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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1996
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 number 0-2287
SYMMETRICOM, INC.
(Exact name of registrant as specified in its charter)
California No. 95-1906306
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
85 West Tasman Drive, San Jose, California 95134-1703
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (408) 943-9403
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, No Par Value
(Title of Class)
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 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 if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K ($229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K. [X]
The aggregate market value of the voting stock held by non-
affiliates of the registrant at September 2, 1996 was approximately
$222,575,473. The number of shares outstanding of the registrant's
Common Stock at September 2, 1996 was 15,650,849.
Documents Incorporated by Reference
Portions of the SymmetriCom, Inc. Proxy Statement for the 1996
Annual Meeting of Shareholders filed with the Commission on or about
September 13, 1996 are incorporated by reference into Part III of this
Annual Report on Form 10-K.
PART I
ITEM 1. Business
SymmetriCom, Inc. (the "Company") was incorporated in California in
1956. The Company conducts its business through two separate operations,
Telecom Solutions and Linfinity Microelectronics Inc. (Linfinity). Each
operates in a different industry segment. Telecom Solutions principally
designs, manufactures and markets advanced network synchronization
systems and intelligent access systems for telephone companies, private
network operators and wireless service providers. Linfinity principally
designs, manufactures and markets linear and mixed signal integrated
circuits as well as modules for use in power supply, data communications
and signal conditioning applications in commercial, industrial, and
defense and space markets.
Telecom Solutions
Telecom Solutions offers a broad range of time reference, or
synchronization, systems and intelligent access, or transmission,
systems for the worldwide telecommunications industry.
Synchronization
Reliable synchronization is fundamental to telecommunications
services, as it permits the orderly and error free transmission of data.
Synchronization allows digital switching and transmission systems to
operate at a common, or synchronized, clock rate. High quality
synchronization is an essential requirement for telecommunications
service providers as they move from analog to digital and implement
transmission technologies such as the Synchronous Optical Network (SONET)
and the Signaling System Seven (SS7) network. Synchronization
degradation can cause digital signal impairments such as jitter, wander
and phase transients, resulting in loss of data.
The Company's core synchronization products consist principally of
quartz and rubidium based Digital Clock Distributors (DCDs), which
provide highly accurate and uninterruptible clocks that meet the
synchronization requirements of digital networks. Telecom Solutions has
established itself as a leader in telephone network synchronization and
has introduced a series of DCDs and related products. These products
provide the critical timing which enables telecommunications service
providers to synchronize precisely such diverse telephone network
elements as digital switches, digital cross-connect systems and
multiplexers for customers who are dependent upon high quality data
transmission.
Telecom Solutions has two key product platforms that are fundamental
to the DCD product family, the DCD 500 Series and the DCD Local Primary
Reference (LPR) Series. The DCD 500 Series is a third generation
synchronization and timing distribution platform that provides the
accurate clock references needed throughout a network to ensure reliable
synchronization. The platform can be equipped with a variety of cards to
increase functionality. The Maintenance Interface System (MIS) and the
Precision Synchronization Monitor (PSM) cards provide an interface for
network management and performance monitoring capabilities, which are
becoming increasingly important for network maintenance. Such
capabilities include network alarm surveillance, central location
monitoring and additional clock functions. Furthermore, the platform
meets the international standards required for deployment in a
Synchronous Digital Hierarchy (SDH) network.
The DCD-LPR Series provides the ability to effectively use either
the Global Positioning System (GPS) or Long Range Navigation (LORAN-C)
satellite and land navigation services which provide direct Stratum 1
traceable synchronization at offices equipped with DCD systems.
The Integrated Local Primary Reference (ILPR) system integrates the
two platforms, the DCD 500 Series and the DCD-LPR in a single package.
The ILPR is a self-contained primary reference source solution.
The Company's ability to provide network management is essential as
Telecommunications Management Network (TMN) standards, established by the
International Telecommunications Union (ITU), have gained popularity
among major telecommunications service providers. Telecom Solutions has
recently introduced a UNIX-based TMN Element Manager, the TEMTM network
management system, which is TMN compliant. The Company has also
developed a Windows NT based proprietary network management system. The
Company anticipates commercial shipments to commence during fiscal 1997.
Telecom Solutions introduced CellSyncTM, for the wireless
communications market during fiscal 1996 and expects commercial shipments
to commence during fiscal 1997. CellSync is a compact synchronization
device which combines GPS technology with a feature called BESTIMETM for
use with applications in both conventional mobile phone cellular sites
and in Personal Communication Systems (PCS) cell sites. BESTIME is a
Multiple Input Frequency Lock Loop (MIFLL) designed to adaptively
ensemble a variety of frequency sources.
In the first quarter of fiscal 1994, the Company acquired Navstar
Limited, a United Kingdom company, and its U.S. affiliate (collectively
"Navstar"). Navstar develops and manufactures systems that use global
positioning technology to determine precise geographic locations and
elevations to an accuracy of a few centimeters. GPS receivers are used
internally in the Company's synchronization products, such as the LPR and
ILPR. Navstar products are also sold in the survey, positioning and
location markets.
Telecom Solutions synchronization systems are typically priced from
$3,000 to $40,000. Navstar products are typically priced from $300 to
$5,000.
Transmission Products
Telecom Solutions transmission products include Secure 7 and the
Integrated Digital Services Terminal (IDST). Secure 7, is a multi-
bandwidth, intelligent, fault-tolerant, digital transmission terminal
that automatically reroutes disrupted high priority telephone data links
such as those used for emergency call services within SS7
telecommunications networks. Secure 7 is designed to provide
approximately 100% availability for these critical data applications.
The IDST is a network access system designed for use in telephone
company central and end offices. Customers have deployed the IDST
primarily as a transmission, monitoring and test access vehicle for SS7
networks. The IDST provides maintenance personnel with flexible,
centralized remote access to SS7 links for troubleshooting and
performance verification, resulting in a comprehensive solution in the
monitoring and transport of links requiring increased reliability. The
IDST can also be deployed as an intelligent digital terminal, an
intelligent network element providing connectivity between the transport
network and customer-serving side of the network. The IDST enhances the
network with distributed digital cross-connect functionality and provides
subrate, multipoint, test and surveillance capabilities to the subscriber
loop.
Transmission products are typically priced at less than $20,000 for a
small system to more than $300,000 for a large system.
The Company supplies its synchronization systems and transmission
products predominantly to the seven Regional Bell Operating Companies
(RBOCs), interexchange carriers, independent telephone companies, private
network operators, wireless service providers and international
telecommunications service providers. Navstar predominantly sells it
products to Telecom Solutions, the U.S. Government, original equipment
manufacturers (OEMs) and international customers.
Linfinity Microelectronics Inc.
During fiscal 1994, substantially all of the assets and liabilities
of the Company's Semiconductor Group were transferred to Linfinity, a
newly-formed subsidiary of the Company. Linfinity products principally
include linear and mixed signal, standard and custom integrated circuits
(ICs) as well as modules primarily for use in power supply, data
communications and signal conditioning applications in commercial,
industrial, and defense and space markets.
ICs are generally divided into three categories; linear, also
referred to as analog, digital and mixed signal circuits. Linear
circuits process, measure or control real world functions such as
temperature, pressure, sound, weight, light and speed. Digital signals
are either "on " or "off" and are represented by binary digits "1" or
"0". Mixed signal ICs consist of a combination of linear and digital
functionality on one chip. The need for analog devices designed to
manage real world functionality continues to grow.
Linfinity's marketing strategy is to shift to high-volume commercial
products from low-volume, custom military programs and to focus on value-
added standard "off-the-shelf" products. Linfinity has been
transitioning to standard products since fiscal 1994 and now offers
approximately 400 standard products in its catalog.
Linfinity derived the majority of its net sales in fiscal 1996 from
power supply products, predominantly standard linear ICs which control,
regulate, monitor, convert or route voltage and current. These products
are used in computer and data storage, lighting, automotive,
telecommunications, test, instrumentation, and defense and space
equipment. These products include pulse width modulators which shape and
manage the characteristics of voltage, low dropout regulators which
convert unregulated input voltage to regulated output voltage with a
minimum amount of overhead voltage, linear voltage regulators which
control the power supply output levels, supervisory circuits which
monitor power supply, and power factor correction ICs which reduce energy
consumption in fluorescent lighting and other applications. New power
supply products introduced by Linfinity include backlight inverter
modules and voltage regulator modules, both of which first shipped in the
fourth quarter of fiscal 1996. The backlight inverters incorporate
Linfinity's proprietary technology and are single-stage cold cathode
fluorescent lamp inverter modules that provide dimmable backlighting for
LCD products. The voltage regulator modules are used in PC motherboards
employing Intels' new, high end Pentiumr Pro processors which require an
intelligent voltage supply.
Data communications ICs are a relatively new product line for
Linfinity. These products include Small Computer Systems Interface
(SCSI) products; high speed, parallel communications buses which permit
high data transfer rates between computers and various peripheral devices
such as hard disk drives, host adapter cards, motherboards, bus
extenders, cables and connectors.
Linfinity offers a range of products for use in analog signal
conditioning applications. Signal conditioning ICs translate and buffer
analog signals from sensors in a variety of applications including
instrumentation, industrial controls, telecommunications and audio
equipment. Products include voltage references, comparators and
operational amplifiers.
Linfinity has established a range of manufacturing processes in its
in-house fabrication facility which includes both bipolar and bipolar
complementary metal oxide semiconductor (BiCMOS) wafer fabrication
processes. The bipolar processes provide (1) a high-voltage, high-power
process for certain power supply applications and (2) a high-performance,
low-voltage process for certain signal conditioning applications. The
BiCMOS process combines the high-performance, low-voltage bipolar process
with a CMOS process for mixed signal applications such as certain power
supply and data communications ICs.
Linfinity products are generally priced from $0.30 to $5.00 for
commercial and industrial applications, $2.50 to $22.00 for defense
applications and $200 to $500 for high reliability defense and space
applications.
Linfinity sells its products in the commercial, industrial, and
defense and space markets to OEMs and distributors.
Industry Segment Information
Information as to net sales, operating income and identifiable assets
attributable to each of the Company's two industry segments for each year
in the three-year period ended June 30, 1996, is contained in Note L of
the Notes to Consolidated Financial Statements. See Item 8, Part II,
"Financial Statements and Supplementary Data."
Marketing
In the United States, Telecom Solutions markets and sells most of its
products through its own sales force to the seven RBOCs, major
interexchange carriers, independent telephone companies, private network
operators and wireless service providers. Internationally, Telecom
Solutions markets and sells its products through its own sales operation
in the United Kingdom and independent sales representatives and
distributors elsewhere. In the United States and internationally,
Linfinity sells its products through its own sales force and independent
sales representatives to original equipment manufacturers and
distributors.
Licensing and Patents
The Company incorporates a combination of trademark, copyright and
patent registration, contractual restrictions and internal security to
establish and protect its proprietary rights. The Company has United
States patents and patent applications pending covering certain
technology used by its Telecom Solutions and Linfinity operations. In
addition, both operations use technology licensed from others. However,
while the Company believes that its patents have value, the Company
relies primarily on innovation, technological expertise and marketing
competence to maintain its competitive advantage. The telecommunications
and semiconductor industries are both characterized by the existence of a
large number of patents and frequent litigation based on allegations of
patent infringement. The Company intends to continue its efforts to
obtain patents, whenever possible, but there can be no assurance that
patents will be issued or that any existing patents or patents that are
obtained will not be challenged, invalidated or circumvented or that the
rights granted will provide any commercial benefit to the Company.
Additionally, if any of the Company's processes or designs are identified
as infringing upon patents held by others, there can be no assurances
that a license will be available or that the terms of obtaining any such
license will be acceptable to the Company.
Manufacturing
The Telecom Solutions manufacturing process consists primarily of in-
house electrical assembly and test performed by the Company's subsidiary
in Aguada, Puerto Rico. Additionally, the Company's subsidiary, Navstar,
in England performs in-house electrical assembly and test of its GPS
receivers.
The Linfinity manufacturing process consists primarily of bipolar and
BiCMOS wafer fabrication, component assembly and final test. Its ICs are
principally fabricated in the Company's wafer fabrication facility in
Garden Grove, California. However, Linfinity also utilizes outside
services to perform certain operations during the fabrication process.
In addition, most of Linfinity's ICs utilizing CMOS wafer processes are
currently manufactured by outside semiconductor foundries. Component
assembly and final test are performed in the Far East by independent
subcontract manufacturers or in Garden Grove by employees.
The manufacturing of Linfinity's ICs is a highly precise and complex
process. Minute impurities, contaminants, errors or difficulties in the
manufacturing process, defects in the masks used to print circuits on a
wafer, or equipment failure among other factors can cause a substantial
number of wafers to be rejected or numerous die on each wafer to be
nonfunctional. There can be no assurance that current manufacturing
yields can be maintained or better yields will be achieved in the future.
The Company primarily uses standard parts and components and standard
subcontract assembly and test, which are generally available from
multiple sources. The Company, to date, has not experienced any
significant delays in obtaining needed standard parts, single source
components or services from its suppliers but there can be no assurance
that such problems will not develop in the future. However, the Company
maintains a reserve of certain ICs, certain single source components and
seeks alternative suppliers where possible. The Company believes that a
lack of availability of ICs or single source components would have an
adverse effect on the Company's operating results.
Backlog
The Company's backlog was approximately $26.6 million at June 30,
1996, compared to approximately $21.6 million at June 30, 1995. Backlog
consists of orders which are expected to be shipped within the next
twelve months. However, the Company does not believe that current or
future backlog levels are meaningful indicators of future revenue levels.
Furthermore, most orders in backlog can be rescheduled or canceled
without significant penalty. Telecom Solutions backlog was approximately
$9.8 million and $5.1 million at June 30, 1996 and 1995, respectively.
Historically, a substantial portion of Telecom Solutions net sales in any
fiscal period has been derived from orders received during that period.
Linfinity backlog was approximately $16.8 million and $16.5 million at
June 30, 1996 and 1995, respectively. Linfinity backlog is dependent on
the cancellation or delay of customer orders, the overall condition of
the semiconductor industry and the cyclical nature of customer demand in
each of its markets. See Item 7, Part II, "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Business
Outlook and Risk Factors."
Key Customers and Export Sales
No customer accounted for 10% or more of net sales in fiscal years
1996 or 1994. One of Telecom Solutions' customers, Southwestern Bell
Telephone, accounted for 11% of the Company's net sales in fiscal 1995.
Export sales, primarily to the Far East (13% and 11% in fiscal years 1996
and 1995, respectively), Canada and Western Europe accounted for 28%, 24%
and 19% of the Company's net sales in fiscal years 1996, 1995 and 1994,
respectively.
International sales may be subject to certain risks, including but
not limited to, foreign currency fluctuations, export restrictions,
longer payment cycles and unexpected changes in regulatory requirements
or tariffs. Gains and losses on the conversion to U.S. dollars of
foreign currency accounts receivable and accounts payable arising from
international operations may in the future contribute to fluctuations in
the Company's business and operating results. Sales and purchase
obligations denominated in foreign currencies have not been significant.
Accordingly, the Company does not currently engage in foreign currency
hedging activities or derivative arrangements but may do so in the future
to the extent that such obligations become more significant.
Additionally, currency fluctuations could have an adverse effect on the
demand for the Company's products in foreign markets.
Competition
The telecommunications and semiconductor industries as well as the
markets in which the Company competes are highly competitive and subject
to changing technologies. A number of the Company's competitors or
potential competitors have been in operation for a much longer period of
time than the Company, have greater financial, manufacturing, technical
and marketing resources, and are able to or could offer much broader
lines of products than are presently marketed by the Company.
Telecom Solutions competes primarily on product reliability and
performance, product features, adherence to standards, customer service
and, to a lesser extent, price. The Company experienced increased
competition in fiscal 1996, and it expects increasing competition in
fiscal 1997, from existing and new competitors as the demand for
synchronization and related products continues to develop. In early
1996, the Telecommunications Act of 1996 was enacted which permits RBOCs,
under certain conditions, to manufacture telecommunications equipment
which also could result in increased competition. The Company believes
that Telecom Solutions generally competes favorably with respect to the
factors listed above.
Linfinity competes primarily on price, product reliability and
performance, delivery time, and customer service. Linfinity has a broad
spectrum of customers predominantly in North America, the Far East and
Europe. Large multinational companies as well as smaller, niche
companies compete with Linfinity in North America. Primarily large
multinational companies compete with Linfinity in the Far East and
Europe. The Company believes that Linfinity generally competes favorably
with respect to these factors.
There can be no assurance that either Telecom Solutions or Linfinity
will be able to compete successfully in the future. The Company's
ability to compete successfully is dependent upon its response to the
entry of new competitors, changing technology and customer requirements,
development or acquisition of new products, the timing of new product
introductions by the Company or its competitors, continued improvement of
existing products, cost effectiveness, quality, price, service and market
acceptance of the Company's products.
Research and Development
The Company has actively pursued the application of new technology in
the industries in which it competes and has its own staff of engineers
and technicians who are responsible for the design and development of new
products. In fiscal years 1996, 1995 and 1994, the Company's overall
research and development expenditures were $15,413,000, $13,407,000, and
$11,454,000, respectively. All research and development expenditures
were expensed as incurred. At June 30, 1996, 77 engineering and
engineering support employees were engaged in development activities.
Telecom Solutions focused its development efforts in fiscal year 1996 on
wireless communications products and network management functionality and
monitoring products, as well as enhancement of core synchronization and
transmission products. Telecom Solutions research and development
expenditures were $9,581,000, $8,457,000 and $7,821,000 in fiscal years
1996, 1995 and 1994, respectively. Linfinity continued to focus its
development efforts in fiscal year 1996 on improving its design
capabilities, improving its bipolar and BiCMOS process technologies and
new product development. New products, which are now in production
include backlight inverter and voltage regulator modules, low dropout
regulators and SCSI terminators. Enhancement of these products and
additional new products are in the development stage. Linfinity research
and development expenditures were $5,832,000, $4,950,000 and $3,633,000
in fiscal years 1996, 1995 and 1994, respectively. The Company will
continue to make significant investments in product development, although
there can be no assurance that the Company will be able to successfully
develop new products or enhanced existing products or that such new or
enhanced products will achieve market acceptance.
Government Regulation
The telecommunications industry is subject to government regulatory
policies regarding pricing, taxation and tariffs which may adversely
impact the demand for the Company's telecommunications products. These
policies are continuously reviewed and subject to change by the various
governmental agencies. The Company is also subject to government
regulations which set installation and equipment standards for newly
installed hardware.
Environmental Regulation
The Company's operations are subject to numerous federal, state and
local environmental regulations related to the storage, use, discharge
and disposal of toxic, volatile or otherwise hazardous chemicals used in
its manufacturing process. Failure to comply with such regulations could
result in suspension or cessation of the Company's operations, could
require significant capital expenditures, or could subject the Company to
significant future liabilities.
Employees
At June 30, 1996, the Company had 667 employees, including 374 in
manufacturing, 112 in engineering and 181 in sales, marketing and
administration. At June 30, 1996, Telecom Solutions had 426 employees
and Linfinity had 241 employees. The Company believes that its future
success is highly dependent on its ability to attract and retain highly
qualified management, sales, marketing and technical personnel.
Accordingly, the Company maintains employee incentive and stock plans for
certain of its employees. Additionally, Linfinity maintains a separate
employee stock option plan for certain Linfinity employees. The Company
currently has a number of open positions primarily in engineering. Any
difficulties in filling these positions could lead to delays in new
product development. No Company employees are represented by a labor
union, and the Company has experienced no work stoppages. The Company
believes that its employee relations are good.
ITEM 2. Properties
The following are the principal facilities of the Company as of June
30, 1996:
Approximate Owned/Lease
Principal Floor Area Expiration
Location Operations (Sq. Ft.)____ Date_____
San Jose, California Corporate Offices
and Telecom Solutions
administration,
sales, engineering
and manufacturing 47,000 July 1997
Aguada, Puerto Rico Telecom Solutions
manufacturing 45,000 September 1999
Aguada, Puerto Rico Telecom Solutions
manufacturing 22,000 September 2000
Northampton, Navstar administration,
England sales, engineering and
manufacturing 18,000 April 1999
Garden Grove, Linfinity administration,
California sales, engineering
and manufacturing 96,000 Owned
Garden Grove, Linfinity wafer
California fabrication 9,000 Owned
During June 1996, the Company entered into an agreement to lease a
118,000 square foot facility to be constructed in San Jose, California,
which will replace existing facilities currently leased for certain
Telecom Solutions and Corporate operations. The estimated lease
commencement date is April 1997. The lease expires twelve years from the
commencement date.
The 96,000 square foot facility located in Garden Grove, California
is subject to an encumbrance as described in Note E of the Notes to
Consolidated Financial Statements. See Item 8, Part II, "Financial
Statements and Supplementary Data." The Company believes that its
current facilities are well maintained and generally adequate to meet
short-term requirements.
ITEM 3. Legal Proceedings
In January 1994, a complaint was filed in the United States District
Court for the Northern District of California against the Company and
three of its officers, by one of the Company's shareholders. The
plaintiff requested that the court certify him as representative of a
class of persons who purchased shares of the Company's common stock
during a specified period in 1993. The complaint alleges that false and
misleading statements made during that period artificially inflated the
price of the Company's common stock in violation of federal securities
laws. There is no specific amount of damages requested in the complaint.
Limited discovery has occurred and no trial date has been set. In
November 1995, an amended complaint was filed which named a fourth
officer of the Company as a defendant. The Company and its officers have
filed a motion to dismiss the amended complaint which is pending before
the Court. After consultation with counsel, the Company and its officers
believe that the complaint is entirely without merit, and intend to
vigorously defend against the action. The Company is also a party to
certain other claims in the normal course of its operations. While the
results of such claims cannot be predicted with certainty, management,
after consultation with counsel, believes that the final outcome of such
matters will not have a material adverse effect on the Company's
financial position or results of operations.
ITEM 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of the security holders of the
Company during the last quarter of the fiscal year ended June 30, 1996.
Executive Officers of the Company
Following is a list of the executive officers of the Company as of
June 30, 1996 and brief summaries of their business experience. All
officers, including executive officers, are elected annually by the Board
of Directors at its meeting following the annual meeting of shareholders.
The Company is not aware of any officer who was elected to the office
pursuant to any arrangement or understanding with another person.
Name Age Position
William D. Rasdal 63 Chairman of the Board and Chief
Executive Officer
Paul N. Risinger 63 Vice Chairman and Assistant Secretary
Retired August 14, 1996
J. Scott Kamsler 48 Vice President, Finance, Chief
Financial Officer and Secretary
D. Ronald Duren 53 President and Chief Operating
Officer, Telecom Solutions
Dale Pelletier 45 Vice President, Operations, Telecom
Solutions
Brad P. Whitney 42 President and Chief Operating
Officer, Linfinity Microelectronics
Inc.
Mr. Rasdal has served as Chairman of the Board of the Company since
July 1989 and as Chief Executive Officer since joining the Company in
November 1985. From November 1985 until July 1989, Mr. Rasdal was
President and a Director of the Company. Mr. Rasdal has also served as a
Director of Celeritek, Inc., a manufacturer of high frequency radio
products, since April 1985. From March 1980 until March 1985, Mr. Rasdal
was associated with Granger Associates, a manufacturer of
telecommunications products. His last position with Granger Associates
was President and Chief Operating Officer. From November 1972 to January
1980, Mr. Rasdal was employed by Avantek as Vice President and Division
Manager for Avantek's microwave integrated circuit and semiconductor
operations. For the thirteen years prior to joining Avantek, he was
associated with TRW in various management positions.
Mr. Risinger served as Vice Chairman of the Company from August 1990
to August 1996 and as a Director of the Company from March 1989 to August
1996. Mr. Risinger retired from all of his Company positions effective
August 14, 1996. From November 1985, when Mr. Risinger joined the
Company, until August 1990, he served as Executive Vice President,
Advanced Marketing and Technology (AMAT). Mr. Risinger has also served
as a Director of Applied Microsystems Corporation, a supplier of tools
used in embedded systems solutions, since December 1993. From April 1981
to May 1985, Mr. Risinger served as Executive Vice President, AMAT, for
Granger Associates and was responsible for the development of new
businesses for the Digital Signal Processing Division. For four years
prior thereto, he served as Executive Vice President and Chief Operating
Officer of the Safariland Companies, a manufacturer of equipment and
accessories in the public safety field. Prior to joining Safariland, Mr.
Risinger was associated with TRW in various management roles in
marketing, research and development, and general management for seventeen
years.
Mr. Kamsler has served as Vice President, Finance, Chief Financial
Officer and Secretary since joining the Company in October 1989. Mr.
Kamsler has also served as a Director of DSP Technology Inc., a
manufacturer of computer automated measurement and control
instrumentation, since November 1988. Prior to October 1989, Mr. Kamsler
served as Vice President, Finance and Chief Financial Officer of Solitec,
Inc. (January 1984 to September 1989), a manufacturer of semiconductor
production equipment, DSP Technology Inc. (April 1984 to September 1989),
a former affiliate of Solitec, and E-H International, Inc. (March 1982 to
January 1984), a manufacturer of automatic test equipment, disk and tape
drive controllers, and printed circuit boards. From November 1977 until
January 1982, Mr. Kamsler held various finance positions with Intel
Corporation.
Mr. Duren has served as President and Chief Operating Officer,
Telecom Solutions, a division of the Company, since August 1990. From
August 1988 until August 1990, Mr. Duren served as Vice President, Sales,
Telecom Solutions. From July 1986, when Mr. Duren joined the Company,
until August 1988, he held the position of Director of Marketing and
Sales, Telecom Solutions. For three years prior to joining the Company,
Mr. Duren served as Vice President, Telco Sales for Granger Associates.
Previously, Mr. Duren served in various management positions with AT&T
for seventeen years.
Mr. Pelletier has served as Vice President, Operations, Telecom
Solutions, a division of the Company, since November 1993. From July
1993 until November 1993, Mr. Pelletier served as Vice President and
General Manager, Telecom Solutions. From July 1992 until July 1993, Mr.
Pelletier served as General Manager, Synchronization Division, Telecom
Solutions. From August 1990 until July 1992, he served as
Synchronization Division Manager, Telecom Solutions. From August 1989
until August 1990, Mr. Pelletier served as Operations Manager, Telecom
and Analog Solutions Divisions. From August 1986, when Mr. Pelletier
joined the Company, until August 1989, he held the position of
Manufacturing Manager, Telecom Solutions. Previously, Mr. Pelletier
served in various finance and manufacturing positions for nine years with
several manufacturing companies.
Mr. Whitney has served as President and Chief Operating Officer for
Linfinity Microelectronics Inc., a subsidiary of the Company, since
joining the Company in November 1992. From May 1980 until November 1992,
Mr. Whitney held various positions with Texas Instruments (TI), an
electronics company. From November 1990 to November 1992, Mr. Whitney
was the Standard Linear Products Manager, Semiconductor Group at TI.
From December 1985 to November 1990, Mr. Whitney was the Op Amps Product
Manager, Semiconductor Group. From November 1983 through November 1985,
Mr. Whitney held various positions within the Voltage Regulator Product
Group at TI. For the three years prior to working in the Semiconductor
Group, Mr. Whitney was associated with the Consumer Products Group. His
last position in this Group was as IC Development Manager, Home Computer
Division. Prior to joining TI, Mr. Whitney was an Engineering Supervisor
and Instructor for the University of Southwestern Louisiana Departments
of Computer Science and Electrical Engineering.
PART II
ITEM 5. Market for the Registrant's Common Stock and Related
Stockholder Matters
The information is described in Note M of the Notes to Consolidated
Financial Statements. See Item 8, Part II, "Financial Statements and
Supplementary Data."
ITEM 6. Selected Financial Data
The following selected financial data should be read in conjunction
with the Company's Consolidated Financial Statements and the Notes
thereto included in Item 8, Part II, "Financial Statements and
Supplementary Data," and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included in Item 7, Part
II.
Year ended June 30,
1996 1995 1994 1993 1992
________ _______ _______ _______ _______
(In thousands, except per share amounts)
Operating Results:
Net sales:
Telecom Solutions $ 68,243 $ 62,814 $59,215 $57,031 $42,094
Linfinity
Microelectronics
Inc. 37,795 40,294 39,170 30,882 26,704
________ ________ _______ _______ _______
Total 106,038 103,108 98,385 87,913 68,798
Operating income 8,263 10,868 8,331 7,940 3,136
Earnings before
income taxes 9,476 11,599 8,125 7,724 2,825
Net earnings 7,478 10,346 6,551 6,001 2,194
Net earnings per
common and common
equivalent share .47 .66 .43 .40 .16
Balance Sheet:
Cash and
investments 34,270 33,205 21,250 18,232 10,146
Working capital 55,522 50,739 38,503 29,348 20,661
Total assets 93,531 85,326 69,054 58,954 48,231
Long-term debt 5,709 5,766 5,818 5,865 5,907
Shareholders' equity 70,403 60,125 46,786 38,102 30,185
ITEM 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The following discussion should be read in conjunction with the
Company's consolidated financial statements and notes thereto.
Business Outlook and Risk Factors
Certain trend analysis and other information contained in
Management's Discussion and Analysis of Financial Condition and Results
of Operations consist of "forward looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, as amended, and are subject to
the safe harbor provisions of those Sections. The Company's actual
results could differ materially from those discussed in the forward
looking statements due to a number of factors including the factors
listed below.
Potential Fluctuations in Operating Results. The Company's quarterly
and annual operating results have fluctuated in the past, and may
continue to fluctuate in the future, due to a number of factors including
the timing, cancellation or delay of customer orders; changes in the
product or customer mix of sales; the timing of new product introductions
by the Company or its competitors; customer delays in qualification of
key new products; delays in new product development and production
startup; increasing competition; market acceptance of the Company's and
its competitors' products; the long sales cycles associated with the
Company's products and other competitive factors. Company operations
entail a high level of fixed costs and require an adequate volume of
production and sales to maintain reasonable gross margins. Accordingly,
any significant decline in demand or any material delay of customer
orders would have a material adverse effect on the Company's business,
operating results and financial condition.
Order Timing. A substantial portion of each quarter's shipments is
based on orders received during that quarter, and from time to time, a
significant portion of each quarter's shipments is based on orders
received in the last month of that quarter. Furthermore, most orders in
backlog can be rescheduled or cancelled without significant penalty.
Therefore, operating results may fluctuate significantly from the
Company's expectations quarter to quarter due to uncertainty in the
timing and the receipt of orders, delays in product shipment and
rescheduling or cancellation of orders. Although Linfinity's bookings
rate increased during the fourth quarter of fiscal 1996, the Company
continues to remain cautious for the first quarter of fiscal 1997 due to
the overall weakness in the semiconductor industry.
New Product Development. The Company is affected by changing
technologies and frequent new product introductions. The Company's
success will depend on its ability to respond to changing technologies
and customer requirements. Delays in new product development or delays
in production startup could have a material adverse effect on the
Company's business, operating results and financial condition. There can
be no assurance that the Company will successfully develop and introduce
new or enhanced products, or that such new or enhanced products will
achieve market acceptance.
Product Performance and Reliability. The Company's customers
establish demanding specifications for performance and reliability. The
Company's products are complex and use many state of the art components,
processes and techniques. There can be no assurance that new products or
enhancements of existing products will not contain undetected errors or
failures due to the complexities of such products. Any such unforeseen
problem could have a material adverse effect on the Company's business,
operating results and financial condition.
Market Change. Future results depend in large part on growth in the
markets for the Company's products. The growth in each of these markets
depends on, among other things, changes in general economic conditions,
or conditions which relate specifically to the markets in which the
Company competes. Some factors which affect the markets for the
Company's products include changes in regulatory conditions, legislation,
export rules or conditions, interest rates and fluctuations in the
business cycle for any particular market segment.
Competition. Markets for the Company's products are highly
competitive, and some of the Company's competitors, or potential
competitors are much larger than the Company, with substantially greater
financial, manufacturing, technical and marketing resources. Operating
results are subject to fluctuation based on unforeseen actions taken by
competitors, the entry of new competitors and the introduction of new or
enhanced competing products. Competition for some of the Company's
products is increasing. Results will depend on the Company's ability to
maintain competitive performance, quality, price and service.
The Company's stock price has been and may continue to be subject to
significant volatility. Many factors, including any shortfall in sales
or earnings from levels expected by securities analysts and investors
could have an immediate and significant adverse effect on the trading
price of the Company's common stock.
Results of Operations
The Company conducts its business through two separate operations.
Telecom Solutions designs, manufactures and markets telecommunications
equipment including advanced network synchronization systems and
intelligent access systems. Linfinity Microelectronics Inc. (Linfinity)
designs, manufactures and markets linear and mixed signal integrated
circuits as well as modules for use in power supply, data communications
and signal conditioning applications.
Net Sales
Net sales increased by $2.9 million (3%) to $106.0 million in fiscal
1996 and by $4.7 million (5%) to $103.1 million in fiscal 1995. The
increase in fiscal 1996 sales was due to higher sales at Telecom
Solutions offset by lower Linfinity sales. The increase in fiscal 1995
sales was due to higher sales at both operations.
Telecom Solutions' net sales increased by $5.4 million (9%) to $68.2
million in fiscal 1996 and by $3.6 million (6%) to $62.8 million in
fiscal 1995. The increase in fiscal 1996 sales primarily resulted from
new synchronization products sales which offset declines in mature
synchronization products sales, and higher Integrated Digital Services
Terminal (IDST), and Secure 7 sales. The increase in fiscal 1995 sales
principally resulted from new synchronization products sales which more
than offset substantial declines in sales of analog and mature
synchronization products.
Linfinity's net sales decreased by $2.5 million (6%) to $37.8 million
in fiscal 1996 and increased by $1.1 million (3%) to $40.3 million in
fiscal 1995. The decrease in fiscal 1996 was essentially due to lower
unit volume of product sold primarily resulting from the general slowdown
in the demand for integrated circuits used in personal computers in the
last half of fiscal 1996. Also, the Company shifted its product sales to
lower priced commercial and industrial products. The increase in fiscal
1995 sales was primarily due to higher unit volume which more than offset
a shift in sales to lower priced products.
Gross Margin
The Company's gross margins were 44%, 46% and 42% in fiscal 1996,
1995 and 1994, respectively. In fiscal 1996, the lower gross margin was
essentially due to decreased manufacturing efficiencies and a shift to
lower margin products at Telecom Solutions, and a significant decline in
unit volume and other manufacturing efficiencies at Linfinity. In fiscal
1995, the higher gross margin resulted primarily from increased
manufacturing efficiencies at both operations and to a shift to higher
margin products at Telecom Solutions. Future gross margins will largely
depend on product mix, manufacturing efficiencies, selling prices and the
development and market acceptance of new products with higher gross
margins.
Operating Expenses
Research and development expense increased to $15.4 million (or 15%
of net sales) in fiscal 1996 from $13.4 million (or 13% of net sales) and
$11.5 million (or 12% of net sales) in fiscal 1995 and 1994,
respectively. The increase in fiscal 1996 was principally due to a
higher investment in new product development by both operations. Telecom
Solutions focused on developing wireless synchronization products and
network management software, as well as enhancing the core
synchronization and transmission products. Linfinity's development
efforts were focused on low dropout regulators, backlight inverters and
the Small Computer Systems Interface (SCSI) product line. Additionally,
the increased spending in fiscal 1996 more than offset a decrease
attributable to substantially lower earnings-based incentive compensation
due to both operations' performance in fiscal 1996 compared to fiscal
1995. In fiscal 1995, the increase was primarily due to the Company's
continued emphasis on new product development, with a proportionately
higher increase at Linfinity.
Selling, general and administrative expense decreased by 1% to $22.5
million (or 21% of net sales) in fiscal 1996 from $22.8 million (or 22%
of net sales) in fiscal 1995 and increased by 6% in fiscal 1995 from
$21.4 million (or 22% of net sales) in fiscal 1994. The decrease in
fiscal 1996 was substantially due to lower earnings-based incentive
compensation due to both operations' performance partially offset by
increased marketing expenditures to support Telecom Solutions new
wireless synchronization products and continued expansion in
international markets. The increase in fiscal 1995 was principally due
to higher earnings-based incentive compensation.
Operating Income
Operating income decreased by 24% to $8.3 million in fiscal 1996 and
increased by 30% to $10.9 million in fiscal in 1995. The decrease in
fiscal 1996 was primarily due to a decline in Linfinity's operating
income and, to a lesser extent, a decline in Telecom Solutions' operating
income. The increase in fiscal 1995 was entirely due to higher Telecom
Solutions' operating income as Linfinity's operating income declined
slightly. See Note L of the Notes to Consolidated Financial Statements
included in Item 8, Part II, "Financial Statements and Supplementary
Data."
Interest Income (Expense)
Interest income increased by $.5 million to $1.8 million in fiscal
1996 and by $.9 million to $1.3 million in fiscal 1995 essentially due to
an increase in the average cash, cash equivalents and short-term
investments balance. Interest expense was $.6 million in fiscal 1996,
1995 and 1994.
Income Taxes
The Company's effective tax rate was 21%, 11% and 19% in fiscal 1996,
1995 and 1994, respectively. The effective tax rate was lower than the
combined federal and state tax rate essentially due to the benefit of
lower income tax rates on income earned in Puerto Rico and state credits.
The effective tax rate in fiscal 1996 is higher than the effective tax
rate in fiscal 1995 principally due to the reduction in the valuation
allowance for deferred tax assets in fiscal 1995. In future years, the
Company expects the effective tax rate to increase over the fiscal 1996
tax rate, and to approximate the combined federal and state tax rate
reduced by any available tax credits and any benefit that may be derived
from the Company's operation in Puerto Rico. Certain provisions of the
Omnibus Budget Reconciliation Act of 1993 and The Small Business Job
Protection Bill of 1996 may result in less favorable tax treatment for
future income earned in Puerto Rico, and this tax treatment will be
eliminated in fiscal 2006.
As a result of the factors discussed above, net income was $7.5
million, or $.47 per share, in fiscal 1996 compared to net income of
$10.3 million, or $.66 per share, in fiscal 1995 and net income of $6.6
million, or $.43 per share, in fiscal 1994.
New Accounting Pronouncements
In March 1995, Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of" (SFAS 121), was issued which requires
recognition of impairment of long-lived assets in the event the net book
value of such assets exceeds the future undiscounted cash flows
attributable to such assets. The Company anticipates adoption of SFAS
121 in 1997, and it is not expected to have a material impact on the
Company's financial position or results of operations.
In October 1995, Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" (SFAS 123), was issued which
establishes a fair value based method of accounting for stock-based
compensation plans. The Company believes, as permitted by SFAS 123, that
beginning in 1997 it will elect to continue to apply APB Opinion No. 25,
"Accounting for Stock Issued to Employees," for purposes of determining
net earnings and will adopt SFAS 123 pro forma disclosure requirements
for net earnings and net earnings per share information.
Liquidity and Capital Resources
Working capital increased by $4.8 million to $55.5 million at June
30, 1996, from $50.7 million at June 30, 1995, while the current ratio
increased to 4.8 to 1.0 from 4.2 to 1.0. During the same period, cash,
cash equivalents and short-term investments increased to $34.3 million
from $33.2 million primarily due to $9.0 million in cash provided by
operating activities and $1.8 million in proceeds from the issuance of
common stock, offset by $9.1 million used for capital expenditures. At
June 30, 1996, the Company had $7.0 million of unused credit available
under its bank line of credit.
The Company believes that cash, cash equivalents, short-term
investments, funds generated from operations and funds available under
its bank line of credit will be sufficient to satisfy working capital and
capital equipment requirements in fiscal 1997. At June 30, 1996, the
Company had no material outstanding commitments to purchase capital
equipment.
ITEM 8. Financial Statements and Supplementary Data
The Company's financial statements follow Item 14, Part IV.
ITEM 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
Not applicable.
PART III
ITEM 10. Directors and Executive Officers of the Registrant
Information regarding directors appearing under the caption "Proposal
No. One - Election of Directors--Nominees" on pages 2 and 3 of the
Company's Proxy Statement for the 1996 Annual Meeting of Shareholders
filed with the Commission on September 13, 1996, (the "Proxy Statement")
is incorporated herein by reference.
Information regarding executive officers is included in Part I hereof
under the heading "Executive Officers of the Company" immediately
following Item 4 in Part I hereof.
Information regarding compliance with Section 16(a) of the Securities
Exchange Act of 1934, as amended, is incorporated herein by reference
from the section entitled "Other Information--Section 16(a) Beneficial
Ownership Reporting Compliance" appearing of page 4 of the Proxy
Statement.
ITEM 11. Executive Compensation
Incorporated herein by reference to the Proxy Statement under the
captions "Proposal No. One - Election of Directors--Nominees" on pages 2
and 3, "Executive Officer Compensation" on pages 6, 7 and 8, "Proposal
No. One - Election of Directors--Director Compensation" on page 4 and
"Certain Transactions" on page 8.
ITEM 12. Security Ownership of Certain Beneficial Owners and
Management
Incorporated herein by reference to the Proxy Statement under the
caption "Other Information--Share Ownership by Principal Shareholders and
Management" on page 5.
ITEM 13. Certain Relationships and Related Transactions
Incorporated herein by reference to the Proxy Statement under the
caption "Certain Transactions" on page 8.
PART IV
ITEM 14. Exhibits, Financial Statement Schedule and Reports
on Form 8-K
(a) Financial Statements and Financial Statement Schedule
1. Financial Statements. The following financial statements
of the Company and the report of Deloitte & Touche LLP,
Independent Auditors, are included in this report on Form
10-K on the pages indicated.
Consolidated Balance Sheets at June 30, 1996 and 1995
Consolidated Statements of Operations for the years ended
June 30, 1996, 1995 and 1994
Consolidated Statements of Shareholders' Equity for the
years ended June 30, 1996, 1995 and 1994
Consolidated Statements of Cash Flows for the years ended
June 30, 1996, 1995 and 1994
Notes to Consolidated Financial Statements
Independent Auditors' Report
2. Financial Statement Schedule. The following financial
statement schedule of the Company for the years ended June
30, 1996, 1995, and 1994 is filed as part of this report
on Form 10-K and should be read in conjunction with the
financial statements.
Schedule II Valuation and Qualifying Accounts and
Reserves
All other schedules have been omitted because they are not
applicable, not required, or the required information is
included in the Consolidated Financial Statements or notes
thereto.
3. Exhibits:
See Item 14(c) below.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the last quarter of
the fiscal year ended June 30, 1996. A report on Form 8-K
was filed during July 1996, pursuant to Item 5 of Form 8-K,
to report the retirement on August 15, 1996, of Paul
Risinger, a Director and the Vice Chairman of the Company.
(c) Exhibits
The exhibits listed on the accompanying index immediately
following the signature page are filed as a part of this
report.
(d) Financial Statement Schedules
See Item 14(a) above.
SYMMETRICOM, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30,
1996 1995
_______ _______
ASSETS
Current assets:
Cash and cash equivalents $31,327 $19,354
Short-term investments 2,943 13,851
_______ _______
Cash and investments 34,270 33,205
Accounts receivable, net of allowance for
doubtful accounts of $330 and $339 14,544 11,845
Inventories 17,847 17,855
Other current assets 3,647 3,715
_______ _______
Total current assets 70,308 66,620
Property, plant and equipment, net 21,547 16,978
Other assets, net 1,676 1,728
_______ _______
$93,531 $85,326
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,544 $ 4,308
Accrued liabilities 9,185 11,521
Current maturities of long-term debt 57 52
_______ _______
Total current liabilities 14,786 15,881
Long-term debt, less current maturities 5,709 5,766
Deferred rent 231
Deferred income taxes 2,633 3,323
Commitments and contingencies
Shareholders' equity:
Preferred stock, no par value:
Authorized - 500 shares
Issued - none
Common stock, no par value:
Authorized - 32,000 shares
Issued and outstanding - 15,570
and 15,097 shares 21,862 19,062
Retained earnings 48,541 41,063
_______ _______
Total shareholders' equity 70,403 60,125
_______ _______
$93,531 $85,326
======= =======
The accompanying notes are an integral part of these consolidated
financial statements.
SYMMETRICOM, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Year ended June 30,
1996 1995 1994
________ ________ _______
Net sales $106,038 $103,108 $98,385
Cost of sales 59,824 56,047 57,165
________ ________ _______
Gross profit 46,214 47,061 41,220
Operating expenses:
Research and development 15,413 13,407 11,454
Selling, general and
administrative 22,538 22,786 21,435
________ ________ _______
Operating income 8,263 10,868 8,331
Interest income 1,807 1,341 397
Interest expense (594) (610) (603)
________ ________ _______
Earnings before income taxes 9,476 11,599 8,125
Income taxes 1,998 1,253 1,574
________ ________ _______
Net earnings $ 7,478 $ 10,346 $ 6,551
======== ======== =======
Net earnings per common and common
equivalent share $ .47 $ .66 $ .43
======== ======== =======
Weighted average common and common
equivalent shares outstanding 16,034 15,714 15,370
======== ======== =======
The accompanying notes are an integral part of these consolidated
financial statements.
SYMMETRICOM, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands)
Total
Share-
Common Stock Retained holders'
Shares Amount Earnings Equity
______ _______ _______ _______
Balances at June 30, 1993 13,728 $13,936 $24,166 $38,102
Issuance of common stock:
Stock option exercises 343 977 977
Tax benefit from stock
option plans 1,156 1,156
Net earnings 6,551 6,551
______ _______ _______ _______
Balances at June 30, 1994 14,071 16,069 30,717 46,786
Issuance of common stock:
Stock option exercises, net
of shares tendered upon
exercise 910 1,611 1,611
Employee stock purchase plan 18 188 188
Net exercise of warrant 98
Tax benefit from stock
option plans 1,194 1,194
Net earnings 10,346 10,346
______ _______ _______ _______
Balances at June 30, 1995 15,097 19,062 41,063 60,125
Issuance of common stock:
Stock option exercises, net
of shares tendered upon
exercise 407 1,079 1,079
Employee stock purchase plan 66 710 710
Tax benefit from stock
option plans 1,011 1,011
Net earnings 7,478 7,478
______ _______ _______ _______
Balances at June 30, 1996 15,570 $21,862 $48,541 $70,403
====== ======= ======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
SYMMETRICOM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year ended June 30,
1996 1995 1994
________ ________ _______
Cash flows from operating activities:
Cash received from customers $103,056 $103,800 $97,514
Cash paid to suppliers and employees (94,610) (86,910) (87,805)
Interest received 1,723 1,303 407
Interest paid (594) (610) (603)
Income taxes paid (559) (725) (1,273)
________ ________ _______
Net cash provided by operating
activities 9,016 16,858 8,240
________ ________ _______
Cash flows from investing activities:
Purchases of short-term investments (24,644) (16,754)
Maturities of short-term investments 35,552 2,903
Capital expenditures, net (9,092) (6,629) (3,606)
Acquisition of other assets (596) (26) (539)
Purchase of Navstar (2,012)
________ ________ _______
Net cash provided by (used for)
investing activities 1,220 (20,506) (6,157)
________ ________ _______
Cash flows from financing activities:
Repayment of long-term debt (52) (47) (42)
Proceeds from issuance of
common stock 1,789 1,799 977
________ ________ _______
Net cash provided by financing
activities 1,737 1,752 935
________ ________ _______
Net increase (decrease) in cash
and cash equivalents 11,973 (1,896) 3,018
Cash and cash equivalents at
beginning of year 19,354 21,250 18,232
________ ________ _______
Cash and cash equivalents at end
of year $ 31,327 $ 19,354 $21,250
======== ======== =======
Reconciliation of net earnings to
net cash provided by operating
activities:
Net earnings $ 7,478 $ 10,346 $ 6,551
Adjustments (net of effects of 1994
Navstar purchase):
Depreciation and amortization 5,171 5,260 5,789
Net deferred income taxes (98) (713) (656)
Changes in assets and liabilities:
Accounts receivable (2,699) 432 (1,060)
Inventories 8 (2,044) (2,430)
Other current assets (524) (54) (194)
Accounts payable 1,236 84 275
Accrued liabilities (1,325) 3,746 139
Deferred rent (231) (199) (174)
________ _______ _______
Net cash provided by operating
activities $ 9,016 $16,858 $ 8,240
======== ======= =======
The accompanying notes are an integral part of these consolidated
financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note A--Summary of Significant Accounting Policies
Business. SymmetriCom, Inc. (the Company) conducts its business through
two separate operations, Telecom Solutions and Linfinity Microelectronics
Inc. (Linfinity). Each operates in a different industry segment. Telecom
Solutions principally designs, manufactures and markets
telecommunications equipment including advanced network synchronization
systems and intelligent access systems. Linfinity designs, manufactures
and markets linear and mixed signal integrated circuits as well as
modules for use in power supply, data communications and signal
conditioning applications.
Principles of Consolidation. The consolidated financial statements
include the accounts of the Company and its subsidiaries. All
significant intercompany accounts and transactions are eliminated.
Fiscal Period. The Company's fiscal year ends on the Sunday closest to
June 30. For presentation purposes, each fiscal year is presented as if
it ended on June 30. All references to years refer to the Company's
fiscal years. Fiscal years 1996 and 1995 consisted of 52 weeks and
fiscal year 1994 consisted of 53 weeks.
Use of Estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could differ
from those estimates.
Cash Equivalents. The Company considers all highly liquid debt
investments purchased with an original maturity of three months or less
to be cash equivalents.
Short-term Investments. Short-term investments, consisting of corporate
debt securities and repurchase agreements which mature through November
1996, are classified as available-for-sale and reported at fair value.
Net unrealized gains and losses, if significant, are excluded from
earnings and included as a separate component of shareholders' equity.
The cost of securities sold is based on the specific identification
method.
Fair Values of Financial Instruments. Fair values of cash, cash
equivalents and short-term investments approximate carrying value based
upon quoted market prices. The estimated fair value of long-term debt
approximates carrying value using current market interest rates.
Inventories. Inventories are stated at the lower of cost (first-in,
first-out) or market.
Property, Plant and Equipment. Property, plant and equipment are stated
at cost. Depreciation and amortization are computed using the straight-
line method based on the estimated useful lives of the assets (three to
thirty years) or the lease term if shorter.
Intangible Assets. Intangible assets, primarily purchased technology,
are included in other assets and amortized over five years.
Revenue Recognition. Sales are recognized upon shipment. Provisions are
made for warranty costs, sales returns and price protection.
Foreign Currency Translation. Foreign currency translation gains and
losses and the effect of foreign currency exchange rate fluctuations have
not been significant.
Concentrations of Credit Risk. Financial instruments which potentially
subject the Company to concentrations of credit risk consist principally
of cash equivalents, short-term investments and accounts receivable. The
Company places its investments with high-credit-quality corporations and
financial institutions. Accounts receivable are derived primarily from
sales to telecommunications service providers, original equipment
manufacturers and distributors. Management believes that its credit
evaluation, approval and monitoring processes substantially mitigate
potential credit risks.
Net Earnings Per Common and Common Equivalent Share. Net earnings per
common and common equivalent share is computed using the weighted average
number of common shares outstanding and dilutive stock options, using the
treasury stock method.
Recent Accounting Pronouncements. In March 1995, Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed of" (SFAS 121), was
issued which requires recognition of impairment of long-lived assets in
the event the net book value of such assets exceeds the future
undiscounted cash flows attributable to such assets. The Company
anticipates adoption of SFAS 121 in 1997, and it is not expected to have
a material impact on the Company's financial position or results of
operations.
In October 1995, Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" (SFAS 123), was issued which
establishes a fair value based method of accounting for stock-based
compensation plans. The Company believes, as permitted by SFAS 123, that
beginning in 1997 it will elect to continue to apply APB Opinion No. 25,
"Accounting for Stock Issued to Employees," for purposes of determining
net earnings and will adopt SFAS 123 pro forma disclosure requirements
for net earnings and net earnings per share information.
Note B--Acquisition
In August 1993, the Company acquired, in a purchase transaction,
substantially all the assets of Navstar Limited, a U.K. company, and its
U.S. affiliate (collectively "Navstar") for $2,012,000 in cash and the
assumption of $1,035,000 in liabilities. The fair value of assets
acquired included purchased technology of $1,756,000, tangible assets of
$1,071,000 and goodwill of $220,000. Navstar designs, manufactures and
markets Global Positioning System receivers.
Note C--Linfinity Microelectronics Inc.
In July 1993, substantially all of the assets and liabilities of the
Company's Semiconductor Group were transferred to Linfinity, a newly-
formed subsidiary, in exchange for 6,000,000 shares of Linfinity Series A
preferred stock and 2,000,000 shares of Linfinity common stock. No other
Linfinity capital stock has been issued except for shares issued under
Linfinity's employee stock option plan. Each Series A preferred share is
convertible into one share of common stock. In addition, 2,000,000
shares of Linfinity's common stock have been reserved for issuance under
Linfinity's employee stock option plan. All options have been granted at
the fair market value on the date of grant as determined by Linfinity's
Board of Directors based upon independent appraisal; accordingly, no
compensation expense has been recorded. Outstanding stock options
generally vest 25% per year from date of grant and expire no later than
ten years from date of grant. At June 30, 1996, options to purchase
1,778,000 shares of Linfinity's common stock had been granted and were
outstanding with exercise prices of $.50 to $2.65 per share, options to
purchase 12,000 shares had been exercised at prices of $.50 to $.80 per
share, 210,000 shares were available for grant and options to purchase
909,000 shares were exercisable at prices of $.50 to $2.65 per share.
Note D--Balance Sheet Components
June 30,
1996 1995
_______ _______
(In thousands)
Inventories:
Raw materials $ 6,704 $ 5,433
Work-in-process 6,868 6,910
Finished goods 4,275 5,512
_______ _______
$17,847 $17,855
======= =======
Property, Plant and Equipment, net:
Land $ 1,247 $ 1,247
Buildings and improvements 8,659 8,666
Machinery and equipment 38,864 30,369
Leasehold improvements 2,312 2,173
_______ _______
51,082 42,455
Accumulated depreciation and amortization (29,535) (25,477)
_______ _______
$21,547 $16,978
======= =======
Accrued Liabilities:
Employee compensation and benefits $ 3,687 $ 5,954
Accrued warranty expense 2,088 2,520
Other 3,410 3,047
_______ _______
$ 9,185 $11,521
======= =======
Note E--Borrowing Arrangements
The Company has a $7,000,000 unsecured bank line of credit which
expires in December 1997 and bears interest at the bank's prime rate,
8.25% at June 30, 1996. The line of credit agreement requires that the
Company maintain certain financial ratios and prohibits an operating loss
in two consecutive quarters. The unsecured bank line of credit has not
been utilized during the last three years.
Long-term debt consists of a 10.25% note, payable in monthly
installments of approximately $54,000, including interest, until November
1997 when the balance of the principal is due. The note is
collateralized by land, building and related personal property. At June
30, 1996, maturities of long-term debt were $57,000 in 1997 and
$5,709,000 in 1998.
Note F--Income Taxes
Income tax expense consists of:
Year ended June 30,
1996 1995 1994
_______ _______ _______
(In thousands)
Current:
Federal $ 1,250 $ 1,341 $ 1,366
State (56) 159 778
Puerto Rico 902 466 86
_______ _______ _______
2,096 1,966 2,230
_______ _______ _______
Deferred:
Federal 386 (532) (1,144)
State (114) (373) 104
Puerto Rico (370) 192 384
_______ _______ _______
(98) (713) (656)
_______ _______ _______
$ 1,998 $ 1,253 $ 1,574
======= ======= =======
Deferred income tax expense (benefit) is recorded when income and
expenses are recognized in different periods for financial reporting and
tax purposes. The significant components of deferred income tax expense
(benefit) are as follows:
Year ended June 30,
1996 1995 1994
_______ _______ _______
(In thousands)
Net operating loss and credit carryforwards $ (156) $ (813) $ 642
Reserves and accruals 32 631 (548)
Depreciation and amortization (93) (263) (639)
Deferred taxes on Puerto Rico earnings (688) 204 1,339
Change in valuation allowance 807 (472) (1,450)
_______ _______ _______
$ (98) $ (713) $ (656)
======= ======= =======
The Company's effective income tax rate differs from the federal
statutory income tax rate as follows:
Year ended June 30,
1996 1995 1994
_______ _______ _______
Federal statutory income tax rate 35.0% 35.0% 35.0%
Change in valuation allowance ( 17.6) (17.8)
Federal tax benefit of Puerto Rico
operations (17.2) (12.9) (8.9)
Puerto Rico taxes 5.6 5.7 5.8
Research and development tax credit (2.6) (1.6)
State income taxes, net of federal benefit (1.8) 1.2 5.9
Other (.5) 2.0 1.0
_______ _______ _______
Effective income tax rate 21.1% 10.8% 19.4%
======= ======= =======
The principal components of the Company's deferred tax assets and
liabilities are as follows:
June 30,
1996 1995
_______ _______
(In thousands)
Deferred tax assets:
Net operating loss and credit carryforwards $ 5,560 $ 5,404
Reserves and accruals 2,692 2,724
_______ _______
8,252 8,128
Valuation allowance (5,115) (4,308)
_______ _______
3,137 3,820
_______ _______
Deferred tax liabilities:
Depreciation and amortization 815 908
Unremitted Puerto Rico earnings 2,296 2,984
_______ _______
3,111 3,892
_______ _______
Net deferred tax (asset) liability $ (26) $ 72
======= =======
Based on the Company's assessment of future realizability of deferred
tax assets, a valuation allowance has been provided as it is more likely
than not that sufficient taxable income will not be generated to realize
certain temporary differences and tax credit carryforwards.
Additionally, at June 30, 1996, approximately $4,750,000 of the valuation
allowance was attributable to the potential tax benefit of stock option
transactions, which will be credited directly to common stock if
realized.
At June 30, 1996, for federal income tax purposes, the Company had
net operating loss carryforwards of approximately $1,900,000 which expire
in the years 2003 through 2007, research and development and investment
tax credit carryforwards of approximately $3,200,000 which expire in the
years 1999 through 2010 and alternative minimum tax credit carryforwards
of approximately $1,000,000 which have no expiration date. Additionally,
for state income tax purposes, the Company had research and development
tax credit carryforwards of approximately $700,000 which have no
expiration date.
The Company operates a subsidiary in Puerto Rico under a grant
providing for partial exemption from Puerto Rico taxes through the year
2008. During 1993, the Company elected to have this subsidiary taxed
under Section 936 of the U.S. Internal Revenue Code which exempts
qualified Puerto Rico source earnings from federal income taxes. Certain
provisions of the Omnibus Budget Reconciliation Act of 1993 and the Small
Business Job Protection Bill of 1996 may result in less favorable tax
treatment for future income earned in Puerto Rico, and this tax treatment
will be eliminated in 2006. Appropriate taxes have been provided on this
subsidiary's earnings which are intended to be remitted to the parent
company. Approximately $9,000,000 of Puerto Rico earnings were
distributed to the Company during 1996. At June 30, l996, the total
unremitted earnings of the Puerto Rico subsidiary and the related tax
liability were approximately $19,500,000 and $2,296,000, respectively.
Note G--Commitments
The Company leases certain facilities and equipment under operating
lease agreements which expire at various dates through September 2000.
During June 1996, the Company entered into an agreement to lease a
facility to be constructed which will replace existing facilities
currently leased for certain Telecom Solutions and Corporate operations.
The Company has committed to fund a minimum of $2,950,000 of tenant
improvements in the new facility. The estimated lease commencement date
is April 1997. The lease expires twelve years from the commencement date
and contains two renewal options for five years each.
Rental expense charged to operations was $1,741,000 in 1996,
$1,554,000 in 1995 and $1,859,000 in 1994. Future minimum payments due
under noncancelable leases at June 30, 1996, were $2,003,000 in 1997,
$2,085,000 in 1998, $1,809,000 in 1999, $1,665,000 in 2000, $1,687,000 in
2001 and $15,673,000 thereafter.
Note H--Contingencies
In January 1994, a complaint was filed in the United States District
Court for the Northern District of California against the Company and
three of its officers, by one of the Company's shareholders. The
plaintiff requests that the court certify him as representative of a
class of persons who purchased shares of the Company's common stock
during a specified period in 1993. The complaint alleges that false and
misleading statements made during that period artificially inflated the
price of the Company's common stock in violation of federal securities
laws. There is no specific amount of damages requested in the complaint.
Limited discovery has occurred and no trial date has been set. In
November 1995, an amended complaint was filed which named a fourth
officer of the Company as a defendant. The Company and its officers have
filed a motion to dismiss the amended complaint which is pending before
the Court. After consultation with counsel, the Company and its officers
believe that the complaint is entirely without merit, and intend to
vigorously defend against the action. The Company is also a party to
certain other claims in the normal course of its operations. While the
results of such claims cannot be predicted with certainty, management,
after consultation with counsel, believes that the final outcome of such
matters will not have a material adverse effect on the Company's
financial position or results of operations.
Note I--Related Party Transactions
The Company paid $36,000 in each of the three years ended June 30,
1996 for marketing research to a firm whose Managing Director was a
director of the Company. During 1995, certain executive officers
exercised stock options in exchange for notes of $43,000. These notes
bear interest at approximately 6% per annum, payable annually. The notes
are collateralized by the stock issued upon exercise of the stock options
and are due in July 1997. The notes are offset against common stock.
During 1993, the Company made a $95,000 unsecured 5% loan to an executive
officer which was repaid in 1996.
Note J--Benefit Plans
401(k) Plans. The Company's U.S. and Puerto Rico employees are eligible
to participate in the Company's 401(k) plans. The Company's
discretionary contributions vest immediately and were $102,000, $101,000
and $89,000 in 1996, 1995 and 1994, respectively.
Note K--Shareholders' Equity
Stock Options. The Company has an employee stock option plan under which
employees and consultants may be granted non-qualified and incentive
options to purchase shares of the Company's authorized but unissued
common stock. Stock appreciation rights may also be granted under this
plan, however, none have been granted. The Company's shareholders have
approved a plan under which the number of shares reserved for issuance
under the employee stock option plan will automatically increase each
July by an amount equal to 3% of the Company's outstanding shares as of
June 30. In July 1996, the number of shares reserved for issuance
increased by 467,000. In addition, the Company has a director stock
option plan under which non-employee directors are granted options each
January to purchase 10,000 shares of the Company's authorized but
unissued common stock. All options have been granted at the fair market
value of the Company's common stock on the date of grant. Options expire
no later than ten years from the date of grant and are generally
exercisable in annual installments of 25%, 25% and 50% at the end of each
of the first three years following the date of grant. Stock option
activity for the three years ended June 30, 1996, is as follows:
Shares Options Outstanding
Available Number Price
For Grant of Shares Per Share
_________ _________ _________
(In thousands, except per share amounts)
Balances at June 30, 1993 936 2,231 $ 1.50 to 13.00
Granted (489) 489 7.63 to 17.75
Exercised -- (343) 1.50 to 7.50
Canceled 92 (92) 2.50 to 17.75
_____ _____
Balances at June 30, 1994 539 2,285 1.63 to 17.75
Granted (591) 591 8.94 to 16.75
Exercised -- (967) 1.63 to 13.00
Canceled 332 (332) 3.13 to 17.75
_____ _____
Balances at June 30, 1995 280 1,577 1.63 to 17.75
Authorized 650 -- --
Granted (871) 871 11.13 to 22.75
Exercised -- (427) 1.63 to 10.13
Canceled 370 (370) 7.50 to 22.75
_____ _____
Balances at June 30, 1996 429 1,651 $ 1.75 to 22.75
===== ===== ===============
Exercisable at June 30, 1996 593 $ 1.75 to 17.75
===== ===============
The stock option activity includes the cancellation of options for 235,000
shares in July 1994 and 297,000 shares in April 1996 and the corresponding
grant of new options at exercise prices equal to the fair market value on
the dates of the new grants, $8.94 in July 1994 and $11.98 in April 1996.
The new options began revesting in July 1994 and April 1996, respectively.
Employee Stock Purchase Plan. The Company has an employee stock purchase
plan under which eligible employees may authorize payroll deductions of up
to 10% of their compensation to purchase shares of the Company's common
stock at 85% of the fair market value at certain specified dates. Under
this plan, 450,000 shares of common stock have been reserved for issuance
and 84,000 shares have been issued through June 30, 1996.
Common Share Purchase Rights. The Company has a shareholder rights plan
which authorizes the issuance of one common share purchase right for each
share of common stock. The rights expire in December 2000 and are not
exercisable or transferable apart from the common stock until the
occurrence of certain events. Such events include the acquisition of 20%
or more of the Company's outstanding common stock or the commencement of
a tender or exchange offer for 30% or more of the Company's outstanding
common stock. If the rights become exercisable, each right entitles its
holder to purchase one new share of common stock at an exercise price of
$25.00, subject to certain antidilution adjustments. Additionally, if
the rights become exercisable, a holder will be entitled, under certain
circumstances, to purchase, for the exercise price, shares of common
stock of the Company or in other cases, of the acquiring company, having
a market value of twice the exercise price of the right. Under certain
conditions, the Company may redeem the rights for a price of $.01 per
right or exchange each right not held by the acquirer for one share of
the Company's common stock.
Warrants. During March 1995, the Company issued 98,000 shares of common
stock, net of 27,000 shares tendered, in connection with the exercise of
a warrant to purchase common stock at $3.375 per share.
Note L--Business Segment Information
Industry Segment Information. Information relating to the Company's
industry segments is as follows:
Year ended June 30,
1996 1995 1994
________ ________ _______
(In thousands)
Net sales:
Telecom Solutions $ 68,243 $ 62,814 $59,215
Linfinity 37,795 40,294 39,170
________ ________ _______
$106,038 $103,108 $98,385
======== ======== =======
Operating income:
Telecom Solutions $ 5,880 $ 6,222 $ 3,588
Linfinity 2,383 4,646 4,743
________ ________ _______
$ 8,263 $ 10,868 $ 8,331
======== ======== =======
Identifiable assets:
Telecom Solutions $ 62,574 $ 55,098 $43,223
Linfinity 30,957 30,228 25,831
________ ________ _______
$ 93,531 $ 85,326 $69,054
======== ======== =======
Depreciation and amortization expense:
Telecom Solutions $ 2,654 $ 2,841 $ 2,917
Linfinity 2,517 2,419 2,872
________ ________ _______
$ 5,171 $ 5,260 $ 5,789
======== ======== =======
Capital expenditures:
Telecom Solutions $ 3,832 $ 2,102 $ 2,017
Linfinity 5,260 4,527 1,589
________ ________ _______
$ 9,092 $ 6,629 $ 3,606
======== ======== =======
Major Customers and Export Sales. No customer accounted for 10% or more of
net sales in 1996 or 1994. One of Telecom Solutions' customers accounted
for 11% of the Company's net sales in 1995. Export sales, primarily to the
Far East (13% and 11% in 1996 and 1995, respectively), Canada and Western
Europe accounted for 28%, 24% and 19% of the Company's net sales in 1996,
1995 and 1994, respectively.
Note M--Quarterly Results Unaudited
QUARTERLY RESULTS AND STOCK MARKET DATA (UNAUDITED)
First Second Third Fourth Total
Quarter Quarter Quarter Quarter Year
_______ _______ _______ _______ ________
(In thousands, except per share amounts)
Fiscal Year 1996:
Net sales:
Telecom Solutions $17,215 $18,360 $14,336 $18,332 $ 68,243
Linfinity
Microelectronics
Inc. 10,463 10,066 8,357 8,909 37,795
_______ _______ _______ _______ ________
Total 27,678 28,426 22,693 27,241 106,038
Gross profit 13,066 13,589 8,328 11,231 46,214
Operating income 3,500 4,146 (244) 861 8,263
Earnings before
income taxes 3,817 4,479 58 1,122 9,476
Net earnings 2,771 3,337 318 1,052 7,478
Net earnings per
common and common
equivalent share .17 .21 .02 .07 .47
Common stock
price range (A):
High 26-5/8 22-5/8 13-7/8 14-3/4 26-5/8
Low 20-5/8 12-7/8 8-7/8 9-5/8 8-7/8
Fiscal Year 1995:
Net sales:
Telecom Solutions $14,407 $15,753 $16,027 $16,627 $ 62,814
Linfinity
Microelectronics
Inc. 9,774 9,837 10,234 10,449 40,294
_______ _______ _______ _______ ________
Total 24,181 25,590 26,261 27,076 103,108
Gross profit 10,821 11,380 12,463 12,397 47,061
Operating income 2,371 2,419 2,924 3,154 10,868
Earnings before
income taxes 2,444 2,547 3,152 3,456 11,599
Net earnings 1,999 2,412 2,786 3,149 10,346
Net earnings per
common and common
equivalent share .13 .15 .18 .20 .66
Common stock
price range (A):
High 12 13-5/8 17 21-3/4 21-3/4
Low 8 10-7/8 13-1/8 15-1/2 8
(A) The Company's common stock trades on The Nasdaq Stock Market
under the symbol SYMM. At June 30, 1996, there were approximately 1,498
shareholders of record. Common stock prices are closing prices as
reported on the Nasdaq Stock Market System. The Company has not paid
cash dividends during the last two fiscal years and has no present plans
to do so.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
SymmetriCom, Inc.
We have audited the accompanying consolidated balance sheets of
SymmetriCom, Inc. and subsidiaries as of June 30, 1996 and 1995, and the
related consolidated statements of operations, shareholders' equity and
cash flows for each of the three years in the period ended June 30, 1996.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of SymmetriCom,
Inc. and subsidiaries at June 30, 1996 and 1995, and the
results of their operations and their cash flows for each of the three
years in the period ended June 30, 1996 in conformity with generally
accepted accounting principles.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
San Jose, California
July 23, 1996
SCHEDULE II
SYMMETRICOM, INC.
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(In thousands)
Balance Charged
at to Costs Balance
Beginning and Deductions at End
of Year Expenses (1) of Year
Year ended June 30, 1996:
Accrued warranty expense $ 2,520 $ 1,105 $ 1,537 $ 2,088
Allowance for doubtful
accounts $ 339 $ 16 $ 25 $ 330
Year ended June 30, 1995:
Accrued warranty expense $ 2,071 $ 1,021 $ 572 $ 2,520
Allowance for doubtful
accounts $ 242 $ 122 $ 25 $ 339
Year ended June 30, 1994:
Accrued warranty expense $ 2,136 $ 386 $ 451 $ 2,071
Allowance for doubtful
accounts $ 114 $ 155 $ 27 $ 242
(1) Deductions represent costs charged or amounts written off against
the reserve or allowance.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
SYMMETRICOM, INC.
Date: September 16, 1996 By: /s/ J. Scott Kamsler
__________________________
(J. Scott Kamsler)
Vice President, Finance and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
Signature Title Date
_________ _____ ____
/s/ William D. Rasdal Chairman of the Board and September 16, 1996
______________________ Chief Executive Officer
(William D. Rasdal) (Principal Executive Officer)
/s/ J. Scott Kamsler Vice President, Finance September 16, 1996
______________________ and Chief Financial Officer
(J. Scott Kamsler) (Principal Financial
and Accounting Officer)
/s/ Roger A. Strauch Director September 16, 1996
______________________
(Roger A. Strauch)
/s/ Robert M. Wolfe Director September 16, 1996
______________________
(Robert M. Wolfe)
Exhibit
Number Index of Exhibits
3.1(1) Restated Articles of Incorporation.
3.2(2) Certificate of Amendment to Restated Articles of
Incorporation filed December 11, 1990.
3.3(10) Certificate of Amendment to Restated Articles of
Incorporation filed October 27, 1993.
3.4(10) By-Laws, as amended July 21, 1993.
4.1(3) Common Shares Rights Agreement dated December 6, 1990,
between Silicon General, Inc. and Manufacturers Hanover
Trust Company of California, including the form of Rights
Certificate and the Summary of Rights attached thereto as
Exhibits A and B, respectively.
4.2(4) Amendment to the Common Shares Rights Agreement dated
February 5, 1993 between Silicon General, Inc. and Chemical
Trust Company of California, formerly Manufacturers Hanover
Trust Company of California, including the form of Rights
Certificate and the Summary of Rights attached thereto as
Exhibits A and B, respectively.
10.1(5)(15) Amended and Restated Employees' Stock Option Plan (1980),
with form of Stock Option Agreement (1980 Plan).
10.2(5)(15) Amended and Restated Non-Qualified Stock Option Plan (1982),
with form of Employee Non-Qualified Stock Option (1982
Plan).
10.3(5)(15) Amended and Restated Employee Stock Option Plan (1983), with
form of Stock Option Under Incentive Stock Option Plan 1983.
10.4(13)(15) 1990 Director Option Plan (as amended through October 25,
1995).
10.5(5)(15) Form of Director Option Agreement.
10.6(13)(15) 1990 Employee Stock Plan (as amended through October 25,
1995).
10.7(5)(15) Forms of Stock Option Agreement, Restricted Stock Purchase
Agreement, Tandem Stock Option/SAR Agreement, and Stock
Appreciation Right Agreement for use with the 1990 Employee
Stock Plan.
10.8(11)(15) 1995 Employee Stock Purchase Plan, with form of Subscription
Agreement.
10.9(2) Loan Agreements between the Company and the John Hancock
Mutual Life Insurance Company, dated October 18, 1990,
including exhibits thereto.
10.10(6) Lease Agreement by and between the Company and Menlo Tasman
Investment Company dated June 16, 1986, and Amendment to
Lease dated March 27, 1987.
10.11(2) Lease Agreement by and between Zeltex Puerto Rico, Inc., a
subsidiary of the Company, and Puerto Rico Industrial
Development Company dated January 22, 1991.
10.12(10) Lease Agreement by and between Telecom Solutions Puerto Rico,
Inc., a subsidiary of the Company, and Puerto Rico Industrial
Development dated August 9, 1994.
10.13(10) Lease Agreement by and between Navstar Systems Limited, a
subsidiary of the Company, and Baker Hughes Limited dated
April 22, 1994.
10.14 Lease Agreement by and between the Company and Nexus Equity,
Inc. dated June 10, 1996.
10.15(10) Revolving Credit Loan Agreement between the Company and
Comerica Bank-Detroit dated December 1, 1993.
10.16(12) First Amendment to the Revolving Credit Loan Agreement between
the Company and Comerica Bank-Detroit dated April 20, 1995.
10.17 Second Amendment to the Revolving Credit Loan Agreement
between the Company and Comerica Bank-Detroit dated June 1,
1996.
10.18(7) Form of Indemnification Agreement.
10.19(9) Linfinity Microelectronics Inc. Common Stock and Series A
Preferred Stock Purchase Agreement dated June 28, 1993.
10.20(9) Tax Sharing Agreement between Linfinity Microelectronics Inc.
and the Company dated June 28, 1993.
10.21(9) Intercompany Services Agreement between Linfinity
Microelectronics Inc. and the Company dated June 28, 1993.
10.22(9)(15) Linfinity Microelectronics Inc. 1993 Stock Option Plan with
form of Stock Option Agreement.
10.23(9) Linfinity Microelectronics Inc. Form of Indemnification
Agreement.
10.24(9)(15) Employment offer letter by and between the Company and Brad
P. Whitney, President and Chief Operating Officer, Linfinity
Microelectronics Inc. dated November 20, 1992.
10.25(8) Agreement for Sale and Purchase of the Navstar Business of
Radley Services Limited.
10.26(8) Agreement for the Sale and Purchase of Certain Assets of
Navstar Electronics, Inc.
10.27(14) Supplement and Amendment, dated November 27, 1995, to the
Lease Agreement by and between Telecom Solutions Puerto Rico,
Inc., a subsidiary of the Company, and Puerto Rico Industrial
Development dated August 9, 1994
21.1 Subsidiaries of the Company.
23.1 Independent Auditors' Consent and Report on Schedule.
27.1 Financial Data Schedule.
Footnotes to Exhibits
(1) Incorporated by reference from Exhibits to Annual Report on Form
10-K for the fiscal year ended July 2, 1989.
(2) Incorporated by reference from Exhibits to Annual Report on Form
10-K for the fiscal year ended June 30, 1991.
(3) Incorporated by reference from Exhibits to Registration Statement
on Form 8-A filed with the Securities and Exchange Commission on
December 8, 1990.
(4) Incorporated by reference from Exhibits to Registration Statement
on Form 8-A filed with the Securities and Exchange Commission on
February 11, 1993.
(5) Incorporated by reference from Exhibits to Registration Statement
on Form S-8 filed with the Securities and Exchange Commission on
December 24, 1990.
(6) Incorporated by reference from Exhibits to Annual Report on Form
10-K for the fiscal year ended June 28, 1987.
(7) Incorporated by reference from Exhibits to the 1990 Proxy
Statement.
(8) Incorporated by reference from Exhibits to Current Report on Form
8-K filed with the Securities and Exchange Commission on September
2, 1993.
(9) Incorporated by reference from Exhibits to Annual Report on Form
10-K for the fiscal year ended June 30, 1993.
(10) Incorporated by reference from Exhibits to Annual Report on Form
10-K for the fiscal year ended June 30, 1994.
(11) Incorporated by reference from Exhibits to Registration Statement
on Form S-8 filed with the Securities and Exchange Commission on
January 4, 1995.
(12) Incorporated by reference from Exhibits to Annual Report on Form
10-K for the fiscal year ended June 30, 1995.
(13) Incorporated by reference from Exhibits to Registration Statement
on Form S-8 filed with the Securities and Exchange Commission on
January 19, 1996.
(14) Incorporated by reference from Exhibits to Quarterly Report on Form
10-Q for the quarter ended December 31, 1995.
(15) Indicates a management contract or compensatory plan or
arrangement.