0000730000-01-500022.txt : 20011112
0000730000-01-500022.hdr.sgml : 20011112
ACCESSION NUMBER: 0000730000-01-500022
CONFORMED SUBMISSION TYPE: 10-Q
PUBLIC DOCUMENT COUNT: 1
CONFORMED PERIOD OF REPORT: 20010930
FILED AS OF DATE: 20011105
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: 1934 Act
SEC FILE NUMBER: 000-12718
FILM NUMBER: 1775048
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
supx10qq2.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 September 30, 2001
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 incorporation or organization) (IRS Employer Identification #)
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
The total number of shares outstanding of the Registrant's common stock as of
October 16, 2001 were 12,420,429
Total number of pages: 11
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.................................. 8
PART II- OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders........ 10
Item 6. Exhibits and Reports on Form 8-K........................... 11
Signatures............................................................ 11
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, Six-months Ended,
September 30, September 30,
2001 2000 2001 2000
Net sales $ 14,243 $ 22,512 $ 29,324 $ 44,815
Cost and expenses:
Cost of sales 8,505 13,018 17,696 26,407
Research and development 2,706 2,512 5,976 4,942
Selling, general and administrative 1,905 2,920 3,721 5,200
Total costs and expenses 13,116 18,450 27,393 36,549
Income from operations 1,127 4,062 1,931 8,266
Interest income 441 595 968 1,114
Other income (expense), net 148 651 524 623
Income before provision ------ ------ ------ ------
for income taxes 1,716 5,308 3,423 10,003
Provision for income taxes 583 1,805 1,164 3,401
------ ------ ----- -----
Net income $ 1,133 $ 3,503 $ 2,259 $ 6,602
Net income per share:
Basic $ 0.09 $ 0.28 $ 0.18 $ 0.54
Diluted $ 0.09 $ 0.27 $ 0.18 $ 0.50
Shares used in per share computation:
Basic 12,417 12,342 12,414 12,309
Diluted 12,642 13,167 12,628 13,116
See accompanying Notes to Unaudited Condensed Consolidated Financial
Statements.
SUPERTEX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
September 30, March 31,
2001 2001
ASSETS
Current assets:
Cash and cash equivalents $ 48,504 $ 44,282
Trade accounts receivable,
net of allowance of $1,827 and $2,412 12,274 13,536
Inventories 14,295 14,388
Prepaid expenses and other current assets 1,190 1,404
Deferred income taxes 4,388 4,388
------ ------
Total current assets 80,651 77,998
Property, plant and equipment, net 15,171 15,200
Intangible and other assets, net 1,987 2,499
Deferred income taxes 2,998 2,998
------- -------
TOTAL ASSETS $ 100,807 $ 98,695
LIABILITIES
Current liabilities:
Trade accounts payable $ 5,689 $ 6,659
Accrued salaries, wages and employee benefits 6,552 7,173
Other accrued liabilities 801 645
Deferred revenue 1,866 1,262
Income taxes payable 987 597
------ ------
Total current liabilities 15,895 16,336
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 12,420 and 12,394 shares 25,875 25,318
Retained earnings 59,037 57,041
------- -------
Total shareholders' equity 84,912 82,359
------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 100,807 $ 98,695
See accompanying Notes to Unaudited Condensed Consolidated Financial
Statements.
SUPERTEX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
Six months Ended
CASH FLOWS FROM OPERATING ACTIVITIES September 30, September 30,
2001 2000
Net income $ 2,259 $ 6,602
Non-cash adjustments to net income:
Depreciation and amortization 1,801 2,531
Provision for doubtful accounts
and sales returns 405 1,211
Provision for excess
and obsolete inventories 58 277
Gain on sale of long-term investments (127) (628)
Changes in operating assets and liabilities:
Accounts receivable 857 (4,545)
Inventories 35 184
Prepaid expenses and other assets 178 (880)
Trade accounts payable
and accrued expenses (1,435) 2,170
Income taxes payable 390 1,919
Deferred revenue 604 371
----- -----
Total adjustments 2,766 2,610
----- -----
Net cash provided by operating activities 5,025 9,212
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment (1,724) (3,659)
Proceeds from disposal of assets 717
Purchases of short-term investments -- 28,228
Proceeds from maturities of investments -- (16,636)
Sales (purchases) of long-term investments 627 (1,000)
Net cash provided by (used in)
investing activities (1,097) 7,650
CASH FLOWS FROM FINANCING ACTIVITIES
Stock options exercised 610 928
Repurchase of stock (316) --
Net cash provided by financing activities 294 928
------ ------
NET INCREASE IN CASH AND CASH EQUIVALENTS 4,222 17,790
CASH AND CASH EQUIVALENTS:
Beginning of period 44,282 22,584
------ ------
End of period $ 48,504 $ 40,374
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 quarters ended September 30, 2001 and 2000 include all
adjustments (consisting of normal recurring adjustments) necessary for fair
presentation of the consolidated financial condition, results of operations,
and cash flows for those periods in accordance with accounting principles
generally accepted in the United States of America.
The year-end condensed balance sheet data was derived from audited financial
statements, but does not include all disclosures required by accounting
principles generally accepted in the United States of America. These
financial statements should be read in conjunction with the audited
consolidated financial statements of Supertex, Inc. for the fiscal year ended
March 31, 2001, 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 accounting
principles generally accepted in the United States of America 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):
September 30, 2001 March 31, 2001
Raw materials........................... $ 1,420 $ 1,662
Work-in-process......................... 9,985 9,281
Finished goods.......................... 2,890 3,445
------- -------
$ 14,295 $ 14,388
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, Six-months Ended
September 30, September 30,
2001 2000 2001 2000
BASIC:
Net income $ 1,133 $ 3,503 $ 2,259 $ 6,602
Weighted average shares
outstanding for the period 12,417 12,342 12,414 12,309
Net income per share $ 0.09 $ 0.28 $ 0.18 $ 0.54
DILUTED:
Net income $ 1,133 $ 3,503 $ 2,259 $ 6,602
Weighted average shares
outstanding for the period 12,417 12,342 12,414 12,309
Dilutive effect of stock options 225 825 214 807
------ ------ ------ ------
Total 12,642 13,167 12,628 13,116
Net income per share $ 0.09 $ 0.27 $ 0.18 $ 0.50
Note 4 - Recent Accounting Pronouncements
Recent Accounting Pronouncements In June 1998, the Financial Accounting
Standards Board (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 adopted SFAS No. 133 effective April 1, 2001. The
adoption of SFAS 133 did not have a material impact on the Company's financial
position or results of operations.
In July 2001, FASB issued FASB Statements Nos. 141 and 142 (FAS 141 and
FAS 142), "Business Combinations" and "Goodwill and Other Intangible Assets."
FAS 141 replaces APB 16 and eliminates pooling-of-interests accounting
prospectively. It also provides guidance on purchase accounting related to
the recognition of intangible assets and accounting for negative goodwill.
FAS 142 changes the accounting for goodwill from an amortization method to an
impairment-only approach. Under FAS 142, goodwill will be tested annually and
whenever events or circumstances occur indicating that goodwill might be
impaired. FAS 141 and FAS 142 are effective for all business combinations
completed after June 30, 2001. Upon adoption of FAS 142, amortization of
goodwill recorded for business combinations consummated prior to July 1, 2001
will cease, and intangible assets acquired prior to July 1, 2001 that do not
meet the criteria for recognition under FAS 141 will be reclassified to
goodwill. Companies are required to adopt FAS 142 for fiscal years beginning
after December 15, 2001, but early adoption is permitted. The Company expects
to adopt FAS 142 effective April 1, 2002. The Company has determined that the
adoption of FAS 142 will not have a material impact on its results of
operations and financial position.
In June 2001, the FASB issued FASB Statement No. 143 (FAS 143), "Accounting
for Asset Retirement Obligations". FAS 143 requires that the fair value of a
liability for an asset retirement obligation be realized in the period which
it is incurred if a reasonable estimate of fair value can be made. Companies
are required to adopt FAS 143 for fiscal years beginning after June 15, 2002,
but early adoption is encouraged. The Company has not yet determined the
impact this standard will have on its financial position and results of
operations, although it does not anticipate that the adoption of this standard
will have a material impact on the Company's financial position or results of
operations.
In August 2001, the FASB issued FASB Statement No. 144 (FAS 144). "Accounting
for the Impairment or Disposal of Long-lived Assets". FAS 144 supercedes FASB
Statement No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of, and the accounting and reporting
provisions of APB Opinion No. 30, Reporting the Results of Operations --
Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions, for
the disposal of a segment of a business (as previously defined in that
Opinion). This Statement also amends ARB No. 51, Consolidated Financial
Statements, to eliminate the exception to consolidation for a subsidiary for
which control is likely to be temporary. Companies are required to adopt FAS
144 for fiscal years beginning after December 15, 2001, and interim periods
within those fiscal years, but early adoption is encouraged. The Company has
not yet determined the impact this standard will have on its financial
position and results of operations, although it does not anticipate that the
adoption of this standard will have a material impact on the Company's
financial position or results of operations.
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, 2001. 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 September 30, 2001 were
$14,243,000, a 37% decrease compared to $22,512,000 for the same quarter last
year. Net sales for the six months ended September 30, 2001 were $29,324,000,
a 35% decrease compared to $44,815,000 for the same period of the prior fiscal
year. Sales for the second quarter were adversely affected by the decline in
the telecommunications infrastructure spending and general economic slowdown
with weakness in all the markets we serve. Many of our customers reduced
their demands for our component products as they face slower customer orders
and rising inventory levels.
As a percentage of total sales for the quarter ended September 30, 2001, sales
to customers in the medical electronics, imaging, and telecommunications
markets represented 38%, 30%, and 22% of total sales, respectively, compared
to 38%, 26% and 25% of total sales for the quarter ended September 30, 2000.
Sales to customers in other markets for the quarter ended September 30, 2001
was 10% of total sales, compared to 11% of the same period of last fiscal
year.
Approximately 27% of the Company's net sales for the quarter ended
September 30, 2001 and 28% for the six-month period ended September 30, 2001
were derived from international customers as compared to 41% and 40% of the
same periods of last year. The decrease in international sales resulted from
decreased shipments to our customers in Asia and Europe primarily due to the
sharp decline of orders from contract manufacturers in Asia and the lack of
telecommunications infrastructure spending.
Gross Profit As a percent of sales, the Company's gross profit was 40% for
the three-month and six-month periods ended September 30, 2001 compared with
42% and 41% for the respective periods in the prior fiscal year. Rigorous cost
reduction measures allowed the Company to quickly lower manufacturing
expenditures to adjust to a much lower sales level thereby retaining the gross
profit percentage to sales.
Research and Development Research and development (R&D) expense increased 8%
to $2,706,000 for the quarter ended September 30, 2001 as compared to
$2,512,000 for the same quarter of the prior fiscal year. For the six months
ended September 30, 2001, research and development increased 21% to $5,976,000
from $4,942,000 for the same period last year. The increase in R&D expense in
absolute dollars as well as in percentage of sales is primarily due to the
Company's continued development efforts in new integrated circuits (ICs) to
drive the optical micro-electro-mechanical systems (MEMS) and in network power
interface circuits to drive photonic and gigabit Ethernet modules and voice
over Internet Protocol (VoIP) telephone systems. The increase in R&D
expenses in the three and six-month periods ended September 30, 2001 included
labor costs for additional headcount, rent, purchases of mask toolings, and
data processing costs to support new product development activities in our
design centers.
Selling, General and Administrative Selling, general and administrative
expense (SG&A) was $1,905,000 or 13% of net sales for the quarter ended
September 30, 2001 as compared with $2,920,000 or 13% of net sales in the
same quarter of the prior fiscal year. For the six months ended
September 30, 2001, selling, general and administrative expense was
$3,721,000 or 13% of net sales compared to $5,200,000 or 12% for the same
period of the prior fiscal year. In absolute dollars, SG&A expenditures for
the three-month period decreased by 35% when compared to the same period in
the prior fiscal year primarily due to a reduction in sales commissions of
$184,000 attributed to a declining sales, a drop in provision for bad debts of
$296,000 and a decrease in labor costs and related benefits of $420,000 due to
a reduction in headcount. For the six-month period, the reduction in SG&A
dollar expenditures when compared to the same period in the prior fiscal year
was due to a reduction in sales commissions of $340,000, a reduction in the
provision for bad debts of $606,000, and a decrease in labor costs and
related benefits of $322,000 due to a reduction in headcount.
Income from Operations Income from operations was $1,127,000, or 8% of net
sales for the quarter ended September 30, 2001 compared to $4,062,000, or 18%
of net sales for the quarter ended September 30, 2000. For the six months
ended September 30, 2001, income from operations was $1,931,000 or 7% of net
sales, compared to $8,266,000 or 18% of net sales for the same period of the
prior fiscal year. The decrease in operating income as a percentage of sales
is attributable to the increase in research and development expense at a time
of declining sales.
Interest and Other Income Interest and other income, net for the three-month
and six-month periods ended September 30, 2001, were $589,000 and $1,492,000,
respectively. For the three-month and six-month periods ended September 30,
2000, interest and other income were $1,246,000 and $1,737,000, respectively.
The decrease in other income compared with the same period of prior fiscal
year is primarily due to a decrease in proceeds from disposal of surplus
equipment and lower yields on cash deposit accounts.
Provision for Income Taxes The Company's effective tax rate for the three
months ended September 30, 2001 remained unchanged at 34%.
Liquidity and Capital Resources On September 30, 2001, the Company had
$48,504,000 in cash and cash equivalents, compared with $44,282,000 on
March 31, 2001. This increase is due primarily to a positive cash flow from
operating activities of $5,025,000 consisting principally of net income of
$2,259,000 and non-cash charges for depreciation and amortization of
$1,801,000. Factors affecting cash flow from operating activities include
(a) a decrease in accounts receivable of $857,000 with a corresponding
reduction in the provision for doubtful accounts and sales return of
$405,000 largely due to lower sales; (b) an increase in deferred revenue of
$604,000, of which $425,000 is derived from a technology licensing agreement;
and (c) a decrease in accounts payable and other accrued items of $1,435,000
due to a decrease in purchasing activities.
Net cash used in investing activities during the six-month period was
$1,097,000 of which $1,724,000 was used to purchase equipment for the wafer
fab and testing operations offset in part by $627,000 provided by the proceeds
from the sale of long-term investments in Galleon New Media Funds.
Net cash provided by financing activities for the six-month period was
$294,000 generated by proceeds from the issuance of common stock through the
exercise of employee stock options of $226,000, and by proceeds from the
issuance of common stock through the Employee Stock Purchase Plan of $384,000.
This amount was offset by our repurchase of 25,000 shares of common stock for
$316,000 as authorized by the Company's Stock Repurchase Program.
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.
Item 2. - Quantitative and Qualitative Disclosures About Market Risk and
Interest Rate Risk.
Interest Rate Sensitivity The Company is exposed to financial market risks
due primarily to changes in interest rates. The Company does not use
derivatives to alter the interest characteristics of its investment
securities. The Company has no holdings of derivative or commodity
instruments. The fair value of the Company's investment portfolio or related
income would not be significantly impacted by changes in interest rates since
the investment maturities are short and the interest rates are primarily
fixed. As of September 30,2001, the Company maintained its funds primarily
in money market funds and it plans to continue to invest a significant portion
of its existing cash in interest bearing money market funds and other
short-term debt securities with maturities of less than a year.
PART II - OTHER INFORMATION
Item 4. - Submission of Matters to a Vote of Security Holders
The Company's Annual Shareholders' Meeting was held on August 17, 2001 at
10:00 a.m., at which the following matters were acted upon:
Votes Withheld/ Broker
Matter Acted Upon Votes For Votes Against Abstentions Non-Votes
1. Election of Directors
Benedict Choy 11,012,937 0 906,922 0
Henry C. Pao 11,039,682 0 880,177 0
Richard Siegel 11,216,221 0 703,638 0
W. Mark Loveless 11,422,756 0 497,103 0
Elliott Schlam 11,422,392 0 497,467 0
Milton Feng 11,422,392 0 497,467 0
2. Approval of the adoption of the 2001 Stock Option Plan and the
reservation of 2,000,000 shares of common stock.
7,487,709 2,304,866 21,090 2,106,194
3. Ratification of the appointment of PricewaterhouseCoopers LLP as the
independent accountants of the Company for the fiscal year ending
March 30, 2002.
11,904,366 8,825 6,668 0
Item 6. - Exhibits and Reports on Form 8-K
(a) Exhibits: None
(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: October 22, 2001
By: /s/ Henry C. Pao
Henry C. Pao, Ph.D.
President
(Principal Executive and Financial Officer)