-----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, KoaoeLtig2Pt0jBm+2Ycl/zmloSvu+GFbtpJftpqOt8TYYRbkA72PJIUNP1nbIAg +ZqdyVbsu5EFMHySVsFk2A== 0000730000-01-500003.txt : 20010223 0000730000-01-500003.hdr.sgml : 20010223 ACCESSION NUMBER: 0000730000-01-500003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010215 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUPERTEX INC CENTRAL INDEX KEY: 0000730000 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 942328535 STATE OF INCORPORATION: CA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-12718 FILM NUMBER: 1546744 BUSINESS ADDRESS: STREET 1: 1235 BORDEAUX DR CITY: SUNNYVALE STATE: CA ZIP: 94089 BUSINESS PHONE: 4087440100 MAIL ADDRESS: STREET 1: 1235 BORDEAUX DR CITY: SUNNYVALE STATE: CA ZIP: 94089 10-Q 1 supertex.txt 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 quarterly period ended December 31, 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 February 12, 2001, 12,405,539 shares of the Registrant's common stock were issued and outstanding. Total number of pages: 10 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 10 PART I - FINANCIAL INFORMATION Item 1. Financial Statements SUPERTEX, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited) (in thousands, except per share amounts) Three-months Ended, Nine-Months Ended, December 31, December 31, 2000 1999 2000 1999 Net sales $ 20,209 $ 17,709 $ 65,025 $ 50,743 Cost and expenses: Cost of Sales 11,800 11,065 38,208 32,531 Research and development 3,054 1,583 7,996 6,143 Selling, general and administrative 2,568 1,939 7,768 5,044 ------ ------ ------ ------ Total costs and expenses 17,422 14,587 53,972 43,718 ------ ------ ------ ------ Income from operations 2,787 3,122 11,053 7,025 Interest income 672 467 1,786 1,242 Other income (expense), net (160) 59 464 (65) ------ ------ ------ ------ Income before provision for income taxes 3,299 3,648 13,303 8,202 Provision for income taxes 1,122 1,204 4,523 2,707 ------ ------ ------ ------ Net income $ 2,177 $ 2,444 $ 8,780 $ 5,495 ====== ====== ====== ====== Net income per share: Basic $ 0.18 $ 0.20 $ 0.71 $ 0.45 Diluted $ 0.17 $ 0.20 $ 0.67 $ 0.44 Shares used in per share computation: Basic 12,386 12,121 12,335 12,104 Diluted 13,041 12,496 13,091 12,394 See accompanying Notes to Unaudited Condensed Consolidated Financial Statements. SUPERTEX, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited, in thousands) December 31, 2000 March 31, 2000 ASSETS Current assets: Cash and cash equivalents $ 18,664 $ 22,584 Short-term investments 22,640 11,592 Trade accounts receivable, net of allowance of $1,660 and $1,366 16,406 14,428 Other receivables 814 315 Inventories 13,941 15,083 Deferred income taxes 2,862 2,862 Prepaid expenses 1,249 440 ------ ------ Total current assets 76,576 67,304 Property, plant and equipment, net 16,450 14,890 Long term investments 3,152 1,402 Intangible and other assets, net 443 1,157 Deferred income taxes 1,870 1,870 ------ ------ TOTAL ASSETS $ 98,491 $ 86,623 ====== ====== LIABILITIES Current liabilities: Trade accounts payable $ 7,087 $ 8,395 Accrued salaries, wages and employee benefits 6,021 4,495 Income taxes payable 1,510 353 Other accrued liabilities 577 276 Deferred license revenue 400 -- Deferred revenue on shipments to distributors 724 835 ------ ------ Total current liabilities 16,319 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 12,405 and 12,251 shares 24,290 23,167 Retained earnings 57,882 49,102 ------ ------ Total Shareholders' equity 82,171 72,269 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 98,491 $ 86,623 ====== ====== See accompanying Notes to Unaudited Condensed Consolidated Financial Statements. SUPERTEX, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited, in thousands) Nine months Ended December 31, 2000 December 31, 1999 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 8,780 $ 5,495 Non-cash adjustments to net income: Depreciation and amortization 3,868 4,320 Provision for doubtful accounts and sales returns 1,683 1,932 Provision for excess and obsolete inventories 277 866 Gain on disposal of assets (776) -- Changes in operating assets and liabilities: Accounts receivable (3,661) (4,589) Inventories 865 (3,570) Prepaid expenses and other assets (1,317) (88) Trade accounts payable and accrued expenses 519 1,832 Income taxes payable 1,157 757 Deferred license revenue 400 -- Deferred revenue on shipments to distributors (111) (95) ------ ------ Total adjustments 2,902 1,365 ------ ------ Net cash provided by operating activities 11,682 6,860 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property, plant and equipment (4,888) (3,386) Proceeds from disposal of assets 961 -- Purchases of short term investments (39,276) (43,536) Proceeds from maturities of short term investments 28,228 23,255 Purchases of long term investments (1,750) -- ------ ------ Net cash used in investing activities (16,725) (23,667) ------ ------ CASH FLOWS FROM FINANCING ACTIVITIES Stock options exercised 1,123 723 Repurchase of stock -- (966) Net cash provided by (used in) financing ------ ------ activities 1,123 (243) ------ ------ NET DECREASE IN CASH AND CASH EQUIVALENTS (3,920) (17,050) CASH AND CASH EQUIVALENTS: Beginning of period 22,584 28,190 End of period $ 18,664 $ 11,140 See accompanying Notes to Unaudited Condensed Consolidated Financial Statements. 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 nine months ended December 31 , 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 Inventories consisted of (in thousands): December 31, 2000 March 31, 2000 Raw materials.................... $ 1,720 $ 1,088 Work-in-process.................. 8,632 11,652 Finished goods................... 3,589 2,343 --------- --------- $ 13,941 $ 15,083 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). Three-months Ended, Nine-months Ended, December 31, December 31, 2000 1999 2000 1999 BASIC: Net income $ 2,177 $ 2,444 $ 8,780 $ 5,495 Weighted average shares outstanding for the period 12,386 12,121 12,335 12,104 ------ ------ ------ ------ Net income per share $ 0.18 $ 0.20 $ 0.71 $ 0.45 DILUTED: Net income $ 2,177 $ 2,444 $ 8,780 $ 5,495 Weighted average shares outstanding for the period 12,386 12,121 12,335 12,104 Dilutive effect of stock options 655 375 756 290 ------ ------ ------ ------ Total 13,041 12,496 13,091 12,394 ------ ------ ------ ------ Net income per share $ 0.17 $ 0.20 $ 0.67 $ 0.44 Note 4 - Long Term Investments On June 21, 2000, the Company purchased 1,059,322 shares of Series A Preferred Stock of LightConnect Inc., an optical MEMS start up, for $1,000,000. The Company owns 12% of LightConnect's outstanding Series A Preferred Stock shares. On September 2000, the Company purchased 600,000 shares of Series A Preferred Stock of OEpic Inc., for $750,000. OEpic Inc., is a start up company whose business is in design, manufacture and sale of ultra-high-speed integrated photonic components for the next generation telecommunication applications. The company owns 14% of OEpic's outstanding Series A Preferred Stock shares. The Company recorded its investment in both LightConnect and OEpic as long-term investments 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. An example of such a statement in this 10-Q is 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. This statement is only a prediction, is not a guaranty of future performance, and is 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 from those expressed or forecasted in the forward-looking statements. These risks and 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. Overview Supertex designs, develops, manufactures, and markets high voltage analog and mixed signal integrated circuits utilizing state-of-the-art high voltage DMOS, HVCMOS and HVBiCMOS analog and mixed signal technologies. We supply standard and custom interface products primarily for use in the telecommunications, imaging, and medical electronics markets. We also provide wafer foundry services for the manufacture of integrated circuits for customers using customer-owned designs and mask toolings. Results of Operations Net Sales Net sales for the quarter ended December 31, 2000 were $20,209,000, a 14% increase compared to $17,709,000 for the same quarter last year. Net sales for the nine months ended December 31, 2000 were $65,025,000, a 28% increase compared to $50,743,000 for the same period of the prior fiscal year. The increase in sales for the quarter and year-to-date period are primarily due to increased unit sales volume of both core and foundry products. As percentage of total sales for the quarter ended December 31, 2000 and 1999, sales to customers in the medical electronics and telecommunications markets represented 37% and 28% of total sales, respectively. Sales to customers in the imaging market was 24% in 2000 compared with 23% in 1999. Sales to all other markets represented 11% in 2000 and 12% in 1999, respectively. As percentage of total sales for the nine months ended December 31, 2000, sales to customers in the medical electronics market represented 36% of our business as compared with 35% for the same period in 1999. Sales to customers in the telecommunications market was 27% in 2000 compared with 29% in 1999. Sales to customers in the imaging market was 25% in 2000 compared with 23% in 1999. Sales to all other markets represented 12% in 2000 compared with 13% in 1999. On a dollar basis, sales of our medical electronics products increased 31% to $23,314,000 for the nine months ended December 31, 2000, sales of our telecommunication products increased 19% to $17,570,000, and sales of our imaging products increased 39% to $16,472,000. Approximately 38% of the Company's net sales for this quarter and 40% for the nine-month period ended December 31, 2000, were derived from international customers as compared to 39% and 36% for the respective periods in the prior year. Although dollar sales to international customers increased from quarter to quarter, the percentage of international sales to total sales is slightly lower primarily due to lower demand in Japan. For the nine-month period, the increase in percentage of international sales is primarily due to the increased sales volume in both Europe and Asia Gross Profit As a percent of sales, the Company's gross margin for the three-month and nine-month periods ended December 31, 2000 were 42% and 41% respectively, compared with 38% and 36% for the same periods of the last fiscal year. The improvement in gross margin is primarily due to higher production volume in our new six-inch fab operation, allowing us to benefit from economies of scale. Research and Development Research and development (R&D) expense increased 93% to $3,054,000 for the quarter ended December 31, 2000 as compared to $1,583,000 for the same quarter of the prior year. For the nine months ended December 31, 2000, R&D expense increased 30% to $7,996,000 from $6,143,000 for the same period last year, with most of the increase occurring during this past quarter. The increase in R&D expense for the three-month and nine-month periods this year as compared to last year was due to an increases in payroll expense resulting from additional headcount, and in new product development efforts, as well as the transfer of our products from four-inch to six-inch fab. Our customers have continued to worked with us in our development efforts in the new integrated circuits (ICs) to drive the optical micro-electro-mechanical systems (MEMS) and in the network power interface circuits to drive photonic and gigabit Ethernet modules and voice over Internet Protocol (VoIP) telephone systems. Selling, General and Administrative Selling, general and administrative expense was $2,568,000 or 13% of net sales for the quarter ended December 31, 2000 as compared with $1,939,000 or 11% of net sales in the same quarter of the prior year. For the nine months ended December 31, 2000, selling, general and administrative expense was $7,768,000 or 12% of net sales compared to $5,044,000 or 10% for the same period last year. The dollar increases in selling, general and administrative expense for the three-month period were primarily due to salary adjustments of $227,000, consulting fees of $127,000, and commissions of $100,000. The dollar increases for the nine-month period were due to salary adjustments of $877,000, bad debt expense of $518,000 and sales commissions of $600,000, consulting fees of $175,000, depreciation of $155,000 and data processing expenses for software implementation of $154,000. Interest and Other Income Interest and other income, net for the three and nine month periods ended December 31, 2000 was $512,000 and $2,250,000, respectively. For the three and nine month periods ended December 31, 1999, interest and other income, net was $526,000 and $1,177,000, respectively. The increase for the nine-month period was due to a $776,000 gain from disposal of assets including retired equipment from the four-inch fabrication plant and a $544,000 increase in interest income attributed to larger average cash and investment balances. Provision for Income Taxes The Company's effective tax rate for the three and nine months ending December 31, 2000 was 34% compared to 33% for the same periods of the last fiscal year. Overview of Change in Financial Condition Total assets increased to $98,491,000 as of December 31, 2000, up from $86,623,000 at the end of last fiscal year ended March 31, 2000. The increase is due primarily to favorable operating results during the first nine months of the fiscal year. Liquidity and Capital Resources On December 31, 2000, the Company had $41,304,000 in cash, cash equivalents, and short-term investments, compared with $34,176,000 on March 31, 2000. This increase is due primarily to positive cash flow from operating activities of $11,682,000 consisting principally of net income of $8,780,000. Positive factors contributing to cash flow from operating activities are as follows: * There was decrease in inventory of $865,000 primarily caused by the increase in net sales. * There was an increase in income taxes payable of $1,157,000 due to a higher amount of income subject to tax and a higher tax rate. * There was an increase in trade accounts payable and accrued expenses of $520,000 resulting from normal operating activities. * There was an increase in deferred revenue from a licensing agreement of $400,000. Meanwhile, negative factors affecting operating cash flow were as follows: * There was increase in accounts receivable of $3,661,000 primarily caused by the increase in net sales. * There was an increase in prepaid expenses and other assets of $1,317,000 relating primarily to a prepaid software maintenance contract of $705,000; an increase in non-trade receivables from sale of surplus four-inch equipment of $381,000; and increased accrued interest income of $110,000. Net cash used in investing activities during the nine-month period was $16,725,000 of which $11,048,000 was used for short-term investments, $4,888,000 was used to purchase property and equipment offset by proceeds from disposal of surplus equipment of $961,000, and $1,750,000 was used to purchase long-term investments in LightConnect, Inc. and OEpic Inc. Net cash provided by financing activities during the nine-month period was $1,123,000 all of which was generated from stock option exercises. 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 (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: February 14, 2001 By: /s/Henry C. Pao ------------------- Henry C. Pao, Ph.D. President (Principal Executive and Financial Officer) -----END PRIVACY-ENHANCED MESSAGE-----