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 MARCH 30, 1997.
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 or other jurisdiction of
incorporation or organization)
22-2582106
(I.R.S. Employer Identification No.)
35 Technology Drive
Warren, New Jersey 07059
(Address of principal executive offices)
(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
April 16, 1997 was 14,481,943.
INDEX
ANADIGICS, Inc.
Part. I. Financial Information
Item 1. Financial Statements (unaudited)
Condensed consolidated balance sheets - March 30, 1997 and
December 31, 1996.
Condensed consolidated statements of income - Three months ended
March 30, 1997 and March 31, 1996.
Condensed consolidated statements of cash flows - Three months
ended March 30, 1997 and March 30, 1996.
Notes to condensed consolidated financial statements -
March 30, 1997.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
PART I
FINANCIAL STATEMENTS
Item 1. Financial Statements (unaudited)
CONDENSED CONSOLIDATED BALANCE SHEETS
ANADIGICS, Inc.
(Amounts in thousands, except share and per share amounts)
March 30, 1997 Dec. 31, 1996 *
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 15,103 $ 23,112
Marketable securities 12,039 9,008
Accounts receivable, net 12,378 10,696
Inventory - Note 2 9,687 8,901
Prepaid expenses and other current assets 1,381 1,221
Deferred taxes 699 699
Total current assets 51,287 53,637
Cash and cash equivalents 48,338
Property and equipment:
Equipment and furniture 44,324 40,151
Leasehold improvements 3,798 3,710
Projects in process 24,862 6,702
Less accumulated depreciation and
amortization 23,583 21,830
49,401 28,733
Deferred taxes 4,131 4,131
Deposits 695 495
Total assets $ 153,852 $ 86,996
Liabilities and stockholders' equity - Note 3
Current liabilities:
Accounts payable $ 14,314 $ 7,173
Accrued liabilities 3,344 3,671
Income taxes payable 4,737 3,676
Current maturities of capital lease
obligations 960 1,292
Total current liabilities 23,355 15,812
Capital lease obligations, less current
portion 540 627
Total liabilities 23,895 16,439
Stockholders' equity
Common stock, $0.01 par value, 34,000,000 shares
authorized, 14,481,943 and 12,564,678, issued
and outstanding at March 30, 1997 and
December 31, 1996, respectively 145 126
Additional paid-in capital 155,011 98,800
Accumulated deficit (25,199) (28,369)
Total stockholders' equity 129,957 70,557
Total liabilities and stockholders'
equity $ 153,852 $ 86,996
* The condensed balance sheet at December 31, 1996 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. Further, certain amounts as of
December 31, 1996 have been reclassified to conform with the March 30, 1997
presentation. See Notes to Condensed Consolidated Financial Statements.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
ANADIGICS, Inc.
(Amounts in thousands, except per share amounts)
Three months ended
March 30, 1997 March 31, 1996
(unaudited) (unaudited)
Net sales $ 22,860 $ 13,574
Cost of sales 12,321 6,835
Gross profit 10,539 6,739
Research and development expenses 3,439 2,878
Selling and administrative expenses 2,746 1,968
Operating income 4,354 1,893
Interest expense 54 105
Interest income 615 418
Income before income taxes 4,915 2,206
Provision for income taxes 1,745 441
Net income $ 3,170 $ 1,765
Net income per share of common stock (1)$ 0.23 $ 0.14
Weighted average common and common
equivalent shares outstanding (1) 14,065,366 12,562,331
(1) - Historical share and per share data has been restated to reflect a
3-for-2 stock split.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
ANADIGICS, Inc.
(Amounts in thousands)
Three months ended
March 30, 1997 March 31, 1996
(unaudited) (unaudited)
Cash flows from operating activities:
Net income $ 3,170 $ 1,765
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 1,403 837
Amortization 351 568
Changes in operating assets and liabilities:
Accounts receivable (1,682) (326)
Inventory (786) (1,849)
Prepaid expenses and other current assets (160) (340)
Deferred taxes (107)
Deposits (200) 108
Accounts payable 7,141 2,931
Accrued liabilities (327) 1,140
Income taxes payable 1,061 229
Net cash provided by operating activities 9,971 4,956
Cash flows from investing activities:
Purchase of plant and equipment (22,422) (3,894)
Purchase of marketable securities (5,031) (2,500)
Proceeds from sale of marketable securities 2,000 4,429
Net cash used in investing activities (25,453) (1,965)
Cash flows from financing activities:
Payment of capital lease obligations (419) (434)
Issuance of common stock 56,230 30
Net cash provided by (used in) financing activities 55,811 (404)
Net increase in cash and cash equivalents 40,329 2,587
Cash and cash equivalents at beginning of period 23,112 6,394
Cash and cash equivalents at end of period $ 63,441 $ 8,981
Supplemental cash flow information:
Interest paid $ 54 $ 105
Taxes paid $ 227 $ 320
Included in the Change in Accounts payable and Purchases of plant and
equipment amounts above for the three months ended March 30, 1997 are
purchases of capital equipment of $9,119 for which no cash was disbursed
during such period.
ANADIGICS, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited) -
March 30, 1997
1. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited, condensed, 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
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three month period ended March 30, 1997 are not necessarily
indicative of the results that may be expected for the year ending
December 31, 1997. For further information, refer to the financial
statements for the year ended December 31, 1996 and footnotes thereto
included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1996.
The condensed, consolidated financial statements include the accounts of the
Company and its wholly owned subsidiary, ANADIGICS Foreign Sales Corporation.
All significant intercompany accounts have been eliminated in consolidation.
2. Inventories
Inventories are stated at the lower of cost (first-in, first-out method) or
market. Inventories consist of the following:
March 30, 1997 Dec. 31, 1996
Raw materials $ 1,570 $ 1,278
Work in process 6,349 6,291
Finished goods 1,768 1,332
$ 9,687 $ 8,901
3. Stockholders' Equity
On January 30, 1997 the Company declared a stock dividend of one share of
common stock for each two shares of common stock outstanding. The dividend
was payable on February 20, 1997 to holders of record on February 10, 1997.
Accordingly, the 1996 financial statements have been retroactively restated
to reflect the three-for-two stock split.
On February 20, 1997, the Company successfully completed a public offering
of an additional 1,875,000 shares of common stock. The Company intends to
use the net proceeds from the public offering of approximately $55.4 million
to purchase capital equipment and leasehold improvements, and for general
corporate purposes, including working capital. Accordingly, the remaining
portion of the proceeds received from the public offering which was
designated for the purchase of capital equipment and to make leasehold
improvements of $48.3 million has been classified as long term as of
March 30, 1997.
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 consolidated statements of
operations data as a percent of net sales for the periods presented:
Consolidated Statements of Operations -
Three months ended
March 30, 1997 March 31, 1996
Net sales 100.0% 100.0%
Cost of sales 53.9% 50.4%
Gross profit 46.1% 49.6%
Research and development expenses 15.0% 21.2%
Selling and administrative expenses 12.0% 14.5%
Operating income 19.1% 13.9%
Interest expense 0.3% 0.8%
Interest income 2.7% 3.1%
Income before income taxes 21.5% 16.2%
Provision for income taxes 7.6% 3.2%
Net income 13.9% 13.0%
First Quarter 1997 (Ended March 30, 1997) Compared to First Quarter 1996
(Ended March 31, 1996)
Net Sales. Net sales during the first quarter of 1997 increased 68% to $22.9
million from $13.6 million in the first quarter of 1996. First quarter 1997
sales of integrated circuits ("IC" or "ICs") for cellular and personal
communication system ("PCS") applications increased $9.3 million to $12.1
million from $2.8 million in the first quarter of 1996 as demand for power
amplifier ICs increased. Sales of ICs for the digital GSM, CDMA and TDMA
standards accounted for over 75% of the cellular and PCS sales during
the first quarter of 1997 to $4.6 million from $3.4 million in the
first quarter of 1996 as demand for wide-band CATV tuner and infrastructure
ICs increased. Sales of ICs for direct broadcast satellite applications
decreased 14% during the first quarter of 1997 to $3.1 million from $3.6
million in the first quarter of 1996 as demand for low noise block converter
ICs decreased. Sales of ICs for fiber optic telecommunications and data
communication applications decreased 10% during the first quarter of 1997
to $2.6 million from $2.8 million in the first quarter of 1996. Generally,
selling prices for same product sales were lower in the first quarter of
1997 compared to the same period in 1996. Engineering service sales, which
reflect customers' contributions to research and development, decreased
$0.5 million during the first quarter of 1997 to $0.5 million from $1.0
million in the first quarter of 1996.
Gross Margin. Gross margin during the first quarter of 1997 declined to 46.1%
from 49.6% in the first quarter of 1996. The decline in gross margin was due
to a shift in sales mix to lower margin, high volume ICs. In comparison to
the fourth quarter of 1996, the gross margin improved in the first quarter
of 1997 to 46.1% from 43.5%. The improvement in gross margin from the fourth
quarter of 1996 to the first quarter of 1997 was the result of improved
product yields and efficiencies gained from the conversion from three-inch
to four-inch wafers.
The Company completed the conversion of its existing fab from three-inch to
four-inch wafers during the fourth quarter of 1996. As a result,
substantially all of the Company's sales in the first quarter of 1997 were
from four-inch wafers for which the manufacturing yields on certain products
produced were not at optimal levels. The Company has on-going activities to
improve these yields, however there can be no assurance that the Company
will be successful in improving the yields. (See Risks and Uncertainties)
Research and Development. Company sponsored research and development expense
increased 19% during the first quarter of 1997 to $3.4 million from $2.9
million during the first quarter of 1996. As a percent of sales, it declined
to 15.0% in the first quarter of 1997 from 21.2% in the first quarter of
1996. During the first quarter of 1997, the Company spent approximately
two-thirds of its research and development on ICs for cellular, PCS and
other wireless applications.
In comparison to the fourth quarter of 1996, Company sponsored research and
development expense increased 10% during the first quarter of 1997 to $3.4
million from $3.1 million. As a percent of sales, it increased to 15.0% in
the first quarter of 1997 from 13.9% in the fourth quarter of 1996. The
Company expects that research and development expense will continue to
increase from quarter to quarter during 1997, both in absolute dollars and
as a percentage of sales.
Selling and Administrative. Selling and administrative expenses increased
40% during the first quarter of 1997 to $2.7 million from $2.0 million in
the first quarter of 1996. Selling expenses increased 44%, primarily due to
higher commissions paid to sales representatives and general staffing
increases. General and administrative expenses increased 35%, primarily due
to general staffing increases. As a percentage of sales, selling and general
administrative expenses declined to 12.0% in the first quarter of 1997 from
14.5% in the first quarter of 1996.
Interest Income. Interest income increased 47.1% to $0.6 million during the
first quarter of 1997 from $0.4 million during the first quarter of 1996.
The $0.2 million increase was due to higher invested cash balances following
the receipt of proceeds from the public offering of the Company's common
stock on February 20, 1997.
Provision for Income Taxes. The provision for income taxes during the first
quarter of 1997 was recorded at an estimated annual effective tax rate of
35.5% of pre-tax income.
Liquidity and Capital Resources
As of March 30, 1997, the Company had $63.4 million in cash and cash
equivalents, including $48.3 million designated for the purchase of capital
equipment and to make leasehold improvements, and $12.0 million in
marketable securities. No amounts were drawn on the Company's credit
facilities during the three month period ended March 30, 1997.
Net cash provided by financing activities was $55.8 million during the
three months ended March 30, 1997, compared to a use of cash of $0.4 million
in the first quarter of 1996. On February 26, 1997, the Company received
$55.4 million in net proceeds from a public offering of 1,875,000 shares of
common stock.
Net cash used in investing activities was $25.5 million during the three
month period ended March 30, 1997, compared to a use of cash of $2.0 million
in the same period of 1996. The increase in cash used in investing activities
of $23.5 million was due to an increase in equipment purchases and leasehold
improvements of $18.5 million (primarily for the new four-inch wafer
fabrication facility) and a net increase in purchases of marketable
securities of $5.0 million.
Net cash provided by operations was $10.0 million during the three month
period ended March 30, 1997, compared to $5.0 million provided by operations
during the three month period ended March 31, 1996. The increase in cash
provided by operations during the three months ended March 30, 1997 was due
to a net increase in accounts payable of $7.1 million related primarily to
capital equipment purchases, compared to an increase in accounts payable of
$2.9 million in the same period in 1996.
The Company expects to spend approximately $30 million on equipment and
furniture and approximately $15 million on leasehold improvements during the
twelve month period ending March 31, 1998. At March 30, 1997 the Company has
committed to purchase approximately $30 million of equipment and furniture,
and leasehold improvements, including approximately $14 million for the
Company's new four-inch wafer fab. The Company expects to begin depreciating
the new four-inch wafer fab in the fourth quarter of 1997, concurrent with
the commencement of production.
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.
Effect of Changes in Accounting Principles
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings Per Share" which is required to be adopted on
December 31, 1997. At that time, the Company will be required to change the
method currently used to compute earnings per share and to restate all prior
periods. Under the new requirements for calculating primary earnings per
share, the dilutive effect of stock options will be excluded. The impact of
applying Statement 128 would have resulted in an increase in basic earnings
per share for the first quarter ended March 30, 1997 and March 31, 1996 of
$0.01. Statement 128 would have had no effect on the calculation of diluted
earnings per share for these quarters.
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 (as that term is described in the
Securities Act of 1933, as amended) that involve risks and uncertainties,
including timely product and process 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, 1996. These forward-looking statements can generally be
identified as such because the context of the statement will include words
such as the Company "believes", "anticipates", "expects", or words of
similar import. Similarly, statements that describe the Company's future
plans, objectives, estimates or goals are forward-looking statements. The
cautionary statements made in this Form 10-Q should be read as being
applicable to all related forward-looking statements wherever they appear
in this Form 10-Q. Important factors that could cause actual results and
developments to be materially different from those expressed or implied by
such statements include those factors discussed herein.
ANADIGICS, Inc.
PART II.
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are included herein:
Exhibit 11. - Statement Re: Computation of Earnings Per Share
(unaudited)
Exhibit 27. - Financial Data Schedule
(b) Reports on Form 8-K during the quarter ended March 30, 1997.
On January 30, 1997, the Company filed Form 8-K with the Securities
and Exchange Commission. Included in the Form 8-K in Item 5., Other Events,
was the declaration of a stock dividend of one share of the Company's common
stock, par value $.01 per share, for each two shares of common stock
outstanding. The dividend was payable on February 20, 1997 to holders of
record on February 10, 1997. Attached as exhibits to the Form 8-K were the
Company's press releases announcing the declaration of the stock dividend,
the Company's financial results for the fourth quarter and year ended
December 31, 1996 and the filing of a registration statement with the
Securities and Exchange Commission with respect to the Company's proposed
offering of common stock.
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
Senior Vice President
and Chief Financial Officer
Dated: May 1, 1997
ANADIGICS, Inc.
EXHIBIT INDEX
Page
Exhibit 11. Statement Re: Computation of Earnings Per Share
(unaudited) 14
Exhibit 27. Financial Data Schedule 15
ANADIGICS, Inc.
Exhibit 11. Statement Re: Computation of Earnings Per Share (unaudited)
Three months ended
March 30, 1997 March 31, 1996
Average shares outstanding 13,401,406 12,129,947
Net effect of dilutive stock options -
based on treasury stock method
using average market price 663,960 432,384
Totals 14,065,366 12,562,331
Net income (in thousands) $3,170 $1,765
Per share amount $0.23 $0.14