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Previous: KEYSTONE FINANCIAL INC, 8-K, 1996-07-19 |
Next: FIDELITY ADVISOR SERIES IV, N-30D, 1996-07-19 |
<PAGE> 1
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 period ended June 29, 1996, or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 for the transition period from ________
to ________
Commission File No. 0-12719
GIGA-TRONICS INCORPORATED
(Exact name of Registrant as specified in its charter)
California 94-2656341
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
4650 Norris Canyon Road, San Ramon, CA 94583
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (510) 328-4650
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 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
---- ----
Common stock outstanding as of June 29, 1996: 2,642,970
<PAGE> 2
PAGE 2
GIGA-TRONICS INCORPORATED
INDEX
PART I - FINANCIAL INFORMATION Page No.
- ------------------------------ --------
ITEM 1 Financial Statements:
Balance Sheets as of June 29, 1996 (unaudited)
and March 30, 1996 ..................................... 3
Statements of Operations, three months ended
June 29, 1996 and June 24, 1995 (unaudited)............. 4
Statements of Cash Flows, three months ended
June 29, 1996 and June 24, 1995 (unaudited) ............ 5
Notes to Unaudited Financial Statements ................ 6
ITEM 2 Management's Discussion and Analysis
of Operations and Financial Condition................... 7
PART II - OTHER INFORMATION
ITEM 1
TO 5 Not Applicable
ITEM 6 Exhibits and Reports on Form 8-K
(a) Exhibits
(11) Computation of Net Earnings and
Common Share Equivalents .................... 8
(b) Reports on Form 8-K
Not Applicable
SIGNATURES.............................................................. 9
<PAGE> 3
PAGE 3
GIGA-TRONICS INCORPORATED PAGE 3
BALANCE SHEETS
(In thousands, except share data)
ASSETS
<TABLE>
<CAPTION>
June 29, 1996 March 30, 1996
------------- --------------
(Unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 7,014 $ 5,772
Investments 5,082 5,013
Trade accounts receivable 2,270 2,715
Inventories, net 4,567 4,660
Prepaid expenses 230 188
Deferred income taxes 1,163 1,185
-------- --------
Total current assets 20,326 19,533
Property and Equipment:
Machinery and equipment 6,504 6,518
Office furniture and fixtures 322 322
Leasehold improvements 106 103
-------- --------
Gross cost property and equipment 6,932 6,943
Less accumulated depreciation and amortization (5,333) (5,185)
-------- --------
Net property and equipment 1,599 1,758
Patents and licenses 1,450 1,590
Other assets 134 146
-------- --------
Total assets $ 23,509 $ 23,027
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 1,455 $ 1,540
Accrued commissions 113 156
Accrued expenses 596 660
Accrued payroll and benefits 543 474
Accrued warranty 478 480
Accrued earnout payable 393 393
Income taxes payable 75 --
-------- --------
Total current liabilities 3,653 3,703
Deferred income taxes 223 223
-------- --------
Total liabilities $ 3,876 $ 3,926
======== ========
Shareholders' Equity:
Convertible preferred stock of no par value;
Authorized 1,000,000 shares; no shares
outstanding at June 29, 1996 and March 30, 1996 -- --
Common stock of no par value; Authorized
40,000,000 shares; 2,642,970 shares at June 29, 1996, and
2,602,420 shares at March 30, 1996 issued
and outstanding 8,131 7,925
Unrealized loss on investments (6) (47)
Retained earnings 11,508 11,223
-------- --------
Total shareholders' equity 19,633 19,101
-------- --------
Total liabilities and shareholders' equity $ 23,509 $ 23,027
======== ========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 4
PAGE 4
GIGA-TRONICS INCORPORATED
STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
---------------------------
June 29, June 24,
1996 1995
-------- ---------
<S> <C> <C>
Net sales $ 5,855 $ 6,261
Cost of sales $ 3,501 3,976
------- -------
Gross profit 2,354 2,285
Product development 638 660
Selling, general and administrative 1,334 1,452
------- -------
Operating expenses 1,972 2,112
Net operating income 382 173
Other income 23 72
Amortization of intangibles (140) (140)
Interest income, net 115 52
------- -------
Earnings before income taxes 380 157
Provision for income taxes 95 39
------- -------
Net earnings $ 285 $ 118
======= =======
Earnings per share of common stock $ 0.11 $ 0.05
======= =======
Weighted average common and common
equivalent shares outstanding 2,687 2,620
======= =======
</TABLE>
See accompanying notes to financial statements.
<PAGE> 5
PAGE 5
GIGA-TRONICS INCORPORATED
STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
----------------------------
June 29, June 24,
1996 1995
--------- ----------
<S> <C> <C>
Cash flows provided from operations:
Net earnings as reported $ 285 $ 118
Adjustments to reconcile net earnings to net cash provided
from operations
Depreciation and amortization 357 374
Gain on sale of fixed assets (16) --
Deferred income taxes, net 22 9
Changes in operating assets and liabilities 442 894
------- -------
1,090 1,395
Cash flows used by investing activities:
Investment purchases, net (28) (9)
Additions to property and equipment (26) (65)
------- -------
Net cash used in investing activities (54) (74)
Cash flows from financing activities
Issuance of common stock 206 --
------- -------
Net cash provided by financing activities 206 --
Increase in cash and cash equivalents 1,242 1,321
Beginning cash and cash equivalents 5,772 2,137
------- -------
Ending cash and cash equivalents $ 7,014 $ 3,458
======= =======
</TABLE>
Supplementary disclosure of cash flow information:
(1) No cash was paid for interest in the periods indicated.
(2) Cash paid for income taxes in the three month period ending June 29,
1996 was $20,000.
(3) Non-cash investing activities:
The Company incurred an unrealized gain of $41,000 on investments held
available for sale.
See accompanying notes to financial statements.
<PAGE> 6
PAGE 6
GIGA-TRONICS INCORPORATED
NOTES TO FINANCIAL STATEMENTS
(1) Basis of Presentation
The financial statements included herein have been prepared by the
Company, pursuant to the rules and regulations of the Securities and
Exchange Commission. The results of operations for the interim periods
shown in this report are not necessarily indicative of results to be
expected for the fiscal year. In the opinion of management, the
information contained herein reflects all adjustments necessary to make
the results of operations for the interim periods a fair statement of
such operations. For further information, refer to the financial
statements and footnotes thereto, included in the Annual Report on Form
10-K, filed with the Securities and Exchange Commission for the year
ended March 30, 1996.
(2) Inventories
Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
June 29, 1996 March 30, 1996
------------- --------------
<S> <C> <C>
Raw materials $1,835 $1,705
Work-in-process 1,891 2,022
Finished goods 841 933
------ ------
$4,567 $4,660
====== ======
</TABLE>
<PAGE> 7
PAGE 7
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF OPERATIONS AND FINANCIAL CONDITION
THREE MONTHS ENDED JUNE 29, 1996 AND JUNE 24, 1995
Net sales for the three month period ended June 29, 1996 decreased 6.5%
($406,000) compared to the same period last year. The change resulted mostly
from a decrease in shipments of RF signal generator products and power
measurement devices, offset somewhat by an increase in microwave signal
generator products.
Gross profit for the three month period increased by 3.0% ($69,000) despite the
lower sales volume due to greater manufacturing efficiencies.
Operating expenses for the three month period decreased 6.6% ($140,000) compared
to the same period last year. The decrease was primarily attributable to lower
sales and marketing expenses.
Other income for the same period last year was comprised primarily of an
insurance claim recovery.
Higher interest income was a result of a $4,979,000 increase in cash, cash
equivalents and investments compared to the end of the same period last year.
Earnings before income taxes for the three month period increased 142%
($223,000) compared to the same period last year. The change was primarily due
to improved gross margins, lower sales and marketing expenses, and higher
interest income.
For the three month period ended June 29, 1996, the level of new bookings and
the backlog of unfilled orders decreased significantly from the levels at
year-end. The decrease in backlog results mostly from a decline in microwave
signal generator product line defense-related orders. Due to the softness in
order intake, fiscal 1997 revenues (excluding acquisitions, including the
proposed acquisition of ASCOR, Inc.) will likely be less than fiscal 1996.
However, it is projected at this time that continued improvement in
manufacturing efficiencies and other cost reduction activities will largely
offset any unfavorable impact caused by the decline in revenues.
FINANCIAL CONDITION
The Company maintains a strong financial position, with working capital of
$16,673,000 and a ratio of current assets to current liabilities of 5.6 at June
29, 1996. The Company continues to fund all of its working capital needs from
cash flow provided from operations. Cash provided from operations for the three
month period ended June 29, 1996, was $1,090,000. Management believes that cash
reserves and investments remain adequate to meet anticipated operating needs.
During the three month period, the Company spent $26,000 on new manufacturing
and test equipment and other capital items. The Company will continue to invest
in capital items that support growth and new product development, raise
productivity and improve quality. Historically, the Company has satisfied its
cash needs internally for both operating and capital expenses, and management
expects to continue to do so. The issuance of common stock was related to
exercise of stock options.
Note: These statements contain forward looking information that involves a
number of risks and limitations discussed in more detail in other documents
submitted to the SEC.
<PAGE> 8
PAGE 8
EXHIBIT II
PART II, Item 6
COMPUTATION OF NET EARNINGS PER SHARE AND
COMMON SHARE EQUIVALENTS
(Unaudited)
(In thousands, except per share data)
Earnings per share were computed using the weighted average number of shares
outstanding plus, when dilutive, incremental shares issuable upon exercise of
outstanding options under the treasury stock method.
<TABLE>
<CAPTION>
Three Months Ended
---------------------------
June 29, June 24,
1996 1995
----------- -----------
<S> <C> <C>
Weighted average number of
common shares outstanding:
Common stock outstanding 2,617 2,570
Common stock equivalents 70 50
--------- ---------
2,687 2,620
========= =========
Net earnings $ 285 $ 118
========= =========
Net earnings per share of
common stock $ 0.11 $ 0.05
========= =========
</TABLE>
<PAGE> 9
PAGE 9
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.
GIGA-TRONICS INCORPORATED
(Registrant)
Date: 7/15/96 /s/
----------------- ---------------------------------------------------
George H. Bruns, Jr.
Chairman and Chief Executive Officer
(Principal Executive Officer)
Date: 7/15/96 /s/
----------------- ---------------------------------------------------
Gregory L. Overholtzer
Vice President, Finance and Chief Financial Officer
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000719274
<NAME> GIGA-TRONICS
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-29-1997
<PERIOD-START> MAR-31-1996
<PERIOD-END> JUN-29-1996
<EXCHANGE-RATE> 1
<CASH> 7,014
<SECURITIES> 5,082
<RECEIVABLES> 2,491
<ALLOWANCES> (221)
<INVENTORY> 4,567
<CURRENT-ASSETS> 20,326
<PP&E> 6,932
<DEPRECIATION> (5,333)
<TOTAL-ASSETS> 23,509
<CURRENT-LIABILITIES> 3,653
<BONDS> 0
0
0
<COMMON> 8,131
<OTHER-SE> 11,502
<TOTAL-LIABILITY-AND-EQUITY> 23,509
<SALES> 5,855
<TOTAL-REVENUES> 5,855
<CGS> 3,501
<TOTAL-COSTS> 5,473
<OTHER-EXPENSES> 117
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (115)
<INCOME-PRETAX> 380
<INCOME-TAX> 95
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 285
<EPS-PRIMARY> 0.11
<EPS-DILUTED> 0
</TABLE>
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