1996 By: /s/ Juergen F. Biehn
--------------------------
Juergen F. Biehn
Vice President and
Chief Financial Officer
Page 9 of 9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 8,021
<SECURITIES> 0
<RECEIVABLES> 50,782
<ALLOWANCES> (7,272)
<INVENTORY> 27,777
<CURRENT-ASSETS> 113,007
<PP&E> 209,133
<DEPRECIATION> (119,388)
<TOTAL-ASSETS> 212,271
<CURRENT-LIABILITIES> 74,378
<BONDS> 0
0
0
<COMMON> 100
<OTHER-SE> 97,008
<TOTAL-LIABILITY-AND-EQUITY> 212,271
<SALES> 70,061
<TOTAL-REVENUES> 70,061
<CGS> 41,379
<TOTAL-COSTS> 20,594
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 590
<INCOME-PRETAX> 7,660
<INCOME-TAX> 841
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,819
<EPS-PRIMARY> 0.68
<EPS-DILUTED> 0.68
</TABLE>
