SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________
FORM 10-Q
[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 No. 0-25662
ANADIGICS, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State of other jurisdiction of incorporation or organization)
22-2582106
(I.R.S. Employer Identification No.)
35 Technology Drive Warren, New Jersey
(Address of principal executive offices)
07059
(Zip Code)
(908) 668-5000
(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 [ ]
The number of shares outstanding of the registrant's common stock as of
June 30, 1996 was 8,318,314.
<PAGE>
INDEX
ANADIGICS, Inc.
Part. I. Financial Information
Item 1. Financial Statements (unaudited)
Condensed balance sheets - June 30, 1996 and
December 31, 1995.
Condensed statements of income - Three and six
months ended June 30, 1996 and June 30, 1995.
Condensed statements of cash flows - Six months
ended June 30, 1996 and June 30, 1995.
Notes to condensed financial statements - June 30,
1996.
Item 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operations.
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
PART I
FINANCIAL STATEMENTS
Item 1. Financial Statements (unaudited)
CONDENSED BALANCE SHEETS
ANADIGICS, Inc.
(Amounts in thousands)
June 30, 1996 Dec 31, 1995 *
(unaudited)
Assets
Current assets:
Cash and cash equivalents $15,646 $6,394
Marketable securities 14,566 22,788
Accounts receivable, net 9,012 7,379
Inventory - Note 2 10,425 8,735
Prepaid expenses and other current assets 1,850 981
Deferred taxes 291 184
Total current assets 51,790 46,461
Equipment and furniture 37,778 31,951
Leasehold improvements 2,784 2,586
Less accumulated depreciation and amortization 18,806 16,060
21,756 18,477
Deposits 502 280
Deferred taxes 1,032 1,032
Total assets $75,080 $66,250
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $3,818 $2,671
Accrued liabilities 4,205 4,027
Income taxes payable 2,837 2,092
Current maturities of capital lease
obligations 1,679 1,718
Total current liabilities 12,539 10,508
Capital lease obligation, less current portion 1,086 1,919
Total liabilities 13,625 12,427
Stockholders' equity - Note 3
Common stock 83 77
Common stock non-voting - 3
Common stock subscribed (2) (2)
Additional paid-in capital 97,903 94,105
Accumulated deficit (36,529) (40,360)
Total stockholders' equity 61,455 53,823
Total liabilities and equity $75,080 $66,250
* The condensed balance sheet at December 31, 1995 has been derived from
the audited financial statements at that date but does not include all the
information and footnotes required by generally accepted accounting
principles for complete financial statements. See Notes to Condensed
Financial Statements.<PAGE>
CONDENSED STATEMENTS OF INCOME
ANADIGICS, Inc.
(Amounts in thousands, except per share amounts)
Three months ended Six months ended
06/30/96 06/30/95 06/30/96 06/30/95
(unaudited) (unaudited) (unaudited) (unaudited)
Net sales $15,862 $12,465 $29,437 $23,435
Cost of sales 8,254 5,767 15,090 11,207
Gross profit 7,608 6,698 14,347 12,228
Research and development exp 3,284 3,182 6,162 5,911
Selling and administrative exp 2,063 1,658 4,031 3,057
Operating income 2,261 1,858 4,154 3,260
Interest expense 90 184 214 410
Interest income 411 330 849 419
Income before income taxes 2,582 2,004 4,789 3,269
Provision for income taxes 516 581 958 948
Net income $2,066 $1,423 $3,831 $2,321
Net income per share $0.24 $0.18 $0.45 $0.34
<PAGE>
CONDENSED STATEMENTS OF CASH FLOWS
ANADIGICS, Inc.
(Amounts in thousands)
The six months ended
June 30, 1996 June 30, 1995
(unaudited) (unaudited)
Cash flow from operating activities
Net income $3,831 $2,321
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation 1,765 1,146
Amortization 1,119 1,128
Changes in operating assets and liabilities:
Accounts receivable (1,633) 1,539
Inventory (1,690) (1,216)
Other current assets (869) (373)
Deferred taxes (107) -
Deposits (222) 49
Accounts payable 1,147 1,268
Income taxes payable 745 947
Accrued liabilities 178 1,124
Net cash provided by operating activities 4,264 7,933
Cash flows from investing activities
Purchase of plant and equipment (6,163) (4,664)
Purchase of marketable securities (5,529) 0
Proceeds from sale of marketable securities 13,688 0
Net cash provided by (used in) investing activities 1,996 (4,664)
Cash flows from financing activities:
Payment of capital lease obligations (872) (1,056)
Payment of long-term debts 0 (2,583)
Exercise of warrants 3,610 0
Exercise of options 253 4
Issuance of common stock 1 25,104
Proceeds of common stock subscribed - 18
Net cash provided by (used in) financing activities 2,992 21,487
Net increase in cash and cash equivalents 9,252 24,756
Cash and cash equivalents at beginning of period 6,394 4,564
Cash and cash equivalents at end of period $15,646 $29,320
Non-cash investing and financing activities:
Acquisition of plant and equipment under
financing leases $0 $1,341
Interest paid $214 $410
Taxes paid $320 $0<PAGE>
ANADIGICS, Inc.
Notes to Condensed Financial Statements (unaudited) June 30, 1996
1. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed 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
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three and six month periods ended June 30, 1996 are not
necessarily indicative of the results that may be expected for the year
ending December 31, 1996. For further information, refer to the financial
statements for the year ended December 31, 1995 and footnotes thereto
included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1995.
2. Inventories
Inventories are stated at the lower of cost (first-in, first-out method) or
market. Inventories consist of the following:
June 30 Dec. 31
1996 1995
Raw materials $1,265 $882
Work in process 6,290 6,137
Finished goods 2,870 1,716
$10,425 $8,735
3. Stockholders' Equity
Common stock consists of the following:
June 30 Dec. 31
1996 1995
Common stock, $0.01 par value; 34,000,000 shares
authorized at December 31, 1995 and June 30, 1996,
7,735,957 and 8,271,373 shares issued and
outstanding at December 31, 1995 and June 30, 1996,
respectively $83 $77
Common stock, non-voting $0.01 par value; 1,000,000
shares authorized at December 31, 1995 and June 30,
1996, 347,781 and 46,941 shares issued and
outstanding at December 31, 1995 and June 30, 1996,
respectively $0 $3
<PAGE>
ANADIGICS, Inc.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operation
Results of Operations
The following table sets forth unaudited statements of operations data as
a percent of net sales for the periods presented:
Statements of Operations
Three months ended Six months ended
06/30/96 06/30/95 06/30/96 06/30/95
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 52.0% 46.3% 51.3% 47.8%
Gross profit 48.0% 53.7% 48.7% 52.2%
Research and development expenses 20.7% 25.5% 20.9% 25.2%
Selling and administrative expenses 13.0% 13.3% 13.7% 13.0%
Operating income 14.3% 14.9% 14.1% 14.0%
Interest expense 0.6% 1.4% 0.7% 1.8%
Interest income 2.6% 2.6% 2.9% 1.8%
Income before income taxes 16.3% 16.1% 16.3% 14.0%
Provision for income taxes 3.3% 4.7% 3.3% 4.1%
Net income 13.0% 11.4% 13.0% 9.9%
Second Quarter 1996 (Ended June 30, 1996) Compared to Second Quarter 1995
(Ended June 30, 1995)
Net Sales. Net sales during the second quarter of 1996 increased 27% to
$15.9 million from $12.5 million in the second quarter of 1995. Second
quarter 1996 sales of integrated circuits (ICs) for fiber optic
telecommunications and data communication applications increased 54% to
$3.3 million from $2.1 million in the second quarter of 1995 as demand for
OC-12 and lower bit rate transimpedance amplifiers (TIA) increased. Sales
of ICs for direct broadcast satellite applications increased 24% during
the second quarter of 1996 to $4.0 million from $3.2 million in the second
quarter of 1995. Sales of ICs for cable television applications increased
22% during the second quarter of 1996 to $3.8 million from $3.1 million in
the second quarter of 1995. Sales of ICs for cellular and personal
communication applications increased 4% during the second quarter of 1996
to $3.9 million from $3.8 million in the second quarter of 1995.
Engineering service sales which reflect customers' contributions to
research and development increased $0.6 million during the quarter to $0.9
million from $0.3 million in the second quarter of 1995.
Gross Margin. Gross margin during the second quarter of 1996 declined to
48.0% from 53.7% in the second quarter of 1995. Product gross margins
declined due to generally lower IC prices while manufacturing efficiency
associated with higher volumes were significantly offset by start-up cost
inefficiencies on new products. The Company expects that product gross
margins in the next quarter may continue to be adversely impacted by
start-up costs and manufacturing inefficiencies associated with new
products. As production yields improve and the conversion from 3" to 4"
wafers is completed, the Company expects to see product gross margins
improve at the end of 1996.
Research and Development. Company funded research and development expense
increased 3% during the second quarter of 1996 to $3.3 million from $3.2
million in the second quarter of 1995. As a percent of sales company
funded research and development declined to 20.7 % in the second quarter
of 1996 from 25.5% in the second quarter of 1995. Total research and
development spending, which includes company funded and customer funded
research and development increased 13% during the second quarter of 1996 to
$3.8 million from $3.4 million in the second quarter of 1995.
Selling and Administrative. Selling and administrative expenses increased
24% during the second quarter of 1996 to $2.1 million from $1.7 million in
the second quarter of 1995. As a percentage of sales it declined to 13.0 %
in the second quarter of 1996 from 13.3 % in the second quarter of 1995.
Higher sales commissions associated with the increased sales and higher
advertising expenses were mainly responsible for the increase.
Interest income. Interest income increased to $0.4 million during the
second quarter of 1996 from $0.3 million in the second quarter of 1995 on
higher average invested cash balances.
Interest expense. Interest expense declined during the second quarter of
1996 to $0.1 million from $0.2 million in the second quarter of 1995 on
lower levels of indebtedness.
Provision for Income Taxes. The provision for income taxes during the
second quarter of 1996 was recorded at an effective tax rate of 20% of
pre-tax income.
Six Months 1996 (Ended June 30, 1996) Compared to Six Months 1995 (Ended
June 30, 1995)
Net Sales. Net sales during the first six months of 1996 increased 26% to
$29.4 million from $23.4 million in the first six months of 1995. First
six month 1996 sales of integrated circuits for cable television
applications increased 50% to $7.2 million from $4.8 million in the first
six months of 1995 as demand for tuner ICs from set top box manufacturers
increased . Sales of ICs for fiber optic telecommunication and data
communication applications increased 41% during the first six months of
1996 to $6.1 million from $4.3 million in the first six months of 1995.
Sales of ICs for direct broadcast satellite applications increased 15%
during the first six months of 1996 to $7.6 million from $6.6 million in
the first six months of 1995. Sales of ICs for cellular and personal
communication system applications decreased 5% during the first six months
of 1996 to $6.8 million from $7.1 million in the first six months of 1995.
Engineering service sales which reflect customers' contributions to
research and development increased $1.2 million during the first six
months of 1996 to $1.8 million from $0.6 million in the first six months
of 1995.
Gross Margin. Gross margin during the first six months of 1996 declined
to 48.7% from 52.2% in the first six months of 1995. Product gross margins
declined due to generally lower IC prices and manufacturing inefficiency
associated with new product start up.
Research and Development. Company sponsored research and development
expense increased 4% during the first six months of 1996 to $6.2 million
from $5.9 million in the first six months of 1995. As a percent of sales
company funded research and development declined to 20.9 % in the first
six months of 1996 from 25.2% in the first six months of 1995.
Selling and Administrative. Selling and administrative expenses increased
32% during the first six months of 1996 to $4.0 million from $3.1 million
in the first six months of 1995. As a percentage of sales it increased to
13.7 % in the first six months of 1996 from 13.0 % in the first six months
of 1995.
Interest income. Interest income increased to $0.8 million during the
first six months of 1996 from $0.4 million in the first six months of 1995
on higher average invested cash balances.
Interest expense. Interest expense declined during the first six months
of 1996 to $0.2 million from $0.4 million in the first six months of 1995
on lower levels of indebtedness.
Provision for Income Taxes. The provision for income taxes during the
first six months of 1996 was recorded at an effective tax rate of 20% of
pre-tax income.
Liquidity and Capital Resources
At June 30, 1996, the Company had $15.6 million in cash and cash
equivalents on hand and $14.6 million in marketable securities. Sales and
purchases of marketable securities provided a net of $8.2 million of cash
during the first six months of 1996. There was no balance outstanding on
its $15 million revolving credit facilities with First Union Bank.
Operations generated $4.3 million in cash during the first six months of
1996 after the impact of increases in accounts receivable of $1.6 million
and in inventories of $1.7 million.
Capital expenditures of $6.2 million were made during the first six
months of 1996. The equipment acquired includes items to upgrade and
increase wafer fabrication capacity and other production capacity as well
as equipment for research and development. At June 30, 1996 the Company
had committed to purchase $8.1 million of capital equipment. The Company
expects to spend approximately $15.0 million on capital equipment and $3.0
million on capital improvements to new and existing leased facilities in
1996. In 1997 and 1998, the Company expects to spend approximately $35
million on the recently announced new GaAs wafer fabrication facility.
Net cash generated by financing activities was $3.0 million. In May,
1996 certain warrant holders elected to exercise warrants at $17.25 per
share for 209,270 shares of Common Stock, thereby generating $3.6 million
in cash. Shares outstanding at June 30, 1996 were 8,318,314 compared with
7,997,228 at June 30, 1995.
The Company believes that its sources of capital, including internally
generated funds and existing bank credit facilities will be adequate to
satisfy anticipated capital needs for the next twelve months.
Nevertheless, the Company may elect to finance its future capital
requirements through additional equity or debt financing.
Risks and Uncertainties
Except for historical information contained herein, this Management's
Discussion and Analysis of Financial Condition and Results of Operation
contains forward-looking statements that are subject to risks and
uncertainties, including timely product development, individual product
pricing pressure, order rescheduling or cancellation, variation in
production yield, difficulties in obtaining components and assembly
services needed for production of integrated circuits, change in economic
conditions of the various markets the Company serves, as well as the other
risks detailed from time to time in the Company's reports filed with the
Securities and Exchange Commission, including the report on Form 10-K for
the year ended December 31, 1995.<PAGE>
ANADIGICS, Inc.
PART II.
OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its annual meeting of stockholders on May 23, 1996 at
which the Company's stockholders voted on (a) the election of three Class I
Directors, and (b) ratification of the appointment of Ernst & Young LLP as
independent auditors for the fiscal year ending December 31, 1996. The
Company solicited proxies from stockholders by a proxy statement dated as
of April 23, 1996.
The election of the three Class I Directors was approved by holders of
approximately 5,579,132 shares of the Company's capital stock, or 83.0% of
outstanding capital stock. No holders voted against the nominees. Holders
of approximately 4,094 shares of capital stock, or .06%, abstained from
voting on such nominees.
The ratification of the appointment of Ernst & Young LLP as independent
auditors was approved by holders of approximately 5,572,107 shares of the
Company's capital stock, or 82.9% of outstanding capital stock. Holders of
approximately 3,000 shares of capital stock, or .04% voted against, and
holders of approximately 8,119 shares of capital stock, or .12%, abstained
from voting on such ratification.
Item 6. Exhibits and reports on Form 8-K
(a) The following exhibit is included herein:
Exhibit 11. Statement Re: Computation of Earnings Per Share (unaudited)
Exhibit 27. Financial Data Schedule
(b) The Company did not file any reports on Form 8-K during the
quarter ended June 30, 1996.
<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.
ANADIGICS, INC.
By: /s/ John F. Lyons
John F. Lyons
Vice President and
Chief Financial Officer
Dated: July 25, 1996
<PAGE>
ANADIGICS, Inc.
EXHIBIT INDEX
Page
Exhibit 11. Statement Re: Computation of Earnings Per Share
(unaudited) 14
Exhibit 27. Financial Data Schedule 15
<PAGE>
ANADIGICS, Inc.
Exhibit 11. Statement Re: Computation of Earnings Per Share (unaudited)
Three months ended Six months ended
06/30/96 06/30/95 06/30/96 6/30/95
Average shares outstanding 8,205,620 7,406,844 8,146,126 6,456,870
Net effect of dilutive stock
options - based on treasury
stock method using average
market price 391,639 324,359 339,947 314,628
Totals 8,597,259 7,731,203 8,486,073 6,771,498
Net income (in thousands) $2,066 $1,423 $3,831 $2,321
Per share amount $0.24 $0.18 $0.45 $0.34
