UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 10-Q
-------------------
(Mark One)
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
- ----- Exchange Act of 1934
For the quarterly period ended June 29, 1997
OR
- ----- Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number: 000-28276
SAWTEK INC.
(Exact name of registrant as specified in its charter)
Florida 59-1864440
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1818 South Highway 441
Apopka, Florida 32703
(Address of principal executive offices)
Telephone Number (407) 886-8860
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days:
Yes X No
--------- ---------
As of July 15, 1997, there were 20,741,805 shares of the Registrant's
Common Stock outstanding, par value $.0005.
<PAGE>
Sawtek Inc.
TABLE OF CONTENTS
Part I. Financial Information Page Number
- ------------------------------ -----------
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets as of June 30, 1997
and September 30, 1996 .......................... 3
Consolidated Statements of Income (Loss) for the
three months and nine months ended June 30, 1997
and 1996......................................... 4
Consolidated Statements of Cash Flows for the nine
months ended June 30, 1997 and 1996.............. 5
Notes to Consolidated Financial Statements....... 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations ... 8
Part II. Other Information
- --------------------------
Item 1. Legal Proceedings ............................... 14
Item 2. Changes in Securities ........................... 14
Item 3. Defaults Upon Senior Securities ................. 14
Item 4. Submission of Matters to a Vote of Security
Holders ......................................... 14
Item 5. Other Information ................................ 14
Item 6. Exhibits and Reports on Form 8-K ................ 14
Signatures......................................................... 15
Exhibit Index ..................................................... 15
<PAGE>
PART I - FINANCIAL INFORMATION
- ------------------------------
Item 1. Financial Statements
<TABLE>
SAWTEK INC.
CONSOLIDATED BALANCE SHEETS
<CAPTION>
June 30, September 30,
1997 1996
-------- -------------
(unaudited)
(dollars in thousands, except per share data)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 42,378 $ 27,743
Accounts receivable net of allowance for doubtful accounts and returns of
$629 at June 30, 1997 and $654 at September 30, 1996 8,231 7,938
Inventories 6,899 6,509
Deferred income taxes 1,249 1,266
Other current assets 590 528
-------- --------
Total current assets 59,347 43,984
Other assets 121 186
Property, plant and equipment, net 39,727 30,424
-------- --------
Total assets $ 99,195 $ 74,594
======== ========
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $ 1,739 $ 1,801
Accrued wages and benefits 2,926 3,109
Other accrued liabilities 2,236 1,068
Current maturities of long-term debt 1,251 1,363
Income taxes payable 4,285 844
-------- --------
Total current liabilities 12,437 8,185
Long-term debt, less current maturities 3,144 3,786
Deferred income taxes 5,700 998
Shareholders' equity:
Common stock; $.0005 par value; 120,000,000 authorized shares; issued and
outstanding shares 20,426,805 at June 30, 1997 and 19,854,102 at
September 30, 1996 10 10
Capital surplus 54,402 53,000
Unearned ESOP compensation (1,171) (1,367)
Retained earnings 24,673 9,982
-------- --------
Total shareholders' equity 77,914 61,625
-------- --------
Total liabilities and shareholders' equity $ 99,195 $ 74,594
======== ========
See accompanying notes to consolidated financial statements.
</TABLE>
3
<PAGE>
<TABLE>
SAWTEK INC.
CONSOLIDATED STATEMENTS OF INCOME (LOSS) - unaudited
<CAPTION>
Three Months Nine Months
Ended Ended
June 30, June 30,
--------------- ---------------
1997 1996 1997 1996
---- ---- ---- ----
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Net sales $21,203 $14,926 $59,714 $39,664
Cost of sales 9,213 6,986 26,204 18,590
------- ------- ------- -------
Gross profit 11,990 7,940 33,510 21,074
Operating expenses:
Selling expenses 1,152 1,174 3,548 2,746
General & administrative expenses 1,292 1,509 4,212 4,157
ESOP compensation expense 195 1,846 587 12,925
Research & development expenses 1,088 467 2,681 1,371
------- ------- ------- -------
Total operating expenses 3,727 4,996 11,028 21,199
------- ------- ------- -------
Operating income (loss) 8,263 2,944 22,482 (125)
Interest expense 41 114 152 339
Other income (557) (240) (1,365) (260)
------- ------- ------- -------
Income (loss) before taxes 8,779 3,070 23,695 (204)
Income taxes 3,333 1,699 9,004 4,054
------- ------- ------- -------
Net income (loss) $ 5,446 $ 1,371 $14,691 ($ 4,258)
======= ======= ======= =======
Net income (loss) per share $ 0.25 $ 0.07 $ 0.69 ($ 0.23)
======= ======= ======= =======
Shares used in computing net income (loss) per
share 21,401 20,286 21,372 18,566
======= ======= ======= =======
See accompanying notes to consolidated financial statements.
</TABLE>
4
<PAGE>
<TABLE>
SAWTEK INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
<CAPTION>
Nine Months Ended
June 30,
-----------------
1997 1996
---- ----
(in thousands)
<S> <C> <C>
Operating Activities:
Net income (loss) $ 14,691 ($ 4,258)
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Depreciation and amortization 2,826 1,352
Deferred income taxes 4,719 390
Loss on sale of fixed assets 269 0
ESOP allocation 196 12,925
Compensatory stock options 553 0
Changes in operating assets and liabilities:
Increase in assets:
Accounts receivable (293) (375)
Inventories (390) (3,568)
Other current assets (62) (263)
Increase (decrease) in liabilities:
Accounts payable (62) 1,208
Accrued liabilities 985 1,045
Income taxes payable 3,441 31
------- --------
Net cash provided by operating activities 26,873 8,487
Investing activities:
Purchase of property, plant and equipment (12,388) (21,716)
Proceeds from sale of fixed assets 55 0
Reduction in Industrial Revenue Bond assets 0 2,606
-------- --------
Net cash used in investing activities (12,333) (19,110)
Financing activities:
Proceeds from long-term debt 0 8,200
Principal payments on long-term debt (754) (10,263)
Net proceeds from sale of common stock in the initial public offering 0 35,254
Net proceeds from sale of common stock other than in the initial public offering 849 338
Purchase of common stock 0 (121)
Redemption of preferred stock 0 (100)
Preferred stock dividends paid 0 (27)
-------- --------
Net cash provided by financing activities 95 33,281
-------- --------
Increase in cash and cash equivalents 14,635 22,658
Cash and cash equivalents at beginning of period 27,743 2,819
-------- --------
Cash and cash equivalents at end of period $ 42,378 $ 25,477
======== ========
Interest paid $ 224 $ 404
======== ========
Income taxes paid $ 873 $ 3,634
======== ========
See accompanying notes to consolidated financial statements.
</TABLE>
5
<PAGE>
SAWTEK INC.
Notes to Consolidated Financial Statements - June 30, 1997 (unaudited)
1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information as set forth in the requirements of Article 10 of
Regulation S-X. Accordingly, they do not contain all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, the accompanying unaudited
consolidated financial statements reflect all adjustments (consisting only of
normal recurring adjustments) considered necessary for a fair presentation of
the Company's financial condition as of June 30, 1997, and the results of its
operations, and its cash flows for the three and nine-month periods ended June
30, 1997 and 1996. These financial statements should be read in conjunction with
the Company's audited financial statements as of September 30, 1996, including
the notes thereto, and the other information set forth therein included in the
Company's most recent annual report on Form 10-K for the year ended September
30, 1996 (File No. 000-28276), which was filed with the Securities and Exchange
Commission on November 8, 1996 and the Company's S-3 filing dated June 30, 1997.
The following discussion may contain forward looking statements which are
subject to the risk factors set forth in "Risks and Uncertainties" in Item 2 of
this Form 10-Q.
The Company maintains its records on a fiscal year ending on September 30 of
each year and all references to a year refer to the year ending on that date.
The Company's first, second and third quarters end on the Sunday closest to the
last day of the last month of such quarter, which was June 29, 1997, for the
second quarter of 1997. However, for convenience, the financial statements are
dated as of June 30, 1997.
Operating results for the three and nine-month periods ended June 30, 1997 are
not necessarily indicative of the operating results that may be expected for the
year ending September 30, 1997.
2. Earnings (Loss) Per Share
Earnings (loss) per share ("EPS") is computed based on the weighted average
number of common shares, common stock options (using the treasury stock method)
and all ESOP shares outstanding. In accordance with Securities and Exchange
Commission staff accounting bulletins, common and common equivalent shares
issued by the Company at prices below the public offering price during the
period beginning one year prior to the filing date of the initial public
offering on April 29, 1996, have been included in the calculation as if they
were outstanding for all periods prior to the offering (using the treasury stock
method and the initial public offering price).
3. Inventories - Inventories are composed of the following:
<TABLE>
<CAPTION>
June 30, 1997 September 30, 1996
------------- ------------------
(in thousands)
<S> <C> <C>
Raw Material...................................... $2,329 $1,976
Work in Process................................... 1,983 2,341
Finished Goods.................................... 2,587 2,192
------ ------
Total.................................... $6,899 $6,509
====== ======
</TABLE>
6
<PAGE>
4. Property, Plant and Equipment - Property, plant and equipment are
composed of the following:
<TABLE>
<CAPTION>
June 30, 1997 September 30, 1996
------------- ------------------
(in thousands)
<S> <C> <C>
Land and Improvements.............................. $ 671 $ 671
Buildings.......................................... 9,596 9,829
Production and Test Equipment...................... 28,092 21,459
Computer Equipment................................. 2,862 2,734
Furniture and Fixtures............................. 1,613 1,533
Construction in Progress........................... 9,705 4,774
------- -------
52,539 41,000
Less Accumulated Depreciation...................... 12,812 10,576
------- -------
Total..................................... $39,727 $30,424
======= =======
</TABLE>
5. Shareholders' Equity
The consolidated changes in shareholders' equity for the nine months ended June
30, 1997 are as follows:
<TABLE>
<CAPTION>
(in thousands)
Unearned
Common Stock Capital ESOP Retained
Shares Amount Surplus Compensation Earnings
------ ------ ------- ------------ --------
<S> <C> <C> <C> <C> <C>
Balance at October 1, 1996 19,854 $ 10 $53,000 ($1,367) $ 9,982
Net income 14,691
ESOP allocation 196
Compensatory stock options granted 553
Sale of common stock 573 849
------ ---- ------- ------ -------
Balance at June 30, 1997 20,427 $ 10 $54,402 ($1,171) $24,673
====== ==== ======= ====== =======
</TABLE>
6. Increase in Authorized Shares
On March 17, 1997, the shareholders of the Company voted to amend the Articles
of Incorporation to increase the number of authorized shares of Common Stock,
par value $.0005 per share, from 40,000,000 shares to 120,000,000 shares. This
amendment was adopted pursuant to a recommendation by the Board of Directors to
the shareholders of the Corporation and approved by the required majority of the
holders of the Company's Common Stock on March 17, 1997, at a special meeting of
the shareholders.
7. Recently Issued Accounting Standards
In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share," which is
effective for financial statements issued for periods ending after December 15,
1997. This pronouncement establishes standards for computing and presenting
earnings per share ("EPS") for entities with publicly-held common stock or
potential common stock. SFAS 128 simplifies the standards for computing EPS and
makes them comparable to international EPS standards.
Early application of this statement is not permitted.
7
<PAGE>
In February 1997, the FASB issued SFAS Statement No. 129, Disclosure of
Information about Capital Structure, which is applicable to all companies.
Capital structure disclosures required by Statement 129 include liquidation
preferences of preferred stock, information about the pertinent rights and
privileges of the outstanding equity securities, and the redemption amounts for
all issues of capital stock that are redeemable at fixed or determinable prices
on fixed or determinable dates. Statement 129 is effective for financial
statements for periods ending after December 15, 1997.
In June, 1997, the FASB issued SFAS Statement No. 130, Reporting Comprehensive
Income, which establishes standards for the reporting and display of
comprehensive income and its components in a full set of general purpose
financial statements. According to the FASB, the proposal was developed in
response to financial statement users' concerns about the increasing number of
items that bypass the income statement, such as changes in value of
available-for-sale securities and foreign currency translation adjustments, and
the effort required to analyze them (even though they are separately disclosed
in a statement of shareholders' equity). The standard does not address when
transactions are recorded, how they are measured in the financial statements, or
whether they should be included in net income or other comprehensive income. The
statement is effective for fiscal years beginning after December 15, 1997.
In June, 1997, the FASB issued SFAS Statement No. 131, Disclosures About
Segments of an Enterprise and Related Information, which significantly changes
the way public companies report segment information in annual financial
statements and also requires those companies to report selected segment
information in interim financial reports to shareholders. Statement No. 131 is
effective for periods beginning after December 15, 1997.
The Company intends to adopt the provisions of these standards in 1998 and does
not expect their application to have a material impact on the financial
statements of the Company.
Item 2. Management's discussion and analysis of financial condition and results
of operations
The following discussion and analysis should be read in conjunction with the
Company's Consolidated Financial Statements and Notes thereto included elsewhere
in this Form 10-Q. Except for the historical information contained herein, the
discussion in this Form 10-Q contains certain forward-looking statements that
involve risks and uncertainties, such as statements of the Company's plans,
objectives, expectations and intentions. The cautionary statements made herein
should be read as being applicable to all related forward-looking statements
wherever they appear. The Company's actual results could differ materially from
those discussed here. Factors that could cause or contribute to such differences
include those discussed in "Risks and Uncertainties," as well as those discussed
elsewhere herein.
8
<PAGE>
Overview
- --------
The Company was incorporated in 1979 to design, develop, manufacture and market
a broad range of electronic components based on surface acoustic wave ("SAW")
technology used in telecommunications, data communications, video transmission,
military and space systems and other markets. The Company's focus has been on
the high-end performance spectrum of the market, and its primary products are
SAW bandpass filters, resonators, delay lines, oscillators and SAW-based
sub-systems. Initially, the Company's products were concentrated in the military
and space systems market. The Company has since shifted its attention to
commercial markets which accounted for 87% of net sales in the first nine months
of 1997. The Company has also experienced significant growth in its
international markets over the last five years, with international sales having
more than doubled to approximately 47% of net sales for the first nine months of
1997.
The Company derives revenue from high-volume commercial production components,
military/industrial production components and engineering services and products.
Non-recurring engineering ("NRE") revenue is included in net sales and relates
to the design and development of custom devices and delivery of prototype parts.
In all cases, revenue is recognized when the parts or services have been
completed and units, including prototypes, have been shipped.
Net sales increased 51% from the first nine months of 1996 to the first nine
months of 1997. The growth in net sales is mainly attributable to growth in the
wireless communications market to which the Company supplies SAW bandpass
filters for cellular telephone base stations and, to a lesser extent, for
handheld subscriber telephones. The Company has a broad product line of SAW
filters and other components with average selling prices generally in the range
of $3 to $300 for many high performance wireless applications.
For the nine months ended June 30, 1997, net sales to the Company's top ten
customers accounted for approximately 75% of net sales with the top four
customers accounting for 47%. The Company expects that sales of its products to
a limited number of customers will account for a high percentage of its net
sales in the foreseeable future.
In 1991, the Company established an Employee Stock Ownership Plan ("ESOP"). At
that time, the Company borrowed $4.0 million from its commercial bank and loaned
it to the ESOP to finance the purchase of 8,888,880 shares of the Company's
Common Stock. These ESOP shares are accounted for in accordance with the
American Institute of Certified Public Accountants ("AICPA") Statement of
Position ("SOP") 76-3, which uses cost as the basis for valuing shares as they
are released and allocated to participants' accounts. In 1994, the Company
borrowed an additional $1.7 million and loaned it to the ESOP to enable it to
purchase 1,610,600 shares of Common Stock. In 1996, the Company repaid the 1994
loan resulting in the allocation of the related shares to participants'
accounts. These shares are accounted for in accordance with the AICPA's SOP
93-6, which uses market value as the basis of valuing shares. The impact of this
was a charge to ESOP compensation expense of $12.9 million reflected in the
financial results for 1996. Of the $12.9 million, $11.3 million was a one-time,
non-cash charge (amounting to $0.59 per share). The Company does not anticipate
contributing additional shares of Common Stock beyond those that already have
been placed in trust for the ESOP. The remaining balance of $1.2 million will be
repaid over the life of the loan.
Management does not believe that inflation has had a material impact on
operating costs and earnings of the Company.
9
<PAGE>
Results of Operations
- ---------------------
The following table sets forth, for the periods indicated, the percentage
relationship of certain items from the Company's statement of operations to
total net sales:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
------------------ -----------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 43.5 46.8 43.9 46.9
----- ----- ----- -----
Gross profit 56.5 53.2 56.1 53.1
Operating expenses:
Selling expenses 5.4 7.9 5.9 6.9
General & administrative expenses 6.1 10.1 7.1 10.5
ESOP compensation expense .9 12.4 1.0 32.6
Research & development expenses 5.1 3.1 4.4 3.5
----- ----- ----- -----
Total operating expenses 17.5 33.5 18.4 53.5
----- ----- ----- -----
Operating income (loss) 39.0 19.7 37.7 (.4)
Interest expense .2 .7 .3 .8
Other income (2.6) (1.6) (2.3) (.7)
----- ----- ----- -----
Income (loss) before income taxes 41.4 20.6 39.7 (.5)
Income taxes 15.7 11.4 15.1 10.2
----- ----- ----- -----
Net income (loss) 25.7% 9.2% 24.6% (10.7)%
===== ===== ===== =====
</TABLE>
10
<PAGE>
Net Sales. Net sales increased 42% from $14.9 million in the quarter ended June
30, 1996 to $21.2 million in the quarter ended June 30, 1997 and increased 51%
from $39.7 million in the nine months ended June 30, 1996 to $59.7 million in
the nine months ended June 30, 1997. The increase for both the three and
nine-month periods was a result of increased product shipments to the wireless
communication market, specifically sales of high volume filters for base station
applications and telephone handsets based on CDMA technology for the
telecommunications industry. International sales decreased from approximately
65.4% and 57.6% of net sales in the three and nine-month periods ended June 30,
1996 to 54.4% and 46.7% of net sales for the three and nine-month periods ended
June 30, 1997, respectively. Sales for military and space systems of
approximately 13.2% and 13.6% of net sales in the three and nine-month periods
ended June 30, 1996 compare to approximately 12.4% and 12.8% of net sales for
the three and nine-month periods ended June 30, 1997, respectively. The
percentage decrease was due to the increase in overall net sales, however, the
dollar volume of international and military sales actually increased in both the
three and nine-month periods ended June 30, 1997 compared to the same periods
ended June 30, 1996.
Gross Margin. Gross margin increased from 53.2% and 53.1% in the three and
nine-month periods ended June 30, 1996 to 56.5% and 56.1% in the three and
nine-month periods ended June 30, 1997 primarily due to improved yields, lower
manufacturing costs associated with the Costa Rican operation and economies of
scale with the increased volume. As the Company shifts its product mix to high
volume production, including filters for handsets, it is anticipated that gross
margins will decline as these components are more susceptible to downward
pricing pressure and have lower overall gross profit margins.
Selling Expenses. Selling expenses, as a percentage of net sales, decreased from
7.9% and 6.9% in the three and nine-month periods ended June 30, 1996 to 5.4%
and 5.9% for the corresponding periods of 1997. For the nine months ended June
30, 1997, most of the selling expenses remained relatively constant compared to
the same period in 1996, with commission expenses paid to outside sales
representatives as the only component that increased with the higher sales
level. The Company anticipates that selling expenses will increase as new
employees are added to support its sales and marketing effort in the future and
as commissions are incurred.
General and Administrative Expenses. General and administrative expenses
decreased from $1.5 million for the quarter ended June 30, 1996 to $1.3 million
for the quarter ended June 30, 1997 because the results for the quarter ended
June 30, 1996 had certain one-time start-up costs for the Company's Costa Rican
operation. General and administrative expenses remained essentially flat at $4.2
million for the nine-month periods ending June 30, 1996 and 1997.
ESOP Compensation Expense. ESOP compensation expense decreased from $12.9
million in the first nine months of 1996 to $587,000 in the first nine months of
1997. This decrease of $12.3 million is a result of the Company allocating all
of the ESOP shares acquired in 1994 to employees' accounts for services rendered
during the first seven months of 1996. For the quarter ended June 30, 1997, the
Company recorded a charge of $195,000 for ESOP compensation compared to $1.8
million for the same period in 1996. The 1996 share allocation was accounted for
in accordance with SOP 93-6 which uses market value as the basis of valuing
shares as they are allocated. The shares were acquired at a cost of $1.03 per
share compared to an average market value of $8.03 for the first seven months of
1996. The charge for ESOP shares allocated in 1997 is based on SOP 76-3 which
uses the cost of the shares. All remaining ESOP shares are accounted for in
accordance with SOP 76-3.
11
<PAGE>
Research and Development Expenses. Research and development expenses increased
$621,000 in the quarter ended June 30, 1997 compared to the quarter ended June
30, 1996. R&D increased 96% from $1.4 million in the nine months ended June 30,
1996 to $2.7 million in the first nine months of 1997, and increased as a
percentage of net sales from 3.5% to 4.4% for the same period. These expenses
increased due to additional personnel and expanded research and development
efforts. The Company anticipates that research and development expenses will
continue to increase in total dollars as personnel and programs are added. A
significant portion of the Company's development activities is conducted in
connection with the design and development of custom devices, which is paid for
by customers and classified as NRE items. The revenue generated from these items
is included in net sales and the cost is reflected in cost of sales rather than
in research and development expenses.
Interest Expense. Interest expense decreased from $339,000 in the first nine
months of 1996 to $152,000 in the first nine months of 1997, due to repayment of
debt with a portion of the funds from the Company's initial public offering.
Other Income. Other income primarily represents interest income and
non-operating expenses. Other income increased for the three and nine-month
periods as the Company recorded increased interest income on its cash balances.
Income Tax Expense. The provision for income taxes as a percentage of income
(loss) before income taxes was 38.0% for the three and nine-month periods ended
1997. In the three and nine-month periods ended June 30, 1996, the Company
incurred a non-deductible charge for ESOP compensation expense of approximately
$1.6 million and $11.2 million, respectively. Had it not been for this charge,
the tax provision would have been approximately 37% for both periods. The
Company expects that its effective tax rate will remain at approximately 37% to
38% during 1997.
Risks and Uncertainties
- -----------------------
General Risks and Uncertainties. Except for historical information contained
herein, this Management's Discussion and Analysis of Financial Condition and
Results of Operations contains forward-looking statements that are subject to
risks and uncertainties, including fluctuations in quarterly results, backlog,
capacity limitations, order rescheduling or cancellation, limited sources of
supply, dependence on continuing demand for wireless communication services,
dependence on a limited number of customers, technological change, competition,
risks associated with international operations, variation in production yield,
change in economic conditions of the various markets the Company serves, as well
as the other risks detailed in the Company's Form 10-K filed with the Securities
and Exchange Commission on November 8, 1996 and in the Company's Form S-3 filed
on June 30, 1997.
12
<PAGE>
Liquidity and Capital Resources
- -------------------------------
The Company has financed its operations to date through cash generated from
operations, bank borrowings, lease financing, the private sale of securities,
and its May 1, 1996 initial public offering. The Company requires capital
principally for equipment, expansion of its primary facility, financing of
accounts receivable and inventory, investment in product development activities
and new technologies and for its operations in Costa Rica. For the nine months
ended June 30, 1997, the Company generated net cash from operating activities of
$26.9 million, consisting primarily of net income of $14.7 million, $2.8 million
of depreciation and amortization, $4.7 million in deferred taxes and $4.4
million of increases in other current liabilities. The Company has a revolving
credit agreement totaling $15.0 million from SunTrust Bank, Central Florida,
N.A. available through January 1998. There were no balances outstanding on this
credit line at June 30, 1997.
The Company made capital expenditures of approximately $4.0 million during the
quarter ended June 30, 1997 and $12.4 million for the nine months ended June 30,
1997. The Company intends to spend approximately $20 million in 1997 on capital
equipment and facilities.
The Company completed a public offering on July 1, 1997 and raised an additional
$9.5 million in cash through the issuance of 300,000 new shares of common stock.
The Company believes that its cash position, together with its credit facility
and funds expected to be generated from operations, will be sufficient to meet
its projected working capital and other cash requirements through the next 12
months. There can be no assurance that events in the future will not require the
Company to seek additional capital in the future or, if so required, that it
will be available on terms acceptable to the Company, if at all.
13
PART II - OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings. The Company is not subject to any legal proceedings
that, if adversely determined, would cause a material adverse effect on
the Company's financial condition, business or results of operations.
Item 2. Changes in Securities. None.
Item 3. Defaults Upon Senior Securities. None.
Item 4. Submission of Matters to a Vote of Security Holders. None.
Item 5. Other Information. None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit 11.1 - Statement regarding computations of earnings per
share.
(b) Exhibit 27 - Financial Data Schedule.
(c) Reports on Form 8-K.
The Company did not file any reports on Form 8-K during the
three months ended June 30, 1997.
14
<PAGE>
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.
Dated: July 18, 1997
SAWTEK INC.
(Registrant)
/S/ Raymond A. Link
Raymond A. Link
Vice President Finance, Chief Financial Officer
(Principal Financial Officer)
EXHIBIT INDEX
- -------------
11.1 Statement regarding computations of earnings per share.
2.7 Financial Data Schedule.
15
<PAGE>
SAWTEK INC. EXHIBIT 11.1
STATEMENT REGARDING COMPUTATIONS OF EARNINGS PER SHARE -
as reported on Form 10Q
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
------------------ -----------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
PRIMARY EARNINGS PER SHARE
Weighted average number of shares of Common
Stock outstanding 20,399 18,756 20,158 16,311
Net effect of dilutive stock options based on the
Treasury stock method using the average fair market
value in effect for the period 982 1,480 1,185 2,254
------- ------- ------- -------
Total shares outstanding for Primary EPS 21,381 20,236 21,343 18,565
======= ======= ======= =======
FULLY DILUTED EARNINGS PER SHARE
Weighted average number of shares of Common
Stock outstanding 20,399 18,756 20,158 16,311
Net effect of dilutive stock options based on the
Treasury stock method using the fair market value
at the end of the period 1,002 1,530 1,214 2,255
------- ------- ------- -------
Total shares outstanding for Fully Diluted EPS 21,401 20,286 21,372 18,566
======= ======= ======= =======
Net income (loss) applicable to common shareholders $ 5,446 $ 1,371 $14,691 ($ 4,258)
Earnings (loss) per share: Primary $ 0.25 $ 0.07 $ 0.69 ($ 0.23)
Fully Diluted $ 0.25 $ 0.07 $ 0.69 ($ 0.23)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0001009675
<NAME> Sawtek Inc.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1997
<PERIOD-END> JUN-29-1997
<CASH> 42,378
<SECURITIES> 0
<RECEIVABLES> 8,860
<ALLOWANCES> 629
<INVENTORY> 6,899
<CURRENT-ASSETS> 59,347
<PP&E> 52,539
<DEPRECIATION> 12,812
<TOTAL-ASSETS> 99,195
<CURRENT-LIABILITIES> 12,437
<BONDS> 3,144
0
0
<COMMON> 10
<OTHER-SE> 77,904
<TOTAL-LIABILITY-AND-EQUITY> 99,195
<SALES> 59,714
<TOTAL-REVENUES> 59,714
<CGS> 26,204
<TOTAL-COSTS> 26,204
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 33
<INTEREST-EXPENSE> 41
<INCOME-PRETAX> 23,695
<INCOME-TAX> 9,004
<INCOME-CONTINUING> 14,691
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,691
<EPS-PRIMARY> .69
<EPS-DILUTED> .69
</TABLE>
