-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NWP3/+EOCutEfTSeHP3tw1TbW5GSzgPwmC++z9KsnTIrrhjNkUkYECLlsGu60tcZ ZjECo6HlP9UvZpKHXzqMrg== 0000899243-99-000175.txt : 19990210 0000899243-99-000175.hdr.sgml : 19990210 ACCESSION NUMBER: 0000899243-99-000175 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19981227 FILED AS OF DATE: 19990209 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TEXAS MICRO INC CENTRAL INDEX KEY: 0000724621 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 042738973 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-18238 FILM NUMBER: 99524390 BUSINESS ADDRESS: STREET 1: 5959 CORPORATE DRIVE CITY: HOUSTON STATE: TX ZIP: 77036 BUSINESS PHONE: 7135418200 MAIL ADDRESS: STREET 1: 5959 CORPORATE DRIVE STREET 2: SUITE 1600 CITY: HOUSTON STATE: TX ZIP: 77036 FORMER COMPANY: FORMER CONFORMED NAME: SEQUOIA SYSTEMS INC DATE OF NAME CHANGE: 19920703 10-Q 1 2ND QUARTER 10-Q ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------- FORM 10-Q --------------------- [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended DECEMBER 27, 1998 ----------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 0-18238 TEXAS MICRO INC. (Exact Name of Registrant as Specified in its Charter) DELAWARE 04-2738973 (State or other jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 5959 CORPORATE DRIVE, HOUSTON, TEXAS 77036 (Address of Principal Executive Offices) (Zip Code) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 713-541-8200 --------------------- Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] As of February 1, 1999, 13,457,818 shares of the registrant's Common Stock, $.40 par value, were outstanding. ===============================================================================
PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS TEXAS MICRO INC. AND SUBSIDIARIES December 27, June 30, 1998 1998 (unaudited) ----------- --------- (in thousands) ASSETS Current Assets: Cash and cash equivalents $ 4,961 $ 7,568 Accounts receivable, net of allowance for doubtful accounts of $857 at December 27, 1998 and $888 at June 30, 1998 13,842 11,508 Inventories 11,676 8,291 Other current assets 1,588 1,825 ---------- -------- Total current assets 32,067 29,192 ========== ======== Equipment and improvements, at cost: Computer equipment 3,776 3,379 Machinery and equipment 4,599 4,270 Furniture and fixtures 1,085 1,011 Leasehold improvements 1,309 968 Construction in progress 1,829 519 ---------- -------- 12,598 10,147 Less - Accumulated depreciation and amortization 7,346 6,549 ---------- -------- 5,252 3,598 ---------- -------- Other assets 144 66 ---------- -------- Total Assets $ 37,463 $ 32,856 ========== ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 4,705 $ 3,886 Accrued expenses 7,627 5,783 ---------- -------- Total current liabilities 12,332 9,669 ========== ======== Commitments and contingencies Stockholders' Equity: Preferred stock, $.40 par value: Authorized--12,500 shares at December 27, 1998 and June 30, 1998 Issued--none - - Common stock, $.40 par value: Authorized--35,000 shares at December 27, 1998 and June 30, 1998 Issued--15,643 shares at December 27, 1998 and June 30, 1998 6,257 6,257 Additional paid-in capital 80,327 80,314 Accumulated deficit (55,580) (57,468) Unrealized loss on securities available for sale (568) (325) Treasury stock, at cost, 2,219 shares at December 27, 1998 and 2,250 shares at June 30, 1998 (5,324) (5,400) Cumulative translation adjustment 19 (191) ---------- -------- Total stockholders' equity 25,131 23,187 ---------- -------- Total Liabilities and Stockholders' Equity $ 37,463 $ 32,856 ========== ======== The accompanying notes are an integral part of these consolidated financial statements.
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CONSOLIDATED STATEMENTS OF OPERATIONS TEXAS MICRO INC. AND SUBSIDIARIES (unaudited) For the three months ended, For the six months ended, December 27, December 28, December 27, December 28, 1998 1997 1998 1997 ------------ ------------ ------------ ------------ (in thousands, except per share data) Revenues Product $ 21,636 $ 18,507 $ 41,117 $ 34,544 Service and other 421 425 1,262 425 ------------ ------------ ------------ ------------ Total revenues 22,057 18,932 42,379 34,969 Cost of revenues Product 14,320 13,109 27,186 24,202 Service and other 254 - 501 - ------------ ------------ ------------ ------------ Total cost of revenues 14,574 13,109 27,687 24,202 Gross profit 7,483 5,823 14,692 10,767 Research and development expenses 2,309 1,907 4,579 3,858 Selling, general and administrative expenses 4,230 3,902 8,418 7,477 ------------ ------------ ------------ ------------ Total operating expenses 6,539 5,809 12,997 11,335 Income (loss) from operations 944 14 1,695 (568) Interest income 78 69 177 159 Other income (expense) 133 17 203 38 ------------ ------------ ------------ ------------ Income (loss) before provision for income taxes 1,155 100 2,075 (371) Provision for income taxes 108 28 196 46 ------------ ------------ ------------ ------------ Net income (loss) $ 1,047 $ 72 $ 1,879 $ (417) ============ ============ ============ ============ Basic income (loss) per share $ 0.08 $ 0.01 $ 0.14 $ (0.03) ============ ============ ============ ============ Diluted income (loss) per share $ 0.08 $ 0.01 $ 0.14 $ (0.03) ============ ============ ============ ============ Average common shares outstanding 13,423 13,509 13,422 13,507 ============ ============ ============ ============ Average common shares assuming dilution 13,636 13,917 13,643 13,507 ============ ============ ============ ============ The accompanying notes are an integral part of these consolidated financial statements.
3
CONSOLIDATED STATEMENTS OF CASH FLOWS TEXAS MICRO INC. AND SUBSIDIARIES (unaudited) For the six months ended, December 27, December 28, 1998 1997 ------------ ------------- (in thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 1,879 ($417) Adjustments to reconcile net income (loss) to net cash (used in) operating activities-- Depreciation 777 728 Amortization 53 53 Provisions for inventories 937 178 Provisions for bad debts 152 32 Changes in assets and liabilities: Accounts receivable (2,412) (2,834) Inventories (4,291) (1,176) Other current assets 7 4 Accounts payable 814 (150) Accrued expenses 1,834 1,819 --------- --------- Net cash used in operating activities (250) (1,763) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of equipment and improvements (2,421) (680) Proceeds from sale of SES business unit - 890 Increase in other assets (131) 2 --------- --------- Net cash provided by (used in) investing activities (2,552) 212 --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock 97 53 --------- --------- Net cash provided by financing activities 97 53 --------- --------- Effect of exchange rates on cash 98 (34) --------- --------- NET DECREASE IN CASH AND CASH EQUIVALENTS (2,607) (1,532) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 7,568 8,386 --------- --------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 4,961 $ 6,854 ========= ========= Supplemental Disclosure of Cash Flow Information: Cash paid for income taxes $ 81 $ 21 The accompanying notes are an integral part of these consolidated financial statements.
4 Notes to Consolidated Financial Statements Texas Micro Inc. and Subsidiaries (unaudited) NOTE 1 - BASIS OF PRESENTATION Texas Micro Inc. (the "Company") is a provider of differentiated Intel-based computer systems and single board computers ("SBC's") for the communications and industrial automation markets. The Company operates in one segment, computer systems. The financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the "Commission"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The Company believes, however, that the disclosures made are adequate to make the information not misleading. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the Company's latest audited financial statements, which are contained in the Company's Annual Report on Form 10-K for the year ended June 30, 1998, filed with the Commission on September 14, 1998. This information includes all adjustments (consisting of normal, recurring adjustments) which the Company considers necessary for a fair presentation of such information. The results of operations for the three and six months ended December 27, 1998 are not necessarily indicative of results to be expected for the entire year. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. NOTE 2 - INVENTORIES Inventories including materials, labor and manufacturing overhead consisted of the following: (in thousands) December 27, June 30, 1998 1998 ----------- --------- Raw materials $ 7,731 $ 5,682 Work-in-process 2,505 1,899 Finished goods 1,440 710 ----------- --------- $ 11,676 $ 8,291 ----------- --------- NOTE 3 - NET INCOME (LOSS) PER SHARE Basic income (loss) per share is based on the weighted average number of common shares outstanding during the period, while diluted income (loss) per share is computed to reflect the potential dilution of common stock under the Company's stock option plans. For loss periods, weighted average common share equivalents are excluded from the calculation as their effect would be antidilutive. NOTE 4 - COMPREHENSIVE INCOME The Company adopted Statement of Financial Accounting Standards ("SFAS") No.130, "Reporting Comprehensive Income" during the first quarter of fiscal 1999. SFAS No. 130 establishes new rules for the reporting and presentation of comprehensive income and its components. The Company's comprehensive income is comprised of net income, foreign currency translation adjustments and unrealized losses on marketable securities held as available-for-sale investments. Comprehensive income (loss) was $829,000 and $1,850,000 for the three and six- month periods ending December 27, 1998 compared to $30,000 and ($467,000) for the three and six-month periods ending December 28, 1997. 5 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Company is a provider of differentiated Intel-based computer systems and single board computers ("SBCs") for the communications and industrial automation markets. The Company operates in one segment, computer systems. RESULTS OF OPERATIONS REVENUES The Company's revenues for the second quarter of fiscal 1999, which ended December 27, 1998, of $22,057,000 increased 17% from $18,932,000 for the second quarter of fiscal 1998. Service and other revenue remained relatively flat, however, only $142,000 in license revenue was recorded in the second quarter of fiscal 1999 compared to $425,000 in the second quarter of fiscal 1998. During the second quarter of 1999, units shipped increased 25% and the average unit selling price declined 7% as compared with the second quarter of 1998. Sales to the top five customers represented 46% of total revenues for the second quarter of fiscal 1999 and 26% for the second quarter of fiscal 1998. The Company had one customer that represented 20% of total revenues for the quarter ended December 27, 1998. The Company's revenues for the first six months of fiscal 1999 of $42,379,000 increased 21% from $34,969,000 for the first six months of fiscal 1998. During the first six months of 1999, units shipped increased 31% and the average unit selling price declined 9% as compared with the first six months of 1998. Sales to the top five customers represented 44% of total revenues for the first six months of fiscal 1999 compared to 23% of total revenues for the same period a year ago. Product revenues for both the three and six months ended December 28, 1998 are higher than the comparable periods a year ago as a result of new design wins, the introduction of new products and a ramp up in products sold to existing strategic customer accounts. Sales outside the United States for the second quarter of fiscal 1999 increased to $7,196,000 or 33% of total revenues, from $5,448,000, or 29% of total revenues for the second quarter of fiscal 1998. For the six months ended December 27, 1998, sales outside the United States comprised $13,304,000, or 31% of total revenues, as compared to $10,697,000, or 31%, for the comparable period a year ago. GROSS MARGIN - ------------ Gross margin of 34% for the second quarter of fiscal 1999 reflected an increase of 3 percentage points from 31% in the second quarter of fiscal 1998. This increase is primarily attributable to economies of scale generated by the growth in production volume and efficiencies gained in manufacturing partially offset by a decrease in license revenue recorded. Gross margin of 35% for the first six months of fiscal 1999 reflected an increase of 4 percentage points from 31% for the first six months of fiscal 1998. This increase is attributable to economies of scale generated by the growth in product revenues and efficiencies gained in manufacturing. Additionally, the Company recognized $761,000 in gross margin related to service and other sales revenues during the first six months of fiscal 1999 compared to $425,000 for the same period in fiscal 1998. The Company provides its customers with systems and SBCs requiring long product life cycles. Gross margins are generally lower during the start up phase of the product life cycle and have the potential to improve as volume increases. In order to achieve its gross margin targets, while providing its customers with competitive pricing, the Company continuously monitors its costs and makes appropriate pricing revisions, which usually result in lower prices to its customers. Continued fluctuations in future margin levels may result from the timing of large design wins and component cost reductions, product mix, and the level of production efficiencies. 6 RESEARCH AND DEVELOPMENT EXPENSES - --------------------------------- The Company's research and development expenses of $2,309,000 for the second quarter of fiscal 1999 increased 21% from $1,907,000 for the second quarter of fiscal 1998. As a percent of revenues, research and development expenses remained relatively flat at 10% for both the second quarter of fiscal 1999 and fiscal 1998. For the first six months of fiscal 1999, research and development expenses increased to $4,579,000 or 19% from $3,858,000 for the first six months of fiscal 1998. As a percent of revenues, research and development expenses were flat at 11% for both the six months of fiscal 1999 and 1998. The increase in research and development expense for the three and six month periods ending December 27, 1998 over the same periods in the prior year is due to continued investment in new product development, primarily in the Calvin and CompactPCI products, enhancements to existing products and new customer design wins. In addition, the Company continues its research and development activities on highly available Intel-based servers. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES - -------------------------------------------- Selling, general and administrative expenses increased 8% to $4,230,000, or 19% of revenues, for the second quarter of fiscal 1999 from $3,902,000, or 21% of revenues, for the second quarter of fiscal 1998. The increase in expenses are primarily due to an increase in enterprise wide computer system implementation related costs and higher employment costs. Selling, general and administrative expenses increased 13% to $8,418,000, or 20% of revenues, for the first six months of fiscal 1999 from $7,477,000, or 21% of revenues, for the first six months of fiscal 1998. The increase in expenses compared to the same periods in the prior fiscal year is primarily due to an increase in enterprise wide computer system implementation related costs, bad debt write-offs and higher employment costs. OPERATING INCOME (LOSS) - ----------------------- The Company reported income from operations of $944,000 for the second quarter of fiscal 1999, compared to income from operations of $14,000 for the second quarter of fiscal 1998. The increase in income from operations resulted from the increase in revenues and a higher gross margin percentage. For the first six months of fiscal 1999 the Company reported an operating income of $1,695,000, compared to a loss from operations of $568,000 for the prior year period. The improved results are attributed to the increase in revenues and gross margin while minimizing the increase in operating expenses. INTEREST AND OTHER INCOME - ------------------------- The Company generated interest income of $78,000 and $177,000 during the three and six months ended December 27, 1998, as compared to $69,000 and $159,000 for the comparable periods a year ago. Other income was $133,000 and $203,000 during the three and six months ended December 27, 1998, as compared to $17,000 and $38,000 for the comparable periods a year ago. The increase in other income is primarily a result of favorable foreign currency translation rate gains in the first half of fiscal 1999. INCOME TAXES - ------------ The Company recorded provisions for income taxes, primarily for alternative minimum, foreign and state income taxes, of $108,000 and $196,000 for the three and six months ended December 28, 1998 compared to $28,000 and $46,000 for the three and six months ended December 28, 1997. LIQUIDITY AND CAPITAL RESOURCES At December 27, 1998, the Company had cash and cash equivalents of $4,961,000 and working capital of $19,735,000. This compared to cash and cash equivalents of $7,568,000 and working capital of $19,523,000 at June 30, 1998. 7 Cash used in operations was $250,000 for the six months ended December 27, 1998. Cash used in operating activities resulted primarily from increases in accounts receivable and inventories associated with the Company's growth partially offset by increases in accounts payable and accrued liabilities. The Company's capital expenditures during the six months ended December 28, 1998 increased by $1,741,000 as compared to the same period a year ago, primarily due to expenditures for a new enterprise wide computer system and manufacturing equipment. Capital expenditures for the remaining portion of fiscal 1999 are expected to be less than the level experienced in the first half of fiscal 1999. The Company believes that its present cash flow and cash balances are adequate for its operating needs and capital expenditures through fiscal 1999. In June 1997, the FASB issued SFAS No. 131, "Disclosure about Segments of an Enterprise and Related Information". The Company intends to adopt this standard in the fourth quarter of fiscal year 1999. SFAS No. 131 establishes standards for reporting information about operating segments in annual financial statements and requires selected information about operating segments in interim financial reports issued to stockholders. It also establishes standards for related disclosures about products and services, geographic areas and major customers. This Statement supersedes SFAS No. 14, "Financial Reporting for Segments of a Business Enterprise", but retains the requirement to report information about major customers. SFAS No. 131 is not expected to have a material impact on the Company's consolidated financial statements. YEAR 2000 COMPLIANCE Many computer systems and imbedded chips may experience problems handling dates beyond the year 1999. Therefore, some devices containing imbedded chips and computer hardware and software will need to be modified prior to the Year 2000 in order to remain functional. In response to these Year 2000 issues, the Company has assigned a project team to assess the readiness of its internal business processes, non-financial software and imbedded chip systems, products sold to customers and external noncompliance by customers and suppliers for handling the Year 2000. The Company has created a website at www.texasmicro.com containing additional information about the Year 2000 issue and the Company's compliance program. INTERNAL BUSINESS PROCESSES. During fiscal 1999, as part of a business modernization program intended to reduce cycle time and improve profitability, the Company purchased an enterprise wide computer system, which the software vendor has indicated, is Year 2000 compliant. The total estimated hardware, software and installation cost for this new system is approximately $3 million of which approximately $1.9 million has been spent to date. The Company is currently in the implementation phase for this system with full implementation to be completed by September 1999. Based on this schedule, the Company expects to be in full compliance with its internal financial systems before the Year 2000. However, if due to unforeseen circumstances, the implementation is not completed on a timely basis, the Year 2000 could have a material impact on the operations of the Company. Contingency plans have been established in a few areas where the Company believes there is some risk that the system will not be implemented before Year 2000. Those plans include adapting or replacing some of the Company's currently existing systems to make them Year 2000 compliant. The cost of making those adaptations are not expected to be material and will be expensed in the period incurred. INTERNAL NON-FINANCIAL SOFTWARE AND IMBEDDED CHIP TECHNOLOGY. The Company is in the assessment phase with regard to non-financial software and imbedded chip systems and is currently assessing the impact of the Year 2000 on its non- financial systems such as manufacturing equipment, security equipment, etc., with Year 2000 compliance scheduled for September 1999. The Company does not, at this time, have sufficient data to estimate the cost of achieving Year 2000 compliance for its major non-financial systems and as such, the costs of achieving Year 2000 compliance could have a material impact on the operations of the Company. Since the Company is in the assessment phase, the Company does not currently have a formal contingency plan in place for its internal non-financial software and imbedded chip systems. A Year 2000 failure with respect to certain of the Company's non-financial systems such as manufacturing equipment could have a material adverse affect on the Company's financial condition and results of operations. 8 PRODUCTS SOLD TO CUSTOMERS. The Company believes that it has substantially identified and resolved all potential Year 2000 problems with any of the hardware products which it currently develops and markets. However, management also believes that it is not possible to determine with complete certainty that all Year 2000 problems affecting the Company's hardware products have been identified or corrected due to the complexity of these products and the fact that these products interact with other third party vendor products and operate with software or in systems which are not under the Company's control. EXTERNAL NONCOMPLIANCE BY CUSTOMERS AND SUPPLIERS. The Company is also contacting critical suppliers of products and services to determine that the suppliers' and service providers' operations and the products and services they provide are Year 2000 capable or to monitor their progress toward Year 2000 capability. To the extent that responses to Year 2000 readiness are unsatisfactory, the Company intends to change suppliers or service providers to those who have demonstrated Year 2000 readiness. No assurances can be given that the Company will be successful in finding such alternative suppliers and service providers. In the event that any of the Company's significant suppliers do not successfully and timely achieve Year 2000 compliance, and the Company is unable to replace them with alternate suppliers, the Company's business or operations could be adversely affected. The Company does not currently have any formal information concerning the Year 2000 compliance status of its customers but has received indications that many of its customers are working on Year 2000 compliance. In the event that any of the Company's significant customers do not successfully and timely achieve Year 2000 compliance, the Company's business or operations could be adversely affected through a delay by the customer in placing orders with the Company or delays in payments due the Company. CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS Statements in this Quarterly Report on Form 10-Q that relate to future results or events are based on the Company's current expectations. There are many factors that affect the Company's business and the results of its operations and may cause the actual results to differ materially from those expected, projected or contained in forward-looking statements. These factors include technological changes and the ability of the Company to develop new products; the customer demand and market acceptance of the Company's products; the ability of the Company to manage its inventory levels to minimize excess inventory, declining inventory values and obsolescence; the risks and uncertainties relating to the Company's foreign operations including foreign currency fluctuations and intellectual property risk and risks associated with the Year 2000 issue. For a discussion of these and other factors affecting the Company's business, see "ITEM 1. BUSINESS -- Certain Factors That May Affect Future Results" in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1998 and the preceding section, "Year 2000 Compliance." PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company is from time to time a party to various lawsuits arising in the ordinary course of business. The Company knows of no pending litigation which is reasonably likely to have a material adverse impact on its financial condition or its results of operations. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS At the Company's Annual Meeting of Stockholders held on December 3, 1998, the following proposals were adopted by the vote specified below: Proposal 1 - Election of Directors Proposal 2 - Amend the Company's 1993 Employee Stock Purchase Plan by extending its termination date by two years, from June 30, 1999 until June 30, 2001, and permitting employee purchases thereunder until such date. Proposal 3 - Amend the Company's 1995 Outside Directors Stock Option Plan by extending its termination date by three years, from July 1, 1999 until July 1, 2002. 9 Proposal 4 - Ratification of the appointment of PricewaterhouseCoopers LLP as the Company's Independent Accountants. For Withheld Against Abstain No Vote --- -------- ------- ------- ------- Proposal 1 - Francis J. Hughes, Jr. 11,607,084 100,026 - - - A. Theodore Englevist 11,606,184 100,926 - - - Dennis M. Malloy 11,608,684 98,426 - Proposal 2 11,386,256 - 294,753 25,831 - Proposal 3 11,037,178 - 653,237 16,695 - Proposal 4 11,668,157 - 29,114 9,839 - ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits 10.30 Amendment No. 2 to the 1993 Employee Stock Purchase Plan, adopted December 3, 1998. 10.31 Amendment No. 1 to the 1995 Outside Directors' Stock Option Plan, adopted December 3, 1998. 27 Financial Data Schedule b) Reports on Form 8-K None. 10 SIGNATURES 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, thereunto duly authorized. TEXAS MICRO INC. Date: February 5, 1999 By: /s/ J. Michael Stewart ---------------------------- J. Michael Stewart President and Chief Executive Officer Date: February 5, 1999 By: /s/ Kermit R. Sumrall ---------------------------- Kermit R. Sumrall Secretary and Acting Chief Financial Officer Date: February 5, 1999 By: /s/ Michael L. Baudler ---------------------------- Michael L. Baudler Controller 11 EX-10.30 2 AMENDMENT #3 TO EMPLOYEE STOCK PURCHASE PLAN EXHIBIT 10.30 TEXAS MICRO INC. AMENDMENT NO. 3 TO THE 1993 EMPLOYEE STOCK PURCHASE PLAN EFFECTIVE DECEMBER 3, 1998 The 1993 Employee Stock Purchase Plan (the "Plan") is hereby amended by deleting Paragraph 4, OFFERING DATES, and replacing it with the following: OFFERING DATES The Plan will be implemented by twelve (12) semi-annual offerings of shares of Common Stock (referred to herein individually and collectively as the "Offerings") during the period commencing July 1, 1999 and terminating June 30, 2001. The first four Offerings shall each be of a maximum of 62,500 shares (subject to adjustment as provided in Paragraphs 12(a) and 17), the second four Offerings shall each be of a maximum of 125,000 shares and the third four Offerings, commencing July 1, 1999 and ending June 30, 2001, shall include only those shares of Common Stock as were not purchased in one or more of the first eight Offerings (as the number of such shares may be subject to adjustment as provided in Paragraphs 12(a) and 17). This Amendment shall be effective from and after December 3, 1998. Except as specified above, all terms and conditions of the Plan remain in full force and effect. Texas Micro Inc. By /s/ J. Michael Stewart ---------------------------- J. Michael Stewart President and CEO Attest: /s/ K.R. Sumrall December 3, 1998 ------------------- ----------------------------- K.R. Sumrall Date EX-10.31 3 AMENDMENT #1 TO OUTSIDE DIRECTORS STOCK OPTION PLAN EXHIBIT 10.31 TEXAS MICRO INC. AMENDMENT NO. 1 TO THE 1995 OUTSIDE DIRECTORS' STOCK OPTION PLAN EFFECTIVE DECEMBER 3, 1998 The 1995 Outside Directors' Stock Option Plan (the "Directors' Plan") is hereby amended by deleting Paragraph 5 (a)(II), SUBSEQUENT GRANTS, and replacing it with the following: Subsequent Grants. A fully vested option to purchase 2,500 shares of the Common Stock shall be granted automatically to each outside director on each July 1 from July 1, 1995 through and including June 30, 2002, provided, that he or she is an eligible director on the date of grant of such option. This Amendment shall be effective from and after December 3, 1998. Except as specified above, all terms and conditions of the Directors' Plan remain in full force and effect. Texas Micro Inc. By /s/ J. Michael Stewart ----------------------------- J. Michael Stewart President and CEO Attest: /s/ K.R. Sumrall December 3, 1998 -------------------- ----------------------------- K.R. Sumrall Date EX-27 4 FINANCIAL DATA SCHEDULE
5 0000724621 TEXAS MICRO INC. 1,000 US DOLLARS 6-MOS JUN-30-1999 SEP-28-1998 DEC-27-1998 1 4,961 0 14,699 857 11,676 32,067 12,598 7,346 37,463 4,705 0 0 0 6,257 18,874 37,673 41,117 42,379 27,186 27,687 12,997 0 0 2,075 196 1,879 0 0 0 1,879 0.14 0.14
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