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Table of Contents
 
UNITED STATES
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, 2002
 
¨
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the Transition Period from:
 
Commission File Number 0-21422
 
 
OPTi INC.
(Exact name of registrant as specified in this charter)
 
California
(State or other jurisdiction of
incorporated or organization)
  
77-0220697
(I.R.S. Employer
Identification No.)
 
880 Maude Avenue, Suite A, Mountain View, California
(Address of principal executive office)
  
94043
(Zip Code)
 
Registrant’s telephone number, including area code (650) 625-8787
 
 
Indicate by check mark whether the registrant (1) has filed all reports 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, 2002 was 11,633,903
 

Table of Contents
 
OPTi, Inc.
 
FORM 10-Q
 
For the Quarterly Period Ended June 30, 2002
 
INDEX
 
        
Page
Part I.
  
Financial Information
     
   
Item1.    Financial Statements
     
      
3
      
4
      
5
      
6
      
11
Part II.
  
Other Information
     
      
17
      
17
      
17
      
17
      
17
  
18

2

Table of Contents
OPTi Inc.
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
    
Three Months Ended
June 30,
  
    
2002
   
2001
  
    
(000's omitted, except per
share data)
  
Net Sales
   
$
1,835
   
$
1,655
 
Costs and expenses:
                
Cost of sales
   
 
1,098
   
 
956
 
Research and development
   
 
—  
   
 
285
 
Selling, general, and administrative
   
 
633
   
 
801
 
    
  
Total costs and expenses
   
 
1,731
   
 
2,042
 
    
  
Operating income (loss)
   
 
104
   
 
(387
)
Interest and other income, net
   
 
1,601
   
 
436
 
    
  
Income before income tax provision
   
 
1,705
   
 
49
 
Income tax provision
   
 
—  
   
 
2
 
    
  
Net income
   
$
1,705
   
$
47
 
    
  
Basic net income per share
   
$
0.15
   
$
0.00
 
    
  
Diluted net income per share
   
$
0.15
   
$
0.00
 
    
  
Asset dividend per share
   
$
0.19
   
 
—  
 
    
  
Shares used in computing basic per share amounts
   
 
11,634
   
 
11,634
 
    
  
Shares used in computing diluted per share amounts
   
 
11,634
   
 
11,634
 
    
  
 
 
 
See accompanying notes.

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Table of Contents
 
OPTi Inc.
 
CONDENSED CONSOLIDATED BALANCE SHEETS
 
    
June 30, 2002
   
March 31, 2002
    
Unaudited
   
Unaudited
    
(000's omitted)
ASSETS
              
Current assets
              
Cash and cash equivalents
   
$
14,434
   
$
14,332
Short-term investments
   
 
56
   
 
3,347
Accounts receivable, net
   
 
392
   
 
182
Inventories
   
 
375
   
 
258
Other current assets
   
 
351
   
 
799
    
  
Total current assets
   
 
15,608
   
 
18,918
Property and equipment, net
   
 
25
   
 
35
Other assets
   
 
287
   
 
287
    
  
Total assets
   
$
15,920
   
$
19,240
    
  
LIABILITIES AND SHAREHOLDERS' EQUITY
              
Current liabilities
              
Accounts payable
   
$
100
   
$
88
Accrued expenses
   
 
346
   
 
607
Accrued employee expenses
   
 
385
   
 
326
Deferred tax liability
   
 
—  
   
 
65
    
  
Total current liabilities
   
 
831
   
 
1,086
Shareholders’ equity:
              
Preferred stock, no par value:
              
Authorized shares—5,000
              
No shares issued or outstanding
   
 
—  
   
 
—  
Common stock, no par value:
              
Authorized shares—50,000
              
Issued and outstanding shares—11,634 at June 30, 2002 and March 31, 2002
   
 
15,053
   
 
15,597
Accumulated other comprehensive income
   
 
36
   
 
2,557
Retained earnings
   
 
—  
   
 
—  
    
  
Total shareholders’ equity
   
 
15,089
   
 
18,154
    
  
Total liabilities and shareholders’ equity
   
$
15,920
   
$
19,240
    
  
 
See accompanying notes.

4

Table of Contents
 
OPTi Inc.
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
    
Three months Ended
June 30,
  
    
2002
     
2001
  
    
(000's omitted)
  
Operating Activities:
                  
Net income
   
$
1,705
 
   
$
47
 
Adjustments:
                  
Depreciation
   
 
10
 
   
 
44
 
Gain on Tripath Technology distribution
   
 
(1,544
)
   
 
—  
 
Changes in assets and liabilities:
                  
Accounts receivable
   
 
(210
)
   
 
693
 
Inventories
   
 
(117
)
   
 
311
 
Other assets
   
 
448
 
   
 
(138
)
Accounts payable
   
 
12
 
   
 
(135
)
Accrued expenses
   
 
(261
)
   
 
(175
)
Accrued employee expenses
   
 
59
 
   
 
—  
 
    
  
Net cash provided by operating activities
   
 
102
 
   
 
647
 
Investing Activites:
                  
Purchase of property and equipment
   
 
—  
 
   
 
(34
)
Purchase of short-term investments
   
 
—  
 
   
 
(382
)
    
  
Net cash used in investing activities
   
 
—  
 
   
 
(416
)
    
  
Net increase in cash and cash equivalents
   
 
102
 
   
 
231
 
Cash and cash equivalents beginning of period
   
 
14,332
 
   
 
11,758
 
    
  
Cash and cash equivalents end of period
   
$
14,434
 
   
$
11,989
 
    
  
 
 
See accompanying notes.

5

Table of Contents
 
OPTi Inc.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2002
 
1.    Basis of presentation
 
The information at June 30, 2002 and for the three month periods ended June 30, 2002 and 2001, are unaudited, but includes all adjustments (consisting of normal recurring accruals) which the Company’s management believes to be necessary for the fair presentation of the financial position, results of operations and cash flows for the periods presented. Interim results are not necessarily indicative of results for a full year. The accompanying financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2001.
 
Liquidation of the Company.    On September 7, 2001, the Board of directors approved a plan to liquidate and dissolve the Company. Implementation of this plan would have required the approval of the shareholders of the Company. The Board anticipated that, as part of the liquidation, the Company would distribute to its shareholders cash, Tripath Technology Inc. shares, plus any residual cash held by the Company at the end of the liquidation period. Currently, the Company business activities consist primarily of continued sales of its universal serial bus controller device and core logic products for embedded designs.
 
On January 3, 2002, the Company announced the postponement of its voluntary liquidation and dissolution. The Company’s Board determined that it would be prudent to postpone the liquidation plan to allow the Company more time to evaluate its intellectual property position, including the means by which it would pursue claims for the potential infringement of certain ot it patents. The Board decision was not due to any change in the Company’s business prospects.
 
The consolidated financial statements of the Company as of June 30, 2002 and December 31, 2001, respectively, were prepared under generally accepted accounting principles for a going concern entity and do not reflect changes in the carrying amounts of assets and liabilties which may be affected should the shareholders approve a plan of liquidation of the Company’s assets. Amounts that may be affected include those related to the carrying value of property, plant and equipment as well as possible adjustments of amounts related to other assets and and liabilities of the Company including additional costs for severance.
 
2.    Net income per share
 
Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income per share is calculated using the weighted average number of common and dilutive common equivalent shares outstanding during the period. Dilutive common equivalent shares consist of stock options.
 
The following table sets forth the computation of basic and diluted net income per share:
 
    
Three Months ended
June 30,
    
2002
   
2001
Net income
   
$
1,705
   
$
47
    
  
Weighted average number of common shares outstanding
   
 
11,634
   
 
11,634
    
  

6

Table of Contents

OPTi Inc.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
               
Basic net income per share
   
$
0.15
   
$
0.00
    
  
Weighted average number of common shares outstanding
   
 
11,634
   
 
11,634
Effect of dilutive securities:
              
Employee stock options
   
 
—  
   
 
—  
    
  
Denominator for diluted net income per share
   
 
11,634
   
 
11,634
    
  
Diluted net income per share
   
$
0.15
   
$
0.00
    
  
 
3.    Short-Term Investments
 
The following is a summary of available to sale securities as of of June 30, 2002 and March 31, 2002:
 
    
June 30, 2002
   
March 31, 2002
    
Amortized Cost
     
Gross Unrealized Gains
   
Estimated Fair Value
   
Amortized Cost
   
Gross Unrealized Gains
   
Estimated Fair Value
Cash
   
$
14,434
     
—  
   
$
14,434
   
$
14,332
   
 
—  
   
$
14,332
Investment in Tripath Technology, Inc.
   
 
20
     
36
   
 
56
   
 
725
   
 
2,622
   
 
3,347
    
    
  
  
  
  
    
$
14,454
     
36
   
$
14,490
   
$
15,057
   
$
2,622
   
$
17,679
    
    
  
  
  
  
Reported as:
                                          
Cash and cash Equivalents
   
$
14,434
     
—  
   
$
14,434
   
$
14,332
          
 
14,332
Short-term Investments
   
 
20
     
36
   
 
56
   
 
725
   
 
2,622
   
 
3,347
    
    
  
  
  
  
    
$
14,454
     
36
   
$
14,490
   
$
15,057
   
$
2,622
   
$
17,679
    
    
  
  
  
  
 
At June 30, 2002 and March 31, 2002, net unrealized gains on marketable securities have been included in the Company’s Shareholders’ Equity, less the associated deferred tax liability of $0 and $65,000, repectively.
 
4.    Inventories
 
Inventories consist of finished goods and work in process (in thousands):
    
June 30, 2002