<PAGE>
UNITED STATESUNITED STATES
SECURITIES & 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 June 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: 0-27712
__________________________
INTEGRATED PACKAGING ASSEMBLY CORPORATION
(Exact name of registrant as specified in its charter)
CALIFORNIA 77-0309372
(State or other jurisdiction of incorporation) (I.R.S. Employer
Identification No.)
2221 OLD OAKLAND ROAD
SAN JOSE, CA 95131-1402
(Address of principal executive offices) (Zip Code)
(408) 321-3600
(Registrant's telephone number, including area code)
__________________________
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
------
Number of shares of common stock outstanding as of August 8, 1996: 13,852,180
<PAGE>
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheet.................................3
Condensed Statement of Operations.......................4
Condensed Statement of Cash Flows.......................5
Notes to Financial Statements...........................6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................8
PART II. OTHER INFORMATION
Item 6. Exhibits................................................16
Signatures.......................................................17
Exhibit Index....................................................18
Integrated packaging Assembly Corporation, Form 10-Q Page 2
<PAGE>
PART FINANCIAL INFORMATION
ITEM FINANCIAL STATEMENTS
INTEGRATED PACKAGING ASSEMBLY CORPORATION
CONDENSED BALANCE SHEET
(IN THOUSANDS)
(UNAUDITED)
JUNE 30 DEC 31
1996 1995
------- ------
Assets
Current assets:
Cash and cash equivalents $15,703 $ 5,424
Short term investments 6,044 ---
Accounts receivable, net 4,267 2,903
Inventory 1,770 2,141
Prepaid expenses and other current
assets 608 487
------- ---------
Total current assets 28,392 10,955
Property and equipment, net 26,740 17,050
Other assets 297 255
------- ---------
Total assets $55,429 $ 28,260
======= =========
Liabilities and Shareholders' Equity
Current liabilities:
Current portion of long term debt $ 3,639 2,948
Accounts payable 2,508 1,855
Accrued expenses and other
liabilities 2,839 1,379
------- ---------
Total current liabilities 8,986 6,182
------- ---------
Long term debt 7,009 7,015
------- ---------
Mandatorily Redeemable Convertible
Preferred Stock --- 15,981
------- ---------
Shareholders' equity (deficit)
Common Stock 39,621 449
Accumulated deficit (188) (1,367)
------- ---------
Total shareholders' equity 39,433 (918)
(deficit) ------- -------
Total liabilities and $55,429 $28,260
shareholders' equity ======= =======
The accompanying notes are an integral part of these financial statements
Integrated Packaging Assembly Corporation, Form 10-Q Page 3
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INTEGRATED PACKAGING ASSEMBLY CORPORATION
CONDENSED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
FISCAL QUARTER ENDED SIX MONTHS ENDED
---------------------- -----------------------
JUNE 30 JUNE 30 JUNE 30 JUNE 30
1996 1995 1996 1995
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues $8,469 $4,638 $ 16,526 $ 7,644
Cost of revenues 6,717 3,437 12,777 5,550
------ ------ ------ ------
Gross profit 1,752 1,201 3,749 2,094
Operating expenses
Selling, general & administrative 841 506 1,603 891
Research & development 252 162 461 297
------ ------ ------ ------
Total operating expenses 1,093 668 2,064 1,188
Operating income 659 533 1,685 906
Interest & other income (expense) 58 (118) (56) (338)
------ ------ ------ ------
Income before income taxes 717 415 1,629 568
Provision for income taxes (150) (29) (450) (40)
------ ------ ------ ------
Net income $ 567 $ 386 $1,179 $ 528
====== ====== ====== ======
Net income per share $ 0.04 $ 0.03 $ 0.09 $ 0.04
====== ====== ====== ======
Weighted average common
shares and equivalents 14,798 11,256 13,603 11,271
====== ====== ====== ======
</TABLE>
The accompanying notes are an integral part of these financial statements
Integrated Packaging Assembly Corporation, Form 10-Q Page 4
<PAGE>
INTEGRATED PACKAGING ASSEMBLY CORPORATION
CONDENSED STATEMENT OF CASH FLOWS
INCREASE (DECREASE) CASH
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
---------------------
JUNE 30 JUNE 30
1996 1995
---------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,179 $ 528
ADJUSTMENTS:
Depreciation and amortization 1,288 547
Changes in assets and liabilities:
Accounts receivable (1,364) (1,769)
Inventory 371 (478)
Prepaid expenses and other assets (163 (277)
Accounts payable 653 448
Accrued expenses & other liabilities 1,460 323
-------- -------
Net cash provided by (used in) operating
activities 3,424 (678)
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:
Acquisition of property and equipment (10,758) (3,759)
Net investment in short term investments (6,044) --
-------- -------
Net cash used in investing activities (16,802) (3,759)
-------- -------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:
Payments under capital lease obligations (768) (656)
Principal payments on note payable (687) --
Proceeds from note payable 2,000 --
Proceeds from issuance of Mandatorily
Redeemable Convertible Preferred Stock -- 7,961
Proceeds from issuance of Common Stock 23,112 27
-------- -------
Net cash provided by investing activities 23,657 7,332
-------- -------
NET INCREASE (DECREASE) IN CASH 10,279 2,895
Cash and cash equivalents at beginning of
period 5,424 3,030
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $15,703 $ 5,925
======= =======
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING
ACTIVITIES
Acquisition of equipment under capital
leases $ 147 $ 40
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements
Integrated Packaging Assembly Corporation, Form 10-Q Page 5
<PAGE>
INTEGRATED PACKAGING ASSEMBLY CORPORATION
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Integrated packaging Assembly Corporation (the "Company") packages integrated
circuits for companies in the semiconductor industry.
The accompanying unaudited 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 regulation S-X. Accordingly, they do
not have the information and footnoted required by generally accepted accounting
principles for complete financial statements. In the opinion or management, all
adjustments (consisting of normal recurring adjustments) considered necessary
for a fair presentation have been included.
The financial statements should read in conjunction with the audited
statements for the years ended December 31, 1994 and 1995 included in the
Company's registration Statement on Form SB-2 declared effective February 28,
1996.
The results of operations for the three month and six month periods ended June
30, 1996 are not necessarily indicative of results of that may be expected for
the entire year ending December 31, 1996.
FISCAL YEAR
The Company's fiscal quarters and year end on the Sunday nearest the calendar
end and December 31, respectively. For purposes of financial statement
presentation, each fiscal year is presented as having ended on December 31 and
each fiscal quarter is presented as having ended on the calendar quarter end.
Fiscal 1994 consisted of 53 weeks; fiscal 1995 consisted of 52 weeks; fiscal
1996 will consist of 52 weeks.
NOTE 2. BALANCE SHEET COMPONENTS
(In thousands)
<TABLE>
<CAPTION>
JUNE 30 DEC 31,
1996 1995
------------ ----------
<S> <C> <C>
Inventory
Raw materials $1,725 $1,906
Work in process 45 235
------ -------
$1,770 $2,141
====== =======
</TABLE>
Integrated Packaging Assembly Corporation, Form 10-Q Page 6
<PAGE>
NOTE 3. COMMON STOCK
Common Stock as of June 30, 1996 reflects the sale of 3,450,000 shares of Common
Stock issued in the Company's initial public offering completed February 28,
1996. Net proceeds to the Company were $23.2 million as a result of the
initial public offering. In addition, Common Stock also reflects the
conversion of all the Mandatorily Redeemable Convertible Preferred Stock
outstanding prior to the public offering into an aggregate of 7,862,130 shares
of Common Stock.
NOTE 4. INCOME TAXES
The provision for income taxes reflects the estimated annualized effective tax
rate applied to earnings for the interim period. The effective tax rate differs
from the statutory rate primarily due to use of federal and state net operating
loss carryforwards (NOLs).
NOTE 5. 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. Common equivalent
shares consist of Common Stock issued upon the conversion of the Company's
Mandatorily Redeemable Convertible Preferred Stock using the as if converted
method and the exercise of stock options and warrants using the treasury stock
method. Pursuant to the requirements of the Securities and Exchange Commission,
common stock equivalent shares relating to stock options and warrants, using the
treasury stock method, and the Mandatorily Redeemable Convertible Preferred
Stock, even where antidilutive, using the as if-converted method, issued
subsequent to December 31, 1994 are included in the computation of net income
per share through February 28, 1996, the effective date of the Company's initial
public offering.
Integrated Packaging Assembly Corporation, Form 10-Q Page 7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
In addition to the historical information contained herein, this Management's
Discussion and Analysis of Financial Condition and Results of Operations
contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. The forward-looking statements contained herein are
subject to certain factors that could cause actual results to differ materially
from those reflected in the forward-looking statements. Such factors include,
but are not limited to, those discussed below and elsewhere in this Report on
Form 10-Q.
OVERVIEW
Integrated Packaging Assembly Corporation, (the "Company"), is an independent
North American semiconductor packaging foundry. The Company receives wafers
from its customers and assembles each integrated circuit in a protective plastic
package. The Company commenced commercial production in the quarter ended March
31, 1994. Since then, the Company has been engaged in a continual program to
expand its manufacturing capacity, and the Company believes that its competitive
position depends substantially on its ability to successfully continue such
expansion. The expansion of the Company's manufacturing capacity is highly
dependent on the ability of the Company (i) to obtain certain critical capital
equipment which is manufactured for the Company by a limited number of suppliers
and (ii) to identify, hire, and train qualified personnel. See "Certain
Factors Affecting Operating Results".
REVENUES
The Company recognizes revenues upon shipment of products to its customers.
Revenue for the three month and six month periods ended June 30, 1996, increased
to $8.5 million and $16.5 million representing increases of 83% and 116%
respectively, over the comparable periods in the prior fiscal year. The
increase in revenues for both the three month and six month periods reflect both
a growth in unit volume from certain existing customers as well as an expansion
of the Company's customer base.
Future revenue growth is dependent on the Company receiving increased orders
from current customers and/or new customers and the Company increasing its
manufacturing capacity. In order to increase its manufacturing capacity, the
Company must obtain additional, critical capital equipment and identify, hire,
and train qualified personnel. The Company experienced delays in the receipt of
two molding and encapsulation systems during the first and second quarters of
fiscal 1996. The equipment was received at the end of the second quarter, and
the delay in the delivery had an adverse impact on second quarter revenues.
Revenue in the second quarter was also adversely impacted by a shortage of raw
material needed for a principal customer. The shortage was caused by the
delivery of raw materials in June 1996 which did not pass the Company's
standards at incoming inspection. As the vendor did not replace the defective
material in time, the Company's revenues were adversely impacted.
A substantial portion of the Company's net revenues in each quarter results from
shipments during the last month of that quarter, and for that reason, among
others, the Company's revenues are subject to significant quarterly
fluctuations. In addition, the Company establishes its targeted expenditure
levels based on expected revenues. If anticipated orders and shipments in any
quarter do not occur when expected, expenditure levels could be
disproportionately high and the Company's operating results for that quarter
could be adversely affected.
Integrated Packaging Assembly Corporation, Form 10-Q Page 8
<PAGE>
GROSS PROFIT
Cost of revenues includes materials, labor, depreciation and overhead costs
associated with semiconductor packaging. Gross profit for the three month and
six month periods ended June 30, 1996 increased to $1.8 million and $3.7 million
representing increases of 46% and 79% respectively, over the comparable periods
in the prior fiscal year. Gross profit as a percentage of revenues, or gross
margin, decreased to 20.7% for the second quarter of 1996 compared to 25.9% for
the second quarter of 1995. Gross margin decreased to 22.7% for the six month
period ended June 30, 1996 compared to 27.4% for the same period in 1995.
Gross margin in the first six months of 1995 reflected a relatively high
proportion of low volume prototype orders which carry significantly higher gross
margins compared to high volume production orders. Over the past year, an
increasing percentage of the Company's revenues have been generated from high
volume production orders. Currently, low volume prototype orders constitute
only a small percentage of overall volume, and the Company believes that any
further decline in such orders as a percentage of overall revenues would not
have a material adverse impact on future financial results.
The Company also incurred higher expenses in the second quarter of 1996, from
adding manufacturing manpower and infrastructure, which served to reduce gross
margin.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expenses consist primarily of costs
associated with sales, customer service, finance, administration and management
personnel, as well as advertising, public relations, legal and facilities costs.
Selling, general and administrative expenses increased 66% to $841,000 and 80%
to $1.6 million for the three month and six month periods ended June 30, 1996,
respectively, over the comparable periods in 1995. These increases were due
primarily to increases in staff, marketing efforts and facilities to support the
Company's expansion.
As a percentage of revenues, selling, general and administrative expenses
decreased from 10.9% for the second quarter of 1995 to 9.9% in the 1996 quarter,
and from 11.7% for the first six months of fiscal 1995 to 9.7% for the
comparable period in 1996. The decrease in such expenses as a percentage of
revenues was a result of spreading fixed costs over a larger revenue base. The
Company anticipates that its selling, general and administrative expenses will
continue to increase in absolute dollars in future periods, although such
expenses may fluctuate as a percentage of revenues.
RESEARCH AND DEVELOPMENT
Research and development expenses consist primarily of the costs associated with
research and development personnel, the cost of related materials and services,
and the depreciation of development equipment. Research and development
expenses increased 56% to $252,000 and 55% to $461,000 for the three month and
six month periods ended June 30, 1996 respectively, over the comparable periods
in 1995. These increases were due primarily to the Company's expanded efforts in
ongoing product development.
As a percentage of revenues, research and development expenses decreased from
3.5% in the second quarter of 1995 to 3.0% in the 1996 quarter, and from 3.9%
for the first six months of fiscal 1995 to 2.8% for the comparable period in
1996. The decrease in such expenses as a percentage of revenues reflects the
higher revenue level in 1996. The Company anticipates that its research and
development expenses will continue to increase in absolute dollars in future
periods.
Integrated Packaging Assembly Corporation, Form 10-Q Page 9
<PAGE>
INTEREST AND OTHER INCOME (EXPENSE)
Interest and other income resulted in net other income of $58,000 and for the
quarter ended June 30, 1996 compared to a net other expense of $118,000 for the
same quarter last year. For the six month period ended June 30, 1996, net other
expense declined to $56,000 compared to $338,000 for the comparable period in
1995. The change was due to interest income increasing to $365,000 in the
second quarter of 1996, from $123,000 for the same quarter in 1995. The
increase in interest income was earned on proceeds obtained in the Company's
initial public offering which was completed in March, 1996.
PROVISION FOR INCOME TAXES
The Company applied a provision for income taxes for the quarter ended June 30,
1996 at an expected rate of 21%, compared to a rate of 7% for the comparable
period in the prior year, reflecting the anticipated depletion of its remaining
tax loss carryforward in 1996. The Company expects to provide for income taxes
in future years at a rate of approximately 40%.
LIQUIDITY AND CAPITAL RESOURCES
During the six month period ended June 30, 1996, the Company's principal sources
of liquidity were cash flow from operations of $3.4 million, proceeds of $2.0
million from an equipment secured term loan, and net proceeds of $23.1 million
from its initial public offering completed in the first quarter. Cash flow from
operations was comprised primarily of net income of $1.2 million, depreciation
and amortization of $1.3 million, a decrease in inventory of $0.4 million and an
increase in accounts payable and accrued liabilities of $2.1 million, offset by
an increase in accounts receivable of $1.4 million. As of June 30, 1996, the
Company had cash and cash equivalents of $15.7 million and short term
investments of $6.0 million.
The Company had capital expenditures of $10.8 million during the first six
months of 1996. The capital expenditures were incurred primarily for the
purchase of production equipment. The Company expects to spend approximately
$8 million on capital expenditures during the remainder of 1996, primarily for
the acquisition of production equipment. Most of the Company's production
equipment has been funded either through capital leases or term loans secured by
capital equipment. The Company acquired $3.7 million and $4.0 million of
production equipment through capital leases in 1993 and 1994 respectively, which
leases expire from December 1997 to January 1999. The production equipment
acquired in 1995 was funded through two term loans, with a total amount of $4.9
million, secured by the equipment.
During June 1996, the Company concluded a loan facility providing $4 million of
equipment financing, available through March, 1997. The Company has utilized
$2.0 million of this facility through June 30, 1996.
The Company has a $2.0 million revolving credit line, secured by substantially
all of the Company's assets, expiring in May 1997. As of June 30, 1996, no
money had been borrowed against this line; however, $500,000 of this line had
been utilized to secure outstanding commercial letters of credit.
Integrated Packaging Assembly Corporation, Form 10-Q Page 10
<PAGE>
The Company believes that its existing cash and short term investment balances
along with anticipated cash from operations and equipment financing will be
sufficient to meet its projected working capital and other cash requirements at
least through 1996. There can be no assurance, however, that lower than
expected revenues, increased expenses, increased costs associated with the
purchase or maintenance of capital equipment, or other events will not cause the
Company to seek more capital, or capital sooner than currently expected. The
timing and amount of the Company's actual capital requirements will depend on a
number of factors, including demand for the Company's services, availability of
capital equipment, adverse fluctuations in foreign currency exchange rates,
changes in semiconductor industry conditions and competitive factors. There can
be no assurance that additional financing will be available when needed or, if
available, will be available on satisfactory terms.
Integrated Packaging Assembly Corporation, Form 10-Q Page 11
<PAGE>
CERTAIN FACTORS AFFECTING OPERATING RESULTS
The Company's operating results are affected by a wide variety of factors that
could materially and adversely affect revenues, gross profit and operating
income. These factors include the short term nature of its customers'
commitments, timing and volume of orders relative to the Company's production
capacity, long lead times for the manufacturing equipment required by the
Company, evolutions in the life cycles of customers' products, timing of
expenditures in anticipation of future orders, lack of a meaningful backlog,
effectiveness in managing production processes, changes in costs and
availability of labor, raw materials and components, costs to obtain materials
on an expedited basis, mix of orders filled, the impact of price competition on
the Company's average selling prices and changes in economic conditions.
Unfavorable changes in any of the above factors would adversely affect the
Company's business, financial condition and results of operations.
DEPENDENCE ON A LIMITED NUMBER OF EQUIPMENT SUPPLIERS
The semiconductor packaging business is capital intensive and requires a
substantial amount of highly automated, expensive capital equipment which is
manufactured by a limited number of suppliers, many of which are located in Asia
or Europe. The market for capital equipment used in semiconductor packaging has
been and is expected to continue to be characterized by intense demand, limited
supply and long delivery cycles. As the Company attempts to expand its
production capacity, it will be necessary for the Company to obtain a
substantial amount of this capital equipment. Accordingly, the Company's
operations and expansion plans are highly dependent on its ability to obtain a
significant amount of this capital equipment from a limited number of suppliers.
The Company has no long term agreement with any such supplier and acquires such
equipment on a purchase order basis. This dependence creates substantial risks.
Should any of the Company's major suppliers be unable or unwilling to provide
the Company with high quality capital equipment in amounts necessary to meet the
Company's requirements, the Company would experience severe difficulty locating
alternative suppliers in a timely fashion and its ability to achieve its
expansion plans would be materially adversely affected. A prolonged delay in
equipment shipments by key suppliers or an inability to locate alternative
equipment suppliers would have a material adverse effect on the Company's
business, financial condition and results of operations and could result in
damage to customer relationships.
In this regard, the Company experienced a significant delay in the receipt of
two molding systems previously scheduled for delivery in March and April 1996,
which did not arrive until late in the second quarter. These delays adversely
impaired the Company's revenues in the second quarter of 1996.
Moreover, increased levels of demand in the capital equipment market may cause
an increase in the price of equipment, further lengthen delivery cycles and
limit the ability of suppliers to adequately service equipment following
delivery, any of which could have a material adverse effect on the Company's
business, financial condition and results of operations. In addition, adverse
fluctuations in foreign currency exchange rates, particularly the Japanese yen,
could result in increased prices for the equipment purchased by the Company,
which could have a material adverse effect on the Company's business, financial
condition and results of operations.
Integrated Packaging Assembly Corporation, Form 10-Q Page 12
<PAGE>
DEPENDENCE ON THE SEMICONDUCTOR INDUSTRY
The Company's business is substantially affected by market conditions in the
semiconductor industry, which is highly cyclical and, at various times, has been
subject to significant economic downturns and characterized by reduced product
demand, rapid erosion of average selling prices and production overcapacity. In
addition, the markets for integrated circuits are characterized by rapid
technological change, evolving industry standards, intense competition and
fluctuations in endures demand. Because the Company's business is entirely
dependent on the requirements of semiconductor companies for independent
packaging foundries, any downturn in the semiconductor industry is expected to
have an adverse effect on the Company's business, financial condition and
results of operations. For example, delays or rescheduling of orders due to a
downturn or anticipated downturn in the semiconductor industry could have a
material adverse effect on the Company's business, operating results and
financial condition.
In this regard, the Company experienced a significant decline in orders during
June 1996 which the Company attributes to reduced demand for semiconductors
manufactured by certain of the Company's customers that serve, in particular,
the personal computer market. There can be no assurance that this recent
downturn in the computer industry, or the general economic conditions underlying
this downturn, will not continue into the third and fourth quarters of 1996.
Furthermore, there can be no assurance that any such continuation or expansion
of this downturn will not result in an additional and significant decline in the
demand for the products produced by the Company's customers and a corresponding
material adverse impact on the Company's business, operating results and
financial condition.
In addition, the Company has been substantially dependent on a relatively small
number of customers within the semiconductor industry. The Company anticipates
that significant customer concentration will continue at least through fiscal
year 1996. There can be no assurance that such customers or any other
customers will continue to place orders with the Company in the future at the
same levels as in prior periods. The loss of one or more of the Company's
customers, or reduced orders by any of its key customers, would adversely affect
the Company's business, financial condition and results of operations.
EXPANSION OF MANUFACTURING CAPACITY
The Company believes that its competitive position depends substantially on its
ability to expand its manufacturing capacity. The Company is continuing to make
significant investments to expand such capacity, particularly through the
acquisition of capital equipment and the training of new personnel. There can
be no assurance that the Company will be able to utilize such capacity or expand
its manufacturing capacity in a timely manner, that the cost of such expansion
will not exceed management's current estimates or that such capacity will not
exceed the demand for the Company's services. In addition, expansion of the
Company's manufacturing capacity will continue to significantly increase its
fixed costs, and the future profitability of the Company will depend on its
ability to utilize its manufacturing capacity in an effective manner. The
Company's inability to generate the additional revenues necessary to fully
utilize its capacity would have a material adverse effect on the Company's
business, financial condition and results of operations.
Integrated Packaging Assembly Corporation, Form 10-Q Page 13
<PAGE>
MANAGEMENT OF GROWTH
The Company has recently experienced and may continue to experience substantial
growth in the number of its employees and the scope of its operations. This
growth is expected to continue to strain the Company's managerial, financial,
manufacturing and other resources. In addition, in order to manage its growth,
the Company must not only improve its existing operational, financial and
management systems, it must continue to implement additional operating and
financial controls and hire and train additional personnel. Any failure to
improve the Company's operational, financial and management systems could have a
material adverse effect on the Company's business, financial condition and
results of operations. Because the Company's expense levels are based in part
on anticipated future revenue levels, if revenue were to fall below projected
levels, the Company's operating results would be materially adversely affected.
In addition, the Company must hire and train significant numbers of additional
personnel to operate the highly complex capital equipment required by its
manufacturing operations. There can be no assurance that the Company will be
able to hire and properly train sufficient numbers of qualified personnel or to
effectively manage such growth and its failure to do so could have a material
adverse effect on the Company's business, financial condition and results of
operations.
PRODUCT QUALITY AND RELIABILITY; PRODUCTION YIELDS
The semiconductor packaging process is complex and product quality and
reliability is subject to a wide variety of factors. Defective packaging can
result from a number of factors, including the level of contaminants in the
manufacturing environment, human error, equipment malfunction, use of defective
raw materials, defective plating services and inadequate sample testing. From
time to time, the Company expects to experience lower than anticipated
production yields as a result of such factors. For example, in the second and
third quarters of 1995, the Company experienced inefficiencies due to rework of
subcontracted plating services which required the Company to reschedule planned
new production and resulted in lower gross profit during such periods. The
Company's failure to maintain high quality production standards or acceptable
production yields would likely result in loss of customers, delays in shipments,
increased costs, cancellation of orders and product returns for rework, any of
which could have a material adverse effect on the Company's business, financial
condition and results of operations.
DEPENDENCE ON RAW MATERIALS SUPPLIERS AND SUBCONTRACTORS
To maintain competitive manufacturing operations, the Company must obtain from
its vendors, in a timely manner, sufficient quantities of acceptable materials
at expected prices. The Company sources most of its raw materials, including
critical materials such as lead frames and die attach compound, from a limited
group of suppliers. Molding compound, a critical raw material, is obtained from
a single supplier. From time to time, vendors have extended lead times or
limited the supply of required materials to the Company because of vendor
capacity constraints and, consequently, the Company has experienced difficulty
in obtaining acceptable raw materials on a timely basis. In addition, from time
to time, the Company may reject materials from those vendors that do not meet
its specifications, resulting in declines in output or yield. Any interruption
in the availability of or reduction in the quality of materials from these
suppliers would materially adversely affect the Company's business, financial
condition and results of operations. For example, in the second quarter of
fiscal 1996, the Company's revenues were adversely affected by the rejection of
a batch of key material.
Integrated Packaging Assembly Corporation, Form 10-Q Page 14
<PAGE>
The Company purchases all of its materials on a purchase order basis and has no
long term contracts with any of its suppliers. There can be no assurance that
the Company will be able to obtain sufficient quantities of raw materials and
other supplies. The Company's business, financial condition and results of
operations would be materially adversely affected if it were unable to obtain
sufficient quantities of raw materials and other supplies in a timely manner or
if there were significant increases in the costs of raw materials that the
Company could not pass on to its customers.
The Company also relies on subcontractors to perform certain manufacturing
operations such as plating. From time to time, the Company's plating
subcontractors have experienced significant manufacturing problems. In
particular, such problems resulted in delayed customer shipments by, and
increased costs to, the Company during the second and third quarters of 1995.
There can be no assurance that the Company's subcontractors will not experience
manufacturing problems in the future or that such problems will not result in
increased costs or production delays which could have a material adverse effect
on the Company's business, financial condition and results of operations.
DEPENDENCE ON SINGLE MANUFACTURING FACILITY
The Company's current manufacturing operations are located in a single facility
in San Jose, California. Because the Company does not currently operate
multiple facilities in different geographic areas, a disruption of the Company's
manufacturing operations resulting from various factors, including sustained
process abnormalities, human error, government intervention or a natural
disaster such as fire, earthquake or flood, could cause the Company to cease or
limit its manufacturing operations and consequently would have a material
adverse effect on the Company's business, financial condition and results of
operations.
COMPETITION; POTENTIAL DECLINE IN AVERAGE SELLING PRICES
The semiconductor packaging industry is highly competitive. The Company
currently faces substantial competition from established packaging foundries
located in Asia. Each of these competitors has significantly greater
manufacturing capacity, financial resources, research and development
operations, marketing and other capabilities than the Company, and has been
operating for a significantly longer period of time than the Company. Such
companies also have established relationships with many large semiconductor
companies which are current or potential customers of the Company. The Company
could face substantial competition from Asian packaging foundries should one or
more of such companies decide to establish foundry operations in North America.
The Company could also face competition from emerging independent North American
packaging foundries. The Company also competes against companies which have in
house packaging capabilities as current and prospective customers constantly
evaluate the Company's capabilities against the merits of in house packaging.
Many of the Company's customers are also customers of one or more of the
Company's competitors. In addition, the Company expects that average selling
prices for its products may decline in the future, principally due to intense
competitive conditions. A decline in average selling prices of the Company's
products, if not offset by reductions in the cost of producing those products,
would decrease the Company's gross margins and could materially and adversely
affect the Company's business, financial condition and results of operations.
There can be no assurance that the Company will be able to reduce its cost per
unit.
Integrated Packaging Assembly Corporation, Form 10-Q Page 15
<PAGE>
PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.17 Sublease agreement between Company and Peripheral Computer
Support dated March 8, 1996
11.1 Statement Regarding Computation of Earnings Per Share
27 Financial Data
(b) Reports on Form 8-K
None
Integrated Packaging Assembly Corporation, Form 10-Q Page 16
<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.
INTEGRATED PACKAGING ASSEMBLY CORPORATION
Date: August 12, 1996 /s/ Tony Lin
______________________________
Tony Lin
Vice President, Finance and Chief Financial
Officer
Integrated Packaging Assembly Corporation, Form 10-Q Page 17
<PAGE>
EXHIBIT INDEX
10.17 Sublease agreement between Company and Peripheral Computer
Support dated March 8, 1996
11.1 Statement Regarding Computation of Earnings Per Share
27 Financial Data
Integrated Packaging Assembly Corporation, Form 10-Q Page 18
<PAGE>
EXHIBIT 10.17
SUBLEASE
SUBLANDLORD: PERIPHERAL COMPUTER SUPPORT, INC.
SUBJECT PROPERTY: A PORTION OF 2221 OLD OAKLAND ROAD, SAN JOSE, CALIFORNIA
SUBTENANT: INTEGRATED PACKAGING ASSEMBLY CORPORATION
DATE: MARCH 8, 1996
1. PARTIES. This Sublease is made and entered into as of March 8, 1996, by
and between Peripheral Computer Support, Inc. ("Sublandlord), and Integrated
Packaging Assembly Corporation ("Subtenant"), under the Master Lease dated
April 8, 1994, between EMIF CALIFORNIA LIMITED PARTNERSHIP VIII, LP, a
California Limited Partnership, as "Lessor" ("Master Landlord") and Sublandlord
under this Sublease as "Lessee" for approximately __13,805__ square feet of
------
improved space located on the second floor of that certain building bearing the
address of 2221 Old Oakland Road, Santa Clara, California (the "Master
Premises"). A copy of the Master Lease, including the Addendum thereto, is
attached hereto as Attachment I and incorporated herein by this reference.
2. PROVISIONS CONSTITUTING SUBLEASE
2.1 This Sublease is subject to all of the terms and conditions of the
Master Lease. Except as specifically set forth herein, Subtenant hereby
assumes and agrees to perform all of the obligations of "Lessee" under the
Master Lease to the extent said obligations apply to the Subleased Premises and
Subtenant's use of the Common Areas. Sublandlord hereby agrees to use its best
efforts to cause Master Landlord under the Master Lease to perform all of the
obligations of Master Landlord as "Lessor" thereunder to the extent said
obligations apply to the Subleased Premises and Subtenant's use of the Common
Areas. Subtenant shall not commit or permit to be committed on the Subleased
Premises or on any other portion of the Project any act or omission which
violates any term or condition of the Master Lease. Except to the extent waived
or consented to in writing by the other party or parties hereto who are affected
thereby, neither of the parties hereto will, by renegotiation of the Master
Lease, assignment, subletting, default or any other voluntary action, avoid
or seek to avoid the observance or performance of the terms to be observed or
performed hereunder by such party, but will at all times in good faith assist
in carrying out all the terms of this Sublease and in taking all such action as
may be necessary or appropriate to protect the rights of the other party or
parties hereto who are affected thereby against impairment. Nothing contained
in this Section 2.1 or elsewhere in this Sublease shall prevent or prohibit
Sublandlord (a) from exercising its right to terminate the Master Lease pursuant
to the terms thereof or (b) from assigning its interest in this Sublease or
subletting the Premises to any other third party. All defined terms used herein
shall have the meaning ascribed to them in the Master Lease unless otherwise
defined herein.
-1-
<PAGE>
2.2 Except as otherwise expressly provided in this Sublease, the terms,
provisions, and conditions contained in the Master Lease are incorporated in
this Sublease by reference, and are made a part hereof as if herein set forth
at length, "Sublandlord" being substituted for the "Lessor" under the Master
Lease, "Subtenant" being substituted for the "Lessee" under the Master Lease,
and "Subleased Premises" being substituted for "Premises") under the Master
Lease. "Rent" under the Master Lease shall be deemed to refer to be Rent
hereunder. The "Security Deposit" under the Master Lease shall be deemed to be
the Security Deposit hereunder, and any amount associated with such term in the
Master Lease shall be deemed the amount of the Security Deposit hereunder. In
the event of a conflict between a provision of the Master Lease and a provision
of this Sublease with respect to Subtenant's rights and obligations under this
Sublease, the terms of this Sublease shall prevail. Notwithstanding any
provision to the contrary in this Sublease, the following provisions of the
Master Lease are expressly not incorporated herein by reference, and such
provisions shall solely be the obligation of Sublandlord: Sections 2.1, 3.1,
3.2, 3.3, 4, the first sentence of Section 5; Sections 10, 11, 30, 41, 51, 55,
56, 57, and 58.
3. SUBLEASED PREMISES AND RENT
3.1 SUBLEASED PREMISES. Sublandlord leases to Subtenant and Subtenant
leases from Sublandlord the Subleased Premises upon all of the terms, covenants
and conditions contained in this Sublease. The Subleased Premises consist of
that portion of the Master Premises consisting of approximately 13,805 square
feet, as shown on Exhibit A of this Sublease.
3.2 RENT. Subtenant shall pay to Sublandlord as Rent for the Subleased
Premises the sum of Five Thousand Five Hundred Twenty Two Dollars ($5,522.00)
per month, without deductions, offset, prior notice or demand. Rent shall be
payable by Subtenant to Sublandlord in consecutive monthly installments on or
before the first day of each calendar month during the Sublease Term. If the
Sublease commencement date or the termination date of the Sublease occurs on a
date other than the first day or the last day, respectively, of a calendar
month, then the Rent for such partial month shall be prorated and the prorated
Rent shall be payable on the Sublease commencement date or on the first day of
the calendar month in which the Sublease termination date occurs, respectively.
3.3 OPERATING EXPENSES. Subtenant shall assume all of the Sublandlord's
share of the building operating expenses defined in Section 4.2 of the Master
Lease. Master Landlord will adjust the monthly billings to Sublandlord and
Subtenant to reflect these adjusted percentages. Notwithstanding any provision
to the contrary in this Sublease or in the Master Lease, Subtenant shall have no
liability for all or any portion of that component of the management fee
described in Section 52(A) of the Master Lease which is equal to five percent
(5%) of the amount of base rent payable under the Master Lease and such amount
shall be excluded from Operating Expenses. Sublandlord will cooperate with
Subtenant to arrange with Master Landlord for Subtenant to pay Subtenant's Share
of Operating Expenses directly to Master Landlord on the terms and conditions
applicable under the Master Lease. If such method of payment is not effected,
Subtenant shall pay Subtenant's Share of Operating Expenses to Sublandlord on a
monthly basis along with its payments of Rent. Such payments shall in any
event be equitably prorated for any partial month occurring included in the term
of this Sublease. If Sublandlord receives any refunds or credits from Master
Landlord with respect to the Operating Expenses, Sublandlord shall pay to
Subtenant an amount equal to Tenant's Share of any such refund or credit.
Direct billing of the Subtenant's share of Operating Expenses does not release
Sublandlord from liability for the payment of Operating Expenses if Subtenant
fails to make timely payment to Master Landlord.
-2-
<PAGE>
3.4 SECURITY DEPOSIT In addition to the Rent specified above,
Subtenant shall pay to Sublandlord an equivalent of one month's rent as a
Security Deposit. The Security Deposit shall not bear interest. Upon the
termination or sooner expiration of this Sublease, Sublandlord shall return the
Security Deposit, or the balance remaining after application of the Sublease
for the purposes permitted under this Sublease, in accordance with California
Civil Code Section 1950.7, or any successor statute thereto.
4. RIGHTS OF ACCESS AND USE
4.1 USE Subtenant shall use the Subleased Premises only for those
purposes permitted in the Master Lease, unless Sublandlord and Master Landlord
consent in writing to other uses prior to the commencement thereof.
5. SUBLEASE TERM
5.1 SUBLEASE TERM The Sublease Term shall be for the period
commencing on the date which is the last to occur of the following (i) the
mutual execution and delivery of this Sublease by Sublandlord and Subtenant and
(ii) Subtenant's receipt of an executed original of the Consent to Sublease
which immediately follows this Sublease, continuing through July 31, 1997. In
no event shall the Sublease Term extend beyond the Term of the Master Lease.
6. NOTICES All notices, demands, consents and approvals which may or are
required to be given by either party to the other hereunder shall be given in
the manner provided in the Master Lease, at the addresses shown on the
signature page hereof. Sublandlord shall notify Subtenant of any Event of
Default under the Master Lease, or of any other event of which Sublandlord has
actual knowledge which will impair Subtenant's ability to conduct its normal
business at the Subleased Premises, as soon as reasonably practicable following
Sublandlord's receipt of notice from the Landlord of an Event of Default or
actual knowledge of such impairment. If Sublandlord elects to terminate the
Master Lease, Sublandlord shall so notify Subtenant by giving at least 30 days'
notice prior to the effective date of such termination.
7. COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT. Subtenant shall be
responsible for the installation and cost of any and all improvements,
alterations or other work required on or to the Subleased Premises or to any
other portion of the property and/or building of which the Subleased Premises
are a part, required or reasonably necessary because of: (1) Subtenant's use of
the Subleased Premises or any portion thereof; (2) the use by a subtenant by
reason of assignment or sublease; or (3) both, including any improvements,
alterations or other work required under the Americans with Disabilities Act of
1990. Compliance with the provisions of this Section 8 shall be a condition of
Sublandlord granting its consent to any assignment or Sublease of all or a
portion of this Sublease and the Subleased Premises described in this Sublease.
-3-
<PAGE>
8. DAMAGE AND DESTRUCTION AND EMINENT DOMAIN. Master Landlord will deliver to
Subtenant a copy of all notices delivered to Sublandlord under Sections 9 and 14
of the Master Lease. If Master Landlord elects to cancel and terminate the
Master Lease under Section 9, this Sublease shall also be terminated as of the
same effective date.
9. SUBTENANT'S DEFAULT. Notwithstanding any provision of this Sublease to the
contrary including, without limitation, any provision of the Master Lease
incorporated herein, (i) Subtenant shall not be in default under this Sublease
if it ceases to occupy all or any part of the Subleased Premises so long as it
continues to perform its other obligations under this Sublease, and any such
cessation of occupancy shall not constitute abandonment of the Subleased
Premises, and (ii) if Sublandlord terminates Subtenant's right to occupy the
Subleased Premises following Subtenant's default under this Sublease and
Subtenant's failure to cure any such default within any applicable cure period,
Sublandlord shall be deemed to have terminated this Sublease.
10. ASSIGNMENT AND SUBLETTING. If Subtenant requests Sublandlord's consent
to any assignment or subletting and Master Landlord's consent is also required
for such assignment or subletting and Master Landlord gives such consent,
Sublandlord shall not unreasonably withhold its consent.
11. SUBLANDLORD'S COOPERATION. If Master Landlord's consent is required for
any action which Subtenant desires to take under this Sublease, Sublandlord
shall cooperate with Subtenant to obtain such consent. Subtenant is responsible
for informing Master Landlord and Sublandlord of any alterations or improvements
to the Subleased Premises. If Master Landlord's approval for the alteration is
required under the Master Lease, Subtenant will get such approval. Subtenant
is responsible for securing all necessary permits for the work. Subtenant is
responsible for any restoration costs due Master Landlord and will indemnify
Sublandlord if Sublandlord has to pay such costs.
12. COMPLIANCE WITH NONDISCRIMINATION REGULATIONS It is understood that it
is illegal for Sublandlord to refuse to display or sublease the Subleased
Premises, or to assign, surrender or sell the Master Lease, to any person
because of race, color, religion, national origin, sex, sexual orientation,
marital status or disability.
13. TOXIC CONTAMINATION DISCLOSURE. Sublandlord and Subtenant each
acknowledge that they have been advised that numerous federal, state, and/or
local laws, ordinances and regulations ("Laws") affect the existence and
removal, storage, disposal, leakage of and contamination by materials designated
as hazardous or toxic ("Toxics"). Many materials, some utilized in everyday
business activities and property maintenance, are designated as hazardous or
toxic.
Some of the Laws require that Toxics be removed or cleaned up by landowners,
future landowners or former landowners without regard to whether the party
required to pay for "clean up" caused the contamination, owned the property at
the time the contamination occurred or even knew about the contamination. Some
items, such as asbestos or PCBs, which were legal when installed, now are
classified as Toxics, and are subject to removal requirements. Civil lawsuits
for damages resulting from Toxics may be filed by third parties in certain
circumstances.
-4-
<PAGE>
Sublandlord and Subtenant each acknowledge that Broker has no specific
expertise with respect to environmental assessment or physical condition of the
Subleased Premises, including, but not limited to, matters relating to: (i)
problems which may be posed by the presence or disposal of hazardous or toxic
substances on or from the Subleased Premises, (ii) problems which may be posed
by the Subleased Premises being within the Special Studies Zone as designated
under the Alquist-Priolo Special Studies Zone Act (Earthquake Zones), Section
2621(S)2630, inclusive of California Public Resources Code, and (iii) problems
which may be posed by the Subleased Premises being within a HUD Flood Zone as
set forth in the U.S. Department of Housing and Urban Development "Special
Flood Zone Area Maps," as applicable.
Sublandlord and Subtenant each acknowledge that Broker has not made an
independent investigation or determination of the physical or environmental
condition of the Subleased Premises, including, but not limited to, the
existence or nonexistence of any underground tanks, sumps, piping, toxic or
hazardous substances on the Subleased Premises. Subtenant agrees that it will
rely solely upon its own investigation and/or the investigation of professionals
retained by it or Sublandlord, and neither Sublandlord nor Subtenant shall rely
upon Broker to determine the physical and environmental condition of the
Subleased Premises or to determine whether, to what extent or in what manner,
such condition must be disclosed to potential sublessees, assignees, purchasers
or other interested parties.
14. RENT ABATEMENT AND DAMAGES TO PERSONAL PROPERTY In the event
Sublandlord, pursuant to the terms of the Master Lease, is entitled to and
receives rent abatement, then to the extent such rent abatement affects the
Subleased Premises, Subtenant shall be entitled to rent abatement in an amount
that the net rentable area of the Subleased Premises bears to the total net
rentable area of the Master Premises, and only to the extent any such abatement
applies to the Sublease term. In addition, any amounts paid or credited to
Sublandlord under the terms of the Master Lease for damage to personal property
shall be credited to Subtenant, subject to the same limitations set forth
above.
15. WAIVER OF SUBROGATION. Subtenant agrees that, upon Master Landlord's
execution of Master Landlord's Consent to Sublease which follows this Sublease,
the waiver of subrogation provision in Section 8.6 of the Master Lease shall be
effective between Master Landlord and Subtenant as well as between Master
Landlord and Sublandlord.
-5-
<PAGE>
16. HAZARDOUS MATERIALS. Paragraph 50 of the Master Lease is hereby
incorporated into this Lease except that all references to Lessee or to Tenant
refer to Subtenant and all references to Lessor refer to both Sublandlord and
Master Landlord and all references to Premises refer to Subleased Premises.
SUBLANDLORD: PERIPHERAL COMPUTER SUPPORT, INC.
By: /s/ Tu Nguyen Date: March 8, 1996
Its: President
SUBTENANT: INTEGRATED PACKAGING ASSEMBLY CORPORATION
By /s/ Tony Lin Date: March 8, 1996
Its: Chief Financial Officer
-6-
<PAGE>
EXHIBIT 11.1
INTEGRATED PACKAGING ASSEMBLY CORPORATION
COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS, EXCEPTS PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Fiscal Quarter Ended Six Months Ended
---------------------- ------------------
June 30 June 30 June 30 June 30
1996 1995 1996 1995
---------- ---------- -------- --------
<S> <C> <C> <C> <C>
Weighted average common shares
outstanding 13,843 2,111 10,073 2,111
Common equivalent shares from options, warrants
and convertible preferred stock (1) -- 2,347 -- 2,347
Weighted average common equivalent
shares from convertible preferred stock
calculated using if-converted method -- 6,123 2,621 6,123
Weighted average common stock equivalents
calculated by the treasury stock method
applied to options and warrants 955 675 909 690
-------- --------- -------- --------
Weighted average common shares and
equivalents 14,798 11,256 13,603 11,271
======== ========= ======== ========
Net income $567 $386 $1,179 $528
======== ========= ======== ========
Net income per share $0.04 $0.03 $0.09 $0.04
======== ========= ======== ========
</TABLE>
(1) Pursuant to Securities and Exchange Commission Staff Accounting Bulletins,
common and common equivalent shares and options issued by the Company
during the 12 month period prior to the initial public offering of the
Company's common stock have been included as if they were outstanding for
all periods presented
Integrated Packaging Assembly corporation, Form 10-Q
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
EXHIBIT 27
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED STATEMENT OF OPERATIONS, THE CONDENSED BALANCE SHEET AND THE
ACCOMPANYING NOTES TO THE CONDENSED FINANCIAL STATEMENTS, AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 15,703
<SECURITIES> 6,044
<RECEIVABLES> 4,322
<ALLOWANCES> 55
<INVENTORY> 1,1770
<CURRENT-ASSETS> 28,392
<PP&E> 29,770
<DEPRECIATION> 3,030
<TOTAL-ASSETS> 55,429
<CURRENT-LIABILITIES> 8,986
<BONDS> 0
0
0
<COMMON> 39,621
<OTHER-SE> (189)
<TOTAL-LIABILITY-AND-EQUITY> 55,429
<SALES> 16,526
<TOTAL-REVENUES> 16,526
<CGS> 12,777
<TOTAL-COSTS> 12,777
<OTHER-EXPENSES> 2,064
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 308
<INCOME-PRETAX> 1,629
<INCOME-TAX> 450
<INCOME-CONTINUING> 1,179
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,179
<EPS-PRIMARY> 0.09
<EPS-DILUTED> 0.09
</TABLE>
