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, 1998
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 19, 1998, 12,0050,988 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 .............................. 9
<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,
------------ ------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $ 12,650 $ 13,613 $ 25,651 $ 25,925
-------- -------- -------- --------
Cost and expenses:
Cost of sales 6,508 7,468 13,415 14,147
Research and development 1,478 1,425 2,979 2,801
Selling, general and administrative 1,785 1,603 3,477 3,237
-------- -------- -------- --------
Total costs and expenses 9,771 10,496 19,871 20,185
-------- -------- -------- --------
Income from operations 2,879 3,117 5,780 5,740
Interest income 483 373 953 717
Other income (expense), net (13) (2) (42) 26
-------- -------- -------- --------
Income before provision for income taxes 3,349 3,488 6,691 6,483
Provision for income taxes 1,139 1,186 2,274 2,204
-------- -------- -------- --------
Net income $ 2,210 $ 2,302 $ 4,417 $ 4,279
======== ======== ======== ========
Net income per share:
Basic $ 0.18 $ 0.19 $ 0.37 $ 0.35
======== ======== ======== ========
Diluted $ 0.18 $ 0.19 $ 0.36 $ 0.35
======== ======== ======== ========
Shares used in per share computation
Basic 12,066 12,064 12,082 12,057
======== ======== ======== ========
Diluted 12,258 12,421 12,290 12,400
======== ======== ======== ========
<FN>
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
SUPERTEX, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
<CAPTION>
Sept. 30, 1998 Mar. 31, 1998
-------------- -------------
(in thousands)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 15,827 $ 24,556
Short term investments 20,989 6,956
Trade accounts receivable,
net of allowances of $847 and $700 8,104 9,784
Other receivables 334 322
Inventories 10,367 10,263
Deferred income taxes 2,181 2,181
Prepaid expenses 204 218
-------- --------
Total current assets 58,006 54,280
Property and equipment, net 11,692 12,349
-------- --------
TOTAL ASSETS $ 69,698 $ 66,629
======== ========
</TABLE>
<TABLE>
LIABILITIES
<CAPTION>
Current liabilities:
<S> <C> <C>
Trade accounts payable and accrued liabilities $ 5,947 $ 6,881
Income taxes payable 1,351 1,080
Deferred revenue on shipments to distributors 1,145 1,451
-------- --------
Total current liabilities 8,443 9,412
-------- --------
SHAREHOLDERS' EQUITY
Preferred stock, no par value --
10,000 shares authorized, none outstanding -- --
Common stock, no par value -- 30,000 shares
authorized; issued and outstanding
12,050 and 12,097 shares 20,689 20,710
Accumulated other comprehensive income 106 3
Retained earnings 40,460 36,504
-------- --------
Total shareholders' equity 61,255 57,217
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 69,698 $ 66,629
======== ========
<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, 1998 Sept. 30, 1997
-------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income $ 4,417 $ 4,279
-------- --------
Non-cash adjustments to net income:
Depreciation and amortization 1,668 1,120
Provision for doubtful accounts
and sales returns 895 679
Provision for excess and obsolete inventories (161) (30)
Changes in operating assets and liabilities:
Accounts and other receivables 773 (2,059)
Inventories 57 (298)
Prepaid expenses 14 48
Trade accounts payable and accrued expenses (934) (357)
Income taxes payable 271 719
Deferred revenue on shipments to distributors (306) 381
-------- -------- ------- -------
Total adjustments 2,277 203
-------- -------- ------- -------
Net cash provided by operating activities 6,694 4,482
-------- -------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (1,011) (1,443)
Purchases of short term investments (21,409) (14,188)
Proceeds from maturities of
short term investments 7,478 8,153
-------- -------- ------- -------
Net cash used in investing activities (14,942) (7,478)
-------- -------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Stock options exercised 82 205
Repurchase of stock (563) (208)
-------- -------- ------- -------
Net cash used in financing activities (481) (3)
-------- -------- ------- -------
NET DECREASE IN CASH AND CASH EQUIVALENTS (8,729) (2,999)
CASH AND CASH EQUIVALENTS:
Beginning of period 24,556 19,166
-------- --------
End of period $ 15,827 $ 16,167
======== ========
<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, 1998 and 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, 1998, 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.
Note 2
- ------
Inventories consisted of (in thousands):
Sept. 30, 1998 March 31, 1998
-------------- --------------
(unaudited)
Finished goods .............................. $ 3,509 $ 2,919
Work-in-process ............................. 6,130 6,200
Raw materials ............................... 728 1,144
------- -------
$10,367 $10,263
======= =======
Note 3
- ------
Net Income per Share Basic EPS is computed as net income divided by the
weighted average number of common shares outstanding for the period. Diluted
EPS reflects the potential dilution that could occur from common shares
issuable through stock options, warrants, and other convertible securities.
The following is a reconciliation of the numerator (net income) and the
denominator (number of shares) used in the basic and diluted EPS calculations.
For Three-months Ended, For Six-months Ended,
September 30, September 30,
1998 1997 1998 1997
---- ---- ---- ----
BASIC:
Weighted average shares
outstanding for the period 12,066 12,064 12,082 12,057
Net income $ 2,210 $ 2,302 $ 4,417 $ 4,279
-------- -------- -------- --------
Net income per share $ 0.18 $ 0.19 $ 0.37 $ 0.35
======== ======== ======== ========
DILUTED:
Weighted average shares
outstanding for the period 12,066 12,064 12,082 12,057
Common stock equivalents 192 357 208 343
------ ------ ------ ------
Total common and common
equivalent shares 12,258 12,421 12,290 12,400
------ ------ ------ ------
Net income $ 2,210 $ 2,302 $ 4,417 $ 4,279
------- ------- ------ ------
Net income per share $ 0.18 $ 0.19 $ 0.36 $ 0.35
======= ======= ======= =======
<PAGE>
Note 4
- ------
Comprehensive Income The Company has adopted the provisions of Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income",
effective April 1, 1998. The statement requires the disclosure of
comprehensive income and its components on the Statement of Income or in a full
set of general-purpose financial statements. Comprehensive income is defined
as net income plus revenues, expenses, gains and losses that, under generally
accepted accounting principles are excluded from net income. For the quarter
ended September 30, 1998 and 1997, comprehensive income approximated net
income.
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
future results could differ materially from those discussed here
and elsewhere in this report. Factors that could affect future
results include general economic conditions, both in the United
States and foreign markets, economic conditions specific to the
semiconductor industry, the Company's ability to introduce new
products, its ability to enhance existing products, its ability
to meet the continually changing requirements of its customers,
its ability to manufacture efficiently, its ability to control
costs, and its ability to maintain and enhance relationships
with its assembly and test subcontractors and independent
distributors and sales representatives.
Results of Operations
Net Sales: Net sales for the quarter ended September 30, 1998
were $12,650,000, a 7% decrease from $13,613,000 of the same
quarter last year. The sales decline was primarily due to price
concessions given to our foreign customers for large exchange rate
differentials and also due to slower sales in our digital integrated
circuit family. For the six months ended September 30, 1998, net sales
declined slightly by 1% to $25,651,000 from $25,925,000 when compared
with the same period of the prior year.
In this quarter as well as the six months period, approximately 56% of
the Company's net sales were derived from customers outside the United
States. All of the company's sales to international customers were
denominated in U.S. currencies.
Gross Margin: As a percent of sales, the Company's gross margin for
the quarter and the six month periods ended September 30, 1998 increased
to 49% and 48% respectively, compared with the 45% gross margin for the
same quarter and six month periods of last fiscal year, primarily due to
cost control measures taken.
Research and Development: Research and development expenses increased
to 12% of net sales for the quarter and six months ending September 30,
1998. This compares with R&D expenses of 11% of net sales for the same
quarter and six month periods of last year. Dollar expenditures increased
slightly to $1,478,000 and $2,979,000 for the quarter and six months ended
September 30, 1998 respectively, as compared with $1,425,000 and $2,801,000
for the same periods of the last fiscal year. The increase was related to
new product development and the Company expects that new product
development expenses will continue to increase during this fiscal year.
Selling, General and Administrative: Expenses for selling, general and
administrative were higher at $1,785,000, or 14% of net sales as compared
with $1,603,000, or 12%, in the same quarter of last fiscal year. For
the six months ended September 30, 1998, selling, general and
administrative expenses were at 14% of net sales compared to 13% for the
same period last year. The percentage increase in this category was due
to an increase in bad debts expense.
Interest Income: Interest income for this quarter were $483,000 compared
with $373,000 last year. Six months interest income was $953,000, a 33%
increase from $717,000 of the same period of last fiscal year. Higher
amount of funds available for investments contributed to this increase.
Provision for Income Taxes: The Company's effective tax rate for the
three- and six- months ended June 30, 1998 remained at 34%, same as last
fiscal year.
Overview: Total assets grew to $69,698,000 as of September 30, 1998, up
from $66,629,000 from quarter ending March 31, 1998. The increase is due
to favorable operating results for the quarter.
Liquidity and Capital Resources On September 30, 1998, the Company had
$36,816,000 in cash, cash equivalents, and short term investments, compared
with $31,512,000 on March 31, 1998. This increase is mostly due to positive
cash flow from operating activities of $6,694,000 consisting principally of
net income of $4,417,000. Net cash used in investing activities as of the
second quarter of fiscal year 1999 was $14,942,000 compared to $7,478,000
for the same period last year. Net cash used in short-term investment
activities totaled $13,931,000, and $1,011,000 was used in the purchase of
equipment. Net cash used in financing activities was $481,000. Repurchase
of stocks accounted for $563,000, which was offset by proceeds from stock
option exercises of $82. 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 1999.
Year 2000 Compliance Risks: The Company is aware of the issues associated
with the programming code in existing computer systems and software products
as the millennium (year 2000) approaches. The "year 2000" problem is
pervasive and complex, as virtually every computer operation will be
affected in the same way by the rollover of the two digit year value to 00.
The issue is whether computer systems will properly recognize date-sensitive
information when the year changes to 2000. Systems that do not properly
recognize such information could generate erroneous data or cause a system
to fail. As a result, many companies' software, computer systems and other
equipment may need to be upgraded or replaced in order to comply with such
"Year 2000" requirements.
The Company is utilizing both internal and external resources to identify,
correct or reprogram, and test the systems for year 2000 compliance. It has
initiated its Year 2000 compliance program and has completed the process of
identifying the programs and systems that could be affected by the Year 2000
issue. The Company has also developed an implementation plan to address the
potential exposures related to the impact of the millennium. This plan
includes modification or conversion of certain existing systems with new
systems in order to comply with such "Year 2000" requirements. It is
expected that the evaluation, remediation, and testing of all necessary
modifications for compliance will be completed by December 31, 1999. The
financial impact of making the required systems changes cannot be known
precisely at this time while the total cost of Year 2000 systems assessments
and modifications will be funded through cash flows from operations. Based
upon its evaluation to date, the Company believes that the Year 2000 issue
will not have a material impact on the operations of the Company. However,
if such modifications and conversions are not made, or are not completed in
a timely fashion, the Year 2000 issue will have a material adverse effect
on the Company's operations, business, financial condition and operating
results.
The Company has relationships with, and is to varying degrees dependent upon,
a large number of third parties that provide information, goods and services
to the Company. If significant numbers of these third parties experience
failures in their systems or equipment due to Year 2000 non-compliance,
it could materially adversely affect the Company's ability to process
transactions, manufacture products, or engage in similar normal business
activities. While some of these risks are outside the control of the
Company, the Company has initiated formal communications with all its
primary vendors and service providers to determine if plans are being
developed or are already in place to address processing of transactions
in the year 2000. Meanwhile, the Company's net sales could be materially
adversely affected if the Company's customers or potential customers
reallocate spending from the Company's products to their efforts to resolve
the Year 2000 issue.
<PAGE>
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 7, 1998
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 10,824,023 0 53,632 0
Yunni Pao 10,823,023 0 54,632 0
Benedict C. K. Choy 10,824,023 0 53,632 0
Frank C. Pao 10,823,023 0 54,632 0
Richard E. Siegel 10,823,023 0 54,632 0
2. Ratification of PricewaterhouseCoopers LLP as independent
accountants for the Company for fiscal year ending March 31,1999.
10,855,294 8,015 14,346 0
<PAGE>
Item 6. - Exhibits and Reports on Form 8-K
(a) Exhibits
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 29, 1998
By: /s/ Henry C. Pao
---------------------------
Dr. Henry C. Pao, President
(Principal Executive and
Financial Officer)
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-30-1999
<PERIOD-END> SEP-30-1998
<CASH> 15,827
<SECURITIES> 20,989
<RECEIVABLES> 8,438
<ALLOWANCES> 847
<INVENTORY> 10,367
<CURRENT-ASSETS> 58,006
<PP&E> 27,646
<DEPRECIATION> 15,954
<TOTAL-ASSETS> 69,698
<CURRENT-LIABILITIES> 5,947
<BONDS> 0
0
0
<COMMON> 20,795
<OTHER-SE> 40,460
<TOTAL-LIABILITY-AND-EQUITY> 69,698
<SALES> 25,651
<TOTAL-REVENUES> 25,651
<CGS> 13,415
<TOTAL-COSTS> 19,871
<OTHER-EXPENSES> 29
<LOSS-PROVISION> 192
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 6,691
<INCOME-TAX> 2,274
<INCOME-CONTINUING> 4,417
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,417
<EPS-PRIMARY> .37
<EPS-DILUTED> .36
</TABLE>
