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 September 30, 1997
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 October 15, 1997, 12,086,164 shares of the Registrant's
common stock were issued and outstanding.
Total number of pages: 11
<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 4. Submission of Matters to a Vote of Security Holders .. 9
Item 6. Exhibits, Financial Statement Schedule
and Reports on Form 8-K .............................. 10
<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, Six-months Ended,
------------------ ----------------
September 30, September 30,
------------ ------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $ 13,613 $ 12,920 $ 25,925 $ 25,381
-------- --------
Cost and expenses:
Cost of sales 7,468 6,584 14,147 12,894
Research and development 1,425 1,223 2,801 2,534
Selling, general and administrative 1,603 1,503 3,237 3,097
-------- -------- -------- --------
Total costs and expenses 10,496 9,310 20,185 18,525
-------- -------- -------- --------
Income from operations 3,117 3,610 5,740 6,856
Interest income 373 352 717 719
Other income (expense), net (2) 13 26 13
-------- -------- -------- --------
Income before provision for income taxes 3,488 3,975 6,483 7,588
Provision for income taxes 1,186 1,272 2,204 2,428
-------- -------- -------- --------
Net income $ 2,302 $ 2,703 $ 4,279 $ 5,160
======== ======== ======== ========
Net income per share $ 0.19 $ 0.22 $ 0.35 $ 0.41
======== ======== ======== ========
Shares used in per share computation 12,414 12,499 12,400 12,497
======== ======== ======== ========
<FN>
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
SUPERTEX, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
<CAPTION>
Sept. 30, 1997 Mar. 31, 1997
-------------- -------------
(unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 16,167 $ 19,166
Short term investments 10,532 4,497
Trade accounts receivable,
net of allowances of $595 and $525 10,674 9,337
Other receivables 197 154
Inventories 9,578 9,249
Deferred income taxes 1,834 1,834
Prepaid expenses 370 418
-------- --------
Total current assets 49,352 44,655
Property and equipment, net 12,074 11,753
-------- --------
TOTAL ASSETS $ 61,426 $ 56,408
======== ========
</TABLE>
<TABLE>
LIABILITIES
<CAPTION>
Current liabilities:
<S> <C> <C>
Trade accounts payable $ 3,330 $ 3,813
Accrued salaries, wages and employee benefits 2,610 2,499
Income taxes payable 884 166
Other accrued liabilities 382 366
Deferred revenue on shipments to distributors 1,458 1,077
-------- --------
Total current liabilities 8,664 7,921
-------- --------
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
12,086,164 and 12,047,031 shares 20,507 20,302
Retained earnings 32,255 28,185
-------- --------
Total shareholders' equity 52,762 48,487
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 61,426 $ 56,408
======== ========
<FN>
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
SUPERTEX, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
<CAPTION>
Six Months Ended
----------------
Sept. 30, 1997 Sept. 30, 1996
-------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income $ 4,279 $ 5,160
-------- --------
Non-cash adjustments to net income:
Depreciation and amortization 1,120 941
Provision for doubtful accounts
and sales returns 679 823
Provision for excess and obsolete inventories (30) 235
Changes in operating assets and liabilities:
Accounts and other receivables (2,059) (2,243)
Inventories (298) (552)
Prepaid expenses 48 (449)
Trade accounts payable and accrued expenses (357) 1,243
Income taxes payable 719 13
Deferred revenue on shipments to distributors 381 270
-------- -------- ------- -------
Total adjustments 203 281
-------- -------- ------- -------
Net cash provided by operating activities 4,482 5,441
-------- -------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (1,443) (2,746)
Purchases of short term investments (14,188) (28,942)
Proceeds from maturities of
short term investments 8,153 16,273
-------- -------- ------- -------
Net cash used in investing activities (7,478) (15,415)
-------- -------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Stock options exercised 205 290
Repurchase of stock (208) 0
-------- -------- ------- -------
Net cash provided by (used in) financing activities (3) 290
-------- -------- ------- -------
NET DECREASE IN CASH AND CASH EQUIVALENTS (2,999) (9,684)
CASH AND CASH EQUIVALENTS:
Beginning of period 19,166 16,108
-------- --------
End of period $ 16,167 $ 6,424
======== ========
<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 financial statements
for the six months ended September 30, 1997, 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, 1997, 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):
Sept. 30, 1997 March 31, 1997
-------------- --------------
(unaudited)
Finished goods .............................. $ 2,298 $ 1,656
Work-in-process ............................. 6,132 5,993
Raw materials ............................... 1,148 1,600
------- -------
$ 9,578 $ 9,249
======= =======
Recent Accounting Pronouncements In February 1997, the
Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share"
(SFAS 128), which specifies the computation, presentation and
disclosure requirements for earnings per share. SFAS 128
supersedes Accounting Principles Board Opinion No. 15 and is
effective for financial statements issued for periods ending
after December 15, 1997. SFAS 128 requires restatement of all
prior-period earnings per share data presented after the
effective date. SFAS 128 will not have a material impact on the
Company's financial position, results of operations or cash
flows.
In June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" (SFAS 130). SFAS 130 establishes
standards for reporting and display of comprehensive income and
its components in a full set of general-purpose financial
statements. Comprehensive income is defined as "the change in
equity of a business enterprise during a period from
transactions and other events and circumstances from nonowner
sources. It includes all changes in equity during a period
except those resulting from investments by owners and
distributions to owners." SFAS 130 is effective for fiscal
years beginning after December 15, 1997, and reclassification of
financial statements for earlier periods provided for
comparative purposes is required. SFAS 130 is not expected to
have a material impact on the Company's financial position,
results of operations or cash flows.
<PAGE>
In June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related
Information" (SFAS 131). SFAS 131 establishes standards for the
way that public business enterprises report information about
operating segments in annual financial statements and requires
that those enterprises report selected information about
operating segments in interim financial reports issued to
shareholders. SFAS 131 generally supersedes Statement of
Financial Accounting Standards No. 14, "Financial Reporting for
Segments of a Business Enterprise." Under SFAS 131, operating
segments are components of an enterprise about which separate
financial information is available that is evaluated regularly
by the chief operating decision maker in deciding how to
allocate resources and in assessing performance. Generally,
financial information is required to be reported on the basis
that it is used internally. SFAS 131 is effective for financial
statements for periods beginning after December 15, 1997, and
restatement of comparative information for earlier years is
required. However, SFAS 131 is not required to be applied to
interim financial statements in the initial year of application.
SFAS 131 will not have a material impact on the Company's
financial position, results of operations or cash flows.
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 21 E of the Securities Exchange 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 industry in which
the Company competes is characterized by extreme rapid changes
in technology and frequent new product introductions. The
Company believes that its long-term growth will depend largely
on its ability to continue to enhance existing products and to
introduce new products and features that meet the continually
changing requirements of customers, as well as timely capacity
expansions. While the Company has invested heavily in new
products, new processes and new capacities, there can be no
assurance that it can continue to introduce new products, new
processes and new capacities on a timely basis or that certain
of its products, processes and capacities will not be rendered
noncompetitive or obsolete by its competitors.
Results of Operations
Net Sales: Net sales for the second quarter ended September 30,
1997 increased 5% to $13,613,000 from $12,920,000 of the same
quarter last year. Six months net sales of $25,925,000
increased 2% from the same period last year of $25,381,000.
Continued strength in our customers' markets contributed to this
increase in sales. During the six months ended September 30,
1997, approximately 52% of Supertex's shipments were to
international customers.
Gross Margin: Gross margin for the second quarter and six months
ended September 30, 1997 were 45% compared with 49% for the same
quarter and six months period of the prior year. The decrease in
gross margin is a result of the change in product mix toward less
mature products which caused the Company to incur higher
engineering support costs. In order to meet its product demand,
the Company is in the
<PAGE>
process of completing its wafer fabrication facility upgrades,
and additional maintenance and support costs were incurred.
Research and Development: As a percentage of net sales, R&D
expenses increased to 10.5% and 10.8% of net sales for the
quarter and six months ending September 30, 1997, respectively.
This compares with R&D expense of 9.5% and 10% of net sales for
the quarter and six months period of last year. Dollar
expenditures also increased to $1,425,000 for the three months
($2,801,000 for six months) ended September 30, 1997 versus
$1,223,000 for three months ($2,534,000 for six months)
corresponding periods of last year. The Company expects that
research and development expenses will increase during the
remainder of this fiscal year.
Selling, General and Administrative: Selling, general and
administrative expenses for the second quarter and six months
ended September 30, 1997 and for the corresponding periods of the
prior fiscal period were 12% of net sales. Fixed costs remained
fairly constant from year to year in this category, with sales
commissions increases in line with increased sales.
Interest and Other Income: Interest and other income for the
second quarter of the current year was $371,000, a 2% increase
from $365,000 for the same period last year. For the six months
ended September 30, 1997, interest and other income also
increased 2% from the corresponding period of the prior year.
Provision for Income Taxes: The Company's effective tax rate for
the six months ended September 30, 1997 was 34%, an increase
from 32% for the same period of last fiscal year.
Liquidity and Capital Resources: On September 30, 1997, the
Company had $26,699,000 in cash, cash equivalents and short term
investments, compared with $23,633,000 on March 31, 1997. 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. Net cash used in investing activities as of second
quarter of fiscal year 1998 is $7,478,000 which consisted mainly
of purchases of short-term investments. Net cash used in the
repurchase of stocks was $208,000 which was offset by proceeds
from stock option exercises of $205,000.
The Company anticipates that available funds and cash expected
to be generated from operations will be sufficient to meet cash
and working capital requirements through the end of fiscal year
1998. The Company expects to spend approximately $6,827,000 for
capacity expansion during fiscal year 1998.
Recent Accounting Pronouncements: In February 1997, the
Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share"
(SFAS 128), which specifies the computation, presentation and
disclosure requirements for earnings per share. SFAS 128
supersedes Accounting Principles Board Opinion No. 15 and is
effective for financial statements issued for periods ending
after December 15, 1997. SFAS 128 requires restatement of all
prior-period earnings per share data presented after the
effective date. SFAS 128 will not have a material impact on the
Company's financial position, results of operations or cash
flows.
In June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" (SFAS 130). SFAS 130 establishes
standards
<PAGE>
for reporting and display of comprehensive income and its
components in a full set of general-purpose financial statements.
Comprehensive income is defined as "the change in equity of a
business enterprise during a period from transactions and other
events and circumstances from nonowner sources. It includes all
changes in equity during a period except those resulting from
investments by owners and distributions to owners." SFAS 130 is
effective for fiscal years beginning after December 15, 1997, and
reclassification of financial statements for earlier periods
provided for comparative purposes is required. SFAS 130 is not
expected to have a material impact on the Company's financial
position, results of operations or cash flows.
In June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related
Information" (SFAS 131). SFAS 131 establishes standards for the
way that public business enterprises report information about
operating segments in annual financial statements and requires
that those enterprises report selected information about
operating segments in interim financial reports issued to
shareholders. SFAS 131 generally supersedes Statement of
Financial Accounting Standards No. 14, "Financial Reporting for
Segments of a Business Enterprise." Under SFAS 131, operating
segments are components of an enterprise about which separate
financial information is available that is evaluated regularly
by the chief operating decision maker in deciding how to
allocate resources and in assessing performance. Generally,
financial information is required to be reported on the basis
that it is used internally. SFAS 131 is effective for financial
statements for periods beginning after December 15, 1997, and
restatement of comparative information for earlier years is
required. However, SFAS 131 is not required to be applied to
interim financial statements in the initial year of application.
SFAS 131 will not have a material impact on the Company's
financial position, results of operations or cash flows.
PART II - OTHER INFORMATION
Item 4. - Submission of Matters to a Vote of Security Holders
The Company's Annual Shareholders' Meeting was held on August 1,
1997 at 10:00 a.m., at which the following matters were acted
upon:
Votes Votes Withheld/ Broker
----- --------------- ------
Matter Acted Upon Votes For Against Abstentions Non-Votes
----------------- --------- ------- ----------- ---------
1. Election of Directors
Henry C. Pao 11,195,811 0 54,985 0
Yunni Pao 11,195,261 0 55,535 0
Benedict C. K. Choy 11,195,611 0 55,185 0
Frank C. Pao 11,185,411 0 65,385 0
Richard E. Siegel 11,190,311 0 60,485 0
2. Ratification of Coopers and Lybrand LLP as independent
accountants for the Company for fiscal year ending March 31,1998
11,239,171 5,900 5,725 0
<PAGE>
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: October 23, 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 Six Months Ended
September 30, September 30,
1997 1996 1997 1996
------ ------ ------ ------
<S> <C> <C> <C> <C>
PRIMARY:
Weighted Average Shares Outstanding 12,057 11,997 12,057 11,981
Common Stock Equivalents 357 502 343 516
------- ------- ------- -------
Total common and common equivalent shares 12,414 12,499 12,400 12,497
======= ======= ======= =======
Net income $ 2,302 $ 2,703 $ 4,279 $ 5,160
======= ======= ======= =======
Net income per share $ 0.19 $ 0.22 $ 0.35 $ 0.41
======= ======= ======= =======
FULLY DILUTED:
Weighted Average Shares Outstanding 12,057 11,997 12,057 11,981
Dilutive employee stock options 424 523 376 526
------- ------- ------- -------
Total common and common equivalent shares 12,481 12,520 12,433 12,507
======= ======= ======= =======
Net income $ 2,302 $ 2,703 $ 4,279 $ 5,160
======= ======= ======= =======
Net income per share $ 0.18 $ 0.22 $ 0.34 $ 0.41
======= ======= ======= =======
<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> 6-MOS
<FISCAL-YEAR-END> MAR-30-1998
<PERIOD-END> SEP-30-1997
<CASH> 16,167
<SECURITIES> 0
<RECEIVABLES> 11,269
<ALLOWANCES> 595
<INVENTORY> 9,578
<CURRENT-ASSETS> 49,352
<PP&E> 26,760
<DEPRECIATION> 14,686
<TOTAL-ASSETS> 61,426
<CURRENT-LIABILITIES> 8,664
<BONDS> 0
0
0
<COMMON> 20,507
<OTHER-SE> 32,255
<TOTAL-LIABILITY-AND-EQUITY> 61,426
<SALES> 25,925
<TOTAL-REVENUES> 25,925
<CGS> 14,147
<TOTAL-COSTS> 20,185
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 91
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 6,483
<INCOME-TAX> 2,204
<INCOME-CONTINUING> 4,279
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,279
<EPS-PRIMARY> .35
<EPS-DILUTED> .34
</TABLE>
