U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 5, 2004
Berkeley Technology Limited
(Exact Name of Registrant as Specified in its Articles)
----------------------
0-21874
(Commission File Number)
Jersey (Channel Islands) U.K. Not applicable
(State or Other Jurisdiction (I.R.S. Employer Identification No.)
of Incorporation)
Minden House
6 Minden Place
St. Helier
Jersey
Channel Islands
JE2 4WQ
Tel: 011 44 1534 607700
(Address and telephone of Principal Executive Offices)
N/A
(Former Name or Address, if Changed Since Last Report)
The following information is furnished pursuant to this
Item 9,"Regulation FD Disclosure" and Item 12, " Results of Operations and
Financial Condition."
FOR IMMEDIATE RELEASE August 5, 2004
Berkeley Technology Limited
Financial Results
For the Quarter Ended
June 30, 2004
London, August 5, 2004 - Berkeley Technology Limited (OTCBB: BKLYY; London: BEK)
(the "Company"), today reported financial results for its fiscal quarter ended
June 30, 2004. The Company's consolidated net income, computed in accordance
with U.S. generally accepted accounting principles ("U.S. GAAP"), for the three
months ended June 30, 2004 was $0.2 million, or $0.00 per diluted share and
$0.04 per diluted ADR, compared with $16.4 million, or $0.32 per diluted share
and $3.19 per diluted ADR, for the same period in 2003. For the second quarter
of 2004, the Company's consolidated income from continuing operations was $0.2
million, or $0.00 per diluted share and $0.04 per diluted ADR, compared with
$5.4 million, or $0.11 per diluted share and $1.06 per diluted ADR, for the
second quarter of 2003.
For the six months ended June 30, 2004, the Company's consolidated net loss was
$6.5 million, or $(0.13) per diluted share and $(1.28) per diluted ADR, compared
with income of $14.5 million, or $0.28 per diluted share and $2.85 per diluted
ADR, for the same period in 2003. For the six months ended June 30, 2004, the
Company's consolidated loss from continuing operations was $6.5 million, or
$(0.13) per diluted share and $(1.28) per diluted ADR, compared with income from
continuing operations of $4.6 million, or $0.09 per diluted share and $0.90 per
diluted ADR, for the same period in 2003.
The Company reports net income (loss) and diluted earnings (loss) per share and
ADR in accordance with U.S. GAAP.
The results for the second quarter of 2004 were impacted by the increase in the
value of the listed equity securities held by the Company, including those held
by London Pacific Assurance Limited ("LPAL"), partially offset by the write-down
in the book value of one private equity security. The listed equity securities
held in LPAL are not available to fund the operations or commitments of the
Company or its other subsidiaries. Net realized and unrealized investment gains
totaled $1.6 million in the second quarter of 2004, compared to $7.3 million in
the second quarter of 2003.
Volatility in the Company's listed equity holdings continues to have a
substantial impact on the Company's financial results. The bulk of these listed
equity holdings are in Packeteer, Inc. ("PKTR"). The Company's Jersey, Channel
Islands based insurance company, LPAL, holds most of the Company's investment in
PKTR. During July 2004, LPAL sold 200,000 shares of PKTR for $2.9 million,
realizing a gain of $1.7 million, which was offset by the reversal of unrealized
gains of $2.0 million recorded in prior periods, resulting in a net loss of $0.3
million for the month of July 2004. Subsequent to June 30, 2004, following
PKTR's earnings release, PKTR's share price declined, resulting in a fall in
value of $3.1 million on the Company's remaining PKTR holding as of August 4,
2004. PKTR continues to be profitable, to generate cash and has a strong balance
sheet. We are holding our current PKTR position at these price levels.
As of June 30, 2004, the book value per share and book value per ADR were $0.56
and $5.58, respectively. These book value per share and ADR computations exclude
the number of shares held by the employee benefit trusts and the related cost of
those shares.
LPAL continued to serve its policyholders; however, no new policies are
currently being sold. Policyholder liabilities for LPAL fell during the second
quarter of 2004 by $1.5 million to $23.6 million primarily due to maturing
policies. As of June 30, 2004, LPAL's corporate bonds, cash, due from brokers
and accrued interest totaled $27.1 million.
The Company now focuses on its venture capital and consulting business, which
works with technology companies that are looking to grow their operations
internationally. The Company advises on overseas operations, assists in locating
investor capital, and occasionally takes principal positions where the case is
compelling and the timeframe for realization could be relatively short. It is
still early in the process but consulting fees are now being generated.
*****
Statements contained herein which are not historical facts are forward-looking
statements that involve a number of risks and uncertainties that could cause the
actual results of the future events described in such forward-looking statements
to differ materially from those anticipated in such forward-looking statements.
Factors that could cause or contribute to deviations from the forward-looking
statements include, but are not limited to, (i) variations in demand for the
Company's products and services, (ii) the success of the Company's new products
and services, (iii) significant changes in net cash flows in or out of the
Company's businesses, (iv) fluctuations in the performance of debt and equity
markets worldwide, (v) the enactment of adverse state, federal or foreign
regulation or changes in government policy or regulation (including accounting
standards) affecting the Company's operations, (vi) the effect of economic
conditions and interest rates in the U.S., the U.K. or internationally, (vii)
the ability of the Company's subsidiaries to compete in their respective
businesses, (viii) the ability of the Company to attract and retain key
personnel, and (ix) actions by governmental authorities that regulate the
Company's businesses, including insurance commissions. The Company undertakes no
obligation to update any forward-looking statements, whether as a result of new
information, future developments or otherwise.
Please address any inquiries to:
Ian Whitehead Jersey (0)1534 607700
Chief Financial Officer
Berkeley Technology Limited
Form 10-Q for the quarter ended June 30, 2004
A copy of the above document will be submitted to the U.K. Listing Authority and
will be shortly available for inspection at the U.K. Listing Authority's
Document Viewing Facility, which is situated at:
Financial Services Authority
25 The North Colonnade
Canary Wharf
London
E14 5HS
Tel: 020 7676 1000
Berkeley Technology Limited
Condensed Consolidated Statements of Income
Under U.S. GAAP (unaudited)
In thousands, except per share and ADR amounts
Three Months Ended Six Months Ended
June 30, June 30,
.......................... ..........................
2004 2003 2004 2003
............ ............ ............ ............
Continuing operations:
Revenues:
Investment income $ 334 $ 528 $ 691 $ 1,059
Insurance policy charges 1 - 3 4
Consulting and other fee income 97 - 194 -
Net realized investment gains (losses) 1,557 (6,825) 913 (14,149)
Change in net unrealized investment gains and
losses on trading securities 92 14,126 (4,741) 22,439
............ ............ ............ ............
2,081 7,829 (2,940) 9,353
Expenses:
Amounts credited on insurance policyholder
accounts 333 527 717 1,046
Operating expenses 1,270 1,314 2,548 3,048
Interest expense - 540 - 676
............ ............ ............ ............
1,603 2,381 3,265 4,770
............ ............ ............ ............
Income (loss) from continuing operations before
income tax expense 478 5,448 (6,205) 4,583
Income tax expense 283 5 290 12
............ ............ ............ ............
Income (loss) from continuing operations 195 5,443 (6,495) 4,571
Discontinued operations:
Loss from discontinued operations, net of income
tax expense (benefit) of $0, $(3),
$0 and $2, respectively - (776) - (1,758)
Income on disposal of discontinued
operations, net of income tax expense of $0, $36,
$0 and $36, respectively - 11,685 - 11,685
............ ............ ............ ............
Income on discontinued operations - 10,909 - 9,927
............ ............ ............ ............
Net income (loss) $ 195 $ 16,352 $ (6,495) $ 14,498
............ ............ ............ ............
............ ............ ............ ............
Berkeley Technology Limited
Condensed Consolidated Statements of Income
(Continued)
Under U.S. GAAP (unaudited)
In thousands, except per share and ADR amounts
Three Months Ended Six Months Ended
June 30, June 30,
.......................... ..........................
2004 2003 2004 2003
............ ............ ............ ............
Basic earnings (loss) per share and ADR:
Basic earnings (loss) per share:
Continuing operations $ 0.00 $ 0.11 $ (0.13) $ 0.09
Discontinued operations - 0.21 - 0.20
............ ............ ............ ............
$ 0.00 $ 0.32 $ (0.13) $ 0.29
............ ............ ............ ............
............ ............ ............ ............
Basic earnings (loss) per ADR:
Continuing operations $ 0.04 $ 1.07 $ (1.28) $ 0.90
Discontinued operations - 2.15 - 1.96
............ ............ ............ ............
$ 0.04 $ 3.22 $ (1.28) $ 2.86
............ ............ ............ ............
............ ............ ............ ............
Diluted earnings (loss) per share and ADR:
Diluted earnings (loss) per share:
Continuing operations $ 0.00 $ 0.11 $ (0.13) $ 0.09
Discontinued operations - 0.21 - 0.19
............ ............ ............ ............
$ 0.00 $ 0.32 $ (0.13) $ 0.28
............ ............ ............ ............
............ ............ ............ ............
Diluted earnings (loss) per ADR:
Continuing operations $ 0.04 $ 1.06 $ (1.28) $ 0.90
Discontinued operations - 2.13 - 1.95
............ ............ ............ ............
$ 0.04 $ 3.19 $ (1.28) $ 2.85
............ ............ ............ ............
............ ............ ............ ............
Berkeley Technology Limited
Condensed Consolidated Balance Sheets
Under U.S. GAAP (unaudited)
In thousands, except share amounts
June 30, December 31,
2004 2003
............ ............
ASSETS
Investments (principally of life insurance subsidiary):
Fixed maturities:
Available-for-sale, at fair value (amortized cost: $22,349 and
$25,403 as of June 30, 2004 and December 31, 2003, respectively) $ 22,223 $ 25,393
Equity securities:
Trading, at fair value (cost: $3,354 and $4,544 as of June 30,
2004 and December 31, 2003, respectively) 10,950 16,882
Available-for-sale, at estimated fair value (cost: $1,850 and $4,262
as of June 30, 2004 and December 31, 2003, respectively) 1,850 4,262
............ ............
Total investments 35,023(1) 46,537
Cash and cash equivalents 14,741(1) 14,408
Cash held in escrow 1,002 999
Accrued investment income 577 926
Other assets 1,499 643
............ ............
Total assets $ 52,842 $ 63,513
............ ............
............ ............
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Life insurance policy liabilities $ 23,563 $ 28,054
Accounts payable and accruals 965 562
............ ............
Total liabilities 24,528 28,616
............ ............
Commitments and contingencies
Shareholders' equity:
Ordinary shares, $0.05 par value per share: 86,400,000 shares authorized;
64,439,073 shares issued and outstanding as of June 30, 2004 and
December 31, 2003 3,222 3,222
Additional paid-in capital 68,615 68,615
Retained earnings 20,575 27,070
Employee benefit trusts, at cost (13,684,881 shares as of June 30, 2004
and December 31, 2003) (63,571) (63,571)
Accumulated other comprehensive loss (527) (439)
............ ............
Total shareholders' equity 28,314 34,897
............ ............
Total liabilities and shareholders' equity $ 52,842 $ 63,513
............ ............
............ ............
<FN>
(1) Includes $34,359 of investments and $3,348 of cash and cash equivalents in the Company's insurance subsidiary
(LPAL) which are not currently available to fund the operations or commitments of the Company or its other subsidiaries.
</FN>
Berkeley Technology Limited
Condensed Consolidated Statements of Cash Flows
Under U.S. GAAP (unaudited)
In thousands
Six Months Ended
June 30,
..........................
2004 2003 (1)
............ ............
Net cash provided by continuing operations $ 2,736 $ 8,367
Net cash used in discontinued operations - (523)
............ ............
Net cash provided by operating activities 2,736 7,844
............ ............
Cash flows from investing activities:
Payment of guarantee obligations - (10,836)
Purchases of available-for-sale fixed maturity securities - (3,591)
Purchases of available-for-sale equity securities (15) -
Proceeds from sale and maturity of available-for-sale fixed maturity
securities 3,082 13,297
Proceeds from sale of available-for-sale equity securities 75 -
Proceeds from disposal of discontinued operations - 15,010
Capital expenditures (4) (2)
Other cash flows from investing activities (3) -
............ ............
Net cash provided by investing activities 3,135 13,878
............ ............
Cash flows from financing activities:
Insurance policyholder benefits paid (5,561) (3,019)
Repayment of notes payable - (9,314)
............ ............
Net cash used in financing activities (5,561) (12,333)
............ ............
Net increase in cash and cash equivalents 310 9,389
Cash and cash equivalents at beginning of period (2) 14,408 15,308
Foreign currency translation adjustment 23 351
............ ............
Cash and cash equivalents at end of period (2), (3) $ 14,741 $ 25,048
............ ............
............ ............
<FN>
(1) Reclassifications have been made to conform with the current period presentation.
(2) Amounts reflect continuing operations only. Does not include $1,002 of cash held in escrow as of June 30, 2004.
(3) The amount for June 30, 2004 includes $3,348 in the Company's insurance subsidiary (LPAL) which is not available
to fund the operations or commitments of the Company or its other subsidiaries.
</FN>