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, 2002
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
The total number of shares outstanding of the Registrant's common stock as of
February 7, 2003 was 12,658,267
Total number of pages: 15
SUPERTEX, INC.
QUARTERLY REPORT - FORM 10Q
Table of Contents Page No.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Condensed Consolidated Statements of Income 3
Unaudited Condensed Consolidated Balance Sheets 4
Unaudited 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
Item 3. Quantitative and Qualitative Disclosures About Market Risk
and Interest Rate Risk 12
Item 4. Controls and Procedures 12
PART II- OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities and Use of Proceeds 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Securities Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
Statement of Chief Executive Officer and Chief Financial Officer under
18 U.S.C. 1350 14
Signatures 14
Certifications 15
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,
2002 2001 2002 2001
Net sales $13,888 $14,062 $40,385 $43,386
------- ------- ------- -------
Cost and expenses:
Cost of sales 8,658 7,955 25,609 25,651
Research and development 2,164 2,581 6,972 8,558
Selling, general and administrative 2,366 1,803 6,407 5,523
------- ------- ------- -------
Total costs and expenses 13,188 12,339 38,988 39,732
------- ------- ------- -------
Income from operations 700 1,723 1,397 3,654
Interest income 154 335 648 1,303
Other income (expense), net 124 (46) 538 478
------- ------- ------- -------
Income before provision
for income taxes 978 2,012 2,583 5,435
Provision for income taxes 281 684 827 1,848
------- ------- ------- -------
Net income $697 $1,328 $1,756 $3,587
======= ======= ======= =======
Net income per share:
Basic $0.06 $0.11 $0.14 $0.29
======= ======= ======= =======
Diluted $0.05 $0.10 $0.14 $0.28
======= ======= ======= =======
Shares used in per share computation:
Basic 12,608 12,445 12,591 12,424
======= ======= ======= =======
Diluted 12,680 12,796 12,752 12,678
======= ======= ======= =======
See accompanying Notes to Unaudited Condensed Consolidated Financial
Statements.
SUPERTEX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
December 31, March 31,
2002 2002
ASSETS
Current assets:
Cash and cash equivalents $ 57,305 $ 52,492
Short term investments 3,866 0
Trade accounts receivable, net 8,788 9,436
Inventories 14,779 16,494
Prepaid expenses and other current assets 665 902
Deferred income taxes 3,293 3,293
--------- ---------
Total current assets 88,696 82,617
Property, plant and equipment, net 13,335 16,327
Other Assets 101 1,451
Deferred income taxes 2,985 2,985
--------- ---------
TOTAL ASSETS $ 105,117 $ 103,380
========= =========
LIABILITIES
Current liabilities:
Trade accounts payable $ 3,120 $ 5,769
Accrued salaries, wages and employee benefits 6,021 6,565
Other accrued liabilities 661 655
Deferred revenue 1,881 1,729
Income taxes payable 2,450 566
-------- --------
Total current liabilities 14,133 15,284
-------- --------
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 12,658 and 12,544 shares
at December 31, 2002 and March 31, 2002,
respectively 28,586 27,454
Retained earnings 62,398 60,642
-------- --------
Total shareholders' equity 90,984 88,096
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 105,117 $ 103,380
======== ========
See accompanying Notes to Unaudited Condensed Consolidated Financial
Statements.
SUPERTEX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
Nine months Ended
CASH FLOWS FROM OPERATING ACTIVITIES December 31, December 31,
2002 2001
Net income $ 1,756 $ 3,587
---------- ----------
Non-cash adjustments to net income:
Depreciation and amortization 4,128 2,927
Provision for doubtful accounts (147) (416)
Provision for excess and obsolete inventories 896 901
Gain on sale of long-term investments (1,092) (127)
Gain (loss) on disposal of assets (10) 12
Loss on impairment of long-term investment 750 --
Changes in operating assets and liabilities:
Accounts receivable 795 2,769
Inventories 819 (1,524)
Prepaid expenses and other assets 237 315
Trade accounts payable and accrued expenses (3,187) (2,384)
Income taxes payable 1,884 1,105
Deferred revenue 152 566
---------- ----------
Total adjustments 5,225 4,144
---------- ----------
Net cash provided by operating activities 6,981 7,731
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment (1,136) (4,838)
Proceeds from disposal of property and equipment 10 149
Purchases of short-term investments (3,866) --
Sales of long-term investments 1,692 627
---------- ----------
Net cash used in investing activities (3,300) (4,062)
CASH FLOWS FROM FINANCING ACTIVITIES
Stock options exercised 1,132 1,014
Repurchase of stock -- (315)
---------- ----------
Net cash provided by financing activities 1,132 699
---------- ----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 4,813 4,368
CASH AND CASH EQUIVALENTS:
Beginning of period 52,492 44,282
---------- ----------
End of period $ 57,305 $ 48,650
========== ==========
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 month periods ended December 31, 2002 and
2001 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, 2002, which were included in the Annual Report on Form 10-K (File
Number 000-12718).
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.
The financial statements have been prepared on a consolidated basis. The
condensed consolidated financial statements include the accounts of Supertex,
Inc. and its subsidiary. All significant intercompany balances have been
eliminated on consolidation.
Note 2 - Inventories
Inventories consisted of (in thousands):
December 31, 2002 March 31, 2002
Raw materials........................... $ 1,164 $ 1,218
Work-in-process......................... 9,258 11,849
Finished goods.......................... 4,357 3,427
--------- --------
$ 14,779 $ 16,494
========= ========
During the quarter ended December 31, 2002, the Company recorded a charge to
cost of goods sold of approximately $937,000 to write-down work-in-process
inventory due to quantities on hand being in excess of projected demand. The
write-down in inventory is centered primarily in the Company's Telecom data
communication products.
Note 3 - Comprehensive Income
Comprehensive income equals net income for all periods presented.
Note 4 - 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,
2002 2001 2002 2001
BASIC:
Net income $ 697 $ 1,328 $ 1,756 $ 3,587
======= ======= ======= =======
Weighted average shares outstanding
for the period 12,608 12,445 12,591 12,424
======= ======= ======= =======
Net income per share $ 0.06 $ 0.11 $ 0.14 $ 0.29
======= ======= ======= =======
DILUTED:
Net income $ 697 $ 1,328 $ 1,756 $ 3,587
======= ======= ======= =======
Weighted average shares outstanding
for the period 12,608 12,445 12,591 12,424
Dilutive effect of stock options 72 351 161 254
------- ------- ------- -------
Total 12,680 12,796 12,752 12,678
======= ======= ======= =======
Net income per share $ 0.05 $ 0.10 $ 0.14 $ 0.28
======= ======= ======= =======
Options to purchase the Company's common stock of 841,369 shares at an average
price of $21.70 per share, and 437,430 shares at an average price of $30.01
per share for the third quarter of fiscal 2003 and third quarter of fiscal
2002, respectively, were outstanding but were not included in the computation
of diluted earnings per share because their effect would have been
antidilutive. For the nine months period ended December 31, 2002 and 2001,
respectively, options to purchase the Company's common stock of 650,292
shares at an average price of $24.74 per share, and 590,737 shares at an
average price of $26.34 per share, were outstanding but were not included
in the computation of diluted earnings per share because their effect would
have been antidilutive.
Note 5 - Investments
During the quarter ended September 30, 2002, the Company sold a long-term
investment resulting in a $1,092,000 gain before taxes. This gain was
partially offset by a $750,000 impairment charge before taxes to fully
reserve for another long-term investment in a start-up company that is
experiencing liquidity concerns. These amounts are included within other
income (expense), net in the Condensed Consolidated Statements of Income.
Note 6 - Recent Accounting Pronouncements
In June 2002, the FASB issued SFAS No. 146, "Accounting for Exit or Disposal
Activities" ("SFAS 146"). SFAS 146 addresses significant issues regarding the
recognition, measurement, and reporting of costs that are associated with
exit and disposal activities, including restructuring activities that are
currently accounted for under EITF No. 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)." The scope of
SFAS 146 also includes costs related to terminating a contract that is not a
capital lease and termination benefits that employees who are involuntarily
terminated receive under the terms of a one-time benefit arrangement that is
not an ongoing benefit arrangement or an individual deferred-compensation
contract. SFAS 146 is effective for exit or disposal activities that are
initiated after December 31, 2002 and early application is encouraged. The
Company's adoption of SFAS 146 on January 1, 2003 had no impact on the
Company's financial position or results of operations.
In November 2002, the FASB issued FASB Interpretation No. 45 ("FIN 45"),
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others, an interpretation of FASB
Statements No. 5, 57, and 107 and Rescission of FASB Interpretation No. 34."
FIN 45 clarifies the requirements of FASB Statement No. 5, "Accounting for
Contingencies," relating to the guarantor's accounting for, and disclosure of
the issuance of certain types of guarantees. The disclosure provisions of the
Interpretation are effective for financial statements of interim or annual
reports that end after December 15, 2002. However, the provisions for initial
recognition and measurement are effective on a prospective basis for
guarantees that are issued or modified after December 31, 2002, irrespective
of the guarantor's year-end. The Company's adoption of FIN 45 did not have
a material impact on the Company's financial position or results of
operations.
In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation, Transition and Disclosure." SFAS No.148 amends SFAS No. 123 and
requires prominent disclosures in both annual and interim financial statements
about the method of accounting for stock-based employee compensation and the
effect of the method used on reported results. SFAS No. 148 is effective for
fiscal years ending after December 15, 2002 and is effective for interim
periods beginning after December 15, 2002. The Company's adoption of SFAS
No. 148 on January 1, 2003 did not have a material effect 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 forward-looking statements in this 10-Q is our
anticipation that our available funds and expected cash generated from
operations will be sufficient to meet our cash and working capital
requirements through at least the next twelve months. These statements are
only predictions not a guaranty of future performance, and are 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 that we would have an
unexpectedly large demand for cash as well as those risks and uncertainties
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, 2002. 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.
Critical Accounting Policies
We described our critical accounting policies in Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
of our Annual Report on Form 10-K for the year ended March 31, 2002.
Our critical accounting policies are those that are most important to the
portrayal of our financial condition and results of operations, and require
our management's significant judgments and estimates and such consistent
application fairly depicts our financial condition and results of operations
for all periods presented.
Critical accounting policies affecting us, and the critical estimates we made
when applying them have not changed materially since March 31, 2002.
Overview
Supertex designs, develops, manufactures, and markets high voltage
semiconductor devices, including 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 high voltage
interface products primarily for use in the telecommunications, imaging,
medical electronics, and industrial markets. We also provide wafer foundry
services for the manufacture of integrated circuits for customers using
customer-owned designs and mask tooling.
Results of Operations
Net Sales
Net sales for the quarter ended December 31, 2002 were $13,888,000, a 1%
decrease compared to $14,062,000 for the same quarter of prior fiscal year.
Net sales for the nine months ended December 31, 2002 were $40,385,000, a 7%
decrease compared to $43,386,000 for the same period of the prior fiscal year.
Net sales for the quarter ended December 31, 2002 continued to be adversely
affected by the global economic slowdown and the slowdown in the semiconductor
industry. However, net sales for the quarter ended December 31, 2002
increased 5% sequentially when compared with net sales for the quarter ended
September 30, 2002 of $13,220,000. Medical electronics product sales
increased by $267,000 or 6%, telecommunications product sales increased by
$162,000 or 7% and imaging product sales increased by $107,000 or 2% for the
quarter ended December 31, 2002 as compared to the quarter ended September 30,
2002.
As a percentage of total net sales for the quarter ended December 31, 2002,
sales to customers in the medical electronics, imaging, and telecommunications
product sales represented 37%, 37%, and 18% of total net sales respectively,
compared to 44%, 27% and 21% of total net sales for the same quarter of the
prior fiscal year. Sales of other miscellaneous products for the quarters
ended December 31, 2002 and 2001 were 8% of total sales.
Sales to international customers for the quarter ended December 31, 2002 were
$3,788,000, or 27% of the Company's net sales as compared to $4,681,000, or
33% of total net sales for the same period of prior fiscal year. The
decrease in international sales for the quarter ended December 31, 2002
compared to the same period of the prior fiscal year is the result of
decreased shipments to our customers in Japan and Korea. For the nine-months
ended December 31, 2002 sales to international customers were $12,190,000, or
30% of total net sales as compared to $12,743,000, or 29% of total net sales
for the same period of prior fiscal year.
Gross Profit
Gross profit represents net sales less cost of sales. Cost of sales includes
the cost of purchasing raw silicon wafers, cost associated with assembly,
packaging, test, quality assurance and product yields, the cost of personnel,
facilities, and equipment associated with manufacturing support and charges
for excess inventory.
During the quarter ended December 31, 2002, the Company recorded a charge to
cost of goods sold of approximately $937,000 to write-down work-in-process
inventory due to quantities on hand being in excess of projected demand. The
write-down in inventory is centered primarily in our Telecom data
communication products. Our customer orders have increasingly become orders
placed with short lead-time instead of longer-term orders, which has made it
more difficult to project future demand.
As a percent of sales, the Company's gross margin were 38% and 37% for the
three-months and nine-months ended December 31, 2002 respectively, compared
with 43% and 41%, respectively, for the same periods of the prior fiscal year.
Gross profit has been adversely affected by less favorable product mix, the
charge for the write-down of inventory, and continued low plant capacity
utilization, which has been partially offset by continued cost controls.
Research and Development (R&D)
R&D expenses decreased 16% to $2,164,000 for the quarter ended December 31,
2002 as compared to $2,581,000 for the same quarter of the prior fiscal year.
The dollar decrease in R&D expenses for the quarter ended December 31, 2002
is primarily due to cost control measures adopted by the Company through
reduction in software and overhead expenses. Additional savings were realized
through lower prototype processing costs as several new products were
transferred to production status.
As a percent of net sales, our R&D expenses were 16% of net sales for the
quarter ended December 31, 2002 as compared with 18% for the same quarter of
the prior fiscal year.
For the nine months ended December 31, 2002, R&D expenses decreased 19% to
$6,972,000 from $8,558,000 for the same period of the prior fiscal year. The
decrease is attributed primarily to the reduction in prototype processing
cost as many new products were transferred to production status, reduction in
software expenses and reduction in mask tooling expenses.
Selling, General and Administrative (SG&A)
SG&A expenses increased by 31% to $2,366,000 or 17% of net sales for the
quarter ended December 31, 2002 as compared to $1,803,000 or 13% of net sales
of the same quarter of the prior fiscal year. This increase was primarily
due to stepped-up sales and marketing efforts which included increase in
payroll and benefits of $110,000 resulting from additional headcount, an
increase in salesman bonus of $108,000, an increase in conference related
expenses of $43,000, and an increase in travel expenses of $44,000. In
addition, the SG&A expenses of the prior fiscal year quarter were partially
offset by benefits from the collection of previously reserved accounts
receivable of $232,000.
For the nine months ended December 31, 2002, SG&A expenses were $6,407,000 or
16% of net sales as compared to $5,523,000 or 13% for the same period of the
prior fiscal year, an $884,000 increase. This increase was attributed mainly
to an increase of $296,000 in payroll and benefits due to additional
headcount, an increase in advertising spending of $175,000, an increase in
sales commissions expenses of $163,000, and an increase in travel expenses of
$100,000. In addition, SG&A expenses for the nine months ended December 31,
2001 were partially offset by benefits from the collection of previously
reserved accounts receivable of $416,000 as compared with SG&A expenses for
the nine months ended December 31, 2002, which were partially offset by
benefits from the collection of previously reserved accounts receivable of
approximately $147,000.
Income from Operations
Income from operations was $700,000, or 5% of net sales for the quarter ended
December 31, 2002 compared to $1,723,000, or 12% of net sales for the same
quarter of the prior fiscal year. The decrease in operating income is
primarily attributable to the charge for the write-down of inventory, further
decline in production capacity utilization and an increase in Sales and
Marketing expenses.
For the nine months ended December 31, 2002, income from operations was
$1,397,000 or 3% of net sales, compared to $3,654,000 or 8% of net sales for
the same period of the prior fiscal year. The decrease in operating income
is attributable primarily to the charge for the write-down of inventory,
lower sales, continued decline in production capacity utilization,
unfavorable product mix, some price erosion and the continued economic
slowdown.
Interest Income and Other Income, Net
Interest income and other income, net for the three and nine-months ended
December 31, 2002 were $278,000 and $1,186,000, respectively, when aggregated
together. For the corresponding periods of the prior fiscal year they were
$289,000 and $1,781,000 respectively.
Interest income for the three and nine- months ended December 31, 2002 was
$154,000 and $648,000 respectively, compared to $335,000 and $1,303,000
respectively for the same periods of the prior fiscal year. The decrease in
interest income is primarily attributable to lower yields in the money
market accounts where we maintain the bulk of our cash deposits.
Other income, net for the quarter ended December 31, 2002 was $124,000
compared with other expense, net of $46,000 for the same quarter of the
prior fiscal year, a $170,000 increase. The increase in other income, net
was attributable primarily to a gain representing an increase in the fair
value of mutual fund investments held by the Company's Supplemental Employee
Retirement Plan of $81,000, and a $59,000 gain from the settlement of a
dispute.
Other income, net for the nine-months ended December 31, 2002 was $538,000,
compared with $478,000 for the same period of the prior fiscal year, a
$60,000 increase. The increase was primarily attributed to a gain from sale
of long-term investments of $1,092,000 during the nine months ended December
31, 2002 as compared with gains from the sale of long-term investments of
$127,000 for the same period of the prior year, a $750,000 impairment charge
taken during the nine months ended December 31, 2002 to fully reserve for a
long-term investment in a start-up company that is experiencing liquidity
concerns, a gain during the nine months ended December 31, 2002 representing
an increase in the fair value of mutual fund investments held by the Company's
Supplemental Employee Retirement Plan of $81,000, a $59,000 gain during the
nine months ended December 31, 2002 from the settlement of a dispute, the
absence of restocking fees collected from customers for returning products
in the nine months ended December 31, 2002 as compared to $160,000 of such
fees for the same period of prior fiscal year, and a net increase in sub-lease
expenses of $126,000.
Provision for Income Taxes
The Company's effective tax rate for the quarter ended December 31, 2002 was
29% compared to 34% for the same quarter of the prior fiscal year. For the
nine-months ended December 31, 2002, the effective tax rate was 32% compared
to 34% for the same period of the prior fiscal year. The reduction of the
effective tax rate was primarily due to a change in the geographic mix of
income.
Liquidity and Capital Resources
On December 31, 2002, the Company had $61,171,000 in cash, cash equivalents,
and short term investments, compared with $52,492,000 on March 31, 2002. The
Company anticipates that available sources of funds including cash, cash
equivalents, short term investments, 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.
Cash and cash equivalents increased $4,813,000 to $57,305,000 at December 31,
2002 from $52,492,000 at December 31, 2002. The increase is due primarily to
a positive cash flow from operating activities of $6,981,000 consisting
principally of a net income of $1,756,000, non-cash charges for depreciation
and amortization of $4,128,000, a gain on the sale of a long-term investment
of $1,092,000 which was partially offset by an impairment charge of $750,000
on another long-term investment, an increase in the provision for excess and
obsolete inventories of $896,000 and a decrease in the provision for doubtful
accounts of $147,000. Other factors affecting cash flow from operating
activities include (a) a decrease in accounts payable and other accrued
items of $3,187,000 due to a decrease in purchasing activities; (b) an
increase in income tax payable $1,884,000; (c) a decrease in inventory of
$819,000; (d) a decrease in accounts receivable of $795,000; (e) a decrease
in prepaid expense and other assets of $237,000, and; (f) an increase in
deferred revenue of $152,000.
Net cash used in investing activities during the nine-months ended December
31, 2002 was $3,300,000. Investing activities for the nine-months ended
December 31, 2002 consisted of $1,692,000 from the sale of a long-term
investment offset by purchases of short-term investments of $3,866,000, and
purchases of equipment of $1,136,000 primarily for upgrading our wafer
fabrication facility.
Net cash provided by financing activities for the nine-months ended December
31, 2002 was $1,132,000 and was generated by proceeds from the issuance of
common stock through the exercise of employee stock options and employee
stock purchases.
Future minimum lease payments and sublease income under all non-cancelable
operating leases at December 31, 2002 are as follows (in thousands):
Fiscal Year Ended March 31 Operating Lease Sublease Income
- -------------------------- --------------- ---------------
Q4 2003 $ 326 $ 147
2004 1,257 632
2005 1,124 370
2006 147 336
2007 152 336
--------------- ---------------
$ 3,006 $ 1,821
Item 3. - Quantitative and Qualitative Disclosures About Market Risk and
Interest Rate Risk.
Interest Rate Sensitivity
The Company is not likely exposed to financial market risks due primarily to
changes in interest rates. It does not use derivatives to alter the interest
characteristics of its investment securities. It has no holdings of
derivative or commodity instruments. The fair value of its 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 December 31, 2002, it 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 investments with maturities of less than a year.
Item 4. Controls and Procedures.
(a) Evaluation of disclosure controls and procedures
The term "disclosure controls and procedures" refers to the controls
and other procedures of a company that are designed to ensure that
information required to be disclosed by a company in the reports that it
files under the Securities Exchange Act of 1934 ("Exchange Act") is recorded,
processed, summarized and reported within required time periods.
The Company's principal executive and financial officer has evaluated the
Company's disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14(c) and 15d-14(c)) within the 90 days prior to the date of this
Form 10-Q ("Evaluation Date") and has determined that, as of the Evaluation
Date, such controls and procedures are reasonable taking into account the
totality of the circumstances.
(b) Changes in internal controls
There were no significant changes in the Company's internal controls or in
other factors that could significantly affect these controls subsequent to
the Evaluation Date.
PART II - OTHER INFORMATION
Item 1. - Legal Proceedings
None
Item 2. - Changes in Securities and Use of Proceeds
None
Item 3. - Defaults Upon Senior Securities
None
Item 4. - Submission of Matters to a Vote of Security Holders
None
Item 5. - Other Information
None
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.
Statement of Chief Executive Officer and Chief Financial Officer under
18 U.S.C. 1350
I, Henry C. Pao, the chief executive officer and chief financial officer of
Supertex, Inc., a California corporation (the "Company"), certify pursuant
to Section 1350 of Chapter 63 of Title 18 of the United States Code that:
(i) the Quarterly Report of the Company on Form 10-Q for the period
ending December 31, 2002 (the "Report"), fully complies with the requirements
of Section 13(a) or 15(d), whichever is applicable, of the Securities
Exchange Act of 1934, and
(ii) the information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
/s/ Henry C. Pao
_________________________________
Henry C. Pao, Ph.D.
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 11, 2003
By: /s/ Henry C. Pao
_____________________________
Henry C. Pao, Ph.D.
President
(Principal Executive and Financial Officer)
CERTIFICATIONS
I, Henry C. Pao, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Supertex, Inc., a
California corporation ("registrant");
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of and for the periods, presented in this
quarterly report;
4. I am responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and I have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to me by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report my conclusions about the
effectiveness of the disclosure controls and procedures based on my
evaluation as of the Evaluation Date;
5. I have disclosed, based on my most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of directors (or
persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. I have indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of my most
recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: February 11, 2003 /s/ Henry C. Pao
____________________________
Henry C. Pao, Ph.D.
Chief Executive Officer
and Chief Financial Officer