-----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, Uohp1KWFdfZgVHnPLoG2ZR/yPVB5y6YXOiRStNnmP5tS443QwmxQdLpLY+KMg5BX bQ71HPHYjjczYsLai8laPg== 0000730000-99-000005.txt : 19990809 0000730000-99-000005.hdr.sgml : 19990809 ACCESSION NUMBER: 0000730000-99-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990730 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: 99675044 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 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 June 30, 1999 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 July 15, 1999, 12,092,568 shares of the Registrant's common stock were issued and outstanding. Total number of pages: 12 SUPERTEX, INC. QUARTERLY REPORT - FORM 10Q Table of Contents Page No. - ----------------- -------- PART I - FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Statements of Income .................... 3 Consolidated Balance Sheets .......................... 4 Consolidated Statements of Cash Flows ................ 5 Notes to Consolidated Financial Statements ........... 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations .................. 8 PART II - OTHER INFORMATION Item 6. Exhibits, Financial Statement Schedule and Reports on Form 8-K .............................. 11 PART I - FINANCIAL INFORMATION Item 1. Financial Statements SUPERTEX, INC. CONSOLIDATED STATEMENTS OF INCOME (unaudited) (in thousands, except per share amounts)
Three-months Ended, June 30, ---------- 1999 1998 ---- ---- Net sales $ 16,297 $ 13,001 -------- -------- Cost and expenses: Cost of sales 10,741 6,907 Research and development 2,835 1,501 Selling, general and administrative 1,492 1,692 -------- -------- Total costs and expenses 15,068 10,100 -------- -------- Income from operations 1,229 2,901 Interest income 415 470 Other income (expense), net (48) (29) -------- -------- Income before provision for income taxes 1,596 3,342 Provision for income taxes 527 1,135 -------- -------- Net income $ 1,069 $ 2,207 ======== ======== Net income per share: Basic $ 0.09 $ 0.18 ======== ======== Diluted $ 0.09 $ 0.18 ======== ======== Shares used in per share computation Basic 12,082 12,098 ======== ======== Diluted 12,212 12,322 ======== ======== See accompanying Notes to Consolidated Financial Statements.
SUPERTEX, INC. CONSOLIDATED BALANCE SHEETS (unaudited)
Jun. 30, 1999 Mar. 31, 1999 ------------- ------------- (in thousands) ASSETS Current Assets: Cash and cash equivalents $ 20,436 $ 28,190 Short term investments 10,050 1,366 Trade accounts receivable, net of allowances of $1,012 and $1,020 12,440 10,860 Other accounts receivable 714 657 Inventories 12,731 11,330 Deferred income taxes 1,862 1,862 Prepaid expenses 286 453 -------- -------- Total current assets 58,519 54,718 Property and equipment, net 15,119 15,946 Long-term receivables 41 -- Intangibles assets, net 1,815 2,072 Deferred Income Taxes 1,853 1,853 -------- -------- TOTAL ASSETS $ 77,347 $ 74,589 ======== ========
LIABILITIES
Current liabilities: Trade accounts payable $ 7,986 $ 6,835 Accrued salaries, wages and employee benefits 3,882 3,162 Income taxes payable 519 -- Other accrued liabilities 416 714 Deferred revenue on shipments to distributors 1,065 1,198 -------- -------- Total current liabilities 13,868 11,909 -------- -------- 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 12,077 and 12,099 shares in 1998 20,949 20,895 Accumulated other comprehensive income 358 356 Retained earnings 42,172 41,429 -------- -------- Total shareholders' equity 63,479 62,680 -------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 77,347 $ 74,589 ======== ======== See accompanying Notes to Consolidated Financial Statements.
SUPERTEX, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited, in thousands)
Three Months Ended ----------------- June 30, 1999 June 30, 1999 ------------- ------------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 1,069 $ 2,207 -------- -------- Non-cash adjustments to net income: Depreciation and amortization 1,461 772 Provision for doubtful accounts and sales returns 350 254 Provision for excess and obsolete inventories 297 (161) Changes in operating assets and liabilities: Trade and other receivables (2,028) 855 Inventories (1,698) (167) Prepaid expenses 167 13 Trade accounts payable and accrued expenses 1,573 (671) Income taxes payable 519 1,054 Deferred revenue on shipments to distributors (133) (165) -------- -------- Total adjustments 508 1,784 -------- -------- Net cash provided by operating activities 1,577 3,991 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment (377) (732) Purchases of short term investments (8,682) (11,400) Proceeds from maturities of short term investments -- 6,000 Other -- 58 -------- -------- Net cash used in investing activities (9,059) (6,074) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Stock options exercised 132 25 Repurchase of stock (404) -- ------- ------- Net cash used in financing activities (272) 25 ------- ------- NET DECREASE IN CASH AND CASH EQUIVALENTS (7,754) (2,058) CASH AND CASH EQUIVALENTS: Beginning of period 28,190 24,556 -------- -------- End of period $ 20,436 $ 22,498 ======== ======== See accompanying Notes to Consolidated Financial Statements.
SUPERTEX, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 - ------ In the opinion of management, the unaudited financial statements for the three months ended June 30, 1999 and 1998 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, 1999, 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. Note 2 - ------
Inventories consisted of (in thousands): Dec. 31, 1998 March 31, 1998 ------------- -------------- (unaudited) Finished goods .............................. $ 3,650 $ 3,534 Work-in-process ............................. 7,813 7,099 Raw materials ............................... 1,268 697 ------- ------- $12,371 $11,330 ======= =======
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. The following is a reconciliation of the numerator (net income) and the denominator (number of shares) used in the basic and diluted EPS calculations.
For Three-months Ended, ----------------------- June 30, -------- 1999 1998 ---- ---- BASIC: Weighted average shares outstanding for the period 12,082 12,098 Net income $ 1,069 $ 2,207 -------- -------- Net income per share $ 0.09 $ 0.18 ======== ======== DILUTED: Weighted average shares outstanding for the period 12,082 12,098 Common stock equivalents 130 224 ------ ------ Total common and common equivalent shares 12,212 12,322 ------ ------ Net income $ 1,069 $ 2,207 ------- ------- Net income per share $ 0.09 $ 0.18 ======= =======
SUPERTEX, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 4 - ------ Comprehensive Income: The Company has adopted the provisions of Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income." The statement requires the disclosure of comprehensive income and its components in a full set of general purpose financial statements or on the statement of operations. Comprehensive income is defined as net income plus revenues, expenses, gains and losses that are excluded from net income in accordance with generally accepted accounting principles. There are no material differences between comprehensive income and the net income. 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 operation 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. PART I - FINANCIAL INFORMATION Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations Certain Factors: This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21 E of the Securities Exchange Act of 1934. Actual future results could differ materially from those discussed here and elsewhere in this report. Factors that could affect future results include general economic conditions, both in the United States and foreign markets, economic conditions specific to the semiconductor industry, risks associated with customer concentration, the successful integration of the newly acquired wafer fabrication facility and other risks associated with this acquisition, the Company's timely introduction of new products, its ability to enhance existing products, its ability to implement new capacities or technologies, its ability to meet the continually changing requirements of its customers, its ability to manufacture efficiently, its ability to control costs, and its ability to maintain and enhance relationships with its assembly and test subcontractors and independent distributors and sales representatives. Concentration of Credit Risk: The Company sells its semiconductor products in North America, Europe and the Pacific Rim to numerous customers. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. Allowances for potential credit losses are maintained and such losses historically have not been material. Substantially all of the Company's cash, cash equivalents and short term investments are held at four major financial institutions domiciled in the United States. Results of Operations Net Sales: Net sales for the quarter ended June 30, 1999 were $16,297,000, a 25% increase from $13,001,000 of the same quarter last year. This sales increase was primarily due to our recently acquired foundry business through the fab acquisition. In this quarter, approximately 35% of the Company's net sales were derived from customers outside the United States. All of the Company's sales to international customers were denominated in U.S. currencies. There was no currency exchange exposure, however as the U.S. dollar continues to be strong against other currencies, many international customers requested and received modest price concessions. Gross Profit: The Company's gross profit for the quarter was $5,556,000, compared with $6,094,000 in the same quarter last year. As a percent of net sales, gross margin for the quarter was 34%, a 13% decrease from when compared with the same quarter last fiscal year. The gross profit was adversely affected by the extra overhead absorption of the two fabs, including the double declining depreciation of the physical assets of the new fab. Research and Development: Research and development expenses increased 89% to $2,835,000 for the quarter ended June 30, 1999 as compared with $1,501,000 for the same quarter of last year. As a percent of sales, research and development expenditures increase to 17% compared to 12% for the same quarter last year. The increase was primarily due to a non-recurring payment of $1,350,000 to Orbit Semiconductor, Inc. under a process development agreement. This is the final payment to Orbit for assisting Supertex in accelerating the process transfer to the recently acquired six-inch fab from Supertex's existing four-inch fab which is scheduled to close by the end of this fiscal year. Selling, General and Administrative: Expenses for selling, general and administrative were lower at $1,492,000, or 9% of net sales for the quarter ending June 30, 1999 as compared with $1,692,000, 13%, in the same quarter of last fiscal year. The dollar decrease in this category was primarily due to a decrease in bad debt expenses. Interest and Other Income (Expense): Interest and other income (expense) for this period were $367,000 compared with $441,000 last year. There were less funds available for investment due to the cash used in the acquisition of the new fab facility. Provision for Income Taxes: The Company's effective tax rate for the three months ended June 30, 1999 was at 33% compared to 34% of the same period last year. Overview: Total assets grew to $77,347,000 as of June 30, 1999 up from $74,589,000 from quarter ending March 31, 1999. The increase is due to a favorable operating results for the quarter. Liquidity and Capital Resources: On June 30, 1999, the Company had $30,486,000 in cash, cash equivalents, and short term investments, compared with $29,556,000 on March 31, 1999. This increase is mostly due to positive cash flow from operating activities of $1,577,000 consisting principally of net income of $1,069,000. Net cash used in investing activities in the first quarter of 1999 was $9,059,000 which consisted primarily of purchases of short term investments. Net cash used in financing activities was $272,000 which consists primarily of funds used for stock repurchase of $404,000 offset by proceeds from exercises of stock options. The Company anticipates that available funds and cash expected to be generated from operations will be sufficient to meet cash and working capital requirements through the end of fiscal year 2000. Year 2000 Issues. Background: The Company is aware of the issues associated with the programming code in existing computer systems and software products as the millennium (year 2000) approaches. The "Year 2000" or "Y2K" problem is pervasive and complex, as virtually every computer operation will be affected in the same way by the rollover of the two digit year value to 00. The issue is whether computer systems will properly recognize date-sensitive information when the year changes to 2000. Systems that do not properly recognize such information could generate erroneous data or cause them to fail. As a result, many companies' software, computer systems and other equipment may need to be reprogrammed or replaced in order to comply with such "Y2K" requirements. Assessment: The Y2K problem could affect computers, software, and other equipment used, operated, or maintained by the Company. Accordingly, the Company has been reviewing its internal computer program and systems to ensure that they will be Y2K compliant in a timely manner. It is utilizing both internal and external resources to identify, correct or reprogram, and test the systems for Y2K compliance. The Company's Y2K readiness program is divided into five major sections, namely; Enterprise Resource Planning (ERP) Systems, PC Systems and Applications, Shop Floor Control System, the Facilities Systems, and Third Party Suppliers and Customers. The inventory and priority assessment phases of each section of the program have been completed. The testing phases of the program are being performed by the Company. It is anticipated that all reprogramming efforts will be completed by September 30, 1999. For other sections, a safety net has been built into our Y2K readiness program to allow for any possible unplanned or unscheduled occurrence that may need to be remedied prior to the millennium. As part of the Y2K readiness program, the Company has purchased and is implementing a Shop Floor Control System ("MESA") software, from Camstar Systems, Inc. This will replace the existing work in process tracking system. Implementation of MESA is on schedule and is expected to be completed by the second fiscal quarter of this year. Remaining business software programs and computer systems are expected to be Y2K compliant through the Y2K readiness program including those supplied by vendors. Any business software programs and computer systems that are not Y2K compliant will be retired before the millennium. It is important to note that Supertex, Inc. products are not date sensitive. Suppliers and Customers: As part of the Y2K readiness program, the Company has identified primary vendors, service providers and customers that are believed to be critical to business operations. Steps are being undertaken to reasonably ascertain their stage of Y2K readiness through questionnaires, interviews and other available means. The process of evaluating these third party business partners began on July 1, 1998 and was completed in June, 1999. Follow-up reviews are scheduled throughout the remainder of 1999. However, the Company has limited or no control over the actions of these third parties. Thus, while the Company does not anticipate any significant Y2K problems relating to these parties, there can be no assurance that these third party entities will resolve any or all Y2K problems before the occurrence of a material disruption to the Company or any of its customers. Any failure of these third parties to resolve their Y2K problems in a timely manner could have a material adverse effect on the Company's business, financial condition and results of operations. Costs: It is currently estimated that the aggregate cost of the Company's Y2K project is approximately $1,200,000 including the cost of implementing MESA, estimated to be approximately $700,000, substantially all of which would be capitalized. Other non-Y2K information technology projects have not been materially delayed or impacted by the Company's Y2K initiatives. Contingency Plans: The Company is currently developing contingency plans intended to mitigate possible disruption in business operations that may result from the Y2K issue. The Company's initial contingency plan was completed on June 30, 1999. Contingency plans may include increasing inventory levels of raw materials, securing alternate sources of supply and distribution, accelerated replacement of affected equipment or software, short to medium-term use of backup equipment and software, increased work hours for Company personnel, additional staffing, manual workarounds and other appropriate measures. Risks: The Company's Y2K readiness program is an ongoing process and the risk assessments and estimates of costs and completion dates for the various components of the Y2K readiness program described above are forward looking statements and are subject to change. Factors that may cause changes include among others the continued availability and cost of programming and testing resources, ability to identify and remediate all Y2K problems, the timely implementation of Y2K ready systems, the timely conversion by third parties of their equipment and proprietary software, and unanticipated problems identified in the ongoing compliance review. Although preliminary estimates indicate that the Y2K issue will not have a material impact on the Company, there can be no assurance that the Y2K issues, due to the above factors or other unforeseen consequences, will not have a material adverse effect on the Company's business, financial condition and operating results. PART II - OTHER INFORMATION Item 6. - Exhibits and Reports on Form 8-K (a) Exhibits 27.1 Financial Data Schedule (b) Reports on Form 8-K. None. 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: July 28, 1999 By: /s/ Henry C. Pao --------------------------- Dr. Henry C. Pao, President (Principal Executive and Financial Officer) EX-27 2 ARTICLE 5 FINANCIAL DATA SCHEDULE FOR FIRST FISCAL QTR. 10-Q
5 1,000 3-MOS MAR-25-2000 JUN-30-1999 20,436 10,050 13,452 1,012 12,731 58,519 34,599 19,480 77,347 13,868 0 0 0 20,949 42,530 77,347 16,297 16,297 10,741 15,068 0 104 0 1,596 527 1,069 0 0 0 1,069 .09 .09
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