UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarter ended April 2, 2005
| ¨ | 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)
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 ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
As of May 10, 2005, there were 69,960,303 shares of Common Stock; $0.01 par value, outstanding.
INTEGRATED CIRCUIT SYSTEMS, INC.
INDEX
2
Item 1. Consolidated Financial Statements
INTEGRATED CIRCUIT SYSTEMS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands)
(Unaudited)
| April 2, 2005 |
July 3, 2004 |
|||||||
| ASSETS |
||||||||
| Current Assets: |
||||||||
| Cash and cash equivalents |
$ | 43,874 | $ | 68,973 | ||||
| Marketable securities |
24,198 | 126,606 | ||||||
| Accounts receivable, net |
45,489 | 45,717 | ||||||
| Inventory, net |
18,431 | 18,772 | ||||||
| Deferred income taxes |
18,658 | 22,759 | ||||||
| Prepaid assets |
3,615 | 6,309 | ||||||
| Other current assets |
3,545 | 880 | ||||||
| Total current assets |
157,810 | 290,016 | ||||||
| Property and equipment, net |
20,417 | 19,254 | ||||||
| Long term investments |
139,001 | 5,000 | ||||||
| Intangibles |
42,077 | 27,842 | ||||||
| Goodwill |
35,422 | 35,422 | ||||||
| Other assets |
5,143 | 62 | ||||||
| Total assets |
$ | 399,870 | $ | 377,596 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
| Current Liabilities: |
||||||||
| Lease payable |
$ | 38 | $ | 82 | ||||
| Accounts payable |
13,879 | 17,557 | ||||||
| Accrued salaries and bonus |
86 | 2,811 | ||||||
| Accrued commissions |
1,835 | 838 | ||||||
| Accrued expenses |
1,300 | 1,474 | ||||||
| Accrued vacation |
1,082 | 1,024 | ||||||
| Accrued expenses and other current liabilities |
1,982 | 2,371 | ||||||
| Income taxes payable |
930 | 3,576 | ||||||
| Total current liabilities |
21,132 | 29,733 | ||||||
| Deferred tax and other liabilities |
12,448 | 11,638 | ||||||
| Total liabilities |
33,580 | 41,371 | ||||||
| Commitments and contingencies | ||||||||
| Shareholders’ equity: | ||||||||
| Preferred Stock, authorized 5,000; none issued |
— | — | ||||||
| Common stock, $0.01 par, authorized 300,000; Issued 73,131 and 72,701 shares, as of April 2, 2005 and July 3, 2004, respectively |
731 | 727 | ||||||
| Additional paid in capital |
289,908 | 282,569 | ||||||
| Retained earnings |
144,276 | 107,140 | ||||||
| Deferred compensation |
(801 | ) | — | |||||
| Treasury stock, at cost, 3,153 shares, as of April 2, 2005 and 2,475 shares, as of July 3, 2004 |
(67,824 | ) | (54,211 | ) | ||||
| Total shareholders’ equity |
366,290 | 336,225 | ||||||
| Total liabilities and shareholders’ equity |
$ | 399,870 | $ | 377,596 | ||||
See accompanying notes to consolidated financial statements.
3
INTEGRATED CIRCUIT SYSTEMS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands)
(Unaudited)
| Three Months Ended |
Nine Months Ended |
|||||||||||||||
| April 2, 2005 |
March 27, 2004 |
April 2, 2005 |
March 27, 2004 |
|||||||||||||
| Revenue: |
$ | 58,124 | $ | 67,794 | $ | 184,848 | $ | 202,644 | ||||||||
| Cost and expenses: |
||||||||||||||||
| Cost of sales |
23,817 | 26,745 | 75,858 | 81,288 | ||||||||||||
| Research and development |
9,943 | 10,426 | 29,556 | 29,748 | ||||||||||||
| Amortization of Video research and development costs |
— | — | 7,051 | — | ||||||||||||
| Selling, general and administrative |
9,555 | 8,533 | 29,125 | 26,811 | ||||||||||||
| Amortization of intangibles |
1,115 | 575 | 3,164 | 1,725 | ||||||||||||
| Operating income |
13,694 | 21,515 | 40,094 | 63,072 | ||||||||||||
| Interest and other income |
1,249 | 544 | 2,818 | 1,885 | ||||||||||||
| Interest expense |
(15 | ) | (33 | ) | (45 | ) | (251 | ) | ||||||||
| Income before income taxes |
14,928 | 22,026 | 42,867 | 64,706 | ||||||||||||
| Income taxes |
1,921 | 3,480 | 5,731 | 10,228 | ||||||||||||
| Net income |
$ | 13,007 | $ | 18,546 | $ | 37,136 | $ | 54,478 | ||||||||
| Basic income per share: |
||||||||||||||||
| Net income |
$ | 0.19 | $ | 0.26 | $ | 0.53 | $ | 0.77 | ||||||||
| Diluted income per share: |
||||||||||||||||
| Net income |
$ | 0.18 | $ | 0.26 | $ | 0.52 | $ | 0.75 | ||||||||
| Weighted average shares outstanding – basic |
70,041 | 70,320 | 70,242 | 70,398 | ||||||||||||
| Weighted average shares outstanding – diluted |
70,718 | 72,215 | 71,206 | 72,817 | ||||||||||||
See accompanying notes to consolidated financial statements.
4
INTEGRATED CIRCUIT SYSTEMS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
| Nine Months Ended |
||||||||
| April 2, 2005 |
March 27, 2004 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ | 37,136 | $ | 54,478 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
8,632 | 6,855 | ||||||
| Amortization of Video research & development costs |
7,051 | — | ||||||
| Gain on sale of assets |
(1,302 | ) | (659 | ) | ||||
| Tax benefit of stock options |
2,415 | 9,905 | ||||||
| Deferred income taxes |
4,989 | 1,491 | ||||||
| Changes in assets and liabilities: |
||||||||
| Accounts receivable |
228 | (13,291 | ) | |||||
| Inventory |
341 | (1,065 | ) | |||||
| Other assets, net |
(5,119 | ) | 1,424 | |||||
| Accounts payable, accrued expenses and other current liabilities |
(5,839 | ) | 6,233 | |||||
| Restructuring costs |
(72 | ) | (753 | ) | ||||
| Accrued interest expense |
— | (57 | ) | |||||
| Income taxes payable |
(2,646 | ) | (2,439 | ) | ||||
| Net cash provided by operating activities |
45,814 | 62,122 | ||||||
| Cash flows from investing activities: |
||||||||
| Purchases of marketable securities |
(91,834 | ) | (161,893 | ) | ||||
| Purchases of long term investments |
(134,001 | ) | ||||||
| Sales/Maturities of marketable securities |
195,058 | 92,880 | ||||||
| Capital expenditures |
(6,216 | ) | (5,641 | ) | ||||
| Video business unit asset purchase |
(24,450 | ) | — | |||||
| Other |
155 | 47 | ||||||
| Net cash used in investing activities |
(61,288 | ) | (74,607 | ) | ||||
| Cash flows from financing activities: |
||||||||
| Exercise of stock options |
3,298 | 11,636 | ||||||
| Shares purchased through stock purchase plan |
798 | 655 | ||||||
| Purchase of treasury stock |
(13,613 | ) | (30,251 | ) | ||||
| Repayment of long-term debt |
— | (10,000 | ) | |||||
| Capital lease payments |
(108 | ) | (111 | ) | ||||
| Net cash provided by financing activities |
(9,625 | ) | (28,071 | ) | ||||
| Net (decrease) increase in cash and cash equivalents |
(25,099 | ) | (40,556 | ) | ||||
| Cash and cash equivalents: |
||||||||
| Beginning of period |
$ | 68,973 | $ | 118,038 | ||||
| End of period |
$ | 43,874 | $ | 77,482 | ||||
See accompanying notes to consolidated financial statements.
5
INTEGRATED CIRCUIT SYSTEMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
(1) INTERIM ACCOUNTING POLICY
The accompanying financial statements have not been audited. In the opinion of our management, the accompanying consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) necessary to present fairly our financial position at April 2, 2005 and results of operations and cash flows for the interim periods presented.
Certain footnote information has been condensed or omitted from these financial statements. Therefore, these financial statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended July 3, 2004. Results of operations for the nine months ended April 2, 2005 are not necessarily indicative of results to be expected for the full year.