Back to GetFilings.com
1
UNITED STATES
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 for the fiscal year ended March 28, 1998, or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the transition period from to
Commission File No. 0-12719
GIGA-TRONICS INCORPORATED
- - --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 94-2656341
- - ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4650 Norris Canyon Road, San Ramon, CA 94583
- - --------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (925) 328-4650
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
- - ------------------- -----------------------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, No par value
--------------------------
(Title of class)
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's 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. [X]
The aggregate market value of voting stock held by non-affiliates of the
Registrant calculated on the closing average bid and asked prices as of June 23,
1998 was $15,252,815. For purposes of this determination only, directors and
officers of the Registrant have been assumed to be affiliates. There were a
total of 4,326,299 shares of the Registrant's Common Stock outstanding as of
June 23, 1998.
2
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents have been incorporated by reference into the
parts indicated:
PART OF FORM 10-K DOCUMENT
PART II Registrant's ANNUAL REPORT TO
Items 5, 6, 7 and 8 SHAREHOLDERS for the fiscal year
ended March 28, 1998.
PART III Registrant's PROXY STATEMENT for its
Items 10, 11, 12 and 13 1998 annual meeting of shareholders
to be filed no later than 120 days
after the close of the fiscal year
ended March 28, 1998.
2
3
PART I
The forward-looking statements included in this report, which reflect
management's best judgment based on factors currently known, involve risks and
uncertainties. Actual results could differ materially from those anticipated in
the forward-looking statements included herein as a result of a number of
factors, including but not limited to those discussed under "Certain Factors
Which May Adversely Affect Future Operations Or An Investment In The Company" in
Item 1 below and in Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations," incorporated by reference on pages 14
through 16 of the Company's 1998 Annual Report to Stockholders.
ITEM 1. BUSINESS
General
Giga-tronics designs, manufactures and markets through its Giga-tronics
Instrument Division, a broad line of test and measurement equipment used in the
development, test and maintenance of wireless communications products and
systems, flight navigational equipment, electronic defense systems and automatic
testing systems. These products are used primarily in the design, production,
repair and maintenance of commercial telecommunications, radar, and electronic
warfare.
Effective July 23, 1996, Giga-tronics acquired ASCOR, Inc.(ASCOR).
ASCOR, located in Fremont, California, designs, manufactures, and markets a line
of switching and connecting devices that link together many specific purpose
instruments that comprise a portion of automatic test systems. ASCOR offers a
family of switching and interface test adapters as standard VXI configured
products, as well as complete system integration services to the Automatic Test
Equipment market.
Effective June 27, 1997, Giga-tronics completed a merger with Viking
Semiconductor Equipment, Inc. (Viking) by issuing approximately 420,000 shares
of the Company's common stock in exchange for all of the common stock of Viking.
The merger was accounted for using the pooling-of interest method of accounting.
Viking, located in Fremont, California, manufactures and markets a line of
optical inspection equipment used to manufacture and test semiconductor devices.
Products include die attachments, automatic die sorters, tape and reel
equipment, and wafer inspection equipment.
Effective December 2, 1997, Giga-tronics completed a merger with
Ultracision, Inc. (Ultracision) by issuing approximately 517,000 shares of the
Company's common stock in exchange for all of the common stock of Ultracision.
The merger was accounted for using the pooling-of-interest method of accounting.
Ultracision is a manufacturer of automation equipment for the test and
inspection of silicon wafers. Ultracision additionally produces a line of
probers for the testing and inspection of silicon devices.
The Company intends to broaden its product lines and expand its market,
both by internal development of new products and through the acquisition of
other business entities. From time to time, the Company considers a variety of
acquisition opportunities.
Recent Developments
Effective May 18, 1998, Giga-tronics Inc. completed an acquisition of
Microsource, Inc. (Microsource). All the outstanding shares of Microsource were
exchanged for $1,500,000 plus contingent future payments based on earnings from
Microsource for the next two years. The acquisition will be accounted for under
the "purchase" method of accounting. Microsource develops and manufactures a
broad line of YIG (Yttrium, Iron, Garnet) tuned oscillators, filters and
microwave synthesizers, which are used by its customers in manufacturing a wide
variety of microwave instruments or devices.
3
4
Industry Segments
The Company manufactures products used in test, measurement and
handling. The Company operates primarily in two industry segments; electronics
and electro-mechanical test and measurement and semiconductor test and robotics.
Products and Markets
Test and Measurement
The Company produces signal sources, generators and sweepers, and power
measurement instruments for use in the microwave and RF frequency range (10 kHz
to 75 GHz). Within each product line are a number of different models and
options allowing customers to select frequency range and specialized
capabilities, features and functions. The end-user markets for these products
can be divided into three broad segments: commercial telecommunications, radar
and electronic warfare. The Company's instruments are used in the design,
production, repair and maintenance and calibration of other manufacturers'
products, from discrete components to complex systems.
The Company also produces switch modules, and interface adapters that
operate with a bandwidth from direct current (DC) to 18 GHz. The company's
switch modules may be incorporated within its customer's automated test
equipment. The end-user markets for these products are primarily related to
electronic warfare, though the VXI architecture may become more accepted by the
telecommunications market.
Semiconductor Test and Robotics
In addition, the Company manufactures and markets a line of optical
inspection equipment used in the testing of semiconductor devices. Products
include die attachments, automatic die sorters, tape and reel equipment, and
wafer inspection equipment. Further, the Company manufacturers automation
equipment for the test inspection and robotic handling of silicon wafers in
addition to a line of probers for the testing and inspection of silicon devices.
Sources and Availability of Raw Materials and Components
Substantially all of the components required by the Company to make its
assemblies are available from more than one source. The Company occasionally
uses sole source arrangements to obtain leading-edge technology, favorable
pricing or supply terms. Although extended delays in delivering components could
result in longer product delivery schedules, the Company believes that its
protection against this possibility stems from its practice of dealing with
well-established suppliers and maintaining good relationships with such
suppliers.
Patents and Licenses
The Company attempts to obtain patents when appropriate. However, the
Company believes that its competitive position depends primarily on the creative
ability and technical competence of its personnel and the timely introduction of
new products rather than on the ownership or development of patents.
The Company licenses certain instrument operating system software from
third parties. The Company believes, based on industry practice, that any
additional licenses necessary could be obtained on conditions which would not
have a materially adverse financial effect on the Company.
Seasonal Nature of Business
The business of the Company is not seasonal.
4
5
Working Capital Practices
The Company does not believe that it has any special practices or
special conditions affecting working capital items that are significant for an
understanding of its business.
Importance of Limited Number of Customers
The Company had been a leading supplier of microwave and radio frequency
(RF) test instruments to various U.S. Government defense agencies, as well as to
their prime contractors. Management anticipates sales to U.S. Government
agencies will remain significant in fiscal 1999, even though the outlook for
defense-related orders continues to be soft. Defense related agencies accounted
for 12%, 28% and 32% of net sales in fiscal 1998, 1997 and 1996, respectively.
Commercial business accounted for 88%, 72% and 68%, of net sales in fiscal 1998,
1997 and 1996, respectively. In the past several years, sales to the defense
industry in general, and direct sales to the United States and foreign
government agencies in particular, have declined. Giga-tronics believes this
softening of product orders, and the resulting decline in defense sales
revenues, is indicative of the world-wide decline in governmental defense
spending. Any further decline in defense orders as a consequence of the
foregoing circumstance, or otherwise, could have a material adverse effect on
the business, operating results, financial condition and cash flows of
Giga-tronics.
Backlog of Orders
On March 28, 1998, Giga-tronics had a backlog of approximately
$6,492,000 compared to $10,192,000 at March 27, 1997. Orders for the Company's
products include program orders from both the U.S. Government and defense
contractors, with extended delivery dates. Accordingly, the backlog of orders
may vary substantially from quarter to quarter and the backlog entering any
single quarter may not necessarily be indicative of sales for any period.
Backlog includes only those customer orders for which a delivery
schedule has been agreed upon between the Company and the customer and, in the
case of U.S. Government orders, for which funding has been appropriated. The
Company believes that essentially all of the backlog will be shipped within the
next twelve months.
A portion of the year-end backlog consists of U.S. Government contracts.
These contracts contain customary provisions permitting termination at the
convenience of the Government upon payment of a negotiated cancellation charge.
The Company never has experienced a significant contract termination.
Competition
Giga-tronics is engaged in a highly competitive field. Competition from
numerous existing companies is intense and potential new entrants are expected
to increase. The Company's Test and Measurement products compete with Hewlett
Packard, Anritsu, Marconi and Rhode & Schwarz while the Semiconductor Test and
Robotics compete with various other competitors. Many of these companies have
substantially greater research and development, manufacturing, marketing,
financial, technological, personnel and managerial resources than Giga-tronics.
There can be no assurance that any products developed by these competitors will
not gain greater market acceptance than any developed by Giga-tronics.
Accordingly, Giga-tronics will be required to continue to devote substantial
resources and efforts to marketing and research and development activities.
In addition, Giga-tronics expects to continue to make significant
investments in research and development. There can be no assurance that future
technologies, processes or product developments will not render Giga-tronics'
current product offerings obsolete or that Giga-tronics will be able to develop
and introduce new products or enhancements to existing products which satisfy
customer needs in a timely manner or achieve market acceptance. The failure to
do so could adversely affect Giga-tronics' business.
5
6
Sales and Marketing
The Company markets its test and measurement products through its
distributors and representatives to government and commercial customers, while
the Company markets its semiconductor test and robotics equipment through
separate distributors and sales representatives to semiconductor manufacturers.
Product Development
Products of the type manufactured by the Company historically have had
relatively long product life cycles. However, the electronics industry is
subject to rapid technological changes at the component level. The future
success of the Company is dependent on its ability to steadily incorporate
advancements in component technologies into its new products.
Product development expense was approximately $6,200,000, $4,581,000 and
$4,495,000 in fiscal 1998, 1997 and 1996, respectively. Activities included the
development of new products and the improvement of existing products. It is
management's intention to maintain expenditures for product development at
levels required to sustain its competitive position. All of the Company's
product development activities are internally funded and expensed as incurred.
Manufacturing
The assembly and testing of the Company's microwave, RF and power
measurement products is done at its San Ramon facility. The assembly and testing
of the Company's switching and connecting devices is done at its Fremont
facility. The assembly and testing of the Company's line of optical inspection
equipment used to manufacture and test semiconductor devices is done at a
separate Fremont facility. The assembly and testing of the Company's automation
equipment for the test, inspection, and handling of silicon wafers along with
the test and assembly of the Company's prober line is done at its Santa Clara
facility.
Environment
To the best of its knowledge, the Company is in compliance with all
federal, state and local laws and regulations involving the protection of the
environment.
Employees
As of March 28, 1998, the Company employed 226 persons. Management
believes that the future success of the Company depends on its ability to
attract and retain skilled personnel. None of the Company's employees is
represented by a labor union, and the Company considers its employee relations
to be satisfactory.
Information about Foreign Operations
The Company sells to its international customers through a network of
foreign technical sales representative organizations. Sales to foreign customers
were approximately $10,410,000, $11,896,000 and $10,320,000 in fiscal 1998, 1997
and 1996, respectively.
The Company has no foreign-based operations or material amounts of
identifiable assets in foreign countries. Its gross margins on foreign and
domestic sales are similar.
6
7
Certain Factors Which May Adversely Affect Future Operations Or An Investment In
The Company
Although the Company has achieved more balance between its defense and
commercial businesses, defense related orders remain important to the Company.
The outlook for such orders continues to be soft especially in the far east. If
this trend were to continue, shipments in the current year could fall short of
plan with a concurrent decline in earnings. Current softness in the market for
the Company's commercial products has resulted in a substantial decline in
backlog. If this trend cannot be reversed in the near term, shipments in the
current year could fall short of plan with a concurrent decline in earnings.
However, the Company believes that growth can be realized by maintaining an
effective new product development program, aggressively pursuing new markets,
and vigorously competing for defense business. In addition, the Company intends
to broaden its product lines and expand its markets. Nevertheless, there is no
assurance these efforts will lead to increased sales in the near term.
During fiscal years 1997 and 1998, Giga-tronics made three business
acquisitions: ASCOR, Viking and Ultracision. Subsequent to year end, on May 18,
1998, Giga-tronics acquired Microsource. Giga-tronics has acquired these
companies with the expectation that the acquisitions would result in long-term
strategic benefits. The realization of the benefits sought from these
acquisitions depends on the ability of Giga-tronics to effectively utilize the
joint product development capabilities, sales and marketing capabilities,
administrative organizations and facilities of these companies. There can be no
assurance that these benefits will be achieved or that the activities of these
companies will be integrated in a coordinated, timely and efficient manner. The
combination of these entities also will require the dedication of management
resources, which will detract such persons' attention from the day-to-day
business of Giga-tronics. There can be no assurance the integration will be
completed without disrupting Giga-tronics businesses. The inability of
Giga-tronics to effectively utilize resources and to achieve integration in a
timely and coordinated fashion could result in a material adverse effect on
Giga-tronics' financial condition, operating results and cash flow.
Prior to the acquisition of Viking and Ultracision, Giga-tronics had no
experience in the semiconductor manufacturing equipment industry. As a result,
integration of these companies may be difficult. The difficulties may be
increased by the necessity of coordinating geographically separate organizations
and addressing possible differences in corporate cultures and management
philosophies. Finally, expenditures related to the development of new products
by these subsidiaries have, and may in the future, impact the financial results
of Giga-tronics. The future success of Giga-tronics may depend on its ability to
steadily incorporate advancements in semiconductor manufacturing technologies
into its new products. The impact of these new subsidiaries on the operations of
Giga-tronics remains uncertain.
The market for electronics equipment is characterized by rapidly
changing technology and evolving industry standards. Giga-tronics believes that
its future success will depend in part upon its ability to develop and
commercialize its existing products and to develop new products and application
and in part to develop, manufacture and successfully introduce new products and
product lines with improved capabilities and to continue to enhance existing
products. There can be no assurance that Giga-tronics will successfully complete
the development of current or future products or that such products will achieve
market acceptance.
The market price of the Common Stock could be subject to significant
fluctuations in response to variations in quarterly operating results,
shortfalls in revenues or earning from levels expected by securities analysts
and other factors such as announcements of technological innovations or new
products by Giga-tronics or by competitors, government regulations or
developments in patent or other proprietary rights. In addition, the Nasdaq
National Market and other stock markets have experienced significant price
fluctuations in recent months. These fluctuations often have seemingly been
unrelated to the operating performance of the specific companies whose stocks
are traded. Broad market fluctuations, as well as general foreign and domestic
economic conditions, may adversely affect the market price of the Common Stock.
Giga-tronics stock at any time has historically traded on thin volume on
Nasdaq. Sales of a significant volume of stock could result in a depression of
Giga-tronics share price.
7
8
ITEM 2. PROPERTIES
As of March 28, 1998, the Company's executive, marketing, sales and
engineering offices and manufacturing facilities for its microwave and RF signal
generator and power measurement products are located in approximately 47,300
square feet in San Ramon, California, which the Company occupies under a lease
agreement expiring December 31, 2006.
The Company's marketing, sales and engineering offices and manufacturing
facilities for its switching and connecting devices are located in approximately
12,160 square feet in Fremont, California, under a lease expiring on January 31,
1999.
The Company's marketing, sales and engineering offices and manufacturing
facilities for its automation equipment for the inspection of silicon wafers and
prober line are located in approximately 20,400 square foot facility in Santa
Clara, California, under a lease expiring on June 30, 2002.
The Company's marketing, sales and engineering offices and manufacturing
facilities for its line of optical inspection equipment used in the manufacture
and test of semiconductor devices are located in an approximately 12,100 square
foot facility in Fremont, California, owned by the Company.
ITEM 3. LEGAL PROCEEDINGS
As of March 28, 1998, the Company has no pending legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year ended March 28, 1998. Executive Officers of
the Company are listed on page 16 of this Form 10-K.
8
9
PART II
The Registrant's Annual Report to Shareholders for the year ended March
28, 1998, is filed as Exhibit 13.0 with the Form 10-K (the "1998 Annual
Report"). The information responsive to Items 5, 6, 7 and 8, which is contained
in the 1998 Annual Report, is specifically incorporated by reference in this
Form 10-K. With the exception of such information, the 1998 Annual Report is not
deemed filed as part of this report.
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
Incorporated by reference from the 1998 Annual Report, see "Common Stock
Market Prices" which appears on page 31.
On July 27, 1997, Giga-tronics issued 419,997 shares of its common stock
as consideration for all of the issued and outstanding shares of Viking
Semiconductor Equipment, Inc. ("Viking") pursuant to an Agreement and Plan of
Reorganization with Viking. The recipients of the shares were the 13
shareholders of Viking. In addition, on December 2, 1997, Giga-tronics issued
516,992 shares of its common stock in connection with its acquisition of all of
the capital stock of Ultracision, Inc. ("Ultracision") pursuant to an Agreement
and Plan of Reorganization with Ultracision. The recipients of the shares were
the 12 shareholders of Ultracision. Both transactions were exempt from
registration under the Securities Act pursuant to Section 2 (2).
ITEM 6. SELECTED FINANCIAL DATA
Incorporated by reference from the 1998 Annual Report, see "Selected
Financial Data" which appears beginning on page 30.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
Incorporated by reference from the 1998 Annual Report, see "Management's
Discussion and Analysis" which appears on pages 14 to 16.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not yet applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following items which appear in the 1998 Annual Report are incorporated by
reference:
Consolidated Balance Sheets.....................................page 17
Consolidated Statements of Operations...........................page 18
Consolidated Statements of Shareholders' Equity.................page 19
Consolidated Statements of Cash Flows...........................page 20
Notes to Consolidated Financial Statements......................page 21 - 28
Independent Auditors' Report....................................page 29
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES.
Not applicable.
9
10
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding directors of the Company is set forth under the
heading "Election of Directors" of the Company's Proxy Statement for the 1998
Annual Meeting of Shareholders, incorporated herein by reference. This Proxy
Statement is to be filed no later than 120 days after the close of the fiscal
year ended March 28, 1998.
ITEM 11. EXECUTIVE COMPENSATION
Information regarding the Company's compensation of its executive
officers is set forth under the heading "Executive Compensation" of the Proxy
Statement, incorporated herein by reference. This Proxy Statement is to be filed
no later than 120 days after the close of the fiscal year ended March 28, 1998.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information regarding security ownership of certain beneficial owners
and management is set forth under the heading "Stock Ownership of Certain
Beneficial Owners and Management" of the Proxy Statement, incorporated herein by
reference. This Proxy Statement is to be filed no later than 120 days after the
close of the fiscal year ended March 28, 1998.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not applicable.
10
11
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) Financial Statements
The following financial statements and schedules are filed or
incorporated by reference as a part of this report.
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
1998 Annual Report
to Shareholders
Financial Statements (Page No.)
- - -------------------- ------------------
Consolidated Balance Sheets - 17
As of March 28, 1998 and
March 29, 1997
Consolidated Statements of Operations - 18
Years Ended March 28, 1998,
March 29, 1997 and March 30, 1996
Consolidated Statements of Shareholders' Equity - 19
Years Ended March 28, 1998,
March 29, 1997 and March 30, 1996
Consolidated Statements of Cash Flows - 20
Years Ended March 28, 1998,
March 29, 1997 and March 30, 1996
Notes to Consolidated Financial Statements 21 - 28
Independent Auditors' Report 29
Form 10-K
(a)(2) Schedules (Page No.)
- - -------------------- ------------------
Report on Financial Statement Schedule and 14
Consent of Independent Auditors
Schedule II - Valuation and Qualifying 15
Accounts
All other schedules are not submitted because they are not applicable or
not required or because the required information is included in the financial
statements or notes thereto.
Except for those portions thereof incorporated by reference in this Form
10-K, the 1998 Annual Report and the Proxy Statement are not to be deemed filed
as part of this report.
11
12
(a)(3) Exhibits
Reference is made to the Exhibit Index which is found on pages 17 and 18
of this Form 10-K Report.
(b) Reports on Form 8-K
A report on Form 8K-A dated February 13, 1998 was filed on February 17,
1998. It consisted of the required disclosure of the financial
statements for Ultracision.
12
13
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
GIGA-TRONICS INCORPORATED
By /s/ GEORGE H. BRUNS, JR.
--------------------------------------
George H. Bruns, Jr.
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
/s/ GEORGE H. BRUNS, JR. Chairman of the Board 6/24/98
- - -------------------------------- and Chief Executive Officer (Date)
George H. Bruns, Jr. (Principal Executive Officer)
/s/ MARK H. COSMEZ II Vice President, Finance 6/24/98
- - -------------------------------- and Chief Financial Officer (Date)
Mark H. Cosmez II (Principal Accounting Officer)
/s/ JAMES A. COLE Director 6/24/98
- - -------------------------------- (Date)
James A. Cole
/s/ EDWARD D. SHERMAN Director 6/24/98
- - -------------------------------- (Date)
Edward D. Sherman
/s/ ROBERT C. WILSON Director 6/24/98
- - -------------------------------- (Date)
Robert C. Wilson
13
14
Exhibit 23.0
REPORT ON FINANCIAL STATEMENT SCHEDULE AND CONSENT OF
INDEPENDENT AUDITORS
The Board of Directors and Shareholders
Giga-tronics Incorporated
The audits referred to in our report dated May 1, 1998, except as to
Note 14, which is as of May 21, 1998, included the related financial statement
schedule as of March 28, 1998 and March 29, 1997, and for the years ended March
28, 1998, March 29, 1997, and March 30, 1996, incorporated herein by reference.
This financial statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion on this financial
statement schedule based on our audits. In our opinion, such financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.
We consent to incorporation by reference in the registration statements
(Nos. 333-34719, 333-39403, and 333-48889) on Form S-8 and (Nos. 333-50091) on
Form S3 of Giga-tronics Incorporated of our reports included herein and
incorporated herein by reference.
/s/ KPMG PEAT MARWICK LLP
-----------------------------------------
KPMG Peat Marwick LLP
Mountain View, California
June 24, 1998
14
15
GIGA-TRONICS INCORPORATED
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Column A Column B Column C Column D Column E
- - ------------------------------------ -------------------- ------------------ -------------- ----------------- -------------
Balance at Charged to Charged to Balance
Beginning of Cost and Other Deductions at End
Description Period Expenses Accounts (Recoveries) of Period
- - ------------------------------------ -------------------- ------------------ -------------- ----------------- -------------
$ $ $ $ $
Year ended March 28, 1998
Allowances deducted from assets:
Accounts receivable:
For doubtful accounts1 323,983 39,800 --- 71,139 292,644
Total 323,983 39,800 --- 71,139 292,644
======================================================================================
Year ended March 29, 1997
Accounts receivable:
For doubtful accounts1 293,827 23,451 --- (6,705) 323,983
Total 293,827 23,451 --- (6,705) 323,983
======================================================================================
Year ended March 30, 1996
Accounts receivable:
For doubtful accounts1 60,621 253,030 --- 19,824 293,827
Total 60,621 253,030 --- 19,824 293,827
======================================================================================
1 Allowance for accounts receivable collection exposure.
15
16
GIGA-TRONICS INCORPORATED
EXECUTIVE OFFICERS
Name Age Position
Curt M. Berggren 44 For the last 5 years, has been the
President, Viking Semiconductor Equipment,
Inc.
George H. Bruns, Jr. 79 Chief Executive Officer since January,
1995, Chairman of the Board and a Director
of the Company. Founded the Company in 1980
and has been a Director since inception.
Mr. Bruns is General Partner of The Bruns
Company, a private venture investment and
management consulting firm. Mr. Bruns is
Director of Peninsula Wireless
Communications Inc. and Testronics. Inc.
Mark H. Cosmez II 47 Vice President, Finance/Chief Financial
Officer, Giga-tronics from October 1997.
Before joining the company, Mr. Cosmez
was the chief financial officer for Pacific
Bell Public Communications. Prior to 1997,
he was the vice president of finance and
chief financial officer for International
Microcomputer Software Inc. (IMSI), a
NASDAQ traded software company. From 1994
to 1995, he was the corporate controller
for The Software Toolworks.
Byron F. Flanders 62 Vice President, Manufacturing from June,
1996. Manager, Power Measurement Product
Line with Giga-tronics from December, 1995
to June, 1996. Prior to joining
Giga-tronics, Mr. Flanders was General
Manager of Herguth Laboratories, Inc. from
1993 to 1995 and Vice President of
Manufacturing for Zeta Graphics Corporation
from 1977 to 1992.
Robert D. Geddes 55 Vice President, Marketing and Sales since
July 15, 1996. Mr. Geddes previously served
as Vice President Marketing and Sales for
Systron Donner Corporation from April, 1986
to July 1996.
Gordon P. Hampton 62 For the last 5 years has been the
President, Ultracision, Inc.
Lawrence A. Kaye 56 Vice President, Engineering since 1997.
Director of Manufacturing Engineering from
March, 1994 and as Director of Engineering
from September 1993 to March, 1994. Mr.
Kaye previously served as Vice President,
Engineering with Giga-tronics from April
1980 to September, 1993.
James R. Koehn 57 President, Giga-tronics Instrument Division
as of May 1998. Mr. Koehn previously served
as President of Marconi Instruments, Inc.
of Fort Worth, TX. Prior to December 1994
he was a Vice President at Tektronix.
Jeffrey T. Lum 52 For the last 5 years has been the
President, ASCOR, Inc.
Edward D. Sherman 64 President of Microsource, Inc. from May 18,
1998. Assistant to the Chairman of
Giga-tronics Incorporated April 1, 1997 to
May 17, 1998. President and Chief Executive
Officer of FET Acquisition Co., Inc. from
April, 1995 through September, 1996. Served
as Product Line Manager for Giga-tronics
from May, 1995 through March, 1996.
President and Chief Executive Officer at
3dbm, Inc. from January, 1994 through
March, 1995. Prior to that time, and from
1990, Mr. Sherman served as President and
Chief Executive Officer of Peninsula
Engineering. Mr. Sherman has been a member
of the Board of Directors since 1993.
16
17
GIGA-TRONICS INCORPORATED
INDEX TO EXHIBITS
2.1 Agreement and Plan of Reorganization, dated as of May 20, 1996 by and
among Giga-tronics Incorporated, ASCOR Acquisition Corp. and ASCOR,
Inc., previously filed on May 30, 1996, as Exhibit 2.1 to Form 10-K for
the fiscal year ended March 30, 1996.
2.2 Letter of Agreement between Giga-tronics Incorporated and ASCOR, Inc.,
dated May 20, 1996, as previously filed on May 30, 1996, as Exhibit 2.2
to Form 10-K for the fiscal year ended March 30, 1996.
2.3 Agreement and Plan of Reorganization, dated as of June 6, 1997, by and
among Giga-tronics Incorporated, GTV Acquisition Corp. and Viking
Semiconductor Equipment, Inc., as previously filed on Jun 13, 1997, as
Exhibit 2.3 to Form 10-K for the fiscal year ended March 29, 1997.
2.4 Agreement and Plan of Reorganization, dated as of December 2, 1997, by
and among Giga-tronics Incorporated, Giga Acquisition Corp. and
Ultracision, Inc. as previously filed on December 16, 1997, as Exhibit
2.1 to Form 8-K, and incorporated herein by reference.
2.5 Agreement and Plan of Reorganization as amended, dated as of December
22, 1997, by and among Giga-tronics Incorporated, Giga Micro Corp., and
Microsource Inc., as previously filed on June 1, 1998, as Exhibit 2.1 to
form 8-K and incorporated herein by reference.
3.1 Articles of Incorporation of Registrant, as amended, previously filed on
May 6, 1983, as Exhibit 3.1 to Form S-1 registration, File No. 2-83581
(hereinafter "Form S-1"), and subsequently filed on July 3, 1991, as
Exhibit 3.1 to Form 10-K for the fiscal year ended March 30, 1991, and
incorporated herein by reference.
3.2* By-laws of Registrant, as amended, previously filed on May 6, 1983, as
Exhibit 3.2 to Form S-1, and subsequently filed on July 3, 1991, as
Exhibit 3.2 to Form 10-K for the fiscal year ended March 30, 1991, on
June 13, 1997 as Exhibit 3.2 to Form 10-K for the fiscal year ended
March 29, 1997, and incorporated herein by reference.
10.4 1990 Restated Stock Option Plan and form of Incentive Stock Option
Agreement, previously filed on July 3, 1991, as Exhibit 10.4 to Form
10-K for the fiscal year ended March 30, 1991, subsequently filed on
December 3, 1997 as Exhibit 19.1 to Form S-8 and incorporated herein by
reference.
10.5 Standard form Indemnification Agreement for Directors and Officers,
previously filed on July 3, 1991, as Exhibit 10.5 to Form 10-K for the
fiscal year ended March 30, 1991, and incorporated herein by reference.
10.6 Proposal for Retired Officers' Health Insurance, previously filed on
July 3, 1991, as Exhibit 10.6 to Form 10-K for the fiscal year ended
March 30, 1991, and incorporated herein by reference.
10.7 Form Stock Option Agreement for Automatic Director Grants, previously
filed on July 3, 1991, as Exhibit 10.7 to Form 10-K for the fiscal year
ended March 30, 1991, and incorporated herein by reference.
10.8 Special One Time Option Grant to Robert Wilson, previously filed on July
3, 1991, as Exhibit 10.8 to Form 10-K for the fiscal year ended March
30, 1991, and incorporated herein by reference.
10.11 Asset Purchase and Licensing Agreement between John Fluke Mfg. Co., Inc.
and Giga-tronics Incorporated dated June 3, 1993, previously filed on
June 23, 1993, as Exhibit 10.11 to Form 10-K for the fiscal year ended
March 27, 1993 and incorporated herein as reference.
17
18
10.12 Lease between Giga-tronics Incorporated and Calfront Associates for 4650
Norris Canyon Road, San Ramon, CA, dated December 6, 1993, previously
filed as an exhibit to Form 10-K for the fiscal year ended March 26,
1994.
10.13 Employee Stock Purchase Plan, previously filed on August 29, 1997, as
Exhibit 99.1 to Form S-8, and incorporated herein by reference.
10.14 Form of Incentive Stock Option Agreements for Ultracision Inc., as
Amended by the Assumed Option Agreement, as previously filed on March
30, 1998 as Exhibit 99.3 to Form S-8 and incorporated herein by
reference.
13.0* 1998 Annual Report to Shareholders.
23.0* Report on Financial Statement Schedule and Consent of Independent
Auditors. (See page 14 of this Annual Report on Form 10-K.)
27.0* Financial Data Schedule
* Attached as exhibits to this Form 10-K.
18