<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
[x] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended September 30, 1999
or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from ________________ to ________________.
Commission file number 0-25560.
CELERITEK, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 77-0057484
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3236 Scott Blvd., Santa Clara, CA 95054
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
(408) 986-5060
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
NOT APPLICABLE
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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: [X] Yes [ ] No
Applicable only to corporate issuers:
Indicate the number of shares outstanding of each of the issuer's classes of
stock, as of the latest practicable date.
Common Stock, No Par Value: 7,458,751 shares as of October 24, 1999
<PAGE> 2
CELERITEK, INC.
<TABLE>
<CAPTION>
PART I: FINANCIAL INFORMATION PAGE
----
<S> <C>
Item 1: Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets: 1
September 30, 1999 and March 31, 1999
Condensed Consolidated Statements of Operations: 2
Three and six months ended September 30, 1999 and 1998
Condensed Consolidated Statements of Cash Flows: 3
Three and six months ended September 30, 1999 and 1998
Notes to Condensed Consolidated Financial Statements 4
Item 2: Management's Discussion and Analysis of Financial Condition
and Results of Operations 6 - 12
Item 3: Quantitative and Qualitative Disclosures 12
about Market Risk.
PART II: OTHER INFORMATION
Item 4: Submission of Matters to a Vote of Security Holders 13
Item 6: Exhibits and Reports on Form 8-K 14
SIGNATURES 15
</TABLE>
<PAGE> 3
CELERITEK, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
September 30, March 31,
1999 1999
------------- ---------
(Unaudited) (Note)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,526 $ 1,729
Short-term investments 6,380 5,904
Accounts receivable, net 10,127 10,615
Inventories 11,263 11,376
Prepaid expenses, other current assets,
and Deferred tax assets 1,223 3,241
------- -------
Total current assets 31,519 32,865
Property and equipment, net 6,013 7,201
Other assets 146 144
------- -------
Total assets $37,678 $40,210
======= =======
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities:
Line of credit $ 1,500 $ --
Current portion of long-term debt 778 1,611
Current obligations under capital leases 162 162
Accounts payable 3,723 4,217
Accrued payroll 1,602 1,400
Accrued liabilities 2,374 2,215
------- -------
Total current liabilities 10,139 9,605
Long-term debt, less current portion 500 --
Non-current obligations under capital leases 185 257
Shareholders' equity 26,854 30,348
------- -------
Total liabilities and shareholders' equity $37,678 $40,210
======= =======
</TABLE>
Note: The balance sheet at March 31, 1999 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
See accompanying notes.
Page 1
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CELERITEK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
------------------------- -------------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $ 10,731 $ 10,829 $ 20,919 $ 21,025
Cost of goods sold 8,381 8,189 17,776 19,655
-------- -------- -------- --------
Gross profit 2,350 2,640 3,143 1,370
Operating expenses:
Research and development 1,444 1,357 2,883 3,218
Selling, general and administrative 1,942 2,036 4,169 4,538
-------- -------- -------- --------
Total operating expenses 3,386 3,393 7,052 7,756
Loss from operations (1,036) (753) (3,909) (6,386)
Interest income (expense) and other, net 78 (31) 118 (37)
-------- -------- -------- --------
Loss before income tax (958) (784) (3,791) (6,423)
Benefit for income taxes 0 (298) 0 (2,441)
-------- -------- -------- --------
Net Loss $ (958) $ (486) $ (3,791) $ (3,982)
======== ======== ======== ========
Basic and diluted loss per share $ (0.13) $ (0.07) $ (0.51) $ (0.55)
======== ======== ======== ========
Weighted average common shares outstanding 7,427 7,212 7,404 7,211
</TABLE>
See accompanying notes.
Page 2
<PAGE> 5
CELERITEK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
-----------------------------
September 30, September 30,
1999 1998
------------- -------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $(3,791) $(3,982)
Adjustment to reconcile net income (loss) to
net cash used in operating activities:
Depreciation, amortization and other 1,423 1,549
Changes in operating assets and liabilities 2,486 (1,313)
------- -------
Net cash used in operating activities 118 (3,746)
INVESTING ACTIVITIES
Purchase of property and equipment (235) (1,351)
Decrease (increase) in other assets (2) (33)
Purchases of short-term investments (4,302) (1,000)
Sales of short-term investments 3,826 4,500
------- -------
Net cash used in investing activities (713) 2,116
FINANCING ACTIVITIES
Borrowings under lines of credit 1,500 --
Payments on long-term debt (333) (138)
Borrowings on long-term debt -- 1,000
Payments on obligations under capital leases (72) (39)
Proceeds from issuance of common stock 297 498
------- -------
Net cash provided by financing activities 1,392 1,321
Increase (decrease) in cash and cash equivalents 797 (309)
Cash and cash equivalents at beginning of period 1,729 4,022
------- -------
Cash and cash equivalents at end of period $ 2,526 $ 3,713
======= =======
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Income taxes -- $ 975
Interest 76 175
</TABLE>
See accompanying notes.
Page 3
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CELERITEK, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 1999
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions
to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
included.
Operating results for the three months ended September 30, 1999 are not
necessarily indicative of the results that may be expected for the
fiscal year ended March 31, 2000. This financial information should be
read in conjunction with the consolidated financial statements and notes
thereto included in the Company's annual report on Form 10-K for the
year ended March 31, 1999.
2. INVENTORIES
The components of inventory consist of the following:
<TABLE>
<CAPTION>
September 30, March 31,
1999 1999
------------- ---------
(In Thousands)
<S> <C> <C>
Raw materials ....... $ 2,755 $ 3,054
Work-in-process ..... 8,508 8,322
------- -------
$11,263 $11,376
======= =======
</TABLE>
3. LINES OF CREDIT
The Company has renewed its Master Loan Agreement (the "Loan
Agreement"), as amended, which will expire October 31, 2000. Under the
agreement, the Company has available a line of credit for up to
$6,000,000 subject to a borrowing base test of the Company's accounts
receivable. The Company drew $1,500,000 during the second quarter of
fiscal 2000 against the previous line of credit. This outstanding
balance was transferred to the Renewed Loan Agreement. The Loan
Agreement has an interest rate of the Bank's Reference Rate (8.25% as of
November 1, 1999) plus .50%. Additionally, the Company has a $400,000
Letter of Credit open, leaving a balance of $4,100,000 available on the
Line of Credit as of September 30, 1999. At
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any point in time the Company's borrowing ability may be limited by the
amount of eligible accounts receivable.
Under the Loan Agreement a second line of credit was converted to two
term loans of thirty-six months each in March and September 1998. The
term loans bear interest at the bank's reference rate plus 0.5%. As of
September 30, 1999, the Company had borrowings totaling $1,278,000
outstanding against the term loans. Such credit facilities are secured
by the Company's assets. As part of the Loan Agreement certain covenants
were established. The covenants pertain to the maintenance of certain
financial ratios, liquidity levels, a minimum tangible net worth and
limits on the payment of dividends. The Company was in compliance with
the covenants as of September 30, 1999.
4. EARNINGS PER SHARE
In accordance with the Statement of Financial Accounting Standards No.
128, "Earnings per Share," basic earnings (loss) per common share are
computed using the weighted average common shares outstanding during the
period. Diluted earnings per common share incorporates the incremental
shares issuable upon the assumed exercise of stock options when
dilutive.
The following table sets forth the computation of basic and diluted
earnings (loss) per share (in thousands, except per share data):
<TABLE>
Three months ended
----------------------
30-Sep 30-Sep
------ ------
1999 1998
------ ------
<S> <C> <C>
BASIC
Net income (loss) .......................... ($958) ($486)
====== =======
Weighted common shares outstanding ......... 7,427 7,212
====== =======
Basic earnings (loss) per common share ..... $(0.13) $ (0.07)
====== =======
DILUTED
Net income ................................. $ (958) $ (486)
====== =======
Weighted common shares outstanding ......... 7,427 7,212
Dilutive effect of stock options ........... -- --
------ -------
Weighted common shares outstanding,
assuming dilution ........................ 7,427 7,212
====== =======
Diluted earnings per common share .......... $(0.13) $ (0.07)
====== =======
</TABLE>
Page 5
<PAGE> 8
5. COMPREHENSIVE INCOME
The Company had no Comprehensive Income items for the periods presented.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
This Quarterly Report on Form 10-Q contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. These forward-looking statements
represent the Company's expectations or beliefs concerning future events and
include statements, among others, regarding the length and timing of delays of
customer orders, achievement of designs, and the potential of the market sales
volume and sales to significant customers and the sufficiency of capital
resources. Actual results could differ materially from those projected in the
forward-looking statements as a result of a variety of factors, including those
set forth under "Management's Discussion and Analysis of Financial Condition and
Results of Operations," "Risks, Trends, and Uncertainties," and elsewhere in
this report.
RESULT OF OPERATIONS - SECOND QUARTER OF FISCAL 2000 COMPARED TO THE SECOND
QUARTER OF FISCAL 1999:
Total net sales of $10.7 million decreased 1% for the second quarter of
fiscal 2000 when compared to $10.8 million in total net sales for the second
quarter of fiscal 1999. Total net sales to commercial customers of $6.1 million
for the second quarter of fiscal 2000 represented an 11% increase from the prior
year due primarily to higher unit sales of semiconductor products. Semiconductor
sales increased 85% year over year. The microwave radio/satellite product line
had 37% lower revenues when compared to second quarter of fiscal 1999. The lower
net sales of radio/satellite products were primarily due to the late transfer
into production of several new products. Total net sales to defense customers
decreased 13% to $4.6 million for the second quarter of fiscal 2000 versus $5.3
million in the second quarter of fiscal 1999. The Company expects quarterly
revenues in the defense business to decline or have limited growth.
For the first six months of fiscal 2000 sales of $20.9 million were
basically flat when compared with $21.0 million for the same period in fiscal
1999. See "Risks, Trends, and Uncertainties Potential Fluctuations in Quarterly
Results."
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<PAGE> 9
The gross margin of the Company declined to 22% of revenues for the
second quarter of fiscal 2000 from 24% in the second quarter of fiscal 1999. The
decline in gross margin in comparison to the prior year was due to lower than
average manufacturing costs in the second quarter of fiscal 1999. In the second
quarter of fiscal 1999, the gross margin benefited from the sale of previously
written down product. Year-to-date gross margin increased to 15% of revenues
from 7% in the first half of fiscal 1999. During the first six months of fiscal
1999 the Company experienced a severe downturn in customer demand for
radio/satellite products which resulted in production cost variances and
inventory write-offs in the first quarter. See "Risks, Trends, and Uncertainties
- - Yields and the High Degree of Fixed Costs in the Manufacturing Operation."
Research and development expenses increased 6% to $1.44 million, or 14%
of net sales, in the second quarter of fiscal 2000 from $1.36 million in the
second quarter of fiscal 1999. For the six months ended September 30, 1999
research and development expenses decreased. However in the first quarter of
fiscal 1999, the Company made significant investments in its Northern Ireland
design center. Year to date, research and development expenses are 14% of
revenues. The Company expects the dollar level of investment in research and
development expenditure to increase. See "Risks, Trends, and Uncertainties -
Dependence on Key Personnel."
Selling, general and administrative expenses decreased to $1.9 million,
or 18% of net sales, in the second quarter of fiscal 2000 from $2.0 million, or
19% of net sales, in the second quarter of fiscal 1999. The dollar decrease was
primarily due to cost reduction activities of management and lower legal
expensed. For the six-month period of fiscal 2000, Selling, general and
administrative expenses of $4.2 million are down 8% when compared to the same
period of fiscal 1999.
Interest income (expense) and other, increased $109,000 for the second
quarter of fiscal 2000 when compared to the same period in fiscal 1999. Year to
date, the increase totals $155,000 versus fiscal 1999. These increases are
primarily due to the conversion of short-term financing of capital equipment to
operating leases and higher yielding short-term investments.
Due to the Company's overall loss position, a valuation allowance has
been established in an amount equal to the expected benefit derived by applying
the statutory rate to the net loss for the first and second quarters of fiscal
2000. In fiscal 1999 income tax benefits of $2.1 million and $.3 million were
recorded in the first and second quarters, respectively, to reflect income taxes
recoverable from prior years.
LIQUIDITY AND CAPITAL RESOURCES
The Company has funded its operations to date primarily through cash
flows from operations and sales of equity securities including the initial
public offering of common stock completed in December 1995 and January 1996,
which generated net proceeds of approximately $12.1 million.
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The Company has renewed its Master Loan Agreement (the "Loan
Agreement"), as amended, which will expire October 31, 2000. Under the
agreement, the Company has available a line of credit for up to $6,000,000
subject to a borrowing base test of the Company's accounts receivable. The
Company drew $1,500,000 during the second quarter of fiscal 2000 against the
previous line of credit. This outstanding balance was transferred to the renewed
Loan Agreement. The Loan Agreement has an interest rate of the Bank's Reference
Rate (8.25% as of November 1, 1999) plus .50%. Additionally, the Company has a
$400,000 Letter of Credit open, leaving a balance of $4,100,000 available on the
Line of Credit as of September 30, 1999. At any point in time the Company's
borrowing ability may be limited by the amount of eligible accounts receivable.
Under the Loan Agreement a second line of credit was converted to two term loans
of thirty-six months each in March and September 1998. The term loans bear
interest at the bank's reference rate plus 0.5%. As of September 30, 1999, the
Company had borrowings totaling $1,278,000 outstanding against the term loans.
Such credit facilities are secured by the Company's assets. As part of the loan
agreement certain covenants were established. The covenants pertain to the
maintenance of certain financial ratios, liquidity levels, a minimum tangible
net worth and limits on the payment of dividends. The Company was in compliance
with the covenants as of September 30, 1999. The Company's business, operating
results and financial condition would be materially adversely affected if the
loan agreement were terminated.
As of September 30 1999, the Company had $2.6 million of cash and cash
equivalents, $6.4 million of short-term investments and $21.4 million of working
capital. The Company believes that the current capital resources combined with
cash generated from operations and borrowings available both from its line of
credit and available equipment leasing sources should be sufficient to meet its
liquidity and capital expenditure requirements through the next twelve months.
Should the Company's ability to borrow against its credit line or its ability to
lease capital equipment be limited, the Company's business, operating results
and financial condition would be materially adversely affected.
IMPACT OF YEAR 2000
The following statements are a "Year 2000 readiness disclosure" within
the meaning of the Year 2000 Information and Readiness Disclosure Act.
Many currently installed computer systems and software products are
coded to accept only two-digit entries in date code fields. Beginning in the
year 2000, these date code fields will need to accept four-digit entries to
distinguish 21st century dates from 20th century dates. Any of the Company's
computer programs or hardware that have date-sensitive software or embedded
chips and have not been upgraded to comply with such "Year 2000" requirements
may recognize a date using "00" as the year 1900 rather that the year 2000. This
could result in a system failure or miscalculations causing disruptions of
operations, including, among other things, a temporary inability to process
transactions, send invoices, or engage in similar normal business activities.
Based on a review of the Company's product lines, the Company has
determined that the products it has sold and will continue to sell do not
require remediation to be Year 2000 compliant. Accordingly, the Company has
determined that it has no contingencies related to the Year 2000 issue for the
products it has sold.
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The Company has tested, modified and upgraded its software so that its
various computer systems will function properly and that the Year 2000 will not
pose significant operational problems for its computer systems. Documents and
internal communications from the Company's ERP system now routinely display and
transact with the correct logic on date codes of the year 2000.
The Company has initiated communications with all of its suppliers. Over
500 companies have been surveyed, responses reviewed, and risk levels
categorized. Full assessment of supplier risk is complete. Those vendors that
pose significant risk to the Company's ability to produce and ship products have
all been reviewed and have certified that they are Y2K compliant. As a further
preventive step, the procurement management organization will intensively review
vendor commitments prior to and immediately after January 1, 2000.
Public Utilities - The Company operates in Santa Clara, California, as
do other major manufactures of semiconductor products. The Company is dependent
on Pacific Gas and Electric, Pacific Bell, and the City of Santa Clara for vital
services and energy. The Company has not been informed of any risk of service
interruption and has chosen not to speculate about such risk. To the contrary,
general public disclosures by these entities claim compliance. The Company will
monitor public disclosures by major manufacturers such as Intel, National
Semiconductor, AMD, and Siliconix as a measure in assessing such risk. The
Company will also request these utility companies to provide statements of Y2K
compliance.
The cost of compliance monitoring and mitigation activities has not been
material to the Company, nor is it expected to adversely affect the operating
results.
RISKS, TRENDS, AND UNCERTAINTIES
The following risk factors should be carefully reviewed in addition to the other
information contained in this Quarterly Report on Form 10-Q.
Potential Fluctuations in Quarterly Results. The Company's quarterly
results have fluctuated in the past, and may continue to fluctuate in the
future, due to a number of factors, including: the timing, cancellation or delay
of customer orders; the mix of products sold; changes in manufacturing capacity
and variations in the utilization of this capacity; the timing of new product
introductions by the Company or its competitors; the long sales cycle associated
with the Company's application-specific products; market acceptance of the
Company's and its customers' products; variations in average selling
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prices of semiconductors; variations in manufacturing yields; changes in
inventory levels and other competitive factors. Any unfavorable changes in the
factors listed above or others could have a material adverse effect on the
Company's business, operating results and financial condition. For example,
during fiscal 1999, a number of contracts were either terminated or delayed by
both commercial and defense customers and revenues declined substantially. There
can be no assurance that additional contracts will not be cancelled or delayed
or that customers will ever reinstate orders under contracts which have been
delayed. There can be no assurance that the Company will be able to maintain
quarterly profitability in the future. See "Risks, Trends, and Uncertainties -
Dependence on Limited Number of OEM Customers."
Continued Penetration of Commercial Markets; New Product Introductions.
The Company's ability to grow will depend substantially on its ability to
continue to apply its radio frequency ("RF") and microwave signal processing
expertise and GaAs semiconductor technologies to existing and emerging
commercial wireless communications markets. If the Company is unable to design,
manufacture and market new products for existing or emerging commercial markets
successfully, its business, operating results and financial condition will be
materially adversely affected. Furthermore, if the markets for the Company's
products in the commercial wireless communications area fail to grow, or grow
more slowly than anticipated, the Company's business, operating results and
financial condition could be materially adversely affected.
Yields and the High Degree of Fixed Costs in the Manufacturing
Operation. The Company has in the past and may in the future experience
significant delays in product shipments due to lower than expected production
yields, and there can be no assurance that the Company will not experience
problems in maintaining acceptable yields in the future. The Company's
manufacturing yields vary significantly among products, depending on a given
product's complexity and the Company's experience in manufacturing the product.
To the extent that the Company does not maintain acceptable yields, its
business, operating results, and financial condition could be materially
adversely affected. In addition, the Company's fixed costs, which consist
primarily of investments in manufacturing equipment, repair, maintenance, and
depreciation costs of such equipment and fixed labor costs related to
manufacturing and process engineering, are high and during periods of decreased
demand, such as during fiscal 1999, the high fixed costs could have a material
adverse effect on the Company's business, operating results, and financial
condition.
Even though the Company has significant production capacity, there can
be no assurance that the Company will be successful in its efforts to generate
orders to utilize the additional capacity, or that net sales and gross margin
will increase.
Dependence on a Limited Number of OEM Customers. A relatively limited
number of OEM customers historically have accounted for a substantial portion of
the
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Company's sales. In fiscal 1999 and 1998 sales to the Company's top ten
customers accounted for approximately 56% and 63% of total net sales,
respectively. In the twelve months ended March 31, 1999 no one customer
accounted for more than 10% of total net sales. During the first half of fiscal
2000, two customers accounted for 27% of total net sales. The Company expects
that sales of its products to a limited number of OEM customers will continue to
account for a high percentage of its sales for the foreseeable future, although
sales to any single customer are subject to significant variability from quarter
to quarter. Such fluctuations or a complete loss of one or more of these
customers, could have a material adverse effect on the Company's business,
operating results and financial condition.
No Assurance of Product Performance and Reliability. The Company's
customers establish demanding specifications for performance and reliability.
There can be no assurance that problems will not occur in the future with
respect to performance and reliability of the Company's products. If such
problems occur, the Company could experience increased costs, delays in or
reductions, cancellations or rescheduling of orders and shipments, product
returns and discounts, and product redesigns, any of which would have a material
adverse effect on the Company's business, operating results and financial
condition.
Rapid Technological Change. The markets in which the Company competes
are characterized by rapidly changing technologies, evolving industry standards
and continuous improvements in products and services. There can be no assurance
that the Company will be able to respond to technological advances, changes in
customer requirements or changes in regulatory requirements or industry
standards, and any significant delays in the development, introduction or
shipment of products could have a material adverse effect on the Company's
business, operating results and financial condition.
Competition. The markets in which the Company competes are intensely
competitive and the Company expects competition to increase. Most of the
Company's current and potential competitors have significantly greater
financial, technical, manufacturing and marketing resources than the Company and
have achieved market acceptance of their existing technologies. The ability of
the Company to compete successfully depends upon a number of factors, including
the rate at which customers incorporate the Company's products into their
systems, product quality and performance, price, experienced sales and marketing
personnel, rapid development of new products and features, evolving industry
standards and the number and nature of the Company's competitors. There can be
no assurance that the Company will be able to compete successfully in the
future, which would have a material adverse effect on the Company's business,
operating results and financial condition.
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Dependence on Key Suppliers. Certain components used by the Company in
its existing products are only available from single sources, and certain other
components are presently available or acquired only from a limited number of
suppliers. In the event that its single source suppliers are unable to fulfill
the Company's requirements in a timely manner, the Company may experience an
interruption in production until alternative sources of supply can be obtained,
which could damage customer relationships or have a material adverse effect on
the Company's business, operating results and financial condition.
DEPENDANCE ON OFFSHORE SUB-CONTRACTORS
The Company contracts with a third party vendors in Asia to
assemble and test certain of its products to reduce manufacturing labor costs.
Although the Company strives to maintain more than one vendor for each
manufacturing process or product, it is not always possible due to volume and
quality issues. To the extent that any of the vendors are not able to provide a
sufficient level of service with an acceptable quality level, the Company could
have difficulty meeting its delivery commitments, which could materially
adversely impact the Company's financial, operating and financial results
Dependence on Key Personnel. The Company's future success depends in
significant part upon the continued service of its key technical and senior
management personnel and its continuing ability to attract and retain highly
qualified technical and managerial personnel. In particular, the Company in the
past has experienced difficulty attracting and retaining qualified engineers and
thin-film microwave technicians. Competition for these kinds of experienced
personnel is intense, and there can be no assurance that the Company can retain
its key technical and managerial employees or that it can attract, assimilate or
retain other highly qualified technical and managerial personnel in the future.
The failure to attract, assimilate or retain key personnel could have a material
adverse effect on the Company's business, operating results and financial
condition.
ITEM 3. QUANTITATIVE AND QUALITATIVE MARKET RISK
Reference is made to Part II, Item 7A, Quantitative and Qualitative
Disclosures about Market Risk, in the Registrant's Annual Report Form
10K for the year ended March 31, 1999.
PART 2 - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting of Shareholders was held on July 30, 1999.
The results of the voting were as follows:
Proposal 1: Election of the Board of Directors of the Company.
<TABLE>
Nominee Votes For Votes Withheld
------- --------- ---------------
<S> <C> <C>
Tamer Husseini 3,984,913 8,174
Robert J. Gallagher 3,984,912 8,175
Thomas W. Hubbs 3,985,012 8,075
William D. Rasdal 3,985,012 8,075
Charles P. Waite 3,985,012 8,075
</TABLE>
Proposal 2. Ratification of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending March 31, 2000.
<TABLE>
<S> <C>
Votes For: 3,988,366
Votes Against: 2,075
Votes Abstaining: 2,646
</TABLE>
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Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
Number
27. Financials Data Schedule
B. No reports on Form 8-K were filed during the quarter ended
September 30, 1999.
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SIGNATURES
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.
Celeritek, Inc.
(Registrant)
Date: November 10, 1999 /s/ P. MICHAEL HOULIHAN
----------------------------------------
P. Michael Houlihan, Vice President,
Chief Financial Officer and Assistant
Secretary
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<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
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0
0
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