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 December 31, 1996
or
( ) Transition Report Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934 (No Fee Required)
Commission File No. 0-12718
SUPERTEX, INC.
(Exact name of Registrant as specified in its Charter)
California 94-2328535
(State or other jurisdiction of (IRS Employer Identification #)
incorporation or organization)
1235 Bordeaux Drive
Sunnyvale, California 94089
(Address of principal executive offices)
Registrant's Telephone Number, Including Area Code: (408) 744-0100
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock
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 January 22, 1997, 12,087,531 shares of the Registrant's
common stock were issued and outstanding.
Total number of pages: 10
<PAGE>
SUPERTEX, INC.
QUARTERLY REPORT - FORM 10Q
Table of Contents
- ----------------- Page No.
--------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Income ................... 3
Consolidated Balance Sheets ......................... 4
Consolidated Statements of Cash Flows ............... 5
Notes to Consolidated Financial Statements .......... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ................. 7
PART II- OTHER INFORMATION
Item 6. Exhibits, Financial Statement Schedule and
Reports on Form 8-K .................................. 8
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
SUPERTEX, INC.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(in thousands, except per share amounts)
<CAPTION>
Three-months Ended, Nine-months Ended,
------------------ -----------------
December 31, December 31,
----------- -----------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $ 10,850 $ 11,118 $ 36,230 $ 30,634
Cost and expenses:
Cost of sales 6,197 5,718 19,090 15,821
Research and development 1,326 1,456 3,860 4,059
Selling, general and administrative 1,501 1,471 4,598 4,165
-------- -------- -------- --------
Total costs and expenses 9,024 8,645 27,548 24,045
-------- -------- -------- --------
Income from operations 1,826 2,473 8,682 6,589
Interest income 348 293 1,067 855
Other income, net 21 25 35 109
-------- -------- -------- --------
Income before provision for income taxes 2,195 2,791 9,784 7,553
Provision for income taxes 703 865 3,131 2,342
-------- -------- -------- --------
Net income $ 1,492 $ 1,926 $ 6,653 $ 5,211
======== ======== ======== ========
Net income per share $ 0.12 $ 0.16 $ 0.53 $ 0.42
======== ======== ======== ========
Shares used in per share computation 12,598 12,274 12,530 12,275
======== ======== ======== ========
<FN>
See accompanying Notes to Consolidated Financial Statments.
</TABLE>
<PAGE>
<TABLE>
SUPERTEX, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
<CAPTION>
Dec. 31, 1996 Mar. 31, 1996
------------- -------------
(unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 5,104 $ 16,108
Short term investments 21,018 6,281
Trade accounts receivable,
net of allowances of $571 and $559 7,512 7,823
Other receivables 231 81
Inventories 8,831 7,254
Deferred income taxes 1,242 1,241
Prepaid expenses 470 174
-------- --------
Total current assets 44,408 38,962
Property and equipment, net 8,959 6,466
-------- --------
TOTAL ASSETS $ 53,367 $ 45,428
======== ========
</TABLE>
<TABLE>
LIABILITIES
<CAPTION>
Current liabilities:
<S> <C> <C>
Trade accounts payable $ 4,171 $ 3,357
Accrued salaries, wages and employee benefits 1,777 1,723
Income taxes payable 0 638
Other accrued liabilities 298 314
Deferred revenue on shipments to distributors 1,066 733
-------- --------
Total current liabilities 7,312 6,765
-------- --------
SHAREHOLDERS' EQUITY
Preferred stock, no par value --
10,000,000 shares authorized, none outstanding -- --
Common stock, no par value -- 30,000,000
shares authorized; issued and outstanding
12,087,531 and 11,935,671 shares 19,448 18,709
Retained earnings 26,607 19,954
-------- --------
Total shareholders' equity 46,055 38,663
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 53,367 $ 45,428
======== ========
<FN>
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
SUPERTEX, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
<CAPTION>
Nine Months Ended
-----------------
Dec. 31, 1996 Dec. 31, 1995
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income $ 6,653 $ 5,211
Non-cash adjustments to net income:
Depreciation and amortization 1,559 1,090
Provision for doubtful accounts
and sales returns 1,370 673
Provision for excess and obsolete inventories (177) 245
Deferred income taxes (1) 0
Loss on disposal of assets 0 8
Changes in operating assets and liabilities:
Accounts and other receivables (1,209) (1,426)
Inventories (1,400) (720)
Prepaid expenses (296) (77)
Trade accounts payable and accrued expenses 852 101
Income taxes payable (638) (35)
Deferred revenue on shipments to distributors 333 229
------- -------
Total adjustments 395 88
------- -------
Net cash provided by operating activities 7,046 5,299
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (4,052) (3,948)
Purchases of short term investments (43,969) (39,343)
Proceeds from maturities of
short term investments 29,232 36,080
------- -------
Net cash used in investing activities (18,789) (7,211)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Stock options exercised 739 147
Repurchase of stock 0 (501)
------- -------
Net cash provided by (used in) financing activities 739 (354)
------- -------
NET DECREASE IN CASH AND CASH EQUIVALENTS (11,004) (2,266)
CASH AND CASH EQUIVALENTS:
Beginning of period 16,108 4,437
------- -------
End of period $ 5,104 $ 2,171
======= =======
<FN>
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
SUPERTEX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1
- ------
In the opinion of management, the unaudited information for the
three months and nine months ended December 31, 1996, include
all adjustments (consisting of normal recurring adjustments)
necessary for fair presentation of financial condition and
results of operations for those periods in accordance with
generally accepted accounting principles.
The year-end condensed balance sheet data was derived from
audited financial statements, but does not include all
disclosures required by generally accepted accounting
principles. These financial statements should be read in
conjunction with the audited financial statements of Supertex,
Inc. for the fiscal year ended March 31, 1996, which were
included in the Annual Report on Form 10-K (File Number 0-12718).
Interim results are not necessarily indicative of results for
the full fiscal year.
Inventories consisted of (in thousands):
December 31, 1996 March 31, 1996
----------------- --------------
(unaudited)
Finished goods ............................ $ 1,527 $ 1,366
Work-in-process ........................... 6,274 4,122
Raw materials ............................. 1,030 1,766
------- -------
$ 8,831 $ 7,254
======= =======
During October 1995, the Financial Accounting Standards Board
issued Statement No. 123, "Accounting for Stock-Based
Compensation" (SFAS 123), which establishes a fair value based
method of accounting for stock-based compensation plans. The
Company is currently following the requirements of Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees." The Company plans to adopt SFAS 123 during fiscal
1997 utilizing the disclosure alternative.
During March 1995, the Financial Accounting Standards Board
issued Statement No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed of"
(SFAS 121), which requires the Company to review for impairment
of long-lived assets, certain identifiable intangibles and
goodwill related to those assets whenever events or changes in
circumstances indicate that the carrying amount of an asset may
not be recoverable. SFAS 121 will become effective for the
Company's 1997 fiscal year. The Company does not expect SFAS
121 to have a material impact on the Company's financial
condition or results of operations.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations
Certain Factors: This report contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933
and Section 21E of the Securities Act of 1934. Actual results
could differ materially from those projected in the
forward-looking statements as a result of the risk factors set
forth below and elsewhere in this report. The Company's sales
are concentrated in the high voltage semiconductor components
industry, which is highly competitive and rapidly changing.
Significant technological changes in the industry, changes in
production yields and efficiencies, customer requirements, or
the emergence of competitor products with new capabilities or
technologies, could affect the Company's operating results
adversely. The Company currently buys all of its blank silicon
wafers, an integral component of its products, from one
supplier. Failure by this supplier to satisfy the Company's
requirements on a timely basis at competitive prices could cause
a delay in manufacturing and a possible loss of revenues, which
would affect operating results adversely.
Results of Operations
Net Sales: Net sales for the third quarter ended December 31,
1996 decreased 2% from $11,118,000 of the same quarter last year
to $10,850,000. As the production facilities have been running
at the limit of their capacities for over three quarters,
equipment and employee fatigue took a toll in production
efficiency due to excessive equipment downtime and employee
absenteeism. In late November a regular weekend shift was added
to relieve employee fatigue, but new employees had to be
trained. However, the demand for our newly introduced products
required the Company's production organization to go through the
learning curve and ramp up much faster than planned. Efforts to
expedite production runs were unsuccessful within the quarter and
resulted in significant yield losses and lower sales than
planned. In the latter part of the quarter, certain potentially
large customers requested product specification changes to
improve the performance of their end products. Accommodating
their needs was costly for the near term as some products had to
be scrapped and sales in those products were missed in the
quarter. Such cooperation in the past, however, enabled us to
cement long term relationships with our customers. The above
described problems adversely affected the quarter's sales. Nine
months net sales of $36,230,000 increased 18% from the same
period last year of $30,634,000. During the nine months ended
December 31, 1996, approximately 50% of Supertex's shipments
were to international customers.
Gross Margin: Gross margin for the third quarter of fiscal 1997
was 43% of net sales compared with 49% for the same quarter of
the prior year. Yield losses and production inefficiencies
during the quarter resulted in higher cost of goods
manufactured, reducing this quarter's gross margin. Research and
Development(R&D) resources had to be brought in to fix the
problems, further aggravating the margin and temporarily
diverting the R&D efforts. Gross margin for the nine months
ended December 31, 1996, was 47%, a slight decrease from 48% for
the same period of last fiscal year.
Research and Development: As a percentage of net sales, R&D
expenses were 12% of net sales for the quarter, and 11% of net
sales for the nine months ending December 31, 1996. This
compares with 13% of net sales for the three and nine month
periods of last year. Dollar expenditures in this category were
lower at $1,326,000 for the three months ($3,860,000 for the
nine months) ended December 31, 1996 versus $1,456,000 for
comparable three months ($4,059,000 for nine months) last year.
Some of the
<PAGE>
R&D resources were diverted to support new product
ramp and solve the yield problems in manufacturing during the
quarter. The Company intends to invest heavily at least at the
same dollar rate in its new product and process development
efforts.
Selling, General and Administrative: Selling, general and
administrative expenses for the third quarter ended December 31,
1996 were 14% of net sales, a slight increase from 13% for the
same quarter of last fiscal year. Selling, general and
administrative expenses for the nine months ended December 31,
1996 were 13%, compared with 14% for the same period of last
fiscal year.
Interest and Other Income: Interest and other income for the
third quarter of the current year was $369,000, a 16% increase
from $318,000 for the same period last year. For the nine
months ended December 31, 1996, interest and other income also
increased 14% from the corresponding period of the prior year.
Increased cash available for short-term investments accounted
for this growth.
Provision for Income Taxes: The Company's effective tax rate for
the nine months ended December 31, 1996 was 32%, an increase
from 31% for the same period of last fiscal year.
Liquidity and Capital Resources: On December 31, 1996, the
Company had $26,122,000 in cash, cash equivalents and short term
investments, compared with $22,389,000 on March 31, 1996. This
increase is mostly due to positive cash flow from operating
activities consisting principally of net income and an increase
in liability accounts, and partially offset by an increase in
receivables and inventories. Net cash used in investing
activities as of third quarter of fiscal year 1997 is
$18,789,000, which consisted mainly of purchases of short-term
investments and acquisition of fixed assets. Net cash provided
by financing activities is $739,000 from the proceeds of stock
option exercises.
The Company anticipates that available funds and cash expected
to be generated from operations will be sufficient to meet cash
and working capital requirements for the remainder of the fiscal
year. The Company believes that success in the semiconductor
business requires substantial capital in order to maintain the
flexibility and take advantage of opportunities as they may
arise. As the market and business conditions warrant, the
Company may invest in or acquire complementary businesses,
products, technologies and/or production facilities.
Recent Accounting Pronouncements: During October 1995, the
Financial Accounting Standards Board issued Statement No. 123,
"Accounting for Stock-Based Compensation" (SFAS 123), which
establishes a fair value based method of accounting for
stock-based compensation plans. The Company is currently
following the requirements of Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees". The
Company plans to adopt SFAS 123 during fiscal 1997 utilizing the
disclosure alternative.
During March 1995, the Financial Accounting Standards Board
issued Statement No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed of"
(SFAS 121), which requires the Company to review for impairment
of long-lived assets, certain identifiable intangibles and
goodwill related to those assets whenever events or changes in
circumstances indicate that the carrying amount of an asset may
not be recoverable. SFAS 121 will become effective for the
Company's 1997 fiscal year. The Company does not expect SFAS
121 to have a material impact on the Company's financial
condition or results of operations.
<PAGE>
PART II - OTHER INFORMATION
Item 6. - Exhibits and Reports on Form 8-K
(a) Exhibits
11.1 Statement Regarding Computation of Net Income Per Share
27.1 Financial Data Schedule
(b) Reports on Form 8-K.
None.
SIGNATURE
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.
SUPERTEX, INC.
(Registrant)
Date: January 27, 1997
By: /s/ Henry C. Pao
------------------------
Dr. Henry C. Pao, President
(Principal Executive and
Financial Officer)
<PAGE>
<TABLE>
Exhibit 11.1
Supertex, Inc.
Statement Regarding Computation of Net Income Per Share
(unaudited)
(in thousands, except per share data)
<CAPTION>
Three Months Ended Nine Months Ended
December 31, December 31,
1996 1995 1996 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
PRIMARY:
Weighted Average Shares Outstanding 12,068 11,891 12,010 11,897
Common Stock Equivalents 530 383 520 378
------- ------- ------- -------
Total common and common equivalent shares 12,598 12,274 12,530 12,275
======= ======= ======= =======
Net income $ 1,492 $ 1,926 $ 6,653 $ 5,211
======= ======= ======= =======
Net income per share $ 0.12 $ 0.16 $ 0.53 $ 0.42
======= ======= ======= =======
FULLY DILUTED:
Weighted Average Shares Outstanding 12,068 11,891 12,010 11,897
Dilutive employee stock options 530 399 527 397
------- ------- ------- -------
Total common and common equivalent shares 12,598 12,290 12,537 12,294
======= ======= ======= =======
Net income $ 1,492 $ 1,926 $ 6,653 $ 5,211
======= ======= ======= =======
Net income per share $ 0.12 $ 0.16 $ 0.53 $ 0.42
======= ======= ======= =======
<FN>
Net income per share in the consolidated financial statements is
presented under the primary basis as the effect of dilution
under the fully diluted basis is not material.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-30-1997
<PERIOD-END> DEC-31-1996
<CASH> 5,104
<SECURITIES> 0
<RECEIVABLES> 7,997
<ALLOWANCES> 486
<INVENTORY> 8,831
<CURRENT-ASSETS> 44,407
<PP&E> 22,209
<DEPRECIATION> 13,249
<TOTAL-ASSETS> 53,367
<CURRENT-LIABILITIES> 7,313
<BONDS> 0
0
0
<COMMON> 19,448
<OTHER-SE> 26,406
<TOTAL-LIABILITY-AND-EQUITY> 53,367
<SALES> 36,230
<TOTAL-REVENUES> 36,230
<CGS> 19,090
<TOTAL-COSTS> 27,548
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (6)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 9,784
<INCOME-TAX> 3,131
<INCOME-CONTINUING> 6,653
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,653
<EPS-PRIMARY> .53
<EPS-DILUTED> .53
</TABLE>
