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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(MARK ONE)
(x) Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (Fee Required)
For the Fiscal Year Ended March 31, 1997
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 No.)
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 aggregate market value of the voting stock held by
non-affiliates of the registrant as of May 13, 1997, was
$107,786,000 based on the closing transaction reported for such
date. For purposes of this disclosure, shares of common stock
held by persons who hold more than 5% of the outstanding shares
of common stock and shares held by officers and directors of the
Registrant, have been excluded in that such persons may be
deemed to be "affiliates" as that term is defined under the
rules and regulations promulgated under the Securities Exchange
Act of 1934. This determination of affiliate status is not
necessarily a conclusive determination for other purposes.
The number of shares outstanding of the Registrant's common
stock as of May 13, 1997, was 12,050,971.
Documents Incorporated by Reference: Part III incorporates
information by reference from the Company's definitive proxy
statement for the Annual Meeting of Shareholders to be held on
August 1, 1997 (the "Proxy Statement").
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (Sec. 229.405 of this
chapter) is not contained herein, and will not be contained, to
the best of registrants knowledge, in definitive proxy or
information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. ( )
Exhibit Index is on Page 25
Total number of pages is 29
(BLANK PAGE)
SUPERTEX, INC.
ANNUAL REPORT - FORM 10K
Table of Contents
- ----------------- Page No.
--------
PART I
Item 1. Business .............................................. 4
Item 2. Properties ............................................ 8
Item 3. Legal Proceedings ..................................... 8
Item 4. Submission of Matters to a Vote of Security Holders ... 8
PART II
Item 5. Market for Registrant's Common Equity and Related
Shareholder Matters ................................... 8
Item 6. Selected Consolidated Financial Data .................. 9
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations ................... 9
Item 8. Financial Statements and Supplementary Data ........... 11
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure ................... 11
PART III
Item 10. Directors and Executive Officers of the Registrant ... 12
Item 11. Executive Compensation ............................... 12
Item 12. Security Ownership of Certain Beneficial Owners and
Management ........................................... 12
Item 13. Certain Relationships and Related Transactions ....... 12
PART IV
Item 14. Exhibits, Financial Statement Schedule and Reports on
Form 8-K ............................................. 12
Signatures .................................................... 13
PART I
Item 1. Business
Supertex, Inc. ("Supertex" or the "Company") is a
technology-based, niche-oriented, producer of specialized
semiconductor components. It designs, develops, manufactures,
and markets proprietary products utilizing state-of-the-art
DMOS, HVCMOS and HVBiCMOS technologies. With respect to DMOS,
the Company has maintained an established position in key
products for commercial, industrial and military uses,
principally in small signal power MOSFETS. Supertex has been an
industry leader in high voltage integrated circuits (HVCMOS AND
HVBiCMOS), which take advantage of the best features of CMOS,
bipolar, and DMOS technologies and integrate them into the same
chip. They are used by flat panel display, printer, medical
ultrasound imaging, telephone, telecommunications and
instrumentation industries.
The Company markets its products through direct sales personnel,
independent sales representatives and distributors in the United
States and abroad, primarily to electronic equipment
manufacturers.
The Company was incorporated in California in October 1975 and
conducted an initial public offering of its Common Stock in
December 1983. Its executive offices are located at 1235
Bordeaux Drive, Sunnyvale, California 94089, and its principal
manufacturing facilities are located at 1225/1231 Bordeaux
Drive, Sunnyvale, California 94089. Supertex also maintains
three direct field offices located in: (1) Tallman, New York;
(2) Des Plaines, Illinois; and (3) South Wales, United Kingdom.
The telephone number of its headquarters is (408) 744-0100. The
Company's mailing address is 1235 Bordeaux Drive, P.O.Box 3607,
Sunnyvale, California 94088-3607.
Products
Supertex offers semiconductor products that facilitate the
interface between the low voltage computer logic signal world
and the high voltage requirements of the real world. It
supplies standard and custom interface products for the
following three market groups:
(1) Telecommunications Group consists of interface products used
in telephone handsets, solid state relays, modems, fax, ISDN,
networking, PABX, PCMCIA cards, as well as diagnostic, curbside,
set-top and central office equipment. In addition they are used
in military radio frequency and microwave communication
applications.
(2) Imaging Group consists of interface products for Flat Panel
Displays and Non-impact Printers and Plotters. The flat panel
display product family is sold to customers using
Electro-Luminescent (EL), Plasma, Vacuum Fluorescent, Plasma-
addressed LCD, Ferro-electric LCD, and Field Emission Display
(FED) technologies. There is also a family of products for
driving EL panels to backlight displays of handheld instruments,
such as cellular phones, pagers, and meters. The printer product
family is used in ink-jet and electrostatic types of printers
and plotters which are mostly high end with full color high
resolution and high speed.
(3) Medical Electronics Group consists of products primarily for
ultrasound diagnostic imaging equipment as well as selected
portable instrumentation applications.
Because Supertex is a leading provider of products to these
specific markets, Supertex has been able to work very closely
with key customers to define new products by determining future
market needs. Such close collaboration has produced a wide
range of leading edge new products for Supertex and allowed its
customers to develop more quickly new and more advanced products
for their markets.
In the DMOS discrete transistor and array product line, Supertex
focuses on certain niches such as very low threshold devices
which are most suitable for telecommunication and hand held
applications where power costs are at a premium.
Research and Development
Supertex expended approximately $5,306,000, $5,647,000, and
$4,427,000 on research and development activities during fiscal
years 1997, 1996, and 1995, respectively. Research and
development activities continue at the rate of over thirty new
product projects per year.
Supertex believes that its position as a leading supplier in its
targeted markets can only be maintained through continuous
investments in research and development. Supertex focuses its
efforts on designing new products with existing process
technologies while also developing new process technologies to
be used for future new products. The effective monitoring and
control of the Company's research and development programs have
actually resulted in better performance and greater
technological achievements.
Manufacturing
Manufacturing operations include wafer fabrication, limited
assembly and packaging, product testing, and quality control.
The Company's wafer fabrication facilities are continually
upgraded to keep pace with technological developments, to
enhance environmental controls, and to improve technical
capabilities. To support growth, the Company anticipates
significant capital expenditures for equipment additions and
upgrades and for facility expansion in the near future. In
addition, through a licensing agreement, Texas Instruments has
allocated a certain amount of its wafer capacity to Supertex to
supplement the Company's production needs.
Supertex subcontracts most of its standard component packaging
to independent assemblers, principally in Thailand, Taiwan,
Malaysia, and the Philippines. The Company tests all products
before shipment to customers. The Company has experienced
increases in packaging and assembly costs in the past due to
fluctuations in the valuation of foreign currencies and
recognizes that future fluctuations could have a material
adverse impact on gross margins. To date, however, the Company
has not experienced any materially adverse effects from these
fluctuations. A specialized assembly area is maintained at the
Company's manufacturing facilities to package engineering
prototypes, to ensure high priority deliveries, and to assemble
high reliability circuits required in military and high
reliability applications. Although the Company's off-shore
assembly subcontractors have not experienced any serious work
stoppage, the political situation in these countries could be
volatile. Any prolonged work stoppage or other inability of the
Company to assemble products would have a material adverse
impact on the Company's operating results although the Company
has qualified assemblers in different countries to reduce risk.
Furthermore, economic risks, such as changes in tariff or
freight rates or interruptions in air transportation, could
adversely affect the Company's operating results.
The availability of silicon wafers has improved considerably in
the past year. Supertex, with several suppliers, has the wafer
supply capability to continue its operations. . The Company has
also made arrangements with its major wafer supplier to
guarantee a continuous supply. This agreement expires in July
2000. Assembly packages and other raw materials used by the
Company in the manufacture of its products are obtainable from
several suppliers. Such types of materials had been in short
supply in the past, but recently these materials appear to be
subject to competitive pricing pressure. However, any future
shortage of supply would have a material adverse effect on the
operating results of the Company. As is typical in the
semiconductor industry, the Company must allow lead time in
ordering certain materials and services and often commits to
volume purchases to obtain favorable pricing concessions and
resource allocations.
Government regulations impose various environmental controls on
the waste treatment and discharge of certain chemicals and gases
after their use in semiconductor processing. The Company
believes that its activities comply with present environmental
regulations. However, increasing attention has been focused on
the environmental impact of semiconductor manufacturing
operations. While the Company has not experienced any material
adverse effects on its business or financial results from its
compliance with environmental regulations and installation of
pollution control equipment, there can be no assurance that
changes in such regulations will not necessitate the acquisition
of costly equipment or other requirements in the future. The
Company works closely with pollution experts from federal,
state, and local agencies,
especially from the City of Sunnyvale, California, to ascertain
that the Company is in compliance with present requirements.
Sales
Supertex markets its standard and custom products in the United
States and abroad through the Company's direct sales and
marketing personnel and through independent sales
representatives and distributors supported by the Company's
field sales managers out of the Company's sales offices in
Illinois, New York, and the United Kingdom.
Export sales are made primarily through independent distributors
to customers in Western Europe and the Far East, and represented
51%, 44%, and 50% of net sales in fiscal years 1997, 1996, and
1995, respectively. Exports to the Far East are largely to
customers in Japan. Export sales are denominated only in U.S.
dollars. Although export sales are subject to certain
governmental commodity controls and restrictions for national
security purposes, the Company has not had any material adverse
effects on its business or financial results because of these
limitations.
In fiscal 1997, one customer, a distributor, accounted for
approximately 18% of net sales. In fiscal 1996, two customers
accounted for 15% and 12% of net sales. In fiscal 1995, the
second customer discussed in the preceding sentence, accounted
for approximately 16% of net sales. There is no long-term
production agreement with these customers. Normal terms and
conditions of sale apply, which include a 60-day notice of
cancellation and charges for work in process for cancellations
of less than 60 days from shipment.
Inventories are stated at the lower of cost (determined on a
first-in, first-out basis) or market value. The Company's
inventories include high technology parts and components that
are specialized in nature or subject to rapid technological
obsolescence. While the Company has programs to minimize the
required inventories on hand and considers technological
obsolescence when estimating amounts required to reduce recorded
amounts to market values, it is reasonably possible that such
estimates could change in the near term.
Direct sales to customers are recognized upon shipment of
product. Sales to distributors are made primarily under
arrangements allowing price protection and the right of stock
rotation on merchandise unsold by the distributors. Because of
the uncertainty associated with pricing concessions and future
returns, the Company defers recognition of such sales and the
related costs of sales until the merchandise is sold by
distributors to end users.
Backlog
The Company's backlog at March 31, 1997, was approximately
$15,168,000 compared with $17,942,000 and $11,729,000 at March
31, 1996 and 1995, respectively. Due to general industry
slowdown and high inventory, customers are demanding much
shorter lead times, resulting in smaller backlog. The Company
expects that all of this backlog will be shipped in fiscal 1998.
Customers may cancel or reschedule orders without significant
penalty, and the price of products may be adjusted between the
time the purchase order is booked into backlog and the time the
product is shipped to the customer. For those reasons, the
Company believes that backlog is not meaningful in predicting
the Company's actual net revenue for any future period.
Competition
Because of the Company's product niche orientation, market
statistics generally are not available for many of its products.
Competition in general among manufacturers of semiconductor
components and discrete transistors is intense. Many of the
Company's domestic and foreign competitors have greater
facilities, financial, technical, and personnel resources, and
more diverse product lines. Such factors as product prices,
product performance, diversity of product lines, delivery
capabilities, and the ability to adapt to rapid technological
change and develop new and improved products are the principal
methods of competition in the
industry. The Company believes it is a leader in important
segments of its product families where it has a technological
and/or cost advantage and that it is generally competitive with
respect to these factors.
Patents and Licenses
The Company holds numerous United States patents expiring from
1997 to 2009 and has applications for additional patents
pending. Although the Company believes that its patents may
have value, there can be no assurance that the Company's
patents, or any additional patents that may be obtained in the
future, will provide meaningful protection from competition. The
Company believes that its success depends primarily on the
experience, creative skills, technical expertise, and marketing
ability of its personnel rather than on the ownership of
patents. Patents may, however, be useful for cross license
purposes.
Supertex is not aware that any of its products infringe on
patent or other proprietary rights of third parties but it
cannot be certain that they do not do so. If infringement is
alleged, there can be no assurance that the necessary licenses
could be obtained, or if obtained, would be on terms or
conditions that would not have a material adverse effect on the
Company.
Employees
At March 31, 1997, the Company had 316 full time employees.
Many of the Company's employees are highly skilled, and the
Company's continued growth and success will depend in part on
its ability to attract and retain such employees, who are
generally in great demand. At times, the Company as well as
other semiconductor manufacturers experience difficulty in
hiring and retaining sufficient numbers of skilled personnel.
The Company believes that the compensation, benefits, and
incentives offered to its employees are competitive with those
generally offered throughout the semiconductor industry. There
are no collective bargaining agreements between the Company and
its employees, and there has been no work stoppage due to labor
difficulties. The Company considers its employee relations to
be good.
Executive Officers of the Company
Officer
Name Position with the Company Age Since
- ---- ------------------------- --- -------
Henry C. Pao President, Principal 59 1976
Executive and Financial
Officer
Richard E. Siegel Executive Vice President 51 1982
Benedict C. K. Choy Senior Vice President, 51 1976
Technology Development and
IC Products, and Secretary
Michael V. Bond Vice President, DMOS 57 1983
Products
Dennis E. Kramer Vice President, Materials 55 1996
Officers appointed by the Board of Directors serve at the
discretion of the Board. There is no family relationship
between any directors or executive officers of the Company
except as stated below.
Henry C. Pao is a founder of Supertex and has served as
President, Principal Financial and Executive Officer, and as a
Director since the Company's formation in fiscal 1976. Dr. Pao
is the son of Mr. Yunni Pao and the brother of Frank Pao, also
Directors of the Company.
Richard E. Siegel joined the Company in 1981 as National Sales
Manager, was appointed Vice President of Sales and Marketing in
April 1982, Senior Vice President in February 1988, and has
served as Executive Vice President since November 1988. He has
been a Director since 1988.
Benedict C. K. Choy, a founder of the Company, joined Supertex
in fiscal 1976 as Vice President, Device Technology and Process
Development, and has served as Senior Vice President since
February 1988. He has been a Director since 1986.
Michael V. Bond joined Supertex in June 1982, as Director of
DMOS Products, and was appointed Vice President, DMOS
Operations, in 1983. He has also served as Vice President of
Quality Assurance/Quality Control since that time.
Dennis E. Kramer joined Supertex in September 1981 as Wafer Fab
II Production Manager. Over his tenure, he has managed many
facets of wafer fabrication process as well as all the back-end
manufacturing operations. He was promoted to Vice President of
Materials in 1996.
Item 2. Properties
The Company leases facilities covering approximately 38,000
square feet at 1225/1231 Bordeaux Drive, Sunnyvale, California.
Operations at these facilities include wafer fabrication,
process engineering, assembly, and quality control functions.
These facilities are leased from a corporation owned by a
director of the Company. (See Note 6 of "Notes to Consolidated
Financial Statements.")
The Company owns its corporate headquarters, a facility of
approximately 42,000 square feet at 1235 Bordeaux Drive,
Sunnyvale, California, which houses the executive offices, sales
and marketing, product engineering, test, production control,
corporate financial and administrative staff.
The Company believes that its existing facilities and equipment
are well maintained and are in good operating condition.
Item 3. Legal Proceedings
None.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during
the quarter ended March 31, 1997.
PART II
Item 5. Market for Registrant's Common Equity and Related
Shareholder Matters
On May 13, 1997, the last reported sale price was $12 7/8 per
share. There were approximately 2,947 shareholders of record of
common stock on May 13, 1997. The Company has not paid cash
dividends on its common stock in fiscal years 1997 and 1996, and
its Board of Directors presently intends to continue this policy
in order to retain earnings for the development of the Company's
business. Accordingly, it is anticipated that no cash dividends
will be paid to holders of common stock in the foreseeable
future.
The following table sets forth the range of high and low closing
sale prices reported on The Nasdaq Stock Market under the symbol
SUPX for the periods indicated.
Fiscal Years Ended March 31,
----------------------------
1997 1996
---- ----
High Low High Low
-------- -------- -------- --------
First Quarter $ 20 1/8 $ 12 1/2 $ 9 3/8 $ 7 3/8
Second Quarter 19 3/4 14 12 1/8 8 1/8
Third Quarter 25 3/8 13 3/4 11 1/4 8 3/4
Fourth Quarter 16 1/4 11 13 3/4 9 1/2
Item 6. Selected Consolidated Financial Data
The selected financial information and other data presented
below should be read in conjunction with the "Consolidated
Financial Statements," "Notes to Consolidated Financial
Statements," and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included
elsewhere in this Form 10-K.
Fiscal Years Ended March 31,
----------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
(in thousands)
Balance Sheet Data:
Working capital ....... $ 36,734 $ 32,197 $ 27,723 $ 23,240 $ 20,971
Total assets .......... $ 56,408 $ 45,428 $ 37,310 $ 31,202 $ 27,234
Shareholders' equity .. $ 48,487 $ 38,663 $ 31,164 $ 25,776 $ 23,080
Fiscal Years Ended March 31,
----------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
(in thousands, except per share amounts)
Statement of Operations Data:
Net sales .............. $ 48,935 $ 42,802 $ 31,806 $ 26,108 $ 23,752
Costs and expenses:
Costs of sales ........ 26,073 22,097 16,133 13,652 13,828
Research and
development ........... 5,306 5,647 4,427 4,360 4,127
Selling, general and
administrative ........ 6,226 5,700 5,324 4,576 4,164
Income from operations . 11,330 9,358 5,922 3,520 1,633
Other income:
Interest income ....... 1,430 1,099 867 509 545
Other income, net ..... 63 255 129 83 131
Income before provision
for income taxes ..... 12,823 10,712 6,918 4,112 2,309
Provision for income
taxes .................. 4,103 3,321 1,853 1,110 630
Net income ........... $ 8,720 $ 7,391 $ 5,065 $ 3,002 $ 1,679
====== ====== ====== ====== ======
Net income per share ... $ 0.70 $ 0.60 $ 0.42 $ 0.25 $ 0.14
====== ====== ====== ====== ======
Shares used in per
share computation ...... 12,509 12,296 12,003 11,842 12,085
====== ====== ====== ====== ======
Item 7. 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 results
could differ materially from those projected in the
forward-looking statements as a result of the risk factors set
forth below and elsewhere in this report. The industry in which
the Company competes is characterized by extreme rapid changes
in technology and frequent new product introductions. The
Company believes that its long-term growth will depend largely
on its ability to continue to enhance existing products and to
introduce new products and features that meet the continually
changing requirements of customers. While the Company has
invested heavily in new products and processes, there can be no
assurance that it can continue to introduce new products and
features on a timely basis or that certain of its products and
processes will not be rendered noncompetitive or obsolete by its
competitors.
The following discussion should be read in conjunction with the
"Consolidated Financial Statements," "Notes to Consolidated
Financial Statements" and "Selected Consolidated Financial Data"
included elsewhere in this Form 10-K.
The following table sets forth items from the Statements of
Income as a percentage of net sales for the periods indicated:
Fiscal Years Ended March 31,
----------------------------
1997 1996 1995
---- ---- ----
Net sales ........................... 100.0 % 100.0 % 100.0 %
Costs of sales ..................... 53.3 51.6 50.7
Research and
development ........................ 10.8 13.2 13.9
Selling, general and
administrative ..................... 12.7 13.3 16.7
Income from operations .............. 23.2 21.9 18.6
Other income
Interest income .................... 2.9 2.6 2.7
Other income, net .................. 0.1 0.6 0.4
Income before provision
for income taxes .................. 26.2 25.1 21.7
Provision for
income taxes ........................ 8.4 7.8 5.8
Net income ......................... 17.8 % 17.3 % 15.9 %
Results of Operations
NET SALES. The Company had net sales of $48,935,000 in fiscal
1997, an increase of $6,133,000 or 14% from the previous fiscal
year. Fiscal 1996 net sales improved from fiscal 1995 by
$10,996,000 or 35%. The Company's sales growth has been
generated principally by new product introductions in the
Company's targeted markets of medical ultrasound imaging,
telecommunications, and flat panel displays.
In fiscal 1997, approximately 51% of the Company's net sales
were derived from customers outside the United States, primarily
in Western Europe and the Far East (44% in fiscal 1996 and 50%
in fiscal 1995). All of the Company's sales to international
customers were denominated in U.S. currencies. There was no
currency exchange exposure; however toward the end of the fiscal
1997 when the US dollar strengthened, many customers requested
and received price concessions.
GROSS MARGIN. The Company's gross margin as a percentage of net
sales was 46.7%, 48.4%, and 49.3% in fiscal 1997, 1996, and
1995, respectively. In fiscal 1997, production ramp up of newer
products, which have yet to benefit from production learning
curve efficiencies, contributed to the lower gross margins. As
the Company gains production experience in these newer products,
gross margins are expected to improve.
RESEARCH AND DEVELOPMENT. Research and development expenses were
10.8%, 13.2%, and 13.9% of net sales in fiscal 1997, 1996, and
1995, respectively. The percentage decreases from year to year
were due to sales volume increases and tighter cost controls,
offset by increases in the number of projects in the last three
years. The Company expects that research and development
projects will continue to increase during fiscal 1998.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and
administrative expenses were 12.7%, 13.3%, and 16.7% of net
sales in fiscal 1997, 1996, and 1995, respectively. The
percentage decrease for each year was due to sales volume
increases, offset by actual dollar expense increases due to
increases in payroll and its related benefits, sales
commissions, and incentive compensation for certain sales
personnel.
INTEREST INCOME. Interest income, which consists of interest
income from the Company's cash, cash equivalents and short-term
investments, was $1,430,000 as compared with $1,099,000 in
fiscal 1996 and $867,000 in fiscal 1995 primarily due to the
higher amount of funds available for investment.
PROVISION FOR INCOME TAXES. Income taxes for fiscal 1997, 1996,
and 1995 were at 32%, 31% and 27%, respectively, of income
before provision for income taxes. The effective income tax
rate is expected to increase in fiscal 1998.
RECENT ACCOUNTING PRONOUNCEMENTS. In February 1997, the
Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share"
(SFAS 128), which specifies the
computation, presentation and disclosure requirements for
earnings per share. SFAS 128 supersedes Accounting Principles
Board Opinion No. 15 and is effective for financial statements
issued for periods ending after December 15, 1997. SFAS 128
requires restatement of all prior-period earnings per share data
presented after the effective date. SFAS 128 will not have a
material impact on the Company's financial position, results of
operations or cash flows.
FINANCIAL CONDITION
OVERVIEW. Total assets grew to $56,408,000 at the end of fiscal
1997, up from $45,428,000 at the end of fiscal 1996. The
increase is due to favorable operating results for the year.
LIQUIDITY AND CAPITAL RESOURCES. The Company's primary source of
funds for fiscal 1997, 1996, and 1995 has been the net cash
generated from operating activities of $8,524,000, $7,737,000,
and $3,767,000, respectively. Net cash provided by operating
activities in fiscal 1997 of $8,524,000 consisted principally of
net income of $8,720,000 plus depreciation and amortization of
$2,163,000, provision for doubtful accounts and sales returns
$2,054,000 and an increase in accounts payable and accrued
expenses and deferred revenue of $1,284,000 and $344,000,
respectively, partially offset by increases in accounts
receivable and inventories of $3,641,000 and $2,251,000,
respectively.
Net cash used in investing activities in fiscal 1997 was
$5,668,000 which consisted of a decrease in short term
investments of $1,784,000 and purchases of property and
equipment of $7,452,000, which included the costs of upgrading
the Company's fabrication facility during the fiscal year.
Net cash provided by financing activities in fiscal 1997 was
$202,000, which consisted of proceeds from exercises of stock
options partially offset by repurchases of the Company's common
stock.
As of March 31, 1997, the Company's working capital was
$36,734,000, which included approximately $23,663,000 in cash,
cash equivalents and short-term investments.
The Company anticipates that the 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 1998. The Company expects to spend approximately
$6,362,000 for capital acquisitions during fiscal year 1998.
Item 8. Financial Statements and Supplementary Data
The Financial Statements and Financial Statement Schedule are
listed in Item 14 of this report.
Supplementary Quarterly Financial Data:
Quarters Ended
-----------------------------------------------------------------------------
Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,
1997 1996 1996 1996 1996 1995 1995 1995
------- ------- ------- ------- ------- ------- ------- -------
(Unaudited) (in thousands, except per share amounts)
Statement of Operations Data:
Net sales ................... $12,705 $10,849 $12,920 $12,461 $12,168 $11,118 $10,359 $ 9,157
Costs of sales .............. 6,983 6,196 6,584 6,310 6,276 5,718 5,422 4,681
Income from operations ...... 2,648 1,826 3,610 3,246 2,769 2,473 2,185 1,931
Income before provision for
income taxes ................ 3,039 2,195 3,975 3,614 3,159 2,791 2,492 2,270
Net income .................. $ 2,067 $ 1,492 $ 2,703 $ 2,458 $ 2,180 $ 1,926 $ 1,719 $ 1,566
Net income per share ........ $ 0.17 $ 0.12 $ 0.22 $ 0.20 $ 0.18 $ 0.16 $ 0.14 $ 0.13
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
Information regarding directors is set forth under "Election of
Directors - Nominees" on Page 2 of the Proxy Statement, which
information is incorporated herein by reference. Information
regarding executive officers is included in Part I hereof under
caption "Executive Officers of the Company," and is hereby
incorporated herein by reference.
Item 11. Executive Compensation
Information regarding the Company's remuneration of its officers
and directors is set forth under "Compensation of Directors" on
page 5 and "Compensation of Executive Officers" on page 7 of the
Proxy Statement, which information is incorporated herein by
reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
Information regarding the security ownership of certain
beneficial owners and management is set forth under "Security
Ownership of Certain Beneficial Owners and Management" on pages
5 through 6 of the Proxy Statement, which information is
incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
Information regarding certain relationships and related
transactions is set forth under "Certain Transactions: Lease
with Company Director" on page 5 of the Proxy Statement, which
information is incorporated herein by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedule, and Reports
on Form 8-K
(a) The following documents are filed as part of this report:
Page No.
--------
1. Report of Coopers & Lybrand L.L.P.,
Independent Accountants ................................... 14
2. Consolidated Financial Statements:
Consolidated Balance Sheets at March 31, 1997 and 1996 ... 15
For the three years ended March 31, 1997, 1996, and 1995:
Consolidated Statements of Income ....................... 16
Consolidated Statements of Shareholders' Equity ......... 16
Consolidated Statements of Cash Flows ................... 17
Notes to Consolidated Financial Statements ............... 18
3. Financial Statement Schedule. The following Financial
Statement Schedule of Supertex, Inc., is filed as part of this
report and should be read in conjunction with the Consolidated
Financial Statements of Supertex.
Schedule for fiscal years ended March 31, 1997, 1996,
and 1995:
II Valuation and Qualifying Accounts ..................... 24
All other schedules have been omitted since the required
information is not present or it is not present in amounts
sufficient to require submission of the schedule, or because the
information required is included in the consolidated financial
statements, including notes thereto.
4. Exhibits. The exhibits listed in the accompanying EXHIBIT
INDEX are filed as part of this annual report.
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the
quarter ended March 31, 1997.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto
duly authorized.
SUPERTEX, INC.
Dated: June 4, 1997 /s/ Henry C. Pao
----------------------------------
Henry C. Pao, President, Principal
Financial and Accounting Officer
Pursuant to the requirements of the Securities Act of 1934, this
report has been signed by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Henry C. Pao,
his attorney-in-fact, with the power of substitution, for him in
any and all capacities, to sign any amendments to this report on
Form 10-K, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that
said attorney-in-fact, or his substitute or substitutes, may do
or cause to be done by virtue hereof.
Signature Title Date
/s/ Henry C. Pao President, Principal June 4, 1997
- ----------------------- Executive and Financial
(Henry C. Pao) Officer and Director
/s/ Richard E. Siegel Executive Vice President June 4, 1997
- ----------------------- and Director
(Richard E. Siegel)
/s/ Benedict C. K. Choy Senior Vice President June 4, 1997
- ----------------------- and Director
(Benedict C. K. Choy)
/s/ Yunni Pao Director June 4, 1997
- -----------------------
(Yunni Pao)
/s/ Frank C. Pao Director June 4, 1997
- -----------------------
(Frank C. Pao)
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
The Board of Directors and Shareholders of Supertex, Inc.:
We have audited the consolidated financial statements and the
financial statement schedule of Supertex, Inc. and subsidiary
listed in Item 14(a) of this Form 10-K. These financial
statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements and
financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Supertex, Inc. and subsidiary as of March
31, 1997 and 1996, and the consolidated results of their
operations and their cash flows for each of the three years in
the period ended March 31, 1997 in conformity with generally
accepted accounting principles. In addition, in our opinion,
the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken
as a whole, presents fairly, in all material respects, the
information required to be included therein.
/s/ COOPERS & LYBRAND L.L.P.
San Jose, California
April 25, 1997
SUPERTEX, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
March 31,
-------------------
1997 1996
---- ----
ASSETS
Current Assets:
Cash and cash equivalents .............................. $ 19,166 $ 16,108
Short term investments ................................. 4,497 6,281
Trade accounts receivable, net of allowances of
$525 in 1997 and $559 in 1996 .......................... 9,337 7,823
Other accounts receivable .............................. 154 81
Inventories ............................................ 9,249 7,254
Deferred income taxes .................................. 1,834 1,241
Prepaid expenses ....................................... 418 174
-------- --------
Total current assets .................................. 44,655 38,962
Property and equipment, net ............................. 11,753 6,466
-------- --------
TOTAL ASSETS ............................................ $ 56,408 $ 45,428
======== ========
LIABILITIES
Current liabilities:
Trade accounts payable ................................. $ 3,813 $ 3,357
Accrued salaries, wages and employee benefits .......... 2,499 1,723
Income taxes payable ................................... 166 638
Other accrued liabilities .............................. 366 314
Deferred revenue on shipments to distributors .......... 1,077 733
Total current liabilities ............................. 7,921 6,765
Commitments (Note 6)
SHAREHOLDERS' EQUITY
Preferred stock, no par value -- 10,000,000
shares authorized, none outstanding .................... -- --
Common stock, no par value -- 30,000,000 shares
authorized; issued and outstanding 12,047,031 shares
in 1997 and 11,935,671 shares in 1996 .................. 20,302 18,709
Retained earnings ...................................... 28,185 19,954
Total shareholders' equity ............................ 48,487 38,663
------ ------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY .............. $ 56,408 $ 45,428
====== ======
See accompanying Notes to Consolidated Financial Statements.
SUPERTEX, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
Year Ended March 31,
---------------------------------
1997 1996 1995
--------- --------- ---------
Net sales .......................... $ 48,935 $ 42,802 $ 31,806
Costs and expenses:
Costs of sales .................... 26,073 22,097 16,133
Research and development .......... 5,306 5,647 4,427
Selling, general
and administrative ................ 6,226 5,700 5,324
Total costs and expenses ......... 37,605 33,444 25,884
Income from operations ............. 11,330 9,358 5,922
Other income:
Interest income ................... 1,430 1,099 867
Other income, net ................. 63 255 129
Income before provision
for income taxes ................. 12,823 10,712 6,918
Provision for income taxes ......... 4,103 3,321 1,853
Net income ....................... $ 8,720 $ 7,391 $ 5,065
Net income per share ............... $ 0.70 $ 0.60 $ 0.42
Shares used in per
share computation .................. 12,509 12,296 12,003
See accompanying Notes to Consolidated Financial Statements.
SUPERTEX, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(in thousands)
Common Stock
------------------ Retained Shareholders'
Shares Amount Earnings Equity
------ -------- -------- -------------
Balance, March 31,
1994 ................. 11,718 $ 17,503 $ 8,273 $ 25,776
Stock options
exercised ........... 227 740 -- 740
Stock repurchased ... (52) (70) (347) (417)
Net income .......... -- -- 5,065 5,065
------ ------ ------ ------
Balance, March 31,
1995 ................. 11,893 $ 18,173 $ 12,991 $ 31,164
Stock options
exercised ........... 99 329 -- 329
Stock repurchased ... (56) (85) (428) (513)
Tax benefit from
exercise of stock
options ............. -- 292 -- 292
Net income .......... -- -- 7,391 7,391
------ ------ ------ ------
Balance, March 31,
1996 ................. 11,936 $ 18,709 $ 19,954 $ 38,663
Stock options
exercised ........... 156 763 -- 763
Stock repurchased ... (45) (72) (489) (561)
Tax benefit from
exercise of stock
options ............. -- 902 -- 902
Net income .......... -- -- 8,720 8,720
------ ------ ------ ------
Balance, March 31,
1997 ................. 12,047 $ 20,302 $ 28,185 $ 48,487
====== ====== ====== ======
See accompanying Notes to Consolidated Financial Statements.
SUPERTEX, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Year Ended March 31,
--------------------
1997 1996 1995
---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net income .................................. $ 8,720 $ 7,391 $ 5,065
------- ------- -------
Non-cash adjustments to net income:
Depreciation and amortization .............. 2,163 1,571 1,138
Provision for doubtful accounts
and sales returns .......................... 2,054 857 799
Provision for excess and
obsolete inventories ....................... 256 99 (277)
Loss on disposal of assets ................. 2 24 7
Deferred income taxes ...................... (593) 214 (137)
Changes in operating assets and liabilities:
Accounts receivable ........................ (3,641) (2,609) (2,663)
Inventories ................................ (2,251) (716) (924)
Prepaid expenses ........................... (244) (5) 39
Trade accounts payable
and accrued expenses ....................... 1,284 756 944
Income taxes payable ....................... 430 (84) (293)
Deferred revenue on
shipments to distributors .................. 344 239 69
------- ------- -------
Total adjustments ........................... (196) 346 (1,298)
------- ------- -------
Net cash provided by operating activities ... 8,524 7,737 3,767
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment ......... (7,452) (4,620) (2,050)
Purchases of short term investments ......... (33,275) (39,350) (33,019)
Proceeds from maturities
of short term investments ................... 35,059 48,088 18,000
------- ------- -------
Net cash provided by (used in)
investing activities ........................ (5,668) 4,118 (17,069)
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Stock options exercised ..................... 763 329 740
Stock repurchased ........................... (561) (513) (417)
------- ------- -------
Net cash provided by
(used in) financing activities .............. 202 (184) 323
------- ------- -------
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS ................... 3,058 11,671 (12,979)
CASH AND CASH EQUIVALENTS:
Beginning of year .......................... 16,108 4,437 17,416
------- ------- -------
End of year ................................ $ 19,166 $ 16,108 $ 4,437
------- ------- -------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Tax benefit from exercise of stock options 902 292 --
See accompanying NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
SUPERTEX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Nature of Business. The Company designs, manufactures and
markets custom and standard semiconductor products.
Use of Estimates in Preparation of the Financial Statements. 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 and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Certain Risks and Uncertainties. The Company's sales are
concentrated in the high voltage semiconductor components
industry, which is highly competitive and rapidly changing.
Significant technological changes in the industry, changes in
customer requirements or the emergence of competitor products
with new capabilities or technologies could affect the Company's
operating results adversely. The Company currently buys
substantially all of its silicon wafers, an integral component
of its products, from one supplier. Failure by this supplier to
satisfy the Company's requirements on a timely basis at
competitive prices could cause a delay in manufacturing and a
possible loss of revenues, which would affect operating results
adversely.
Principles of Consolidation. The consolidated financial
statements include the accounts of the Company and its
wholly-owned subsidiary. All significant intercompany accounts
and transactions have been eliminated.
Net Sales. The Company has no revenue-producing operations
outside the United States. In fiscal 1997, one customer, a
distributor, accounted for approximately 18% of net sales. In
fiscal 1996, two customers accounted for 15% and 12% of net
sales. In fiscal 1995, the second customer discussed in the
preceding sentence, accounted for approximately 16% of net
sales. Export sales, which are made primarily to Western Europe
and the Far East, accounted for approximately 51%, 44%, and 50%
of net sales in fiscal 1997, 1996 and 1995, respectively.
Fiscal Period The Company uses a 52-53 week fiscal year ending
the Saturday nearest March 31. The Company's fiscal years in
the accompanying financial statements have been shown ending on
March 31. Fiscal years 1997, 1996, and 1995 all comprise 52
weeks.
Cash and Cash Equivalents. The Company considers all highly
liquid debt instruments purchased with an original maturity of
three months or less to be cash equivalents. The carrying
amounts reported in the balance sheets of cash, cash equivalents
and short term investments approximate estimated fair value
because of the short maturity of the financial instruments.
Short Term Investments. Short term investments, which are
classified as held to maturity, consist principally of bank
certificates of deposit that mature within one year and are
stated at cost, which approximates fair market value.
Inventories. Inventories are stated at the lower of cost
(determined on a first-in, first-out basis) or market value.
The Company's inventories include high technology parts and
components that are specialized in nature or subject to rapid
technological obsolescence. While the Company has programs to
minimize the required inventories on hand and considers
technological obsolescence when estimating amounts required to
reduce recorded amounts to market values, it is reasonably
possible that such estimates could change in the near term.
SUPERTEX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Recent Accounting Pronouncements. In February 1997, the
Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share"
(SFAS 128), which specifies the computation, presentation and
disclosure requirements for earnings per share. SFAS 128
supersedes Accounting Principles Board Opinion No. 15 and is
effective for financial statements issued for periods ending
after December 15, 1997. SFAS 128 requires restatement of all
prior-period earnings per share data presented after the
effective date. SFAS 128 will not have a material impact on the
Company's financial position, results of operations or cash
flows.
Property and Equipment. Property and equipment are stated at
cost and generally depreciated using accelerated methods over
estimated useful lives of five to thirty-nine years. Leasehold
improvements are recorded at cost and are amortized on a
straight-line basis over the lesser of the related lease term or
the estimated useful life of the assets.
Long-Lived Assets. Effective April 1, 1996, the Company adopted
Statement of Financial Accounting Standards No. 121 (SFAS 121),
"Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of," which requires the Company
to review for impairment of long-lived assets whenever events or
changes in circumstances indicate that the carrying amount of an
asset might not be recoverable. In certain situations, an
impairment loss would be recognized. The adoption of SFAS 121
did not impact the Company's financial condition or results of
operations.
Revenue Recognition. Direct sales to customers are recognized
upon shipment of product. Sales to distributors are made
primarily under arrangements allowing price protection and the
right of stock rotation on merchandise unsold by the
distributors. Because of the uncertainty associated with
pricing concessions and future returns, the Company defers
recognition of such sales and the related costs of sales until
the merchandise is sold by distributors to end users.
Net Income per Share. Net income per share is computed using the
weighted average number of common and common equivalent shares
outstanding. Common equivalent shares consist of outstanding
stock options.
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 three major banks domiciled
in the United States.
Income Taxes. The Company utilizes the liability method to
account for income taxes where deferred tax assets or
liabilities are determined based on the temporary differences
between the bases used for financial versus tax reporting of
assets and liabilities, using tax laws and rates in effect for
the year in which the differences are expected to affect taxable
income. The realizability of deferred tax assets is based on
expectations about future taxable income.
Stock Compensation. Effective April 1, 1996, the Company adopted
Statement of Financial Accounting Standards No. 123 (SFAS 123),
"Accounting for Stock-based Compensation," which requires the
Company to value stock-based compensation and to either record
the value in the financial statements or to disclose the impact
of the value and its impact on net income and earnings per share
in the footnotes to the financial statements. The Company
elected the disclosure alternative and continues to account for
stock-based compensation using the intrinsic value method
prescribed by Accounting Principles Board No. 25, "Accounting
for Stock Issued to Employees." Accordingly, the adoption of
SFAS 123 did not impact the Company's financial condition or
results of operations.
SUPERTEX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
2. INVENTORIES (in thousands):
March 31,
---------------
1997 1996
---- ----
Finished goods ....................................... $ 1,656 $ 1,366
Work-in-process ...................................... 5,993 4,122
Raw materials ........................................ 1,600 1,766
----- -----
$ 9,249 $ 7,254
===== =====
3. PROPERTY AND EQUIPMENT (in thousands):
March 31,
---------------
1997 1996
---- ----
Machinery and equipment ............................. $ 20,985 $ 13,792
Leasehold improvements .............................. 1,626 1,588
Building ............................................ 1,959 1,861
Furniture and fixtures .............................. 78 78
------ ------
24,648 17,319
Less accumulated depreciation & amortization ........ (13,720) (11,707)
------ ------
10,928 5,612
Land ................................................ 825 854
------ ------
$ 11,753 $ 6,466
====== ======
4. INCOME TAXES
The components of the provision for income taxes for fiscal
years ended March 31, 1997, 1996 and 1995 are as follows (in
thousands):
March 31,
------------------------
1997 1996 1995
---- ---- ----
Federal - current .......................... $ 4,128 $ 2,693 $ 1,571
Federal - deferred ......................... (540) 202 (147)
----- ----- -----
3,588 2,895 1,424
State - current ............................ 568 414 419
State- deferred ............................ (53) 12 10
----- ----- -----
515 426 429
----- ----- -----
$ 4,103 $ 3,321 $ 1,853
===== ===== =====
All of the Company's revenue is taxable in the
United States. The provision for income taxes differs from the
amount computed by applying the statutory federal income tax
rate to income before provision for income taxes as follows:
1997 1996 1995
---- ---- ----
Statutory provision ........................... 35% 34% 34%
State tax, net of federal benefits ............ 4% 5% 5%
Tax credits ................................... (3%) (2%) (4%)
Benefit of foreign sales corporation .......... (3%) (2%) (3%)
Other ......................................... (1%) (4%) (5%)
---- ---- ----
32% 31% 27%
==== ==== ====
Income taxes of $4,265,000, $3,155,000, and $2,266,000 were paid
during fiscal 1997, 1996, and 1995, respectively.
SUPERTEX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The components of the deferred tax assets are as follows (in thousands):
March 31,
--------------
1997 1996
---- ----
Deferred tax assets:
Accrued benefits ..................................... $ 363 $ 242
Inventory allowances ................................. 225 190
Accrued liabilities .................................. 156 68
State deferred taxes (net of federal benefits) ....... 220 167
Deferred revenue on shipments to distributors ........ 377 215
Allowances for doubtful accounts and sales returns ... 184 190
Other ................................................ 309 169
----- -----
Total deferred tax assets ........................... $ 1,834 $ 1,241
===== =====
Management has determined that no valuation allowance is
required because, although realization is not assured, the
Company has sufficient taxable income in carryback years to
absorb items deductible in the future for federal tax purposes
and anticipates that its estimated future taxable income will
allow the deferred tax asset for state tax purposes to be fully
realized in future years. The amount of the deferred tax asset
that is realizable could be reduced in the near term if actual
results differ significantly from estimates of future taxable
income.
5. EMPLOYEE BENEFIT PLANS
Profit Sharing Plan -- The Company has a discretionary profit
sharing plan for the benefit of eligible employees. Related
expenses were $1,259,000, $1,040,000, and $652,000 in fiscal
1997, 1996, and 1995, respectively.
Savings and Retirement Plan -- The Supertex Savings and
Retirement Plan allows for employee savings intended to qualify
under the provisions of Section 401 of the Internal Revenue
Code. Employees having at least three months of permanent
service may make pretax contributions of 1% to 20% of qualified
compensation, with the Company matching certain percentages of
employee contributions, all of which are 100% vested. In fiscal
years 1997, 1996, and 1995, the Company's matching contributions
were $160,000, $221,000, and $138,000, respectively.
Stock Option Plan -- The 1991 Stock Option Plan (the Option
Plan) provides for granting incentive stock options to
employees, and non-statutory stock options to employees and
consultants. Terms for exercising options are determined by the
Board of Directors, and options expire at the earlier of the
term provided in the Notice of Grant or upon termination of
employment or consulting relationship.
A total of 1,925,715 shares of the Company's common stock were
reserved for issuance under the 1991 Plan. As of March 31,
1997, 183,790 options were exercisable at a weighted average
exercise price of $5.00. As of March 31, 1996, 123,530 options
were exercisable at a weighted average exercise price of $3.97.
As of March 31, 1995, 47,120 options were exercisable at a
weighted average exercise price of $3.34. Options granted under
the Plan are granted at the fair market value of the Company's
common stock on the date of grant and generally expire 7 years
from the date of grant or at termination of service, whichever
occurs first. The options generally are exercisable beginning
one year from date of grant and generally vest over a five year
period.
Activity under the Option Plan is as follows (in thousands,
except share and per share data):
Available Options Outstanding Weighted
For -------------------------------------- Average
Grant* Shares Price Per Share Amount Exercise Price
--------- ------ --------------- ------ --------------
March 31, 1994 balance ... 146,915 828,400 $ 1 7/8 - $ 4 3/8 $ 2,705 $ 3.27
Granted ................. (201,300) 201,300 3 1/2 - 7 3/4 1,109 $ 5.51
Exercised ............... (227,080) 1 7/8 - 4 3/8 (740) $ 3.26
Canceled ................ 129,260 (135,360) 2 3/8 - 7 3/4 (473) $ 3.49
-------- -------- ------
March 31, 1995 balance ... 74,875 667,260 1 15/16 - 7 3/8 2,601 $ 3.90
Granted ................. (376,600) 376,600 7 1/4 - 12 5/8 3,495 $ 9.28
Exercised ............... (98,510) 1 15/16 - 7 3/8 (329) $ 3.34
Canceled ................ 83,000 (83,400) 2 3/8 - 11 3/8 (493) $ 5.91
Authorized .............. 1,000,000 -- -- -- --
March 31, 1996 balance ... 781,275 861,950 2 3/4 - 12 5/8 5,274 $ 6.12
Granted ................. (364,300) 364,300 12 - 9 7/8 4,859 $ 13.34
Exercised ............... (156,360) 2 3/4 - 11 3/4 (763) $ 4.88
Canceled ................ 63,000 (63,000) 2 3/4 - 17 1/2 (684) $ 10.86
March 31, 1997 balance ... 479,975 1,006,890 $ 2 3/4 - $19 7/8 $ 8,686 $ 8.63
Stock Compensation -- The Company has adopted the
disclosure-only provisions of SFAS 123. Accordingly, no
compensation cost has been recognized for the 1991 Stock Option
Plan. Had compensation cost for the Option Plan been determined
based on the fair value at the grant date for the awards
consistent with the provisions of SFAS 123, the Company's net
income and net income per share for the years ended March 31,
1997 and 1996 would have been reduced to the pro forma amounts
indicated below (in thousands except per share data):
1997 1996
------ ------
Net Income As reported $8,720 $7,391
Pro forma $8,002 $7,032
Earnings per share As reported $ 0.70 $ 0.60
Pro forma $ 0.65 $ 0.58
The weighted average fair value of options granted during
fiscal 1997 was $6.87 per share. The weighted average fair
value of all options granted during fiscal 1996 was $4.46 per
share. All options were granted at the market price of the
Company's common stock on the date of grant. The proforma
disclosures may not be representative of the effects on reported
net income or earnings-per-share for future years because options
vest over several years and additional awards generally are made
each year.
The fair value of each option grant for the Option Plan is
estimated on the date of grant using the Black-Scholes multiple
options pricing model with the following weighted average
assumptions by year:
1997 1996
---- ----
Risk-free interest rate .................. 5.53% 5.53%
Expected term of option from vest date ... 0.54 0.54
Expected volatility ...................... 61.5% 61.5%
Expected dividend yield .................. -- --
The options outstanding and currently exercisable by exercise
price under the Option Plan at March 31, 1997 are as follows:
Options Outstanding Options Exercisable
------------------------------------------------ -----------------------------
Weighted-Average
Range of Exercise Number Remaining Weighted-Average Number Weighted-Average
Prices Outstanding Contractual Life Exercise Price Outstanding Exercise Price
- ----------------- ----------- ---------------- ---------------- ----------- ----------------
$ 2.750 - $ 4.125 278,660 3.22 $ 3.33 122,040 $ 3.36
$ 4.375 - $ 9.375 325,580 5.14 $ 7.90 47,500 $ 7.45
$ 9.500 - $12.000 297,450 6.54 $11.62 12,850 $10.77
$12.375 - $19.875 105,200 6.49 $16.44 1,400 $12.38
$ 2.750 - $19.875 1,006,890 5.16 $ 8.63 183,790 $ 5.00
6. COMMITMENTS
The Company leases its manufacturing facility under an operating
lease that expires in 2001, from a corporation owned by one of
the Company's directors. Under the lease, the Company is
responsible for maintenance costs, including real property
taxes, utilities and other costs. Future minimum lease payments
at March 31, 1997 are as follows (in thousands):
Fiscal Year
-------------------------------------
1998 1999 2000 2001 Total
---- ---- ---- ---- -----
$ 350 $ 350 $ 350 $ 322 $1,372
Rental expenses, net of sublease, were approximately $321,000,
$473,000, and $503,000 (net of sublease income of $105,000,
$86,000, and $21,000, respectively) in fiscal years 1997, 1996, and 1995,
respectively.
SCHEDULE II
SUPERTEX, INC.
VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
Balance at Charged to Balance at
Beginning Costs and Write-Off End
of Period Expenses of Accounts of Period
---------- ---------- ----------- ----------
Year ended March 31, 1995
Allowance for
sales returns ........... $ 317 $ 717 $ 682 $ 352
Allowance for
doubtful accounts ....... 93 82 40 135
Inventory allowances .... 720 (277) (171) 614
Year ended March 31, 1996
Allowance for
sales returns ........... $ 352 $ 867 $ 785 $ 434
Allowance for
doubtful accounts ....... 135 (10) -- 125
Inventory allowances .... 614 99 154 559
Year ended March 31, 1997
Allowance for
sales returns ........... 434 2,020 2,077 377
Allowance for
doubtful accounts ....... 125 34 11 148
Inventory allowances .... 559 256 171 644
SUPERTEX, INC.
EXHIBIT INDEX
(The Registrant will furnish to any shareholders who so request
a copy of this Annual Report on Form 10-K and any Exhibit listed
below, provided that the Registrant may require payment of a
reasonable fee not to exceed its expense in furnishing such
information.)
Exhibit Exhibit Description
3.1* Restated Articles of Incorporation of Registrant filed
May 21, 1980.
3.2* Certificate of Amendment of Articles of Incorporation filed
April 16, 1981.
3.3* Certificate of Amendment of Articles of Incorporation filed
September 30, 1983.
3.4**** Bylaws of Registrant, as amended.
10.2* Lease for 1225 and 1231 Bordeaux Drive, Sunnyvale,
California, dated January 25, 1991, between Fortuna Realty
Company, as Lessor, and Registrant, as Lessee.
10.6* 1981 Stock Option Plan, as amended, with form of stock
option agreement.
10.6a**** 1991 Stock Option Plan, as amended, with form of stock
option agreement.
10.7* Profit Sharing Plan.
10.21** Certificate of Amendment of Articles of Incorporation
filed October 14, 1988.
10.22*** Agreement with Texas Instruments Inc. dated May 31,
1991. (1)
11.1 Statement Regarding Computation of Net Income per Share.
23.1 Consent of Coopers & Lybrand L.L.P., Independent
Accountants.
24.1 Power of Attorney.
27.1 Financial Data Schedule.
* Incorporated by reference to exhibit of same number of
Registrant's Registration Statement on Form S-1
(File No. 2-86898), which became effective December 6, 1983.
** Incorporated by reference to exhibit filed with Quarterly
Report on Form 10-Q for period ended October 1, 1988.
*** Incorporated by reference to exhibit filed with Annual
Report on Form 10-K for year ended March 31, 1991.
**** Incorporated by reference to exhibit included in
Registrant's Registration Statement on Form S-8 (File No.
33-43691) which became effective September 1, 1995.
(1) Confidential treatment of portions of this exhibit was
granted by order dated August 12, 1991.
Exhibit 11.1