================================================================================
UNITED STATES
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 period ended September 28, 1996.
OR
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission file number: 0-24360
SPECTRIAN CORPORATION
(Exact name of registrant as specified in its charter)
CALIFORNIA 77-0023003
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
350 West Java Drive
Sunnyvale, California 94089
(Address of principal executive offices)
Telephone Number (408) 745-5400
(Registrant's telephone number, including area code)
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 September 28, 1996 there were 8,167,239 shares of the Registrant's Common
Stock outstanding.
================================================================================
<PAGE>
SPECTRIAN CORPORATION
Form 10-Q
INDEX
Page No.
Cover Page 1
Index 2
PART I - Financial Information
ITEM 1 - Condensed consolidated financial statements
Condensed consolidated balance sheets -
September 28, 1996 and March 31, 1996 3
Condensed consolidated statements of operations -
three months and six months ended
September 30, 1995 and September 28, 1996 4
Condensed consolidated statements of cash flows -
three months and six months ended
September 30, 1995 and September 28, 1996 5
Notes to condensed consolidated financial statements 6
ITEM 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II - Other Information
ITEM 5 - Other Information 13
ITEM 6 - Exhibits and Reports on Form 8-K 14
Signatures 15
2
<PAGE>
SPECTRIAN CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
March 31, September 28,
Assets 1996 1996
-------- -------------
(Unaudited)
Current Assets:
Cash and cash equivalents $ 1,163 $ 4,205
Short-term investments 3,002 ----
Accounts receivable, less allowance for doubtful
accounts of $339 and $352, respectively 11,980 10,209
Inventories 7,229 10,217
Prepaid expenses and other current assets 420 469
--------- ---------
Total current assets 23,794 25,100
Property and equipment, net 32,128 35,567
--------- ---------
$ 55,922 $ 60,667
========= =========
Liabilities and Shareholders' Equity
Current Liabilities:
Bank borrowings and current portion of debt $ --- $ 6,240
Accounts payable 6,964 4,449
Accrued liabilities 4,120 4,161
--------- ---------
Total current liabilities 11,084 14,850
Debt obligations, net of current portion ---- 5,680
--------- ---------
Total liabilities 11,084 20,530
--------- ---------
Shareholders' Equity:
Common Stock, no par value, 20,000,000 shares
authorized; 8,014,525 and 8,167,239 shares
issued and outstanding, respectively 51,956 52,859
Deferred compensation expense (182) (134)
Unrealized gains on investments 2 ----
Accumulated deficit (6,938) (12,588)
--------- ---------
Total shareholders' equity 44,838 40,137
--------- ---------
$ 55,922 $ 60,667
========= =========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
<PAGE>
<TABLE>
SPECTRIAN CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
<CAPTION>
Three months ended Six months ended
September 30, September 28, September 30, September 28,
-------------- ------------- ------------- -------------
1995 1996 1995 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Product sales $19,490 $22,005 $39,752 $31,565
Non-recurring engineering revenues 1,461 267 1,660 630
----------- ----------- ---------- -----------
20,951 22,272 41,412 32,195
----------- ----------- ---------- -----------
Costs and expenses:
Cost of product sales 12,682 16,639 25,692 25,130
Research and development 3,737 3,770 7,032 8,063
Selling, general and administrative 2,094 1,946 4,152 4,325
----------- ----------- ---------- -----------
18,513 22,355 36,876 37,518
----------- ----------- ---------- -----------
Operating income (loss) 2,438 (83) 4,536 (5,323)
Interest income (expense), net 229 (251) 596 (325)
----------- ----------- ---------- -----------
Income (loss) before income taxes 2,667 (334) 5,132 (5,648)
Income tax expense 214 2 415 2
----------- ----------- ---------- -----------
Net income (loss) $ 2,453 $ (336) $ 4,717 $(5,650)
=========== =========== ========== ===========
Net income (loss) per share $ 0.29 $ (0.04) $ 0.57 $ (0.70)
=========== =========== ========== ===========
Shares used in computing per
share amounts 8 ,393 8,147 8,335 8, 093
=========== =========== ========== ===========
<FN>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
</FN>
</TABLE>
4
<PAGE>
<TABLE>
SPECTRIAN CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<CAPTION>
Six months ended
September 30, September 28,
------------- -------------
1995 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 4,717 $ (5,650)
Adjustments to reconcile net income (loss) to net
cash provided by (used for) operating activities:
Depreciation and amortization 1,956 2,951
Stock option compensation expense 102 48
Tax benefit associated with stock options 402 ---
Changes in operating assets and liabilities
Accounts receivable 409 1,771
Inventories (565) (2,988)
Prepaid expenses and other assets (301) (49)
Accounts payable (72) (2,515)
Accrued liabilities 640 41
---------- --------
Net cash provided by (used for) operating activities 7,288 (6,391)
---------- --------
Cash used for investing activities:
Purchase of short-term investments (10,692) ----
Proceeds from sale of short-term investments 8,221 3,000
Purchase of property and equipment (13,862) (6,390)
---------- --------
Net cash used for investing activities (16,333) (3,390)
---------- --------
Cash flows from financing activities:
Proceeds from bank borrowings and debt ---- 12,000
Repayments of debt obligations ---- (80)
Proceeds from sales of Common Stock, net 890 903
---------- --------
Net cash provided by financing activities 890 12,823
---------- --------
Net increase (decrease) in cash and cash equivalents (8,155) 3,042
Cash and cash equivalents, beginning of period 8,420 1,163
========== ========
Cash and cash equivalents, end of period $ 265 $ 4,205
========== ========
<FN>
The accompanying notes are an integral part of these condensed consolidated
financial statements
</FN>
</TABLE>
5
<PAGE>
SPECTRIAN CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: Basis of Presentation
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles. However, certain information or
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to the rules and regulations of the Securities and Exchange
Commission. In the opinion of the management, the statements include all
adjustments (which are of a normal and recurring nature) necessary for the fair
presentation of the financial information set forth therein. These financial
statements should be read in conjunction with the Company's audited consolidated
financial statements as incorporated by reference in the Company's Form 10-K for
fiscal year ended March 31, 1996. The interim results presented herein are not
necessarily indicative of the results of operations that may be expected for the
full fiscal year ending March 31, 1997, or any other future period.
NOTE 2: Balance Sheet Components
Balance sheet components are as follows:
March 31, September 28,
1996 1996
----------- -------------
(In thousands)
Inventories:
Raw materials $ 1,512 $ 1,843
Work in process 4,842 7,839
Finished goods 875 535
----------- ------------
$ 7,229 $ 10,217
=========== ============
Property and equipment:
Machinery and equipment $ 26,053 $ 31,449
Land, building and improvements 15,682 16,330
Furniture and fixtures 1,342 1,449
Leasehold improvements 927 902
----------- ------------
44,004 50,130
Less accumulated depreciation and
amortization 11,876 14,563
----------- ------------
$ 32,128 $ 35,567
=========== ============
Accrued liabilities:
Employee compensation and benefits $ 2,673 $ 2,703
Warranty 699 699
Other accrued liabilities 748 759
----------- ------------
$ 4,120 $ 4,161
=========== ============
6
<PAGE>
NOTE 3: Investments
The Company accounts for investments in accordance with Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" ("FAS 115"). Under the provisions of FAS 115, the Company has
classified its investments in certain debt and equity securities as
"available-for-sale". Such investments are recorded at fair market value, with
unrealized gains and losses reported as a separate component of shareholders'
equity. Interest income is recorded using an effective interest rate, with the
associated premium or discount amortized to "Interest income, net".
As of September 28, 1996, available-for-sale securities consisted of the
following:
Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
-------------------------------------------------
(In thousands)
Corporate debt securities $4,037 $ - $ - $4,037
-------------------------------------------------
$4,037 $ - $ - $4,037
-------------------------------------------------
As of September 28, 1996, these securities were classified as follows:
(In thousands)
Cash equivalents $ 4,037
Short-term investments -
------------
$ 4,037
------------
As of September 28, 1996, all securities held were due in less than one year.
NOTE 4: Revenue Recognition
The Company recognizes product sales upon shipment and concurrently accrues for
expected warranty expenses. Repair and service revenues are recognized when the
service is performed.
Non-recurring engineering revenues relate to customer funded development
projects and are deferred and recognized upon completion of project milestones.
The Company is under no obligation to repay funds once related milestones are
achieved. Costs associated with such customer funded research and development of
$1,073,000 and $413,000 for the three months ended September 30, 1995 and
September 28, 1996, respectively, and $2,025,000 and $1,148,000 for the six
months ended September 30, 1995 and September 28, 1996, respectively, are
included in research and development expense.
7
<PAGE>
NOTE 5: Earnings Per Share Computation
Net income (loss) per share has been computed using the weighted average number
of outstanding shares of Common Stock and common equivalent shares from stock
options outstanding (when dilutive using the treasury stock method). Common
Stock Options are assumed to be exercised and the proceeds used to buy back
Common Stock at the fair market value (the treasury stock method). Due to the
net loss incurred during the three and six month periods ending September 28,
1996, Common Stock Options outstanding would be antidilutive and are therefore
not included in the earnings per share calculation.
NOTE 6: Bank Borrowings and Debt
In June 1996, the Company was extended a $6.0 million Term Loan, secured by all
of the Company's real estate. Under the terms of the agreement, which expires
June 2001, the Company will make monthly payments against the loan based on a
25-year fixed amortization schedule, plus interest at a rate equal to current
prime plus 3/4%. Upon the June 2001 expiration, all remaining principal will
become due and payable. Under the terms of the agreement, the Company is
required to maintain certain minimum working capital, net worth, profitability,
and other specific financial ratios. As of September 28, 1996, the Company was
in conformance with these convenants. This loan is reflected in the Balance
Sheet as of September 28, 1996 as $240,000 current portion of debt obligations,
with the remainder as a long term liability.
In July 1996, the Company used all $6,000,000 of its available revolving line of
credit. Under the terms of the agreement, the Company is required to maintain
certain minimum working capital, net worth, profitability, and other specific
financial ratios. As of September 28, 1996, the Company was in conformance with
these convenants.
8
<PAGE>
SPECTRIAN CORPORATION AND SUBSIDIARY
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Overview
Spectrian provides highly linear power amplifiers to wireless
communications infrastructure original equipment manufacturers ("OEMs"). The
Company designs, manufactures, and markets single carrier and multicarrier
amplifiers that support a broad range of worldwide analog and digital
transmission standards, including AMPS, TDMA, CDMA, TACS, GSM and DCS-1800.
Spectrian's customers include many of the world's largest manufacturers of
wireless infrastructure equipment, including Ericsson and Northern Telecom, as
well as other equipment manufacturers in emerging wireless markets. The
Company's revenues are derived from a limited number of OEM customers and
products. In recent periods, sales to the Company's major customers as a
percentage of total revenues have fluctuated significantly. During the three
months ended September 28, 1996, Northern Telecom Limited and Matra
Communication, in which Northern Telecom has an equity investment, accounted for
67% and 10% of the Company's total revenues, respectively. The concentration of
sales among a limited number of OEM customers, in particular Northern Telecom,
has increased the volatility of the Company's revenues and results of
operations. The Company expects that it will continue to experience volatility
in customer orders and requested ship rates that are inherent in an OEM
business, but it is working to diversify its customer base to reduce this risk.
The Company's business, financial condition and results of operations
have been materially adversely affected in the past by the failure of
anticipated orders to materialize and by deferrals or cancellations of orders as
a result of changes in OEM requirements. In addition, growth in the cellular
market has slowed considerably from prior levels, causing the Company's largest
customer to carry much lower inventory levels than in previous periods. This
softening demand from the Company's largest customer, as well as delays in the
availability for sale of new products, and scrap and inefficiencies associated
with introducing these new products into manufacturing, have caused significant
revenue and net income fluctuations during the current fiscal year. The Company
executed a reduction in force of approximately 10% of its regular and temporary
employees during the three months ended June 29, 1996, which was intended to
lower operating costs without significantly impacting the Company's ability to
develop new products or meet future production requirements. The Company
incurred one-time costs of approximately $300,000 in relation to this reduction
in force during the three months ended June 29, 1996. Results during the six
months ended September 28, 1996 were impacted by redundant costs associated with
developing the Company's new 4-inch wafer fabrication facility while still
maintaining its 3-inch facility for wafer production. The Company expects these
redundant costs to continue until the fourth quarter of fiscal 1997, when the
full qualification of the 4-inch wafer fabrication facility is anticipated. In
addition, the Company incurred significant manufacturing costs during the six
months ended September 28, 1996, primarily due to inefficiencies associated with
the transition of several new products from development into production.
Spectrian pursues a strategy of vertical integration of its manufacturing
process, and expends significant resources for research and development in all
aspects of the design of power amplification products. In order to offset
declining average sales prices and improve gross margins, the Company believes
that it must develop new products that can be sold at higher average prices.
Significant delays in the release of these new products coming out of
development, as well as the inherent high costs associated with introducing new
products into manufacturing, have had an adverse impact on the Company's results
of operations, and will continue to have a similar impact as future products are
introduced.
9
<PAGE>
Results of Operations
Three Month and Six Month Periods Ended September 30, 1995 and
September 28, 1996
Revenues. The Company generates product sales revenue from the sale of power
amplifiers to OEMs in cellular and other markets, as well as from amplifier
repair and service. A portion of the Company's revenues is also generated
through non-recurring engineering ("NRE") revenues, which represent funding from
the Company's OEM customers for specific development projects. The Company's
revenues increased by 6% from $20.9 million in the three months ended September
30, 1995 to $22.3 million in the three months ended September 28, 1996,
primarily due to increased shipments of multicarrier and Personal Communications
Services ("PCS") CDMA amplifiers as well as increases in sales of existing
cellular amplifier products. The Company's revenues decreased by 22% from $41.4
million in the six months ended September 30, 1995 to $32.2 million in the six
months ended September 28, 1996, primarily due to the softening demand by the
Company's largest customer and the delays in the availability for sale of new
products that occurred in the three month period ending June 29, 1996.
The Company's revenues are derived primarily from a limited number of OEM
customers and products. During the three months ended September 28, 1996,
Northern Telecom Limited and Matra Communication, in which Northern Telecom has
an equity investment, accounted for 67% and 10% of revenues, respectively. If
the Company were to lose a major OEM customer, in particular Northern Telecom,
or if orders by a major OEM customer were to otherwise decrease, the Company's
business, financial condition and results of operations would be materially
adversely affected.
Cost of Product Sales. Cost of product sales consists primarily of raw
materials, RF transistor fabrication costs, amplifier assembly and test costs,
overhead and warranty costs, and does not include costs incurred in connection
with NRE revenues. The Company's cost of product sales increased by 31% from
$12.7 million in the three months ended September 30, 1995 to $16.6 million in
the three months ended September 28, 1996. The Company's cost of product sales
decreased by 2% from $25.7 million in the six months ended September 30, 1995 to
$25.1 million in the six months ended September 28, 1996.
Gross margin on product sales decreased from 35% in the three month period
ended September 30, 1995 to 24% in the three month period ended September 28,
1996, primarily due to inefficiencies, scrap and high material costs on new
products coming out of development into production. The cost of scrapping wafers
and transistors for the Company's newer products was particularly high during
the period and was exacerbated by the Company's continued reliance on its older
3-inch wafer fabrication facility for production. Gross margin on product sales
decreased from 35% in the six month period ended September 30, 1995 to 20% in
the six month period ended September 28, 1996, primarily due to inefficiencies
and high material costs on new products coming out of development into
production, as well as fixed overhead costs that were spread over lower revenue
during the three month period ended June 29, 1996.
Despite the focus on designing products for manufacturability, the Company
has experienced high manufacturing costs, including high scrap and material
waste, significant material obsolescence, labor inefficiencies, high overtime
hours, inefficient material procurement and an inability to recognize economies
of scale, particularly with regard to the large number of new products coming
out of development into production. The Company's high manufacturing costs have
historically had a material adverse effect on gross margins. Although the
Company has initiated actions to reduce its manufacturing costs, including the
development of a new 4-inch wafer fabrication facility, any failure to achieve
these reductions could have a material adverse effect on the Company's business,
financial condition and results of operations.
Research and Development. Research and development expenses include the cost of
designing, developing or cost reducing amplifiers and RF transistors, including
the cost associated with NRE revenues. NRE funding received from OEM customers
may be greater or less than the related development costs. Research and
development also includes the expenses associated with the design and start up
expenses of the Company's new 4-inch wafer fabrication facility.
10
<PAGE>
The Company's research and development expenses were a relatively constant
$3.7 million in the three months ended September 30, 1995 compared to $3.8
million in the three months ended September 28, 1996. This virtually flat
spending in research and development spending is attributable to increased
spending on development of the Company's 4-inch wafer fabrication facility and
semiconductor research and development, partially offset by reductions in
engineering administration headcount. The Company's research and development
expenses increased by 15% from $7.0 million in the six months ended September
30, 1995 to $8.1 million in the six months ended September 28, 1996. The
increase in research and development spending is attributable to increased
spending on development of the Company's 4-inch wafer fabrication facility,
research costs associated with the advanced development laboratory in Tennessee
and increased spending on semiconductor research and development.
Research and development expenses as a percentage of revenues decreased
from 18% in the three months ended September 30, 1995 to 17% for the three
months ended September 28, 1996, reflecting virtually flat expenses spread over
increased revenues. Research and development expenses as a percentage of
revenues increased from 17% in the six months ended September 30, 1995 to 25%
for the six months ended September 28, 1996. The increase in research and
development spending as a percentage of revenues reflects the Company's decision
to continue the investment in product development, despite the lower revenues
during the three month period ended June 29, 1996.
Selling, General and Administrative. Selling, general and administrative
expenses include compensation and benefits for sales, marketing, senior
management and administrative personnel, commissions paid to independent sales
representatives, professional fees and other expenses. The Company's selling,
general and administrative expenses decreased by 7% from $2.1 million in the
three months ended September 30, 1995 to $1.9 million in the three months ended
September 28, 1996, primarily due to reduced administrative headcount and
related compensation. The Company's selling, general and administrative expenses
increased by 4% from $4.2 million in the six months ended September 30, 1995 to
$4.3 million in the six months ended September 28, 1996, primarily due to
increases in the Company's sales force and outside services for information
systems support, partially offset by lower administrative headcount and related
compensation.
Selling, general and administrative expenses as a percentage of revenues
decreased from 10% in the three months ended September 30, 1995 to 9% for the
three months ended September 28, 1996 reflecting virtually flat expenses spread
over increased revenues. Selling, general and administrative expenses as a
percentage of revenues increased from 10% in the six months ended September 30,
1995 to 13% for the six months ended September 28, 1996 reflecting virtually
flat expenses spread over decreased revenues.
Interest Income (Expense), Net. Net interest income for the three months ended
September 30, 1995 was $229,000 compared to net interest expense of $251,000 for
the three months ended September 28, 1996. Net interest income for the six
months ended September 30, 1995 was $596,000 compared to net interest expense of
$325,000 for the six months ended September 28, 1996. The change from net
interest income to net interest expense from period to period was a result of
the Company's lower cash balances and the interest associated with incurring $12
million of debt during fiscal 1997.
Income Taxes. The Company recorded a provision of $214,000 for the three month
period ended September 30, 1995 compared to an income tax expense of $2,000 for
the three month period ended September 28, 1996, reflecting the payment of State
of California tax filing fees. No other tax provision was made due to the loss
in the current period. The September 30, 1995 effective tax rate of 8% reflects
the use of net operating loss carryforwards. At March 31, 1996, the Company had
federal and state net operating loss carryforwards for tax reporting purposes of
approximately $25.0 million and $9.0 million, respectively. The Company's
ability to use its net operating loss carryforwards against taxable income may
be subject to restrictions and limitations under Section 382 of the Internal
Revenue Code of 1986, as amended, in the event of a change in ownership of the
Company as defined therein.
11
<PAGE>
Variability of Operating Results. The Company's quarterly operating results have
in the past, and will in the future, vary significantly due to a number of
factors, including the timing, cancellation, or rescheduling of customer
shipments; the timing and level of NRE revenues; variations in manufacturing
efficiencies and costs; the narrow supply line from the Company's wafer
fabrication facility; changes in the mix of products having differing gross
margins; average sales prices; competitive factors; the long sales cycles
associated with the Company's customer-specific products; development risks
associated with the introduction of new products that comprise much of the
Company's future sales; and variations in product development or other operating
expenses. In the near term, operating results may be adversely affected by
continuing delays in the availability for sale of the Company's new products or
by any failure to meet acceptable wafer production levels during the Company's
transition from its current 3-inch wafer fabrication facility to the new 4-inch
wafer fabrication facility currently nearing completion.
Liquidity and Capital Resources
Cash provided by operations was $7.3 million for the six months ended
September 30, 1995 compared to cash used for operations of $6.4 million for the
six months ended September 28, 1996. The decrease in cash provided by operations
in the six months ended September 28, 1996 primarily related to the decrease in
profitability over the comparable period of the prior year, as well as increases
in inventory and payments for capital purchases.
As of September 28, 1996, the Company had working capital of $10.3
million, including $4.2 million in cash and cash equivalents. The Company has a
revolving line of credit with a bank, secured by substantially all of the
Company's assets. Under the terms of the agreement, which expires March 1997,
the Company is required to maintain certain minimum working capital, net worth,
profitability, and other specific financial ratios and prohibits the payment of
cash dividends without the prior written consent of the lender. As of September
28, 1996, the Company was in conformance with these convenants and the revolving
line of credit was fully utilized.
In June 1996, the Company was extended a $6.0 million Term Loan, secured
by all of the Company's real estate. Under the terms of the agreement, which
expires June 2001, the Company will make monthly payments against the loan based
on a 25-year fixed amortization schedule, plus interest at a rate equal to
current prime plus 3/4%. Upon the June 2001 expiration, all remaining principal
will become due and payable. Under the terms of the agreement, the Company is
required to maintain certain minimum working capital, net worth, profitability,
and other specific financial ratios. As of September 28, 1996, the Company was
in conformance with these convenants.
Additions to property and equipment in the six months ended September 30,
1995 were $13.9 million. Additions to property and equipment were $6.4 million
in the six months ended September 28, 1996, including $3.0 million for equipment
and construction for the Company's new 4-inch wafer fabrication facility.
The Company expects capital additions for the remainder of fiscal 1997 to
be approximately $6 million, primarily for test equipment for manufacturing.
Based on the Company's current working capital, expected cash flows and the
Company's debt capacity, the Company believes that sufficient cash will be
available to meet the Company's needs through at least the next twelve months.
In connection with the operation of American Microwave Technology, Inc.
("AMT"), the Company's wholly-owned subsidiary located in Brea, California, the
Company occupies approximately 14,400 square feet of a facility pursuant to a
lease which expired in July 1996 and was subsequently renewed until September
30, 1997.
This Management Discussion and Analysis contains forward-looking statements
that are subject to risks and uncertainties. The Company's results could differ
materially based on various factors including, without limitation, cancellation
or deferral of customer orders, the timely development and market acceptance of
new products, particularly the second generation multicarrier product, continued
growth in wireless communications, including new PCS wireless networks, the
ability to manufacture new or existing products in sufficient quantity or
quality, or economic conditions. Further information on factors which could
affect the Company's financial results are included in the Company's 1996 Annual
Report on Form 10-K.
12
<PAGE>
ITEM 5: Other Information
On October 23, 1996, David S. Wisherd resigned his position as the Company's
Chairman of the Board of Directors and Chief Technology Officer in order to
pursue personal interests. He will continue as a part time employee of the
Company and intends to remain actively involved in the Company's product
development and corporate strategies. His successor as the Company's Chairman of
the Board of Directors has not yet been appointed.
13
<PAGE>
ITEM 6: Exhibits and Reports on Form 8-K
(a)Exhibits
11.1 Statement regarding computation of net income (loss) per share
27.1 Financial Data Schedule
(b)Reports on Form 8-K
The Company did not file any reports on Form 8-K during the three
months ended September 28, 1996.
14
<PAGE>
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.
Dated: November 1, 1996
SPECTRIAN CORPORATION
(Registrant)
/S/ EDWARD A. SUPPLEE, JR.
-----------------------------------
Edward A. Supplee, Jr.
Executive Vice President, Finance and Administration,
Chief Financial Officer and Secretary
(Principal Financial and Accounting Officer)
15
<PAGE>
INDEX TO EXHIBITS
EXHIBITS
11.1 Statement regarding computation of net income (loss) per share
27.1 Financial Data Schedule
16
Exhibit 11.1
<TABLE>
SPECTRIAN CORPORATION AND SUBSIDIARY
COMPUTATION OF NET INCOME (LOSS) PER SHARE
(In thousands except per share data)
<CAPTION>
Three months ended Six months ended
September 30, September 28, September 30, September 28,
------------- -------------- -------------- -------------
1995 1996 1995 1996
------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net income (loss) $ 2,453 $ (336) $ 4,717 $ (5,650)
============= ============ ============ ============
Weighted average number of shares
outstanding used in computation:
Common Stock 7,687 8,147 7,528 8,093
Common Stock equivalents
as a result of stock options
outstanding 706 n/a * 807 n/a *
------------- ------------ ------------ ------------
Shares used in computing per
share amounts ** 8,393 8,147 8,335 8,093
============= ============ ============ ============
Net income (loss) per share $ 0.29 $ (0.04) $ 0.57 $ (0.70)
============= ============ ============ ============
<FN>
* Due to the loss in this period, stock options outstanding would be
antidilutive and are therefore not included in the calculation.
** The dilutive impact of options determined using the fully diluted
calculation is not materially different from the dilutive impact
represented in this statement determined using the primary method.
</FN>
</TABLE>
17
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED BALANCE SHEETS, CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000925054
<NAME> SPECTRIAN CORP /CA/
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> MAR-31-1997 MAR-31-1997
<PERIOD-START> JUN-30-1996 JUN-30-1996
<PERIOD-END> SEP-28-1996 SEP-28-1996
<CASH> 4,205 4,205
<SECURITIES> 0 0
<RECEIVABLES> 10,561 10,561
<ALLOWANCES> 352 352
<INVENTORY> 10,217 10,217
<CURRENT-ASSETS> 25,100 25,100
<PP&E> 50,130 50,130
<DEPRECIATION> 14,563 14,563
<TOTAL-ASSETS> 60,667 60,667
<CURRENT-LIABILITIES> 14,850 14,850
<BONDS> 0 0
<COMMON> 52,859 52,859
0 0
0 0
<OTHER-SE> (12,722) (12,722)
<TOTAL-LIABILITY-AND-EQUITY> 60,667 60,667
<SALES> 22,272 32,195
<TOTAL-REVENUES> 22,272 32,195
<CGS> 16,639 25,130
<TOTAL-COSTS> 5,716 12,388
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 251 325
<INCOME-PRETAX> (334) (5,648)
<INCOME-TAX> 2 2
<INCOME-CONTINUING> (336) (5,650)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (336) (5,650)
<EPS-PRIMARY> (.04) (.70)
<EPS-DILUTED> (.04) (.70)
</TABLE>
