e8vk

Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

933 Murphy Ranch Road
Milpitas, California 95035
(Address of Principal Executive Offices)
(Zip Code)

On October 28, 2003, Xicor, Inc. (“Xicor”) completed its acquisition of Poweready, Inc. (“PRI”) in a transaction accounted for using the purchase method of accounting. This Current Report on Form 8-K includes the audited financial statements of PRI for the fiscal year ended December 31, 2002, and unaudited financial statements for the nine-month periods ended September 30, 2003 and 2002 and includes the unaudited pro forma condensed combined statement of operations for Xicor for the year ended December 31, 2003. These items are included as Exhibits 99.1 and 99.2, respectively.

The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2003 provided in Exhibit 99.2 is provided to illustrate what the consolidated statement of operations of the combined businesses of Xicor and PRI might have looked like if the acquisition had been completed at the beginning of the fiscal year. The unaudited pro forma condensed combined statement of operations should be read in conjunction with the historical consolidated financial statements of Xicor included in Xicor’s report on Form 10-K for the year ended December 31, 2003 as filed with the Securities and Exchange Commission and the historical financial statements of PRI included at Exhibit 99.1. This information is provided for illustrative purposes only and is not necessarily indicative of what the consolidated statement of operations of Xicor would have been if the acquisition of PRI actually occurred on the date assumed. In addition, this information is not necessarily indicative of what Xicor’s future consolidated operating results will be.

Exhibit 99.1 includes the audited financial statements of PRI for the fiscal year ended December 31, 2002, and unaudited financial statements for the nine-month periods ended September 30, 2003 and 2002.

Audited financial statements of Poweready for the fiscal year ended December 31, 2002, and unaudited financial statements for the nine-month periods ended September 30, 2003 and 2002, are filed as Exhibit 99.1 and are incorporated herein by reference.

Unaudited pro forma condensed combined statement of operations for the year ended December 31, 2003 of Xicor giving effect to the merger, is filed as Exhibit 99.2 and is incorporated herein by reference.

99.1

Audited financial statements of Poweready for the fiscal year ended December 31, 2002, and unaudited financial statements for the nine-month periods ended September 30, 2003 and 2002.

99.2

Unaudited pro forma condensed combined statement of operations for the year ended December 31, 2003 of Xicor giving effect to the merger.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	XICOR, INC.

Date: February 23, 2004	By:	/s/Louis DiNardo

		Louis DiNardo
		Co-Chairman of the Board, President and Chief Executive Officer


Exhibit
Number		Description


23.1		Consent of Nation Smith Hermes Diamond.

99.1		Audited financial statements of Poweready for the fiscal year ended December 31, 2002, and unaudited financial statements for the nine-month periods ended September 30, 2003 and 2002.

99.2		Unaudited pro forma condensed combined statement of operations for the year ended December 31, 2003 of Xicor giving effect to the merger.

EX-23.1 3 f96719exv23w1.txt EXHIBIT 23.1 Exhibit 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (Nos. 333-89516 and 333-74186) and Form S-8 (Nos. 33-39627, 33-46687, 33-81986, 33-60947, 333-08597, 333-59509, 333-83563, 333-95589, 333-54436, 333-81370 and 333-102673) of Xicor, Inc. of our report dated September 9, 2003 relating to the financial statements of Poweready, Inc. which appears in this Form 8-K. By: /s/Nation Smith Hermes Diamond ------------------------------ San Diego, California February 23, 2004 EX-99.1 4 f96719exv99w1.txt EXHIBIT 99.1 EXHIBIT 99.1 POWEREADY, INC. FINANCIAL STATEMENTS Year Ended December 31, 2002 (audited) and Nine-Month Periods Ended September 30, 2003 and 2002 (unaudited) POWEREADY, INC. CONTENTS INDEPENDENT AUDITORS' REPORT 3 FINANCIAL STATEMENTS Balance Sheets 4 Statements of Operations 5 Statement of Stockholders' Equity (Deficit) 6 Statements of Cash Flows 7-8 Notes to Financial Statements 9-20

INDEPENDENT AUDITORS' REPORT To the Board of Directors POWEREADY, INC. San Diego, California We have audited the accompanying balance sheet of POWEREADY, INC. (see Note 1 to the financial statements) as of December 31, 2002, and the related statements of operations, stockholders' equity (deficit), and cash flows for the year then ended. 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 audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. 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 audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of POWEREADY, INC. as of December 31, 2002, and the results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. /s/ Nation Smith Hermes Diamond September 9, 2003 San Diego, California 3 POWEREADY, INC. BALANCE SHEETS
September 30, 2003 December 31, (unaudited) 2002 ------------- ------------ ASSETS CURRENT ASSETS Cash (Note 7) $ 63,926 $ 102,640 Accounts receivable - net (Notes 1 and 7) 83,772 81,430 Inventories (Notes 1 and 2) 304,575 348,695 Prepaid expenses and other current assets 12,594 6,113 ----------- ----------- Total current assets 464,867 538,878 FIXED ASSETS - NET (NOTES 1, 3 AND 6) 97,087 94,755 PURCHASED INTANGIBLE ASSETS - NET (NOTES 1 AND 8) 612,172 749,872 GOODWILL (NOTES 1 AND 8) 848,738 848,738 ----------- ----------- TOTAL ASSETS $ 2,022,864 $ 2,232,243 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Current portion of related party notes payable (Note 4) $ 577,804 $ 549,382 Current portion of related party capitalized lease obligations (Note 6) 22,913 11,192 Accounts payable 463,709 162,349 Accrued expenses 85,520 41,097 ----------- ----------- Total current liabilities 1,149,946 764,020 LONG-TERM LIABILITIES Related party notes payable, less current portion (Note 4) 1,083,333 1,045,833 Related party capitalized lease obligations, less current portion (Note 6) 45,697 33,463 ----------- ----------- Total Long-term liabilities 1,129,030 1,079,296 ----------- ----------- Total liabilities 2,278,976 1,843,316 COMMITMENTS AND CONTINGENCIES (NOTE 6) SHAREHOLDERS' EQUITY (DEFICIT): Common stock, no par value; 20,000 shares authorized; issued and outstanding (Note 1) 1,500,000 1,500,000 Accumulated deficit (1,756,112) (1,111,073) ----------- ----------- Total shareholders' equity (deficit) (256,112) 388,927 ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,022,864 $ 2,232,243 =========== ===========
The accompanying notes are an integral part of these financial statements. -4- POWEREADY, INC. STATEMENTS OF OPERATIONS
Nine-Month Period Ended September 30, Year Ended 2003 2002 December 31, (unaudited) (unaudited) 2002 ----------- ----------- ------------ NET REVENUE (Note 1 and 7) $ 1,564,162 $ 1,077,530 $ 1,580,328 Cost of Sales (Note 1) 1,185,895 974,529 1,295,749 ----------- ----------- ----------- GROSS MARGIN 378,267 103,001 284,579 OPERATING EXPENSES Research and Development (Note 1) 243,061 244,936 346,848 Selling, general and administrative expenses 569,880 282,771 404,721 In-process research and development acquired (Note 8) -- 375,000 375,000 Amortization of intangible assets (Note 1) 137,700 122,400 168,300 ----------- ----------- ----------- TOTAL OPERATING EXPENSE 950,641 1,025,107 1,294,869 ----------- ----------- ----------- LOSS FROM OPERATIONS (572,374) (922,106) (1,010,290) Interest expense (71,705) (49,154) (73,583) ----------- ----------- ----------- LOSS BEFORE INCOME TAX PROVISION (644,079) (971,260) (1,083,873) Provision for income taxes (Notes 1 and 5) 960 800 800 ----------- ----------- ----------- NET LOSS $ (645,039) $ (972,060) $(1,084,673) =========== =========== ===========
The accompanying notes are an integral part of these financial statements - 5 - POWEREADY, INC. STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
Common Stock -------------------- Accumulated Stockholders' Shares Amount deficit Equity ------ ----------- ----------- ----------- BALANCE AT DECEMBER 31, 2001 11,400 $ 500,000 $ (26,400) $ 473,600 Issuance of common stock for asset acquisition (Note 8) 8,600 1,000,000 -- 1,000,000 Net Loss -- -- (1,084,673) (1,084,673) ------ ----------- ----------- ----------- BALANCE AT DECEMBER 31, 2002 20,000 1,500,000 (1,111,073) 388,927 Net loss (unaudited) -- -- (645,039) (645,039) ------ ----------- ----------- ----------- BALANCE AT SEPTEMBER 30, 2003 (unaudited) 20,000 $ 1,500,000 $(1,756,112) $ (256,112) ====== =========== =========== ===========
The accompanying notes are an integral part of these financial statements. -6- POWEREADY, INC. STATEMENTS OF CASH FLOWS
Nine-Month Period Ended September 30, Year Ended 2003 2002 December 31, (unaudited) (unaudited) 2002 ----------- ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $(645,039) $ (972,060) $(1,084,673) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 167,163 144,732 198,873 In-process research and development, acquired - 375,000 375,000 Change in operating assets and liabilities net of effects from purchase of IEPD CA (Note 8): Accounts receivable (2,342) 132,272 96,342 Inventories 44,120 (194,800) (130,537) Prepaid expenses and other current assets (6,481) (6,341) (6,113) Accounts payable 301,360 44,685 54,420 Accrued expenses 110,345 48,971 57,475 Customer deposits - 31,000 - --------- ---------- ----------- Net cash used in operating activities (30,874) (396,541) (439,213) --------- ---------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of fixed assets - (1,089) (1,089) --------- ---------- ----------- Net cash used in investing activities - (1,089) (1,089) --------- ---------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Principal payments on related party notes payable (200,000) (52,500) (352,500) Proceeds from issuance of related party notes payable 200,000 462,000 900,000 Principal payments on capitalized lease obligations (7,840) (6,862) (9,495) --------- ---------- ----------- Net cash provided by (used in) financing activities (7,840) 402,638 538,005 --------- ---------- ----------- NET INCREASE (DECREASE) IN CASH (38,714) 5,008 97,703 CASH AT BEGINNING OF THE PERIOD 102,640 4,937 4,937 --------- ---------- ----------- CASH AT THE END OF THE PERIOD $ 63,926 $ 9,945 $ 102,640 ========= ========== ===========
The accompanying notes are an integral part of these financial statements. -7- POWEREADY, INC. STATEMENTS OF CASH FLOWS, CONTINUED
Nine-Month Period Ended September 30, Year Ended 2003 2002 December 31, (unaudited) (unaudited) 2002 ----------- ----------- ----------- SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest $ 5,783 $ 15,821 $ 25,868 Income tax $ 960 $ 800 $ 800 NONCASH INVESTING AND FINANCING ACTIVITIES: The company acquired fixed assets and related capital lease obligations as follows: $ 31,795 $ 54,140 $ 54,140 In February 2002, the Company acquired certain assets and liabilities of Innovative Engineering and Product Development, Inc. (a California corporation) as follows: (see Note 8): - --------------------------------------------------------------------------------------------------------- Accounts receivable $ -- $ 177,772 $ 177,772 Inventory -- 218,158 218,158 Fixed assets -- 70,089 70,089 Accounts payable -- (107,929) (107,929) In-process research and development acquired -- 375,000 375,000 Current technology -- 918,172 918,172 Goodwill -- 848,738 848,738 - --------------------------------------------------------------------------------------------------------- FAIR VALUE OF ASSETS ACQUIRED: $ -- $ 2,500,000 $ 2,500,000 - --------------------------------------------------------------------------------------------------------- Cancellation of amounts due from IEPD-CA to the company -- 500,000 500,000 Related party note payable issued -- 1,000,000 1,000,000 Common Stock issued -- 1,000,000 1,000,000 - --------------------------------------------------------------------------------------------------------- Total Consideration $ -- $ 2,500,000 $ 2,500,000 =========================================================================================================
The accompanying notes are an integral part of these financial statements. -8- 1. SUMMARY OF A summary of the Company's significant accounting SIGNIFICANT policies consistently applied in the preparation ACCOUNTING of the accompanying financial statements follows. POLICIES Nature of POWEREADY, INC. ("the Company") was incorporated operations in the state of Delaware in December 2000 under the name Innovative Engineering and Product Development, Inc. The Company changed its name to Poweready, Inc. in November 2002. The Company is engaged in the design, manufacture and distribution of battery management systems. Through the use of proprietary software and circuits, the Company improves the charging and discharging of batteries which enhances the performance of the battery pack and the run time of the electronic device being powered by the battery. The Company markets to customers nationally and internationally. On October 28, 2003, the Company finalized an agreement (entered into September 10, 2003) to sell 100% of the Company's outstanding common stock to Xicor, Inc. ("Xicor"). These financial statements have been prepared on a historical basis and do not reflect any adjustments resulting from Xicor's application of purchase accounting. Liquidity The Company had working capital deficits and net losses during all periods presented, and a stockholders' deficit at September 30, 2003. Subsequent to December 31, 2002, management secured a pledge from its majority stockholder to provide additional financing as needed to allow the Company to operate for at least the next twelve months and intended to extend the maturity date of the related party debt if necessary. Interim results The accompanying balance sheet as of September (unaudited) 30, 2003, the statements of operations and cash flows for the nine-month periods ended September 30, 2003 and 2002, and related note disclosures herein are unaudited. In the opinion of management, these statements have been prepared in accordance with principles generally accepted in the United States of America and include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the statement of financial position and the results of operations for these periods. Results for the interim periods presented are not necessarily indicative of the results to be expected for the full year. The data disclosed in the notes to the financial statements for these periods are unaudited. 9 Use of The preparation of the financial statements in estimates conformity with generally accepted accountings principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Significant estimates used in preparing these consolidated financial statements include those assumed in computing the reserve for obsolete inventory, determining the useful live of intellectual property and fixed assets. It is reasonably possible that the significant estimates used will change within the next year. Advertising Advertising costs are expensed as incurred. Advertising expense was less than $1,000 in all periods relating to the financial statements herein. Accounts The allowance for doubtful accounts balance receivable represents management's estimate of uncollectible accounts based on historical information. The allowance for doubtful accounts was less than $1,000 for all periods relating to the financial statements herein. Inventories Inventories are stated at the lower of average cost (first-in, first-out) or market. Cost includes materials, direct labor, and manufacturing overhead. Fixed Equipment, furniture, and fixtures are depreciated assets over their estimated useful lives of 3 to 7 years using the straight-line method of accounting. Intangible Intangible assets include approximately $750,000 Assets at December 31, 2002 and $612,000 at September 30, 2003 relating to acquired intellectual property (see Note 8), amortized over its estimated useful life of five years. Acquired intellectual property is accounted for under the provisions of Statement of Financial Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets," effective January 1, 2002. Amortization expense was approximately $168,000 for the year ended December 31, 2002, and $138,000 and $122,000 for the nine-month periods ended September 30, 2003 and 2002, respectively. Goodwill In connection with the acquisition of Innovative Engineering and Product Development, Inc., (a California corporation) ("IEPD - CA") (See Note 8) the Company has recorded goodwill for the amount the purchase price was in excess of identifiable assets. The amount included in goodwill as of December 31, 2002 and September 30, 2003 is approximately $849,000. 10 Goodwill, In accordance with SFAS No. 142, goodwill cont'd resulting from this acquisition has been recognized, but will not be amortized. Goodwill will be evaluated for impairment on an annual basis under SFAS No. 144, as discussed below. Impairment of long The Company has adopted SFAS No. 144, "Accounting lived assets for the Impairment or Disposal of Long-Lived Assets." Under SFAS 144, if the sum of the expected undiscounted cash flows of the long-lived assets is less than the carrying value of such assets, an impairment loss would be recognized and the assets would be written down to their estimated fair values. Research and The Company is actively engaged in new product development development efforts. Costs related to the conceptual formation and design of internally developed software are expensed as research and development as incurred. It is the Company's policy that certain internal software development costs incurred after technological feasibility has been demonstrated and which meet recoverability tests are capitalized and amortized over the estimated economic life of the product. To date, the Company has incurred no significant internal software development costs which meet the criteria for capitalization. Revenue The Company recognizes revenue when the earnings recognition process is complete. This generally occurs when products are shipped to the customer in accordance with the terms of the agreement, when title and risk of loss have been transferred, collectibility is reasonably assured, and pricing is fixed or determinable. Revenue is recognized for engineering services as such services are rendered. In all cases, when the Company records a sale, no significant uncertainty exists surrounding the purchaser's obligation to pay. Costs such as doubtful receivables, sales incentives, product warranty and sales returns are estimated based on historical experience and management's expectations and are recorded at the time product or service revenue is recognized. 11 Shipping and The Company records shipping and handling fees handling costs charged to customers as revenue and shipping and handling costs to expense as incurred. Shipping and handling expense was approximately $7,000 for the year ended December 31, 2002, and $5,000 for each nine-month period ended September 30, 2003 and 2002, which is included in cost of sales. Income taxes Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to differences between the basis of accounts receivable, depreciation of fixed assets, and methods of accounting for inventory and intellectual property for financial and income tax reporting, as well as the tax benefits of net operating loss carryforwards. Deferred taxes represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred tax benefits are recognized for any operating losses that are available to offset future taxable income (see Note 5). New accounting In November 2002 the FASB issued Interpretation standards (FIN) No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others." Among other things, the Interpretation requires guarantors to recognize, at fair value, their obligations to stand ready to perform under certain guarantees. FIN No. 45 is effective for guarantees issued or modified on or after January 1, 2003. The adoption of this interpretation is not expected to have a material effect on the financial statements. In January 2003 the FASB issued FIN No. 46, "Consolidation of Variable Interest Entities." FIN No. 46's consolidation criteria are based on analysis of risks and rewards, not control, and represent a significant and complex modification of previous accounting principles. FIN No. 46 becomes effective on July 1, 2003. The adoption of this interpretation is not expected to have a material effect on the financial statements. 12 2. INVENTORY Inventory consisted of the following:
September 30, 2003 December 31, (unaudited) 2002 - --------------------------------------------------------------------------------------- Finished goods $ 88,002 $ 72,059 Work-in-process 79,303 113,132 Raw materials 137,270 163,504 - -------------------------------------------------------------------------------------- $ 304,575 $ 348,695 ======================================================================================
3. FIXED ASSETS Fixed assets consisted of the following:
September 30, 2003 December 31, (unaudited) 2002 - --------------------------------------------------------------------------------------- Machinery and equipment $ 94,146 $ 64,351 Furniture, fixtures, and office equipment 49,529 47,529 Computer software and equipment 13,448 13,448 - ------------------------------------------------------------------------------------- 157,123 125,328 Less accumulated depreciation and amortization (60,036) (30,573) - ------------------------------------------------------------------------------------- $ 97,087 $ 94,755 =====================================================================================
Depreciation and amortization expense was approximately $31,000 for the year ended December 31, 2002, and $29,000 and $22,000 for the nine-month periods ended September 30, 2003 and 2002, respectively. 4. RELATED PARTY Related party notes payable consisted of the following: NOTES PAYABLE
September 30, 2003 December 31, (unaudited) 2002 - --------------------------------------------------------------------------------------- ~~Note payable to a stockholder; interest at 5% per annum; accrued interest and principal due in December 2005; unsecured. $1,083,333 $1,045,833~~
13 4. RELATED PARTY NOTES PAYABLE,
September 30, 2003 December 31, (unaudited) 2002 - -------------------------------------------------------------------------------------------------- Cont'd Note payable to a stockholder; interest at 7% per annum; accrued interest and principal due in December 2003; unsecured. 370,382 349,382 Note payable to a stockholder; interest at 7% per annum; accrued interest and principal due in December 2003; unsecured. 207,422 - Note payable to a lending company whose President is also the President of the Company; interest at 7.5% per annum; accrued interest and principal due in January 2003; secured by certain fixed assets and intellectual property; paid in full during 2003. - 200,000 -------------------------------------------------------------------------------------- 1,661,137 1,595,215 Less current portion (577,804) (549,382) -------------------------------------------------------------------------------------- Long-term portion $ 1,083,333 $ 1,045,833 ======================================================================================
Future minimum principal payments on notes payable are as follows:
Year Ending December 31, - --------------------------------------------------------------------------- 2003 $ 549,382 2004 - 2005 1,045,833 - --------------------------------------------------------------------------- Total $ 1,595,215 ===========================================================================
5. INCOME TAXES The income tax provisions for the year ended December 31, 2002 and nine-month periods ended September 30, 2003 and 2002 consisted only of the minimum required state payments. 14 5. INCOME TAXES, As of December 31, 2002 and September 30, 2003, a Cont'd current deferred tax asset of approximately $241,000 and $470,000, respectively, had been recognized for the deductible temporary differences primarily relating to net operating losses anticipated to be carried forward. A valuation allowance was recorded for the full amount of the deferred tax assets at each period, as it is not more likely than not that the assets will be utilized. At December 31, 2002 and September 30, 2003, the Company had federal net operating losses of approximately $603,000 and $1,175,000, respectively, and California tax net operating losses of approximately $300,000 and $587,000, respectively. The federal and state tax loss carry-forwards will begin to expire in 2021 and 2011, respectively. If certain changes in the Company's ownership should occur (see Note 1), there would potentially be an annual limitation on the amount of the tax loss carry-forwards, which could be utilized in a tax year. The state of California has suspended the utilization of net operating losses for 2002 and 2003. 6. COMMITMENTS AND CONTINGENCIES Related party The Company has entered into an operating lease operating for its office space. The master lease is with a lease company whose president is also the President of the Company. Total rent expense under this lease was approximately $45,000 for the year ended December 31, 2002, and $37,000 and $32,000 for the nine-month periods ended September 30, 2003 and 2002, respectively. 15 6. COMMITMENTS AND CONTINGENCIES Cont'd Future minimum payments required under operating leases that have initial or remaining non-cancelable lease terms in excess of one year are as follows:
Year Ending December 31, - -------------------------------------------------------------------------------- 2003 $ 49,900 2004 51,100 2005 52,300 2006 22,000 - -------------------------------------------------------------------------------- Total $ 175,300 ================================================================================
Related party The Company leases computer software and capitalized equipment, machinery and equipment, and furniture, lease fixtures, and office equipment under capital obligations leases with a company whose president is also the President of the Company, which were included in fixed assets as follows:
September 30, 2002 December 31, (unaudited) 2002 - --------------------------------------------------------------------------------------- Furniture, fixtures, and office equipment $ 40,984 $ 38,984 Machinery and equipment 39,865 10,070 Computer software and equipment 5,095 5,095 - --------------------------------------------------------------------------------------- 85,944 54,149 Less accumulated depreciation (40,339) (19,855) - --------------------------------------------------------------------------------------- $ 45,605 $ 34,294 =======================================================================================
Depreciation expense related to these capitalized lease obligations was approximately $20,000 for the year ended December 31, 2002, and $20,000 and $14,000 for the nine-month periods ended September 30, 2003 and 2002, respectively. 16 Related party Minimum future payments required under capital capitalized leases are as follows: lease obligations, cont'd
Year Ending December 31, - -------------------------------------------------------------------------------------- 2003 $ 14,400 2004 14,400 2005 14,400 2006 8,400 - -------------------------------------------------------------------------------------- Total minimum lease payments 51,600 Less amount representing interest (6,945) - -------------------------------------------------------------------------------------- Present value of minimum lease payments 44,655 Less current portion (11,192) - -------------------------------------------------------------------------------------- Long-term portion $ 33,463 - --------------------------------------------------------------------------------------
7. CONCENTRATIONS Credit risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and trade accounts receivable. The Company grants unsecured credit to its customers in the ordinary course of business. The Company maintains cash balances at various financial institutions located in San Diego, which at times may exceed the $100,000 Federal Deposit Insurance Corporation limit. The Company has not experienced any losses in such accounts. Management believes that the Company is not exposed to any significant credit risk on cash. Customers Customers which comprise a significant percentage of total revenue are as follows: 17 Customers, Revenue (rounded to the nearest thousand): cont'd
Nine-month Period Ended Year Ended September 30, 2003 (unaudited) December 31, 2002 - -------------------------------------------------------------------------------- Customer A $ 621,000 $ 639,000 Customer B $ - $ 292,000 Customer C $ - $ 158,000 Customer D $ 260,000 $ - Customer E $ 159,000 $ - ================================================================================
Accounts Receivable (rounded to the nearest thousand):
September 30, 2003 (unaudited) December 31, 2002 - -------------------------------------------------------------------------------- Customer A $ - $ 13,000 Customer B $ - $ 9,000 Customer C $ - $ 24,000 Customer D $ 58,000 $ - Customer E $ - $ - ================================================================================
8. ACQUISITION On February 1, 2002, the Company acquired Innovative Engineering and Product Development, Inc., a California corporation (IEPD-CA), a privately held company in the business of designing and developing battery management systems. The IEPD acquisition brought the Company core technology on which the Company plans to build a product base in this market. The acquisition was accounted for using the purchase method of accounting per Statement of Financial Accounting Standards (SFAS) No. 141. Accordingly, the estimated fair value of the assets acquired and liabilities assumed were included in our balance sheet as of February 1, 2002, the effective date of the purchase. The results of operations are included in the consolidated results of operations since the effective date of the purchase. 18 8. ACQUISITION, The Company acquired IEPD-CA for total Cont'd consideration of $2.5 million, consisting of $1.0 million of common stock (8,600 shares or 43% of the outstanding common stock of the Company), issuance of a $1.0 million dollar note payable (see Note 4) and $0.5 million in forgiveness of amounts owed to the Company by IEPD-CA. The total purchase price was allocated by management to the estimated fair value of assets acquired and liabilities assumed as follows based upon various factors: Current technology $ 918,172 Goodwill 848,738 Net tangible assets acquired 358,090 - -------------------------------------------------------------------------------- Net assets acquired 2,125,000 In-process research and development 375,000 - -------------------------------------------------------------------------------- Total consideration $ 2,500,000 ================================================================================

The amount allocated to current technology is being amortized using the straight-line method over their useful lives of 5 years. Amortization of purchased intangible assets is expected to be approximately $184,000 for each calendar year ending 2003, 2004, 2005, 2006 and approximately $15,000 for the calendar year ending 2007 related to the unamortized current technology balance. The net tangible assets acquired consist primarily of accounts receivable, inventory and fixed assets, partially offset by accounts payable, which was assumed. The goodwill is expected to be deductible for tax purposes over the statutory period of 15 years, and in accordance with SFAS No. 142 will not be amortized but instead evaluated periodically to determine whether events or circumstances have occurred indicating that goodwill might be impaired. Current technology was determined using management's estimates which used a discounted cash flow method and factors including projected financial results, and the time value of money. Projected financial results were based on a number of estimates including market growth rates, the Company's competitive position, the product roadmap, the Company's cost structure, and development timelines. Revenues related to products developed under these projects began being recognized in 2002. 19 8. ACQUISITION, The $375,000 of in-process research and Cont'd development expensed in the first quarter of 2002 related to IEPD-CA's current engineering effort that was focused on developing new technology to be incorporated in battery management systems. Management determined the value of the in-process research and development based upon various factors, including management's estimate, at the time of acquisition, of projected financial results, relative risk of successful development, time value of money, and level of completion. Accordingly, goodwill is recorded as the remainder of the consideration less the net assets acquired, less the current technology and in-process research and development discussed above. 9. RELATED PARTY See Notes 1, 4, and 6. TRANSACTIONS 20 EX-99.2 5 f96719exv99w2.txt EXHIBIT 99.2 EXHIBIT 99.2 XICOR, INC. UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS On October 28, 2003, Xicor, Inc. ("Xicor") acquired Poweready, Inc. ("PRI"). The acquisition was accounted for using the purchase method of accounting and the assets and liabilities of PRI, including intangible assets, were recorded on Xicor's balance sheet at their fair values as of October 28, 2003. The results of PRI's operations are included in Xicor's consolidated results of operations since the effective date of the purchase. The following pro forma statement of operations was prepared as if the acquisition had been completed as of the beginning of the year ended December 31, 2003. The unaudited pro forma condensed combined statement of operations should be read in conjunction with the historical consolidated financial statements of Xicor included in Xicor's report on Form 10-K for the year ended December 31, 2003 as filed with the Securities and Exchange Commission and the historical financial statements of PRI included at Exhibit 99.1. The unaudited pro forma statement of operations is presented for illustrative purposes only and is not necessarily indicative of the results of operations that would have actually been reported had the acquisition occurred as of the beginning of the year ended December 31, 2003, nor is it necessarily indicative of future results of operations. XICOR, INC. UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS For the year ended December 31, 2003 (In thousands, except per share data)
Historical Pro Forma -------------------------- ------------------------------- Xicor Poweready Adjustments Combined ----- --------- ----------- -------- Operations Data: (In thousands, except per share amounts) Net sales $ 41,448 $ 1,655 $ -- $ 43,103 Cost of sales 18,779 1,270 -- 20,049 -------- -------- -------- -------- Gross profit 22,669 385 -- 23,054 -------- -------- -------- -------- Operating expenses: Research and development 10,811 271 -- 11,082 Selling, general and administrative 10,419 713 -- 11,132 Amortization of purchased intangible assets 1,135 153 492(a) 1,780 -------- -------- -------- -------- 22,365 1,137 492 23,994 -------- -------- -------- -------- Income (loss) from operations 304 (752) (492) (940) Net interest expense (593) (81) -- (674) Other income and (expense), net 2,718 -- -- 2,718 -------- -------- -------- -------- Income (loss) before income taxes 2,429 (833) (492) 1,104 Provision for income taxes -- 1 -- 1 -------- -------- -------- -------- Net income (loss) $ 2,429 $ (834) $ (492) $ 1,103 ======== ======== ======== ======== Net income (loss) per share: Basic $ 0.09 $ 0.04 Diluted $ 0.08 $ 0.04 Shares used in per share calculations: Basic 26,413 947(b) 27,360 Diluted 29,101 947(b) 30,048
See accompanying notes to unaudited pro forma condensed combined statement of operations. XICOR, INC. NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS 1. BASIS OF PRO FORMA PRESENTATION On October 28, 2003, we acquired Poweready, Inc. (PRI), a privately held company that engages in the design, manufacture and distribution of battery management systems, for total consideration of $12.8 million, consisting of $9.4 million of stock (947,368 shares of Xicor common stock valued at $9.95 per share, the average closing price the 5 days surrounding the signing of the definitive agreement), $3.0 million in cash and direct acquisition costs of $0.4 million for legal, appraisal and accounting fees. Additional consideration of up to $3.0 million will be payable in stock if certain performance milestones are met in 2004 through 2006. Xicor's fiscal year ends on the Sunday nearest December 31. For purposes of financial statement presentation, each fiscal year is deemed to have ended on December 31. Xicor's fiscal year 2003 consisted of 52 weeks. The results of PRI's operations are included in Xicor's 2003 consolidated results of operations since the effective date of the acquisition, October 28, 2003. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2003 combines Xicor's fiscal year 2003 historical consolidated statement of operations with PRI's historical statement of operations for the period from January 1, 2003 through October 27, 2003, giving effect to the acquisition as if it had occurred on the first day of Xicor's fiscal year 2003. 2. PURCHASE PRICE ALLOCATION The acquisition was accounted for using the purchase method of accounting per Statement of Financial Accounting Standards (SFAS) No. 141. Accordingly, the estimated fair value of the assets acquired and liabilities assumed were included in our consolidated balance sheet as of October 28, 2003, the effective date of the purchase. We acquired PRI for total consideration of $12.8 million, consisting of $9.4 million of stock (947,368 shares of Xicor common stock valued at $9.95 per share, the average closing price the 5 days surrounding the signing of the definitive agreement), $3.0 million in cash, and direct acquisition costs of $0.4 million for legal, appraisal and accounting fees. Additional consideration of up to $3.0 million will be payable in stock if certain performance milestones are met in 2004 through 2006. The total purchase price was allocated by management to the estimated fair value of assets acquired and liabilities assumed as follows based upon various factors, including an independent appraisal (in thousands): Tangible Assets $ 530 Current technology 2,400 Customer contracts and relationships 700 Non-compete agreement 300 Order backlog 160 Goodwill 9,516 -------- Total assets acquired 13,606 Liabilities (780) -------- Net Assets Acquired $ 12,826 ========

The intangible assets are being amortized using the straight-line method over their useful lives. The useful lives are 5 years for current technology and customer contracts and relationships, 3 years for the non-compete agreement and 3 months for the order backlog. The tangible assets acquired consist primarily of inventory and equipment. The liabilities assumed consist primarily of accounts payable and accrued expenses. None of the $9.5 million in goodwill is expected to be deductible for tax purposes, and in accordance with SFAS No. 142 will not be amortized but instead reviewed annually for impairment and evaluated periodically to determine whether events or circumstances have occurred indicating that goodwill might be impaired. 3. PRO FORMA ADJUSTMENTS The following pro forma adjustments have been made to the unaudited pro forma condensed combined statement of operations: (a) To eliminate PRI's historical amortization of purchased intangible assets and to record the additional amortization of acquired intangible assets resulting from the acquisition of PRI on a straight line basis over their expected useful lives (as if the acquisition had occurred at the beginning of fiscal year 2003 instead of the actual acquisition date of October 28, 2003) as follows: Current Technology 5 years Customer contracts and relationships 5 years Non-compete agreement 3 years Order backlog 3 months (b) To record the issuance by Xicor of 947,368 shares of Xicor common stock to PRI's shareholders. ~~-----END PRIVACY-ENHANCED MESSAGE-----~~


California	0-9653	94-2526781

(State or other jurisdiction	(Commission	(I.R.S. Employer
of incorporation)	File Number)	Identification No.)

Table of Contents

Table of Contents

Table of Contents

Table of Contents


	ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
SIGNATURES
EXHIBIT INDEX
EXHIBIT 23.1
EXHIBIT 99.1
EXHIBIT 99.2