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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 September 30, 2002
 
¨  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 0-21422
 
 
OPTi Inc.
(Exact name of registrant as specified in this charter)
 
California
     
77-0220697
(State or other jurisdiction of
incorporated or organization)
     
(I.R.S. Employer
Identification No.)
 
880 Maude Avenue, Suite A, Mountain View, California
   
94043
(Address of principal executive office)
   
(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 September 30, 2002 was 11,633,903.
 

Table of Contents
 
OPTi, Inc.
 
FORM 10-Q
 
For the Quarterly Period Ended September 30, 2002
 
INDEX
 
         
Page
Part I.     Financial Information
   
3
        Item 1.
      
3
       
3
       
4
       
5
       
6
        Item 2.
      
11
        Item 3.
      
15
        Item 4.
      
15
Part II.     Other Information
   
16
        Item 1.
      
16
        Item 2.
      
16
        Item 3.
      
16
        Item 4.
      
16
        Item 6.
      
16
  
17
 

2

Table of Contents
 
OPTi Inc.
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
    
Three Months Ended
September 30,
     
Six Months Ended
September 30,
  
    
2002
     
2001
     
2002
     
2001
  
    
(000’s omitted, except per share data)
  
Sales:
                                    
Product sales
   
$
414
 
   
$
1,272
 
   
$
2,249
 
   
$
2,927
 
License sales
   
 
275
 
   
 
—  
 
   
 
275
 
   
 
—  
 
    
  
  
  
Net sales
   
$
689
 
   
$
1,272
 
   
$
2,524
 
   
$
2,927
 
    
  
  
  
Costs and expenses:
                                    
Cost of sales
   
 
191
 
   
 
543
 
   
 
1,289
 
   
 
1,499
 
Research and development
   
 
—  
 
   
 
103
 
   
 
—  
 
   
 
388
 
Selling, general, and administrative
   
 
546
 
   
 
1,192
 
   
 
1,179
 
   
 
1,993
 
    
  
  
  
Total costs and expenses
   
 
737
 
   
 
1,838
 
   
 
2,468
 
   
 
3,880
 
    
  
  
  
Operating income (loss)
   
 
(48
)
   
 
(566
)
   
 
56
 
   
 
(953
)
Interest and other income, net
   
 
57
 
   
 
572
 
   
 
1,658
 
   
 
1,008
 
    
  
  
  
Income before income tax provision
   
 
9
 
   
 
6
 
   
 
1,714
 
   
 
55
 
Income tax provision (benefit)
   
 
(165
)
   
 
—  
 
   
 
(165
)
   
 
2
 
    
  
  
  
Net income
   
$
174
 
   
$
6
 
   
$
1,879
 
   
$
53
 
    
  
  
  
Basic net income per share
   
$
0.01
 
   
$
0.00
 
   
$
0.16
 
   
$
0.00
 
    
  
  
  
Diluted net income per share
   
$
0.01
 
   
$
0.00
 
   
$
0.16
 
   
$
0.00
 
    
  
  
  
Shares used in computing basic per share amounts
   
 
11,634
 
   
 
11,634
 
   
 
11,634
 
   
 
11,634
 
    
  
  
  
Shares used in computing diluted per share amounts
   
 
11,634
 
   
 
11,634
 
   
 
11,634
 
   
 
11,634
 
    
  
  
  
 
See accompanying notes.

3

Table of Contents
 
OPTi Inc.
 
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) 
 
    
September 30,
2002
   
March 31,
2002
    
(000’s omitted)
Assets
              
Current assets
              
Cash and cash equivalents
   
$
14,804
   
$
14,332
Short-term investments
   
 
8
   
 
3,347
Accounts receivable, net
   
 
59
   
 
182
Inventories
   
 
—  
   
 
258
Other current assets
   
 
441
   
 
799
    
  
Total current assets
   
 
15,312
   
 
18,918
Property and equipment, net
   
 
16
   
 
35
Other assets
   
 
287
   
 
287
    
  
Total assets
   
$
15,615
   
$
19,240
    
  
Liabilities and Shareholders’ Equity
              
Current liabilities
              
Accounts payable
   
$
59
   
$
88
Accrued expenses
   
 
227
   
 
607
Accrued employee expenses
   
 
102
   
 
326
Deferred tax liability
   
 
—  
   
 
65
    
  
Total current liabilities
   
 
388
   
 
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 September 30, 2002 and March 31, 2002
   
 
15,053
   
 
15,597
Accumulated other comprehensive income
   
 
—  
   
 
2,557
Retained earnings
   
 
174
   
 
—  
    
  
Total shareholders’ equity
   
 
15,227
   
 
18,154
    
  
Total liabilities and shareholders’ equity
   
$
15,615
   
$
19,240
    
  
 
See accompanying notes.

4

Table of Contents
 
OPTi Inc.
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
    
Six Months Ended
September 30,
  
    
2002
     
2001
  
    
(000's omitted)
  
Operating Activities:
                  
Net income
   
$
1,879
 
   
$
53
 
Adjustments:
                  
Depreciation
   
 
19
 
   
 
149
 
Impairment on short-term investments
   
 
12
 
   
 
—  
 
Gain on Tripath Technology distribution
   
 
(1,544
)
   
 
—  
 
Changes in assets and liabilities:
                  
Accounts receivable
   
 
123
 
   
 
255
 
Inventories
   
 
258
 
   
 
551
 
Other assets
   
 
358
 
   
 
(376
)
Accounts payable
   
 
(29
)
   
 
54
 
Accrued expenses
   
 
(380
)
   
 
(61
)
Accrued employee expenses
   
 
(224
)
   
 
—  
 
    
  
Net cash provided by operating activities
   
 
472
 
   
 
625
 
Investing Activities:
                  
Purchase of property and equipment
   
 
—  
 
   
 
(34
)
Purchase of short-term investments
   
 
—  
 
   
 
(413
)
    
  
Net cash used in investing activities
   
 
—  
 
   
 
(447
)
Financing Activities:
                  
Net cash used in financing activities
   
 
—  
 
   
 
—  
 
    
  
Net increase in cash and cash equivalents
   
 
472
 
   
 
178
 
Cash and cash equivalents beginning of period
   
 
14,332
 
   
 
11,758
 
    
  
Cash and cash equivalents end of period
   
$
14,804
 
   
$
11,936
 
    
  
 
See accompanying notes.

5

Table of Contents
 
OPTi Inc.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
September 30, 2002
 
1.    Basis of Presentation
 
The information at September 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.
 
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 of its 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 September 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 liabilities 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.
 
Sale of the Operating Business.    On September 30, 2002, the Company announced that it had sold its operating business to Opti Technologies, Inc., an unrelated third party. As part of the transaction Opti Technologies was to pay the Company $275,000 in licensing fees and acquire the existing inventory at cost. The Company received $344,000 ($275,000 for the license and $69,000 as a partial payment on the purchase of inventory) in September and the balance of $350,000, for inventory, on October 1, 2002. The Company is also entitled to a quarterly royalty for the sale of its core logic and USB products by Opti Technologies. The Company is to receive 20% of net sales for the USB products and 40% of net sales for the core logic products. The maximum amount of royalties to be paid to the Company from Opti Technologies, Inc. is $1,225,000.
 
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.

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The following table sets forth the computation of basic and diluted net income per share: