(Mark One)

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarter ended March 29, 2003

o

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: 0-19299

Integrated Circuit Systems, Inc.

(Exact name of registrant as specified in its charter)

Pennsylvania

23-2000174

(State or other jurisdiction of incorporation or organization)

(IRS Employer Identification No.)

2435 Boulevard of the Generals
Norristown, Pennsylvania 19403

(Address of principal executive offices)

(610) 630-5300

(Registrant’s telephone number including area code)

Yes   x

No   o

Page
Number

PART I.

FINANCIAL INFORMATION

Item 1.

Consolidated Financial Statements:

Consolidated Balance Sheets:
March 29, 2003 (Unaudited) and June 29, 2002

3

Consolidated Statements of Operations (Unaudited):
Three and Nine Months Ended March 29, 2003 and March 30, 2002

4

Consolidated Statements of Cash Flows (Unaudited):
Nine Months Ended March 29, 2003 and March 30, 2002

5

Notes to Consolidated Financial Statements

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

13

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

19

Item 4.

Controls and Procedures

19

PART II.

OTHER INFORMATION

Item 6.

Exhibits and Reports on Form 8-K

19

March 29,
2003

June 29,
2002

(Unaudited)

ASSETS

Current Assets:

Cash and cash equivalents

$

100,381

$

74,255

Marketable securities

10,047

36,266

Accounts receivable, net

34,481

28,741

Inventory, net

16,648

18,556

Deferred income taxes

7,733

6,791

Prepaid income taxes

1,151

1,181

Prepaid assets

4,378

4,781

Other current assets

1,715

8,924

Total current assets

176,534

179,495

Property and equipment, net

15,774

18,324

Long term investments

33,037

4,000

Intangibles

30,675

32,400

Goodwill

39,230

41,575

Other assets

357

598

Total assets

$

295,607

$

276,392

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current Liabilities:

Current portion of long-term obligations

$

17,010

$

13,744

Accounts payable

14,970

11,416

Accrued expenses and other current liabilities

11,461

25,272

Total current liabilities

43,441

50,432

Long-term debt, less current portion

3,001

28,514

Deferred tax and other liabilities

11,363

13,475

Total liabilities

57,805

92,421

Shareholders’ equity:

Preferred Stock, authorized 5,000; none issued

—  

—  

Common stock, $0.01 par, authorized 300,000; Issued and outstanding 69,342 and 67,841 shares as of March 29, 2003 and June 29, 2002, respectively

694

678

Additional paid in capital

238,813

227,531

Retained earnings (deficit)

12,465

(32,451

)

Deferred compensation

(975

)

(3,988

)

Treasury stock, at cost, 980 and 655 shares as of March 29, 2003 and June 29, 2002, respectively

(13,195

)

(7,799

)

Total shareholders’ equity

237,802

183,971

Total liabilities and shareholders’ equity

$

295,607

$

276,392

Three Months Ended

Nine Months Ended

March 29,
2003

March 30,
2002

March 29,
2003

March 30,
2002

Revenue:

$

60,853

$

53,262

$

180,668

$

127,529

Cost and expenses:

Cost of sales

24,709

23,200

73,731

54,360

Research and development

8,772

8,083

25,793

20,577

Selling, general and administrative

9,497

14,014

29,039

23,988

Operating income

17,875

7,965

52,105

28,604

Interest and other income

405

1,144

1,993

2,735

Interest expense

(377

)

(508

)

(1,294

)

(553

)

Income before income taxes

17,903

8,601

52,804

30,786

Income taxes

2,626

1,554

7,889

4,740

Net income

$

15,277

$

7,047

$

44,915

$

26,046

Basic income per share:

Net income

$

0.22

$

0.11

$

0.66

$

0.39

Diluted income per share:

Net income

$

0.22

$

0.10

$

0.64

$

0.37

Weighted average shares outstanding – basic

68,155

66,533

67,733

66,380

Weighted average shares outstanding – diluted

70,879

70,230

70,401

70,125

Nine Months Ended

March 29,
2003

March 30,
2002

Cash flows from operating activities:

Net income

$

44,915

$

26,046

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

6,534

4,845

Amortization of deferred financing charge

83

43

Amortization of deferred compensation

275

961

(Gain) loss on sale of assets

(503

)

(239

)

Write-off of in process research and development

—  

2,900

Restructuring costs

(1,450

)

—  

Tax benefit of stock options

9,970

6,852

Deferred income taxes

(2,976

)

136

Changes in assets and liabilities:

Accounts receivable

(5,740

)

4,797

Inventory

1,908

3,674

Other assets, net

230

(4,077

)

Accounts payable, accrued expenses and other current liabilities

(1,077

)

(1,189

)

Accrued interest expense

154

367

Other

—  

16

Income taxes

30

(4,916

)

Net cash provided by operating activities

52,353

40,216

Cash flows from investing activities:

Cash paid for acquired business, net of cash acquired

—  

(75,202

)

Purchases of marketable securities

(35,178

)

(47,918

)

Sales/Maturities of marketable securities

32,860

24,062

Capital expenditures

(2,704

)

(2,748

)

Other

2,373

48

Net cash used in investing activities

(2,649

)

(101,758

)