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 June 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 July 14, 1998, 12,101,688 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,
------------------
June 30,
--------
1998 1997
---- ----
<C> <C>
Net sales $ 13,001 $ 12,313
------- -------
Cost and expenses:
Cost of sales 6,907 6,680
Research and development 1,501 1,376
Selling, general and administrative 1,692 1,634
------- -------
Total costs and expenses 10,100 9,690
------- -------
Income from operations 2,901 2,623
Interest income 470 343
Other income(expense), net (29) 28
------- -------
Income before provision for income taxes 3,342 2,994
Provision for income taxes 1,135 1,018
------- -------
Net income $ 2,207 $ 1,976
------- -------
Net income per share:
Basic $ 0.18 $ 0.16
======= =======
Diluted $ 0.18 $ 0.16
======= =======
Shares used in per share computation:
Basic 12,098 12,050
======= =======
Diluted 12,322 12,379
======= =======
<FN>
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
SUPERTEX, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
<CAPTION>
Jun. 30, 1998 Mar. 31, 1998
------------- -------------
(in thousands)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 22,498 $ 24,556
Short term investments 12,356 6,956
Trade accounts receivable,
net of allowances of $706 and $700 8,798 9,784
Other receivables 199 322
Inventories 10,591 10,263
Deferred income taxes 2,181 2,181
Prepaid expenses 205 218
------- -------
Total current assets 56,828 54,280
Property, plant and equipment, net 12,309 12,349
------- -------
TOTAL ASSETS $ 69,137 $ 66,629
======== ========
</TABLE>
<TABLE>
LIABILITIES
<CAPTION>
Current liabilities:
<S> <C> <C>
Trade accounts payable $ 2,922 $ 3,436
Accrued salaries, wages and employee benefits 2,974 3,086
Income taxes payable 2,134 1,080
Other accrued liabilities 314 359
Deferred revenue on shipments to distributors 1,286 1,451
------- -------
Total current liabilities 9,630 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
12,102 and 12,097 shares 20,800 20,713
Retained earnings 38,707 36,504
------ ------
Total shareholders' equity 59,507 57,217
------ ------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 69,137 $ 66,629
======= =======
<FN>
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
SUPERTEX, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
<CAPTION>
Three Months Ended,
------------------
Jun. 30, 1998 Jun. 30, 1997
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income $ 2,207 $ 1,976
-------- --------
Non-cash adjustments to net income:
Depreciation and amortization 772 527
Provision for doubtful accounts
and sales returns 254 459
Provision for excess and obsolete inventories (161) (71)
Changes in operating assets and liabilities:
Accounts and other receivables 855 (1,068)
Inventories (167) (139)
Prepaid expenses 13 (40)
Trade accounts payable and accrued expenses (671) (210)
Income taxes payable 1,054 928
Deferred revenue on shipments to distributors (165) 172
----- -----
Total adjustments 1,784 558
----- -----
Net cash provided by operating activities 3,991 2,534
----- -----
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment (732) (1,026)
Purchases of short term investments (11,400) (4,147)
Proceeds from maturities of
short term investments 6,000 4,000
Other 58 0
------- -------
Net cash used in investing activities (6,074) (1,173)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Stock options exercised 25 19
------- -------
Net cash provided by financing activities 25 19
------- -------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (2,058) 1,380
CASH AND CASH EQUIVALENTS:
Beginning of period 24,556 19,166
-------- --------
End of period $ 22,498 $ 20,546
======== ========
<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 three months ended June 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):
June 30, 1998 March 31, 1998
------------- --------------
(unaudited)
Finished goods......................... $ 3,836 $ 2,919
Work-in-process........................ 5,797 6,200
Raw materials.......................... 958 1,144
------- -------
$ 10,591 $ 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,
June 30,
1998 1997
---- ----
BASIC:
Weighted average shares
outstanding for the period 12,098 12,050
Net income $ 2,207 $ 1,976
-------- --------
Net income per share $ 0.18 $ 0.16
======== ========
DILUTED:
Weighted average shares
outstanding for the period 12,098 12,050
Common stock equivalents 224 329
------ ------
Total common and common
equivalent shares 12,322 12,379
------ ------
Net income $ 2,207 $ 1,976
------- -------
Net income per share $ 0.18 $ 0.16
======= =======
<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 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 June 30, 1998 were
$13,001,000, a 6% increase from $12,313,000 of the same quarter
last year. The Company's sales growth has been generated
principally by new product introductions in the Company's
targeted markets of medical ultrasound imaging,
telecommunications, and flat panel displays.
In this quarter, 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. There was no currency exchange exposure,
however as the US dollar continues to be strong against other
currencies, many international customers requested and received
modest price concessions.
Gross Profit. The Company's gross profit for the quarter was
$6,094,000, compared with $5,633,000 in the same quarter of
last year. As a percent of net sales, gross margin for the
quarter was 47%, a 1% increase from 46% when compared with the
same quarter last fiscal year, primarily due to cost control
measures taken.
Research and Development. Research and development expenses
increased 9% to $1,501,000 for the quarter ended June 30, 1998
as compared with $1,376,000 for the same quarter of last year.
As a percent of sales, research and development expenditures
increased slightly to 12% compared to 11% for the same quarter
last year. The increase was related to new product development
and the Company expects that new product development
expenses will increase during this fiscal year.
Selling, General and Administrative. Expenses for selling,
general and administrative were flat at $1,692,000, or 13%
of net sales, compared with $1,634,000, also 13%, in the
same quarter of last fiscal year. The dollar increase in
this category was due to a slight increase in payroll expenses
as a result of headcount increase in the sales department.
Interest and Other Income. Interest and other income for this
period were $441,000 compared with $371,000 last year. Higher
amount of funds available for investments contributed to this
increase in interest and other income.
Provision for Income Taxes. The Company's effective tax rate
for the three months ended June 30, 1998 remained at 34%
compared to the same period last year.
Overview. Total assets grew to $69,137,000 as of June 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 June 30, 1998, the Company
had $34,854,000 in cash, cash equivalents, and short term
investments, compared with $31,512,000 on March 31, 1998.
This
<PAGE>
increase is mostly due to positive cash flow from
operating activities of $3,991,000 consisting principally of
net income of $2,207,000 plus depreciation of $772,000,
provision for doubtful accounts and sales returns of
$254,000, decrease in receivables and prepaid expenses of
$868,000 and an increase in liability accounts of $218,000,
and partially offset by an increase in inventories of $167,000
and an increase in the provision for obsolescence of $161,000.
Net cash used in investing activities in the first quarter of
1998 was $6,074,000 which consisted primarily of purchases of
short term investments and purchases of equipment.
Net cash provided by financing activities was $25,000 which
consists of proceeds from exercises of stock options.
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 is anticipated that all reprogramming
efforts will be completed by December 31, 1999, including and
allowing adequate time for testing. This process includes
getting confirmations from the Company's primary vendors that
plans are being developed or are already in place to address
processing of transactions in the year 2000. However, there
can be no assurance that the systems of other companies on which
the Company's systems rely will also be converted in a timely
manner or that any such failure to convert by another company
would not have an adverse effect on the Company's systems.
Additionally, the Company's net sales could be 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. Finally, the Company
utilizes third-party equipment and software that may not be
Year 2000 compliant. Although preliminary estimates indicate
that the Year 2000 issue will not have a material impact on the
Company, there can be no assurance that the Year 2000 issue,
due to the above factors or other unforeseen consequences,
will not have a material adverse effect on the Company's
business, financial condition and operating results.
PART II - OTHER INFORMATION
Item 6. - Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule
(b) Reports on Form 8-K.
None.
<PAGE>
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: July 27, 1998
By: /s/ Henry C. Pao
---------------------------
Dr. Henry C. Pao, President
(Principal Executive and
Financial Officer)
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
Supertex, Inc.
Financial Data Schedule
For Three Months ended June 30, 1998
(in thousands)
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> JUN-30-1998
<CASH> 22,498
<SECURITIES> 12,356
<RECEIVABLES> 9,504
<ALLOWANCES> 706
<INVENTORY> 10,591
<CURRENT-ASSETS> 56,828
<PP&E> 27,369
<DEPRECIATION> 15,060
<TOTAL-ASSETS> 69,137
<CURRENT-LIABILITIES> 9,630
<BONDS> 0
0
0
<COMMON> 20,800
<OTHER-SE> 38,707
<TOTAL-LIABILITY-AND-EQUITY> 69,137
<SALES> 13,001
<TOTAL-REVENUES> 13,001
<CGS> 6,907
<TOTAL-COSTS> 10,100
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 35
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,342
<INCOME-TAX> 1,135
<INCOME-CONTINUING> 2,207
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,207
<EPS-PRIMARY> .18
<EPS-DILUTED> .18
</TABLE>
