Here's the data from the 10Q: Dig in!
Excerpt's from JTS 10Q.
Copied from the FreeEdgar database.
Balance Sheet:
AUGUST 3, FEBRUARY 2,
1997 1997
--------- ---------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents (including $1,400, and
$1,800 held as restricted balances at August
3, 1997 and February 2, 1997, respectively) $ 5,228 $ 24,766
Accounts receivable, less allowance for doubtful
accounts of $3,948 and $1,615 at August 3,
1997 and February 2, 1997, respectively 20,680 21,445
Inventories 15,273 17,750
Other current assets 2,418 2,341
--------- ---------
Total current assets 43,600 66,302
PROPERTY AND EQUIPMENT, net 30,029 27,674
ACQUIRED TECHNOLOGY, net 18,109 19,618
GOODWILL, net 15,796 16,673
OTHER ASSETS 698 450
--------- ---------
TOTAL $ 108,232 $ 130,717
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY DEFICIT
CURRENT LIABILITIES:
Bank line of credits $ 21,170 $ 10,540
Borrowings under factoring arrangement 6,389 2,981
Accounts payable 65,952 33,327
Accrued liabilities 17,115 16,415
Current portion of long-term obligations 2,805 1,967
--------- ---------
Total current liabilities 113,431 65,230
--------- ---------
LONG-TERM OBLIGATIONS 52,982 53,081
--------- ---------
STOCKHOLDERS' EQUITY DEFICIT:
Convertible preferred stock, $.001 par value --
authorized, 10,000,000 shares; outstanding,
17,525 and 40,000 shares at August 3, 1997 and
February 2, 1997, respectively -- --
Common stock, $.001 par value -- authorized,
250,000,000 shares; outstanding, 133,919,078
and 104,744,765 at August 3, 1997 and February
2, 1997, respectively 134 105
Additional paid-in capital 350,360 349,961
Notes receivable from shareholders (2,475) (2,510)
Accumulated deficit (406,177) (335,150)
--------- ---------
Total stockholders' equity deficit (58,181) 12,406
--------- ---------
TOTAL $ 108,232 $ 130,717
========= =========
Income Statement:
THREE MONTHS ENDED SIX MONTHS ENDED
-------------------------- --------------------------
AUGUST 3, JUNE 30, AUGUST 3, JUNE 30,
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
NET SALES $ 28,412 $ 1,040 $ 101,825 $ 7,762
--------- --------- --------- ---------
Cost of sales 70,603 931 140,823 5,689
--------- --------- --------- ---------
GROSS MARGIN (DEFICIT) (42,190) 109 (38,998) 983
Amortization of acquired technology 701 -- 1,402 --
Amortization of Goodwill 492 984
Research and development expense 5,264 106 11,964 307
Selling, general and administrative expense 7,883 879 13,471 8,698
--------- --------- --------- ---------
Total operating expenses 14,340 985 27,822 9,005
OPERATING LOSS (56,530) (876) (66,819) (8,025)
Other income (loss), net 451 203 291 6,783
Interest income 32 331 323 663
Interest expense (2,328) (569) 3,994 (1,138)
--------- --------- --------- ---------
NET LOSS (58,375) (911) (70,199) (1,717)
Preferred Stock Dividends (372) -- (828) --
--------- --------- --------- ---------
NET LOSS ATTRIBUTABLE TO COMMON
SHAREHOLDERS $ (58,747) $ (911) $ (71,027) $ (1,717)
========= ========= ========= =========
LOSS PER COMMON SHARE $ (0.49) $ (0.01) $ (0.63) $ (0.03)
Weighted average number of shares used in
computations 119,622 63,839 112,731 63,770
Cash Flow Statement:
THREE MONTHS ENDED SIX MONTHS ENDED
----------------------- -----------------------
AUGUST 3, JUNE 30, AUGUST 3, JUNE 30,
1997 1996 1997 1996
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash used in operating activities $ (17,158) $ (4,027) $ (26,652) $ (4,027)
---------- --------- ---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale of marketable securities 20,908
Purchase of property and equipment (1,467) (7,171)
Proceeds from the sale of property 33
Borrowing by JTS (Prior to Merger) 25,000
Decrease in other assets 46 68
Game software development costs (40) (143)
-------- ---- -------- -----
Net cash provided (used) in investing
activities (1,467) 6 (7,171) (4,134)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under line of credit and factoring
liability 9,160 10,630
Proceeds from borrowings 152 1,310
Repayment of borrowings (221) (442)
Payment on capital leases (100) (233)
Extinguishment of 5- 1/4% convertible
subordinated debentures - - (75)
Issuance of common stock 26 434 84 497
-------- ---- -------- -----
Net cash provided by financing
activities 10,458 434 14,289 422
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS - 87 - (7)
NET DECREASE IN CASH AND CASH EQUIVALENTS (8,167) (2,553) (19,538) (7,746)
CASH AND CASH EQUIVALENTS:
Beginning of period 13,396 23,748 24,766 28,941
------- -------- ------- --------
End of period $ 5,228 $ 21,195 $ 5,228 $ 21,195
======= ======== ======= ========
OTHER CASH FLOW INFORMATION FROM CONTINUING
OPERATIONS
Interest paid 1,468 2,290 4,633 2,290
FROM THE Commentary:
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED AUGUST 3, 1997 COMPARED TO THE
JTS AND ATARI PRO FORMA COMBINED RESULTS OF OPERATIONS FOR THE THREE MONTHS
ENDED JULY 28, 1996.
Revenues for the three months ended August 3, 1997 were $28.4 million.
Revenues from the disk drive division increased from $17.6 million for the same
quarter in the prior year to $28.1 million for the current quarter. Such
revenues increase reflects progress achieved since the Company initiated
shipment of disk drives in October 1995. During the quarter ended August 3, 1997
the Company shipped 297,000 disk drives, which primarily consisting of the
3.5-inch drives, in capacities ranging from 1 gigabyte to 3.2 gigabytes. The
revenue recognized by the Company is after any adjustment required for excess
inventory held by distributors. A non-occurring charge of $11.2 million for
price protection impacted second quarter revenues.
Sales to the top five customers for the three months ended August 3, 1997
were 49.4% of net sales and two customers had sales greater than 10% of total
net sales for the three month period. The Atari division revenues including
royalty income for the current quarter amounted to $0.4 million. Pro forma
combined revenues for the first quarter in the previous year totaled $17.2
million and included approximately $1.3 million of Atari revenues recorded for
the three month period ended June 30, 1997.
The gross margin loss for the three month period ended August 3, 1997 was
$67.7 million compared to a deficit of $6.9 million on a pro forma basis for the
second quarter in the prior year. The portion of the current quarter's gross
margin attributable to the disk drive division was $68.1 million compared to a
deficit of $7.0 million incurred by the disk drive division in the three month
period ended July 28, 1996. The decline in the gross margin resulted from the
significant decrease in market prices for all disk drive capacities in
conjunction with the write down of smaller capacity drives and the related
production materials on hand. Gross margins during the quarter were impacted by
$20.7 million of inventory write-offs. The gross margin for the Atari division
for the current quarter ended August 3, 1997 was $0.4 million compared to a
deficit of $0.1 million for the three month period ended March 31, 1996. The
improvement in the gross margin results from the sales of the Jaguar product and
inventory write offs included in the first quarter of the prior year and the
impact of royalty agreements signed during the first quarter of 1998.
Research and development expense for the three months ended August 3, 1997
was $5.3 million compared to research and development expenses on a pro forma
basis of $7.8 million for the second quarter in the prior year. The quarter over
quarter decrease for the disk drive division was $2.5 million, and was primarily
attributed to reductions in engineering staffing and higher development material
expenditures in the prior year to support the development of new hard disk drive
platforms. The Atari division experienced a quarter over quarter decline in
research and development expenses of $0.1 million due to the elimination of the
game development team. The Company expects that research and development
expenses will continue to decrease throughout fiscal 1998 in absolute dollars
and decrease as a percent of sales.
Selling, general and administrative expenses for the second quarter in the
current year were $7.9. million, including $7.6 million from the disk drive
division, compared to $4.9 million pro forma selling, general administrative
expenses incurred during the first quarter of the previous year which included
$4.0 million from the disk drive division. The $2.5 million increase incurred by
the disk drive division resulted primarily from increases in the provision for
bad and doubtful debts and increased sales and marketing programs focusing on
increasing sales through the distribution channel to the end user. Selling,
general and administrative expenses for the Atari division declined $0.9 million
as a result of staff reductions, reduced rent and other reductions in operating
costs for the division. JTS expects that selling, general and administrative
expenses will decrease marginally through the remainder of fiscal 1998 in
absolute dollars but that such expenses will decline as a percentage of
revenues.
LIQUIDITY AND CAPITAL RESOURCES
At August 3, 1997, JTS had cash and cash equivalents of $5.2 million, a
working capital deficit of $66.0 million and a negative net worth of $54.3
million.
At August 3, 1997, total debt, including bank credit lines and notes payable
was $82.4 million. This included $6.0 million of working capital loans
outstanding between JTS Technology and three Indian banks at an interest rate of
13% as of August 3, 1997 as well as term loan facilities with the Industrial
Credit and Investment Corporation of India Limited (ICICI) and the Shipping
Credit and Investment Corporation of India Limited (SICI) in the amount of $12.5
million at interest rates of LIBOR plus 2.75% and LIBOR plus 4%, respectively.
At August 3, 1997, JTS Technology's borrowings under these term loan facilities
were $12.2 million. The loans are repayable quarterly, commencing at various
points in time in fiscal 1998 and 1999 with final payments through to 2002.
Amounts borrowed under these loan agreements have been used for working capital
purposes, tooling, facilities expansion and purchases of capital equipment.
At August 3, 1997, the Company had $42.3 million of 5 1/4% convertible
subordinated debentures due April 29, 2002, which had been issued in 1987 by
Atari Corporation. The debentures pay interest annually, each April, with the
next interest payment due in April 1998.
On April 16, 1997, the Company obtained a commitment from a finance company
for a revolving line of credit to refinance present debt and to obtain working
capital credit facilities of up to $30 million. The revolving line of credit
will have an initial term of three years with automatic annual renewals
thereafter unless terminated by the finance company. The Company will grant the
finance company a first and exclusive lien on all of the Company's present and
future accounts receivable, inventory, equipment and intangible assets to secure
the obligations. The agreement also contains certain financial covenants. At
August 3, 1997 the Company is in breach of some of these, though not all of
these convanents. The Company is working with the finance company to rectify
these breaches. The Company's debentures, described above, contain a
cross-default clause which provides the Company with 30 days to correct the
original default. |
