-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GB/iqM/M2WyfVUWnoq/GKeOUpPuBF8ukKLU0ThI1YgaCMMT7vZaZ4jHoecCFoiYM y8YsVikcz0T+B7POhdgPVw== 0000950149-97-000119.txt : 19970312 0000950149-97-000119.hdr.sgml : 19970312 ACCESSION NUMBER: 0000950149-97-000119 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961228 FILED AS OF DATE: 19970124 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GIGA TRONICS INC CENTRAL INDEX KEY: 0000719274 STANDARD INDUSTRIAL CLASSIFICATION: 3825 IRS NUMBER: 942656341 STATE OF INCORPORATION: CA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-12719 FILM NUMBER: 97510379 BUSINESS ADDRESS: STREET 1: 4650 NORRIS CANYON ROAD CITY: SAN RAMONN STATE: CA ZIP: 94583 BUSINESS PHONE: 5103284650 MAIL ADDRESS: STREET 1: 4650 NORRIS CANYON ROAD CITY: SAN RAMON STATE: CA ZIP: 94583 10-Q 1 FORM 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the period ended December 28, 1996, 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 No. 0-12719 GIGA-TRONICS INCORPORATED (Exact name of Registrant as specified in its charter) California 94-2656341 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 4650 Norris Canyon Road, San Ramon, CA 94583 (Address of principal executive offices) (Zip Code) Registrant's telephone number: (510) 328-4650 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 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 ----- ----- Common stock outstanding as of December 28, 1996: 3,369,199 2 PAGE 2 GIGA-TRONICS INCORPORATED INDEX PART I - FINANCIAL INFORMATION Page No. ITEM 1 Financial Statements: Balance Sheets as of December 28, 1996 (unaudited) and March 30, 1996........................................3 Statements of Operations, three months and nine months ended December 28, 1996 and December 30, 1995 (unaudited)...............................................4 Statements of Cash Flows, nine months ended December 28, 1996 and December 30, 1995 (unaudited).......5 Notes to Unaudited Financial Statements...................6 ITEM 2 Management's Discussion and Analysis of Operations and Financial Condition........................7 PART II - OTHER INFORMATION ITEM 1 TO 5 Not Applicable ITEM 6 Exhibits and Reports on Form 8-K (a) Exhibits (11) Computation of Net Earnings and Common Share Equivalents..................9 (b) Reports on Form 8-K Not Applicable SIGNATURES...................................................................10 3 PAGE 3 GIGA-TRONICS INCORPORATED BALANCE SHEETS (Unaudited) (In thousands, except share data) ASSETS
December 28, 1996 March 30, 1996 ----------------- -------------- Current Assets: Cash and cash equivalents $ 3,249 $ 5,923 Investments 9,666 5,313 Trade accounts receivable, net 3,777 3,658 Inventories, net 5,146 6,293 Prepaid expenses 150 228 Deferred income taxes 1,557 1,305 -------- -------- Total current assets $ 23,545 $ 22,720 Property and Equipment: Machinery and equipment $ 7,384 $ 7,277 Office furniture and fixtures 544 518 Leasehold improvements 121 106 -------- -------- Gross cost property and equipment 8,049 7,901 Less accumulated depreciation and amortization (6,160) (5,779) -------- -------- Net property and equipment 1,889 2,122 Patents and licenses 1,170 1,590 Other assets 79 152 -------- -------- Total assets $ 26,683 $ 26,584 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $ 1,275 $ 2,070 Accrued commissions 294 277 Other current liabilities 771 751 Accrued payroll and benefits 822 666 Accrued warranty 579 580 Accrued earnout payable -- 393 Income taxes payable 28 47 Notes payable -- 730 -------- -------- Total current liabilities 3,769 5,514 Non-current liabilities 245 253 -------- -------- Total liabilities $ 4,014 $ 5,767 ======== ======== Shareholders' Equity: Preferred stock of no par value; -- -- Authorized 1,000,000 shares; no shares outstanding at December 28, 1996, and March 30, 1996 Common stock of no par value; Authorized 40,000,000 shares; 3,369,199 shares at December 28, 1996 and 3,323,649 shares at March 30, 1996 issued and outstanding 10,872 10,543 Unrealized gain (loss) on investments 30 (47) Retained earnings 11,767 10,321 -------- -------- Total shareholders' equity $ 22,669 $ 20,817 -------- -------- Total liabilities and shareholders' equity $ 26,683 $ 26,584 ======== ========
See accompanying notes to financial statements 4 PAGE 4 GIGA-TRONICS INCORPORATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share data)
Three Months Ended Nine Months Ended ------------------------ ------------------------ Dec. 28, Dec. 30, Dec. 28, Dec. 30, 1996 1995 1996 1995 Net Sales $ 7,697 $ 7,718 $ 22,628 $ 23,059 Cost of sales 4,956 4,830 14,157 14,408 -------- -------- -------- -------- Gross profit 2,741 2,888 8,471 8,651 Product development 607 637 1,990 1,974 Selling, general and administrative 1,499 1,582 4,553 5,013 -------- -------- -------- -------- Operating expenses 2,106 2,219 6,543 6,987 -------- -------- -------- -------- Net Operating income 635 669 1,928 1,664 Other income/(expense) (32) 18 (14) 188 Amortization of intangibles (141) (140) (420) (420) Interest income, net 161 67 431 173 -------- -------- -------- -------- Earnings before income taxes 623 614 1,925 1,605 Provision for income taxes 154 82 479 167 -------- -------- -------- -------- Net earnings $ 469 $ 532 $ 1,446 $ 1,438 ======== ======== ======== ======== Earnings per share of common stock $ 0.14 $ 0.16 $ 0.42 $ 0.43 ======== ======== ======== ======== Weighted average common and common equivalent shares outstanding 3,411 3,369 3,414 3,369
See accompanying notes to financial statements. 5 PAGE 5 GIGA-TRONICS INCORPORATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)
Nine Months Ended -------------------------------------------- December 28, 1996 December 30, 1995 ----------------- ----------------- Cash flows provided from operations: Net earnings as reported $ 1,446 $ 1,438 Adjustments to reconcile net earnings to net cash provided from operations Depreciation and amortization 1,136 1,186 Gain on sale of fixed assets 23 -- Deferred income taxes, net (252) (68) Changes in operating assets and liabilities 172 1,110 ------- ------- Net cash provided by operations 2,525 3,666 Cash flows used by investing activities: Investment sales/(purchases), net (4,276) (318) Additions to property and equipment, net (459) (551) ------- ------- Net cash used in investing activities (4,735) (869) Cash flows from financing activities: Issuance/(re-purchase) of common stock 329 (16) Payments on notes payable (730) (81) Issuance/(payments) of other obligations (63) 49 ------- ------- Net cash provided by financing activities (464) (48) Increase in cash and cash equivalents (2,674) 2,749 Beginning cash and cash equivalents 5,923 3,202 ------- ------- Ending cash and cash equivalents $ 3,249 $ 5,951 ======= =======
Supplementary disclosure of cash flow information: (1) Cash paid for interest in the nine month period ending December 28, 1996 was $44,000. (2) Cash paid for income taxes in the nine month period ending December 28, 1996 was $592,000. (3) Non-cash investing activities: The Company incurred an unrealized gain of $77,000 (after-tax effect) on investments held available for sale during the nine month period ending December 28, 1996. See accompanying notes to financial statements. 6 PAGE 6 GIGA-TRONICS INCORPORATED NOTES TO FINANCIAL STATEMENTS (1) Basis of Presentation The financial statements included herein have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission. The results of operations for the interim periods shown in this report are not necessarily indicative of results to be expected for the fiscal year. In the opinion of management, the information contained herein reflects all adjustments necessary to make the results of operations for the interim periods a fair statement of such operations. For further information, refer to the financial statements and footnotes thereto, included in the Annual Report on Form 10-K, filed with the Securities and Exchange Commission for the year ended March 30, 1996. Effective July 24, 1996, Giga-tronics merged with ASCOR in a transaction accounted for as a "pooling of interests." Accordingly, prior periods have been restated to reflect the acquisition and include the results of the ASCOR operations. (2) Inventories Inventories consist of the following (in thousands): December 28, 1996 March 30, 1996 ----------------- -------------- Raw materials $ 2,230 $ 2,388 Work-in-process 2,284 2,972 Finished goods 632 933 -------- --------- $ 5,146 $ 6,293 ======= ======== 7 PAGE 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS AND FINANCIAL CONDITION THREE MONTHS AND NINE MONTHS ENDED DECEMBER 28, 1996 AND DECEMBER 30, 1995 Net sales for the three month and nine month periods ended December 28, 1996 decreased less than 1% ($21,000) and decreased 2% ($431,000), respectively, compared to the same periods last year. The quarterly shipments of microwave signal generators was down over $1,000,000 from the prior year third quarter, though increased shipment of RF signal generators and power measurement devices offset this decline. For the nine month period, a $1,000,000 decline in shipments of microwave signal generators from the prior year was offset only partially by an increase in sales of ASCOR VXI products. Gross profit for the current three month and nine month periods decreased 5% ($147,000) and 2% ($180,000), respectively, compared to the same periods last year. The quarterly gross profit decline was due to heavily discounted sales of microwave and RF signal generators. It is expected that these large discounts will not continue for the balance of the year in these two product lines. Operating expenses for the three month and nine month periods decreased 5% ($113,000) and 6% ($444,000), respectively, compared to prior year periods. The decreases are due to lower sales and marketing expenses. Operating income for the current three month and nine month periods is $34,000 lower and $264,000 higher, respectively, than the comparable periods last year. For the quarter, lower operating expenses mostly offset the lower gross profit. For the nine month period, the higher operating income was a result of lower operating expenses, only partially offset by lower sales volume. Other income is lower relative to the comparable three month and nine month periods for the prior year because of non-recurring prior year fixed asset sales and an insurance recovery. Earnings before income taxes for the current three month and nine month periods are $9,000 and $320,000 higher, respectively, than the comparable periods of the prior year. The results for the quarter were due to higher interest income and lower operating expenses, offset mostly by lower gross profit. For the nine month period, the results were due to higher interest income and lower operating expenses, only partially offset by the lack of other income and lower sales volume. The favorable interest income is due to higher balances of cash equivalents and investments relative to prior year. Orders for the three month and nine month periods for the current year were lower than the same periods last year. The backlog of unfilled orders as of December 28, 1996, is down significantly from the comparable period of the prior year, mostly due to a decline in microwave signal generator orders. Due to the continued softness in order intake, fiscal 1997 revenues are expected to be less than fiscal 1996. It is unclear at this time whether cost reduction activities will totally offset the unfavorable impact caused by the decline in revenues. 8 PAGE 8 FINANCIAL CONDITION The Company maintains a strong financial position, with working capital of $19,776,000 and a ratio of current asset to current liabilities of 6.2 as of December 28, 1996. The Company continues to fund all of its working capital needs from cash flow provided from operations. Cash provided from operations for the nine month period ended December 28, 1996 was $2,525,000. Management believes that cash reserves and investments remain adequate to meet anticipated operating needs. During the nine month period, the Company spent $459,000 on new manufacturing and test equipment and other capital items. The Company will continue to invest in capital items that support growth and new product development, raise productivity and improve quality. Historically, the Company has satisfied its cash needs internally for both operating and capital expenses, and management expects to continue to do so. The issuance of common stock was related to exercise of stock options. The outflow for notes payable was the retirement of debt by ASCOR in September. Note: These statements contain forward looking information that involve a number of risks and limitations discussed in more detail in other documents submitted to the SEC. 9 PAGE 9 EXHIBIT II PART II, Item 6 COMPUTATION OF NET EARNINGS PER SHARE AND COMMON SHARE EQUIVALENTS (Unaudited) (In thousands, except per share data) Earnings per share were computed using the weighted average number of shares outstanding plus, when dilutive, incremental shares issuable upon exercise of outstanding options under the treasury stock method.
Three Months Ended Nine Months Ended ---------------------- ---------------------- Dec. 28, Dec. 30, Dec. 28, Dec. 30, 1996 1995 1996 1995 -------- -------- -------- -------- Weighted average: Common shares outstanding 3,369 3,291 3,358 3,291 Common share equivalents 42 78 56 78 ------ ------ ------ ------ 3,411 3,369 3,414 3,369 ====== ====== ====== ====== Net earnings $ 469 $ 532 $1,446 $1,438 ====== ====== ====== ====== Net earnings per share of common stock $ 0.14 $ 0.16 $ 0.42 $ 0.43 ====== ====== ====== ======
10 PAGE 10 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. GIGA-TRONICS INCORPORATED (Registrant) Date: 01/15/96 /s/ George H. Bruns, Jr. --------------------------------------------------- George H. Bruns, Jr. Chairman and Chief Executive Officer (Principal Executive Officer) /s/ Gregory L. Overholtzer --------------------------------------------------- Date: 01/15/96 Gregory L. Overholtzer Vice President, Finance and Chief Financial Officer (Principal Accounting Officer) EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS MAR-29-1997 MAR-31-1996 DEC-28-1996 3,249 9,666 4,002 (225) 5,146 23,545 8,049 (6,160) 26,683 3,769 0 0 0 10,872 11,797 26,683 22,628 22,628 14,157 20,700 434 0 (431) 1,925 479 1,446 0 0 0 1,446 0.42 0.42
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