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, 2000
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 November 8, 2000, 12,381,971 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
Condensed Consolidated Statements of Income...............3
Condensed Consolidated Balance Sheets.....................4
Condensed Consolidated Statements of Cash Flows...........5
Notes to Condensed 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.....................................................9
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
SUPERTEX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(in thousands, except per share amounts)
<CAPTION>
Three-months Ended, Six-Months Ended,
September 30, September 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Net sales $ 22,512 $ 16,737 $ 44,815 $ 33,034
Cost and expenses:
Cost of sales 13,018 10,725 26,407 21,466
Research and development 2,512 1,724 4,942 4,560
Selling, general and administrative 2,920 1,609 5,200 3,101
------ ------ ------ ------
Total costs and expenses 18,450 14,058 36,549 29,127
------ ------ ------ ------
Income from operations 4,062 2,679 8,266 3,907
Interest income 595 360 1,114 775
Other income (expense), net 651 (76) 623 (124)
------ ------ ------ ------
Income before provision for
income taxes 5,308 2,963 10,003 4,558
Provision for income taxes 1,805 978 3,401 1,504
------ ------ ------ ------
Net income $ 3,503 $ 1,985 $ 6,602 $ 3,054
====== ====== ====== ======
Net income per share:
Basic $ 0.28 $ 0.16 $ 0.54 $ 0.25
Diluted $ 0.27 $ 0.16 $ 0.50 $ 0.25
Shares used in per share computation:
Basic 12,342 12,109 12,309 12,096
Diluted 13,167 12,474 13,116 12,343
<FN>
See accompanying Notes to Unaudited Condensed Consolidated Financial
Statements.
</TABLE>
<PAGE>
<TABLE>
SUPERTEX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
<CAPTION>
September 30, 2000 March 31, 2000
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 40,374 $ 22,584
Short-term investments -- 11,592
Trade accounts receivable,
net of allowance $1,537 and $1,366 17,762 14,428
Other receivables 259 315
Inventories 14,622 15,083
Deferred income taxes 2,862 2,862
Prepaid expenses 1,367 440
------ ------
Total current assets 77,246 67,304
Property, plant and equipment, net 16,411 14,890
Long term investments 2,402 1,402
Intangible assets and other assets, net 684 1,157
Deferred income taxes 1,870 1,870
------ ------
TOTAL ASSETS $ 98,613 $ 86,623
====== ======
LIABILITIES
Current liabilities:
Trade accounts payable $ 9,514 $ 8,395
Accrued salaries, wages and
employee benefits 5,093 4,495
Income taxes payable 2,272 353
Other accrued liabilities 729 276
Deferred license revenue 437 --
Deferred revenue on shipments to
distributors 769 835
------ ------
Total current liabilities 18,814 14,354
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 12,370 and 12,132 shares 24,095 23,167
Retained earnings 55,704 49,102
------ ------
Total shareholders' equity 79,799 72,269
------ ------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 98,613 $ 86,623
====== ======
<FN>
See accompanying Notes to Unaudited Condensed Consolidated Financial
Statements.
</TABLE>
<PAGE>
<TABLE>
SUPERTEX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
<CAPTION>
Six Months Ended
September 30, 2000 September 30, 1999
------------------ ------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 6,602 $ 3,054
------ ------
Non-cash adjustments to net income:
Depreciation and amortization 2,531 2,931
Provision for doubtful accounts and
sales returns 1,211 1,242
Provision for excess and obsolete
inventories 277 526
Gain on disposal of assets (628) --
Changes in operating assets and liabilities:
Accounts receivable (4,545) (3,578)
Inventories 184 (2,357)
Prepaid expenses and other assets (880) (151)
Trade accounts payable and accrued expenses 2,170 (56)
Income taxes payable 1,919 1,191
Deferred license revenue 437 --
Deferred revenue on shipments to distributors (66) (154)
------ ------
Total adjustments 2,610 (406)
------ ------
Net cash provided by operating activities 9,212 2,648
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment (3,659) (938)
Proceeds from disposal of assets 717 --
Purchases of short term investments 28,228 (28,743)
Proceeds from maturities of short term
investments (16,636) 8,745
Purchases of long term investments (1,000) --
------ ------
Net cash used in investing activities 7,650 (20,936)
------ ------
CASH FLOWS FROM FINANCING ACTIVITIES
Stock options exercised 928 523
Repurchase of stock -- (407)
------ ------
Net cash used in financing activities 928 116
------ ------
NET DECREASE IN CASH AND CASH EQUIVALENTS 17,790 (18,172)
CASH AND CASH EQUIVALENTS:
Beginning of period 22,584 28,190
------ ------
End of period $ 40,374 $ 10,018
------ ------
<FN>
See accompanying Notes to Unaudited Condensed Consolidated Financial
Statements.
</TABLE>
<PAGE>
SUPERTEX, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1 - Basis of Presentation
In the opinion of management, the unaudited condensed consolidated financial
statements for the three and six months ended September 30, 2000 and 1999
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, 2000, 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. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the
financial statements as well as the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from those estimates,
and such differences may be material to the financial statements.
Note 2 - Inventories
<TABLE>
<CAPTION>
Inventories consisted of (in thousands):
September 30, 2000 March 31, 2000
<S> <C> <C>
Raw materials.......................... $ 1,852 $ 1,088
Work-in-process........................ 9,965 11,652
Finished goods......................... 2,805 2,343
--------- --------
$ 14,622 $ 15,083
</TABLE>
Note 3 - Net Income per Share
Basic earnings per share ("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. A reconciliation of the numerator and denominator of basic and
diluted earnings per share is provided as follows (in thousands, except per
share amounts).
<TABLE>
<CAPTION>
Three-months Ended, Six-months Ended,
September 30, September 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
BASIC:
Net income $ 3,503 $ 1,985 $ 6,602 $ 3,054
======== ======= ======== =======
Weighted average shares outstanding
for the period 12,342 12,109 12,309 12,096
-------- ------- -------- -------
Net income per share $ 0.28 $ 0.16 $ 0.54 $ 0.25
======== ======= ======== =======
DILUTED:
Net income $ 3,503 $ 1,985 $ 6,602 $ 3,054
======== ======= ======== =======
Weighted average shares
outstanding for the period 12,342 12,109 12,309 12,096
Dilutive effect of stock options 825 365 807 247
Total 13,167 12,474 13,116 12,343
-------- ------- ------- -------
Net income per share $ 0.27 $ 0.16 $ 0.50 $ 0.25
======== ======= ======== =======
</TABLE>
<PAGE>
Note 4 - Long Term Investments
On June 21, 2000, the Company purchased 1,059,322 shares of Series A
Preferred Stock of LightConnect, an optical MEMS startup, for $1,000,000.
The Company owns 12% of LightConnect's outstanding Series A Preferred Stock
shares. The Company has recorded its investment in LightConnect as a long-term
investment using the cost method of accounting.
Note 5 - Recent Accounting Pronouncements
In June 1998, the FASB issued Statement of Financial Accounting Standards No.
133, ("SFAS No. 133"), "Accounting for Derivative Instruments and Hedging
Activities." SFAS No. 133 establishes new standards of accounting and
reporting for derivative instruments and hedging activities. SFAS No. 133
requires that all derivatives be recognized at fair value in the statement of
financial position and that the corresponding gains or losses be reported
either in the statement of operations or as a component of comprehensive
income, depending on the type of hedging relationship that exists. SFAS No.
133 is effective for fiscal years beginning after June 15, 2000. Earlier
application is allowed as of the beginning of any quarter beginning after
issuance. The Company does not anticipate that the adoption of SFAS 133 will
have a material impact on its financial position or results of operations.
In March 2000, The Financial Accounting Standards Board ("FASB") issued FIN
No. 44 "Accounting for Certain Transactions Involving Stock Compensation an
interpretation of APB Opinion No. 25". This interpretation has provisions
that are effective on staggered dates, some of which began after December 15,
1998 and others that become effective after June 30, 2000. The adoption of
this interpretation did not have a material impact on the company's financial
position or results of operations.
In December, 1999, SAB 101 was issued which summarizes the SEC's views in
applying generally accepted accounting principles to revenue recognition in
financial statements. In June, 2000 SAB 101B was issued to delay the
implementation of SAB 101 until the fourth quarter of fiscal year 2001. The
Company is currently evaluating the impact SAB 101 will have on its financial
position and results of operations.
PART I - FINANCIAL INFORMATION
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Cautionary Statement Regarding Forward Looking Statements This 10-Q includes
forward-looking statements. These forward-looking statements are not
historical facts, and are based on current expectations, estimates, and
projections about our industry, our beliefs, our assumptions, and our goals
and objectives. Words such as "anticipates", "expects", "intends", "plans",
"believes", "seeks", and "estimates ", and variations of these words and
similar expressions, are intended to identify forward-looking statements.
Examples of such a statement in this 10-Q are that the Company anticipates
available funds and expected cash generated from operations to be sufficient
to meet cash and working capital requirements through at least the next
twelve months, that we expect the development efforts to transfer our core
products to the 6" fab will decrease significantly in the next quarter, that
we expect to increase in research and development expenses for new products,
and that we expect our European sales may be negatively affected by
the recent gain in US dollars against the Euro. These statements are only
predictions, are not guarantees of future performance, and are subject to
risks, uncertainties, and other factors, some of which are beyond our control
and are difficult to predict, and could cause actual results to differ
materially form those expressed or forecasted in the forward-looking
statements. These risks and
<PAGE>
uncertainties include those described in "Risk Factors" under Item 7,
"Management's' Discussion and Analysis of Financial Condition and Results of
Operation" in our Annual Report of Form 10-K for the fiscal year ended March
31, 2000. Except as required by law, we undertake no obligation to update
any forward-looking statement, whether as a result of new information,
future events, or otherwise.
Results of Operations
Net Sales: Net sales for the quarter ended September 30, 2000 were $22,512,000,
a 35% increase compared to $16,737,000 of the same quarter last year. Net
Sales for the six month ended September 30, 2000 were $44,815,000, a 36%
increase compared to $33,034,000 of the same periods of the prior fiscal year.
The increase in sales for the quarter and year-to-date period are primarily
due to increased sales volume in the core products and foundry products. Our
core business consists of proprietary products for the telecommunication,
imaging and medical electronics industries.
Approximately 41% of the Company's net sales for this quarter and 40% for the
six month period were derived from international customers as compared to 33%
and 34% for the respective periods in the prior year. The increase in
percentage of international sales is primarily due to the increase in our
non-foundry core business. We expect that our European sales may be
negatively affected by the recent gain in US dollars against the Euro.
Gross Profit: As a percent of sales, the Company's gross margin for the three
and six month periods ended September 30, 2000 were 42% and 41% respectively,
compared with 36% and 35% for the same periods of the last fiscal year. The
improvement in gross margin is primarily due to higher production volume in
our fab operation which resulted in economies of scale.
Research and Development: Research and development expenses increased 46% to
$2,512,000 for the quarter ended September 30, 2000 as compared to $1,724,000
for the same quarter of the prior year. For the six months ended September
30, 2000, research and development increased 8% to $4,942,000 from $4,560,000
for the same period last year. The increase in R&D expenses for this quarter
and six month periods were due to R&D software expenses and development
efforts to transfer our core products from 4" to 6" fab. We expect that the
developement effort to transfer our core products to the 6" fab will
decrease significantly in the next quarter. However, some of the reduction
wil be offset by an increase in research and development expenses for new
products.
Selling, General and Administrative Expenses for selling, general and
administrative were $2,920,000 or 13% of net sales for the quarter ended
September 30, 2000 as compared with $1,609,000 or 10% of net sales in the
same quarter of the prior year. For the six months ended September 30, 2000,
selling, general and administrative expenses were $5,200,000 or 12% of net
sales compared to $3,101,000 or 9% for the same period last year. The dollar
increases in selling, general and administrative expenses for the three and
six month periods were primarily due to increase in recruiting expenses,
salary adjustments, data processing software expenses and bad debts reserves.
Interest and Other Income Interest and other income, net for the three and
six month periods ended September 30, 2000 was $1,246,000 and $1,738,000,
respectively. For the three and six month periods ended September 30, 2000,
interest was $595,000 and $1,114,000, respectively. Other income was
primarily gain on disposal of equipment of $628,000.
Provision for Income Taxes The Company's effective tax rate for the three and
six months ending September 30, 2000 was 34% compared to 33% for the same
periods of the last fiscal year.
Overview Total assets increased to $98,613,000 as of September 30, 2000, up
from $86,623,000 at the end of last fiscal year ended March 31, 2000. The
increase is due to favorable operating results for the first half of the
fiscal year.
Liquidity and Capital Resources On September 30, 2000, the Company had
$40,374,000 in cash, cash equivalents, and short-term investments, compared
with $34,176,000 on March 31, 2000. Cash flow from operating activities was
$9,212,000 consisting principally of net income of $6,602,000. During the
<PAGE>
six-month period, $3,659,000 was used to purchase property and equipment and
$1,000,000 was used for the purchase of Series A Preferred stock of
LightConnect, an optical MEMS startup. Cash was also generated from stock
option exercises of $928,000. The Company anticipates that available funds
and expected cash to be generated from operations will be sufficient to meet
cash and working capital requirements through at least the next twelve months.
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
No report on Form 8-K was filed during the quarter for which
this Form 10-Q is filed.
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: November 14, 2000
By: /s/ Henry C. Pao
-------------------
Henry C. Pao, Ph.D.
President
(Principal Executive and Financial Officer)
<PAGE>
