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 December 30,
1995, 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 (I.R.S. Employer Identification No.)
incorporation or organization)
4650 Norris Canyon Road, San Ramon, CA
(Address of principal executive offices) 94583
(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 December 30, 1995: 2,569,920
<PAGE>
PAGE 2
<TABLE>
<CAPTION>
GIGA-TRONICS INCORPORATED
INDEX
PART I - FINANCIAL INFORMATION Page No.
- ------------------------------ --------
<S> <C>
ITEM 1 Financial Statements:
Balance Sheets as of December 30, 1995 (unaudited)
and March 25, 1995............................................................3
Statements of Operations, three months and nine months ended
December 30, 1995 and December 24, 1994 (unaudited)...........................4
Statements of Cash Flows, nine months ended
December 30, 1995 and December 24, 1994 (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
</TABLE>
<PAGE>
PAGE 3
<TABLE>
<CAPTION>
GIGA-TRONICS INCORPORATED
BALANCE SHEETS
(In thousands, except share data)
ASSETS
December 30, 1995 March 25, 1995
(Unaudited)
----------------- --------------
<S> <C> <C>
Cash and cash equivalents $ 5,761 $ 2,137
Investments 3,685 3,631
Trade accounts receivable 3,191 3,524
Inventories, net 4,871 6,701
Prepaid expenses 288 588
Deferred income taxes 850 868
---------- ---------
Total current assets 18,646 17,449
Property and Equipment:
Machinery and equipment 6,392 6,095
Office furniture and fixtures 413 411
Leasehold improvements 97 93
---------- ---------
Gross cost property and equipment 6,902 6,599
Less accumulated depreciation and amortization (4,861) (4,212)
-------- --------
Net property and equipment 2,041 2,387
Patents and licenses 1,730 2,150
Other assets 165 239
---------- ----------
Total assets $22,582 $22,225
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 1,397 $ 1,477
Accrued commissions 355 318
Accrued expenses 696 745
Accrued payroll and benefits 593 778
Accrued warranty 459 417
Accrued earnout payable 393 472
Income taxes payable 57 --
--------- ---------
Total liabilities 3,950 4,207
Shareholders' Equity:
Convertible preferred stock of no par value.
Authorized 1,000,000 shares; no shares
outstanding at December 30, 1995 and
March 25, 1995 -- --
Common stock of no par value. Authorized
40,000,000 shares; issued and outstanding
2,569,920 shares at December 30, 1995
and March 25, 1995 7,748 7,773
Unrealized loss on investments (41) (77)
10,925 10,322
--------- ---------
Total shareholders' equity 18,632 18,018
--------- ---------
Total liabilities and shareholders' equity $22,582 $22,225
========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
PAGE 4
<TABLE>
<CAPTION>
GIGA-TRONICS INCORPORATED
STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
Three Months Ended Nine Months Ended
------------------ -----------------
<S> <C> <C> <C> <C>
Dec. 30, Dec. 24, Dec. 30, Dec. 24,
1995 1994 1995 1994
-------- -------- -------- --------
Net sales $ 6,171 $ 5,853 $18,644 $17,006
Cost of sales $ 3,907 $ 3,555 $11,781 $10,400
-------- -------- ---------- ---------
Gross profit 2,264 2,298 6,863 6,606
Product development 556 681 1,841 1,877
Selling, general and administrative 1,306 1,352 4,169 3,968
--------- -------- --------- ---------
Operting expenses 1,862 2,033 6,010 5,845
Net operating income 402 265 853 761
Other income 7 -- 152 --
Amortization of intangibles (140) (140) (420) (419)
Interest income, net 91 48 219 135
--------- -------- ---------- -----------
Earnings before income taxes 360 173 804 477
Provision for income taxes 90 44 201 153
--------- --------- ---------- -----------
Net earnings $ 270 $ 129 $ 603 $ 324
========= ========= ========= ==========
Earnings per share of common stock $ 0.10 $ 0.05 $ 0.23 $ 0.13
========= ========= ========= ==========
Weighted average common and common
equivalent shares outstanding 2,648 2,570 2,648 2,570
========= ========= ========= ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
PAGE 5
<TABLE>
<CAPTION>
GIGA-TRONICS INCORPORATED
STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Nine Months Ended
-----------------
Dec. 30, Dec. 24,
1995 1994
-------- --------
<S> <C> <C>
Cash flows provided from (used by) operations:
Net earnings as reported $ 603 $ 324
Adjustments to reconcile net earnings to
net cash provided from (used by) operating activities 3,380 (406)
-------- ---------
3,983 (82)
Cash flows used by investing activities:
Re-purchase of common stock (25) --
Investment sales/(purchases), net (18) 52
Additions to property and equipment (316) (464)
--------- --------
Net cash used by investing activities (359) (412)
Increase (decrease) in cash and cash equivalents 3,624 (494)
Beginning cash and cash equivalents 2,137 2,680
-------- ---------
Ending cash and cash equivalents $ 5,761 $ 2,186
======== =========
</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 nine month period ending December 30
1995 was $145,000.
(3) Non-cash investing activities:
The Company incurred an unrealized gain of $36,000 (after-tax effect) on
investments held available for sale during the nine month period ending
December 30, 1995.
See accompanying notes to financial statements.
<PAGE>
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 25,
1995.
(2) Inventories (unaudited)
Inventories consist of the following (in thousands):
December 30, 1995 March 25, 1995
----------------- --------------
Raw materials $ 1,834 $ 2,489
Work-in-process 2,449 3,347
Finished goods 588 865
---------- ----------
$ 4,871 $ 6,701
======== ========
<PAGE>
PAGE 7
MANAGEMENT'S DISCUSSION AND ANALYSIS
------------------------------------
OF OPERATIONS AND FINANCIAL CONDITION
-------------------------------------
THREE MONTHS AND NINE MONTHS ENDED DEC. 30, 1995 AND DEC. 24, 1994
- -------------------------------------------------------------------
Net sales for the three month and nine month periods ended December 30, 1995
increased 5% ($318,000) and 10% ($1,638,000), respectively, compared to the same
periods last year. The change resulted mostly from an increase in shipments of
microwave signal generator products.
Gross profit for the current three month and nine month periods decreased 1%
($34,000) and increased 4% ($257,000), respectively, compared to the same
periods last year. The change was primarily due to higher sales volume, offset
somewhat by unfavorable product mix and additional inventory reserves for the
current nine month period. For the current three month period, the unfavorable
change in product mix more than offset the increase in sales volume.
Operating expenses for the three and nine month periods decreased 8% ($171,000)
and increased 3% ($165,000), respectively, compared to prior year periods. The
changes are due to higher advertising costs, offset somewhat by lower selling,
administrative and product development expenses for the current nine month
period. For the current three month period, the lower expenses more than offset
the advertising costs.
Other income for the current nine month period was primarily due to the sale of
certain fixed assets, and an insurance claim recovery. Significant other income
is not expected in the fourth quarter.
Operating income for the current three month and nine month periods were
$402,000 and $853,000, respectively, compared to $265,000 and $761,000 for the
same periods last year. The favorable change for the quarter was due to
increased sales volume and lower operating expenses for the quarter, offset
somewhat by unfavorable product mix. The favorable change for the nine month
period was due to higher sales volume, offset somewhat by unfavorable product
mix and higher operating expenses.
Earnings before income taxes for the current three month and nine month periods
were $270,000 and $603,000, respectively, compared to $129,000 and $324,000 for
the same periods last year. The change was favorably affected by sales volume,
other income and interest income, offset somewhat by operating income factors
noted above.
Orders for the three month period ended December 30, 1995 were higher than the
same period last year, while orders for the nine month period were lower than
the same period last year. The backlog of unfilled orders as of December 30,
1995 are somewhat higher than the same period last year.
FINANCIAL CONDITION
- -------------------
The Company maintains a strong financial position, with working capital of
$14,696,000 and a ratio of current assets to current liabilities of 4.7 at
December 30, 1995. The Company continues to fund all of its working capital
needs from cash flow provided from operations. Cash provided from operations for
the nine month period ended December 30, 1995 was $3,983,000. Management
believes that cash reserves and investments remain adequate to meet anticipated
operating needs.
During the nine month period, the Company spent $316,000 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.
<PAGE>
PAGE 8
EXHIBIT II
PART II, Item 6
<TABLE>
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.
<CAPTION>
Three Months Ended Nine Months Ended
------------------ -----------------
<S> <C> <C> <C> <C>
Dec. 30, Dec. 24, Dec. 30, Dec. 24,
1995 1994 1995 1994
---------- ---------- ---------- ----------
Weighted average number of
common shares outstanding:
Common stock outstanding 2,570 2,570 2,570 2,570
Common stock equivalents 78 0 78 0
---------- ---------- --------- ---------
2,648 2,570 2,648 2,570
========== ========== ========= =========
Net earnings $ 270 $ 129 $ 603 $ 324
========== ========== ========= =========
Net earnings per share of
common stock $ 0.10 $ 0.05 $ 0.23 $ 0.13
========== ========== ========= =========
</TABLE>
<PAGE>
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: 1/16/96 GEORGE H. BRUNS, JR.
------- ----------------------------
George H. Bruns, Jr.
Chairman and Chief Executive Officer
(Principal Executive Officer)
Date: 1/16/96 GREGORY L. OVERHOLTZER
------- ----------------------------
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
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-25-1995
<PERIOD-START> MAR-26-1995
<PERIOD-END> DEC-30-1995
<EXCHANGE-RATE> 1
<CASH> 5,761
<SECURITIES> 3,685
<RECEIVABLES> 3,391
<ALLOWANCES> (200)
<INVENTORY> 4,871
<CURRENT-ASSETS> 18,646
<PP&E> 6,902
<DEPRECIATION> (4,861)
<TOTAL-ASSETS> 22,582
<CURRENT-LIABILITIES> 3,950
<BONDS> 0
<COMMON> 7,748
0
0
<OTHER-SE> 10,884
<TOTAL-LIABILITY-AND-EQUITY> 22,582
<SALES> 18,644
<TOTAL-REVENUES> 18,644
<CGS> 11,781
<TOTAL-COSTS> 17,791
<OTHER-EXPENSES> 268
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (219)
<INCOME-PRETAX> 804
<INCOME-TAX> 201
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 603
<EPS-PRIMARY> 0.23
<EPS-DILUTED> 0
</TABLE>
